trivago N.V. Q4 FY2025 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Trivago Q4 Earnings Call 2025. I must advise you the call is being recorded today, Wednesday, the 4th of February 2026. We are pleased to be joined on the call today 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, February 3, 2026, only, unless expressly stated otherwise, in which case, it reflects management's view as of today, Wednesday, February 4, 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 Q4 2025 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 these 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 2024. With that, let me turn the call over to Johannes.

Good morning, and thank you for joining our Q4 2025 earnings call. We are thrilled to share the results of an exceptional year 2025, and our fourth consecutive quarter with double-digit year-over-year growth in Referral revenue and higher-than-expected profitability. For the full year 2025, we exceeded both our top and bottom line expectations despite material FX-related headwinds, delivering 19% year-over-year total revenue growth and EUR 15.8 million in adjusted EBITDA. We closed the year with an exceptionally strong fourth quarter, achieving 27% year-over-year total revenue growth. In 2025, our strategic theme for the year was turning the tide, steering our focus on making our turnaround a reality. In 2026, we are rallying behind the theme, optimizing momentum, pushing frontiers, striking the right balance between growth and marketing discipline while continuing to innovate at the leading edge of our space. Our long-term strategy is playing out. We are confident that our brand and product flywheels can continue to drive growth and profitability. For 2026, we expect double-digit total revenue growth and are targeting at least EUR 20 million of adjusted EBITDA. Despite strong comparables in the first half of the year, we anticipate our fifth consecutive quarter of double-digit total revenue growth in Q1 at higher profitability compared to previous years. Let me now highlight a few developments of the past year that demonstrate our outstanding progress the Trivago team has achieved since Andrej, our CPO; Jasmine, our CMO, and I returned to the company in mid-2023. Our increased brand marketing investments since mid-'23 are paying off. Branded traffic revenue growth has outpaced top line revenue growth significantly in the recent years. We are seeing compounding effects and sustained attractive return on incremental brand marketing spend. Our core hotel search product continues to advance quickly. In 2025, we have improved our conversion reaching a 37% increase versus 2023, materially enhancing our unit economics. These gains are powered by AI and hundreds of experiments each quarter. We have evolved our member proposition, driving revenue from logged-in members to more than 25% of Referral revenue, a 93% increase in Q4 2025 compared to Q4 2023. Our investments in empowering partners are translating into meaningful gains. Our partners reach more qualified leads than ever, and our transaction-based CPA model continues to exceed expectations. More than 140 partners have adopted this operating model, and over 25% of Referral revenue is now processed under this model. Referral revenue flowing through our higher-converting Trivago Book & Go funnel has increased by 137% in Q4 2025 compared to Q4 2023. Zooming out, we believe we are well-positioned within a $1.6 trillion travel market with hotels representing about $500 billion of that opportunity. Our recent research shows that roughly half of travelers prioritize value for money and competitive prices. More than 40% of travelers compare prices between different booking sites. Our deal-oriented value proposition is tailored to this need, giving us conviction that we have substantial room to grow. Let me now recap our key success drivers behind each of our strategic pillars and outline our priorities for 2026. For additional detail, please refer to our investor presentation on ir.trivago.com, which further demonstrates our progress and the points I'm about to cover. Our first strategic priority is to drive growth through brand marketing. Our brand engine continues to gain momentum. Our brand marketing team has run campaigns in 30 countries and has delivered success across all geographical segments in 2025. Our AI-powered summer campaign featuring global icon and soccer coach, Jürgen Klopp, has proven very effective, and our winter campaign started with promising results. In the last quarter, we followed a different approach compared to previous years. We leaned into Latin America markets, which have a different peak seasonality, and invested in other key markets where we identified exceptional opportunities that we chose to exploit. We're consistently improving brand marketing efficiency and have expanded into new brand marketing channels. We remain disciplined and invest behind what we see is working. In 2026, we will continue to increase brand marketing spend, primarily in the markets we have focused on in recent years. However, the pace of growth and brand spend will be substantially lower than in the past years as we are now getting closer to our target brand marketing investment levels. Our priority will shift from entering new markets to further optimizing existing ones. Unlike prior years, when profitable regions subsidized newly activated markets to a greater extent, we expect slower growth in incremental brand marketing spend, combined with compounding effects of the past investments to make us progressively more profitable in 2026 and beyond. Our second strategic priority is to enhance our hotel search and price conversion experience. In 2025, we significantly increased the number of tests run on our platform, delivering meaningful product improvements and conversion rate gains. Advanced machine learning and LLMs have enabled us to develop and scale AI-powered features that are broadly adopted by our users. Our AI highlights and AI review summaries are changing how people discover and evaluate hotels in every search on Trivago today. Our AI-driven natural language search allows travelers to search hotels in entirely new ways. We launched our AI Smart Search in Q4 2024, becoming the first hotel search platform to offer this capability. It's an advanced free-text search powered by large language models that lets users find hotels using natural conversational queries. Since the launch, we have steadily increased its visibility and continuously refined both the UX and the underlying logic. As a result, we are seeing growing user adoption. Our member proposition continues to strengthen as well, which we expect to improve retention. The key drivers behind this success are the exclusive rates that our partners provide to our members and our enhanced ability to personalize search results. Looking ahead to 2026, we will maintain our relentless focus on improving our core product. We see clear upside in further increasing conversion through high-velocity testing. We will continue to invest in AI-powered features that are central to offering a superior hotel search experience. We aim to lead on price perception, offering great deals and making them easy for users to find. We will also stay focused on expanding our member base. In addition, we will double down on Trivago Book & Go, which we aim to integrate more deeply into our user platform's journey with a goal to facilitate a more seamless booking experience that further elevates conversion rates for our partners and Trivago. Our third strategic priority is to empower our partners to realize their full potential on our platform. Our transaction-based CPA model has seen broad adoption among small and midsized partners. These partners often lack resources and data scale needed to optimize bids and exposure effectively in our auction. By shifting risk and optimization complexity away from bidding, the CPA model helps smaller partners compete more effectively in our marketplace. Going forward, we will continue to deliver highly qualified users to our partners, equip them with even better tools, and increase our efforts to help them optimize their rates on Trivago. In particular, we will focus on working with our partners to deliver more exclusive deals to our members. Finally, let me share my enthusiasm for the evolution of AI. I see this as a huge opportunity for our business and shareholders. Our vision is to operate with 600 people as if we were 6,000. We are a fast, nimble team adopting AI in every possible way, using it to amplify our marketing impact with previously unimaginable features for our users, and boost our team's productivity day by day. In short, we are doing far more without expanding our workforce. With that, I'll hand over to our CFO, Wolf, for a more detailed financial review.

Thank you, Johannes, and good morning, everyone. We are excited to report that the fourth quarter reflected our profitable growth trajectory with a year-over-year total revenue growth of 27%. For the full year, we achieved total revenue growth of 19% year-over-year, a net income of EUR 11.2 million, and an adjusted EBITDA of EUR 15.8 million, despite FX-related headwinds. Our brand strategy, as well as our continuous product improvements, led to an all-time high in our conversion rate, which significantly improved our unit economics. Let's review our fourth quarter results and our 2026 outlook. Unless otherwise indicated, all comparisons for 2025 are on a year-over-year basis. In the fourth quarter, our total revenue reached EUR 120 million, representing a 27% increase compared to the same period in 2024. We are pleased to note this marks our fifth consecutive quarter of total revenue growth. This growth was driven by yet another quarter of strong year-over-year double-digit Referral revenue growth of 20% in Americas, 16% in Rest of the World, and 15% in Developed Europe. We achieved this despite FX-related headwinds of approximately 5% globally. The growth was primarily driven by increased branded channel traffic in response to our ongoing brand marketing investments. Strong creatives and the diversification of our branded marketing channels create further potential to scale and reduce our dependency on search engines. During the fourth quarter, we reported a net income of EUR 14.5 million and achieved a better-than-expected adjusted EBITDA of EUR 11.3 million. Operational expenses increased by EUR 26 million, totaling EUR 113 million for the fourth quarter. This was mainly due to a EUR 19.7 million increase in selling and marketing, resulting from higher brand marketing investments made over the course of the quarter and incremental expenses resulting from our acquisition of Trivago DEALS, formerly Holisto. Advertising spend increased by EUR 9.8 million or 43% in Americas, EUR 4.3 million or 31% in Rest of World, and EUR 3.8 million or 18% in Developed Europe, driven largely by increased brand marketing investments in all Trivago core segments. Due to the scaling of our brand marketing investments in this quarter, global ROAS decreased from 162.9% in the prior year to 147.9% in 2025. We observed a reduction in ROAS year-over-year across all Trivago core segments during the fourth quarter with Americas decreasing from 159.6% in 2024 to 137.5% in 2025, Rest of the World decreasing from 148.3% in 2024 to 131% in 2025, and Developed Europe from 176% in 2024 to 173.8% in 2025. As of December 31, 2025, we held EUR 130.9 million in cash and cash equivalents and no long-term debt, underscoring our exceptional financial position. Although we are facing tough comps in Q1 and Q2 2026, we are off to an encouraging start in line with our expectations. We will maintain cost discipline and keep our headcount stable by leveraging AI. We will further scale our brand marketing investments, but at a lower level compared to previous years, and make use of compounding brand effects to gradually increase profitability in 2026. For 2026, we expect double-digit percentage total revenue growth and an adjusted EBITDA of at least EUR 20 million. With that, let's open the line for questions. Operator, we are now ready to take the first question.

Your first question comes from Naved Khan with B.Riley Securities. Please go ahead.

So my first question is just a little bit of clarification on the guidance. So for the double-digit growth in 2026, how should we think about the growth in Referral revenues because you do have some contribution from the Holisto acquisition? Should we expect Referral revenue to also grow in the double digits? And then maybe a related question is, pre-COVID, I think you had around over EUR 800 million in Referral revenue, and you had kind of set out an aspiration goal of getting back to those kind of levels. Do you still expect to get back to where you were pre-COVID levels? And I think the EBITDA margin around the time was around 6%. So how should we think about that over the kind of medium term? And then maybe just a clarification on the brand advertising channel. I think you talked about kind of finding a new opportunity. Can you just elaborate on that a little bit, if it's offline or online? And what's the opportunity to scale that channel?

Thank you for your question. To address your first point, we have decided to provide guidance only on total revenue moving forward. This decision was previously mentioned in our last earnings call. We believe focusing solely on total revenue gives a clearer picture, especially since Referral revenue does not accurately reflect the development of Trivago Core. This is because Referral revenue is presented after intercompany elimination, which excludes the portion related to Trivago DEALS. That part will be included under other revenue, leading to a total revenue figure that we find more meaningful. Additionally, as Trivago Book & Go continues to grow, the misleading nature of looking at Referral revenue alone will become more pronounced. Therefore, we will provide guidance primarily on total revenue at a consolidated level. So far, we are experiencing double-digit top line growth, and I want to highlight that January had a strong start, aligning with our expectations for Q1, which indicates continued double-digit growth and enhanced profitability. That's all for your first question.

I can discuss our aspirations. I believe there are two key points here. You referenced 2019 numbers, and while it's our goal to get as close to that as possible, it isn't a strict target. It is more about executing our marketing strategy. We are being more disciplined in performance marketing, focusing on driving revenue growth through branded traffic rather than merely increasing volume. This means we are raising our ad spend while improving marketing efficiency and the effectiveness of our creative efforts. We anticipate a significant increase in brand marketing investments this year and in the coming years, although the rate of increase will taper off over time. Consequently, revenue will follow this trend; in terms of profitability, we aim for around a 10% adjusted EBITDA share in the next few years. From that point, we will then decide whether to pursue new markets or further enhance profitability and margins, which remains undecided. However, in the short term, consider 2019 as our aspiration, with figures possibly around EUR 800 million or EUR 700 million. We are flexible and will determine the exact figure. Our priority is to enhance the bottom line, achieve solid results, and then decide whether to focus on growth or margins, a decision we'll revisit in a few years. Regarding our brand marketing strategy, I've mentioned that the incremental spending will decrease and slow down. This quarter, our return on ad spend (ROAS) has been lower compared to last year and even the previous year. Typically, we see a higher ROAS in the fourth quarter, but this year's performance is primarily due to our focus on Latin American markets, which have different peak seasonality. While Europe and the U.S. peak in mid-Summer, Latin America peaks at this time of year. We shifted our efforts to those successful markets, especially in Q4, which is why our ROAS is lower. Additionally, we are exploring opportunities in other markets worldwide. When we identify attractive media and marketing opportunities at good prices, we seize them, expecting a strong return on investment. We capitalized on these opportunities in Q4 as well.

Excellent. Thank you very much, and keep up the good execution.

Thank you.

Your next question comes from the line of Doug Anmuth with JPMorgan.

This is Dae Lee, on for Doug. First one, just talk a little bit about how you will characterize the health of global travel as we sit today? And are you expecting any impact from major sporting events, such as the Winter Olympics or the World Cup on your platform? And then secondly, where do you expect the most benefits to show up from the newer products like Book & Go and CPA model? And can these products drive further diversification in your advertiser base?

Thank you for your question. Let me provide a brief overview of the travel trends we are currently observing. The insights I’m sharing are derived from our internal data for the fourth quarter. We’ve noted that ADRs were positive in the Rest of World and Americas, while Developed Europe saw slight negativity. The length of stay has increased slightly across all three segments, and the ABV was positive in Developed Europe and the Rest of World, remaining stable in the Americas. When analyzing recent search interest based on our internal travel data for trips starting in the first quarter of 2026, the overall clicked ABV appears stable. The clicked ABV for Q1 in Developed Europe and the Rest of World is positive, while in the Americas, it is slightly negative. The share of search interest for 4- to 5-star categories remains stable globally. Furthermore, the average clicked travel distance in the fourth quarter has shown a positive year-on-year trend, with the mix of search requests for international destinations steady, except for travelers from the Americas, where there's been a marked shift towards domestic trips by U.S. travelers, accompanied by significant declines in inbound travel to the U.S. from Canada, Germany, and France. Regarding mega events, we haven't factored in any potential positive or negative impacts from events like the World Cup or Olympics; overlapping mega events don’t appear to decrease travel but likely encourage it instead. Therefore, we don't have any significant insights to add here. While we do notice an uptick in prices during such events in major cities, this isn’t particularly new information. Regarding Book & Go and CPA, the partner mix and share have improved significantly over the past two to three years post-pandemic, returning to levels seen in 2019, which we consider positive. Notably, CPA seems to play a larger role in boosting partner competitiveness, while Book & Go has also increased its influence, albeit to a lesser extent compared to CPA. Book & Go grew by 137% in Q4 2025 compared to Q4 2023, and this growth trajectory will continue into 2024 and 2025. We anticipate this trend will persist, further driving conversions for our partners and Trivago overall, contributing positively to our operations.

Your next question comes from the line of Stephen Ju with UBS.

This is Vanessa, calling in for Stephen. So you previously mentioned Holisto now in Trivago DEALS could provide white label booking engine services, particularly for small and medium-sized OTAs and potentially hotel chains. I was just hoping if we could get an update on this opportunity.

I think I touched on it a bit in my remarks and in the previous question. So what this means is, we facilitate the booking for our partners. Our priority is not and might be an opportunity in the future is that we kind of power full tech stacks of other OTAs or so on. That's not a priority for us. What we focus on is this Book & Go being a channel that completes the booking on Trivago on behalf of our partners. And on behalf of Trivago DEALS or the underlying product Holisto has been operating in the past. And that is developing very well in our platform, and with the main goal of driving conversion. And we outlined that conversion has been up 37% compared to 2023, which means marketing is more effective, which means user satisfaction is a lot higher and that, I think, will be the payoff year and not kind of a separate business line that we are after.

Your next question comes from the line of Wei Fang with Mizuho Securities.

Congrats on the solid growth as well. I just want to double-click on the commentary you're saying you're getting much closer to your plan like brand marketing level, right? And does that mean you will need to maybe shift a little bit of your traffic strategy to some of the other channels on the way? Just wanted to see if you can comment on that.

Thank you for your question. I'm not sure I fully understood it. However, regarding our brand investment, I have mentioned before that our strategy is to significantly increase this year and in the coming years, but we expect less incremental growth than in previous years. We have worked successfully in additional brand marketing channels. Previously, we focused heavily on linear TV, but over the last two years, we have explored various new channels, including streaming, podcasts, and social media. We are now capable of scaling these channels effectively due to technological advancements. We've diversified our approach and are now less reliant on linear TV. In terms of broader marketing channels, we have maintained a disciplined approach to performance marketing. We recognize that the most attractive and profitable traffic, which has lasting value, comes from branded traffic—when customers come to us directly with our brand in mind—as opposed to performance marketing channels that offer less stickiness. Throughout this year, we have reduced our reliance on performance marketing and search channels, which has been an essential step. We will continue to be disciplined in these areas. Additionally, we have achieved more diversification in our brand channels, which was also a goal, ensuring we have the ability to grow our brand with high elasticity as we make incremental investments.

There are no further questions at this time. I will now turn the call back to Johannes for closing remarks.

Thank you. I'm proud to be on this journey with such a strong team, and I want to say thanks a lot to everyone at Trivago for making our turnaround a reality. Our shareholders can be confident that we will remain focused on sustaining our momentum and be disciplined in executing on our strategy. Thank you to our partners and investors for your continued trust and support, and we look forward to sharing further updates in our next quarterly call. Thanks a lot.

This concludes today's call. Thank you for attending. You may now disconnect.