North America Equity Research December 2025 US Internet 2026 Outlook Doug Anmuth AC (212) 622-6571 douglas.anmuth@jpmorgan.com J.P. Morgan Securities LLC Dae Lee, CFA AC (415) 315-8500 dae.k.lee@jpmorgan.com J.P. Morgan Securities LLC Bryan M. Smilek AC (212) 622-8886 bryan.smilek@jpmorgan.com J.P. Morgan Securities LLC Neeraj Kookada, CFA (212) 622-0270 neeraj.s.kookada@jpmorgan.com J.P. Morgan Securities LLC Margaret Hoffman (212) 622-1710 margaret.hoffman@jpmchase.com J.P. Morgan Securities LLC See the e ...

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Financial Data and Key Metrics Changes - The company achieved a 13% year-over-year revenue growth, marking the third consecutive quarter of double-digit growth [3][10] - Adjusted EBITDA improved by 18% year-over-year, reaching EUR 16 million [3][11] - Total revenue for Q3 2025 was EUR 165.6 million, a 13% increase compared to Q3 2024 [10][11] - Net profit for the quarter was EUR 11 million, exceeding expectations [11] - Operational expenses decreased by EUR 12.3 million, totaling EUR 153.4 million, primarily due to the non-recurrence of a EUR 30 million impairment charge from the previous year [11][12] Business Line Data and Key Metrics Changes - Referral revenue growth was 14% in the Americas, 12% in the Rest of the World, and 9% in Developed Europe [10] - The growth was driven by increased branded channel traffic and product improvements enhancing booking conversion [11] Market Data and Key Metrics Changes - Developed Europe faced headwinds from strong prior-year comparisons, but trends normalized over the course of Q3 2025 [10] - Unfavorable foreign exchange headwinds negatively impacted revenue by approximately 4% globally [11] Company Strategy and Development Direction - The company aims to continue its double-digit growth trajectory by focusing on branded growth and enhancing the core hotel search experience [4][5] - Strategic priorities include branded growth, improving marketing efficiency, and creating more value for partners [4][8] - The company plans to optimize existing markets rather than expand, which is expected to gradually increase profitability [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-teens revenue growth for the full year of 2025 and a positive adjusted EBITDA of at least EUR 10 million [10][11] - The company is optimistic about the growth potential in its core markets, which still have substantial runway for growth [25] Other Important Information - The company consolidated Trivago Deals Limited into its operations, viewing it as integral to future growth [14] - AI initiatives have significantly improved user experience and operational efficiency, allowing the company to operate with a smaller team [36][52] Q&A Session Summary Question: What percentage of users could be logged in over the next 12-18 months? - Management indicated that while there is no fixed target, reaching around 30% logged-in users would signify a core user segment with better engagement and conversion [16][18] Question: Could Trivago play a role in the B2B space? - Management acknowledged the potential for B2B opportunities but emphasized a current focus on leisure travel, where they see significant growth potential [20] Question: How should we think about growth in the core business versus Holisto? - Management expects both segments to grow double digits, with a focus on optimizing existing markets for profitability [23][24] Question: What improvements are being seen in marketing efficiency? - The majority of growth is attributed to branded growth, with compounding effects expected to enhance profitability over time [27][28] Question: What incentives are provided to logged-in users? - Logged-in users receive private deals, which significantly improve engagement and conversion rates [29][30] Question: How is Trivago positioned against AI-driven tools? - Management noted that while AI tools are growing, they do not see a significant impact on their traffic, emphasizing the strength of their brand and user experience [33][35] Question: Will the 2026 guidance reflect margin expansion? - Management indicated that the focus will be on optimizing existing markets and taking profits to the bottom line rather than expanding into new markets [41][42] Question: Are there any channel conflicts with OTAs due to Holisto? - Management clarified that Holisto, now Trivago Deals, aims to create value for partners and users without significant channel conflicts [54][56]

Financial Performance - Q3 2025 revenue grew by 13% year-over-year[15], with referral revenues increasing by 14% in the Americas, 12% in Rest of World, and 9% in Developed Europe[15] - Adjusted EBITDA improved by 18% in Q3 2025[15] - Total revenue for Q3 2025 was €165.6 million, compared to €146.1 million in Q3 2024[17] - Year-to-date total revenue increased to €429.0 million in 2025 from €366.1 million in 2024[17] - Adjusted EBITDA for Q3 2025 was €16.0 million, up from €13.6 million in Q3 2024[18] - Net income for Q3 2025 was €11.0 million, compared to a loss of €15.4 million in Q3 2024[19] - The company is targeting at least €20 million of adjusted EBITDA for 2026[15] Strategic Initiatives and Outlook - The company expects mid-teens revenue growth and at least €10 million of adjusted EBITDA for full-year 2025[15] - The company completed the acquisition of Holisto Ltd on July 31, 2025, renaming it trivago DEALS Ltd[47] - The company's LTM (Last Twelve Months) total revenue as of Q3 2025 is €524 million, a 14% increase[30]

Core Insights - trivago N.V. reported a 13% year-over-year revenue growth for Q3 2025, marking the third consecutive quarter of double-digit growth, driven by strong branded channel traffic revenue [3][10][14] - The company achieved an Adjusted EBITDA of €16.0 million, an 18% increase from the previous year, and net income of €11.0 million, the strongest third-quarter result since going public [3][5][55] - The strategic acquisition of Holisto Limited contributed positively to the financial results, with a notable income gain of €3.2 million recognized [8][55] Financial Performance - Total revenue for Q3 2025 was €165.6 million, up from €146.1 million in Q3 2024, while total revenue for the nine months ended September 30, 2025, reached €429.0 million, a 17% increase from €366.1 million in the same period of 2024 [5][10] - Referral Revenue increased by 11% year-over-year to €161.6 million in Q3 2025, contributing to a total of €423.5 million for the nine months, also a 17% increase [5][23] - The Return on Advertising Spend (ROAS) remained stable at 134.1% for Q3 2025, reflecting effective marketing strategies despite increased advertising investments [4][33] Market Segments - The Americas segment saw a 14% growth in Referral Revenue, while Developed Europe and Rest of World segments reported 9% and 12% growth, respectively [4][20] - The company continues to observe strong growth dynamics across its marketing channels, particularly in Developed Europe and the Americas, driven by strategic marketing investments [10][11] Advertising and Marketing - Advertising Spend increased by €13.6 million in Q3 2025, representing a 13% year-over-year rise, primarily due to enhanced brand marketing efforts [29][40] - The company maintained a disciplined approach to marketing investments, focusing on long-term sustainability and profitability [12][29] Future Outlook - For the full year of 2025, trivago expects mid-teens percentage revenue growth and positive Adjusted EBITDA of at least €10 million, with a similar outlook for 2026 [4][14] - The company aims to expand its audience reach and enhance user experience through the integration of Holisto's offerings, particularly in the trivago Book & Go service [13][14]

Group 1 - trivago N.V. will release its financial results for the third quarter of 2025 on November 4, 2025, after market close [1] - A webcast by trivago N.V.'s management is scheduled for November 5, 2025, at 2:15 PM CET / 8:15 AM EST [1] - The financial results and webcast details will be available in the Investor Relations section of the company's website [1] Group 2 - trivago N.V. is a leading global hotel search and price comparison platform, recognized as one of the most prominent travel brands [2] - The company aims to help travelers find the best accommodations and save time and money through its services [2] - trivago provides access to over 5.0 million hotels and various types of accommodations in more than 190 countries [2]

Core Viewpoint - The article discusses the author's perspective on value investing, emphasizing the importance of understanding the businesses in which investments are made and focusing on long-term potential rather than short-term market volatility [1]. Group 1: Investment Philosophy - The author identifies as a value investor, aiming to invest in high-quality companies at prices below their intrinsic value to ensure a margin of safety [1]. - The primary consideration before investing is the potential loss and the likelihood of its occurrence, rather than market volatility [1]. - The author expresses a long-term investment strategy, indicating that short-term market fluctuations do not influence their investment decisions [1]. Group 2: Influences and Inspirations - The author cites several renowned investors, including Warren Buffett, Charlie Munger, Peter Lynch, and Mohnish Pabrai, as key influences in shaping their investment philosophy [1].

Financial Data and Key Metrics Changes - The company reported a total revenue of €139.3 million for Q2 2025, representing a 17% year-over-year increase, marking the third consecutive quarter of growth [18] - Referral revenue increased by 18%, driven by sustained branded traffic growth while maintaining a stable return on advertising spend [16] - The company reported a net loss of €6.5 million and an adjusted EBITDA loss of €5.1 million, similar to the previous year's performance [19] Business Line Data and Key Metrics Changes - Referral revenues grew by 32% in the Rest of the World, 20% in Developed Europe, and 10% in the Americas, primarily driven by increased branded channel traffic [19] - The company achieved a milestone of generating 20% of referral revenue from logged-in users, indicating progress in fostering user loyalty [11][17] Market Data and Key Metrics Changes - Geographic performance showed robust growth across all regions, with the Rest of the World leading at 32% year-over-year growth, followed by Developed Europe at 20% and the Americas at 10% [4] - The company faced a foreign exchange headwind that affected the top line by approximately -3%, with a stronger impact of -7% in the Americas [25][26] Company Strategy and Development Direction - The company is focused on three strategic priorities: brand marketing, enhancing the core hotel search experience, and empowering partners [5][12] - Brand marketing investments are expected to continue driving returns, with a commitment to further expand these investments [6] - The acquisition of Hollisto is aimed at enhancing the user experience and expanding the trivago branded booking funnel [14][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-teens percentage revenue growth for the full year of 2025 despite economic uncertainties and foreign exchange headwinds [16][17] - The company anticipates positive adjusted EBITDA in the third and fourth quarters of the year [20] Other Important Information - Operational expenses increased by €19.9 million, totaling €147.3 million for the second quarter, primarily due to higher brand marketing investments [20] - The company maintained a solid global return on advertising spend (ROAS) at 119% for Q2, slightly down from 122.7% in the prior year [21] Q&A Session Summary Question: What was the FX impact for Q2 results? - The FX effect was a strong headwind affecting the top line by approximately -3%, with a -7% impact in the Americas [25][26] Question: What is the growth runway for brand investments? - The company has seen a 22% spend increase year-on-year and an 18% referral revenue increase, indicating effective brand strategy and significant upside potential [26] Question: What differences exist between logged-in and logged-out users? - Logged-in users show a 25% higher conversion rate, and the company is encouraging logins through exclusive deals and features [34][35] Question: What gives confidence for revenue growth acceleration in Q3? - Despite FX effects impacting July, strong double-digit branded traffic growth and branded revenue growth in July support confidence in achieving double-digit growth [36][39] Question: What are the early learnings from partnerships with the Book and Go product? - Early partnerships have shown significant double-digit conversion improvements, making partners more competitive in the marketplace [42][43]

Financial Performance - In Q2 2025, trivago experienced revenue growth, confirming strong momentum[17] - Total revenue for Q2 2025 increased year-over-year[18] - The Last Twelve Months (LTM) total revenue reached €504 million, a 7% increase[24] - Adjusted EBITDA for the LTM Q2 2025 was €13.1 million, an increase of €4.4 million[24] Strategic Focus - trivago is focused on capturing demand through brand marketing, search improvements, and content enhancement[27] - The company aims to match demand and supply by offering deals and partnerships[27] - Core feature improvements are expected to substantially improve conversion rates[27] - A differentiated member proposition is aimed at increasing logged-in users across all segments[27] Partnerships and Acquisitions - trivago expanded its smart bidding and transaction-based model to over 120 partners[51] - The acquisition of Holisto was completed on July 31, 2025, for USD 25.5 million (approximately EUR 22.3 million)[56] - The acquisition of Holisto allows trivago to accelerate the expansion of trivago Book & Go[54]

Core Insights - trivago N.V. reported a strong financial performance with a 17% year-over-year revenue growth for Q2 2025, marking the third consecutive quarter of growth and the second consecutive quarter of double-digit growth across all segments [4][9][10] - The company achieved an 18% increase in Referral Revenue, reaching €138.5 million, driven by branded channel traffic growth [6][9][10] - The acquisition of Holisto Ltd. is expected to enhance user experience and contribute low double-digit million euro revenue in 2025 [5][13] Financial Summary - Total revenue for Q2 2025 was €139.3 million, up from €118.6 million in Q2 2024, reflecting a 17% increase [6][9] - Referral Revenue increased to €138.5 million from €117.2 million, an 18% rise year-over-year [6][21] - Net loss for Q2 2025 was €6.5 million, compared to €4.9 million in Q2 2024, while Adjusted EBITDA loss improved to €5.1 million from €5.4 million [6][49] Revenue Growth by Segment - Revenue growth was driven by a 10% increase in the Americas, 20% in Developed Europe, and 32% in Rest of World [9][21] - Logged-in users contributed 20% of total Referral Revenue, indicating progress in user engagement [9][10] Advertising Spend and Efficiency - Advertising Spend increased by 22% year-over-year to €116.4 million in Q2 2025, reflecting a disciplined approach to marketing investments [12][26] - Return on Advertising Spend (ROAS) was 119.0%, down from 122.7% in Q2 2024, indicating a slight decrease in advertising efficiency [6][30] Cost Structure - Total costs and expenses for Q2 2025 were €147.3 million, up from €127.4 million in Q2 2024, primarily due to increased selling and marketing expenses [32][49] - Selling and marketing expenses rose by €21.8 million year-over-year, with Advertising Spend representing 94% of total selling and marketing expenses [35][36] Outlook - The company anticipates continued double-digit revenue growth for Q3 2025, although at a rate below Q2 2025 [15] - For the full year 2025, trivago expects total revenue growth in the mid-teens percentage range year-over-year [15]