Will Lyons – Senior Director of Investor Relations Stephen Kaufer – President and Chief Executive Officer Julie M.B. Bradley – Chief Financial Officer.

Lloyd Walmsley – Deutsche Bank Securities, Inc. Douglas T. Anmuth – JPMorgan Securities LLC Nathaniel Schindler – Bank of America Merrill Lynch Mark Mahaney – RBC Capital Markets Michael Olson – Piper Jaffray & Co. Ron Zember – Nomura Securities International, Inc. Thomas White – Macquarie Research Naved Kahn – Cantor Fitzgerald Heath P.

Terry – Goldman Sachs & Co. Kevin Kopelman – Cowen and Company Michael Costantini – Susquehanna International Group, LLP Brian Patrick Fitzgerald – Jefferies & Company, Inc. Conor McDade – Evercore Partners.

Good day, ladies and gentlemen, and welcome to the TripAdvisor Second Quarter 2014 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today’s program is being recorded.

I would now like to introduce your host for today’s program, Will Lyons, Senior Director, Investor Relations. Please go ahead..

Thank you, Jonathan. Good afternoon, everyone, and welcome to TripAdvisor’s second quarter 2014 earnings conference call. I’m Will Lyons, Senior Director of Investor Relations for TripAdvisor, and joining me on the call today are our CEO, Steve Kaufer; and our CFO, Julie Bradley.

As is typical we distribute our earnings release through our Investor Relations website located at ir.tripadvisor.com. In today’s 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 the estimates and other forward-looking statements included in this call represent the Company’s views as of today, July 23, 2014. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances.

Please refer to today’s earnings release and TripAdvisor’s filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements.

Finally, unless otherwise stated, all references to selling and marketing expense, general and administrative expense, and technology and content expense are non-GAAP measures as defined in our earnings release and all comparisons on this call will be against our results for the comparable period of 2013.

With that, I’ll now turn the call over to Steve..

Thank you, Will, and welcome, everyone. I am going to first touch upon some highlights and recent developments and then, I’ll hand the call to Julie, who will provide more color on respond Q2 financials and our 2014 outlook. Total revenue growth accelerated to 31% driven by our strengthening click-based revenue business.

On the bottom line, EBITDA growth accelerated to 14% inline with our expectations. During the strong first half of the year, we continued growing content and community as well as innovating of products and platforms to make TripAdvisor even more valuable for consumers and advertisers alike.

We continue to grow our leaders world’s largest travel brand for travel content as we toped a 170 million reviews and opinions on 1.5 million listings of places to stay, 2.3 million places to eat and 450,000 things to do.

New user generated contributions continue to grow more than 100 per minute making TripAdvisor a better research and planning tool every minute for every user. Monthly unique users grew 25% to 280 million during Q2 and more than 1.25 billion unique users visited TripAdvisor sites and apps during the first half of the year.

More than two-thirds of our traffic originates internationally and then the second quarter we launched five localized version to work with TripAdvisor website in Austria, Israel, Finland, Hungary and Vietnam. With the addition of the Czech Republic launched earlier this week.

We now have 43 points of sale with localized content in 26 different languages. As we reinforce our strength at the top of the research and planning funnel we are leveraging the significant assets for community to match more consumers with more businesses driving higher conversion and more profitable bookings for our advertising partners.

This is most evident in our strengthening click-based revenue business, which we accelerated to 28% growth driven by continued healthy pricing in our metasearch option. Revenue-per-hotel shopper growth accelerated for the third straight quarter to 11%. Hotel shopper growth during the quarter, we accelerated to 17%.

As we stated on our last call, hotel shopper growth remains the where we deal to audience growth at the top the click-based revenue funnel, but as we continue to improve conversion in the middle of the funnel through metasearch and complement that with our new Instant Booking feature, we believe that revenue-per-hotel shopper, as well as other factors will continue to gain prominence.

One of that positive revenue-per-hotel shopper growth is an important trend, since it allows us to bit more favorably in pay traffic acquisition channel into drive further traffic growth. We are contemplating – we are complementing our historical strength in online advertising, but in television app released in May in the U.S., Australia and France.

Our key message is that TripAdvisor helps make every experience, every destination better as in don’t just go to Paris, go to TripAdvisor Paris. We’re very pleased with the early results from this campaign as we think Google Trends data shows a meaningful uplift in these three markets for branded search.

Equipped with the new-media strategy we are excited to address our large opportunity to increase unaided brand awareness. Based upon our results to date, we will continue investing aggressively in TV through October of this year and expect to expand this channel next year.

On the product side, we’re leveraging our unique understanding of the traveler to continue to innovate and make each phase of the travel planning cycle simpler and more engaging for every user on every device and every geography. Specifically we’re very pleased with the early results from our Instant Booking initiative. On the user side, 100% of U.S.

smartphone users now see a Book on TripAdvisor button that allows them to seamlessly complete their hotel reservation within the TripAdvisor experience. We expect to introduce a similar book on TripAdvisor option to U.S. users on desktop and tablet later this quarter.

The product is driving value for Instant Booking purpose today as our early data indicates that hotel shoppers are converting at a higher rate through the Instant Booking funnel as compared to metasearch. Our focus remains on growing property and geographical coverage by onboarding more OTAs and suppliers.

We recently added Best Western to our partner list. We expect them to be live later this quarter, and we have several more client integrations currently in development.

Additionally, we have commitments from over 50 Internet booking engines that want to become Instant Booking partners and help the clients, the independent hoteliers leverage our open-booking platform. We’re very excited about Instant Booking and believe this user enhancement will significant long-term benefits for our business.

Instant Booking is just one of the many exciting recent mobile developments. We continue to innovate by reducing friction and increasing engagement touch points throughout the trip planning and trip taking experience.

User adoption of our mobile products and smartphone and tablet remains strong with more than 128 million cumulative TripAdvisor app downloads and nearly 50% of our traffic visiting via mobile devices during Q2.

On the phone we’ve also made it possible for users to download cities directly from the TripAdvisor native app for off-line use, allowing travelers to access user reviews, photos and maps without incurring roaming charges. We have over 300 cities live today with the most popular destinations being Barcelona, Paris and London.

In the future we’re planning to make this feature available for every country, province, state and city in the world. We’re also making good progress in personalizing the TripAdvisor research experience for users.

We recently introduced a new tab-based user interface to 100% of traffic in all major markets, we’ve already seen higher levels of engagement. For now we will focus primarily on personalizing the hotel shopping experience due to our growing percentage of non-hotel traffic.

We also have a unique opportunity in the future to enhance the in-destination research experiences for restaurants and attractions. Switching to our Vacation Rentals business, we continue to focus on improving supply quality and increasing demand which leads to better conversion.

Offering owners the free-to-list option is transform our business and allowed us to focus on improving the quality of the overall vacation rental booking experience. The new model continues to drive strong inventory growth, as we now have nearly 640,000 properties, up nearly 40% from last year, providing consumers with greater choice.

At the same time, we have actually been actively removing lower quality inventory in order to help the traveler find the best rentals. As for improving demand, we are investing in resource just to amplify our search engine presence, as well as improving our CRM touch points.

As we are improving consumers booking experience in hotels and vacation rentals on the accommodation side, we are doing the same in restaurants. Integration of our lafourchette acquisition has gone very smoothly.

In addition to amplifying lafourchette’s business momentum with the TripAdvisor brands and Internet marketing expertise, the team has focused on integrating restaurant reservations deeper into the TripAdvisor experience. TripAdvisor users that are looking to make a dining reservation in France or Spain, we are able to search by date and availability.

You can also see special offers on desktop and mobile web with special offers coming soon to mobile apps. As a result we are seeing a significant increase in restaurant bookings via TripAdvisor.

As we continue to optimize conversion, the team is working – the team is increasingly working on widening the top of the funnel leveraging TripAdvisor’s core online marketing expertise and making incremental investments to stand internationally.

With over 2.3 million restaurant listings and over 200 plus million monthly restaurant page views, TripAdvisor’s scale and breadth of content is unmatched in the restaurant space and adding restaurant reservations makes the perfect fit or our core use of proposition.

Overall, we delivered strong results across business units and I want to thank all TripAdvisor employees for their continued hard work and dedication. We are proud of the progress we have made and we are looking forward to an exciting rest of the year. I will now turn the call over to Julie..

Thank you, Steve. We’re excited by the strong acceleration in our core business. And by the great progress we are making to help lot more consumers with more businesses on our platform. Second quarter total revenue growth accelerated to 31%, up from 22% growth in Q1, coming in at $323 billion. As that provided a 2% tail wind.

On the bottom line, adjusted EBITDA growth accelerated to 14%, up from 12% in Q1. Click-based revenue growth accelerated to 28%, up from 16% in Q1. This Q2 performance was driven by stronger CPC pricing for our metasearch leads and an easing year-over-year cost treated by last year’s metasearch transition.

Revenue per hotel shopper accelerated to the third straight quarter, reaching 11% compared to positive 1% in Q1 and negative 13% in the year-ago quarter. CPC prices were consistent with what we saw in Q1, speaking to the ongoing competition for a high-value lead. As a reminder, Instant Booking revenue is included in the Click-based revenue line.

While Instant Booking revenue was relatively de minimis to our Q2 results. We expected to grow as we onboard more partners and expand global coverage of this feature. I will remind everyone that as we move throughout the back half of the year and into next year, our hotel shopper growth comps eased.

Additionally, Q3 will be the first full quarter that we have a clean comp from the metasearch transition. As such, we expect strong revenue acceleration again in Q3. And believe, there is a potential for further upside to our revenue-per-hotel shopper metric, between now and October. Display-based revenue growth was solid as 19%.

We’re seeing rising aggregate spend in destination marketing organization sector worldwide. And we’re seeing a trend emerge in hotelier’s shifting their marketing strategies from campaign investment to an always on spend strategy.

With nearly 280 million monthly visitors across 43 localized point of sale, TripAdvisor is well positioned as an increasingly attractive channel for these travel industry marketers. Subscription, transaction and other revenue also showed solid growth at 55%, especially in light of a 21 point proper compare.

This was driven in part due to contribution from our lafourchette and vacation home rentals acquisition, to roughly one half of the quarter. We are pleased with the smooth integration of all of these acquired businesses and are actively looking for more great products and teams to add to the TripAdvisor family.

On the expense side, as planned, total expenses de-levered three points sequentially, driven primarily by our selling and marketing line, which is directly related to the timing of our TV ad campaign.

We aggressively launched our new TV ad campaign in May, investing approximately $10 million during the quarter and expect to continue to run our new ads in the U.S., France and Australia through October.

Given this strong early indicator we may look to modestly expand the campaign into another market or two and are forecasting total TV advertising investment inline with 2013 levels of approximately $30 million. However, as compared to 2013 most of the investments will be concentrated in Q3 as opposed to Q4 of last year. Moving on to taxes.

Our Q2 GAAP effective tax rate of 31% increased sequentially primarily due to certain discrete items as well as some changes in full year forecasted geographical mix. We expect our GAAP effective tax rate for the full year to be inline with our 2013 rate of approximately 28%.

We had 146 million diluted shares outstanding during Q2 and we estimate that our diluted share count will increase roughly 1% to 2% by the end of 2014 subject to stock prices movement, potential share buyback and new share issuances.

Q2 CapEx was $22 million or 7% of revenue driven by capitalized engineering salaries and leasehold improvements to support global office expansion. We continue to expect 2014 CapEx to be inline with 2013 exit rate of approximately 8% of revenue.

From a liquidity standpoint our cash, cash equivalents and short-term and long-term marketable securities decreased by $24 million during the quarter to $721 million, driven primarily by positive free cash flow of $136 million offset by an aggregate $152 million, we use to complete our three acquisitions during the quarter.

We have just over $100 million remaining under our existing share repurchase plan outstanding borrowings of $320 million as well as an undrawn credit facility of $200 million. As it relates to guidance, we are reiterating full-year total revenue growth in the high 20s to low 30s.

This includes click-based revenue growth in the high 20s, display-based revenue growth in the mid to high teens and subscription transaction and other revenue growth in the high 60s. On the expense side, we are making incremental investments for our core hotel business as well as our newly acquired restaurant business.

We expect these investments to accelerate building TripAdvisor’s brand driving traffic growth and expanding our restaurant business in new countries. Rolling it up we expect adjusted EBITDA growth in the high 20s consistent with the low end of our previous guidance range.

Often those that these expectations are based upon months and dates data, historical patterns, estimates and other factors while we tend to be appropriately conservative this represents our best spots as of today.

As a reminder, our click-based revenue is highly sensitive to fluctuations in hotel shopper growth conversion as well as partner CPC pricing, which are risks.

Conversely our forecast does not contemplate any meaningful risk in CPC prices or additional on-site conversion improvements from where we are today, nor does it perpetually contemplate any meaningful additional revenue from our Instant Booking initiative or any additional positive impacts from our TV ad campaign.

So those represent potential upside from a traffic and revenue standpoint. In summary, our core business is strengthening and we’re very excited about our additional monetization opportunities in front of us. We will now open the call up to your questions..

(Operator Instructions) Our first question comes from the line of Lloyd Walmsley from Deutsche Bank. Your question please..

Thanks. Wondering if you can just talk about how the click-based ad revenue was growing towards the end of the quarter. I think you said over 30% April, continue to be strong in May and then Julie, in the script you commented that revenues per hotel shopper could strengthen further over the course of the year.

The total quarter was a little bit below April. So wondering if you can just comment on how growth actually the quarter, how it looks now? And then as a follow-up, if you can just elaborate on the sharp acceleration in EMEA, what’s driving that versus the U.S.

growth more or less in line with last quarter?.

Sure. This is Julie, I’ll start-off with your first question. So last quarter we did note that April was off to a strong start for click-based revenue growth of 30%. And what I was referring to in that comment was our core TripAdvisor business whereas for the full quarter consistent with April was 30% growth.

What you see in our aggregate results includes our [A&G] (ph) family and they were slightly below that 30%. So in the aggregate it rose to 28%. I appreciate your question on asking for the exit rate on Q2.

But I think you’ll find that that was probably a one-time comment for us in Q1 and we’re not in the habit of providing inter-quarter guidance?.

Okay..

Thank you. Our next question comes from the line of Dean Prissman from Credit Suisse. Your question please. .

I’ll ask two questions, Steve. First, anecdotally the adoption rate of TripConnect appears to be picked up nicely. Is there anything you can share on the impact you’re seeing on pricing on pages where there is a TripConnect participant? And then I have a follow-up..

Sure. This is Steve. So, yes, there are more and more independent hoteliers getting further traffic with the TripConnect CPC-based bidding. You’ll see TripConnect continues to go through an evolution of not only having CPC partners becoming later this year having CPA or specific booking partners.

While it’s clearly growing, it’s hard for us to measure the impact in the CPC auction. I can tell you in general the folks that are savvy enough to want to be able buy clicks on TripAdvisor are savvy enough to want pay market rates to get them. So you’ll likely see them in premier positions, not necessarily the top, but premier positions.

So we’re getting a pretty good CPC from those folks. We think in general there is a level of expertise that the hotelier has to have or the marketing partner has to have in order to buy traffic on that CPC basis. They have to be able to measure or believe in the return on investment from the clicks, how many bookings that’s driving.

And so moving forward with TripConnect and sort of the next generation of the TripConnect connectivity for Instant Booking we’ll be able to go to many of these same hoteliers and a whole lot more to say, sign up on TripConnect and it’s a commission basis like you’re are used to paying for the bookings that we provide in our Instant Booking flow.

And we’re hopeful that that adoption will be much easier because it’s truly only a pay-for-booking when I get it. Don’t pay for anything when it doesn’t materialize. And you had a second part of the question..

So commentary from many other players within the online travel ecosystem suggests that same day reservations are a meaningful driver of smartphone bookings.

Based on the metasearch queries, you observed to what end is this consistent with user behavior on TripAdvisor and how meaningful of an opportunity is, say, are same day bookings for you?.

I would say, yes, we absolutely see the booking window skew much more closer in on the phone with Instant Booking order, metasearch on the phone. I – but overall, it’s not a particularly meaningful part of our total mix.

You can appreciate or these our thesis behind it is TripAdvisor is wonderful, awesome for planning that a trip it might be the full weekend get away, it might be the full two week in Paris or the Caribbean or anywhere you like to go.

The benefit reading the reviews, selecting the photos, looking at the Popularity Index, personalizing the experience, we believe directly correlates to hey, how long am I going to be on vacation.

The same day booking is much more about location only, is the hotel near where I need to be near the airport, near my business meeting and as such there as many other sites that also serve that functionality.

And TripAdvisor, we believe obviously has a better set of recommendations, but we don’t expect to earn in outsized portion of those last day bookings as our competitors..

.

. :.

Great, thanks for taking my question. One for Julie, if you could just talk one on 3Q, and just following up on Lloyd’s question. Just curious what gives you sort of a confidence and around the drivers of potential upside here in revenue-per-hotel shopper over the next couple of months in 3Q.

And then, Steve, perhaps on Instant Booking, give us some color on how the discussions with major hotel chains are going currently, thanks..

Hi, Doug. And so, the confidence around 3Q is directly related to the fact that this is the first full kind of clean comp and for our metasearch on transition, but so we are seeing great results from the transition. And in Q3 of last year, and that was our most negative impact, as there was a full rollout.

And that was really the trough of the transition. So, where we are setting yourself up with an easy comp..

And this is Steve with the hotel chain discussions.

I’d say there is strong interest on the part of every caveat almost every hotel chain that we spoken to there is a bit of a the recent – we feel a stronger sense of urgency than many of the big hotel chains simply because we love to get them all signed up enrolling before desktop launches than where we have the better the offering, whereas so current mobile offering isn’t perhaps driving enough bookings to make them come over to the new platforms soon enough.

So when I look forward I generally think it’s absolutely aligned with hoteliers interest. That’s why they participate in the metasearch and we believe that’s why many if not all, will be participating in the Instant Booking platform.

It’s a question of sometime on their part, because it is new development work and a question of resources to get it up off the ground, tested live, and since we do drive a fair number of queries and a fair number of bookings it has to be a petty scalable solution on their end..

Thank you. Our next question comes from the line of Nat Schindler from Bank of America Merrill Lynch. Your question please..

Yes, hi. Thank you. Two questions for Julie. One, can you explain to us the accounting changes or the balance sheet changes that are going on, that are causing a real acceleration in the free cash flow growth. I know it’s in the deferred merchant payables numbers up a lot, as well as changes in receivables.

Secondly, and I was wondering if some of that might relate to Instant Booking and how it’s accounted for and if you can go into a little bit on how the accounting for that would work and where the revenue would come in.

Secondly, on the second question, you mentioned that your guidance does not include any new information from the advertising campaign or the rest of the advertising campaign is thus upside to the potential guidance. The same language last quarter, but the difference is you probably spent half of your $30 million to date.

Are you including what has occurred in your learnings from the $15 million or so that has probably been spent in the first several months of your ad campaign into your guidance, or is it still that is anything from the brand campaign is upside? Thank you..

So I will take your first question on the balance sheet. The deferred merchant payable is definitely a large driver of the increase in cash flow also seasonality in the quarter. For the deferred merchant payable and I think about that as like a deposit.

So these are transaction businesses where we collect the money from the travelers in advance and when they stay we pass it on to either the hotel or the property owners if it happens to be a vacation rental. So as those businesses continue to grow you should see the benefit that we will derive from the cash flow.

On the TV ad campaign, I just want to correct a couple of numbers. So our total spend is estimated around $30 million for the year. We spend $10 million in the second quarter as we had started going on air and in May and so, we definitely clearly has seen a uptick in some traffic from the geographies that we were in.

And our plan is to continue to aggressively funds in the third quarter..

And two point we, this is Steve. We’ve continued to spend in July. So, you can essentially think of it as the consistent run rate from now or from May through October.

And we tend to where we always forecast going forward based upon the run rates we’ve seen, so the degree to which our current run rate has been influenced by TV that part is already baked into our expectations or guidance going forward.

To the degree that a more long lasting campaign running for several more months builds on that as opposed to stays level and that would be upside to our numbers. And we have seen the campaign build over time, but we are cautious on predicting anything that we haven’t seen. So we are not projecting at this point.

We are not forecasting a build greater than what we’ve seen so far..

Great, thank you. .

And nearly thinking about to one of the questions that Lloyd had asked early on and I missed in answering and that was with regard to EMEA growth versus U.S. growth.

And so I take couple of factors and that the international revenue continue to grow with the percentage of total revenue for about 53% this past quarter and we did benefit from 2% tailwind on overall revenue. And then, the second more operational wins relates into to our last year our meta roll out schedule.

And so, as we finish our transition in last act that we should do start to see and some of the top trends. .

Thank you. Our next question comes from the line of Mark Mahene from RBC Capital Markets. Your question please..

Hey Julie, could you please just clarify the kind of the trimming down of the EBITDA growth guidance and probably just a little bit more detail different sound like you change mid total amount of commitment to TV that campaign, so what else is in there, you misses that you kind of be opportunistic with new investments growth, investments or some of the investments coming a little more expensive when you would first term, thank you..

Hi sure, thank for the question. And to ask that we just look at our overall opportunity and to continue to and amplify that the TripAdvisor brand and to also expand internationally with our newly acquired restaurant business.

And we have put together a set of specific investments that we plan to roll out over the next as a second half of the year that aimed to increase international expansion, getting lafourchette into new countries and really take advantage of all of the TripAdvisor restaurants page views, and that we have on our site..

Thanks gentlemen..

You’re Welcome..

Thank you. Ou next question comes from the line of Mike Olsen from Piper Jaffray. Your question please..

Hey, good afternoon. Just two questions, here you talked earlier about hotel groups being interested in books.

Is it fair to say that you are expecting Instant Book will be skewed more towards hotel groups initially, but ultimately if more hotel groups get on board that can push OTAs to get more involved to avoid the trend of booking recently going direct from TripAdvisor to the hotel website.

And secondly, both price manger itself got more address that outside of the core channel market with vacation rentals restaurants, talk a lot about that on the call. What other categories do you look at further monetize your existing kind of review content and visitors for example events and attractions bookings or other categories. Thanks..

This is Steve. So the changes in the OTAs and I kind of put the independence as third category.

We are absolutely pursuing all three categories simultaneously and we think very aggressively and the conversations are on going with most and all of the major OTAs, with most not all of the chain groups and we haven’t started the conversations directly with the independent hoteliers since we have to get the connectivity working through the Internet booking engines.

So, kind of we have all free in the works, my sincere hope is that all three eventually or three categories eventually come into the store, I don’t really think there is much of a – I don’t have any doubt that the independent hoteliers will pop onboard just a matter of time in terms of reaching for them all, because it’s another booking channel for them.

So many have expressed interest and it’s a matter of contract negotiations and development works. So, that will common OTAs have expressed varying degrees of interest and we would hope and expect to have a robust marketplace. With all of our types of clients in the store.

Again make the point that Instant Booking is additive to the meta environment, so if we don’t have a particular client or a set of clients participating in Instant Book that’s okay. The consumer still sees adverse nothing different than what they see today and if we have Instant Booking covers, then they also have an Instant Book link.

So it’s still a net ad to the consumer. We believe any which way and over no matter what time period it takes to get all the various clients onboard. To the second question on additional monetization, response pretty big move for us in that while we had page views and it always holds CPM and perhaps sponsorships against it.

We think the opportunity in the restaurant space is phenomenal. We just can’t see any, it’s hard for us to see a path whereby huge numbers of travelers, huge number of locals won’t be making their, for not seen the path where we once can be making their restaurant reservations on their smartphone and increasing numbers globally.

And so we found a fantastic partner, a fantastic team in lafourchette, pulled them into the family and are targeting them with expanding.

For us that’s a fantastic use of the capital that we built up in our core business, because we know they are current model works, we have other players in the space that have a model that works and has been very profitable in scales. And so when we look and say what an excellent use were growth capital for us.

And yes, it comes at the expense of some of our EBITDA today, but it is tough, it’s not even in the bad category, it’s in the clear investment we see a perfect opportunity and we’re going to leverage it, because we’ve always said we’re building the business for the long term and we see a great opportunity.

Yes, we see other opportunities to help travelers, because we have travelers coming to TripAdvisor doing things other than just hotels and restaurants and certainly attractions of tours, or guides, or other travel related things are on the side.

But there’s only so much folks can do it at one time and we have some great partners in that space, and our focus at the moment is restaurants and how we can monetize, in general, are non-hotel traffic.

So it’s a great question and we get starting in hotels, and then flights, and then vacation rentals, and then restaurants, and it’s safe to say, that we will be going beyond where we are now. But that’s all we can say for now..

Thank you. Our next question comes from the line of Anthony Diclemente from Nomura. Your question please..

Hi, there. This is Ron Zember on for Anthony. Just a quick question about Instant Booking. There’s been a pretty impressive rollout this past quarter going from 10% coverage to 100% coverage of devices and I wanted to talk a little bit about rollout into desktop and tablet.

I was wondering if decrements that you have with your partners are device-specific or if we can assume that if there is a partner that dwell on the smartphone it eventually will also be available on desktop tablets?.

Hi, Ron. To answer your question, we couldn’t comment on sort of contract specific items, but it’s a little hard to think of who the client would be that would only want a direct booking or reservation on the phone and not on all of our platforms.

So I can’t say it’d never happen, but it’s not something that we’re hearing from our clients as an option that they would even want. They want the most bookings that they can get and by definition it’s a profitable booking that they’re only paying when it’s booking.

So we don’t envision that to be a challenge or frankly even much of a question with our clients..

Got you. Thank you very much..

Thank you. Our next question comes from the line of Tom White from Macquarie. Your question please..

Great. Thanks for taking my question. It’s on Instant Book for mobile.

I know it’s relatively early since the rollup, but maybe I was hoping you could talk a little bit about any signs that that monetization kind of smartphone versus desktop that you guys have talked about in the past, any sense that it’s closing and maybe giving us an update on kind of what that percentage is today.

And then also just in terms of how consumers are actually using your smartphone app now that Instant Book is there. Any sense of kind of how many – what percentage of consumers are actually clicking on the Instant Book button when it’s available alongside kind of the other traditional metasearch links? Thanks..

Sure. It’s still little early for us to talk about the numbers and the percentages about the Instant Book piece. I give you the caveat that when we look at a rollout we look at the global rollout, all languages. And so on the phone it’s still just U.S. travelers going globally, but still just a subset of even our overall phone traffic.

It’s also probably little early to tell how much of an impact it’s having on repeat traffic, we do measure as the repeat booking behavior, and we certainly do see that folks who are abandoning or shopping cart if you will, they start down the instant book flow.

We do see a good percentage of them coming back to finish the transaction, which is certainly what we would hope.

It’s hard for us to analyze how many of those folks would have come back to us any ways and clicked on the meta-click, so there is still a lot of ifs and ands, and then until we have more of a full roll out, more full coverage, and until we have the data from the desktop, it can be hard to compare what the net effect is..

Thank you..

Thank you. Our next question comes from the line of Naved Kahn from Cantor Fitzgerald. Your question please..

Yes, thanks for taking the question. Just on the EBITDA guidance sort of being treated towards the low end, and I think Julie, can you explain about the investments going into the building out the lafourchette sort of opportunity across different geographies.

Should we think about there is an investment on this particular sort of initiative and the relative investment that’s something that’s going to be a long-term in nature.

Or is it something that you think you can get mostly done in 2014, and then 2015 and beyond, sort of more of a monetization cycle?.

So, we do look at the restaurant business in terms of our core markets where we are the leaders and the expansion markets the newer international markets where you might have a small footprint and need to grow it. Put lender some things or a country where we have no presence in whatsoever.

And there isn’t already an established leader or maybe there are some players that we need to continue with.

We are confidence that the core markets continue to grow at a good pace and that’s generally we consider a profitable growth, so we expect continue to reinvest those profits into our newer markets, then depending on the speed at which we want to enter new markets that’s going to take us negative in the restaurant business because it is such a good opportunity.

Unknown that we can’t forecast, we haven’t done our 2015 yet is how much can the overall TripAdvisor brand and traffic bring in those new markets to know how quickly those new markets can turn it profitable for the restaurant. To my earlier point, we have no hesitation in stating that it’s the great segment to be in.

we feel we deserve to play because the traffic and the content and the brand we have, at least in the markets that we’re choosing to compete in.

And so it’s a question of feet on the ground, signing up restaurants, getting the inventory, putting the widgets on our site, on the restaurant site and that’s something that the great team at La Fourchette know how to do very well. And so, part of the acquisition was being able to provide the growth capital.

I wouldn’t want to leave you with impression that it is just a 2014 investment, because we haven’t made a decision yet for 2015.

But when I talk about investing for a longer term horizon, which I talk about frequently that would lead one to think, hey, I’m thinking about building the restaurant business to be very meaningful for TripAdvisor over a three to five plus year timeframe and that’s going to take more than a quarter or two of investment dollars..

That’s helpful. And then, I have a quick follow-up.

Can you break out the contribution from La Fourchette, the net acquisitions in the second quarter? And what you might be modeling on for the full fiscal 2014 forecast?.

No, we are not breaking out the contributions from the acquired companies in the second quarter..

.

. :.

Great, thanks.

I was just wondering if you could give us a sense of the difference in hotel shopper profitability in Instant Book when using our hotel partner like Choice versus going through Tingo or Getaroom? And how much of the improvement in profitability that you’re expecting over time is going to come from signing up additional hotel partners versus just the natural profitability of the channel?.

So I couldn’t and wouldn’t make a public comment about which client has higher conversions or who is better. You can appreciate how we are trying in the Instant Book path to show the partner that we think will do the best in terms of driving overall dollar volume commission value to TripAdvisor.

So one might argue that suppliers have a leg up in many markets simply by using a name like Choice that gives comfort to the consumer, a well known brand in Expedia or booking or in Orbitz would deliver comfort that the booking is a safe one.

So that’s going to help drive the conversion from when I press Instant Book to when I complete the transaction. You take that conversion rate. You factor in the commission rates that TripAdvisor has paid.

You factor in the overall rates of the room and the availability to help figure out and it’s part of conversion, but it will sort of work its way back to an effective CPC that that Instant Booking button is taking and we compare that effective CPC with what our meta auction shows and we say, hey, is this a more effective place for the traveler to go.

We have to look at it over time because when someone goes down the Instant Book path, we believe they’ll often come back to finish the booking even if they don’t finish it the first time around.

But that’s the kind of level of sophistication that we’re starting to develop, be able to evaluate which is the better channel, which is the best provider to power that Instant Booking option.

When you look at the site today, you can kind of take a look at, hey, based upon what we know now, whose winning the ability to power the Instant Book button and you can see Choice, for example, is frequently winning that opportunity. And so somewhere in that whole equation we’ve decided that that’s best for consumers and our bottom line..

Great. Thanks, Steve..

Thank you. Our next question comes from the line of Kevin Kopelman from Cowen and Company. Your question please..

Hi, thanks. Can you give us an update on the Vacation Rentals business, what you saw in the quarter, how growth looked versus last quarter? And also, what percentage of that business has transitioned over into the commission-based model? Thanks..

.

Sorry I don’t have the exact percentage in front of me. I’m not sure I will be able to talk about it anyways, but I know that that trend continues. And, again, while we’re not discontinuing the subscription line we’re certainly putting most of our attention on driving the commission-based payment model going forward.

So there shouldn’t be any surprise that will continue to grow in overall percentage of Vacation Rentals. That was correct..

Okay thank you..

Thank you. Our next question comes from the line of Brian Nowak from Susquehanna. Your question please..

Hi, this is Michael Costantini on for Brian. I just had a few questions on the Click-based revenue growth.

Just wondering roughly what percentage of hotel shoppers are clicking on monetize meta links? And that’s to your first question potential upside as more shoppers get used to products by clicking? And if so what type of assumption are you making in the guidance around monetize per click for hotel shopper? And then just on the Click-based revenue guidance for 2014, last quarter you said, a high 20s, the low 30s this quarter you just said high 20s, I just want to confirm that was the case just high 20s now? Thanks..

Sure I’ll take the second one first. I said we are reiterating our Click-based revenue guidance at high 20s to low 30s..

All right thanks..

Hi so this is Steve. On the topic of the meta-search we continue to expect growth in the overall meta channel even as we add Instant Booking, because our overall hotel shoppers continue to grow. And we don’t see anything wrong conceptually with the visitor that clicks on a couple of meta bookings, clicks into Instant Book i.e.

nothing go down one path versus the other, you’re welcome to choose both.

In fact we view the price comparison aspect as we’ve seen all the meta prices and letting user go and check that they are real to be perfectly valid user experience all the way to the point where, hey for meta or for Instant Book partner has a room for $200 – has a hotel for $208 and a meta partner has it room for – hotel for $175.

Great as smart consumer may well click on that meta link and book with one of our clients, the rate is cheaper, amen to that, we still made money on the meta auction even though we are Instant Book wasn’t the eventual booking source. We’re perfectly good with that. We expect it to happen a time going forward.

Instant Booking is not a replacement for meta. So yes, we expect to see meta auction we’re paying very close attention to the meta auction even as we roll out Instant Book..

Yes, and I just want to correct what I said, we did reiterate on our overall guidance. Total revenue guidance in high-20s to low-30s and our Click-based revenue guidance in the high-20s and that’s exactly what we said in the previous quarter..

Thank you..

Thank you. Our next question comes from the line of Brian Fitzgerald from Jefferies. Your question please..

Hello..

Hello..

Yes..

Sorry I got crossed there. Just really quickly you’ve been investing in personalization. Wanted to know if you could give us any color in terms of the positive impacts there you’re seeing either in terms of higher user engagement or conversions? And then, really quickly any discernible impacts or changes from [Panda] (ph) updates. Thanks..

Sure. So on personalization, we have sort of two flavors of it. The first is we’ve learned a lot about what makes a hotel right for one person versus the other. I refer to those as tags and we’ve rolled out in all of our major cities is kind of tag based interface, I should say on desktop tablet interfaces, not yet on phone.

That’s allowing folks to say I am looking for a boutique four star with free breakfast and get the right list. That’s truly just perfect for them. So they’ve actively selected those.

Still on just a subsection of our overall traffic we have that experience plus the personalized experience that’s based upon your browsing history and a bit of what we might know about you from the things you’ve contributed on the site.

So for members that have been back or visitors that have this previously for members that have been back all of a sudden we will in fact make a better recommendation for you than the vanilla user for whom we don’t know anything.

In both of those cases last I checked that converged, in both those cases the engagement was up clearly, more time on site, more page views. In both those cases the conversion seem to be up a bit, but it wasn’t something that was – moved the needle enough for me to be sort of talking or bragging about. It’s still early days.

We haven’t rolled out the personalization based upon the browser history for a full audience yet. We still have some tweaks that we think we can make that will in fact lock in some of those conversion improvement as well as just offer a better recommendation more off.

The needle will never be perfect, but given the one-time it fits-all that so many travel sites offer, we think this is a real game changer in terms of long-term stickiness for folks coming back to TripAdvisor because TripAdvisor knows you. We’ve learned about you and watched your history. It’s a work in progress.

And I don’t have exciting results to report on that yet, but believe me when we do I will share..

Thank you..

Sorry. You also asked about the Panda update, but we wouldn’t comment on any specific Google actions or lock there up..

Thanks Steve..

Thank you. Our last question comes from the line of Ken Sena from Evercore. Your question please..

Hey, this is Conor McDade on for Ken. Thanks for taking the question. Just going back to your comments on vacation rentals and there contribution to this distribution another one.

Should we be expecting just to drive that back half acceleration already get to the high sixties growth guidance for institutional revenues, or are you expecting some more real, thanks..

So and we expect vacation rentals and business listings and both included in that line to continue to be strong, but the main driver is the full inclusion of lafourchette. And so, we had just half of the quarter included on this past quarter, but we’ll have it full included for the balance of the year.

And in there we are not breaking out lafourchette to take financials. We – when we raise guidance on our subscription and other line last quarter and we excited – they include the acquisition of lafourchette as the primary driver for that rate..

Great, thank you..

You are welcome..

Thank you. I’d like to hand the call back to CEO, Steve Kaufer please..

Great, thank you, everyone for joining us today. Business is strong and growing and we have lot of exciting opportunities in a variety of categories in front of us. Thanks again, we look forward to updating you all again in 90 days..

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day..