Tripadvisor (TRIP) Q3 2026 Earnings Call Transcript

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DATE

Fri, Nov. 6, 2026

CALL PARTICIPANTS

• Head of IR - Angela White
• President and CEO - Matthew Goldberg
• CFO - Mike Noonan

TAKEAWAYS

• Total Revenue -- $436.4 million, representing an 11% decline year over year.
• Experiences Segment Revenue -- $284.8 million, a 3% decrease driven by demand shifts and marketing spend adjustments.
• Hotels and Other Revenue -- $151.6 million, a 23% decline reflecting lower volume and reduced partner ad spend due to uncertainties in the Middle East.
• Adjusted EBITDA -- $71.1 million, or 16.3% of revenue, compared to 22.0% in the prior year.
• GAAP Net Loss -- $316.9 million, primarily resulting from a non-cash goodwill impairment charge.
• Goodwill Impairment -- $369.5 million, recorded for the Hotels and Other segment following a decline in financial performance and reduction in forecasted profitability.
• Net Proceeds from TheFork Sale -- $685 million, received upon closing the divestiture on Nov. 1, 2026, which the company intends to use for debt reduction.
• Experience Bookings -- 6.8 million, an increase of 2% compared to the prior year.
• Gross Booking Value -- $1.3 billion, which remained flat year over year.
• Viator Platform Bookings -- 4% growth, while bookings on the Tripadvisor platform for the same segment declined in the low-teens.
• B2B2C Experience Bookings -- mid-teens growth year over year, representing the fastest-growing channel within the experiences segment.
• SEO Headwind -- 3 percentage points, impacting both segment bookings and Gross Booking Value growth.
• Global Restructuring Savings -- $40 million in gross annualized savings, resulting from the elimination of 425 roles primarily in the Hotels and Other segment.
• Cash and Cash Equivalents -- $706.8 million as of Sept. 30, 2026, which excludes proceeds from the sale of TheFork.
• Total Debt -- $834 million, including the company's Term Loan B and remaining notes.
• Marketing Expenses -- 48.8% of revenue, an increase of 550 basis points due to free-to-paid channel mix shifts and persistent search engine optimization headwinds.
• Personnel Costs -- 21.5% of revenue, down from 25.2% in the prior year due to lower expenses in the Hotels and Other segment and decreased share-based compensation.
• Q4 Revenue Outlook -- low-teens decline sequentially, reflecting a modest acceleration in experiences declines.

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RISKS

• Noonan stated, "late in the month, protests in Europe began to weigh on demand from both inbound and intra European travelers," noting the impact on demand in late Oct. 2026.
• Noonan noted that "demand shifts and marketing spend adjustments impacted booking performance particularly in August," when performance fell short of company expectations.
• Goldberg stated, "returns have been slower to materialize as we navigate known SEO and other headwinds," referring to the impact of search landscape changes on the Tripadvisor point of sale.
• Noonan warned that "macro factors have played a role including weakness in the North America to Europe corridor, historically our largest," affecting overall segment growth.

SUMMARY

Tripadvisor, Inc. (NASDAQ:TRIP) reported third quarter results characterized by a strategic pivot toward its experiences segment and a significant restructuring of its legacy Hotels and Other operations. Management announced a leadership transition plan where CEO Matthew Goldberg will remain through mid-Feb. 2027, while CFO Mike Noonan will depart at the end of 2026, with Kristen Dalton assuming the interim CFO role. The company completed the $685 million sale of TheFork and initiated a restructuring plan to save $40 million annually by reducing the Hotels and Other workforce by 60%. These actions are intended to streamline the legacy business into a leaner, cash-flow-protective model while reallocating resources to the Viator marketplace flywheel to drive long-term growth in the experiences category.

• Management reported that unique contributors to the platform remain stable to marginally down year over year, while general traffic has experienced double-digit declines.
• CEO Goldberg stated, "In AI discovery, our brands lead in share of citations for experiences prompts," noting that resulting traffic converts well above the site average.
• Viator conversion rates from AI platform integrations are approximately fivefold the site average, according to management.
• The company is prioritizing debt reduction over share repurchases in the near term to preserve balance sheet strength following the divestiture of TheFork.
• Management indicated that search engine optimization exposure has declined to the mid-to-high teens as a percentage of traffic, down significantly over the last three to five years.
• The B2B2C channel, including a new partnership with Airbnb, grew in the mid-teens year over year and remains a key component of the experiences segment's profitability.

INDUSTRY GLOSSARY

• ABV: Average Booking Value, the average dollar amount spent by a customer per reservation.
• AEO: Answer Engine Optimization, the process of optimizing content to be cited by AI-driven search and answer engines.
• B2B2C: Business-to-Business-to-Consumer, a model where the company provides supply to other businesses that then sell to end consumers.
• GBV: Gross Booking Value, the total dollar value of bookings made on the platform prior to cancellations or refunds.
• LTV to CAC: Lifetime Value to Customer Acquisition Cost, a ratio measuring the long-term value of a customer relative to the cost of acquiring them.
• OTA: Online Travel Agency, a web-based marketplace that allows consumers to research and book travel products.
• SEM: Search Engine Marketing, the practice of using paid advertisements to increase visibility in search engine results.
• SEO: Search Engine Optimization, the process of improving organic (unpaid) visibility in search engine results.
• UGC: User-Generated Content, content such as reviews and photos contributed by the platform's community of travelers.

Full Conference Call Transcript

Operator: During the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Angela White, Head of IR. Please go ahead.

Angela White: Thank you, Therese. Good morning, everyone, and welcome to TripAdvisor's Third Quarter 26 Financial Results Call. Joining me today are Matthew Goldberg, President and CEO and Mike Noonan, CFO. This morning, we filed and made available our earnings release. In that release, you will find reconciliations of non-GAAP financial-- . Measures to the most comparable GAAP financial measures discussed on this call. Before we begin, I would like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, 11/05/2026. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances.

Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I will turn the call over to Matthew.

Matthew Goldberg: Thanks, Angela, and good morning, everyone. Earlier this morning, we issued our earnings release, which I hope you have had a chance to review. Mike will cover our quarterly performance in more detail in his section. Before we want to get into earnings, I would like to address this morning's announcement regarding our leadership transition plan. I will remain as CEO through mid February, and I am committed to working with the board and our leadership team to ensure a smooth and seamless transition. The board is working with an executive search firm to identify candidates to lead the company through its next chapter.

As part of that announcement, we also shared that Mike has decided to pursue another opportunity outside the company and will depart at the end of the year. We are fortunate to have a deep bench of talent and Kristen Dalton, our current head of strategy and operations and former VP of FP and A for the company, will step in as interim CFO beginning January 1, 2027. TripAdvisor Group today is a different business than the 1 with from the pandemic when Mike and I joined in 2022. Experiences is now at the core of the company, and we are positioned for an increasingly AI driven travel ecosystem.

The experiences segment has scaled to nearly 5 billion in gross booking value, and now contributes the majority of revenue for the group. We simplified our capital structure, and closed the sale of TheFork this week, strengthening our balance sheet providing financial flexibility. I am impressed by the hard work, commitment, and extraordinary talent of our teams across the organization. I am particularly proud of our people for their resilience, as they have navigated changes across the travel industry that have created known headwinds for our legacy business lines. Clearly, there is more work to do.

But we have valuable assets, a strong financial foundation, and a group of people that I believe represent some of the very best talent in our industry. Now to earnings. I would like to focus on where TripAdvisor Group is today and how the company continues to shape its position to succeed in an experiences category that continues to grow and evolve. 2026 has been a year of strategic transition, progress, and significant learnings. We have completed the sale of the fork, which gives us enhanced capital flexibility. We have taken actions to further simplify our hotels and other business. And aligned our operating model around our highest priority growth driver. Experiences. We continue with our portfolio review.

Which includes evaluating strategic alternatives aligned with our stated priorities. Simplifying our legacy business line, and focusing resources on our growth opportunities. We are taking decisive actions to prioritize resources sharpen our investment, and improve operational focus, to move faster, at scale. First, in hotels and other, we are aggressively aligning costs with our revenue profile. Protecting cash flow, while preserving our valuable brand, reach, community, content, and data. Second, we intend to allocate capital in a disciplined manner maximize shareholder value. Third, we are focusing our execution, and investment around Viator, designed to reaccelerate growth and experiences.

Starting with Hotels and Other, We are taking important actions to further simplify our legacy offerings, and shift to a leaner, more nimble operating model, allowing us to increase the investment in experiences to drive faster execution, and accelerate growth. Yesterday, we announced a comprehensive global restructuring, which impacts H&O segment roles and shifts roles in product, engineering, and data analytics to the experiences segment The net impact for the group as a whole is approximately 40 million of gross annualized savings. Although this was a difficult decision given the number of people impacted in H&O, we believe it is the right approach to transform the group.

The action in Hotels and Other is designed to run the segment at a smaller scale and allows us to retain our focus on the most important and valuable aspects of our brand. Our content, community, and trust. By paring back fixed costs across highly variable and noncore revenue lines, we are also moving to stabilize segment cash flow. TripAdvisor still offers a unique and scaled platform in travel. Despite top of funnel headwinds, the site remains 1 of the most accessed research discovery and validation sites in travel, with its unique content and data assets.

These characteristics have been key to the planning experience with tools such as our on-site AI chat option designed to help travelers plan, explore, and make in destination decisions. It also remains a reliable source of leads for OTA and industry partners. The community and platform continue to provide tangible value to travelers, who, in turn, build value through contributions to our UGC. We see this value evidenced in unique contributor trends. Year to date, unique contributors are stable to marginally down year over year, versus secular driven double digit declines in traffic. And new contributors have remained a consistent portion of total contributors. Providing refreshed UGC.

Importantly, our contributors are driving positive growth in the number of reviews and photos in our top categories hotels and experiences. Additionally, the more engaged a contributor, the more they visit book, and come to us directly. And not surprisingly, contributors have higher than average monetization profile. This community fuels the rich content and data that our hotel and OTA partners and LLM find so valuable, whether as a source of highly qualified leads, or as a source of content, through licensing. or AEO citations. In short, at TripAdvisor, leaner teams will focus on more impactful, personalized guidance by deploying the valuable assets we have developed over many years authentic contributions, content, and our trusted relationship with Travelers.

As we incorporate these assets into our native AI experience, LLM integrations, and partnerships, we can better connect travelers to partners in our most monetized and profitable offerings. Second, this week, we officially closed the sale of The Fork. Generating approximately $685 million in net available proceeds. We expect to prioritize the reduction of long term debt to preserve balance sheet strength reduce interest expense, and maintain strong liquidity. We believe our healthy balance sheet provides flexibility as the company completes its portfolio review and finalizes its 2027 planning. Finally, we remain focused on accelerating our growth in experiences.

The most compelling area of travel, where we believe we are well placed given our strong market position in The US global supply base, and expansive B2B2C partner roster. We believe the increased interest in the category over the last few years is a reflection of the attractiveness of the opportunity. That said, performance has clearly been mixed throughout 2026. Macro factors have played a role including weakness in the North America to Europe corridor, historically our largest. We faced ongoing SEO headwinds in our TripAdvisor point of sale. Our execution has not always been where it needed to be upon combining our experiences operations.

And while we believe the strength of our brand and offering positions us attractively, the marketplace remains competitive. A year ago, we made the decision to bring experiences teams across TripAdvisor and Viator together because while we recognize the distinct roles each brand plays in travel, we believed it would create product and marketing efficiencies. This has proved out as we expected, which is evident in our last 12-month performance across our points of sale. While Viator and B2B2C experiences booked grew in the low-teens, the TripAdvisor channel declined by high-single digits.

Despite increased marketing investment on TripAdvisor, returns have been slower to materialize as we navigate known SEO and other headwinds, which in turn, affected our ability to scale spend in Viator. Particularly in newer channels, where early returns have been positive. Similarly, product and engineering efforts spread across both platforms have slowed conversion gains in Viator. Our primary experience as OTA. The takeaway is clear. Competing investment priorities are delivering uneven returns. Moving forward, we are focusing our primary investment behind the single, higher return Viator OTA flywheel aimed at driving sustainable LTV to CAC improvements in areas such as conversion, repeat bookings, and app adoption.

TripAdvisor will continue to serve as an efficient top of funnel discovery engine and partner lead source. This more focused approach maximizes ROI across performance marketing and product development while positioning us to unlock accelerated growth and long term margin expansion for our experiences segment. Ensuring the compounding effect of a single flywheel is especially important as we expand from our more mature markets and categories and into growth geos and new categories. It also enhances the strategic value proposition for third party and B2B2C partners with access to large quality supply base. Focusing clearly on a single flywheel also positions us well in an evolving discovery and booking environment.

Our marketplace model is resilient to disintermediation by upper funnel LLM given the complexity of a fragmented supply base of small operators complex transaction management, and customer service requirements for both sides of the marketplace. This, combined with our reviews, quality rankings, and availability signals, surface better recommendations within these channels. Viator is already working across all major AI platforms today, including Anthropic, OpenAI, Gemini, and most recently, with Meta. it is early and volumes are still low, but signs are positive. Bookings through LMP partner integrations convert at better than average rates and higher booking values. And in AI discovery, our brands lead in share of citations for experiences prompts.

And the resulting AI traffic converts well above the site average. I want to conclude by stepping back and putting TripAdvisor group today in context. Our assets are well positioned to meet traveler needs in an evolving AI first landscape. We help travelers decide what is worth doing and turn those decisions into bookings. TripAdvisor brings trusted constantly refreshed traveler insights while Viator brings a global marketplace of bookable experiences. Both continue to provide tangible value to travelers, and partners alike. As consumers increasingly turn to AI assistants and agents those platforms need reliable travel information, live availability, and the ability to complete a reservation. TripAdvisor group brings all 3. Positioned to serve travelers wherever their journey begins.

Our existing AI partnerships and strong early referral conversion rates support the opportunity to become an essential source of travel intelligence, and bookable experiences in an increasingly agentic world. We exit 2026 with a simpler, more focused business. Better placed to succeed in an evolving environment. Our teams are laser focused on our execution, and we are investing behind our growth engine to maximize the Viator marketplace flywheel. And moving to a streamlined and agile model for TripAdvisor. All of which sets a strong foundation for the future. With that, I will turn the call over to Mike.

Michael Noonan: Thanks, Matthew, and good morning. I will start with a review of our financial results then provide more detail on the impact of our cost reduction actions as well as some color on recent trends and outlook for Q4. As a reminder, all growth rates are relative to the comparable period in 2025, unless noted otherwise. Now turning to the quarterly results. Consolidated revenue $436 million or a decline of 11%, and adjusted EBITDA $71 million or 16% of revenue. Starting with experiences. Demand shifts and marketing spend adjustments impacted booking performance particularly in August. When bookings growth decelerated relative to July and fell short of expectations.

As a result, experiences booked in the quarter grew 2%, with performance varying significantly by point of sale. Bookings on our Viator platform grew 4%, the TripAdvisor platform declined in the low-teens and third party points of sale grew in the mid-teens. Persistent SEO headwinds created an approximate 3% growth headwind to segment bookings for the quarter. On the demand side, booking trends in The US to Europe quarter weakened further from last quarter, Given this quarter's share of total mix, the softness meaningfully impacted overall segment growth. Meanwhile, in our other primary corridor, US domestic, low-double-digit bookings growth in July decelerated as we moved through the quarter. Overall, demand continued to be impacted by macro headwinds and weather disruptions.

For example, bookings with a shorter booking window slowed to a greater extent during these disruptions. While the related rise in cancellation rates weighed on revenue. We also saw uneven performance in our SEM channel to the quarter. In August, we witnessed a decline in available clicks, which impacted growth for this channel. This also coincided with a planned shift in spend to newer less scale paid channels in efforts to drive long term channel diversification. Although we believe this created some in quarter growth headwinds for the Viator point of sale, we believe this is the right long term investment to drive durable growth with better unit economics over time.

Gross booking value or GBV was flat year over year. Changes in currency were a headwind to growth of approximately 1%. Excluding currency impacts and volume, GBV trends reflected modest pressure on average booking value or ABV driven by a lower mix of US to Europe bookings, which typically carry higher ABVs. As well as lower average values and slower growth in our higher priced booking tiers. SEO headwinds created an estimated 3% headwind to segment GVB growth. Experiences revenue declined 3%, which includes a currency headwind of approximately 1%. Revenue growth was further pressured relative to GBV growth primarily due to increased cancellation rates and, to a lesser extent, lower take rates.

Higher cancellation rates were driven primarily by the travel disruptions previously noted. Year over year take rate pressure was primarily due to testing and discounting and to a lesser degree the lower US to Europe mix given its typically higher take rate. Adjusted EBITDA for the experiences segment was $38 million or 13% of revenue. down 440 basis points. Leverage and personnel costs partially offset increased marketing as a percent of revenue. Year to date, higher marketing spend as percent of GBV has been driven primarily by SEO headwinds and marketing channel mix shift on the TripAdvisor point of sale.

Marketing spend on the Viator point of sale remained largely flat as a percentage of GBV despite incremental investments in new channels. As a percent of segment revenue, marketing deleverage reflected these GBV trends, compounded by higher cancellation rates. Moving forward, concentrating on the Viator point of sale flywheel, combining integrated marketing campaigns with product and supply enhancements is expected to drive higher growth and expanding margins. Turning to the Hotels and Other segment, revenue declined 23% to $152 million Hotel revenue fell 23% to $110 million primarily driven by lower volume and, to a lesser extent, lower pricing although overall pricing levels remain historically strong.

Media and advertising revenue decreased 23% to $28 million as ongoing uncertainties in The Middle East weighed on partner ad spend. Adjusted EBITDA in Hotels and Other was $33 million, 22% of revenue. Down approximately 650 basis points. Deleverage was driven by lower revenue, which offset the benefit of lower fixed costs year over year. As Matt noted, going forward, we will be moving toward further simplifying the segment and accelerating investments and experiences. He covered our strategic rationale. But I would like to cover specifics of the anticipated near term financial impact.

The restructuring is expected to result in annualized gross savings of over $55 million to the H&O segment, by reducing global employee and contractor roles by 425, or approximately 60%. Of our H&O dedicated roles. Of that, approximately 150 roles, or approximately $15 million in associated costs will move to the experiences segment to increase resourcing there. The result of this action is expected to result in group annualized savings of approximately 40 million This action does not include savings associated with any third party vendor costs, which we will pursue in the fourth quarter. Given timing of notifications for impacted employees, we expect very little cost benefit this year.

We estimate a restructuring charge of approximately $15 million to $20 million in Q4. Now turning to consolidated expenses. Which on a GAAP basis include goodwill impairment charge of approximately $369 million. We assess the carrying value of our goodwill annually. And given the financial performance over the last year, we concluded that the fair value of the H&O segment was lower than its carrying value. As such, we have reduced our goodwill on the balance sheet to reflect this assessment. Cost of revenue in Q3 was 9% of revenue, higher by approximately 110 basis points. This is primarily driven by a higher mix of experiences and some modestly higher costs in H&O.

Marketing costs were 49% of revenue, an increase of approximately 550 basis points. This was driven by ongoing free-to-pay channel mix, primarily impacting H&O, and the TripAdvisor point of sale and experiences as a result of persistent SEO headwinds. Personnel costs were 22% of revenue, down approximately 370 basis points. This reduction was driven primarily by lower expenses in the hotels and other segment, alongside decreased share based compensation expense resulting from Q4 25 cost savings program forfeitures and lower annual grant values starting in 2026. Excluding SBC, personnel costs represented approximately 18% of revenue, a decrease of roughly 200 basis points. Technology costs in Q3 were 5% of revenue.

An increase of approximately 70 basis points primarily driven by higher licensing fees associated with AI token spend as we position our teams for faster execution and productivity gains. G&A costs were approximately 4% of revenue, higher by 90 basis points related to an increase in legal reserve expense. Now turning to cash and liquidity. In Q3, operating cash flow was negative $122 million and free cash flow was negative $131 million, reflecting normal seasonal working capital swings as well as timing of certain accruals. Total cash and cash equivalents at September 30 were approximately $707 million Excluding deferred merchant payables of $397 million, our available cash balance was approximately $310 million. Our total debt was approximately $834 million.

On November 1, we closed the sale of the fork, and received approximately $685 million in net cash proceeds. Our post close balance sheet is approximately $1.4 billion, with available cash just over $1 billion. The closing of TheFork provides us flexibility in our capital allocation choices. And at this time, we are prioritizing a strong balance sheet. As such, we currently expect to use a portion of the proceeds to reduce debt. Reducing debt while preserving strong liquidity puts the company on strong footing while leaving other capital allocation options available. With respect to share repurchases, we remain unable to be active in the open market while portfolio review process continues.

Turning now to recent trends and outlook for Q4. As we consider the remainder of the year, several factors shape our outlook. October bookings growth weakened modestly from our exit rate in the third quarter. Driven by continued softness across long haul corridors and the impact of our marketing diversification efforts. Additionally, late in the month, protests in Europe began to weigh on demand from both inbound and intra European travelers. Consequently, sequentially, we expect group revenue to decline to the low-teens, reflecting a modest acceleration in experiences declines which includes a slight currency headwind, and flat performance in H&O, compared to Q3. For experiences, we expect bookings to remain roughly flat year over year. Which assumes Q3 trends continue.

For group adjusted EBITDA, we assume margins to step down sequentially to the low- to mid-single digits. Driven by approximately breakeven adjusted EBITDA in Experiences as we continue investing in paid channel diversification. Our focus on sharpening execution and deploying targeted investments is expected to position the Experiences segment for an improved growth profile in 2027. While it is too early to provide specific guidance for 2027,, our teams are actively establishing strategic priorities for the year. In experiences, given the vast global opportunity and our strong position as a leading platform, we will prioritize investments aimed at driving durable, top line growth over margin expansion.

The added resources from our restructuring put the teams in a good position to start the year. In full stride. In hotels and other, we are prioritizing a smaller, leaner operational footprint and a more durable margin profile. Recognizing the secular trends that have driven top line declines. Which we expect to abate over time as we work through the SEO headwinds. Overall, 2027 is designed to establish a solid operational baseline to support profitable long term growth. Before I pass the call back to the operator to begin Q&A, I would like to take this opportunity to say that it is been a privilege working with my colleagues across the company.

I would like to especially thank my dedicated finance team who have provided tremendous support these past 4 years. I wish the company all the best and look forward to following the company's continued progress. With that, I will turn the call back over to the operator for Q&A.

Operator: Thank you. As a reminder, to ask a question, you will need press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question today is from Richard Clarke with Bernstein. Your line is open.

Richard Clarke: Yes. Hi, good morning. Thanks for taking my questions. I guess just the first 1 on capital allocation. Just if you can give us any hint, Mike, what is the right level of debt given the shrinking business? How much of that $840 million do you want to pay down? And when is this portfolio review going to come to an end? And when might you like to buy back shares? And would you like to buy back shares at the end of that portfolio review? And then just a question on the Experiences business. You said you would focus on just the Viator channel. Is that also to mean that the B2B2C channel is also being de prioritized?

There was a article about you working with Airbnb. Maybe if you can provide some details there and whether that is also being taken down. it is really just fire as the only experience channel going forward.

Michael Noonan: Yep. Yeah. Thanks, Richard. I will take the first piece of capital allocation and Matthew can talk about that good question on the B2B2C. Capital allocation. So listen, I think we are very open eye as to seeing the pressures on EBITDA from our legacy business And so we absolutely wanna maintain a strong balance sheet. The quantum of that pay down I think we will resolve very shortly over the next several weeks. So we are not really gonna announce that yet on the call. But it would, you know, certainly align to the high level priorities which is making sure aggregate debt, is at appropriate levels for, the financial profile. But then also maintaining strong liquidity. Right?

And so we will kinda guide that pay down, by those 2 broad dynamics. As it relates to your the buyback question, you know, I think we have been pretty consistent around the portfolio review process, which is an important comprehensive review we have been under for some time. Does prevent us from being in the open market doing that. We have always stated that our capital allocation priorities have been around strong capital structure deploying capital for buybacks, and then inorganic growth You know, we just said that we are prioritizing the debt repayment first. I think share repurchases are an important component of that. And as you can imagine, there are, you know, once you were.

Once we will be available to do that, it will be a time to evaluate things in that order. Which is around where the where the shares are trading relative to views of value. But it certainly remains in our prioritization as we have historically said. So, Matthew, I will let you talk about Yeah.

Matthew Goldberg: Thanks, Richard. On the B2B2C, I want to be super, super clear No. We are not deprioritizing B2B2C. that is a very important channel. What we are doing is focusing on the Viator flywheel where we can see that focused resources will drive the greatest impact on the B2C side. We will leverage TripAdvisor as an important source of demand and leads. We will simplify that relationship so that we do not have the complexity that we have had in our organization. We think that will be a net positive. B2B2C and our third party points of sale are an area of great strength for us. That channel is growing faster than average. it is mid-teens year-to-year.

And, you know, our 3P business accelerated sequentially. From last quarter. And we view these partnerships as profitable and incremental to our growth that we would not otherwise achieve on our own. So you know, you mentioned 1 partnership. We look at many different partnerships we see headroom for growth there, B2B2C, and 3P will continue to be an important channel. But it is our Viator flywheel that we think on the b to c side is gonna lead the way for us.

Richard Clarke: Thanks, both. And thanks for working you the last few years. Good luck in the future.

Matthew Goldberg: Thanks, Richard. Thanks, Richard.

Operator: Thank you. Our next question is from Naved Khan with B. Riley Securities. Your line is open.

Naved Khan: Great. Thanks a lot. Couple of questions. Maybe just on the experiences side, can you maybe double click on the performance across the different point of sale versus, you know, 1 of your peers which, you know, my-- is-- Seems to be performing better growth wise. And maybe just talk about if the pressures are more competitive in nature versus maybe some questions related to what, you know, what is going on in search and agent tech AI. Channels. You know, you know, given that all players kind of are in the same sort of operating zone, meaning everybody's seeing the same pressure. So come.

You know, just talk about your performance and maybe what might be weighing more in this kind of environment.

Michael Noonan: Great. So, Naved, I will take the first 1 around the different points of sale. Matthew can maybe hit on the, you know, AI, the AI component I think you are hitting on. And as always, come back if we are we are not clear on your questions. So as we have talked about for some time, we do have, you know, different mix and experience in business, and a lot of that is driven by, the different characteristics from each point of sale. You know, the Viator point of sale, which is called, you know, the B2C portion, the TripAdvisor point of sale, is b to c, and then it matches just alluded to, the B2B2C channel.

And each 1 has their own dynamics. Yeah. I think you know, the TripAdvisor point of sale, the ongoing SEO headwind is material. Right? it is material for that channel. And as we call out consistently, you know, it is it is, you know, 3 points of headwind on a GBV. Just for this. Just for the overall segment. So that is. And again, an important thing to continue to point out. Our, you know, the Viator point of sale which we are, you know, reallocating investments to that and the B2B2C channel. Remain our important, you know, most efficient OTA channel. it is where we see most of the conversion gains happening.

We see most of flywheel mechanics benefiting there. And as you as you noted, we are. Or as we noted, we are gonna be moving more resources really drive that flywheel faster. You know, a lot of the growth dynamics, which we can get into in a bit, but a lot of growth dynamics we see really are around some of the macro impacts and what is happening in the broader s. SEM market, which Matthew will get into. And then B2B2C, like, this is a. As Matt just said, incredibly important channel for us, very differentiated. You know, this is more about. The growth is more about how you load partners in. So it is.

The growth algorithm is very different than the B2C flywheels. We are incredibly excited about some of the new partners we have brought on. Airbnb being 1 of them. And we continue to build our roster of partners. That takes time to build. And over time, we expect to continue to build out that business, and it remains an important. Very important piece of profitability for us as well. So I will turn it over to Matthew.

Matthew Goldberg: Yeah. No. Thanks. And just to summarize, there is a bunch of different things happening all at once. there is obviously some macro where some of our corridors are most impacted. Including US to Europe. there is some mix going on there. there is obviously the category reliance on SEM which has been our largest marketing channel. We are diversifying but the marketing mix shift is still relatively nascent. And so the auctions have certainly become more competitive, and we have seen that some of the spend in SEM is less efficient.

So we are excited that we are getting some good results in some of our other channels that we are experimenting with, and we continue we expect to continue to lean into that. Obviously, it reflects some of the broader travel environment demand. It reflects some of the changes in the SERP, in particular, the SEO impact. And we talked about some of the execution. We think the focus that we are putting into our team is gonna actually be quite helpful. But when you think about AI, which you know, you. you have asked about, we actually see AI as a real opportunity.

And so the AI front, as we said, we are integrating with all the major platforms, and we have been there very early to experiment. with agentic experiences across Anthropic, OpenAI, Google Gemini, and Metamuse. And so that is something where we have seen while a small percentage of our traffic, not unlike others, it is you know, probably less than 1% of our overall traffic, it is ramping. And our brands are leading in share of citations for experiences prompts. So that is very exciting for both brands, TripAdvisor and Viator. And, you know, the conversion for each is multiples higher than average. I think in Viator, it is close to 5x the average conversion.

And for TripAdvisor, I think it is about 2x the average conversion. So that is very promising. And so we will lean into it and experiment there, and we think that is gonna be a real opportunity for us in the future.

Naved Khan: Thank you, and good luck to you both.

Matthew Goldberg: Thank you, Naved.

Operator: Thank you. Our next question is from Nafeesa Gupta with BofA Securities. Your line is open.

Nafeesa Gupta: Hi. Good morning. So firstly, on this, like, a follow-up to what Naved asked. Could you talk more about weather experiences if like, the slowdown is a category demand problem, or is there, like, an acquisition problem Are consumers just booking fewer experiences? Or is Viator simply having to spend more to capture them as SEO traffic declines? And then I have a follow-up.

Michael Noonan: Yes. Hey, Nafeesa. I will take that. So yes, listen, I think the growth profile is reflective of a couple things. You know, certainly, we have seen some macro unevenness for sure. And I think you have heard that across the travel ecosystem this quarter and last quarter. We see that in quarter mix where, you know, domestic or domestic corridor has been much more resilient, although still down over the year, but domestic is much more resilient versus our important channel US to Europe corridor for sure. But we see that in higher cancel rates, particularly around some of these peak events and peak impacts.

I would say also as I mentioned in my prepared remarks, you know, the SEM channel is been delivering fewer clicks I would say, this past quarter. Now a lot of that could be tied to macro as well. So, you know, when we think about the overall business, we just think about that demand, that is coming to us and we are able to acquire, particularly in the. In where the category is set so much of the OTA category. Comes through, you know, the paid channels. You know, our business certainly reflects that.

From an efficiency perspective, I would say we still feel very good about the acquisition machine it is masked a little bit because we are making investments in some of these scaling other paid channels. Which do not necessarily have in quarter payback. But are just critical for us to really diversify and expand where we get high quality customers that we hope we can retain for a long time. You know, when we think about our SEM efficiency we actually have decent SEM efficiency in our Viator marketing channels on the. Just on the paid SEM side year over year.

But, again, some of that is masked by some of the timing you see in the investments we are making the other paid channel. So know, net, it is a it is an uneven environment, demand environment and we are navigating, but we are not slowing investment. Because we are. Really wanna make sure that we are investing in the category for the long term.

Matthew Goldberg: Yeah. I just wanna add that, you know, there is a number of paths here that look really, really promising. We mentioned investment in the in the flywheel. Which we think will drive the right outcomes. there is also product opportunities that we see ahead with app that will be more direct. We see supply opportunities. We see category expansion opportunities. We obviously see marketing channel diversification opportunities. So there is a real opportunity, and that is why we are staying focused on it and put the resources where they can make an impact. And I think you had a second question, Nafeesa. Or Yeah.

Nafeesa Gupta: Yeah. Thanks for answering that. And the second is I am just following on the impairment and restructuring in hotels. How should we think about the long term role of that hotels and other segment within TripAdvisor now going ahead? With these changes.

Michael Noonan: Yeah. I will just call the mechanical piece of the impairment process and Matthew will talk about the long term, you know, long term role. So this is as I said in my prepared remarks, this is a normal process we look at our goodwill on the balance sheet You know, clearly, the financial trends in the legacy business necessitated a deeper analysis of that. And concluded with the with the impairment. So I think that. I think that is all pretty standard. I think it does. It does not speak to, like, our. The opportunity around that asset, which I will let Matthew cover that.

Matthew Goldberg: Yeah. I mean, the. TripAdvisor's assets are unique and relevant for addressing travelers' needs and making the connection to partners and suppliers. And so know, they bring trusted human perspectives. And I think the importance of our contributor information that we shared around the durability of contributors having been much stronger than overall traffic. The fact that they are driving growth in our key categories is a really good indicator that we are gonna continue to get that fresh perspective We are gonna lean into that.

And that community and the content and data that if provides and the brand trust that surrounds it will allow the team to continue driving value for partners which includes Viator and experiences as well as our OTA partners, It will simplify our existing revenue streams so we can streamline how we do this. And I think that focus will be quite helpful. That help allows us to have the right cost structure for the future, which will be a leaner more agile team, and that will, you know, maximize cash flow in the business. And so we can also leverage all the work we have done in AI planning and discovery.

And I know the teams are very excited about leaning into what that can look like for the future. So I think we are leaning into that and excited that we will have a smaller team moving faster using AI tools and behaving more like a startup probably.

Nafeesa Gupta: Got it. Thank you.

Operator: Thank you. As a reminder, to ask a question, you need to press 11 on your telephone and wait for your name to be announced. Our next question is from Lloyd Walmsley with Mizuho. Your line is open.

Lloyd Walmsley: Thanks. 2 questions, if I can. First, just have you all filed a lawsuit against Google under the DMA, or is that an opportunity you have looked at? Trivago has done so. There have been some you know, some other court stuff going on over there. Wondering if you guys have a view on that.

And then a second 1, strategically, as you guys have a review underway, you know, what do you all think, to the extent you can comment, what do you think the biggest sort of assets are inside TripAdvisor, whether that is the core hotel or attraction side, like, what do you think are the most valuable assets in the hands of a strategic acquirer not asking you to name anyone, but just if you could sort of give us the pitch of sort of how you all could be valuable in other folks' hands, to the extent you can comment, would love to hear that. Thanks.

Michael Noonan: Great. So I will answer the first 1, and Matthew will give views on, some of the TripAdvisor assets and value we see in there. I mean, Lloyd, appreciate the question. We are. Not much we can say. We are aware of those lawsuits. And, you know, we really cannot say too much about what they. What we may or may not be contemplating. But, yeah, we are certainly aware of what is happening in that in that in that environment. And Matt can chat on TripAdvisor.

Matthew Goldberg: Well, look. We think we have highly differentiated assets that could be valuable both as a standalone go forward and in combination with others. And we have talked about the most differentiated assets across TripAdvisor. I think in an agentic AI world, that ongoing contribution set, that trusted human perspective, all of the content and data, which as we said has not slowed at the same rate as overall traffic is an extraordinarily valuable asset.

And we have seen that in the way that we have interacted with many third parties and partners in the many, you know, the deals and partnerships that we struck with a lot of different parties that we have talked about over the past number of quarters and is shared a bit today. We think that community is valuable. We think the brand and its trust, the way it appears in AEO, is valuable. And, of course, we think the experiences category is extraordinarily valuable. You know, that business has scaled, I think, from I do not know, it was like a billion in GBV when Mike and I got here. It scaled to 5.

You know, over the last 12 months roughly. And it is done that, you know, in a way where we have thought about unit economics that we have seen progress. And, of course, we are continuing to focus on how that flywheel drives unit economics going forward. And so we think there is a number of valuable assets and whatever direction comes, the value will be there.

Lloyd Walmsley: Okay. Well, it is been great working with you guys, and best of luck in your next chapter.

Michael Noonan: Thanks, Lloyd.

Matthew Goldberg: Thanks, Lloyd.

Operator: Thank you. Our next question is from Ross Sandler with Barclays. Your line is open.

Analyst: Hey, guys. I echo the sentiment. Congratulations. Yeah. I was just hoping maybe we could ring fence the downside issue here a little bit. So we know you have lots of different inbound traffic channels. If we just took SEO, and we looked at that today, versus maybe a year ago, the notion of, like, how close are we to Google zero Could you guys just give us a ballpark for the core TripAdvisor brand I do not think Viator has an issue with SEO. Correct me if I am wrong. But where are we on the continuum of zero Google for CoreTripAdvisor? Thanks a lot.

Michael Noonan: Hey, Ross. it is Mike. Appreciate the comments. Yeah. So you are right. I think the. When we talk about our SEO exposure, it is primarily coming through the TripAdvisor which obviously the TripAdvisor point of sale, we see that in experience as well through the TripAdvisor point of sale. Viator has very little. Very, very little SEO So really, it is coming through the legacy brand. So, you know, I think SEO continues to be in the kind of the mid to high teens of exposure. Right? that is down pretty meaningfully year over year. And so when we think about headwinds.

Mechanical headwinds that the SEO will bring, we certainly think that it will still provide headwind in 2027. And, in 2028, we would expect to start to see that to, to abate according to you know, just on the trends in the in the in the in the SEO channel today. So that percent has come down drastically. You know, over the past you know, 3 years, 5 years for sure. And, you know, it is just. As you said, we need to just work through that. And it will provide, you know, a tailwind to growth when we just mechanically get out of that headwind. Super helpful. Thank you. Thanks, Ross.

Operator: Thank you. Our next question is from Doug Anmuth with JPMorgan. Your line is open.

Analyst: Hi. This is Dae Hong on for Doug. Thanks for taking the question. Just have 1 on take rate of your experiences business. Talk about the sustainability of the take rate of that business, and you mentioned testing discounting, over the past quarter. So just curious to hear what you learned from that test. Thank you.

Michael Noonan: Yeah. The take rates have been very consistent over time. You know, I think, again, the take rate is an important measurement around the value we provide to our operators. As they. Our operators are numerous on the platform. They tend to be very small businesses. And, you know, we help them tremendously with their business. And that is not just demand, you know, bringing someone in Iowa to have the ability to have a great experience in Milan. You know, so their exposure they are getting, the ability to drive demand to them, What we do, we step in. We handle friction for these operators.

Cancels customer service, currency translation, all these things that happen that are very hard to do as a very small business operator. So I think we provide an essential marketplace role that is. it is it is enhanced in the experiences category because of the nature of our operator partners. So I think that take rate which we have said is in the mid-20s, reflects that value proposition. Now, you know, the take rates have generally fluctuated up over time and that is been more of a function of our operators choosing different programs to advertise on our platform. Being, you know, willingness to, you know, participate in sponsored ads and things like that.

Which there is a higher take rate associated with that. So it is less about. The take rates are less about us improving. Increasing take rates it is really around how our operators interact in our ecosystem for that. So I think, you know, I think that is a valuable component and we see a stability in that take rate and we expect that to be the case over time. On the discounting front, you know, Price is very important in travel. that is a very basic statement. But it is. And we are always experimenting with the value we provide on a price and does that drive, 1, booking behavior and, 2, long-term loyalty?

And if we are able to drive conversion and drive loyalty and frequency with discounts. That is very high ROI. And that is where we are discounting. that is where we are experimenting to the channels, customer base, how we find the customer base that responds. Most to that discounting. And, of course, that is enhanced by all the. A lot we are doing AI and technology of how you present those offerings in the right time at the right place. Are critical to, I think, long term views of loyalty and retention. for the business. Alright. Thank you. Thanks, Dae.

Operator: Thank you. I am showing no further questions at this time. So I would now like to turn it back to Matthew Goldberg for closing remarks.

Matthew Goldberg: Thanks for joining us this morning. My focus over the coming months will be to deliver on our priorities, support our teams, and ensure that our next CEO inherits a business with operating momentum, motivated talent, and a strong balance sheet. I wanna thank Mike for his leadership, partnership, and significant contributions to the company. I also want to thank our board, and maybe most importantly, our remarkable employees for everything they do, every day. I am confident the best chapters for TripAdvisor lie ahead. Thanks, everyone.

Operator: This does conclude the conference. You may now disconnect.

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