TRIP Q4 2025 Earnings

Hello, and thank you for standing by. Welcome to TripAdvisor fourth quarter 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Angela White, Vice President of Investor Relations.

You may begin.

Thank you, Tawanda. Good morning, everyone, and welcome to TripAdvisor's fourth quarter and full year 2025 financial results call. Joining me today are Matt Goldberg, President and CEO, and Mike Noonan, CFO. Earlier this morning, we filed and made available our earnings release.

In that release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, February 12, 2026. TRIP Advisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements.

With that, I'll turn the call over to Matt.

Thanks, Angela, and good morning, everyone. We're pleased with our 2025 results, which reflected continued momentum in our experiences and European dining marketplace offerings, which are increasingly replacing the declines in our legacy meta-search and media offerings. We achieved record high revenue of $1.9 billion, a result of 10% revenue growth in experiences and 22% growth at the fork, offsetting legacy revenue declines of 8% in our hotels and other segments.

Group adjusted EBITDA was 319 million or 17% of revenue. TripAdvisor Group is fundamentally different today than it was three years ago. Our focus and investment are now deliberately centered on a large and growing marketplace opportunity, particularly in experiences rather than on constrained SEO dependent legacy offerings. This shift is changing the composition of our revenue and profit profile.

In 2025, our marketplace businesses represented 61% of group revenue and 35% of adjusted EBITDA. By contrast, in 2022, our legacy offerings generated 59% of revenue and all of the group's profit. In 2026, we expect this transition to advance further. Marketplace revenue is expected to deliver two-thirds of total group revenue and half of adjusted EBITDA.

And experiences on its own is expected to contribute more than 50% of our revenue and roughly 40% of our adjusted EBITDA, firmly establishing it as the group's primary value drive. Over the past year, we streamlined our corporate structure and made deliberate operational choices to concentrate on the areas of travel with the greatest long-term opportunity, grounded in our competitive advantages. As we enter 2026, our priorities are clear.

We'll extend our leadership position and experiences globally, leverage our differentiated assets to position ourselves for an AI-enabled future, and simplify our legacy offerings while we continue to evaluate strategic options across the portfolio to unlock shareholder value. As we concentrate the group more fully on becoming an experiences-first company, we're mindful that the fork has more limited strategic synergies with where we're headed. At the same time, it's growing fast, diversifying its revenue, expanding profitability, and innovating as the only dining marketplace in Europe operating at scale across both B2B and B2C.

We believe this is a uniquely valuable business with an attractive long-term growth profile, which may be underappreciated in our portfolio given the market activity we've seen around the dining category. As a result, we've decided to explore strategic alternatives for The Fork as part of our broader portfolio review. We view this as one potential path to creating additional capacity for meaningful capital return to shareholders, balanced with opportunities to invest further in our experiences strategy.

I'd like to spend most of my time today on experiences, our highest strategic priority, and the area where we believe we have the assets, track record, and teams to be the global leader. We have a proven business model with growing customer loyalty driving improving unit economics in a highly attractive market. We see a durable long-term position ahead thanks to tailwinds in consumer preferences and low online penetration.

The fragmented long-tail nature of the supply base and the critical role our unique brands play in smoothing the friction between customers and small operators. Over the next few years, the online portion of the experiences market is expected to grow by double digits, and our profitability and scale provides us the flexibility to invest in capturing even more share and accelerate our growth at attractive ROIs. We've achieved meaningful scale.

Our gross booking value, or GBV, is rapidly approaching $5 billion, with a majority of bookings coming from loyal repeat customers that spend more and increasingly returned to us through direct channels. We're driving this growth profitably as we expanded adjusted EBITDA margins and experiences to 10% in 2025 and see a clear path for healthy margin growth in the future. Last year, our bookings volume and GBV growth progressed quarter by quarter and we exited 2025 strong with 18% bookings growth and 16% GBV growth in Q4 profile that suggests we're accelerating, taking share in our core markets, and entering 2026 with momentum.

As we look forward, our priorities are to drive demand from a diverse set of channels, improve our product experience to lift conversion, and grow our supply base to attract new customers. Let me walk through each of these elements of our flywheel briefly, demand, product, and supply. We've made progress in our marketing efficiency, by coordinating our two brands to capture more demand at improving ROIs. Our operating model changes have increased the combined click share in our core US performance marketing channels, outpacing other players.

This year, we'll build on this playbook as we broaden our demand sources, expand investment in social media, and evolve our engagement with scaled strategic partners in AI, while continuing to lower our marketing spend as a percent of revenue. Our product teams are aggressively accelerating experimentation velocity, ending 2025 with more than double our testing volume versus the prior year. This lift has resulted in a meaningful lift to conversion, a critical driver of improving unit economics.

We drove higher conversion rates on the TripAdvisor point of sale quarter by quarter through last year and are now approaching the conversion rates of the Viator point of sale. As we move into 2026, We're sustaining that pace, leveraging AI, machine learning, and predictive modeling to optimize the user experience in areas like personalization, merchandising, and booking flexibility. Working with suppliers, we're also launching new tools to deliver the right price at the right time to travelers, benefiting both sides of the marketplace.

We're extending our supply coverage and quality across markets, leveraging the group's reach and customer signals. In 2025, we've grown supply in our core markets to more than 425,000 products from 70,000 suppliers, and our quality scores above 4.5 out of 5 stars are rising, up approximately 20% from last year. We'll continue to build on our supply scale advantage, focusing on relevance and conversion to attract new customers. We have a clear signal that our efforts are stimulating new demand, As we've added new supply, we continue to improve the all important rate to achieve the first booking and a strong mix of the new experiences are proving to be incremental.

For 2026, this all adds up to higher quality of supply, driving more travelers to more relevant experiences and increased revenue opportunities for our operators. Looking forward, repeat bookers will continue to be our largest and fastest growing cohort, which is especially important given the impact these loyal customers have on our marketing leverage and profitability. We also see opportunities to target new customers by capturing more of the global TAM.

This year, we'll build on our strengths by extending our marketing investment outside of our core U.S. point of sale, leveraging the power of both brands, localizing our storefronts for non-English native language customers, and adding locally relevant new supply across geographies and categories. Before turning to some commentary on our other segments, a quick word on how we'll continue to position ourselves for an AI-enabled future. Last quarter, we mentioned that we would rapidly launch an AI native MVP in Q4, and we did just that.

Our goal is simple. utilize the substantial data and content we have to make more relevant, personalized recommendations, better match to travel intent, and easier to book, whether in the planning phase or in destination. While it's too early to say how or when this AI innovation will change our financial profile, we were pleased that we could deploy smaller teams working at higher velocity to go live quickly with a fully AI-first approach so we can test and learn from the large audience at TripAdvisor.

And the early data indicates that our MVP is outperforming our prior onsite AI efforts across key customer engagement and conversion metrics. And of course, as we innovate on our own platforms, we're also taking advantage of direct relationship with key AI partners to experiment and learn across AI first search and agentic AI through licensing and product integration. The Viator app in ChatGPT is now live. as a proof of concept, joining our apps from TripAdvisor and The Fork.

This cooperation has reinforced the value of our brand, content, and data, and suggests the power of the trust and travel category insight we provide. It's also resulting in significant increases in traffic coming from LLMs with higher revenue per visitor, although it's still small relative to other traffic sources. We believe there's a big opportunity ahead to scale our partnerships further by helping travelers close the trust gap between using AI for discovery and planning and using AI to book with confidence.

Next, turning to the fork. As I mentioned earlier, over the last few years, we've strengthened our market position and financial profile. We diversified our revenue, improving our marketing efficiency and leveraging our R&D investments to increase profitability. In our more mature B2C offering, more than 80% of our bookings are coming from repeat diners.

And with nearly 80% of bookings coming through the mobile app, we're also bringing more diners direct, improving the unit economics and validating the long-term margin opportunity for this business at scale. In our higher growth B2B subscription offering, our improved product is delivering strong growth in premium plan adoption. which in turn is driving higher than average revenue per restaurant within our base of more than 50,000 restaurants, a clear sign of the value in the B2B product.

The Fork's innovation agenda is expanding reach and conversion gains through an engaging social feed while leveraging AI to improve search, matching, and conversion for diners and increasing productivity in customer service.

Finally, we'll continue to simplify our hotel and other offerings as we streamline the cost base while leveraging TripAdvisor's heritage of trusted travel guidance to support our strategic objectives. We continue to hold a unique position in this space, despite ongoing declines in fly-by visitors to our site due to the changing search landscape and the rise of AI overviews. Last year, a stable base of travelers shared nearly 80 million contributions on TripAdvisor, Impressive and consistent volumes despite the traffic headwinds we've endured.

This reflects a commitment of our most loyal travelers and the valuable proprietary data asset we'll deploy to advance our experiences and AI priorities. At the same time, we'll run our hotel and other legacy offerings for profit. We'll continue to align costs with revenue, evaluate strategic partnerships to stabilize and add scale, or potentially exit certain business lines. where we aren't driving value to our broad base of customers or partners, we'll continue to anchor on simplification.

We just kicked off 2026, but we've hit the ground running with energy, focus, and confidence in our plans. We couldn't be more excited about our experiences future, the innovation and execution across our teams, and the opportunity we see to catalyze shareholder value and drive sustainable long-term revenue growth and margin expansion ahead. With that, I'll turn the call over to Mike.

Thanks, Matt, and good morning. I'll start with a review of our financial performance and then provide more information on our outlook for 2026, each under our new segment reporting. As a reminder, all growth rates are relative to the comparable period in 2025, unless noted otherwise. Q4 consolidated revenue was $411 million, flat with a year ago and in line with our expectations.

Revenue growth and experiences and the fork came in at the high end of our guidance range, but was offset by slightly lower revenue performance in hotels and other. Full year consolidated revenue was $1.9 billion, or 3% growth. Q4 consolidated adjusted EBITDA was $45 million, or 11% of revenue, which was at the low end of our expectations. In the quarter, we saw an opportunity to capture incremental demand through increased marketing investment.

which we believe will benefit experiences growth in 2026. Full year consolidated adjusted EBITDA was 319 million, or 17% of revenue. Experiences and the fork both delivered adjusted EBITDA margin expansion that was more than offset by deleverage from hotels and others. Before discussing segment performance, I'd like to briefly review the key changes to our new segment reporting.

This morning, we posted materials with a detailed explanation of the changes and recast of historical periods. I would like to make a few key points on the changes. In the Viator and Experiences segment, revenue and all related metrics are the same as our prior Viator segment reporting. Adjusted EBITDA reflects all costs associated with the entirety of our Experiences business, including the fixed and variable costs for both the Viator and TripAdvisor points of sale.

Therefore, there is no longer inter-segment experiences revenue because the new experiences segment reflects the full P&L for both brands. In hotels and other segments, revenue and adjusted EBITDA includes all revenue and fixed and variable costs included in the prior brand TripAdvisor segment, less any revenue and costs associated with the TripAdvisor experiences point of sale. The fork segment remains unchanged. certain shared group costs are allocated across the segments consistent with our prior segment reporting approach now turn into the results in each segment for q4 in our experiences segment the number of experiences booked grew 18 which was at the high end of our expectations bookings growth in our owned and operated platforms viator and tripadvisor accelerated faster than the overall segment as we continue to lead into coordinated marketing investments across the brands, driving increased conversion.

In North America, our largest source market, we saw another quarter of sequential acceleration, a positive sign that our combined brand approach is delivering results. Booking's volume growth from third-party points of sale remained higher than overall segment, though it stepped down sequentially as we began lapping a period of high growth from third-party merchant partners that began scaling in Q4 2024. Experiences gross booking value, or GBV, grew 16% in Q4, a modest sequential acceleration to approximately $980 million.

We also saw faster GBV acceleration in our owned and operated points of sale. Q4 Experiences revenue grew 10%, to $204 million, a slight acceleration from 90% growth in Q3. The difference in growth between GBV, bookings volume, and revenue continues to be driven by higher bookings volume growth from third-party merchant partners.

However, this gap narrowed in Q4. Changes in FX positively impacted both GBV and revenue growth by approximately three percentage points. Revenue for the full year grew 10% to $924 million. We were pleased with a sequential acceleration in both GBV and bookings volume growth through the year, with GBV reaching more than 4.7 billion for the full year.

While the progression of total GBV demonstrates our meaningful scale in the category, we are also operating with consistently improving unit economics. Repeat bookings continue to be our fastest growing cohort, comprising the majority of our GBV and represent our most profitable customer base. We are managing our business prudently to balance growth and profitability progression while investing for long-term competitive positioning. The financial performance we delivered in 2025 and the momentum we are carrying into 2026 reflect the resiliency of our financial model and the strength of loyal Booker cohorts maturing at scale.

We believe the diversity of our brands and business model is an advantage and uniquely positions us for sustainable leadership in the category. Viator and TripAdvisor represent a significant majority of total segment GBV, with Viator contributing the bulk of GBV. Viator and TripAdvisor leverage a shared industry-leading supply asset that we merchandise to each audience and increasingly in a more personalized way through data and AI. We also leverage our supply to reach incremental audiences through third-party demand partners.

This set of distribution channels is diverse and growing fast. serving thousands of partners globally, extending our reach beyond our core markets. Importantly, bookings from third-party partners are immediately profitable on every transaction. In terms of channel mix on our owned and operated platforms, our direct channels are growing the fastest as a result of our investments in supply and product that convert first-time bookers to loyal repeat cohorts.

Importantly, unlike our legacy hotels offering where we faced SEO headwinds, SEO is not a large channel for us in experiences, and we expect this channel to contribute less than 10% of GBV as we exit 2026. We will continue to leverage both of our brands in the paid channels to attract high-intent new bookers while testing new paid channels that diversify our investment mix from SEM. Experiences adjusted even down Q4 was $15 million, or 7% of revenue, down from $29 million last year.

We anticipated the leverage in the quarter due to a known indirect tax benefit of approximately $4 million realized last year. Additionally, in service of our strategic focus increasing our execution velocity as we enter 2026, we made incremental investments in the quarter to accelerate bookings while continuing to invest in engineering, data, and AI to drive product and supply enhancements that we believe will benefit growth and competitive differentiation in the medium term.

For the full year, Experiences' adjusted EBITDA was $91 million, or a 10% margin, which we believe makes us the most profitable scaled Experiences platform in the world. This adjusted EBITDA profile demonstrates our financial discipline, exhibiting strong and improving unit economics while continuing to invest for future growth. Turning now to the fork. Revenue in Q4 was $57 million, or 18% growth and 9% growth in constant currency.

Total bookings in our B2C channel grew 9%. While a smaller contributor, our B2B subscription revenue grew at a much higher rate, driven by ongoing restaurant adoption of higher price premium plans, highlighting the strong value proposition the fork delivers to restaurants. On a full year basis, revenue was $221 million, representing 22% growth and 17% accounts of currency. Adjusted EBITDA at the fork in Q4 was $1 million, or 2% of revenue.

Approximately 150 basis points higher than last year, driven primarily by leverage in marketing and overall fixed costs. For the full year, adjusted EBITDA was 21 million, or a margin of 9%, a meaningful improvement of over 600 basis points driven by prudent fixed cost management while delivering strong revenue growth. In hotels and other, Q4 revenue was 151 million, a decline of 15%, which we anticipated given the impact of structural demand headwinds in this category.

As we mentioned last quarter, we're managing our hotels offerings to optimize for profitability rather than chase low margin revenue. As a result of product improvements we've made, hotel metal pricing continued to be strong due to the high quality travel intent our platform is delivering to our hotels and OTA partners. Structural traffic headwinds also continue to impact our media and advertising offerings with revenue declining 17% Q4 to 30 million.

For the full year, Hotels and other revenue declined 8% to $750 million. Adjusted EBITDA in the hotel and other category was nearly $30 million, or 20% of revenue. Lower personnel costs related to our cost savings program we announced last quarter partially offset the lower revenue stemming from SEO headwinds, which is driving a higher mix of revenue from paid channels. Full-year adjusted EBITDA was $207 million, or 28% of revenue.

Turning to consolidated expenses, starting with the quarter and for the full year. Cost of revenue in Q4 was 9% of revenue, up almost 200 basis points year-over-year due to the benefit of last year of indirect tax credit. For the full year, cost of revenue was 8% of revenue, flat with last year. Marketing costs in Q4 were 43% of revenue, higher by approximately 550 basis points year-over-year due to marketing investment and experiences.

For the full year, marketing was 42% of revenue, the leverage of approximately 200 basis points, which is largely driven by revenue headwinds at hotel and other. Importantly, experiences improved its marketing leverage for the full year by approximately 130 basis points. Personnel costs in Q4 were 32% of revenue, lower by approximately 300 basis points year-over-year. Lower personnel costs were largely driven by the previously announced gross cost savings program, primarily impacting hotels and other.

Absent share-based compensation, personnel cost as a percent of revenue was lower by approximately 200 basis points. For the full year, personnel costs were 30% of revenue, lower by approximately 200 basis points or 100 basis points absent share-based compensation. Technology costs in Q4 at 6% of revenue were approximately flat with last year. The full year technology costs were flat with last year as well.

G&A's percent of revenue in Q4 was approximately flat with last year. On a full year basis, G&A's percent of revenue was lower by a little over 100 basis points. Now, turning to cash and liquidity. For the full year, operating cash flow was $245 million and free cash flow was $163 million.

The increase in operating cash flow and free cash flow was driven primarily by changes in working capital as a result of lapping the impact of last year's non-recurring tax settlement. Total cash and cash equivalents at December 31st were approximately $1 billion. Our cash balance includes approximately $350 million in term loan B proceeds raised in the first quarter of 2025, which we plan to use to pay our outstanding convertible notes due in April of this year.

After taking into account deferred merchant payables of approximately $308 million and a $350 million term loan, our remaining excess cash balance is approximately $377 million. During the fourth quarter, we repurchased 3.3 million shares at an average cost per share of $15.14 for a total of 50 million. Over the course of the year, we have repurchased 6.1 million shares pursuant to our program, totaling approximately 90 million at an average price per share of $14.72.

Today, we have approximately 110 million remaining in our share of purchase authorization. Combined with the L-TRIP transaction earlier in the year, we've reduced share count by approximately 21% since the end of 2024. We believe that our current cash profile and net leverage levels reflect strong capital structure with appropriate cash for operating needs. Turning now to our outlook for 2026 and Q1.

For the full year, we expect modest consolidated revenue growth, which reflects the ongoing mixed shift we are driving towards our growth marketplace businesses. Our marketplace growth, which we believe is outpacing the overall travel market and the category growth rates where we operate, continues to be offset by structural traffic headwinds impacting our legacy hotels and media advertising business. We expect the mix of our marketplace businesses to continue to grow meaningfully and represent approximately two-thirds of our consolidated revenue as we exit 2026.

Experiences revenue alone is expected to comprise over half of our consolidated revenue. In addition, we expect quarterly performance throughout 2026 to reflect higher seasonality trends that are inherent in scale travel marketplace businesses as experiences and the fork become a larger portion of our consolidated revenue. Now, some brief commentary on each of the segments for the full year 2026. Starting with experiences.

We expect accelerating growth in bookings, GBV, and revenue in our Viator and Turbovisor points of sale and slowing growth in our 3P points of sale as we continue to lap the steep ramp in this channel. As a result of this mix shift, we expect approximately flat bookings volume growth in the year-over-year for this segment. We expect GBV and revenue growth to accelerate with revenue growth in the low teens.

Importantly, we expect to exit the year at a higher revenue growth rate relative to the start of the year as combined marketing, product, and supply efforts gain momentum. At the fork, we expect revenue growth in the low to mid-teens. This growth rate reflects solid volume-driven bookings growth in the B2C business and healthy expansion in our premium software, driving B2B growth above 20%. Segment growth expectations include an estimated currency benefit of approximately 400 basis points on current rates.

In Hotels & Other, we have taken a prudent approach based on the more pronounced trends we observed in the second half of last year. As a result, our current expectations are for mid- to high-teens revenue declines, largely driven by SEO traffic headwinds, and our focus on maintaining consistent ROIs in the paid channels within Hotel Meta. Our hotel metal performance is lapping a difficult comp in the first half of this year as we observed strong pricing last year.

By the second half of the year, we expect to see some stabilization in segment revenue declines as we lap easier comps. Turning to consolidated EBITDA, we expect to deliver flat to modest margin expansion alongside mid-single-digit growth EBITDA growth. Driven by our marketplace businesses and the year-in-year impact from our cost savings program we announced on our last call, offsetting anticipated declines in our hotels and other segments. We expect our marketplace businesses to contribute approximately 50% of our overall EBITDA, up from 35% in 2025, with experiences adjusted EBITDA alone expected to contribute approximately 40% of the total.

On a segment basis, for the full year adjusted EBITDA, in experiences, we expect margins to expand between 300 and 400 basis points, which implies healthy adjusted EBITDA growth, primarily due to greater market efficiencies driven by strong repeat cohorts and by operating our two brands in a more coordinated manner. Adjusted EBITDA will be back halfway due to the typical seasonality in marketing investment in Q1 relative to large seasonal travel period in Q3.

At the fork, we expect to deliver margin expansion between 200 and 300 basis points, primarily due to more efficient marketing mix and continued fixed cost leverage.

Finally, in hotels and other, We expect adjusted EBITDA margin to decline by between 150 and 250 basis points as we continue to manage this business on both variable and fixed costs despite anticipated revenue declines. Turning now to our outlook for Q1, we expect consolidated revenue to be down by 3% to 5% year-over-year. Despite continued growth in our marketplace businesses, anticipated declines in our legacy offering pressure overall growth In particular, given that Q1 is seasonally low revenue in our marketplace offerings, and therefore it's waiting on consolidation, consolidated revenue is lower.

However, we expect to see consolidated revenue acceleration throughout the year as our marketplace businesses continue to increase their share of group revenue mix. On a segment basis, we expect experiences items growth in the low teens, which is due to the lapping of strong 3P growth last year. despite solid growth in our Viator and TripAdvisor points of sale. Revenue is expected to accelerate by approximately 1 to 2% sequentially, in part due to the aforementioned investment we made in Q4.

We expect revenue growth at the fork of between 20 and 22%, which includes a currency benefit of approximately 12 percentage points. We expect hotels and other declines of approximately 21 to 23% due to a continuation of recent trends and a more difficult year-over-year compare in pricing that we expect to erase in the second half. We expect consolidated Q1 adjusted EBITDA margin of approximately 3% to 5%. The stepdown is due to the aforementioned revenue headwinds in hotels and other segments, as well as growth investments and experiences this quarter.

In experiences, we expect adjusted EBITDA margins to step back by approximately 200 basis points year-over-year, primarily due to an increased marketing investment. At the fork, we expect margins to swing positive year-over-year, increasing approximately 800 basis points to about 1% of revenue, benefiting from marketing efficiencies expected in the quarter. In hotels and other, we expect adjusted EBITDA margin between 21% and 23%, which reflects revenue headwinds previously discussed.

We're excited about 2026 and the priorities we've established to continue to extend our leadership in global experiences. We expect to see the increased impact of its contribution to our group financial profile this year, establishing a foundation for multi-year group revenue acceleration while delivering healthy levels of profitability. We look forward to updating you on our progress on our next call. With that, I turn the call back over to the operator for Q&A.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press Start 11 again. Please stand by while we compile the Q&A roster.

Our first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Thanks so much for taking the question. Sticking with the experiences side of the business, can you characterize how you're thinking about the incremental growth investments in the business, especially in the marketing side, in response to two things, both the demand signal you think you're getting from the market in terms of experiences growing as a percentage of consumer spend, and also in light of what might be different or stable elements of the competitive intensity and experiences.

We'd love to get some characterization on both against your growth investments. Thanks so much.

Yeah, thanks, Eric. I appreciate the question. It's Matt, and I'll take the question, and Mike can fill in as he likes. We see the experiences market as very attractive.

Obviously, it's growing faster than other travel categories. We saw, you know, from 19 to 25, the online portion growing at 13%. In that period, we grew 22%. From 22 to 25, the market grew 16% online, 22%.

We grew 22% over that period. So we feel really good about our ability to grow not only in line with the online portion, but to exceed it over time. Looking forward, we think there are a number of reasons that we can really deliver here. The first is the scale we've already achieved.

the position we have in our core market in the U.S. and the ability to extend that globally. You can see that in our GBV that's accelerating and approaching $5 billion last year. You can see that in how our supply is growing and the relationship we have with operators. And you can see demand signals very, very clearly, both in our TripAdvisor point of sale, where we're able to take that data and match supply and demand as we target the supply we want to go after that's going to allow us to extend internationally.

We brought our team together to drive marketing efficiency and we have a stronger competitive position there. We're leveraging our product and as I mentioned, supply across those brands and really smoothing the friction to get more conversion and ultimately driving our unit economics across the business. So that's driving profitability. And as we see scale and accelerating growth with profitability, we really think that that gives us the flexibility to invest further to drive global leadership.

So the operating model is helping. We see it in our data, and you can obviously see it externally. Anybody you talk to in travel is talking about the power of experiences and how that's driving all of the other categories. So we feel we sit bullseye there.

As we relate to others in this space, I think it's really interesting because when you look at where we stand, it's really, you know, we're the most profitable experiences player in there. I think we come from the strongest market, which gives us an opportunity to extend that into other markets. Our unit economics are progressing. And we just feel that between our ability to go after demand and meet that with supply extend the TAM growth, right, by looking into new geographies and categories, we're really well positioned to double down in experiences, add resources and investment that are going to accelerate both growth and profitability over time.

Yeah, and one thing to add on to that, Eric, would be a little bit about specifying the marketing approach to add on. You know, I think a few fundamental things about the category. One, we believe, obviously, it's very large, as Matt said, but the awareness is still relatively low. And so I think it is how you find intent, how you convert that intent.

And, you know, we see that intent primarily through the paid channels. And I think we have exceedingly good teams that are good at those conversions. And importantly, importing those wins over to both our points of sale at Viachar and TripAdvisor. And so really we have to follow that intent and convert that where we can.

And that is really the basis of how we think about our ROIs and the paid channels. You know, we understand that as an investment in a new user, particularly a new user in the category, and that's all then how you drive that repeat behavior. And how we target those ROIs is just based on where we see our long-term margin progression and target margin can be over the long period of time.

and that's the formation of how we think about our ROIs.

Thank you. Please stand by for our next question. Our next question comes from the line of Naved Khan with B. Rowley Securities.

Your line is open.

Great. Thank you very much. I have a question on the experiences margin expansion. I think you're guiding to...

a few hundred basis points of EBITDA margin expansion experiences. And my question is about the fact that you mentioned repeat bookings are up from the previously acquired cohorts. Why not double down on customer acquisition versus giving back some on the EBITDA margin? Why not just optimize for long-term customer growth and maximize the potential there.

And then second question is, I think you mentioned that you expect that SEO will be less than 10% of the traffic for 2026. How should we think about that and your long-term sort of margin view of maybe just business operating at around mid-20s, even down margin? Just give us your thoughts there. Thank you.

Yeah, I'll hit both and Matt can chime in. So I think the question on growth and profitability, what you're getting at. So I think the profitability this year in experiences is driven by two factors. One, which we believe we can continue to drive efficiencies in marketing, driven by really product-driven conversion growth, operating two teams, operating two platforms is one.

We can drive a lot of efficiencies there. We're excited about that. And then, too, as you said, Nived, the natural repeat cohorts that are building in the business. I would just say when we think about our growth profit tradeoff, we are not targeting profitability over growth.

I think what we have to look at and continue to look at is what is that incremental ROI and marginal ROI for new users, which I said, as I just said, is an investment. And we're continuing to look at where we can be smarter and make trade-offs. We made some trade-offs in Q4 that we liked. And so you've seen us demonstrate that in the Q4 and we'll continue to be flexible and do that as we move through the year.

But listen, when we are sitting primarily in a North American market where new users are, We are always looking at that marginal incremental ROI to see where we can drive more growth at profit levels that make sense based on repeat rates we see. Part of the algorithm, we talked about this last call, we mentioned again this call, about how we are expanding our TAM, our addressable TAM, by looking at new regions outside of North America.

And we're very excited about the work that's underway there. And there's a great example where you could see us. leaning into marketing spend as we are growing more aggressively in a new geo. And we will absolutely update you with that, with our progress as we move forward with that.

But I think we're remaining very nimble and open-minded as we think about the growth algorithm. Secondly, on SEO, I think it's just very important that we do see the experiences business not having a major reliance on SEO. And most of the SEO is coming through the CA channel today, but we are expecting on a combined basis to be that below 10%, as I mentioned on the call.

So when we think about long-term margin progression, we're not relying on SEO to hit our long-term margin target. What we are relying on is continued progress in all things we just talked about, which is marketing leverage, the two platforms being able to leverage the brands more effectively in the pay channels, wherever they may be. You know, finding new pay channels outside of SEM, which we're excited about the progress there.

And it's the continuing maturation of our repeat cohorts that are building very nicely. So, you know, all those ladder up to, we believe, feel very strongly still about our long-term margin progression. And we're excited about the growth tradeoffs we have to make to get there. Thank you, Mike.

Yeah. Thank you.

Please stand by for our next question. Our next question comes from the line of Nafeesa Gupta with Bank of America. Your line is open.

Hi, thank you. Hi, Matt. Could you tell us more about this AI Native MVP that you launched in the fourth quarter and how that is different from your earlier trip to the planet? And then I have one more after this.

Yeah, did you say you had a second question? Go ahead and ask it.

Yeah, so I just want to understand about the economics that you're seeing from the large AI platforms in terms of user acquisition, and also how are you thinking about monetizing your users to view data that you have from TripAdvisor Core?

Okay, thanks. Yeah, so on the end, on the AI native MVP, what we wanted to do was to shift the way that we deliver AI products to our customers. And so we want it to be AI first, AI native, use the tools, and really reimagine what TripAdvisor could be in a fully AI native world. So we're going back to our roots.

We want to help people validate their travel choices. with better recommendations that understand who they are, drive personalization, that these recommendations can be better explained through social proof, and that they can immediately be more actionable. And so we've been learning off the last quarters and years of our investment in our AI infrastructure and our products, which we're really adding on to our existing product. Now we're going fully AI native to reinvent.

And so we like the data that we're learning. We believe that we can build trust in the why behind travel choices. We believe that our UGC, which as I said is stable and we intend to really drive growth there, gives the social proof that users want before they're willing to book. And we think that we can ultimately become that trust layer, whether it be on our own products and services or in partnership with a scaled AI partner.

So we're taking a very different approach. The teams have been running really fast. They're extraordinarily lean. And we're iterating on live customer behavior to understand how we can improve and drive that conversion and that revenue.

I will say we're live to a slice of our audience, so it's still early. But in Q4, we saw that the approach drove multiples higher engagement with users than our prior AI travel assistant on the site and had good early monetization signals. Now, that can be applied to whether you're planning or whether you're in destination. So when travelers are in destination, they have a lot of last minute decisions around what they want to do, what they want to see, what they want to eat.

But availability, pricing, and logistics are tricky, especially in experiences. So we're leveraging our assets there to help travelers experience the destination better and really testing, you know, what's around me now, geo-aware recommendations, proactive offers to drive incremental demand, you know, making it much easier to book and access real-time customer support. And we think that's going to drive some good activities. And your second question was, how are we going to leverage our, I think our UGC to drive, can you just repeat the second question?

Yeah, I just want to understand what kind of traffic that you're seeing from large platforms and how are you, what's the economics behind that compared to traditional SEO? And then how do you think about monetizing your user review data that you have, like the large data that you have from users on TripAdvisor?

Yes, as I mentioned, the UGC data continues to be solid and we continue to have both the contributors who are slightly up year on year and the contributions which have been relatively stable year on year as a really differentiated quality content and data asset to leverage. We're using that both on our own platforms as well as in our partnerships. And what we're seeing is that as AI traffic comes in, it tends to be higher intent.

It tends to be, you know, these long queries tend to help us get the answers more quickly. And so we are seeing the conversions to be a bit stronger because it's relatively higher intent. We think lower down the funnel. Now that traffic that we're driving through that AI first approach is a lower relative percentage of our overall traffic, but it's growing much, much faster.

And we're pretty excited about what we can do there, both on our products and through our partnerships ahead. So more to come there. Thank you.

Thank you. Thank you. Will you stand by for our next question? Our next question comes from the line of Stephen Ju with UBS.

Your line is open.

Hey, thank you so much. So I think, you know, for Viator, I think there was a push for a number of years, if not from yourself, but generally, across the segment to make it progressively less episodic by maybe asking your users to use it in their home market. So is that proving to be more challenging or is it just an awareness factor? Are you getting that activity picking up currently?

And because with folks thinking that maybe they should only open up Viator only when they travel.

Yeah, thanks. You know, we're definitely continuing our work to attract customers who are interested in experiences wherever they may be, whether that's on a long haul trip, a domestic short haul trip closer to home, or even, you know, an experience that they want to have over a long weekend. And of course, Our supply is the largest supply available anywhere. So we think that matching that kind of demand is something that we can do now.

We are growing our supply and it will depend on really going after more local experiences, And that's something that as we continue to invest in supply, we can continue to add. I would say that our primary focus right now has been to enter new geos, but as we enter new categories and think about extending that supply, going deeper perhaps into attractions, You know, maybe that local supplier who you rent a canoe from to go down the river with your kids.

You know, that will be something we will continue to do. So it's an area of future growth. I wouldn't say that it's the priority we're driving hardest at. Otherwise, we would have called it out.

But it's definitely something that we believe our platform can deliver on. So there will be more there to discuss going forward.

Thank you.

Please stand by for our next question. Our next question comes from the line of Lloyd Walmsley with Muzuhu. Your line is open.

Thanks. I've got two questions. First, just drilling into the geographic expansion for experiences, like how much of that is building supply in new markets and demand in new markets? Versus maybe selling North American experiences into new points of sale where you don't need new supply.

It's more marketing. Just anything you can help us understand on the plan for geographic expansion. And then the second one was just, you know, you sort of hinted at the potential for evolution in the partnerships with the larger AI search platforms. Like anything...

You can tell us either specifically or should we expect evolution there this year in any meaningful way. Anything you can share there would be great.

Yeah, thanks, Lloyd. On the geo expansion, it's a combination of both. But of course, we're already serving U.S. and North American customers going to international destinations. We think we do that relatively well.

Of course, we can continue to improve as we think about specific supply in particular locations. But I think going after the geo expansion is very much about the supply that will appeal to international source markets that we haven't served in the past. We've done some in English language, but I would say we are under optimized as we think about that native traveler from international source markets. So think about, a different kind of experience that they may want to have relative to an American.

That is supply we will go out. We have the TripAdvisor brand, which is highly trusted and huge awareness in Europe and Asia. And obviously we can leverage that. We can use those signals of intent to go target the right supply.

We can use AI to localize through translation and do that relatively quickly. And then of course, we can leverage all of our data to go and target through our marketing channels in those geographic locations. So think local sourcing of new markets as a meaningful opportunity for us ahead, which we're just getting going on, and we're excited about that with more to come. In the second question about our partnership opportunities, we are very excited about what's ahead in our partnership opportunities.

I would say that 2025 was very much about establishing a foundation. We wanted to learn from partners what worked, what didn't, what we had that was valuable, and really get a set of partners going. So you saw us working with OpenAI, with TripAdvisor and the Fork apps, and we just announced today that this week the Viator app is there. We're learning a lot through that integration about agentic AI.

We've got a licensing arrangement there. With companies like Amazon and Snap, we're exploring multimodal AI. We've explored marketplace data with Microsoft, and we're playing with others around New AI form factors and devices like glasses, where you'll hear more about that in the future. We generated meaningful revenue through these in a diverse way.

I don't think we've broken that out publicly, but we expect it's been growing and we expect that to continue growing across licensing revenue, link back traffic, and integrating our products. We also learned a lot. I think what we learned is that our data is valuable. It's incremental and it's structured.

And so it can really help address customer problems. We're just getting started there. We bring a deep knowledge of the category that I think is very helpful to these horizontal players because specialization and vertical focus is helpful. And as we put our foundation together, We were limited in how we wanted our brand, our content and data to be used.

We were more looking to understand the value ahead. And so we are having meaningful conversations about doing something bigger that would be less constrained. And we think we have the assets to be a deeper partner with a select partner because what they need is a trust layer. They need cross category content.

They need the data. And of course, leading supply and experiences is very helpful too. And so what we think we can do there is to really close what I call the confidence gap between planning and booking. And let me explain why that's such a big opportunity.

Almost half of travelers use AI to plan trips, but less than 10% of them are actually booking with AI. And the gap represents a huge amount of unrealized value. And we think it exists because there needs to be an improvement in trust and there needs to be an execution capability in the current tools. And so we think that nobody's figured that out or cracked it yet.

And we think that we bring brand content data and scale to help make that happen. It's an execution challenge. And that's where we think our role is really compelling because we bring trusted human judgment scaled experiences supply and a transaction layer that, you know, with our 8 million plus POIs and our sort of, you know, social proof through our UGC that may be missing. And so we're going to go after it.

We also think that, you know, trust and being neutral and being able to work with a broad player is an opportunity ahead.

Thank you. Please stand by for our next question. Our next question comes from the line of Jed Kelly with Oppenheimer & Company. Your line is open.

Hey, great. Thanks for taking my question. Just drilling down to experiences, you know, obviously the marketing was up quite a bit in fourth quarter. Can you just talk about the competitive intensity around that, or is that more from you testing new channels?

Now, the other thing with experiences, have you looked into getting into more partnerships, that could actually drive more repeat traffic such as like event ticketing? Thank you.

Yeah, I'll take the first one. Yeah, Matt, take the second one. You know, listen, I think in terms of the marketing spend in Q4, one, no change in approach, as I was talking earlier with Nived. You know, we are looking and driving a very disciplined set of ROIs in our marketing spend.

And, you know, where we think we can drive growth, we will look to do so based on the same set of criteria. I would say when you're accelerating, that deleverage as a percent of revenue is going to show through for sure. When you look at our marketing as a percent of GBV, it's pretty flat year over year. So in our minds, you know, the marketing spend was kind of in line to our historical discipline approach, the way we approach it.

And as I said earlier, we're going to be flexible. And as we approach, as we move through the year, we always are going to be seeking ways to, you know, grow, accelerate, take share.

But we're going to do it in a way that's disciplined, that ladders up to a long term target market. And again, I think as we open up our geo expansion, that opens up a different set of really exciting choices for us.

Yeah, and on your second question, Jed, around partnerships to drive repeat booking, absolutely. We are always talking with a variety of partners. We have a strong B2B team and a partnerships team. Live events and ticketing, as you just described, is one area.

Earlier, we were talking about local activities that we could go after so it's a combination of partnerships and supply and absolutely that is something we're focused on we think there's any number of additional opportunities to go after i don't want to get ahead of ourselves and start talking about those now but we talked about two of them and i think you can expect to hear more from us on on some of those uh opportunities ahead thank you thanks jed

Our next question comes from the line of Tom White with DA Davidson and Company. Your line is open. Tom White, Analyst, DA Davidson: Hey, this is Wyatt on for Tom. Thanks for taking our question.

Just given the heavy fragmentation and experiences, is that technically better insulated from potential AI disintermediation? And I'd like to hear your thoughts on maybe how experiences are maybe uniquely positioned in the travel space.

Yeah, I think that, Tom, thanks for the question. I think your commentary about the long tail of fragmented supply with all of those hundreds of thousands of small businesses that are out there to go after, and we feel really good about our penetration there. I think you're right. I think that does insulate AI disintermediation.

There's a couple other reasons why I think it's insulated and durable ahead. First, as Mike was saying earlier, it's much less dependent on the structurally challenged SEO traffic. Second, I think it's really hard to bring that structure to the supply base and connect them directly to consumers, taking friction out of the journey, putting in place all of the infrastructure as a marketplace, applying customer service, dealing with the logistical challenges.

And then I think the way that we've been competing effectively in these high intent demand channels and getting these repeat economics going is also, you know, an installation there. So, we think that positions us really well. And, of course, you know, we will continue to drive that flywheel and only strengthen the durability and potential to defend. So, it's a good question, and that's exactly how we're approaching it.

Thank you. Ladies and gentlemen, due to the interest of time, I would now like to turn the call back over to Matt Goldberg for closing remarks.

Yeah, thanks for that. And thanks, everyone, for joining us today. We covered a lot on this morning's call. I think the most important thing is, you know, we are excited about 2026 and executing on our priorities.

We think it will drive durable, sustained, long-term shareholder returns. I also just want to take a moment to thank all of our employees for their good work to deliver on our clear priorities ahead. We're looking forward to 2026 and updating you on our progress and plans on the next call. Thank you everyone.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.