trivago N.V. (TRVG) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the trivago Second Quarter Earnings Call 2026. I must advise you the call is being recorded today, Wednesday, the 5th of August 2026. We are pleased to be joined on today's call by Johannes Thomas, trivago's CEO and Managing Director; and Wolf Schmuhl, trivago's CFO and Managing Director. The following discussion, including responses to your questions, reflects management's view as of Tuesday, August 4, 2026, only, unless expressly stated otherwise, in which case reflects management's view as of today, Wednesday, August 5, 2026 only. trivago does not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward-looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to the second quarter 2026 operating and financial review and trivago's other filings with the SEC for information about factors which could cause trivago's actual results to differ materially from those forward-looking statements. You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in trivago's operating and financial review, which is posted on trivago's Investor Relations website at ir.trivago.com. You are encouraged to periodically visit trivago's Investor Relations website for important content. Finally, unless otherwise stated, all comparisons on this call will be against results for the comparable period of 2025. With that, let me turn the call over to Johannes.

Good morning, and thank you for joining our Q2 2026 earnings call. This quarter marked 3 years since Jasmine, Andrej and I returned to trivago with the ambition to turn around the company. At that time, trivago was not at a good place. We had come out of the pandemic weaker than other players in our space. Our product was no longer competitive and our brand has suffered from years of underinvestment. We refocused the company on its core proposition, saving travelers time and money and on bringing trivago back to the top of travelers' minds. That work keeps paying off. In Q2, we delivered our sixth consecutive quarter of double-digit year-over-year total revenue growth, exceeding our expectation on both top and bottom line. Total revenue grew 21% year-over-year, and we achieved a positive adjusted EBITDA, marking our first positive second quarter since 2023. To put this in context, the first half of the year is our investment period, while the second half is where we expect to earn the majority of our profits, reaching profitability already in Q2, while substantially cutting our first half adjusted EBITDA loss shows how much our earnings profile has strengthened as we head into our strongest season. We achieved this and our continued growth despite foreign exchange headwinds and geopolitical pressures waiting on our Rest of the World segment. Let me share a few strategic highlights of the quarter. Branded traffic referral revenue growth once again substantially outpaced our total referral revenue growth, demonstrating that we are growing through the channels that are strategically and financially most attractive to us. Our product converts significantly better with conversion rates up 64% since Q2 2023, improving our unit economics. Building on our member strategy and growing member base, CRM-related channels now give us new ways to engage travelers with no dedicated marketing investment required. Referral revenue from CRM channels has more than doubled compared to last year, exceeding our internal expectation and pace and relevance. trivago Book & Go continues to scale in our marketplace, tripling compared to the previous year, and we are pleased to have onboarded Expedia as a supply partner on this part of our platform. These strong operational and strategic developments give us the confidence to raise our full year guidance. For 2026, we now expect total revenue growth in the mid-teens percentage range and adjusted EBITDA of around $30 million. We are also narrowing our path to a target adjusted EBITDA margin of 10% by 2028. Our long-term strategy is playing out. In 2025, our theme was turning the tide, reflecting our commitment to making our turnaround a reality. This year, under the theme Optimized Momentum, Pushing Frontiers, we are building on that foundation. We aim to strike the right balance between growth and marketing discipline while continuing to innovate at the leading edge of our field. I'm proud of how our teams drive this momentum, leveraging the best of AI in our product, in our marketing and in how we work, making us more impactful as an organization. We are confident that this, alongside our brand and product flywheels can continue to drive growth and profitability. With that, let me walk you through the progress we made against each of our 3 strategic priorities this quarter. These priorities have been in place since 2023, and that consistency is deliberate. We set a clear strategy, and we have executed against it quarter after quarter. For additional detailed illustrations, please also refer to our investor presentation on ir.trivago.com. Our first strategic priority is to drive growth through brand marketing. Our brand engine continues to compound. Branded traffic referral revenue growth once again substantially outpaced our total referral revenue growth, meaning our growth is coming disproportionately from the channel that matters most to us long-term. We see branded traffic as more lasting, travelers will return to us directly rather than through paid channels, and this is what compounding effects of our brand investments show up. Through this, we also aim to further diversify our channel mix and improve the resilience of our business. We remain disciplined in how we deploy performance marketing investments. We continuously optimize our paid channels for their marginal contribution and adjust our attribution investment strategy accordingly. In recent months, we have further leveled up how we measure and think about these investments, sharpening our incrementality and elasticity testing. Referral revenue from SEO traffic sources is only accounting for a low single-digit share of our referral revenue. One topic we haven't touched on much before is how our growth funnel is compounding. Our brand investments bring a growing base of travelers to trivago. Our member initiatives turn a meaningful share of them into signed up profile members and every single sign-up gives us a direct line to travelers throughout their planning and booking journey. From there, our CRM activities such as e-mail and push notifications let us reach them through channels we own at no dedicated marketing costs. CRM is still rather small in terms of revenue, but it is becoming a relevant profit contributor with revenue more than doubling compared to last year. Together, this funnel drives higher retention and revenue at structurally better margins, a meaningful building block on our path to greater profitability. Our second strategic priority is to enhance our core hotel search experience, so travelers can book with confidence, saving time and money. Our product teams have maintained a high testing velocity, improving the user journey, lifting conversion and strengthening our unit economics. Since Q2 2023, our product conversion rate has increased by 64%, demonstrating how much better our product experience and marketing mix have become. This also makes trivago a more attractive channel for our partners who we believe gain access to more incremental and higher intent travelers. This quarter, we enhanced the hotel search experience even further to better align with what we know travelers actually expect, less friction and more reason to trust what they see. We aligned our desktop and mobile experience more closely, surfaced more relevant listings on every screen and simplified the path from search to booking. This is the foundation on which our entire product road map is built on. AI highlights and AI review summaries are now a core part of how travelers compare hotels on trivago. We have continuously advanced both further a new per paragraph format with key elements highlighted and paired with the most relevant images make our AI-generated review summaries easier to scan and more visually appealing. We have also improved the quality and ranking of our hotel highlights for more than 500,000 hotels. They are now context aware, giving travelers a more personalized experience based on what they are looking for. These are just a few examples of how we aim to help people search and decide with more confidence on trivago. Our member proposition continues to strengthen, and our member base keeps growing. We are turning more and more anonymous visitors into profiled members who have a better reason to return and our 3-month retention rate of new members demonstrates this progress. It's up 24% since Q1 2023. Before intercompany eliminations, logged-in members generate more than 30% of referral revenue. The more we know our users, the more we can do for them and the more we can engage with them. trivago Book & Go continues to scale rapidly and its share of bookings on our platform has roughly tripled compared to last year, making it one of the top players in our marketplace. In the recent months, we onboarded several new advertisers to Book & Go, including Expedia as a supply partner. Most importantly, we integrated Book & Go more natively into our platform to achieve a more seamless user experience and higher downstream conversion, building on the technology we gained through the Holisto acquisition last year. We continue to bring teams and technologies closer together to maximize the value we create for our users and partners. Our third strategic priority is to help our partners realize their full potential on our platform. Our partner mix has become structurally more resilient. Before intercompany eliminations, the share of referral revenue from all other advertisers has grown from 20% in Q2 2023 to 35% in Q2 2026, reflecting a broader and more diverse base of advertisers succeeding on our platform. Our transaction-based CPA model has been a key driver of this shift, exceeding our expectation in both adoption and performance. By shifting complexity of bid optimization and risk exposure away from our partners, we believe we are helping advertisers compete more effectively, which strengthens the long-term health of our marketplace. Beyond our 3 strategic priorities, I want to share the strong progress we are making on AI adoption at trivago. Last time, I described our ambition for our roughly 600 core talents to operate with the impact of 6,000. That ambition is showing up in our internal AI adoption numbers. Our latest internal AI survey found 93% of our talents now use AI daily, up from 63% a year ago and 86% say it makes a real measurable difference in the output. On average, our talents are saving 55 minutes a day, up from 36 minutes last year. Our investment reflects the same trend. In the first 7 months of 2026, we spent more than 5x as much on AI tooling and tokens for our teams as we did across all of 2025. We believe our size also puts us in a sweet spot and recent research from [ RAM ] supports this. Looking at more than 21,000 U.S. companies, the economists found that AI adoption peaks at companies around our size with a technical talent composition similar to ours. We see a real advantage in this. We are big enough to build cutting-edge infrastructure and small enough to keep a culture built on curiosity and speed. Saving time and becoming more efficient is great, but we believe the real leverage lies elsewhere. Each of us is becoming dramatically more capable, making better decisions, building products and scaling reliable systems faster. Our ambition is to become an AI-native company where agentic systems take on more of the execution and our people focus on direction, judgment and craft. While we're excited about this progress, we remain disciplined about where our growing investment in this technology creates real value. We are educating our talents. We develop mission-focused AI playbooks for our teams and are building our own infrastructure, drawing on open source models wherever they let us move just as fast at lower cost. I'm confident in how trivago can compete from here. We have the direction, the momentum and talents who are eager to learn and execute faster than anyone else in our space. With that, I'll hand over to our CFO, Wolf, for a more detailed financial review.

Thank you, Johannes, and good morning, everyone. Q2 marked another strong quarter for trivago, and we are delighted that we exceeded our internal year-over-year expectations for both total revenue growth and profitability. We achieved a 21% year-over-year increase in total revenue while shifting more towards profitability despite tough prior year comparables. Our brand strategy, together with significantly improved unit economics by conversion uplifts underpin our balanced approach of driving top line growth while improving profitability. These developments reinforce our confidence in targeting a 10% adjusted EBITDA margin by 2028. In our view, the current share price continues to understate trivago's long-term earnings potential, and we will continue our buyback program as we see it as a disciplined and high-return use of capital. As of July 31, 2026, we have repurchased around 700,000 ADS for around $3.5 million. Let's review our second quarter results as well as our full year 2026 and midterm outlook. Unless otherwise indicated, all comparisons for 2026 are on a year-over-year basis. In the second quarter, total revenue reached EUR 168.4 million, representing year-over-year growth of 21%. Americas grew 16% and Developed Europe 14% in referral revenue year-over-year, both exceeding our expectations, driven by growth in branded channel traffic, compounding brand effects and improved marketing efficiency. Rest of World referral revenue declined 11% year-over-year, impacted by FX headwinds of approximately 7% and geopolitical pressures in the Middle East, including airspace restrictions and elevated oil prices. Throughout the quarter, we took a tactical approach in these markets, adjusting bidding spend and targets locally. The situation in the Middle East remains fluid and creates near-term uncertainty, and we will manage our exposure dynamically as it evolves. That said, Rest of World represented just 18% of our Q2 referral revenue, so the impact on the total referral revenue was limited. Our revenue base is well diversified, which makes us structurally more resilient to localized macro pressures. For the second quarter, we reported a net loss of EUR 5.2 million. At the same time, we delivered a positive adjusted EBITDA of EUR 1.1 million, ahead of our internal expectations and marking the first time since 2023 that we have achieved this milestone already in the second quarter. Operational expenses increased by EUR 26.9 million year-over-year, totaling EUR 174.2 million for the second quarter. This was mainly due to a EUR 14.3 million increase in selling and marketing resulting from higher investment in both brand and performance marketing channels made over the course of the quarter, and incremental expenses resulting from the consolidation of trivago DEALS. Advertising spend increased by EUR 8.3 million or 18% in Developed Europe, EUR 6.2 million or 14% in Americas and decreased by EUR 2.3 million or 9% in Rest of World. Despite further scaling of our marketing investments this quarter, global ROAS rose from 119.0% in Q2 last year to 121.8% in Q2 this year. Americas delivered a notable ROAS improvement, climbing from 116.9% in Q2 2025 to 125.3% in Q2 2026, while Developed Europe experienced a slight decline from 122.1% to 121.0% due to strong brand investments and Rest of World softened from 117.1% to 115.9%. By the end of Q2 2026, we held EUR 114.5 million in cash and cash equivalents and no long-term debt, underscoring our exceptional financial position. Our third quarter is off to an encouraging start. We will continue scaling our brand marketing investments, though at a more moderated pace than in prior years, leveraging compounding brand effects to sustain the momentum of increased profitability in 2026. In addition, we are now consolidating trivago DEALS without the previous 1-month reporting lag, eliminating the timing differences, which impacted our consolidated financial statements since the third quarter of 2025 until the first quarter of 2026. We anticipate sustaining our growth trajectory with steadily improving profitability, targeting a 10% adjusted EBITDA margin by 2028. For 2026, we are increasing our full year guidance to mid-teens percentage year-over-year total revenue growth and an adjusted EBITDA of around EUR 30 million. With that, let's open the line for questions. Operator, we are now ready to take the first question.

[Operator Instructions] Your first question comes from the line of Naved Khan with B. Riley Securities.

A couple of questions from me and great execution here, guys. I like the fact that you guys now are guiding to 10% and put a date on that, so 2028. How should we be thinking about your ability to grow the top line as you kind of march towards the 10% target by 2028? Give us your thoughts on that. And then the second question I have is, in terms of the trivago Book & Go, it's now around 35% of your -- in terms of share. How high do you think the share can go? And also, curious why Expedia opted to participate in that. They have their own brand and just trying to understand why they would opt to participate in Book & Go.

Thanks for your question. So let me take the first one. So how do we think about the top line development and combined with the 10% adjusted EBITDA margin that we call out for 2028. So first of all, we were comfortable to setting this target because the sum of trends that we already observed independently contributed to this new target. We see the compounding effect from our brand flywheel. We see an improved product, which led to conversion rate improvements of around 64%, and all these factors gave us confidence in order to call this out. And in terms of top line, we are still plan to grow above market, and this is how we look at it at the moment.

I can comment on Book & Go. And maybe, the further we go into the year, we will give guidance on next year on top line, but that's what we feel confident sharing right now. I think it will be very interesting how our member strategy turns out, how we create stickiness with users. And I think we are second year into this. We see encouraging results, and we want to see how this unfolds before we give more top line guidance as well. On the Book & Go side, I think what's important here that we continue expanding it across markets. So it's 16 markets now that we have launched the product in. And the question on Expedia is that, they just want additional visibility. And when you join our Book & Go product, they are basically visible with their own brand. And then with their inventory, they are also visible with our branded channels. So it's basically giving them incrementality, that's the belief. And we -- so they have the benefit of incremental visibility. And we have the benefit of offering this on a more broad scale as we prospectively believe this can be more attractive for members as well to, on a long-term basis, book more consistently through the Book & Go channel, so you have a convenient experience. And this growth quickly. It tripled its share over the course of the year. I'm not sure if you said a percentage number, so we are not sharing an absolute percentage number of size. It's a relevant part of the all other segments, but not the majority. This is maybe what we can share here. And it's one of several drivers of the all other segment. The all other segment has been growing because of a combination of things. It's alternative accommodation player being more active in our space, the direct segment becoming more competitive from changes we have done around our hotel details pages, which we shared last quarter and the previous quarter, I believe, where we make them more competitive in our marketplace. They don't have a search results list like Booking or Expedia, and we basically improve the experience and make them more competitive. So the direct players have leaned in more and also enjoy a bigger share in our marketplace. And that's it around Book & Go and the dynamics with the all other segments. Does that answer your question?

Yes. So yes, sorry, I want to correct myself. I think the 35% is to all other and not just Book & Go, which is a part of it. But do you think this 35% can continue to climb higher? Where do you see it over the sort of medium-term? So that's sort of a follow-up question on that. And then the second part of this is, are you also seeing Google implement changes in Europe? I think they've been required to do that. And is that a tailwind for you? Or are they still not implementing those changes?