trivago NV :TRVG-US: Earnings Analysis: Q1, 2017 By the Numbers : June 26, 2017

trivago NV reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of trivago NV – Stingray Digital Group, Inc., Reis, Inc. and Points International Ltd. (RAY.B-CA, REIS-US and PTS-CA) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 286.63 million, Net Earnings of USD 5.61 million.
  • Gross margins widened from 95.61% to 98.29% compared to the same period last year, operating (EBITDA) margins now 5.97% from 4.14%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 286.63 181.11 275.96 201.05 175.66
Revenue Growth (%YOY) 63.17 68.57 55.52 40.8 49.7
Earnings (mil) 5.61 0.31 -1.45 -55.93 0.11
Earnings Growth (%YOY) 4984.18 116.26 93.78 -303 102.62
Net Margin (%) 1.96 0.17 -0.53 -27.82 0.06
EPS 0.02 0 -0.01 -0.16 0
Return on Equity (%) 2.46 0.15 -0.81 N/A 0.07
Return on Assets (%) 2.04 0.13 -0.64 N/A 0.05

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Market Share Versus Profits

Revenues History
Earnings History

TRVG-US‘s change in revenue this period compared to the same period last year of 63.17% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TRVG-US is holding onto its market share. Also, for comparison purposes, revenues changed by 58.27% and earnings by 1,687.31% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 95.61% to 98.29% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 4.14% to 5.97% compared to the same period last year. For comparison, gross margins were 96.79% and EBITDA margins were 6.00% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

TRVG-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 79.97, compared to last year’s level of -3.27 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 0.19% to 4.67% and (2) one-time items. The company’s pretax margins are now 4.62% compared to 0.19% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

trivago NV is a holding company, which engages in the provision of a global hotel search platform. The firm offers a website and a mobile application under the trivago brand. It also provides marketing tools and services for advertisers such as trivago Hotel Manager and trivago Intelligence. The company is headquartered in Düsseldorf, Germany.

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