TripAdvisor (TRIP, Financial) is an American travel website that provides reviews of travel-related topics. TripAdvisor was an early adopter of user-generated content. The website services are free to users, who provide most of the content, and the website is supported by an advertising business model. The company’s business model looks sustainable for the long-term. TripAdvisor is recording good growth and that is reflected in its stock price which is up over 10% YTD.
In Q1FY15, the company stated revenue of $363 million, miss by analyst estimate of $365 million. Revenue from hotel segment was $320 million, an upsurge of 20% from the year-ago quarter. Other segments reported revenue of $43 million, rising 187% year over year.
- North American revenue increased 25% to $182 million, signifying 50% of total revenue.
- Latin America revenues increased 90% to $19 million, signifying 5% of total revenue.
- EMEA region revenues increased 33% to $120 million, signifying 12% of total revenue.
The company reported operating expenses of $239 million, an upsurge of 44.8% from $165 compared to year ago quarter.
Programmatic advertisement on the rise
Currently, the online ad space is under transformation and this has negatively affected many advertisement markets. Many marketers are switching to programmatic ads over the conventional display-based ads.
This is a big cause of concern for many companies as programmatic ads have much lower CPM rates. eMarketer forecasts that programmatic ads will contribute to over 50% of display ad revenue in 2015, equivalent to $14.9 billion.
Moreover, the growth isn’t expected to stop as programmatic ad will account for close to 65% of total advertisement revenue in 2016. TripAdvisor, however, is not heavily exposed to display based revenue as it accounts for 10% of its total revenue. In addition, the company’s dependence is reducing consistently.
Apple watch
The Apple (AAPL, Financial) Watch consists of a new feature called "Glances," which permits customers to get updates from their desired apps with a quick swipe up from the watch face. The TripAdvisor Glance provides timely references to help users find out nearby points of interest based on the person's position (using GPS) and time of day. For instance, at midday, the TripAdvisor Glance will automatically find the highest-rated restaurant nearby the user's current position and recommend the place to go for lunch.
Extra TripAdvisor Apple Watch app features:
- Walking directions: Displays tourists their current location using GPS technology and delivers directions to places of interest by means of Apple Maps.
- Saves: Permits tourists to save their beloved restaurants, attractions and hotels and view them later on a different Apple device or on TripAdvisor.com.
- Helpful search options: Lets tourists alter their search range for points of interest between 1, 5 and 10 miles and category options, such as ranking businesses as per their popularity or by distance.
Conclusion
TripAdvisor looks prime for long-term growth and the company’s nicely positioned to benefit from the increase in programmatic advertisements. In addition, the company’s new Apple Watch initiative also looks smart and will add to its top-line. At present prices, TripAdvisor certainly has a lot of room to grow, making it a prime pick for long-term investors.
