Will Lyons - Senior Director, Investor Relations Stephen Kaufer - President, Chief Executive Officer & Director Julie M.B. Bradley - Chief Financial Officer.

Lloyd Walmsley - Deutsche Bank Securities, Inc Mark Mahaney - RBC Capital Markets LLC Eric Sheridan - UBS Securities LLC Ken Sena - Evercore Partners Robert Peck - SunTrust Robinson Humphrey Jed Kelly - Oppenheimer & Co., Inc. Chris Merwin - Barclays Capital, Inc. Thomas White - Macquarie Heath Terry - Goldman Sachs & Co. Bailey Wizbii - JP Morgan.

Good afternoon, and welcome to TripAdvisor's Third Quarter 2015 Earnings Conference Call. As a reminder, today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Will Lyons, TripAdvisor's Senior Director of Investor Relations. Please go ahead..

Thanks, Blair. Good afternoon, everyone, and welcome to TripAdvisor's third quarter 2015 earnings conference call. Joining me today are Steve Kaufer, CEO, and Julie Bradley, CFO. After the market closed today, we distributed our Q3 earnings release on our Investor Relations website, located at ir.tripadvisor.com.

In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Also, on our Investor Relations website, you'll find supplemental financial information, which includes certain non-GAAP financial measures discussed on this call as well as other performance matrices.

Before we begin, I'd like to remind you that estimates and other forward-looking statements included in this call represent the Company's views as of today, November 5, 2015. 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 comparisons on this call will be against our results for the comparable period of 2014.

And now, I'll turn the call over to Steve..

Thank you, Will, and welcome, everyone for joining on the call. I'm going to update you on our progress on how we are developing the best products for users, expanding our strong global platform to more partners and building a bigger and better business over the long-term.

Our Q3 results clearly show the major impact currency headwinds are having on business. Total revenue grew 17% and adjusted EBITDA grew 9% or 25% and 26% growth respectively in constant currency.

As I'll describe in more detail later in my remarks, the results and business outlook also highlight that we are moving quickly in pursuit of our long-term goals to make TripAdvisor a great place to discover and book the things that make a trip memorable.

First we'll talk about how TripAdvisor's consumers value proposition continues to strengthen in content, community and mobile. In content with 290 million reviews and opinions on 5.3 million businesses around the world TripAdvisor products are indispensable travel planning tools.

Member growth has accelerated this year and most members are contributing content at a record pace of 190 per minute, the fastest growth in our history.

This puts us on track to add another 100 million reviews and opinions over the next 12 months making our travel planning products and tools fresher, richer and better for every user demand, every device in every geography.

Our global travel community also continues to grow its essence by unique monthly visitor growth of 23% and hotel shopper growth of 16%. Travelers can find information on more than 3.6 million restaurants and attractions, so it's no surprise that unique visitors to these pages continues to grow quickly.

We attribute much of this growth engagement to mobile with TripAdvisor's helpful reviews, tips, photos and guides are the perfect travel content. Mobile usage makes up more than half of our traffic, in this quarter we reached more than 230 million app downloads across our brands including 215 million downloads of our [top range] TripAdvisor app.

We are monetizing better on that platform as well. As this quarter's hotel shoppers on phone monetized a 25% the rate of those on desktop which is up nearly 40% since two years ago. Perhaps more importantly, this speaks through the large mobile monetization opportunity in front of us.

Mobile gives us the yet another powerful way to connect directly with consumers. Continuous iteration and innovation here is key, and every TripAdvisor team is actively engaged in delivering more value to users and partners on these devices. On any device TripAdvisor users are close to making a purchase.

In fact the recent Oxford Economic study estimates that TripAdvisor influenced more than 10% of global travel transactions in 2014, whether it's a hotel stay for long weekend, a reservation for two at a restaurant or tickets for hop on and hop off city tour, these are extremely powerful moments for advertisers.

As travel purchases tend to be extremely nuanced, contractual and episodic. TripAdvisor delivered the right ad with right reservation opportunity to the right user at just the right moment at massive global scale.

As proud as we are of this growing influence, we believe that our revenue share represents only a small percentage of the transaction value we're driving for our partners. We are in year one of a multiyear voyaged [for this] monetization week and we continue to make excellent progress.

In hotels, Wyndham Hotel Group and the Priceline Group are the latest of the growing list of more than 70 hotels chains, groups and OTA partners who wants the power of bookings on our platform including seven of the top 10 hotel brands in the world.

In addition, in particular, adding the Priceline Group to the platform is a huge win for our travelers, as their high quality room descriptions in many languages, multicurrency payment capabilities, great room pricing and stellar customer service enables us to accelerate our international rollout in instant booking over the coming year.

We expect to launch the booking.com brand first with the Priceline and [indiscernible] brands to follow next year. Integration work has already begun and I can tell you that I love what I'm seeing. And once we are fully live, we expect users will be able to seamlessly book more than 400,000 properties on our platform in more than a dozen languages.

We are also helping independent hoteliers to drive more bookings on our platform. We are working with more than 130 internet booking engine partners and we expect to connect many of their hotel clients over time.

Regardless of partner size as global reach, instant booking can drive reservations at a fair cost, solve the media attribution issues that are persisted within the internet for years and enable our hotelier clients to develop a more direct relationship with more travelers. Our Marriott integration system is a perfect example.

After the signing the contract in June, we completed the rollout in less than two months and we have seen great early results including improved conversion in more bookings for Marriott to our platform. As we add more globally recognized partners, we are further optimizing the booking experience on their site as well.

This includes developing their own funds and management system for hotel and saving users' credit cards information to make bookings faster and easier. [At the tip of my head], the entire instant booking team who has met this challenge head on towards a meaningful conversion improvements over the past year.

Based upon these improvements and given how important an instant booking is to our long-term goals we accelerated the rolled out our users in two of our largest markets in September. We believe this accelerated rolled out schedule contributed headwinds of approximately $10 million to revenue and $8 million to EBITDA during Q3.

We expect to be live in more major markets in the next year and we'll continue to carefully monitor the opportunity costs associated with this faster international rollout. We know the instant book experience is working with users and partners.

The third piece of the puzzle is monetization for TripAdvisor while not yet accretive, we believe that the faster we transition and teach travelers that they can book on TripAdvisor the quicker we can close the monetization week. Fortunately, we have extremely smart and motivated teams who are up to the challenge.

We have successfully transitioned away from popup windows. We successfully transitioning to metasearch and I know that you will tackle this transition just as where. On the marketing side, we are continuing to more deeply integrate the claims compare book message into our online and offline channels. A big channel for us this past year has been TV.

While we have seen success in many countries, so we are pleased with our TV efforts to live [indiscernible] of the years, you decided to put this marketing channel on foreignness for 2016, while we focus more on the global rollout of instant booking.

Instead, we expect to increase our investment in some of our other global brand building efforts while we also better leverage our community both on the consumer and B2B site to fuel our book on TripAdvisor initiatives.

In addition to our opportunity in hotels, we are matching more consumers and businesses in our fast growing attractions, restaurants and vacation rentals category.

Our content is clearly gives us a unique understanding of travelers especially in attractions and restaurants and we can drive more users of the exact moment that they are looking fine in both a great place to eat or memorable things to do.

These businesses constitute our other segment which generated revenues of $75 million in the third quarter and $217 million on a trailing 12-month basis. Over that timeframe, we have been aggressively reinvesting profits to drive market share gains. We are just in the first year of what we have outlined as the three to five-year growth initiative.

Shifting gears, as we announced a couple weeks ago, the team and I are looking forward to welcoming Ernst Teunissen to TripAdvisor, which brings significant financial and operational expertise as a global CFO and a corporate strategist and I look forward to collaborating with him as we pursue significant growth opportunities ahead.

He officially starts next and Julie will be with us through November 20 to ensure a smooth transition. Before I close 2015 is a tremendous for our book on TripAdvisor initiative. While still in the early days of this evolution, we continue to make tremendous strides towards our long-term growth objectives.

In closing, this is Julie's final earnings call with us and I want to thank her again for all of her contributions over the past four years. I'd also like to thank all of our employees around the globe to build the products that users love in a more valuable platform for advertisers and positioning TripAdvisor for the long-term success.

And with that here is Julie..

Thank you Steve and good afternoon everyone. Results were very healthy despite significant year-over-year currency headwinds. This quarter, total revenue grew 17%. Q3 adjusted EBITDA grew 9%. In constant currency, Q3 total revenue and EBITDA growth would have been 25% and 26% respectively.

Our core hotel segment posted 8% revenue growth, or 15% in constant currency, an EBITDA margin held stable at 36%.

Digging in, Q3 click-based revenue grew 6% or 14% in constant currency driven by 16% hotel shopper growth and offset by continued pricing pressure which includes impacts from currency translation, lower CPC pricing and product changes we've made such as the decision to accelerate our instant booking rollout in U.S. and U.K. our two largest markets.

Revenue for our hotel shopper growth reflects these headwinds as it decelerated to negative 10%. Normalizing for this significant year-over-year currency translation headwinds revenue per hotel shopper growth would have been better though still slightly negative for the quarter due to a lower CPC pricing and the accelerated instant book rollout.

As a housekeeping item, note that during the third quarter we improved our counting methodology for unique users and hotel shoppers and have provided the [recasted] figures back through 2014 in the supplemental financial information tables which are available on our IR site.

Our display-based business performed very well as revenue growth reaccelerated to 20%. These strong results were driven by 22% growth in ad impression sold and with a strength in the U.S. and EMEA markets with hotel, destination marketing organizations and OTA customers in particular.

Our display team continues to innovate this product offering delivering great value to clients. As the currency environment stabilizes, we expect that more clients will be a position to leverage our scale in a robust data management platform in their global addition campaigns.

Other segment revenue grew 92% in Q3, primarily driven by attraction and restaurant acquisition and partially offset by currency translation headings and lower average order value for international travelers.

Other segment adjusted EBITDA margins improved to positive 12% for the quarter driven by high revenue seasonality in our attraction and vacation rental businesses. We've operated this segment at EBITDA breakeven over the trailing 12 months, and continued to reinvest aggressively in our products and sales efforts to drive long-term market share gains.

We expect to see the typical seasonal step down in Q4 and Q3 results while strong should not be taking as a new run rate in the near-term. Over the long-term, we believe margins will expand as we gain greater global scale.

As for expenses, selling and marketing delevered primarily due to top line impacts from our accelerated instant booking rollout an increased investment in our other segment businesses.

We also had a full quarter of expenses related to our 2014 attraction acquisition last year, and we continued to invest heavily in sales and marketing resources to pursue our long-term growth objectives in our newer category.

I will note that the quarter also contain approximately $20 million in television advertising spend which was consistent with both our Q4 investment as well as the year ago quarter.

As Steve mentioned, we've decided to put this investment on pause in 2016 and intend to expand our investment in other brand marketing channels as we rolled out instant book more broadly.

On the other expense lines, general and administrative expenses levered slightly and [checking] content grew in line with revenue as we continue to actively seek talents to pursue our growth initiatives.

On the bottom line, GAAP net income per diluted share was $0.51 which included the sale of one of our Chinese subsidiaries which contributed $0.12 to our GAAP diluted EPS this quarter.

This gain on sale was not included in our non-GAAP net income results of $0.53 per diluted share as the gain is not considered indicative of our ongoing operational results. Moving to headcount, we ended Q3 with approximately 3,000 employees, up 9% driven primarily by the investments we're making to grow our attraction and restaurant businesses.

As for taxes, our Q3 GAAP effective tax rate of 25% decreased primarily due to the changes in full year forecasted geographical mix including a non-taxable gain related to the sale of Kuxun one of our Chinese subsidiaries. We continued to expect GAAP effective tax rate for the full year to be approximately 27% to 28%.

We generated $8 million of cash from operations during the quarter or 2% of revenue. This slide continues to highlight the growth and seasonality of our transaction businesses where we collect cash at the time of booking and pay us to suppliers at the time of stay or when the ticket is used.

CapEx for the quarter was $39 million or 9% of revenue, driven primarily by leasehold improvements, capitalized website development and data center expansion to support our traffic growth. CapEx should sat down significantly as a percentage of revenue moving forward now that we have taken occupancy of our new corporate headquarters.

We now expect 2015 capital expenditures to be 7% of revenue. We continue to run a very capital efficient business. Liquidity remained strong as well with our cash, cash equivalents and short-term and long-term marketable securities balance of $730 million.

We also have an undrawn balance of $708 million from our $1 billion credit facility in just over $100 million remaining under our existing share repurchased [head]. Our capital allocation philosophy remains unchanged as we look to be opportunistic when it comes to making organic and inorganic discretionary growth investments.

Online travel remains competitive and we tend to view investments through a long-term lens versus near-term payback. Looking forward Q4 will have a full quarter impact from our accelerated instant booking rollout and we expect to begin on boarding booking.com later this quarter.

As such we now expect 2015 revenue growth in the high-teens and slightly negative EBITDA growth. This revised outlook attempts to be appropriately conservative to reflect these changes as well as foreign exchange rates as of today. This outlook does not assume future positive or negative FX movement conversion or monetization improvements.

We expect to rollout instant book faster over the coming periods which is great for our travelers and our long-term business prospect as we begin to plug the monetization leak.

Over the near-term, it poses some forecasting challenges as we enable more properties rollout to many more users around the globe and continue to improve the monetization of the product.

As Ernst settles in over the coming months, the team will determine how to evolve communications on future expectations as well as the metrics by which progress will be measured. The business is heading in a right direction and I have enjoyed being part of the journey.

I want to personally thank Steve and the entire TripAdvisor team for a great four years. We will now open the call up to your questions..

[Operator Instructions]. The first question comes from the line Lloyd Walmsley from Deutsche Bank. Your line is open..

Thanks. So Steve you mentioned, I think part of the reason for the accelerated international rollout of instant book was kind of meaningful improvements you are making. I think in conversion or monetization, but maybe just the product.

But can you give us kind of a sense for how fast the arc is in terms of improvement of conversion and what you need to get fix to get the revenue per user of instant book up, can you kind of map that arc versus the pace of their rollout in the new market.

And kind of when you think this might be accretive or if or when you think this might be accretive to revenue per hotel shopper? And then second question, if I can.

When you're talking about pausing the TV ad campaign that we invest impart in other brand advertising, should we assume kind of similar levels of overall marketing spend just shifted to other forms like, is it outdoor, can you kind of give us some color on the plan there? That would be great. Thanks..

Thanks Lloyd, excellent questions. So the arc of version improvement, I would say, has been fairly steady since we launched over a year ago, month-in, month-out, sometimes week-in, week-out, we're just making a constant improvement.

I know heads up coming up is kind of a step change because we are adding a Priceline, super excited about this deal with the Priceline Group because they offer a great brand, global inventory, tremendous content kind of which -- I talked about this several times in the past, very rich win description and a lot of information that our travelers are telling us they want to see on our site before they hit the book button, and at times they have to leave our site even when they have gone into the instant booking flow because we haven't been able to provide everything that the customer is looking for.

booking.com or Expedia for that matter have tremendous content and been able to provide that information that's why the conversion rates on their sites are as good as they are.

This deal allows us to bring in that rich information into our instant booking flow and so we don't know the impact on the conversion rate and we'll know shortly as we roll it out, but that's really going to be a big difference maker in terms of the slow and steady improvement that we've made, up come potential step change when we launch with Priceline Group.

Having said that, we faced a choice last year in booking for this past year in looking at the international rollout because it's been a challenge for us to figure out how to get the content that we need in all the languages and support all the currency types, all of a sudden that challenge is addressed for us in the Priceline deal, and so it makes it just technically or practically feasible to roll it out.

It adds additional uncertainty in our forecasting because while we have the decent amount of experience now in U.S.

and U.K., we don't quite know how instant book is going to flowing in, in France, in Japan, all throughout age, all throughout all the other markets that we look to roll it out in Priceline has great content, the partnership will work in all the countries, but we don't know the conversion impact relative to the [matter] prices that we have.

Coming back up another level, we are really excited about what this does for the business. We've always said that, we're ready to go it alone without an OTA partner because it was the right thing for the business. That was true, having Priceline in the fold now, just allows us to be able to go faster on the path that we were headed down anyways.

And that faster has always been pretty important to us. It is a big transition. We belong to a several in the past and we are looking to forward to not only the week-by-week improvement with the step change functions that we hope this Priceline deal will deliver. To the second part of your question television.

One of the reasons that we wanted to talk about television in this call is that, TV is often a long-term -- it's an advance buy, it's something that you need to plan in advance.

So while we're telling folks that we have decided to pullback for 2016 at least, we don't want anyone to think that, hey, we're just taking all that money and hanging onto it. We will be attempting. We will be spending some of the money in other channels and so we don't want anyone's model to just drop to the bottom line.

We haven't decided how much and of course all throughout the year, we will be evaluating opportunities as they come up, but TV was such a long-term commitment, we haven't updated anything into that specific decision..

Your next question comes from the line Mark Mahaney from RBC Capital Markets. Your line is open..

Yeah, I wanted to follow-up a little bit more on the TV campaign and the thought behind kind of putting that on pause.

You said a pretty long-term orientation in your thinking, So can you spend a little bit more time, has there been any shortfalls in the ROI that you expected to see in a TV campaign and therefore you want to do a revamp of it or is it just a matter of making sure resources are correctly allocated to the IB accelerated rollout? Thank you..

I have been pleased with what we have seen on TV.

I considerate a pause for 2016, redirection into some other channels that I know we will look at because the IB rollout or the success in plugging the leak doesn't actually require more traffic to come in to our site, we already have 350 million users in our [sequence] with all of that traffic and we still think half of which being hotel traffic that's such a great opportunity to plug the leak, and if we can do that and if we can monetize those hotel shoppers to the degree that any other OTA monetizes the hotel shoppers, that's a really big win for us.

And while TV was meant to help that, we feel we actually already have the traveler on our site and by doing other things on our site we can also affect that plug the leak.

So we have an entire global world to look at and so, an extremely global TV educational campaign is hundreds of millions of dollars, but we already have the traffic that's live and with the Priceline Group and our ability to rollout instant book globally we want to sort of concentrate our fire power on delivering that plain compare book message in plugging that leak after travelers already on our site..

Okay, thank you, Steve..

Thanks..

Your next question comes from the line of Eric Sheridan from UBS. Your line is open..

Thanks for taking the questions, maybe just two. One, Steve you mentioned with Priceline coming onboard did that allow you to accelerate your plans.

Maybe just give us a little bit of color on what you'll see from Priceline that allows you to accelerate those plans? Is it the depth of inventory? Is it the brand name that Priceline Group makes the table the consumers will recognize more, and I wanted to understand a little bit more color about that? And then as you faced some of the headwinds as you push faster into IB how should we be thinking about the incremental leverage or deleverage in the business, you gave us a little bit of color around Q4, but how should we be thinking about that as you move through the transition? Thanks..

Sure. Excellent questions, Eric. We do think about those questions and sounds quite a bit of course.

The reason Priceline enables us to accelerate our instant book rollout globally is because of the rich content that they have on 400,000 plus properties all around the globe, and by that I mean they are able to successfully take bookings on 400,000 plus properties in multiple, multiple, different language, processing payments for multiple different credit card by multiple different banks, all of those things because they are such a strong for mobile hotel reservation player, like Expedia, so I'm not saying that there is difference there.

I'm simply saying, they already have the ability for someone that lives in France or in Japan.

They come to their site to see the inventory that the traveler wants to stay in, see all the room descriptions in the local language, make the bookings using the local credit cards and we didn't have any of that for that customer in Japan for instance on TripAdvisor today.

So if were to rollout TripAdvisor today, I would be showing an instant book experience in English to that Japanese traveler.

I would be showing a room description for a Marriott property in English for that, for Marriott it might be a bad example because we might have Japanese content, but an independent hotel or brand, alright, we would be showing content in the wrong language to make a highly converting experience.

Priceline gives us all of that oneself and it's highly strong [curetted] content, payments and breadth of inventory. That allows us to push faster in IB. We hope for an improved conversion rate. Travelers on our site going through that funnel because the experience is better.

And so when we will know shortly enough whether or not that yields higher net revenue all the way to being accretive for us as we rollout instant book. I'm not sure of being plus or minus slightly accretive or slightly negative is going to influence the timing of the rollout for my earlier comments.

We know this is the right thing to do for the traveler. We know this is the right thing to do for long-term direction of TripAdvisor. We're own stated.

We're willing to take some short-term hits along the way, if it gets us toward where we want to be, and we have 18 months of history where we have improved our promotion quarter-after-quarter, quarter-after-quarter, so that we're confident, hey, we're always going be making progress and we may not always be as fast, we may not always be instantly, but we'll get there, and that's what gives us confidence to do a quick rollout even if it's not sort of instantly accretive.

I hope that helped..

Your next question comes from the line of Ken Sena from Evercore. Your line is open..

Maybe if you can just go into that little bit more on the improved county methodology in terms of the hotel shopper growth.

And it looks as early [IBs] also might have been restated and then? And then last quarter you had mentioned weakness in Europe, but didn't seem that you mentioned on this call, so were recoveries in there or was it soft just as attributed to other factors? Thank you..

Sure. The counting on hotel shoppers, boy, if you can understand the challenge that us and every other West companies goes through to figure out who when visiting the site is the really user versus a robotic type. And we do kind of our best job and we're always looking at the algorithms.

And from time to time, we find that there is something that we missed. And in this particular case, we revamped the algorithm to cut out some of the traffic that we didn't think at the end of the day was real. So we're always trying to present you the most active metrics that we have.

We recast them to see the year-on-year over the past period, obviously, had no impact on revenue. Of course creeping out we're filtering out traffic that wasn't real. So it's a housekeeping footnote, because you'll see the stuff would change. I personally didn't pay any attention to it when I learned about it.

In terms of the last quarter setting some weakness in Europe, I think we had a thesis that as the time based upon some of the evidence in front of us on sort of cross-border traffic and weakness in dollar, when we look at the macro issues in our past Q3, we're really pointing at instant book, we accelerate a rollout, right, long-term decisions, short-term, the smaller amount of pain that will certainly ruining the cake.

And then we're looking at as we go forward, I mean, there is some pricing headwind that we see in our [stains and meta] business, and it's meta business, it's an auction, we don't set the price, our clients bid up, bid down, there is more consolidation in the global fit.

There is ton of different trends not to mention currency going on and at the end of the day we believe our leads are just to qualify, so we think if there is a bit of a pricing hit, it's not something that we can influence. What we can influence and really what we're focused on is making IB as successful as it can be going forward.

And that's why to double down, we're even more excited about the Priceline deal and it's our ability to roll it out even quicker..

Thank you and just maybe a follow-up. On the hotel shopper growth in terms of the restatement, you did pull out some traffic.

But is there anything we should infer from the slower shopper growth that you'd want to highlight?.

I don't think so. As I said in more than a few calls, we're at a big scale issue now, so we touch an awful lot of travelers at some point. When I look at the business, I don't really look at dramatically improving hotel shoppers as much -- and those are measured on monthly unique.

So I look more on how do we improve the revenue per shopper, how are we -- both closing the monetization gap as well as giving our shoppers more of what they are looking for. And I think will be a much stronger factor in our revenue growth in the coming months.

Hotel shopper, we certainly expect to continue to grow, but at 16% or not terribly disappoint about that..

Your next question comes from the line of Robert Peck from SunTrust. Your line is open..

Yeah, just two quick questions, please.

First one is on the Priceline deal, the economics, I know you can't tell us the exact economics behind it, but directionally, can you give us a feel for if that's profitable to the Company and maybe the magnitude versus other deals on IB? And then Steve and Julie, we talked about 2015 EBITDA growth expectations.

How should we think about 2016 for investors? Is there a range of growth we can be thinking about as we come out of this period of investment? Thanks so much..

Sure. I'll take the first one. On the economics of the Priceline deal, it was certainly a long time coming, we believe it's a really good deal for Priceline, it's really good deal for TripAdvisor, the economics or such that I am telling everyone, we're going full force rolling this thing out.

We don't disclose the specifics, but you can judge by my actions of accelerating our rollout, that is something I think is going to work for the Company economically.

And hey, Priceline is a really big company, they are not a short-term vision company either, so they are doing some things, well, you should ask them, but I would believe they are doing something that is in their best long-term interest as well..

I'll take the 2016, as this time of the year, we are always in a process of putting to data our plans and evaluating, messaging, and expectation setting for the following year. Ernst will be here next week and I will dilate into that exercise, and we are sure we'll be inviting you on the February call. We have given a couple of nuggets on 2016.

One, we're pulling down, we're pausing TV, but we do expect to reinvest that into other channels. Q4, we're seeing it'd be a full year of instant booking headwinds which as the team is working actively to optimize and make that accretive. There would be expectation that that would continue into 2016.

In addition to the monetization headwinds, there is a slight shift in a way revenue is recognized. So with the majority of our click-based revenue today, we recognize revenue on click immediately.

As instant book become a more meaningful amount of revenue, we'll be experiencing a shift because when with instant book for the majority of our large partners including the Priceline Group, we will be recognizing revenue on stay. So there will be some seasonality and a shift in revenue as that becomes a more meaningful number.

So that's something else to take into consideration and evaluating 2016. We're in the process of doing that ourselves. Looking at booking windows and consumer behavior, we'll an estimate into our 2016 plan..

Your next question comes from the line of Jed Kelly from Oppenheimer. Your line is open..

Great, thanks for taking my questions. As Priceline starts to rollout the instant booking participation, is there a difference on how it's going to participate? TripAdvisor in the U.S. versus internationally, will booking.com be more motivated in the U.S.

and obviously more instant booking weighted internationally? And then can you just briefly touch on what marketing in channels have been driving the most efficiency?.

Sure. Thanks for the question. So we'll know whether were any changes in the display or the participation in meta by Priceline Group, one fetch, once everything is actually rolled out, I'm not under any impression that being in instant book would change anyone's participation in meta whether we're on Priceline Group.

They have always expressed to us as every client has. That's like as many transactions through our platform as possible. So I certainly would encourage you to ask the Priceline Group themselves, but my interpretation would be they are eager for all the traffic that they can get in better, just like they have.

The normal years passed, they have been a phenomenal partner for us over many, many years. And they are excited about the new transactions we'll be delivering through the instant book path.

So it's kind of additive, and I think that's how the discussions have always been based, that it's additive to their thinking of how to maximize their participation in the TripAdvisor channel.

To the second part of the question, which marking channel is the most efficient, we tend to look for as many marketing channels as we can find that deliver sort of quality traffic. And for the most part we operate them on a breakeven basis. We view it as acquiring trial.

And I'm talking about sort of ROI generating online channels, be it the search or targeting or CPM or any of the other methods of acquiring traffic. Other marketing channels that we'll be working on offline, for many of them it's nearly impossible to in that [product] measure. We do a quite bit amount of TR. We do fair amount of content licensing.

We do a fair amount of engaging in various markets by leveraging our B2B or B2C community. None those have a direct ROI, but we spend few dollars in them and I think that's one of the reasons why if you are ever travelling, you're likely to see something branded TripAdvisor along the way and a TripAdvisor rated.

And we level that, we don't even try to measure the marketing efficiency of those..

Your next question comes from the line of Chris Merwin from Barclays. Your line is open..

Great thank you. I just had a couple of quick one. So in terms of the mechanics around instant book, my understanding is that currently your partners take a fixed commission, I guess kind of certain share of page, just based on that commission.

Over time, can you talk about the potential for instant book to being involved into an auction process? Similar they have meta works today, and I know you can't talk about alliance in any deals of the terms but how long my debt shape to for an auction, that should be become reality? And then just secondly, I think maybe you want reasons why your partners get comfortable with instant book and correct me if me I'm wrong, because they get to see other brand and any ethical booking process I assume because they can let it start to repeat customer economics over time, obviously that booking is still being made through Trip, so what can you tell us so far about which part you might be occurring the benefit than it's repeat economics over time? Thanks..

Certainly, so as part of the signup process for an independent hotel on the website, there is two commission rates, 12% and 15%, and here often the hotel sort of guarantee share of either 25% or 50% sort of share of their, we call it, eligible impression of the post visiting the page basically.

It's part of our sort of sales pitch that if you signup, this is what we promise you, it will be a lot more of in that depending on a lot of different factors.

And so going forward that independent who has signed up even at a 15% commission, TripAdvisor has, once the booking.com deal is live or even today with our current OTA partners, we make a choice at run time that that is beyond their share guarantee, do I wish to show and get a room as an OTA for that hotel or the hotel itself or [indiscernible] as an OTA for the hotel, so for any particular property, I might already have three or more participants in instant book.

We make the decision based on who to show once the share guarantee has been met, we make the decision based upon what we think is going to be the best answer for the consumer that's usually going to be the best answer for TripAdvisor.

What I mean is we have to evaluate how good the content is, the quality of the room description because the consumer wants to see that in order to hit the book button. We also care a lot about the price, and so whoever has a cheaper price is also going to have a higher conversion rate on our side, and then finally the commission does come into play.

You can imagine an extreme of somebody offering to pay a ridiculous 20% commission for a property, while somebody else is offering to pay a 12%.

If other things are equal then TripAdvisor is going to give the 20% commission, and that's kind of maximizes us and just no harm to the consumer because as I said all the other aspects of the flow were equivalent.

With the current OTAs with Priceline -- with different brands that we have with Priceline Group, with eventually multiple brands from the Priceline Group, I think we'll have quite a choice as to who could fulfill the offer and we'll look at it from mostly with the best experience for the consumer. And secondarily, who has a good commission to us.

You should interpret that as at the end of the day that combination is probably going to maximize TripAdvisor's revenue because I care the most about how many people are booking, and if I may go a little bit less commission per booking, but more people convert, we're going to make money, consumers are going to be happy, and that's the way we're looking forward.

To the second part of the question, sort of -- if I understand correctly who gets the benefit of the brand placement in the booking flow? From our perspective it's too early to tell.

We just haven't been in the marketplace long enough on enough of our platforms in order to see who might get -- and I'm not even sure how carefully I could measure, but I'm not sure who is going to get that the second trip which tends not to happen the next day or even the next week.

So we want to be very clear with all of our partners and certainly our travelers that is to get a room or that is to book enough term that is powering or Marriott that is powering this transaction.

The other folks that we're going to go to when you want to make a change there would be -- owner of the property they can answer the question faster than we can or if the traveler has one. And if it's a second time booking for a similar property, we're certainly okay if that ends up being supplier direct.

Our biggest opportunity is the traveler coming to our site enjoys the reviews, sees the room tips, looks at a dozen different candid photos, and says, yes, this is the property I'm looking for, I like the price maybe I go down the instant book flow, I'd select the type of room, but I'm not ready to book right now, and the next day or later in the week, when they are sure they want to take that trip, sure they want to stay in that property, they come back to TripAdvisor to finish the booking.

And if we can close that leak, just that one piece of the leak, phenomenal huge rate on TripAdvisor even if the partner that powers the transaction, the Marriott or the Priceline wins the second booking because they have a great remarketing than we targeting to be campaign.

Getting that first booking for us is -- I would say I want both but getting that first booking for us by changing the mindset of the traveler that's the biggest win, that we see over the next couple years..

Your next question comes from the line Tom White from Macquarie. Your line is open..

Great, thanks for taking my question. Maybe another one on the TV marketing pause? I guess I just want to make sure I can understand or sort of reconcile, Steve, your comments about the benefits of educating consumers about instant booking and the ability to book on the site.

I guess, is what you're saying that just sort of the share presence of more instant booking visibility. Thanks to the Priceline deal and some of these other deals.

That that's enough you think to educate consumers or I mean have you done studies or so what gives you confidence to throw that will be enough to kind of change travelers booking habits that have been probably pretty well entrenched sort of the way they book over the past 10 to 15 years? Thanks..

So I wouldn't claim yet that I have an answer as to how we can quickly change consumers' mindsets. I look back and say, TripAdvisor hasn't really had an awareness issue in most of our markets.

TV does a great job growing awareness, so we see how it worked for so many other companies, but the companies have tended to be at a different awareness stage, at different growth stage and so we went forward with TV knowing that it wasn't to move our awareness numbers, but to educate folks on that one could now book on TripAdvisor.

We did the surveys on the TV and certainly the book message stood out, but it was harder to see the behavior change on TripAdvisor. We saw more traffic. We made more money, but it was softer to draw the conclusion that it got people to actually complete a transaction to book on TripAdvisor.

So it would be in my mind no harm whatsoever and configuring a TV campaign that has the same message or I'd like to be creative but the same we're different creative, something wrong with that couldn't possibly hurt, but in the judgment call of is that where we want to push on our branding and marketing for next year, we made the judgment call, because we have to make this one in advance, so if there is no, we're going to pause.

I used the word pause carefully because I'm not saying we wouldn't change our mind, we wouldn't do something else in 2017 or maybe the late 2016, but the notion is that's not -- it's a big dollar, it's not what we're going to spend those dollars on in '16.

When we look at it from -- wow, you have a 100 plus million travelers on the site in a month, 150 million, 175 million, surely that's a big enough sample size to work on the educational message, and recently we've been doing quite a bit on that.

So if you go to the site, many of our devices not all, you will see a much stronger, you can book on TripAdvisor, and buying with the experience of [indiscernible] buzzer button, hundreds of thousands of property is plus the global rollout, plus the message of other brand communications that are different/cheaper than TV, you think that there is as I started with a judgment call, there something kind of wrong with the TV, but we think we can achieve our goals better in terms of training booked by spending our time and some of our dollars..

Okay. Thanks for the color. And I just wanted to say thank you to Julie and good luck on your next chapter..

Great. Thank you very much..

Your next question comes from the line of Heath Terry from Goldman Sachs. Your line is open..

Great, thank you.

On the topic of the hotel shopper data restatement, is it fair to say, based on your comments Steve that this is largely a restatement around buy related traffic and not any sort of change to the way that you're [indiscernible] existing users? And then also if you could us a sense with the numbers changing sort of what the underlying numbers look like? What percentage of your traffic still is hotel shopper and how much did that change? Was the buyer traffic overly related to hotel shoppers versus everything else?.

Sure. Yes, to the best of my knowledge, these restatements that I looked, out for hotel shoppers was entirely bought or fix user related. I do not believe it changed at all whether it was a hotel bought or a restaurant bought, they are all hitting us all the times.

So I look at the percentage of visitors to TripAdvisor and I still put it at roughly half somewhere in the hotel half somewhere looking at hotels. It's a rough approximation. It is different by device, but I'm trying to give some color on the average and there was no change in any nothing else under the covers there..

Your next question comes from the line Douglas Anmuth from JP Morgan..

Hi this is Bailey in for Douglas. I'm going back to Priceline real fast, other than price what types of change and does it have Priceline on IB and what was the impact or reaction being then on the other hotel or OTAs that are considering..

So Priceline has been a great partner, we've been talking to them and every other OTA for quite some time to any instant book, many of them have Priceline and Expedia were the two noble ones that had decline and I think Priceline -- again feel free to ask them, but in ongoing discussions, each made some compromises and we found a common ground that allows them to get what they are looking for out of the relationship which is a branded experience and make sure customers know that Priceline is powering the booking.

We are perfectly happy with that. They get growing transactions from our platform and we of course get the instant book rolling out globally. We get the improved content from our display and hopefully the improve conversion that comes with it. We can continue to show other OTAs and other suppliers in our store.

You look forward to the remaining hotel brands joining in instant book. We look forward to having more instant book options across the board. We continue to signup independent hotels at a decent pace.

We're building our own content management system as I mentioned to make sure those properties are represented on our site with excellent content and strong pricing. And it's like what we've done with meta.

We're building out really strong marketplace globally for lots of different folks, hotels or the intermediaries to be able to power the bookings, so folks that choose to book on TripAdvisor. I take the opportunity to talk about instant booking and meta and I will always referred to it as bookings and meta. We love our instant book strategy.

You heard me talk about it over and over, but I don't want anyone to think that meta is going away. Our messaging of plan compared and book plan that's the review of it.

The content has the great decision support information that we have in order to help the consumer and find exactly where they want to go, where they want to stay, what they want to do to have the great trip, that's the plan message, the compare is, everyone is looking for the best price, showing A price on TripAdvisor and instant book is one of the options, and showing the price that is available elsewhere on the web from all the other players that the travelers web is part of that course into our message, and we expect to have that compare message for the forever future.

It's just part of our core positioning, and plan, compare and book, and we want hit the price of instant booking to offer a great price, terrific content, the trusted brand of TripAdvisor as to why you should click and seeing the content and the brand provided by [what it was] actually doing, powering the booking for us the hotel itself for the high quality travel agent like Priceline or any of the other OTAs that are in store.

It kind of completes that part of the purchase and then the rest of the TripAdvisor value proposition with which we're still very excited about, what we classify into our other businesses, few attractions and the restaurants and other ways that are going to make a trip incredibly powerful, but it's instant booking and meta has that core monetization vehicle for hotels.

It's restaurants and attractions in other services on the trip, it's vacation rentals and alternative lodging in general that helps people well, when a hotel isn't quite what you're looking for. We have these other options.

What are the urban inventories that we're sourcing through on a vacation rental, standard alternative lodging like the traditional vacation rental, those are all part of our store and it's our job to challenge our opportunity to present them at the right time to other travelers that are on our site. All in all, it's a pretty complete picture.

It doesn't have everything, but when we look at the things that travelers are most interested, we would like to think the best offering in the plan space. We have a great offering in the compare space. We're learning how to have the best offering the book space. We don't have it yet, but we're getting that.

And we have the best offering in the in destination market for attractions and restaurants globally. So it's a pretty good coverage of that lifecycle and I guess the question started with Priceline and so Priceline really helps us deliver on that book component..

Alright. With that I think we are stood out of time. So let me say, thank you very much. We are moving fast. We are making great progress on these long-term goals, and I understand really fortunate to have a great team on the job.

So to all of our employees throughout the entire TripAdvisor family thank you again and again for your terrific work, for your hard work. It's showing results. I'm really proud and I look forward to updating everyone again on the next quarter. Thank you..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect..