TripAdvisor (TRIP) Q1 Earnings Beat Estimates, Revenues Lag

TripAdvisor Inc. (NASDAQ:TRIP) reported adjusted first-quarter 2019 earnings of 36 cents per share, beating the Zacks Consensus Estimate by 5 cents. The reported earnings also increased 33.3% sequentially and 20% from the year-ago quarter.

Quarterly revenues were $376 million, missing the Zacks Consensus Estimate of $384 million. Moreover, the top line was down 1% year over year.

Following the company’s first-quarter results, the share price fell 11.41%. The decline was due to lower-than-expected revenues and a decrease in average monthly unique visitors.

Notably, the stock has gained 2.2% against its industry’s decline of 2.1% over the past year.

Revenue Segments

Starting first-quarter 2019, TripAdvisor revised its reporting structure into three segments: Hotels, Media & Platform, Experiences & Dining, and Other.

Revenues of $254 million (accounting for 68% of total revenues) from the Hotels, Media & Platform segment remained flat with the year-ago quarter.

The Experiences & Dining segment’s revenues of $80 million increased 29% year over year and contributed 21% to total revenues. The company will likely continue to invest in supply and marketing to accelerate E&D products, and drive attractive returns over the long run.

The Other segment contributed the remaining 11%. Revenues from rentals, SmarterTravel, Flights/Cruise and TripAdvisor China comprise total revenues under this segment. Revenues in this segment were $42 million, down 33% from the year-ago quarter, primarily due to the elimination of some marginal and unprofitable revenues within some non-TripAdvisor branded offerings.

Important Metrics

Average monthly unique visitors fell 5% from the prior-year quarter to approximately 411 million.

User reviews on the company’s website reached 760 million, representing year-over-year growth of more than 20%. The increase was driven by strong efforts toward improving its user base through marketing initiatives and enhancing mobile-centric product designs.

Operating Results

TripAdvisor’s adjusted operating expenses of $293 million were down 2.2% from $307 million a year ago. Per the press release, operating margin of 8.2% was up 210 basis points from a year ago.

On a GAAP basis, the company’s net income was $26 million or 18 cents per share versus net loss of $5 million or 4 cents in the prior-year quarter.

Balance Sheet & Cash Flow

TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $811 million, up from $670 million recorded in fourth-quarter 2018. Accounts receivables were $236 million, up from $212 million in the fourth quarter.

Cash flow from operations was $182 million, increasing from $31 million in the fourth quarter. Capex was $17 million, up from $16 million in the fourth quarter.

Zacks Rank & Stocks to Consider

Currently, TripAdvisor has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Facebook, Inc. (NASDAQ:FB) , Shopify Inc. (NYSE:SHOP) and AXT, Inc. (NASDAQ:AXTI) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, Shopify and AXT is currently projected at 20.2%, 23.7% and 15%, respectively.

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