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(NASDAQ: TRIP) Q4 2011
Safe Harbor Statement
Forward-Looking Statements. This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts or guarantees of future performance and are based on management's assumptions and expectations as of November 21, 2011, which are inherently subject to difficult to predict uncertainties, risks and changes in circumstances. The use of words such as "intends,” “expects,” “may,” “believes,” “should,” “seeks,” “intends,” “plans,” “potential,” “will,” “projects,” “estimates,” “anticipates” or similar expressions generally identify forward-looking statements. However, these words are not the exclusive means of identifying such statements, and any statements that refer to expectations, beliefs, plans, predictions, projections, forecasts, objectives, assumptions, models, illustrations, profiles or other characterizations of future events or circumstances are forward-looking statements, including w/o limitation statements relating to future revenues, expenses, margins, performance, profitability, cash flows, net income/(loss), earnings per share, growth rates and other measures of results of operations (such as, among others, EBITDA or adjusted EBITDA) and future growth prospects for TripAdvisor’s business. Actual results and the timing and outcome of events may differ materially from those expressed or implied in the forward-looking statements for a variety of reasons, including, among others, those discussed in the “Risk Factors” section of the registration statement on Form S-4 (File No. 333-175828-1), which included a proxy statement for Expedia, Inc. (“Expedia”) and prospectus for Expedia and TripAdvisor (the “Prospectus/Proxy Statement”). Except as required by law, we undertake no obligation to update any forward-looking or other statements in this presentation, whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on forward-looking statements. Non-GAAP Measures. Reconciliations to GAAP measures of non-GAAP measures included in this presentation are included in Appendix. These measures are intended to supplement, not substitute for, GAAP comparable measures. Investors are urged to consider carefully the comparable GAAP measures and reconciliations. Industry / Market Data. Industry and market data used in this presentation have been obtained from industry publications and sources as well as from research reports prepared for other purposes. We have not independently verified the data obtained from these sources and cannot assure you of the data’s accuracy or completeness. Additional Information about the TripAdvisor Spin-Off. As previously announced, Expedia intends to spin-off its TripAdvisor Media Group businesses into a separate publicly-traded company, TripAdvisor, Inc. The spin-off is subject to various conditions, including the requirement that the spin-off be approved by the affirmative vote of holders of a majority of the outstanding shares of Expedia common stock, other than shares owned or controlled by Expedia management. In connection with the proposed spin-off, Expedia, Inc. and TripAdvisor, Inc. have filed a Prospectus/Proxy Statement with the SEC. Stockholders of Expedia and investors are urged to read the Prospectus/Proxy Statement because it contains important information about Expedia, TripAdvisor and the proposed spin-off transaction and related matters. Investors and security holders can obtain free copies of the Prospectus/Proxy Statement by contacting Investor Relations, Expedia, 333 108th Avenue N.E., Bellevue, Washington 98004 (Telephone: (425) 679-3555). Investors and security holders can also obtain free copies of the Prospectus/Proxy Statement and other documents filed by Expedia and TripAdvisor with the SEC at the SEC’s web site at www.sec.gov. In addition to the Prospectus/Proxy Statement, Expedia files, and TripAdvisor will file following the spin-off, annual, quarterly and current reports, proxy statements and other information with the SEC, each of which should be available at the SEC’s web site at www.sec.gov. You may also read and copy any reports, statements and other information filed by Expedia or TripAdvisor at the SEC public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. Expedia and its directors, executive officers and certain members of management and other employees may be deemed to be participants in the solicitation of proxies of Expedia stockholders to approve the proposed spin-off transaction, which transaction will be considered for approval by Expedia stockholders at the 2011 Annual Meeting of Stockholders on December 6, 2011. Directors, executive officers and certain members of management and other employees of Expedia may have interests in the transaction as described in the Prospectus/Proxy Statement, including as a result of current holdings of options, restricted share units or shares of Expedia stock and future holdings of options, restricted share units or shares of TripAdvisor stock, which will be impacted in the transaction. The Prospectus/Proxy Statement, first mailed to Expedia stockholders on or around November 3, 2011, contains information regarding Expedia and the equity interests of its directors and officers who may be deemed participants in the solicitation of proxies is contained in the Prospectus/Proxy Statement. Additional information regarding the interests of such potential participants may be included in other relevant documents to be filed with the SEC.
STEPHEN KAUFER, CO-FOUNDER, PRESIDENT AND CEO
TripAdvisor and the TripAdvisor logo are trademarks or registered trademarks of TripAdvisor LLC in the U.S. and/or other countries. All other trademarks are the property of their respective owners. (c) 2011 TripAdvisor LLC. All rights reserved.
It all started when… Iberostar Tucan Hotel. Playa del Carmen 4 .
over 500. Worldwide New Media Market Model. September 2011 IDC. attracts new consumers and provides great defensibility Compelling and differentiated business model • Rich user-generated content creates valuable monetization opportunities and efficient cost structure (1) (2) comScore.Investment Highlights Leading online travel media platform • 44M monthly uniques(1) Huge and growing market opportunity • $39B+(2) spent on travel advertising each year Definitive resource for travelers and critical partner for merchants • Over 50M reviews and opinions.000 hotels featured Powerful network effects • Scale generates a richer experience for all. August 2011 5 .
Adjusted EBITDA is defined as Operating Income attributed to TripAdvisor Holdings. and (4) non-recurring expenses incurred to effect the spin-off during the six month ended June 30. 2011 with the SEC. Inc. growing.000. profitable – leading online travel media platform (1) IDC. Inc.000. LLC plus: (1) depreciation of property and equipment. Form S-4 filed November 1.000+ 50. LLC Combined Results of Operations as disclosed in Annex E of Amendment No.000+ 93.000. including internal use software and website development. 2011 (3) Reflects compound annual growth of segment reported revenue as disclosed in Expedia.000. Revenue includes intercompany revenues from Expedia. (3) stock-based compensation.000. Inc.000+ 10. (2) amortization of intangible assets.000.000+ $39.000+ 715.000+ 160.TripAdvisor by the Numbers Market opportunity $294.000+ 520.000.000+ 57.000. August 2011 TripAdvisor Holdings. Form 10-K filings with the SEC (2) Reflects 6 .000+ 8. 4 to Expedia.000+ $485M $261M 46% 2011E Travel e-commerce spend(1) 2011E Travel ad spend(1) Reviews and opinions Destinations Hotels Attractions Restaurants Candid photos Facebook connections Mobile downloads 2010 Revenue(2) 2010 Adjusted EBITDA(2) 2006-2010 revenue CAGR(3) The leading travel media platform Financial Scaled. Worldwide New Media Market Model.
Travel: Huge Market. Offline: 62% Online: 38% Total 2011E bookings: $875B(2) Worldwide New Media Market Model. Sixth Edition.S. based on take rates derived from Orbitz Worldwide’s 2010 Form 10-K. Fourth Edition (3) Example OTA commission is Orbitz Worldwide’s. Online Travel overview. Eleventh edition. PhoCusWright European Online Travel Overview. PhoCusWright APAC Online Travel Overview. August 2011 (2) PhoCusWright U. Travel 2011E ad spend: $39B+ (1) 7 . Underpenetrated Online Travel nearly half of global e-commerce(1) Online All other e-commerce travel 44% 56% 2011 Global eCommerce market size: $673B 44% Travel ~$300B 2010-2012E Online travel spend CAGR Online travel – US / Europe maturing while APAC / LATM growing fast(2) 2011E Online travel spend ($B) $149 $120 US EUR 6% 3% 15% 32% 3% 10% 38% 62% $55 $11 US EUR APAC LATM APAC LATM 17% Example OTA commission(3) Online hotel bookings growing faster. more profitable(2) Online Offline 11% 24% 76% (2011E) Hotel / Other Air Online: 16% Offline: 84% Travel ad spend is large and underpenetrated online (1) IDC.
Online Travel overview. Fourth Edition (2) Nielsen.Most Important Information Influencing $800B+ of Travel Spend(1) Word of mouth content is most important in influencing purchasing decisions(2) % of respondents who “trust completely” or “trust somewhat” a source Recommendations from people I know Consumer opinions posted online Emails I signed up for Editorial content Brand websites Ads in newspapers Ads on TV Ads in radio Ads in magazines Ads served in search engine results Online video ads Products shown embedded in TV Online banner ads Ads on social networks Ads on mobile devices 98% of participants found TripAdvisor’s hotel reviews to accurately represent the experience(3) 76% 49% 40% 37% 35% 30% 29% 27% 25% 21% 19% 17% 16% 15% 13% Customer Reviews User-generated photos Friend recommendations (1) PhoCusWright U. custom report. PhoCusWright European Online Travel Overview. Eleventh edition. Sixth Edition. July 2011 8 . Trends in Advertising Spend and Effectiveness. PhoCusWright APAC Online Travel Overview. June 2011 (3) PhoCusWright.S.
Scale generates higher prices 9 .Significant Network Effects and Economies of Scale Scale drives content generation Reviewers want access to broadest audience High monetization enables efficient customer acquisition Continues to invest in ROI-positive customer growth Audience Breadth of information means majority of users find the content they need Over 50M users and opinions Critical source of customers for suppliers A source for a very high % of client leads.
Strong and Differentiated Competitive Position Search providers OTAs Other travel media Other review services High traffic Rich content TripAdvisor position The leading online travel media platform Depth of reviews drive user experience TripAdvisor is a mission critical supplier TripAdvisor has Depth and breadth significantly greater of travel-focused reach/scale content 10 .
TripAdvisor’s Business Model Consumer Value Friend experiences Business listing Display ad / sponsorship Lead generation Tips from friends Business Value Candid photos Review summary Room tips Search filtering Display ad / Cost per click ad Detailed reviews 11 .
57M people have been instantly personalized Facebook users are more engaged on the site Facebook users are 2x more likely to contribute full reviews Higher conversion and monetization 12 .Wisdom of Friends – Ability to Connect Improves Experience Deep social integration heightens the experience Since launch.
355 Partners / referrals 13 Source: comScore.411 Groupe SNCF Priceline 8.188 Qunar.Leading Scale and Global Reach Monthly unique visitors (‘000s) – branded websites Travel Website Landscape TripAdvisor Sites 31.224 Orbitz Worldwide Travelocity 30 countries in 21 languages 12.347 14.941 Yahoo! Travel 15.com Hotels.576 Highly efficient sources of traffic Ctrip.com 11.com 9.461 Global reach Booking.232 8.109 10.com Brand Direct navigation Organic search Paid search 10.419 44.com Expedia Sites 27.378 Kayak. September 2011 .
000 partner sites use TripAdvisor content Provides access to 150M monthly uniques Syndication makes TripAdvisor the de-facto standard for travel review information 14 .Content Syndication A powerful extension of TripAdvisor 30.
September 2011 15 .TripAdvisor Media Group TripAdvisor branded sites 44M monthly uniques(1) TripAdvisor Media Group 61M monthly uniques(1) (1) comScore Media Metrix.
Nov 2011 (as cited in HomeAway prospectus) (3) Boston Consulting Group. Market Sizing Study.Key Areas of Investment and Growth New Platforms New Geographies New Products Mobile • Mobile travel spend expected to be over $2B by 2014. The Internet’s New Billion: Digital Consumers in Brazil. Russia.S. Aug 2011 Radius Global Market Research. twice the amount of time in the U. growing 40+% year-over-year(1) the US China • World’s 2nd largest economy after • 1B hours spent online per day. India. (2) Worldwide New Media Market Model. Sept 2010 16 .(3) Vacation rentals • An $85B vacation rental market in 2010 and growing(2) • Mobile monetization still early • Travel is 4th largest category in the Apple App store • Highly fragmented and inefficient market • Expect more than 650M internet users by 2015 – but still less than 50% penetration (3) • Extending the leading TripAdvisor online travel platform • Widely varied travel pricing (1) IDC. China and Indonesia.
hotels.TripAdvisor Strategy: Mobile Adoption Global: Available in 20 languages Early success: 10M+ downloads Frictionless: GPS and direct bookings maximize functionality Breadth: Information on thousands of activities. transport Depth: Multiple reviews on hundreds of activities in each city Mobile channel is additive and complementary to the web experience 17 .
What TripAdvisor is Doing in China Built Daodao from scratch: launched in 2008 Purchased Kuxun: #2 metasearch player in China 18 .
Stayz. Toprural and AKENA 19 .000 vacation rental listings Uniquely leverages platform to target travellers searching for hotels Acquired FlipKey and Holiday Lettings Partnered with Interhome.Vacation Rentals A new growth opportunity Over 200.
globally • Top engineering talent and robust training programs Say thank you • Recognized by Boston Globe’s “Top Places to Work” (2010. 2011) And give back • 2% of operating profit(1) allocated to employee sponsored charities that help …those less fortunate (1) Represents operating income before amortization of intangible assets 20 . . . . Speed wins • Rapid iteration and product development cycle Recruit the best and brightest .We Have a Winning Culture . .
TripAdvisor for Business (7 years) Barbara Messing Chief Marketing Officer (Joined in 2011.Led by an Experienced Management Team Steve Kaufer Chief Executive Officer and Co-Founder (11 years) Julie Bradley Chief Financial Officer (Joined in 2011) Christine Petersen President. Advertising Sales (10 years) Eric Rosenzweig Senior Vice President. formerly at Hotwire) Marc Charron Managing Director. formerly at Expedia & IAC) Experienced management with proven ability to execute 21 . General Counsel and Secretary (Joined in 2011. Global Product (7 years) Andy Gelfond Vice President. APAC (5 years) Adam Medros Vice President. Engineering (7 years) Robin Ingle Senior Vice President. New Initiatives (3 years) Tyler Young Vice President. Strategic Development and Sales (6 years) Bryan Saltzburg General Manager. Finance and Administration (7 years) Seth Kalvert Senior Vice President.
CFO 22 .FINANCIAL OVERVIEW JULIE BRADLEY.
TripAdvisor Financial Highlights • Among the fastest growing Internet businesses • Long-term revenue growth driven by expanding traffic and user-generated content – the network effect Rapid growth Compelling business model • Diversified revenue streams globally • Differentiated content provides natural search advantage • Low fixed costs • Low cost to acquire customers • Free user generated content Highly scalable. capital efficient Highly profitable and cash flow generative • Strong margins • High cash flow conversion • Low capital expenditures 23 .
(3) stock-based compensation. and (4) non-recurring expenses incurred to effect the spin-off during the six month ended June 30.Track Record of Growth and Profitability Revenue(¹) ($M) Adjusted EBITDA(1) ($M) $261 $485 $197 $352 $298 $239 $318 $147 $141 $175 2008 2009 2010 Through Q2'10 NA Through Q2'11 34% 2008 2009 2010 Through Q2'10 54% Through Q2'11 54% y/y growth (1) Reflects 47% 18% 38% Adj. including internal use software and website development. Inc. LLC Combined Results of Operations as disclosed in Annex E of Amendment No. (2) amortization of intangible assets. 2011 with the SEC. LLC plus: (1) depreciation of property and equipment. EBITDA 49% Margin 56% 54% TripAdvisor Holdings. Revenue includes intercompany revenues from Expedia. 4 to Expedia. 2011 24 . Inc. Adjusted EBITDA is defined as Operating Income attributed to TripAdvisor Holdings. Form S-4 filed November 1.
Robust Historical Growth and Pattern of Seasonality TripAdvisor Media Group Segment Revenue by Quarter ($M)1 $225 $200 +30% $175 $150 $125 $100 $75 $50 $25 $0 2008 q/q growth rate 1 +35% +44% +39% +33% y/y growth: +19% +13% +14% +29% +35% +31% 2009 Q4 (27%) Q1 39% Q2 5% Q3 8% Q4 (18%) Q1 43% 2010 Q2 10% Q3 Q4 11% (23%) Q1 38% 2011 Q2 14% Q3 7% Q1 Q2 10% Q3 8% Reflects segment revenue as reflected in Expedia 10-K and 10-Q filings. Includes Expedia intersegment revenue and does not adjust for separation. 25 .
26 . Includes Expedia intersegment revenue and does not adjust for separation.Increasing Revenue Diversification 2008 Display 13% 2009 Display 14% 2010 Subscription / Other 6% Display 15% CPC 87% CPC 86% CPC 79% $298M Revenue by geography US UK Rest of world 82% 8% 10% $352M $485M US UK Rest of world 70% 12% 18% US UK Rest of world 62% 14% 24% Note: Reflects segment data as disclosed in Expedia 10-K and 10-Q filings.
g.12% T&C 8%-9% Adjusted EBITDA 42% . LLC plus: (1) depreciation of property and equipment. (2) amortization of intangible assets. China. (3) stock-based compensation.Illustrative Post-Spin Operating Model Illustrative post-spin business profile (annual basis) G&A 10% . site redesign / de-monetization) Growth investments (e.35% Key impacts and initiatives • • • • • Changes to the Expedia customer relationship Standalone public company costs User experience enhancement initiatives (e...g. mobile. 2011 27 .47% COGS 2% S&M 31% . vacation rentals) Sales and marketing spend (e. including internal use software and website development. branding and traffic acquisition) Notes: Adjusted EBITDA is defined as Operating Income attributed to TripAdvisor Holdings. and (4) non-recurring expenses incurred to effect the spin-off during the six month ended June 30.g..
600.001 par value. $0. net Goodwill Total assets Historical (as of 6/30/2011) $112 21 75 91 298 39 48 466 $851 Pro forma adjustments $32 (75) (43) 3 ($40) Pro forma (as of 6/30/2011) $144 21 91 256 42 48 466 $811 Key highlights Significant cash flow generation Low working capital usage Strong coverage of debt obligations Current liabilities Long-term debt $161 - $20 380 $181 380 Deferred income taxes. 1. $0. net Other current assets Total current assets Other non-current assets Intangible assets.000 authorized.001 par value.800 issued and outstanding on a pro-forma basis Additional paid-in capital Accumulated other comprehensive loss Total liabilities and equity 1As 30 12 - 30 12 587 648 (1) $851 (648) 124 13 208 ($40) 124 13 208 (1) $811 set forth in the prospectus 28 . 400. 12.000 authorized. net Other long-term liabilities Total liabilities Invested capital Common shares.783 issued and outstanding on a pro-forma basis Class B common stock.Strong Balance Sheet1 TripAdvisor Holdings LLC ($M. except per share amounts) Cash and cash equivalents Short-term investments Receivable from Expedia. 123.
Operational Drivers Revenue Drivers Reach • Members • Traffic • Listings • • • • • • Number of reviews Natural search rankings Engagement / time spent on site Seasonality Engagement Scalability Product Advertising (CPC. CPM) Syndication / licensing Cost Drivers • Engineering • International expansion • Sales and marketing • Traffic acquisition • Vacation rentals • Mobile • China 29 Monetization Investments .
Spin Transaction • Spin rationale • Value creation opportunity for both TripAdvisor and Expedia • Benefits of an enhanced equity currency and greater transparency • Businesses historically managed as independent entities • Create businesses that have a single business focus • Enhance the effectiveness of employee compensation structures • Key dates • Shareholder meeting on December 6th • Spin expected to be effective by end of year 30 .
All rights reserved.S." 31 . (c) 2011 TripAdvisor LLC.CONCLUDING REMARKS STEPHEN KAUFER. All other trademarks are the property of their respective owners. and/or other countries. CO-FOUNDER. PRESIDENT AND CEO "TripAdvisor and the TripAdvisor logo are trademarks or registered trademarks of TripAdvisor LLC in the U.
000 hotels featured Powerful network effects • Scale generates a richer experience for all. over 500. Worldwide New Media Market Model. September 2011 IDC.Investment Highlights Leading online travel media platform • 44M monthly uniques(1) Huge and growing market opportunity • $39B+(2) spent on travel advertising each year Definitive resource for travelers and critical partner for merchants • Over 50M reviews and opinions. attracts new consumers and provides great defensibility Compelling and differentiated business model • Rich user-generated content creates valuable monetization opportunities and efficient cost structure (1) (2) comScore. August 2011 32 .
APPENDIX 33 .
183) $226.883 (4.905) $168.300 (241) (1. net Other.560) $124.738) (46.616 $165.342 $146. LLC Includes internal use software and website development Source: Expedia S-4 amendment number 4 as filed with the SEC on November 1.678 $134.604 (11.249) (4.371 $197.054) $157.889 (13.723) (54) $77.092 (14.035) (1.219 9.022 $141.427 $260.878 (3.494 8.674) (44.461) (178) $138.389) (139) $101.963 12.161) (5.788) 49 $72.776 34 . 2010 2011 $140.721) $125. 2011 (1) 2010 Six months ended June 30.675 5.626 5.242) (3.330 $187.442) (1. 2008 2009 Adjusted EBITDA Depreciation of property and equipment(1) OIBA Amortization of intangible assets Stock-based compensation Spin-off costs GAAP Operating income Related-party interest income (expense).997 (6.435 $174.871 $248.325) 212 $102.178 (978) (660) (64. net Provision for income taxes Net (income) loss attributable to noncontrolling interest Net income attributable to TripAdvisor Holdings.034 (148) (2.644) (85.609) (7.Adjusted EBITDA reconciliation ($ in thousands) Year ended December 31.133 315 1.422 (57.806) (5.
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