Tripadvisor says its financial results for the quarter ending Sept. 30 were better than it had projected as travel is slowly resuming in markets around the world and cost-cutting measures took hold.
And the company says it will launch a new consumer subscription product to drive new revenue for the future.
Total revenue for the quarter was $151 million, a marked improvement from second quarter revenue of $59 million. And after a $74 million adjusted Ebitda loss in the second quarter, the figure turned positive in Q3, to $15 million, although that's still an 88% drop from the same period last year.
"Our Q3 results were better than our internal projections when we last reported in August, and it is a testament to our business model, flexible cost structure and proactive cost reduction efforts that we were able to produce positive Ebitda even at such sharply reduced revenue levels," says Ernst Teunissen, Tripadvisor's chief financial officer, in a statement accompanying the financial report.
"Travel's early recovery progress has been encouraging, but we have planned with conservatism. We strengthened our liquidity position in early Q3, and we remain adequately prepared for a variety of scenarios. We will continue minimizing operating expenses by prudently balancing cost controls with targeted investments in our long-term strategic initiatives."
Monthly unique users on Tripadvisor sites as compared to last year inched up each month of the quarter, from 67% of the 2019 figure in July to 74% in September.
Revenue showed a similar trajectory with July consolidated revenue approximately 30% of last year's comparable period and August and September revenue approximately 40% of last year's comparable period.
"We outlined our expectation for an uneven recovery and, since the start of Q4, we have been seeing exactly that, particularly in Europe, where the virus has resurged. However, each month that passes brings the world closer to important medical developments that will meaningfully restore consumer confidence in travel and allow for a broad-based rebound," Steve Kaufer, Tripadvisor co-founder and CEO, said in the earning statement.
"In the meantime, we remain focused on factors inside our control: execute on initiatives that deepen customer relationships, deliver more value to partners, roll out new and innovative product offerings to both industry partners and consumers and position the business well for many years to come."
After announcing last week the launch of two subscription products for hoteliers, during a call with analysts Kaufer said Tripadvisor would roll out its first direct-to-consumer subscription offering in the coming months.
Kaufer did not share specific details on how the program will operate but said subscribers will get access to discounts on hotels and experiences and to special perks such as room upgrades or spa credits.
"The way we look at it is, we have 400 million unique users on our site... They are already in a plan/buy mode. So, our opportunity with this subscription product here is, while they are on the site, present the value proposition in such a way that it becomes a no-brainer, really simple," Kaufer said.
"And then when you look at our supply side, we have relationships with all of the aggregators and tens or hundreds of thousands of properties and attractions throughout the globe. So we kind of have both pieces of the marketplace and our opportunity is to connect them in a premium package."
The company says its cost reduction efforts -- which have included layoffs and furloughs of more than a 1,500 employees -- are expected to generate fixed cost savings of more than $200 million in 2020 compared to 2019 and have "positioned [the] business for a variety of recovery scenarios."
This report was first published by Phocuswire.