Shares of online travel company TripAdvisor(NASDAQ: TRIP) took off on Tuesday after the company reported financial results for the third quarter of 2023. As of 1 p.m. ET, TripAdvisor stock was up about 11%.
TripAdvisor's strong quarterly report
If you think that TripAdvisor is a stodgy, low-growth business, then you're partly right. The core TripAdvisor platform for reviewing places and experiences only enjoyed 2% year-over-year revenue growth. However, the company grew total revenue by 16%, reaching an all-time quarterly high of $533 million, thanks to the other high-growth platforms it owns.
TripAdvisor's restaurant-booking platform, TheFork, grew revenue 20% year over year, hitting $42 million. But the real star of the show was Viator, a platform for booking experiences and tours. Viator reported Q3 revenue of $245 million, up 41% from the prior-year period and almost matching revenue of $290 million for TripAdvisor's core platform.
TripAdvisor is profitable and has a healthy cash position. And management is using its financial strength to reward shareholders. The company announced a new share repurchase program of $250 million, which is substantial considering its market capitalization is only $2.5 billion.
Can TripAdvisor stock beat the market?
TripAdvisor went public more than a decade ago and yet shares trade lower now than they did back then. The company has grown revenue and it is a profitable business -- it had Q3 net income of $27 million. However, it's never really demonstrated operating leverage with scale, and this may be why it's a long-term loser. The five-year chart below illustrates what I'm talking about.
TRIP Total Operating Expenses (TTM) data by YCharts
This lack of leverage for TripAdvisor was demonstrated in Q3 yet again. The company grew revenue 16% to an all-time high, which was good. But operating expenses were also up 16%, including a 16% increase in sales and marketing expenses.
All in all, Q3 was a good quarter for TripAdvisor. And the future looks promising with Viator supercharging its growth rate. However, this stock might be stuck in neutral until it consistently unlocks higher profitability.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tripadvisor. The Motley Fool has a disclosure policy.
