What happened

Shares of Trivago (TRVG 2.48%) gained 22.1% in July, according to data from S&P Global Market Intelligence. The hotel search company posted its second-quarter earnings results on July 24, with sales and earnings for the period topping expectations and helping the stock close the month with strong double-digit gains. 

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Revenue for the quarter ended in June came in at 223.4 million euros, down roughly 5% from revenue of 235 million euros in the prior-year quarter, but ahead of the average analyst target by 5.1 million euros. The company posted net income of 5.9 million euros, a significant improvement on the loss of 20.7 million euros that it posted in the second quarter of 2018. Earnings per share for the period were 0.02 euros, ahead of the average analyst target for per-share earnings of 0.01 euros.

An aerial view of a beach resort.

Image source: Getty Images.

So what

Trivago has been slimming down and aiming to generate more profitable sales, even if it means that its overall revenue continues to slide. The company's qualified referrals dropped to 131.3 million from 177.1 million in the second quarter of 2018, but its revenue per qualified referral rose to 1.67 euros from 1.30 euros -- propelling a return to referral revenue growth in June. The business recorded a return on advertising spend rate of roughly 130% in the quarter, improving from its rate of roughly 110% in the prior-year period. 

Now what

Pullback in global markets stemming in part from worsening trade dynamics between the U.S. and China has weighed on Trivago in August, with the stock trading down roughly 7% in the month so far.

TRVG Chart

TRVG data by YCharts.

The company expects full-year adjusted EBITDA to come in between 60 million euros and 80 million euros. Hitting the midpoint of that guidance would represent a nearly 350% increase from the 15.7 million euros in adjusted EBITDA that Trivago posted in 2018.