Attached files
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| 8-K - FORM 8-K - Expedia Group, Inc. | d259659d8k.htm |
 Investor
Presentation (NASDAQ: TRIP)
Q4 2011
Exhibit 99.1 |
 Safe Harbor
Statement 2
Forward-Looking Statements.
Non-GAAP Measures.
Industry / Market Data.
Additional Information about the TripAdvisor Spin-Off.
result of new information, future events or otherwise. Investors are cautioned not to
place undue reliance on forward-looking statements. prepared for other purposes. We
have not independently verified the data obtained from these sources and cannot assure you of the data’s accuracy or completeness.
participants may be included in other relevant documents to be filed with the SEC.
supplement, not substitute for, GAAP comparable measures. Investors are urged to consider
carefully the comparable GAAP measures and reconciliations.
This presentation contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are not
historical facts or guarantees of future performance and are based on management's assumptions and expectations as of November 21, 2011, which are
inherently subject to difficult to predict uncertainties, risks and changes in
circumstances. The use of words such as "intends,” “expects,” “may,” “believes,” “should,” “seeks,”
“intends,” “plans,” “potential,” “will,”
“projects,” “estimates,” “anticipates” or similar expressions generally identify forward-looking statements. However, these words are not
the exclusive means of identifying such statements, and any statements that refer to
expectations, beliefs, plans, predictions, projections, forecasts, objectives, assumptions,
models, illustrations, profiles or other characterizations of future events or circumstances
are forward-looking statements, including w/o limitation statements relating to future
revenues, expenses, margins, performance, profitability, cash flows, net income/(loss),
earnings per share, growth rates and other measures of results of operations (such as,
among others, EBITDA or adjusted EBITDA) and future growth prospects for TripAdvisor’s
business. Actual results and the timing and outcome of events may differ materially
from those expressed or implied in the forward-looking statements for a variety of
reasons, including, among others, those discussed in the “Risk Factors” section of the
registration statement on Form S-4 (File No. 333-175828-1), which included a proxy
statement for Expedia, Inc. (“Expedia”) and prospectus for Expedia and TripAdvisor (the
“Prospectus/Proxy Statement”). Except as required by law, we undertake
no obligation to update any forward-looking or other statements in this presentation, whether as a
Reconciliations to GAAP measures of non-GAAP measures included in this presentation are
included in Appendix. These measures are intended to
Industry and market data used in this presentation have been obtained from industry
publications and sources as well as from research reports As previously announced, Expedia intends to spin-off its TripAdvisor Media Group
businesses into a separate publicly-traded company, TripAdvisor, Inc. The
spin-off is subject to various conditions, including the requirement that the spin-off be approved by the affirmative vote of
holders of a majority of the outstanding shares of Expedia common stock, other than shares
owned or controlled by Expedia management. In connection with the proposed
spin-off, Expedia, Inc. and TripAdvisor, Inc. have filed a Prospectus/Proxy Statement with
the SEC. Stockholders of Expedia and investors are urged to read the Prospectus/Proxy
Statement because it contains important information about Expedia, TripAdvisor and the
proposed spin-off transaction and related matters. Investors and security holders can
obtain free copies of the Prospectus/Proxy Statement by contacting Investor Relations,
Expedia, 333 108th Avenue N.E., Bellevue, Washington 98004 (Telephone: (425) 679-
3555). Investors and security holders can also obtain free copies of the Prospectus/Proxy
Statement and other documents filed by Expedia and TripAdvisor with the SEC at the
SEC’s web site
at In addition to the Prospectus/Proxy Statement, Expedia
files, and TripAdvisor will file following the spin-off, annual, quarterly and current
reports, proxy statements and other information with the SEC, each of which should be
available at the SEC’s web site at www.sec.gov. You may also read and copy any reports,
statements and other information filed by Expedia or TripAdvisor at the SEC public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-
800-SEC-0330 for further information. Expedia and its directors, executive
officers and certain members of management and other employees may be deemed to be
participants in the solicitation of proxies of Expedia stockholders to approve the proposed
spin-off transaction, which transaction will be considered for approval by Expedia
stockholders at the 2011 Annual Meeting of Stockholders on December 6, 2011. Directors,
executive officers and certain members of management and other employees of Expedia may
have interests in the transaction as described in the Prospectus/Proxy Statement, including as a result of current holdings of options, restricted share units or
shares of Expedia stock and future holdings of options, restricted share units or shares of
TripAdvisor stock, which will be impacted in the transaction. The Prospectus/Proxy
Statement, first mailed to Expedia stockholders on or around November 3, 2011, contains
information regarding Expedia and the equity interests of its directors and officers
who may be deemed participants in the solicitation of proxies is contained in the
Prospectus/Proxy Statement. Additional information regarding the interests of such potential
www.sec.gov.
|
 TRIPADVISOR
OVERVIEW STEPHEN KAUFER, CO-FOUNDER, PRESIDENT AND CEO
3
TripAdvisor and the TripAdvisor logo are trademarks or registered trademarks of TripAdvisor
LLC in the U.S. and/or other countries. All other trademarks are the property of their
respective owners. (c) 2011 TripAdvisor LLC. All rights reserved.
|
 It all started
when… 4
Iberostar Tucan Hotel, Playa del Carmen |
 Investment
Highlights Leading online travel media platform
•
44M monthly uniques
(1)
Huge and growing market opportunity
•
$39B+
(2)
spent on travel advertising each year
Definitive resource for travelers and critical partner for merchants
•
Over 50M reviews and opinions; over 500,000 hotels featured
Powerful network effects
•
Scale generates a richer experience for all, attracts new consumers and provides great
defensibility Compelling and differentiated business model
•
Rich user-generated content creates valuable monetization opportunities and efficient cost
structure 5
(1)
comScore, September 2011
(2)
IDC, Worldwide New Media Market Model, August 2011 |
 TripAdvisor by
the Numbers 6
Scaled, growing, profitable –
leading online travel media platform
Market
opportunity
160,000+
Attractions
57,000,000+
Facebook connections
50,000,000+
Reviews and opinions
520,000+
Hotels
715,000+
Restaurants
8,000,000+
Candid photos
Destinations
93,000+
10,000,000+
Mobile downloads
The leading
travel media
platform
Financial
$485M
2010 Revenue
(2)
$261M
2010 Adjusted EBITDA
(2)
2006-2010 revenue CAGR
(3)
46%
$294,000,000,000+
2011E
Travel
e-commerce
spend
(1)
$39,000,000,000+
2011E
Travel
ad
spend
(1)
(1)
IDC, Worldwide New Media Market Model, August 2011
(2)
Reflects TripAdvisor Holdings, LLC Combined Results of Operations as disclosed in Annex E of
Amendment No. 4 to Expedia, Inc. Form S-4 filed November 1, 2011 with the SEC. Revenue includes intercompany revenues from
Expedia, Inc. Adjusted EBITDA is defined as Operating Income attributed to TripAdvisor
Holdings, LLC plus: (1) depreciation of property and equipment, including internal use software and website development; (2) amortization
of intangible assets; (3) stock-based compensation; and (4) non-recurring expenses
incurred to effect the spin-off during the six month ended June 30, 2011
(3)
Reflects compound annual growth of segment reported revenue as disclosed in Expedia, Inc. Form
10-K filings with the SEC |
 Travel: Huge
Market, Underpenetrated Online 7
Online
travel
44%
All other
e-commerce
56%
2011 Global
eCommerce
market size:
$673B
11%
17%
3%
10%
Example OTA
Commission
(3)
Online
Offline
2011E Online travel spend
($B)
2010-2012E Online
travel spend CAGR
(1)
IDC, Worldwide New Media Market Model, August 2011
(2)
PhoCusWright U.S. Online Travel overview, Eleventh edition; PhoCusWright European Online Travel
Overview, Sixth Edition; PhoCusWright APAC Online Travel Overview, Fourth Edition (3)
Example OTA commission is Orbitz Worldwide’s, based on take rates derived from
Orbitz Worldwide’s 2010 Form 10-K. 44% Travel
~$300B
Offline:
62%
Online:
38%
Offline:
84%
Online:
16%
Total 2011E bookings:
$875B
(2)
Travel 2011E ad spend:
$39B+
(1)
(2011E)
Travel
nearly
half
of
global
e-commerce
(1)
Online hotel bookings growing faster, more
profitable
(2)
Online travel –
US / Europe maturing while
APAC
/
LATM
growing
fast
(2)
Travel ad spend is large and
underpenetrated online
$149
$120
$55
$11
US
EUR
APAC
LATM
6%
3%
15%
32%
US
EUR
APAC
LATM
76%
62%
24%
38%
Hotel / Other
Air |
 Most Important
Information Influencing $800B+ of Travel Spend (1)
8
Word of mouth content is most important
in
influencing
purchasing
decisions
(2)
76%
49%
40%
37%
35%
13%
15%
16%
17%
19%
21%
25%
27%
29%
30%
Recommendations
from people I know
Customer
Reviews
Friend
recommendations
98% of participants found TripAdvisor’s hotel
reviews
to
accurately
represent
the
experience
(3)
(2)
Nielsen, Trends in Advertising Spend and Effectiveness, June 2011
User-generated
photos
(3)
PhoCusWright, custom report, July 2011
Consumer opinions
posted online
Emails I signed up for
Editorial content
Brand websites
Ads in newspapers
Ads on TV
Ads in radio
Ads in magazines
Ads served in search
engine results
Online video ads
Products shown
embedded in TV
Online banner ads
Ads on social networks
Ads on mobile devices
(1)
PhoCusWright U.S. Online Travel overview, Eleventh edition; PhoCusWright European Online Travel
Overview, Sixth Edition; PhoCusWright APAC Online Travel Overview, Fourth Edition
% of respondents who “trust completely” or “trust somewhat” a
source |
 Significant
Network Effects and Economies of Scale 9
Scale drives content generation
Critical source of customers for
suppliers
Audience
High monetization enables efficient
customer acquisition
Reviewers want
access to broadest
audience
A source for a very
high % of client leads.
Scale generates
higher prices
Breadth of information
means majority of
users find the content
they need
Continues to invest
in ROI-positive
customer growth
Over 50M
users and
opinions |
 Strong and
Differentiated Competitive Position 10
Search
providers
OTAs
Other travel
media
Other review
services
High traffic
Rich content
TripAdvisor
position
Depth of reviews
drive user
experience
TripAdvisor is a
mission critical
supplier
TripAdvisor has
significantly greater
reach/scale
Depth and breadth
of travel-focused
content
The leading online
travel media
platform |
 TripAdvisor’s Business Model
Business listing
Lead generation
Display ad /
sponsorship
Candid photos
Search filtering
Room tips
Tips from friends
Review summary
Display ad /
Cost per click ad
Friend experiences
11
Detailed reviews
Consumer Value
Business Value |
 Wisdom of
Friends – Ability to Connect Improves Experience
12
Deep social
integration
heightens the
experience
Since launch, 57M
people have been
instantly
personalized
Facebook users
are more engaged
on the site
Facebook users
are 2x more likely
to contribute full
reviews
Higher conversion
and monetization |
 31,419
27,941
15,347
14,224
12,188
11,109
10,576
10,378
9,232
8,411
8,355
44,461
TripAdvisor Sites
Booking.com
Expedia Sites
Yahoo! Travel
Orbitz Worldwide
Travelocity
Qunar.com
Ctrip.com
Hotels.com
Kayak.com
Groupe SNCF
Priceline
Leading Scale and Global Reach
13
Monthly
unique
visitors
(‘000s)
–
branded
websites
Travel Website Landscape
Global reach
30
countries
in
21
languages
Brand
Direct navigation
Organic search
Paid search
Partners / referrals
Highly efficient sources of traffic
Source: comScore, September 2011 |
 Content
Syndication 14
A powerful
extension of
TripAdvisor
30,000 partner
sites use Trip-
Advisor content
Provides access
to
150M monthly
uniques
Syndication makes
TripAdvisor the
de-facto standard
for travel review
information |
 TripAdvisor
Media Group 15
TripAdvisor branded sites
44M monthly uniques
(1)
TripAdvisor Media Group
61M monthly uniques
(1)
(1)
comScore Media Metrix, September 2011 |
 Key Areas of
Investment and Growth 16
China
Vacation rentals
Mobile
•
World’s 2
nd
largest economy after
the US
•
1B hours spent online per day,
twice the amount of time in
the
U.S.
(3)
•
Expect more than 650M internet
users
by
2015
–
but
still
less
than
50% penetration
(3)
•
Widely varied travel pricing
•
An $85B vacation rental market in
2010 and growing
(2)
•
Highly fragmented and inefficient
market
•
Extending the leading TripAdvisor
online travel platform
•
Mobile travel spend expected to
be over $2B by 2014, growing
40+% year-over-year
(1)
•
Mobile monetization still early
•
Travel is 4th largest category in
the Apple App store
New Platforms
New Geographies
New Products
IDC, Worldwide New Media Market Model, Aug 2011
Radius Global Market Research, Market Sizing Study, Nov 2011 (as cited in HomeAway prospectus)
Boston Consulting Group, The Internet’s New Billion: Digital Consumers in Brazil, Russia,
India, China and Indonesia, Sept 2010 (1)
(2)
(3) |
 TripAdvisor
Strategy: Mobile Adoption 17
Early success:
10M+
downloads
Global:
Available
in 20 languages
Depth:
Multiple reviews on
hundreds of
activities in each city
Frictionless:
GPS and direct
bookings maximize
functionality
Breadth:
Information on
thousands of
activities, hotels,
transport
Mobile channel is additive and complementary to the web experience
|
 What TripAdvisor
is Doing in China 18
Purchased Kuxun:
#2 metasearch player in
China
Built Daodao from scratch:
launched in 2008 |
 Vacation
Rentals 19
A new growth
opportunity
Over 200,000
vacation rental
listings
Uniquely leverages
platform to target
travellers searching
for hotels
Acquired FlipKey
and Holiday Lettings
Partnered with
Interhome, Stayz,
Toprural and AKENA |
 We Have a
Winning Culture . . . 20
Speed wins
•
Rapid iteration and product development cycle
Recruit the best and brightest . . . globally
•
Top engineering talent and robust training programs
Say thank you
•
Recognized by Boston Globe’s “Top Places to Work”
(2010, 2011)
And give back
•
2% of operating profit
(1)
allocated to employee sponsored charities that help
…
(1)
Represents operating income before amortization of intangible assets
those
less
fortunate |
 Led by an
Experienced Management Team 21
Experienced management with proven ability to execute
Steve Kaufer
Chief Executive Officer and Co-Founder
(11 years)
Barbara Messing
Chief Marketing Officer
(Joined in 2011, formerly at Hotwire)
Andy Gelfond
Vice President, Engineering
(7 years)
Julie Bradley
Chief Financial Officer
(Joined in 2011)
Marc Charron
Managing Director, APAC
(5 years)
Robin Ingle
Senior Vice President, Advertising Sales
(10 years)
Christine Petersen
President, TripAdvisor for Business
(7 years)
Adam Medros
Vice President, Global Product
(7 years)
Eric Rosenzweig
Senior Vice President,
Strategic Development and Sales
(6 years)
Bryan Saltzburg
General Manager, New Initiatives
(3 years)
Tyler Young
Vice President,
Finance and Administration
(7 years)
Seth Kalvert
Senior Vice President,
General Counsel and Secretary
(Joined in 2011, formerly at Expedia & IAC) |
 FINANCIAL
OVERVIEW JULIE BRADLEY, CFO
22 |
 TripAdvisor
Financial Highlights 23
Compelling business
model
•
Diversified revenue streams globally
•
Differentiated content provides natural search advantage
Highly profitable and
cash flow generative
Rapid growth
Highly scalable;
capital efficient
•
Low fixed costs
•
Low cost to acquire customers
•
Free user generated content
•
Strong margins
•
High cash flow conversion
•
Low capital expenditures
•
Among the fastest growing Internet businesses
•
Long-term revenue growth driven by expanding traffic and
user-generated content –
the network effect |
 Track Record of
Growth and Profitability 24
Revenue
(
¹
)
($M)
Adjusted EBITDA
(1)
($M)
y/y
growth
47% 18%
38%
NA
34%
Adj. EBITDA
Margin
49%
56%
54%
54%
54%
(1)
Reflects TripAdvisor Holdings, LLC Combined Results of Operations as disclosed in Annex E of
Amendment No. 4 to Expedia, Inc. Form S-4 filed November 1, 2011 with the SEC. Revenue includes intercompany revenues
from
Expedia,
Inc.
Adjusted
EBITDA
is
defined
as
Operating
Income
attributed
to
TripAdvisor
Holdings,
LLC
plus:
(1)
depreciation
of
property
and
equipment,
including
internal
use
software
and
website
development;
(2)
amortization of intangible assets; (3) stock-based compensation; and (4) non-recurring
expenses incurred to effect the spin-off during the six month ended June 30, 2011
$298
$352
$486
$239
$318
2008
2009
2010
Through
Q2'10
Through
Q2'11
$147
$197
$261
$141
$175
2008
2009
2010
Through
Q2'10
Through
Q2'11 |
 Robust
Historical Growth and Pattern of Seasonality 25
TripAdvisor Media Group Segment Revenue by Quarter ($M)1
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
q/q growth
rate
10%
8%
(27%)
39%
5%
8%
(18%)
43%
10%
11%
(23%)
38%
14%
7%
y/y growth:
+14%
+14%
+29%
+33%
+39%
+43%
+34%
+30%
+35%
+30%
+19%
1
Reflects segment revenue as reflected in Expedia 10-K and 10-Q filings. Includes
Expedia intersegment revenue and does not adjust for separation. $0
$25
$50
$75
$100
$125
$150
$175
$200
$225
2008
2009
2010
2011 |
 Increasing
Revenue Diversification 26
Display
13%
CPC
87%
Display
14%
CPC
86%
Subscription /
Other
6%
Display
15%
CPC
79%
2008
2009
2010
Note: Reflects segment data as disclosed in Expedia 10-K and 10-Q filings. Includes
Expedia intersegment revenue and does not adjust for separation. Revenue by
geography $298M
$352M
$485M
US
82%
UK
8%
Rest of world
10%
US
62%
UK
14%
Rest of world
24%
US
70%
UK
12%
Rest of world
18% |
 Illustrative
Post-Spin Operating Model 27
•
Changes to the Expedia customer relationship
•
Standalone public company costs
•
User experience enhancement initiatives (e.g., site redesign / de-monetization)
•
Growth investments (e.g., China, mobile, vacation rentals)
•
Sales and marketing spend (e.g., branding and traffic acquisition)
COGS
2%
S&M
31%
-
35%
T&C
8%-9%
G&A
10% -
12%
Adjusted
EBITDA
42%
-
47%
Illustrative post-spin business profile (annual basis)
Key impacts and initiatives
Notes: Adjusted EBITDA is defined as Operating Income attributed to TripAdvisor Holdings, LLC
plus: (1) depreciation of property and equipment, including internal use software and website development; (2) amortization of
intangible assets; (3) stock-based compensation; and (4) non-recurring expenses
incurred to effect the spin-off during the six month ended June 30, 2011
|
 Strong Balance
Sheet 1
28
TripAdvisor Holdings LLC ($M, except per share amounts)
Historical (as of
6/30/2011)
Pro forma
adjustments
Pro forma (as
of 6/30/2011)
Cash and cash equivalents
$112
$32
$144
Short-term investments
21
-
21
Receivable from Expedia, net
75
(75)
-
Other current assets
91
-
91
Total current assets
298
(43)
256
Other non-current assets
39
3
42
Intangible assets, net
48
-
48
Goodwill
466
-
466
Total assets
$851
($40)
$811
Current liabilities
$161
$20
$181
Long-term debt
-
380
380
Deferred income taxes, net
30
-
30
Other long-term liabilities
12
-
12
Total liabilities
587
Invested capital
648
(648)
-
Common shares, $0.001 par value, 1,600,000 authorized; 123,783 issued and
outstanding on a pro-forma basis
-
124
124
Class B common stock, $0.001 par value, 400,000 authorized; 12,800 issued and
outstanding on a pro-forma basis
-
13
13
Additional paid-in capital
-
208
208
Accumulated other comprehensive loss
(1)
-
(1)
Total liabilities and equity
$851
($40)
$811
Key highlights
Significant cash
flow generation
Low working
capital usage
Strong coverage of
debt obligations
1
As set forth in the prospectus |
 Operational
Drivers 29
•
Number of reviews
•
Natural search rankings
•
Engagement / time spent on site
•
Seasonality
Engagement
Reach
Scalability
•
Advertising (CPC, CPM)
•
Syndication / licensing
•
Members
•
Traffic
•
Listings
Monetization
•
Sales and marketing
•
Traffic acquisition
•
Engineering
•
International expansion
Product
Investments
•
Vacation rentals
•
Mobile
•
China |
 Spin
Transaction 30
•
Spin rationale
•
Value creation opportunity for both TripAdvisor and Expedia
•
Benefits of an enhanced equity currency and greater transparency
•
Businesses historically managed as independent entities
•
Create businesses that have a single business focus
•
Enhance the effectiveness of employee compensation structures
•
Key dates
•
Shareholder meeting on December 6th
•
Spin expected to be effective by end of year |
 CONCLUDING
REMARKS STEPHEN KAUFER, CO-FOUNDER, PRESIDENT AND CEO
31 |
 Investment
Highlights Leading online travel media platform
•
45M
monthly
uniques
(1)
Huge and growing market opportunity
•
$33B
(2)
spent
on
travel
advertising
each
year
Definitive resource for travelers and critical partner for merchants
•
Over 50M reviews and opinions; over 500,000 hotels featured
Powerful network effects
•
Scale generates a richer experience for all, attracts new consumers and provides great
defensibility Compelling and differentiated business model
•
Rich user-generated content creates valuable monetization opportunities and efficient cost
structure 32
(1)
comScore, September 2011
(2)
IDC, Worldwide New Media Market Model, August 2011 |
 APPENDIX
33 |
 Adjusted EBITDA
reconciliation 34
($ in thousands)
Six months ended
Year ended December 31,
June 30,
2008
2009
2010
2010
2011
Adjusted EBITDA
$146,626
$197,219
$260,963
$140,675
$174,494
Depreciation
of
property
and
equipment
(1)
5,022
9,330
12,871
5,678
8,616
OIBA
$141,604
$187,889
$248,092
$134,997
$165,878
Amortization of intangible assets
(11,161)
(13,806)
(14,609)
(6,242)
(3,249)
Stock-based compensation
(5,560)
(5,905)
(7,183)
(3,721)
(4,442)
Spin-off costs
(1,054)
GAAP Operating income
$124,883
$168,178
$226,300
$125,034
$157,133
Related-party interest income (expense), net
(4,035)
(978)
(241)
(148)
315
Other, net
(1,738)
(660)
(1,644)
(2,674)
1,422
Provision for income taxes
(46,788)
(64,325)
(85,461)
(44,723)
(57,389)
Net (income) loss attributable to noncontrolling
interest
49
212
(178)
(54)
(139)
Net income attributable to TripAdvisor Holdings, LLC
$72,371
$102,427
$138,776
$77,435
$101,342
(1)
Includes internal use software and website development
Source: Expedia S-4 amendment number 4 as filed with the SEC on November 1, 2011
|