Tripadvisor Is Still Considering ‘Strategic Alternatives’

Tripadvisor didn’t repurchase any shares in the third quarter because it is considering “a variety of potential strategic alternatives.”

That was the word from Chief Financial Officer Mike Noonan, who told analysts during Tripadvisor’s third-quarter conference call that the company finished September with $1.1 billion in cash and cash equivalents.

Liberty Tripadvisor CEO Greg Maffei, whose company has voting control of Tripadvisor, said Thursday that the strategic alternatives involve talks between the two companies to change their capital structure. There are no third-party companies involved.

The company wouldn’t provide any details on what those strategic alternatives might be, but typically they might include a sale to a private equity company or strategic buyer, selling brands, or spinning them off.

In February, Tripadvisor’s controlling shareholder, Liberty Tripadvisor, announced it received a merger proposal, and Tripadvisor formed a committee of independent directors to evaluate strategic alternatives. In May, however, the special committee stated that there was no viable transaction with a third party that would be in the best interests of shareholders.

Meanwhile, Tripadvisor has not terminated its share repurchase program even though it didn’t pull the trigger on any stock buybacks in the third quarter.

“There are a variety of reasons at any given time why we might be limited in our ability [to repurchase shares,] CEO Matt Goldberg said. “And one of these reasons is the ongoing consideration of a variety of potential strategic alternatives. But we really can’t get into any of the details more than what we’ve said.”

Tripadvisor saw net income widen 44% to $39 million in the third quarter. Revenue was flat at $532 million. All three of its segments — Brand Tripadvisor, Viator and TheFork — were profitable on an adjusted EBITDA basis.

Bullish on Experiences

Officials said they were confident that experiences would grow faster than the online travel industry as a whole because many experiences are coming online and the category is getting wider recognition.

One analyst asked why Tripadvisor estimated in an investor presentation that the online experiences market would grow at around a 17% CAGR but Viator’s bookings are growing at about half that pace.

One reason, Noonan said, is that one of Viator’s largest distribution outlets is its sister Tripadvisor brand, and “they really manage for profitability. They are growing at lower rates than what Viator is.”

Goldberg added that experiences industry growth rates are around 10%. “And so if you look at that, online is going to grow faster than off-line and OTAs are going to go faster than online as a whole. And we think we’re really well-positioned with the assets that we brought.”

Noonan said the 17% CAGR for experiences includes Asia-Pacific, which is currently not a Viator target market.

Tripadvisor’s TheFork dining reservations platorm, which is the largest in Europe, had its best financial quarter ever, according to Goldberg.

“Revenue accelerated sequentially to $49 million or 17% year-over-year growth,” Goldberg said. “Adjusted EBITDA in the quarter was $5 million or 10% of revenue, a significant improvement from last year.”

Note: This story has been updated to add Greg Maffei’s comments.

Corrections: Tripadvisor finished the third quarter with $1.1 billion in cash and cash equivalents, not $11 billion. Also, it was Chief Financial Officer Mike Noonan, not CEO Matt Goldberg, who said there is a 17% CAGR for experiences in Asia-Pacific.