Shares of Tripadvisor (TRIP 0.64%) fell 17% on Tuesday after the travel website operator's profits fell short of investors' expectations.
Tripadvisor's revenue surged 51% year over year to $459 million in the third quarter. The gains were driven in part by Viator, the company's sightseeing tours and day trips site, which saw revenue soar 138% to $174 million.
Average monthly unique users on Tripadvisor's branded websites grew by 8%. This represented roughly 82% of the users the travel platform had in the pre-pandemic third quarter of 2019.
"The Tripadvisor group of brands and offerings continue to provide a trusted source of travel and experiences, delivering value to consumers hungry to connect with the world as travel recovery continues," CEO Matt Goldberg said in a press release.
The revenue gains helped Tripadvisor's adjusted net income jump 78% to $41 million, or $0.28 per share. Yet despite the sizable increase, the company's profits came in below Wall Street's estimates. Analysts had forecast earnings per share of $0.39.
Competition is intensifying in the online travel industry as consumer demand rebounds. That's forcing Tripadvisor to spend aggressively to defend its market share and grow its website traffic. The company's selling and marketing costs were up 58% in the third quarter. These investments are biting into Tripadvisor's near-term profitability.
Additionally, the strength of the U.S. dollar is negatively impacting Tripadvisor's international results. Foreign exchange rate movements dented the travel platform's revenue by $34 million.
Still, management remains optimistic about Tripadvisor's long-term prospects. "Our brand, our reach, and our community, as well as other enduring assets such as our data and content, are strengths that we intend to leverage," the company said in a letter to shareholders.