Hotel shopper growth a little disappointing in Q4 but meta hit neutrality in December
CONF CALL
- 25% growth in hotel shoppers in Q4; 36% for the year - strength in UK and USA
- 50% total traffic growth
- 4 new point-of-sales in 2013; plan 8 more in 2014
- In 2014, mgmt wants to integrate photos from Oyster acquisition into TRIP, while working on a more engaging member experience on mobile, and have plans to make TRIP membership further come to life for users.
- New TV spot due out Spring 2014
- Meta: bidding landscape matured in Q4. CPC uptick in Q4, consequently resulting in resident per hotel shopper growth
- Tablet: made further improvements on new native app
- TripConnect: remains in early stage of adoption curve
- Display: sold impressions up 34% YoY (larger global sales force)
- Business listings: 69k subscriptions, up 38% YoY; better client-facing tools
- 2014 - free to list platform - expect more improvements
- Daodao: strong demand for international demand for repeat users; remain in investment mode
- No margin target
- May take a short-term hit for the benefit of long-term goals
- Click-based: Stronger pricing from meta leads, offset by smartphone growth and international traffic growth; smartphone impact intensifying given strong hotel shopper traffic on that device
- Meta transition achieved revenue neutrality in December
- Saw more bidders per property on average
- More properties with at least one bidder
- Increasing CPCs
- Model is highly sensitive to CPC pricing. Positive trend will continue into 2014
- Display: Better sell-through rates in APAC and EMEA; also easy Q4 comps
- Subscription: Sales productivity, pricing improvements in business listings and increased brand awareness in vacation rentals
- International revenue (other than dot com): increased slightly as a % of total growth based on hotel shopper growth globally and strong performance of display/business listings products overseas
- Q4 expenses increased sequentially to 75% of revenues due to timing of TV ad campaign
- Effective tax rate of 28% is a good run rate
- Diluted share count will increase 1-2% by the end of 2014
- 4Q capex was 8% of revenues;
- 2014 capex as a % of revenue will remain in-line with 2013 exit rate
- Paid $35MM to acquire 6 companies
- Repurchased $145MM in 2013; $100MM repurchase plan remaining
- Click-based revenue expected to accelerate throughout the year; low twenties growth expectations in 2014
- Mid-to-high teens display rev growth in 2014; up against very strong 2013 comps; does not expect very strong 4Q growth rate to recur
- Low 50s growth from subscription, transaction, and other business lines
- 2014 revenue growth guidance: mid 20s
- 2014 EBITDA growth guidance in line with revenue growth - mid 20s
- Try to give conservative forecast
Q & A
- Hotel shopper comp in 1H 2014 will be tough
- No comment on assisted bookings product timeframe; fully committed to building it in 2014. May launch on other platforms but right now wait and see
- Assisted bookings disruptions will be less than the meta disruptions
- Onsite conversions: nice progress with travelers moving down the funnel
- Leads have been more valuable for clients compared with 6 months ago; more likely for clients to finish the transaction
- TV ad campaign: raised awareness in all 4 markets. Pleased with effort but only the beginning. Looking for harder-hitting campaign.
- Display advertising seasonality: couple of larger orders dropped into the quarter that normally does not happen. Q4 is seasonally very volatile. This big uptick is not in the Q4 forecast for 2014.
- TV ad spend correlation with hotel shopper growth: expect meaningful growth via TV spend but too early to tell
- Non-hotel shopper traffic growing worldwide: nothing but upside
- Meta revenue neutrality: by November, they saw some price increases but pricing picked up in December and continued into January. Not concerned about breakage.
- Monetization on smartphone have not been where it should be
- Hotel shoppers: includes tripadvisor mobile website, does not include daodao, does not include native shoppers on Android/iPhone
- Q1 2014 will have full quarter of native shoppers
- Marketing/selling expense Q4 ex TV spend impact: EBITDA margins would have been closer to previous quarters
- Outside of Summer Olympics, other events are too small to impact results
- Business subscriptions: 775k hotels on platform; of those, >300k registered owners (69k subscribers)
- Traffic: 50% hotel shoppers, 50% non-hotel shoppers
- 4Q headwinds/tailwinds:
- International/mobile continue to drag on traffic in 5-10% range; mobile headwind has strengthened; favorable FX by a point and a half. Meta (revenue/per hotel shopper): neutral in December;
- 2014 headwinds/tailwinds:
- Headwinds with international and mobile. Hope assisted bookings will help the mobile segment. Meta should be a tailwind.