TripAdvisor profit sags as costs jump; shares slide
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[BANGALORE] Travel review website TripAdvisor Inc reported a quarterly profit that missed analysts estimates by a wide margin as marketing costs jumped by nearly two-thirds and referral revenue lagged the company's expectations.
TripAdvisor shares fell 15 per cent to US$71 in post-market trading as the higher costs ate into a 39 per cent rise in revenue.
Chief executive officer Steve Kaufer added that lower-than- expected click-based revenue growth partially offset gains made from the purchase of travel booking website Viator in July.
The company relies heavily on click-based advertising, which made up 70 per cent of its total revenue in the latest quarter.
TripAdvisor makes money when a user clicks through to a third-party booking site.
The company launched a major advertising campaign in the third quarter, driving selling and marketing costs up 64 per cent to US$159 million.
The company's net income fell to US$54 million, or 37 US cents per share, for the third quarter ended Sept 30, from US$56 million, or 38 US cents per share, a year earlier.
On an adjusted basis, the company reported a profit of 48 US cents per share. At US$354 million, revenue exceeded market expectations but earnings lagged.
Analysts had expected earnings of 60 US cents per share on revenue of US$348.8 million, according to Thomson Reuters I/B/E/S.
REUTERS
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