TRIP - NASDAQ

Good day, and thank you for standing by. Welcome to Tripadvisor Fourth Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Angela White, VP of IR. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome to Tripadvisor's fourth quarter and full year 2024 financial results call. Joining me today are Matt Goldberg, President and CEO; and Mike Noonan, CFO. Earlier this morning, we filed and made available our earnings release. In that release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, February 20, 2025. Tripadvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I'll turn the call over to Matt.

Thanks, Angela, and good morning, everyone. Across Tripadvisor Group, we finished 2024 strong, with results that exceeded our expectations on both the top and bottom-line for the fourth quarter and the full year. In Q4, consolidated revenue grew 5% to $411 million, a result of the healthy improvement in growth sequentially across all segments. Adjusted EBITDA was $73 million or 18% of revenue. For the full year, revenue reached $1.8 billion and adjusted EBITDA was $339 million. In 2024, we delivered meaningful progress against our strategic priorities and strengthened our revenue and EBITDA mix. Importantly, for the first time, all three segments positively contributed to Group profit. And now more than half of our revenue is coming from our growth marketplaces at Viator and TheFork, which together delivered $52 million of incremental adjusted EBITDA versus the prior year. The experiences category is increasingly becoming the strategic and financial center of gravity of the Group as we continue to position our unique assets to extend our leadership in this large and fast-growing market. Viator's segment results reflect our ability to grow market share by leveraging our scale, with GBV reaching nearly $4.2 billion in 2024. On the demand side, we continued on our journey to deliver profitable above-market growth with revenue reaching 14% for the year in growth and accelerated to 16% in Q4. Direct booking volume on the Viator point-of-sale grew nearly 30% for the full year, which speaks to the consistent improvements we're making on unit economics as we continue to scale. We put more attention on driving marketing efficiency while investing in critical areas of the consumer-facing product to increase conversion and loyalty. We continue to focus on our mobile app, which was Viator's fastest-growing channel with booking volume up more than 80% for the full year. On the supply side, the number of operators on our platform grew more than 15%, a testament to the value we provide them. Our supply advantage is a critical asset in driving our third-party partner revenue, which grew more than twice the rate of the overall segment in 2024. At Brand Tripadvisor, we made significant progress on our engagement-led strategy, while navigating quarterly variability driven by our legacy offerings, most notably Hotel Meta. The momentum in our strategy and our conviction strengthened throughout the year, supported by tangible progress we saw across key metrics. For example, monthly active users stabilized through the year and grew in our core geographies, a reversal from declines in prior periods. Global monthly active members, an important indicator of engagement grew mid-single digits in 2024 and accelerated in each successive quarter. Monthly active members in the U.S., where we focus most of our testing and experimentation, grew twice the global rate. Each of these engagement improvements are driven by product changes, enhancements and new features that result in more persistent loyalty with our users, which we believe serves as the foundation for turning Tripadvisor back to near-term growth. Our dining marketplace, TheFork segment, grew revenue a healthy 18% to $181 million and delivered full year profitability for the first time in its history, representing an adjusted EBITDA improvement of $19 million over the last year. This performance highlights meaningful strategic progress and an important inflection point in the in the financial trajectory of this business. TheFork is positioned as the leading brand European dining market serving more than 70 million diners and driving nearly €2 billion of restaurant spend in 2024. Turning to 2025, we entered the year with encouraging momentum and sharpened focus. Our plan positions the Group on a multiyear path to sustainable revenue and EBITDA growth across each segment. We expect to drive the majority of our revenue and an increasing portion of our profit from our growth marketplaces at Viator and TheFork, while Tripadvisor stabilized and improved its financial profile throughout the year on its return to full year growth in 2026. This year, we also expect our experiences revenue to be the largest contributor of revenue to the Group for the first time. This progress is consistent with our strategic vision that the experiences category has become increasingly essential to travel plans, and we are uniquely positioned to benefit from its durable secular tailwinds. Our Group strategy for experiences is clear. We will enhance our competitive advantage by taking a holistic approach to the category, leveraging the full scope of assets and shared capabilities to build on our leadership position. This includes the leading OTA Viator, the largest global travel audience at Tripadvisor, and the depth and breadth of supply spanning nearly 400,000 bookable products from more than 65,000 operators globally, all fueled by a powerful data asset. Our teams at Viator and Brand Tripadvisor will accelerate their work together by taking advantage of our differentiators, such as first-party data scale advantage, our trusted global brands and supply relationships. For 2025, our strategic focus at Viator starts with delivering the leading customer experience in the category to drive our conversion and loyalty. Last year, we prioritized our investment in product, user experience and data to deliver improvements in search, navigation and product matching, helping travelers more easily find experiences that perfectly meet their needs. As we continue our investments in product and data, we expect to see ongoing improvements in conversion, repeat rates and customer satisfaction. We'll continue to increase marketing efficiency by optimizing our marketing channels, attracting and converting high-intent customers and delivering better landing pages and other funnel improvements along the customer journey. We have many assets to leverage, including our cross-brand signals, relevant content and merchandising tools, which together will deliver a better shopping experience to fuel ongoing improvements in our unit economics. Turning to our supply. We'll continue to focus on building the world's best experiences catalog, expanding choice in key destinations and filling geographic and category gaps to better serve our customers. We'll continue to enhance our tools to help suppliers participate in our marketplace and optimize their bookings. Given the importance supply plays in the travelers' value proposition, we expect investment in supply to benefit conversion and bookings across all points of sale over time. Finally, these investments will also benefit our ability to grow our third-party partnerships. We value our distribution partnerships as a key channel to reach incremental, profitable demand that would otherwise be difficult to directly access. By extending the features and functionality of our partner API, we expect to enhance existing partnerships, unlock new relationships and continue to grow our third-party channel at high rates. Turning now to the Brand Tripadvisor, where we expect 2025 to be the year we shift our trajectory and stabilize our financial profile. We've progressed our transformation methodically over the past few years, managing the known structural challenges of our legacy business, while setting the foundation for the future. In 2023, we focused on establishing the right leadership talent and aligning the organization. Last year, we delivered new product features, developed capabilities to scale our products, stabilize our audience and improved our engagement metrics. This year, we've continued to align our cost structure to heighten our focus on the areas where we have a high level of conviction to scale financial outcomes. As a starting point, we'll focus on accelerating experiences growth across Tripadvisor-branded services. With hundreds of millions of visitors to our site every month, we have the opportunity to convert more travelers to focus with improvements, including enriched guidance through more visual browsing, checkout enhancements and more relevant recommendations. We will build marketing campaigns around the experiences category as we continue to drive awareness among our large and growing base of travelers looking to plan experiences. We'll also work across the Group to tap growing demand for experiences on Tripadvisor, across underpenetrated geographies and verticals. Second, we'll continue to drive adoption of our mobile where we provide comprehensive trip planning tools, trusted guidance and seamless multi-category booking capabilities. We plan to expand our hotel booking offering in our app and ramp the availability of bookable hotels focusing on conversion and rewards. We're leveraging AI to facilitate improved guidance and more relevant suggestions through personalized sort and our recently launched chat-based AI Travel Assistant, which surfaces personalized information that helps travelers take action faster. We expect to see our product improvements continue to drive growth in active app users and scale our booking revenue across categories. And third, we'll differentiate and expand awareness of the benefits of our membership offering, which focuses on rewarding our most engaged travelers with personalized offers and the ability to earn and redeem awards across their bookings. We're also testing new content formats to drive traveler engagement that make contributions on our platform easier, such as tips, blitz and community interactions. To scale these initiatives, we'll invest in measurable full funnel marketing at Brand Tripadvisor, which we believe will drive financial impact this year while strengthening our trusted brand. Our testing over the last year has given us confidence in our ability to expand awareness of the products yielding deeper engagement and higher monetization, to diversify our acquisition channels and drive more direct traffic and mobile adoption. Now turning to our dining marketplace, TheFork segment, where we'll continue to build on our leadership position in the European dining market while improving our financial profile. In 2025, we'll further leverage the operating efficiencies we achieved last year and accelerate our product innovation, driving balanced growth across both our diner and restaurant offerings. On the diner side, we'll focus on driving engagement and conversion through product improvements in our search rankings and bookings flow, including more personalized recommendations. We'll continue to balance marketing investment across social, performance marketing, brand awareness and our dining rewards program to enhance growth and long-term customer retention. On the restaurant side, we'll continue to improve our supply quality, scaling acquisitions through more cost-effective, product-driven strategies to improve the onboarding experience. We've invested in enhancing and modernizing our ERB software, and we expect this to accelerate restaurant usage of the product, providing additional growth opportunities as we increase penetration in our existing and new supply base. We're also pleased with the ramping of new partnerships like the ones we recently announced at Mastercard and Vodafone that further diversify our revenue mix. These partnerships underscore the strength of our brand and the opportunity to attract and retain new diners we don't reach elsewhere. Finally, across all areas of the Group, we're leveraging our investment in data and AI to reinforce our unique and privileged position of trust. We believe our proprietary data, content assets and trusted brands will help us create substantial value through new products and meaningful partnerships in a fast-moving landscape. We sit on a treasure trove of data across all categories, from the first-party data of our large and growing logged-in audiences to strong signals of intent, engagement patterns and conversion data across multiple marketplaces. Our teams have been quick to adapt to the pace of AI innovation, infusing it into a product, leveraging it in our operations to better provide service to our customers and operators, and delivering the most relevant insights and recommendations. Across the AI landscape, we've been collaborating with a number of platforms to tap new incremental sources of traffic as we test and learn more about audience engagement and conversion opportunities across our category marketplaces. We're also exploring the intersection of our differentiated content and AI agents to create a seamless way to discover and book on our platform. Our teams are innovating and experimenting to expand our reach through strategic partnerships with select leaders in this dynamic space. In addition to the progress we've made across all areas of the business, we also made some important decisions related to capital allocation. And we're on the path to effectively repurchasing a significant portion of shares through an agreement we announced with our controlling shareholder in December. Mike will talk more about this shortly, but I want to be clear. Once this transaction closes, likely in Q2, we will move to a new chapter for Tripadvisor Group with accelerating momentum and strategic flexibility. 2025 is a pivotal year for us. And despite making some hard choices recently, our teams are already well on their way executing with energy, discipline and focus. I want to thank all our employees for their ongoing commitment to our vision to be the most trusted source for travel and experiences. With that, I'll turn the call over to Mike.

Thanks, Matt, and good morning. I'll start with a brief update on our new segment disclosures and revised P&L presentation, then I'll review the quarter and full year, and later, we'll provide our outlook for 2025 and Q1. As a reminder, all growth rates are relative to the comparable period of 2023, unless noted otherwise. First, as part of our earnings release this morning, we provided a table that includes additional segment-level details, reflecting our adoption of the new segment expense disclosure guideline. As part of this update, we'll use the opportunity to align our consolidated financials to the same line items, which we believe provides greater transparency between our segment and consolidated results. Now, turning to the results for the fourth quarter. Consolidated revenue was $411 million or 5% growth and at the high end of our expectations. Consolidated adjusted EBITDA was $73 million or 18% of revenue and was higher than our expectations due to performance at both Brand Tripadvisor and Viator. At Viator, revenue grew 16% to $186 million, which represented 6 points of sequential growth. The number of experiences booked grew 20%, and gross bookings value, or GBV, grew 17% to approximately $840 million, reflecting healthy travel demand in the quarter, driven by the Viator point-of-sale, which grew faster than total segment experiences booked and GBV. As a reminder, total segment growth is a function of relative size, of different growth and profit priorities across each point of sale. Our teams continue to leverage the strength of our brands to optimize our experiences offering globally, which we believe is an important differentiator in the category. On the Viator point-of-sale, repeat bookings growth once again outpaced new bookings growth, supporting the ongoing progression of Viator brand's unit economics as these bookings come at lower acquisition costs. Viator adjusted EBITDA was $20 million or 11% of revenue and was slightly better than expectations, primarily due to a nonrecurring credit to expenses related to indirect tax [ph]. At Brand Tripadvisor, revenue was $204 million, a decline of 6%. Branded hotels revenue was $125 million, a decline of 7% and an improvement over Q3, which exceeded our expectations due to more favorable pricing in Hotel Meta. We saw sequential improvement in both pricing and volume throughout the quarter, in particular in the paid channels. By geography, all regions strengthened throughout the quarter with Rest of World posting the strongest performance with modest growth year-over-year. Media and advertising revenue grew 3% to $36 million. Growth in off-platform revenue, which includes creative offerings and programmatic advertising, more than offset declines in traditional display advertising that correlates to traffic volume as well as the broader display advertising market, which is growing slower than other advertising revenues. Experiences and dining revenue was $35 million, a decline of 8%. Performance and dining continues to reflect balancing the ongoing product-led transition to a self-service sales model. In experiences, revenue performance continued to be driven by Brand Tripadvisor's segment-specific marketing strategy and ROI targets, as well as the impact of funnel optimization testing we embarked on last year. Importantly, experiences contribution profit margin remained healthy, reflecting stable paid margin ROIs combined with a traffic mix profile that is predominantly free. Other revenue was $8 million, a decline of approximately $2 million, primarily due to a business model shift in our vacation rental offerings to merchandise supply, solely from partners. Brand Tripadvisor adjusted EBITDA was $53 million, representing 26% of revenue. Relative to our outlook in November, adjusted EBITDA was higher than our expectations due to stronger volumes Hotel Meta and prudent fixed cost management across personnel, G&A and technology. At TheFork, revenue was $48 million or 23% growth and 26% growth in constant currency, up sequentially 6 points or 11 points in constant currency. Growth was driven by strong performance in both booking volumes as well as pricing. In Q4, booking volumes grew 9% with solid growth rates across all of our channels. Strong year over subscription revenue growth was driven by higher adoption of paid plans and reflective of the meaningful product investments we have made over the past several quarters that's translating to an improved value proposition for our restaurant partners. Additionally, Q4 performance benefited from the impact of partnerships with Vodafone and Mastercard both which initiated in the second half of 2024. Adjusted EBITDA was in line with expectations at breakeven for the quarter. The operating efficiencies we achieved with personnel and technology costs allowed us to make incremental investments in marketing that we believe will benefit growth in 2025. Turning to consolidated expenses for the quarter. Cost of revenue was 7% of revenue, consistent with last year. Marketing was 30% of revenue, an increase of approximately 500 basis points due to growth in marketing spend at Viator and TheFork, which outpaced consolidated revenue growth. Personnel increased 100 basis points to 36% of revenue, including share-based compensation of approximately $28 million. Absent share-based compensation, personnel was 29% of revenue, flat year-over-year. The increase in share-based compensation of $4 million was primarily due to timing differences in vesting schedules for employee equity grants. The Q4 2023 run rate was lower than usual due to a onetime acceleration of the vesting period our 2020 company-wide equity grants to 2 years from 4 years, as disclosed during 2020. Technology and G&A as a percent of revenue were flat year-over-year at 6% and 5%, respectively. As I'll discuss in a moment, we incurred restructuring costs of $21 million as a result of actions initiated in the fourth quarter. Turning briefly to the full year performance. Consolidated revenue was $1.8 billion or 3% growth. Revenue growth of 14% at Viator and 18% at TheFork was offset by an 8% revenue decline at Brand Tripadvisor. Our consolidated performance in 2024 illustrates our ongoing focus of diversifying our group revenue mix that will fuel long-term revenue and profit growth. In 2024, Viator and TheFork contributed 56% of Group revenue, up from 50% in 2023 and 41% in 2022. Full year consolidated adjusted EBITDA was $339 million or 18% of revenue, representing very modest deleverage of less than 50 basis points, as with revenue we see a growing diversification in our consolidated adjusted EBITDA as Viator and TheFork continued incremental $52 million in 2024 versus 2023. Adjusted EBITDA growth at Viator and TheFork was largely driven by marketing efficiencies at Viator and prudent personnel cost management at TheFork. Brand Tripadvisor delivered $301 million in adjusted EBITDA, a year-over-year decline due to the aforementioned revenue performance in hotel meta, combined with investments in data and AI that support our engagement-led strategy. Now turning to cash and liquidity, Q4 operating cash flow was negative $2 million and free cash flow was negative $25 million, an improvement of $10 million, driven by a refund from the previously described 2014 to 2016 IRS transfer pricing settlement and growth in deferred merchant payables, partially offset by interest payments and other working capital cost. For the full year, operating cash flow was $144 million and million and free cash flow was $70. The year-over-year decline in operating cash flow free cash flow were driven primarily by changes in working capital and non-recurring cash outflows related to the 2014, 2016 IRS transfer pricing settlement and other tax-related impact. We ended the year with approximately $1.1 billion in cash, and cash equivalents. During the fourth quarter, we announced a planned merger agreement with Liberty Tripadvisor, which will result in the retirement of approximately 27 million shares and the subsequent issuance of approximately three million shares to the Ultra Preferred stockholders. As part of our agreement, we expect total outlays of approximately $400 million in cash. We anticipate the transaction to close in Q2 2025. Details regarding the transaction can be found in the presentation to be posted in December. Now I'd like to turn to recent trends and our outlook for year. As Matt mentioned in his prepared remarks, our operating teams are focused on executing against a clear set of priorities in 2025 that we believe will position the Group for consistent revenue and adjusted EBITDA growth in the medium term and continued diversification of our portfolio. Each segment is well positioned to accelerate its strategic ambition this year that lay the foundation to deliver this financial profile. At Viator, we're investing to improve our products, both travelers and operators, as well as strengthen the depth and breadth of our supply catalog, which we believe will enable durable growth with sustained improvement in marketing efficiency that will drive ongoing margin, progression. At Brand Tripadvisor, we'll continue to manage near-term trade-off between growth and process with our strategy progression. In Q4, we initiated a broad restructuring plan that will keep personnel costs flat relative to 2024, while enabling an investment in marketing to begin scaling product-led growth initiatives across experiences, the app and membership that levers the product enhancements made last year. At TheFork, we will continue to leverage our investments in the product to drive growth while continuing to drive operating efficiencies to enable ongoing margin expansion. Now to our outlook. For 2025, we expect consolidated revenue growth of 5% to 7% and adjusted EBITDA margin of 16% to 18%. At Viator, we expect mid- to high-teens booking volume growth, which represents an acceleration from last year and reflects healthy underlying management. For revenue, we expect growth in the low to mid-teens, which incorporates approximately 2 points of FX headwinds at current rates. At Brand Tripadvisor, we expect an improvement year-over-year to low single-digit revenue declines. More specifically, we expect stronger year-over-year trends in the second half versus the first half due in part to the difficult first year -- first half year-over-year comps and the impact of our marketing sense. At TheFork, we expect revenue growth in the low double digits, which incorporates approximately 5 points of FX headwinds. On a constant currency basis, we expect stable year-over-year revenue growth. For consolidated adjusted EBITDA, we expect Viator to nearly double adjusted EBITDA and TheFork to nearly -- At Brand Tripadvisor, the revenue pressure from our legacy offerings will impact margins this year but we continue to manage costs in order to fund incremental investments, which we believe will set us up to accelerate both revenue and adjusted EBITDA growth in 2026. On a consolidated basis, this plan sets a clear path for the Group to accelerate revenue growth and a return to EBITDA growth in 2026. Now turning to Q1 2025 guidance. For consolidated revenue, we expect flat to low single-digit decline, which includes currency and holiday timing headwinds of approximately 2 points of growth. For consolidated adjusted EBITDA, we expect margins of approximately 5% to 7% of revenue. At Viator, we expect booking volume growth of 14% to 16% and revenue growth of 9% to 11%, which includes a revenue headwind of approximately 3 points due to holiday timing and approximately 2 points due to FX. For adjusted EBITDA at Viator, we expect margin improvement of approximately 600 basis points. At Brand Tripadvisor, we've observed stable pricing sequentially quarter-to-date in hotel meta but expect revenue decline in the low double digits due largely to a difficult comparison where we had this unusually robust pricing dynamics, which was unique to Q1 2024. For adjusted EBITDA Brand Tripadvisor, we expect margins to decline by approximately 10 points, primarily due to revenue declines and related impact to contribution profit. At TheFork, we expect revenue growth in the low teens which includes headwinds of approximately 5 points from currency and approximately 1 point due to Easter and other calendar timing. For adjusted EBITDA at TheFork, we expect modest margin improvement of approximately 50 basis points. Adjusted EBITDA performance at both TheFork -- at Viator and TheFork reflects typical seasonal investment in marketing spend. With that, I'd like to turn the call back over to operator to begin Q&A.

Thank you. [Operator Instructions] And our first question comes from the line of Stephen Ju with UBS. Your line is open. Please go ahead.

Hey great. Thank you. So Matt, it looks like you saw some acceleration in the Viator experiences available, growth from about 350,000 to 400,000 during the course of year. I think that works out to about 4% supply growth. And your gross bookings in the fourth quarter grew about 17%. So can we talk about what might be happening behind the scenes between what might be things that you're doing from a product perspective to hopefully improve conversion rates versus what might be easier comparisons? Thank you.

Yes. So there's a lot going on at Viator that's driving growth. Obviously, we are starting to really think about how we work between Viator and Tripadvisor experiences together to attack the opportunity holistically. Now Viator is very focused on leaning into product. And so when they think about getting marketing efficiencies, it's both in the way that we're going to diversify our channel mix and the way the product is going to begin to really deliver that experience that will drive repeat and more direct traffic. So they're focused on seamless product matching and making sure the travelers find the right experiences. That will get them to come back. They're focused on expanding and organizing that catalog as we grow, and that improves sort and recommendation and improves the ability to match supply and demand in as many, geographies as possible. They're delivering an intuitive UX. All of that gets people to engage, book more efficiently and then return. And to enhance that, we're focused on improving our app. Now the app is direct traffic and highly repeating. And the app is all about UX improvements, search, making sure that we go after shared booking details and logistics. And as you said, we're continuing to enhance the supply catalog. And that's both in primary markets, but it's also going to secondary and tertiary markets, starting to think about what other geographies we really want to serve. And of course, we're improving our operating experience and making it easier for operators to onboard to efficiently participate, to get the data they need to drive their bookings as efficiently as possible. And finally, they are, like all of our teams, focused on leveraging AI in all of the innovation, across search, sorting and other product details. So we're pretty excited about the experiences category. We think we can continue in the long-term to progress this at a strong and healthy double-digit CAGR for long period to come as we expand margins on our path to OTA-like margins down the road.

Thank you. Our next question comes from the line of Naved Khan with B. Riley Securities. Your line is open. Please go ahead.

Great. Thank you very much. I just had maybe a bigger picture question around the category. So Airbnb has been talking about launch of experiences this year, and wanted to get your thoughts on what does that mean for category growth and maybe for Viator, as you have a new entrant, kind of, creating more awareness and what does it mean for you and how are you thinking about that? The other question I have is just around maybe some clarification on Viator margins for 2025. Mike, did you provide some kind of guidance on how much expansion we can expect this year? And what will be the driver for that?

Thanks, Naved, good to hear from you. I'll take the first question about the category and then I think Mike will follow-up with the margin question. Yes, we agree with Airbnb that this is a very big opportunity and we see massive size and growth ahead. We think the interest and the experiences category just speaks to the overall size of the opportunity, but also customer traveler relevance, and it does, as you suggested, build category awareness, which we think we can benefit from. We also really like our positioning to continue lead in the experiences category. We think that focused OTAs have an advantage, especially in this highly fragmented marketplace. We think we're advantaged with the largest scale supply. We've talked about the 400,000 experiences across 65,000 operators. That is not easy to build. Once you have it, you can really leverage it. You can leverage it in the way that you deliver it and match that supply with demand. We also think that, as a Group, we have a unique position because we've got Tripadvisor and it's still the largest traveler audience available anywhere. We know that travelers searching for experiences is the largest portion of our traffic and the fastest-growing on Tripadvisor. And we match that with the Viator focus as an OTA, our third-party B2B business, which is growing rapidly, the red tech that we have to use, and we really think that we can take a comprehensive approach to this category like nobody else. Mike?

Hi, Naved. On the EBITDA guide for full year for Viator, so just to be clear, we've not guided on margins. We were guiding more on a dollar amount, nearly doubled. So I think you can assume that there clearly is margin expansion within that comment. Obviously, margin wouldn't necessarily mean that would nearly double as well. But I think very focused on that dollar amount, particularly with FX headwinds which we anticipated to see this year. So that's how we're trying to frame that for folks.

And I just want to remind everybody, we're really early in the experiences opportunity. And there's so many different ways to grow, right? The tailwinds that we see in general. But also, as importantly, we think our OTA is in early stages, we're just capturing a very small percentage and there's opportunities geographically, there's opportunities in categories that we're not currently reaching. So we are very excited about the prospects for ongoing growth in the top and bottom-line.

Got it. And maybe just to understand better the impact of FX, so -- in Viator. So is it mostly US tourist kind of going overseas that you get the travel bookings for and that's how you get affected by FX there? Or how should I understand US versus non-US – in the business?

Yes, Naved, that's right. It's mainly with our euro-denominated business. We have a lot of out-of-the-US travelers that travel to Europe. It's our largest kind of corridor -- travel corridor, so to speak. And so where we may collect in dollars, we remit to operators in euros, and that's what creates the headwind there. And that's, again, not entirely, but it's our biggest order of business, and that's driving approximately 2 points of headwinds.

Understood. Thank you, guys.

Thank you. Our next question comes from the line of Richard Clarke with Bernstein. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my question. Maybe just firstly, you talked in the opening remarks about growing your members at mid-double digits. And I think a bit later on, you talked about having redeemable rewards for members. So maybe you could just talk about your membership position? How many members do you have today? What percentage of your revenue it is? And who's funding those rewards? Is this a Tripadvisor investment? Or is this something that's coming from your suppliers?

Thanks, Richard. Appreciate the question. We're really excited about membership. As we mentioned, we have grown membership in the mid-single digit for the year. It's been accelerating quarter-by-quarter. We definitely finished the year in that double-digit growth segment of opportunity. We've talked about membership in the past and said that we had over 130 million members. So when we're talking about growth in membership, we're talking about growth on that base. Membership is something where it's really all about bringing together the reason you would come to the platform and engage, both to contribute and to benefit from those contributions. So our experimentation in the product is actually quite important there. We are obviously investing in that space and leveraging AI to drive membership and personalization. And of course, we are adding bookings. We've been booking in experiences and added hotel bookings, which we talked about last quarter. And we're really excited about what the hotel booking offer can do because the cross-category booking opportunity in our app has proven to be self-reinforcing and drive growth. The rewards are -- rewards where we take the full price and then return it. We are funding those rewards. And they're proving to be something that creates repeat and stickiness. So we're excited to continue to lean into rewards and expand it across the categories. And so this membership, which we will formally launch with more features and functionality this year, should differentiate it for our most valuable travelers and we'll have product improvements, including a wallet, integrated across categories and linking to the web. We'll have these rewards and promotions and, of course, new content contribution formats to reengage our community. So, membership is something that we think is critical to our engagement strategy, and we are seeing good growth there.

Thanks, Matt. Just a follow-up. You said in your prepared remarks that once the ownership position is resolved, Tripadvisor will enter a new phase. Just what has been held back by the ownership position? What changes the other side in terms of what you can do running the business? What will do better?

Yes. Thanks for asking the question. Without controlled ownership, our capital structure is much cleaner. It's simplified. We think it removes an overhang and gives us more flexibility for how we pursue our vision and our strategy. We are solving for a single class of shareholders. We no longer will have any limitations from controlled shareholder that might have their own views of what level of investments we want to make and what that means for their shareholding. And we see many avenues to create shareholder value ahead, and we think there's a lot of different ways to drive that value in the future. And we'll continue to operate the business as we always have, to maximize value for shareholders, and we'll always be open-minded about the best way to do that. We see opportunities for organic investments, we see opportunities for M&A. And certainly, we think we'll continue to be as efficient as we can in all of our capital allocation decisions.

Thank you.

Thank you. Our next question comes from the line of Trevor Young with Barclays. Your line is open. Please go ahead.

Great. Thanks. Just back to Viator and experiences, the updated TAM figures they are suggesting you expect the category to persist in kind of low double-digit growth territory through 2026 and, obviously, a greater shift to online, so maybe online piece growing 12% to 15%. If I heard your 2025 guide correctly, high-teens growth implies some share gains there, but obviously, a focus on EBITDA dollars doubling as well. Why not manage that EBITDA dollar growth to a lower level and accelerate your growth there if this really is kind of one of the most attractive areas of online travel? And then second question, on the AI side, I think you partnered with Perplexity and it looks like possibly OpenAI with Operator as well. Can you just expand on those partnerships a bit in terms of what you give, what you get in return, anything around deal economics, duration of those arrangements and whether you would intend to do more of these partnerships? Thank you.

Hey, Trevor, it's Mike. I'll take the first part and Matt will take the second part. Yes. So it's a great question. We think about trade-offs in growth and profitability. I would say we are making decisions or attempting to make decisions on maximizing growth, right? And that means what does that ROI look like on those -- and the customer acquisition, particularly the pay channels. And we think we're making an efficient decision around that, and that has certain payoffs and LTV associated with that acquisition. So we feel like that spend is efficient. I think some of the margin progression you're seeing is inherent in the model, meaning exactly what we've been talking about, which is drive new user acquisition and get them to repeat. And when we get them to repeat, they come back to us cheaper. So I think we're pretty happy with where we are on the efficiency scale of our acquisition dollars. And the margin -- I think the modest margin progression you're seeing is as much about the model and repeat dynamics than more about our leaving growth on the table per se. So I think we're pretty happy with the trade-off as we speak. And as we go into, as we've talked about for our 2025 priorities at Viator, we're very excited about the product -- the product investment, which have unfold a whole other way to leverage our marketing expense outside of acquisitions, right? So that's really focusing on conversion, bringing best supply, sorting in the right way, all the things that Matt talked about in his prepared remarks. So we are pretty excited about the continued progression of growth and profitability that really are outside of the market growth. Matt?

Yes. Thanks for the question. We are so excited about the prospects for AI. And I don't want to be Pollyannish about this, like any new technology with the speed of adoption like AI, it's going to impact every industry and every company in the world. And it definitely has the potential to propel an industry. And we've also seen areas of disruption. I think it's early, but we clearly see an opportunity for AI to be a tailwind both for travel and for us in the way that we innovate. We think that those companies that are most curious about the potential for AI to best serve customers who have the assets that match up well are going to have opportunities to innovate and grow. And we believe, clearly that we're one of those companies for travel for many reasons. We've been aligning the team, making investments in our data, putting AI at the heart of our product innovation and driving productivity across all our areas. And yes, exploring partnerships with the top players in the industry. We have advantages. We have a well-recognized and hugely trusted brand. We have the highest-quality content asset and a really strong POI database to leverage to create new opportunities. And we, of course, have our own proprietary first-party data that only we will use. And so we're going to do a lot on our own platforms and we're also going to look at partnerships, because we think we have a strong position in the ecosystem to go after AI-first traffic and search customers, incremental sources of demand and leverage our relationships with trust with our suppliers. Now, when you look at perplexity, which you asked about, we're forging this partnership to leverage all of those assets to really think about the AI-first funnel. We're connecting with the users that that come through channel to get access to our trusted guidance and an AI-powered experience. We think it's incremental. And I have to say, we're seeing -- and it's early, but we're seeing that this traffic is high intent and they convert higher than typical traffic that we get that is free like this. And so that deal is a deal that we are putting in place to build on. We're starting with hotels. We're going to add experiences and restaurants over time. And we think that we can both tap traffic as well as revenue share, increase brand awareness. And yes, there's a licensing component to it. But you know what? We're not looking for short-term licensing dollars. We are looking for creating a long-term, durable position in this ecosystem, and that is what our partnerships are about. You're right. We're collaborating with OpenAI operator, because we think there's a huge opportunity here. And we think collaborating allows us to be best positioned favorably as Genetic AI emerges. We are going learn and adapt everything we do to participate in that and bring our proprietary supply to the table, and we're really excited about that. And yes, we will look at deals that focus on our long-term positioning, traffic, product innovation, a holistic exchange of monetization where we can forge partnerships with the companies that we choose, and we'll have more to announce in the not-so-distant future.

Great. Thank you both for all that.

Thank you. And our next question is going to come from the line of Doug Anmuth with JPMorgan. Your line is open. Please go ahead.

Great. This is Dae for Doug. Thanks for taking my questions. I have two. The first one, you talked about formally launching membership later this year. Could you talk about how that's different than the Tripadvisor Plus offering that you had in the past? And what you expect to include in the membership offering? And then secondly, on Brand Tripadvisor returning to positive growth in 2026, could you talk about what needs to happen in 2025 for this to happen? And does that return to growth assumption include a new monetization model?

Yes. Thank you for that. So we've talked a bit about membership. And let's be clear, what we're talking about here is our free membership offer at Tripadvisor, which is giving those who come in, in a logged-in format, more value and more reasons to engage with us. It's very much about the way that we are evolving our products and content to serve them in a logged-in environment. It is about how we are bringing together cross-category booking that will be rewarded. And it's about giving them more ways to get value out of our platform across all our categories. And we feel like adding marketing about that and making people aware of the benefits of that membership is going to continue to drive growth. And we've obviously already seen over the last year really good, strong growth in our membership program. Mike, do you want to hit the second question?

Yes. Yes. So as I always said, like kind of what do we see as the key drivers for 2026 EBITDA margin growth at Brand Tripadvisor. It's really, really a couple of things. And some of them are related to investments. Some of them are that you move through investment phases. So one is obviously stabilizing hotel meta And I think we continue to work on product, work with our partners to create a great offering there. And that that is first part of piece. Second is getting our hotel commerce beginning to scale, and that is what Matt talked about our booking capabilities, hotel capabilities. So getting some modest scale in that will be contributing to margin. Second, getting experience of growth back at TripAdvisor, it's a very, very important platform for us. And we spent, as we said in our prepared remarks, we have been spending a lot of time on how to optimize that that point of sale, surface. It's a very different traffic than Viator. It's a massive, massive funnel. It's global, and we've been spending a lot of time of optimizing growth there. We have a kind of a tough comp in the first half of the year in experiences growth, but we get past that in the second half of the year this year. And then next year, we're looking to -- in 2026, we'll be looking to -- for that to be a solid contributor to that EBITDA story Third, it's really -- or fourth is getting half, and through some of the investments, we have been ongoing through data, AI, these are a lot of investments we've had in the last two years that fund all the investments and the things that Matt was talking about in terms of the app, in terms of membership, obviously, as part of that experiences, so getting to that. And then lastly, just really comps on a lot of these legacy offerings. We've been saying pretty consistently the last many quarters that we have, we have focused over the last few years. We have de-prioritized some of the -- a lot of the legacy business we've had, whether it's car rentals. We just talked about changing our business model in vacation rentals. These create not insignificant EBITDA headwinds. And so we will be lapping and getting past those in 2026. So I think we are excited about what we're doing this year. We're excited about how it sets us up for that progression in 2026.

Got it. Thank you.

Thank you. And our next question is going to come from the line of James Lee with Mizuho Securities USA. Your line is open. Please go ahead.

Great. Thanks for taking my questions. First one is more, big picture, Matt, I was thinking then maybe you could talk about the long-term view on hotel meta search. It's clearly a highly debated topic given all the challenges seen over the last couple of years. So how do you think the industry would navigate? And can you talk about maybe the further transformation needed for Tripadvisor? And second question is about Viator. You guys previously talking about wanting to elaborate, to expand your B2B strategy specifically. Does it make sense to expand kind of beyond OTA, for example, maybe credit card companies redeem points. Thanks.

Hi, James, look, in the long term, we think that meta continues to be a relevant product. And we've said in the past that as long as we are delivering high-quality traffic to our partners and giving them a good investment opportunity, they're going to continue to come. And we've obviously had variability in that line. But I do believe that we've done a lot of good work to stabilize revenue from hotel shoppers across both meta and hotel booking in the app. In meta, we've done product work that has driven price advantage. Why? Because we're figuring out how to deliver higher-quality leads to our partners, and they are willing to pay more for that. And so I think you will continue to see us lean into that and identify ways that meta and booking in the app work together, which we also think can drive really good unit economics and average revenue per user. So we're enthusiastic about it. We think in the long term, it is a player. But we've also said it's not our future growth driver. So as we stabilize the revenue from hotel shoppers, as we accelerate our growth at Tripadvisor experiences, as we scale the impact of our product improvements that are driving engagement and unit economics, we think that, together, that's the profile. We are not trying to return to some kind of a paid -- consumer-paid subscription or anything like that. This is a very thoughtful integrated strategy that we are seeing is working. And so we're enthusiastic about. Now on Viator, you're right, we have a B2B business that we haven't broken out in the past, but it is growing. And I think I said in my prepared remarks, it grew at twice the rate of segment as a whole. And we think that we can grow B2B very quickly. We think it's one of our unique advantages. And it's really interesting because we think it's incremental, we think it's additive, it's profitable. We think we give tremendous value to our partners. And our supply advantage, which we continue to accelerate, is a key part of bringing people to the table, have a conversation with us, that would be different from anybody else in the world to offer this opportunity. And we think we can continue to enhance our current relationships, add new partners. And yes, there are many categories, thanks for mentioning some of them. I tend not to put the new categories to focus out publicly because that's how we're going to grow and I don't necessarily want to signal that to anybody else. But you're absolutely right. There are many, many industries and categories that we have to go to, and geographies, and many of them would be customers that would be hard to reach and acquire and retain on our own. So we're very excited about our third-party B2B business.

Thank you.

Thank you. And I would like to hand the conference back over to Matt Goldberg for closing remarks.

Thank you all for joining us on this morning's call. As I think you can see, we're really excited about what 2025 represents for us. In many ways, it's an inflection point in setting the Group up with renewed momentum and strategic flexibility and plans across every part of this business that I know and we're all excited about. I couldn't be more proud of the work we do every day. We're more optimistic about the next phase of growth at TripAdvisor Group. We look forward to seeing you at the next update. Thanks everyone.