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SEC Filings

20-F
TRIVAGO N.V. filed this Form 20-F on 03/06/2018
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D.
Risk factors
Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in our other filings with the United States Securities and Exchange Commission, or the SEC, including the following risks that we face and that are faced by our industry. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. This report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements as a result of certain factors including the risks described below and elsewhere in this report and our other SEC filings. See “Special note regarding forward-looking statements” above.
Risks related to our industry and business
We derive a large portion of our revenue from a relatively small number of advertisers. A reduction in spending or any change in bidding strategy by one or more of these advertisers could harm our business and negatively affect our financial condition and results of operations.
Our "cost-per-click," or CPC, pricing for click-based advertising depends, in part, on competition among advertisers on our marketplace, with advertisers that pay higher CPCs generally receiving better advertising placement and more referrals from us. Although we aim to improve advertiser diversification and competition on our marketplace in the long term, we continue to generate the great majority of our revenue from our largest online travel agency, or OTA, advertisers. For the years ended December 31, 2015, 2016 and 2017, we generated 27%, 43% and 44% of our total revenue, respectively, from Booking Holdings (formerly The Priceline Group), including its affiliated brands Booking.com and Agoda. Brands affiliated with our majority shareholder, Expedia, Inc., or Expedia, accounted for 39%, 36% and 36% of our total revenue for the years ended December 31, 2015, 2016 and 2017, respectively.
Our ability to grow revenue from our existing advertisers, whether large or not, is dependent to a significant extent on our ability to maintain and diversify our relationships with them. Advertisers are likely to reduce their advertising on our platform or cease it altogether if their advertising spend does not generate referrals, customers, bookings or revenue and profit for them on a basis they deem to be cost-effective. Advertisers may reduce or cease their advertising on our platforms for reasons not related to the value we can deliver to them, such as a weakening of their own financial or business conditions or external economic effects. The loss of any of our major advertisers, including Expedia, Booking Holdings or their affiliated brands, on some or all of our platforms, or a reduction in the amount they spend, could result in significant decreases in our revenue, as well as an increase in credit losses, and could have a material adverse effect on our business, results of operations, financial condition and prospects.
Even if we are able to improve our product and deliver value to our advertisers, the fact that a significant portion of our revenue is generated from brands affiliated with Booking Holdings and Expedia can permit them, depending on marketplace dynamics, to adjust their CPC bids and obtain the same or increased levels of referrals, customers, bookings or revenues and profit at lower cost. This can occur if one or more advertisers change their return-on-investment targets on our marketplace, including on a country or regional level, and such advertisers have sufficient market share to influence our aggregate CPC levels. In the second half of 2017, advertisers representing a significant portion of our revenues increased their testing activities on our marketplace and changed their bidding strategies, significantly impacting their CPC bids on our marketplace in various geographic markets. Some advertisers have also deactivated some of their inventory, most frequently inventory that they alone advertised or that was inactive, and have withdrawn from our marketplace for periods of time in certain geographic markets. We do not have reliable insights as to the advertising or CPC levels or other strategic goals they hope to achieve through their testing and bidding strategies, and are unable to predict with any degree of certainty the likely effects that potential changes in testing and bidding strategies in the future could have on our business, results of operations, financial condition and prospects of their actions.
Our advertisers may also test how changes in their bidding strategies on our marketplace can affect their strategies on other marketing channels, particularly in auctions for search engine keywords on Google. We

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