trivago NV Q3 FY2024 earnings call

Strategic Priorities

• Branded Growth: Secured partnership with Jurgen Klopp for marketing campaign, leveraging AI for localization. Brand marketing investments in 2024 showing positive returns.
• Improve Hotel Search Experience: Expanded AI-powered hotel highlights to 250,000 hotels across 8 languages and 27 markets, introduced new personalization algorithms for relevant search results.
• Best Deal Recovery Experience: Enhanced deal visibility with super saving deals on apps and price drop deals, improved rate accuracy by incorporating partners' full booking funnels.
• Empower Partners: Optimized marketing mix and product to improve conversion rate, introduced second price auction to mitigate risk for advertisers, aim to expand trivago-branded Book & Go funnel in 2025.

In the third quarter of 2024, total revenue was EUR146.1 million, a 7% decline compared to Q3 2023. The Rest of World segment had referral revenues up 9%. Developed Europe showed an 8% decline, which was an improvement from the previous quarter. The Americas segment experienced a 14% decrease. Branded revenue growth was positive in Developed Europe and Rest of World, while Americas faced temporary market headwinds.

Guidance

• Expect adjusted EBITDA to be close to breakeven levels for full-year 2024.
• Anticipate adjusted EBITDA levels similar to 2024 in 2025 while continuing to invest in brand marketing.
• Expect year-over-year revenue growth in 2025 with double-digit medium-term growth.
• Confident in achieving year-over-year top-line growth in Q4 2024.

Risks

• Google ad format changes continue to be a headwind, though expected to gradually normalize by Q1 2025.
• Temporary market headwinds in Americas, including softer demand and reduced TV reach due to major events.

Q: On return to positive growth in Q4, any outlook for Americas and Europe?

A: So far, Q4 shows growth. Americas is back positive, Rest of World is positive, Developed Europe is improving though still a bit negative.

Q: Sources in Rest of World performance marketing besides Google?

A: Non-Google performance marketing is positive, including strong presence in Japan with Yahoo! and social channels.

Q: What drove increased booking conversion?

A: Continuous product improvements, hundreds of tests quarterly, and brand marketing improvements impacting conversion rates.

Q: Outlook for 2025 growth?

A: Driven by branded revenue growth and better performance marketing comps, with comps improving as Google changes stabilize.

Q: Average booking value trends?

A: ABV stable in Q3; Americas slightly down, Developed Europe slightly up, Rest of World stable. Q4 ABV outlook solid with varying trends by region.

Q: Progress on hotel coverage and Google ad format changes?

A: Hotel coverage is AI-driven content initiative expanding unique selling points. Google ad format changes stabilizing with teams becoming more competitive in new formats.