TripAdvisor (TRIP) Tops Q3 Earnings Estimates, Lags Revenues

TripAdvisor Inc. (NASDAQ:TRIP) reported adjusted third-quarter 2018 earnings of 72 cents per share, surpassing the Zacks Consensus Estimate by 25 cents. Also, earnings increased 75.6% sequentially and 100% from the year-ago quarter.

Revenues in the third quarter were $458 million, lagging the Zacks Consensus Estimate of $468 million. However, quarterly revenues were up 4.3% year over year.

On a year-to-date basis, the stock has outperformed the industry it belongs to. It has gained 68.5% compared with the industry’s growth of 2.1% in the said period.

Revenue Segments

TripAdvisor reports revenues under two segments: Hotel and Other.

Revenues of $305 million (accounting for 67% of its total revenues) from the Hotel segment decreased 2% from the year-ago quarter. This segment includes click, display, subscription and transaction-based revenues from hotels, air and cruise, and also comprise sales from the company’s largest subsidiary, SmarterTravel, as well as operations in China.

Revenues of $153 million from the Non-Hotel segment increased 20% year over year and contributed the remaining 33% of its total revenues. This segment includes revenues from attractions, restaurants and vacation rental businesses.

Revenues by Source

Revenues of $194 million (accounting for 42% of the total revenues) from Click-based and transaction decreased 1% from the year-ago quarter. Revenues from Display-based advertising increased 7% year over year to $81 million and brought home 18% of the total revenues. The other hotel revenue component contributed $30 million, down 27% from the year-ago quarter.

Important Metrics

Average monthly unique visitors grew 8% from the prior-year quarter to approximately 490 million.

Average monthly unique hotel shoppers decreased 5% year over year to approximately 160 million.

Operating Results

TripAdvisor’s adjusted operating expenses of $318 million were down 9.1% from $350 million a year ago. Per the press release, operating margin of 19.4% was up 980 basis points from the year ago-quarter.

On a GAAP basis, the company’s net income was $69 million or 49 cents per share compared with $25 million or 18 cents in the prior-year quarter.

Balance Sheet & Cash Flow

TripAdvisor exited the quarter with cash, cash equivalents and short-term investments of roughly $663 million, down from $678 million recorded in the last reported quarter. Accounts receivables were $237 million, down from $300 million in the second quarter.

Cash flow from operations was $14 million, decreasing from $186 million in the last reported quarter. Capex was $15 million, down from $16 million in the second quarter.

Zacks Rank and Stocks to Consider

Currently, TripAdvisor has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are boohoo group plc (OTC:BHOOY) , QuinStreet, Inc. (NASDAQ:QNST) and AMETEK, Inc. (NYSE:AME) , 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 rate for boohoo group, QuinStreet and AMETEK is currently pegged at 25%, 25% and 10.97%, respectively.

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