Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fourth consecutive quarter with improved top line trajectory.
- Positive branded revenue growth in all three segments.
- Successful brand marketing campaigns with over 100 tailored TV spots produced using AI.
- Expanded AI-powered hotel highlights to mobile and app platforms, improving user experience.
- Completion of global rollout of second price auction model, enhancing marketplace dynamics.
Negative Points
- Total revenues declined by 5% compared to the prior year's second quarter.
- Significant negative impact from Google's ad format changes, particularly in Developed Europe.
- Increased operating expenses by EUR11.5 million, primarily due to higher selling and marketing expenses.
- Net loss of EUR4.9 million and an adjusted EBITDA loss of EUR5.4 million during the second quarter.
- Continued negative revenue declines in performance marketing channels across all three segments.
Q & A Highlights
Q: Can you go into some of the product gaps that the Holisto investment will help fill? What drove the decision to invest in them now if you've been partnered since 2022?
A: The product gap is user irritation with leaving our site and landing on different sites, especially on mobile. Holisto provides a consistent user experience, reducing irritation. They have shown capability in building a well-converting booking funnel, which is why we decided to invest now.
Q: It looks like ROAS has improved versus 1Q, while we'd expect a step down given historical seasonality. What's driving this? Are you seeing better payback in the brand channel?
A: ROAS improvement is due to our marketing mix and branded revenue growth across all segments, contributing positively to our overall ROAS development.
Q: In Developed Europe, the revenue decline was steeper in the second quarter versus the first quarter. What's causing the divergence between Developed Europe and the Americas?
A: The divergence is due to stronger headwinds from Google in Developed Europe, leading to a more significant decline in performance marketing revenue compared to the Americas.
Q: On your guidance of positive growth in the back half, do you expect to be positive in both Q3 and Q4? Any trends you can share for July?
A: We expect Q3 to still be challenging due to tough comps and ongoing headwinds from Google. However, we anticipate Q4 to be better. In July, we observed solid travel demand and stable metrics in the Americas and Developed Europe.
Q: Could you talk about the impact expectations from Google during the second half of 2024 relative to 2Q?
A: The Google changes started in Q2 last year and peaked in Q1 this year. We expect the impact to soften in the second half of the year and cease by Q1 next year, based on known headwinds.
Q: Can you talk about the initial feedback from your partners on the rollout of the second price auction across all markets?
A: The feedback has been positive as it simplifies our marketplace and makes bidding easier. We expect this to drive a healthier marketplace over time.
Q: How would you describe user trends so far in July, and to what extent are those trends translating to auction bidding demand?
A: Demand remains solid for the second half of the year. In Q2, we saw stable metrics in the Americas and Developed Europe, with slight decreases in ADRs and ABBs in the Rest of World.
Q: On monetization in Developed Europe and Rest of World, are you seeing improvement there? How should we think about monetization in those regions going forward?
A: Rest of the World was slightly negative but is expected to be positive in the second half. Developed Europe remains challenging due to Google headwinds, but we expect improvement.
Q: Can you talk about the rationale for the investment in Holisto and what you're hoping to achieve with this technology?
A: The rationale is to improve user experience and conversion rates, leading to higher quality leads and better marketplace dynamics. This should drive higher user satisfaction and retention.
Q: Any impact on bookings in Developed Europe due to increased geopolitical tension in the Middle East?
A: There are impacts, but they are not significant. The top markets are in other regions within the Rest of World segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
