INITIAL THOUGHTS
- At the JPM Conference yesterday, mgmt talked down 2Q revenue growth in its core Hotel segment (CBT), suggesting revenues may grow in the MSD to HSD digit range vs. consensus of 11% and 1Q growth of 12%.
- TRIP should have been heading toward another quarter of accelerating CBT revenue growth since it had fully lapped the Int'l IB launch in April, and it already returned to pre-IB revenue/hotel shopper levels in the US in 1Q.
- Mgmt laid out 4 reasons why 2Q is sliding, but we suspect it's just comes down to marketing spend, and potentially one other issue related to its product revamp, which we're still looking into.
- We would have called the soft 2Q guide a sandbag since we're only two weeks removed from its 1Q release, and we estimate that TRIP could have produced +20% CBT revenue growth in 2Q if it just sat on its hands and stuck to its original 2017 gameplan.
- We suspect mgmt may be pivoting and trying to preserve EBITDA, which would be a short-sighted/ill-advised attempt to appease the street.
Let us know if you have any questions or would like to discuss in more detail
Hesham Shaaban, CFA
Managing Director
@HedgeyeInternet
