Trivago today announced financial results for the first quarter of 2020 ended March 31.
Total revenue decreased by €69.2 million, or by 33%, during the first quarter of 2020, compared to the same period in 2019. Referral Revenue in the first quarter of 2020 decreased to €54.6 million, €57.3 million and €24.8 million, or by 23%, 36% and 44% in Americas, Developed Europe and RoW, respectively, compared to the same period in 2019. In all three segments, Referral Revenue was negatively impacted by a significant decline in Qualified Referrals and a decline in Revenue Per Qualified Referral (RPQR). Other revenue decreased by 23% to €3.1 million in the first quarter of 2020, compared to €4.0 million in the same period in 2019, mainly driven by a decrease in subscription revenue.
Net income decreased by €222.1 million to a loss of €214.3 million in the first quarter of 2020, compared to the same period in 2019. The decline was mainly driven by the impairment of goodwill of €207.6 million. In addition, we observed a sharp decline in Referral Revenue as the COVID-19 outbreak intensified which led to a decrease in our profitability. Expected credit losses of €3.8 million associated with our trade receivables further contributed to the decline in profitability. Included as part of other income/(expense), net of €0.3 million is an additional expected credit loss associated with a long term outstanding loan due to us.
Adjusted EBITDA decreased by €22.0 million to a loss of €0.6 million in the first quarter of 2020 compared to the same period in 2019. During the first quarter of 2020 we changed our Adjusted EBITDA definition to better align with our industry and allow for a financial comparison across quarters that excludes the effects of impairment of intangibles assets and goodwill and certain other items, including restructuring.
Referral Revenue decreased by 33% as Referral Revenue decreased by 23%, 36% and 44% in Americas, Developed Europe and RoW, respectively.
Other revenue decreased by 23%, mainly driven by lower subscription revenue.
Advertising Spend decreased by 21%, 38% and 37% in Americas, Developed Europe and RoW, respectively.
Other selling and marketing expenses excl. SBC decreased by 31%, driven by reductions in television advertisement production costs.
Technology and content expense excl. SBC increased by 1%, mainly driven by an increase in third-party IT service provider costs.
Strategic implications for trivago and outlook
As international travel restrictions will likely persist for the near future, trivago believes domestic and nearshore travel will become a more attractive alternative for many travelers. The worsening economic conditions are likely to increase the price consciousness of travelers going forward, making our deals driven product even more relevant.
Overall, industry participants with a weaker financial position or less favorable competitive positions may face financial distress, leading to a generally higher level of consolidation in the industry.
Trivago also believes a cautious and gradual approach will be important to avoid a “second wave” of infections. Rebuilding in strides, a safe travel experience and customers trust in traveling should be the main objective of the industry for the months to come.
Trivago says its key focus for the remainder of the year will be to implement these changes to its platform and product to prepare for the new normal in all aspects of the business.
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