Here’s Why Expedia’s Metasearch Engine, Trivago, Filed For An IPO
After months of planning, Trivago — the metasearch engine in which Expedia has around a 63% stake — has finally filed for an Initial Public Offering (IPO) in the U.S. on November 14th. It will be listed on the NASDAQ with the ticker symbol TRVG, with a holding company named Travel BV. Expedia plans on maintaining its stake in Trivago and controlling the company post the IPO.
Expedia had been lately strengthening Trivago’s capabilities. Trivago is the primary driver to bolster Expedia’s revenues from the advertising and media segment and we currently expect the revenues to grow at a CAGR of ~11% between 2016 to 2023. In 2015, Trivago’s standalone revenue stood at around €490 million, reflecting ~60% year-over-year growth and its adjusted EBITDA reached a few million euros. For the first nine months of 2016, Trivago’s revenues grew by 49% year-on-year to ~$653 million.
Expedia had been lately strengthening Trivago’s capabilities. Trivago is the primary driver to bolster Expedia’s revenues from the advertising and media segment and we currently expect the revenues to grow at a CAGR of ~11% between 2016 to 2023. In 2015, Trivago’s standalone revenue stood at around €490 million, reflecting ~60% year-over-year growth and its adjusted EBITDA reached a few million euros. For the first nine months of 2016, Trivago’s revenues grew by 49% year-on-year to ~$653 million.
What Does Trivago’s IPO Listing Imply?
- Trivago’s listing implies that the company is in a healthy financial state and has the the potential to grow further. The IPO might give Trivago the credibility among investors as a standalone company. According to industry experts, Trivago’s adjusted EBITDA is expected to rise by 142% from around $64 million in 2016 to around $155 million by 2018.
- As is mentioned in its company filing, over the last twelve months till September 30th, 2016, there had been 1.4 billion visits on Trivago’s websites and mobile applications resulting in close to 500 million referrals, and it offered around 1.3 million hotels in close to 200 countries.
- However, the company incurred a net loss of $57.8 million for the first nine months of 2016. Trivago’s huge growth comes from its high marketing spend with over two-thirds of its revenues spent on marketing. This is not an unusual trend for fast growing travel companies such as Airbnb or Uber, who too have spent a huge sum on marketing in order to gain a fast global reach. We can expect Trivago to follow their footsteps and provide a significant return on its investment in the future.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ExpediaSee More at Trefis | View Interactive Institutional Research (Powered by Trefis)