• Total revenue of $354 million, up 39% year-over-year.
• Net income of $54 million, or $0.37 per diluted share, down 4% year-over-year.
• Adjusted EBITDA of $119 million, or 34% of revenue, up 14% year-over-year.
• Non-GAAP net income of $71 million, or $0.48 per diluted share, up 9% year-over-year.
• More than 315 million average monthly unique visitors to TripAdvisor’s websites during the third quarter.
The biggest news for the quarter was our Viator acquisition, which expands our presence into the tours and attractions reservation business. We are thrilled to welcome such a great team to the TripAdvisor family, and are very excited to build on our leadership position in this fast-growing category. While this acquisition helped accelerate Q3 total revenue growth, it was partially offset by lower than expected Click-based revenue growth. Importantly, our business fundamentals remain strong, and we will continue on our path of investing for long term growth,” said Steve Kaufer, TripAdvisor’s President and Chief Executive Officer.
Discussion of Third Quarter 2014 Results
Total revenue for the third quarter of 2014 was $354 million, an increase of $99 million, or 39%, compared to the third quarter of 2013.
Click-based advertising – Revenue from click-based advertising totaled $247 million for the third quarter of 2014, an increase of 31% compared to the third quarter of 2013. Click-based advertising revenue represented 70% of total revenue in the third quarter of 2014, compared to 74% in the third quarter of 2013.
Display-based advertising – Revenue from display-based advertising totaled $35 million for the third quarter of 2014, an increase of 13% compared to the third quarter of 2013. Display-based advertising revenue represented 10% of total revenue in the third quarter of 2014, compared to 12% in the third quarter of 2013.
Subscription, transaction and other – Revenue from subscription, transaction and other totaled $72 million for the third quarter of 2014, an increase of 106%, compared to the third quarter of 2013. Subscription, transaction and other revenue represented 20% of total revenue in the third quarter of 2014, compared to 14% in the third quarter of 2013.
For the third quarter of 2014, revenue from North America grew 35% year-over-year to $176 million, representing 50% of total revenue. Revenue from the Europe, Middle East and Africa region grew 43% year-over-year to $119 million, representing 34% of total revenue. Revenue from the Asia-Pacific region grew 30% year-over-year to $43 million, representing 12% of total revenue. Revenue from the Latin America region grew 78% year-over-year to $16 million, representing 5% of total revenue. International revenue was 53% of total revenue during the third quarter of 2014, flat from 53% in the third quarter of 2013. Click-based advertising revenue by geography is based on the geographic location of our websites.
GAAP net income for the third quarter of 2014 was $54 million, or $0.37 per diluted share, compared to GAAP net income of $56 million, or $0.38 per diluted share, for the third quarter of 2013.
Non-GAAP net income for the third quarter of 2014 was $71 million, or $0.48 per diluted share, compared to non-GAAP net income of $65 million, or $0.45 per diluted share, for the third quarter of 2013.
Adjusted EBITDA for the third quarter of 2014 was $119 million, and Adjusted EBITDA margin was 34%, primarily due to the timing of offline advertising spend, compared to Adjusted EBITDA of $104 million and Adjusted EBITDA margin of 41% for the third quarter of 2013, which did not contain offline advertising spend.
Cash flow from operating activities for the third quarter of 2014 was $58 million, primarily due to seasonality and timing in deferred merchant payables, as well as the timing of our offline ad campaign, customer receipts, and vendor payments. Year-to-date, cash flow from operating activities grew 17% to $326 million, or 34% of revenue, compared to $278 million, or 38% of revenue for the nine months ending September 2013.
As of September 30, 2014, cash and cash equivalents and short and long term marketable securities were $614 million, an increase of $18 million since September 30, 2013 and a decrease of $56 million since December 31, 2013.
TripAdvisor had 2,719 employees as of September 30, 2014, up from 1,939 at September 30, 2013 and 2,356 employees at June 30, 2014.
Other Third Quarter 2014 and Recent Business Highlights
TripAdvisor has nearly 200 million reviews and opinions on more than 4.4 million places to stay, places to eat and things to do – including more than 890,000 hotels and accommodations and approximately 650,000 vacation rentals, 2.4 million restaurants and 480,000 attractions in 145,000 destinations throughout the world.
TripAdvisor averaged nearly 315 million monthly unique visitors** during the quarter ended September 30, 2014, including approximately 50% via mobile devices (tablet and smartphone). TripAdvisor launched localized versions of its website in the Czech Republic, Slovakia, and Serbia in Q3, bringing its total points of sale to 45.
TripAdvisor reached more than 150 million mobile app downloads, up greater than 120% year-over-year – including TripAdvisor, TripAdvisor City Guides (offline access), Jetsetter (hotel flash sale), SeatGuru (air), and GateGuru (air).
TripAdvisor has six Instant Booking partners live and another 13 signed and pending implementation. TripAdvisor also launched an alpha version of Instant Booking on its TripConnect platform, which enables independent hoteliers to receive direct bookings through TripAdvisor. Further, TripAdvisor now powers user review collection on behalf of more than 200 travel brands, including more than 100 hotel brands and chains.
TripAdvisor acquired Viator, the leading resource for researching and booking destination activities around the world. Viator enables users to book online or in-destination via the Viator Tours and Activities app, and features more than 20,000 bookable tours and attractions and more than 600,000 user reviews, photos, and videos.
TripAdvisor announced the launch of Instant Reservation feature for restaurants, which lets users select a restaurant and complete a reservation on TripAdvisor. Instant Reservation is currently available on the over 13,000 restaurants within the La Fourchette network spanning France, Spain, Switzerland, and Belgium.