Accommodation

Trivago issues profits warning after third quarter slowdown

Posted by Phil Davies on
Trivago issues profits warning after third quarter slowdown

Newly listed hotel comparison website Trivago issued a profit warning after a slowdown in referral revenues, deepening a slump in the company’s shares.

The Dusseldorf-based group said that it expected results for the third quarter and the remainder of the year to be “softer” than previously thought.

Trivago is now forecasting annual revenue growth of about 40% and adjusted earnings before interest, tax, depreciation and amortisation [EBITDA] to be lower than in 2016, “but to remain positive”.

The downgrade came only a month after Trivago’s second-quarter trading update, when the company guided the market to about 50% revenue growth, itself a slowdown on 67% achieved in the first half, The Times reported.

Trivago, whose majority shareholder is Expedia, blamed the slowdown on issues related to revenue per qualified referral (RPQR), a key performance measure, which it said it had flagged to investors at its second-quarter results but had since become more significant than expected.

Trivago said: “Due to the speed with which the above RPQR slowdown unfolded, we were unable to pull back our planned television advertising spend quickly enough to prevent overspend.”

It means that Trivago will have a lower return on advertising spending — another key performance indicator — in July and August.

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