Skift Take
A potential buyer could decide to break up Tripadvisor’s parts, including Viator, TheFork, and metasearch, under the theory that the parts are worth more than the whole.
The prospect of a deal to acquire Tripadvisor hung over the company’s fourth-quarter earnings call Thursday and executives didn’t offer any further details.
Tripadvisor said Monday that it had formed a committee to evaluate proposals. One key question is how any transaction would affect a potential spinoff of Viator, Tripadvisor’s tours and activities brand – and growth engine.
Tripadvisor CEO Matt Goldberg said on the call that it wasn’t top of mind.
“Since I joined the company, of course, this notion of a spinoff of Viator has just not been something that we’ve spent a lot of time and energy on, given the markets that we’ve been in,” said Goldberg, who became the company’s boss July 1, 2022.
Chief Financial Officer Michael Noonan said Tripadvisor expects that Viator and TheFork, which is the leading dining reservations brand in Europe, will be profitable on a full-year basis — for the first time — in 2024.
Potential Deal Meant No Tripadvisor 2024 Outlook
Tripadvisor declined to provide any formal 2024 financial outlook, which would have been customary. But Noonan provided a “framework.”
“We will continue to invest and operate the brands in a way that strengthens and builds their long-term sustainable competitive advantage,” Noonan said. “We will do this against the backdrop of what we believe to be a healthy travel market. Although we expect to see some normalization across travel this year versus last year.”
Tripadvisor in a Nutshell
Viator continued to grow over the past year. It generated an increasing portion of Tripadvisor’s overall revenue (41% in 2023 versus 33% a year earlier), and broke even on an adjusted EBITDA basis.
The largest portion of the business, the newly named Brand Tripadvisor, saw modest revenue growth of 7% in 2023. Its adjusted EBITDA inched up by 1%. The segment includes hotel metasearch; media and advertising, experiences and dining revenue sold under the Tripadvisor brand, and products such as vacation rentals, cruise, flights and car rentals. The segments’ financials were adversely impacted by a decline in its European hotel metasearch business.
TheFork, which might be called the OpenTable of Europe, broke even in the fourth quarter, but notched a full-year loss.
Lowers sales and marketing costs as a percentage of revenue improved margins for both the Viator and Branded Tripadvisor segments during the fourth quarter.
Here’s a more detailed look at Tripadvisor’s numbers:
Tripadvisor’s Financials
Tripadvisor’s GAAP net income in the fourth quarter was $32 million versus a $3 million loss a year earlier. Fourth quarter revenue increased 10% to $390 million.
The company’s full-year 2023 net income fell 50% to $10 million on revenue of $1.8 billion, a 20% jump.
Selling and marketing costs, which were 46% of total revenue in the fourth quarter, declined 8% to $179 million. However, selling and marketing costs for full-year 2023 rose 20% to $940 million. That was 53% of revenue, the same as in 2022.
Tripadvisor ended the year with $1.1 billion in cash on hand, and that was $46 million higher than at the end of 2022.
Viator Reversed a Q4 2022 Loss Into Q4 2023 Profit
Viator posted adjusted EBITDA of $15 million in the fourth quarter of 2023, versus a loss in $3 million in last year’s fourth quarter. Tripadvisor said reduced sales and marketing costs as a percent of revenue drove the improvement.
For all of 2023, Viator was break even.
Brand Tripadvisor’s Revenue Was Flat
The Brand Tripadvisor segment, which was formerly called Tripadvisor Core, accounted for nearly 56% of Tripadvisor’s total revenue in the fourth quarter. That revenue was flat at $218 million compared to the same period a year earlier. For full year 2023, Brand Tripadvisor’s revenue climbed 7% to a little more than $1 billion.
Brand Tripadvisor’s adjusted EBITDA increased 13% to $69 million in the fourth quarter. As with Viator’s results, lower sales and marketing expense as a percent of total revenue drove the improvement.
For full year 2023, Branded Tripadvisor’s adjusted EBITDA rose 1% to $348 million.
Tripadvisor’s metasearch business saw declines in Europe for both the fourth quarter and full-year 2023.
TheFork Broke Dining Platform Broke Even in Q4
Tripadvisor’s dining reservations platform, which is a European leader, broke even in the fourth quarter compared with an adjusted EBITDA loss of $15 million a year earlier. For full year 2023, TheFork narrowed its losses to $14 million, from $39 million in the red a year earlier.