TripAdvisor Is Down Over 30% After Q1 Results - What's Going On?

Zinger Key Points
  • Despite beating earnings forecasts, TripAdvisor's shares plummet due to ceased transaction prospects and looming tax settlements.
  • Quarterly revenues slightly exceed expectations at $395 million, but TripAdvisor faces challenges with brand sales and hefty tax expenses.

TripAdvisor, Inc. TRIP shares are falling in the premarket session on Wednesday.

The company reported first-quarter adjusted earnings per share of 12 cents, beating the street view of 2 cents. 

Quarterly revenues of $395 million marginally beat the analyst consensus of $394.86 million, increasing 6% year over year. 

Total Adjusted EBITDA in the quarter under review jumped 42% to $47 million.

Brand Tripadvisor sales slumped 2% year over year to $240 million. Adjusted EBITDA margin for Brand Tripadvisor expanded to 33% from 30% in the year-ago period. The improvement in adjusted EBITDA margin was largely driven by lower selling and marketing and lower people costs as a percent of revenue.

Viator revenue was $141 million, reflecting year-over-year growth of 23%.  

The company bore the brunt of hefty adjustments, resulting in an income tax expense of $42 million for the first quarter of 2024.

In addition, accepting the Mutual Agreement Procedure settlement for income taxes for multiple years, TripAdvisor sees an estimated net operating cash outflow of $110 million to $120 million, inclusive of related interest expense, which is expected to be substantially settled by the company during the second quarter of 2024. 

Chances Of Transaction Ceased!

In February 2024, TripAdvisor disclosed that it had formed a special committee to evaluate proposals resulting from Liberty Tripadvisor Holdings’ stated intention to engage in discussions with respect to a potential transaction or other alternatives. 

The Special Committee now said it sees no transaction with a third party. However, it will continue to evaluate proposed alternatives as appropriate.

“We are pleased with our first quarter results, which provide a solid start to the fiscal year, and were driven by the continued diversification of our portfolio into higher growth experiences offerings,” said Chief Executive Officer Matt Goldberg. 

Price Action: TRIP shares are trading lower by 31.8% to $17.40 premarket at last check Wednesday.

Photo by Tero Vesalainen via shutterstock

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