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SEC Filings

20-F
TRIVAGO N.V. filed this Form 20-F on 03/06/2018
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Referral Revenue in the year ended December 31, 2017 increased by €274.5 million, or 36.8%, compared to 2016. The number of Qualified Referrals increased by 35.8% in the year ended December 31, 2017 compared to 2016. During the same period, RPQR increased by 0.7%. The growth in Referral Revenue was driven by strong advertising spend and the positive Referral Revenue effects during the first half of 2017 following the introduction of our relevance assessment as described above. We reinvested additional Referral Revenue from the relevance assessment in advertising, which also had a positive effect on Referral Revenue during the first half of 2017. In the second half of 2017, we experienced a significant slowdown in Referral Revenue growth as some significant advertisers responded to the introduction of the relevance assessment as described above. This included an algorithm-driven pull back in our performance marketing advertising spend and a deceleration of our brand marketing expenditure growth. The second half of 2017 was also negatively impacted by lower levels of commercialization and increased volatility on our marketplace due to significant testing activities by our largest advertisers.
The increase in Qualified Referrals in the year ended December 31, 2017 was due to the increased awareness of our brand and continued strong TV advertising spend, as well as an increase in performance marketing spend in the first half of 2017. The significant slow-down in Qualified Referral growth rates in the second half of 2017 compared to the same period in 2016 was driven by a deceleration of our advertising spend growth and the impact of the new attribution model and ongoing product optimization as described above.
RPQR was positively impacted in the first half of 2017 by the introduction of the relevance assessment in our marketplace algorithm, which was partially offset in the second half of 2017 by the negative revenue effects described above relating to our advertisers’ response to the introduction of the relevance assessment as well as lower levels of commercialization and increased advertiser testing activities. The second half of 2017 was also negatively impacted by the relative weakening of the U.S. dollar and certain currencies in the Asia Pacific region but was positively impacted by effects we observed from the continued roll-out of the new attribution model and the implementation of measures aimed at optimizing our platforms, which we believe contributed to increased levels of booking conversion. RPQR in 2017 was also negatively impacted by the increased weighting of RPQR in our Rest of World segment.
Referral Revenue in the year ended December 31, 2016 increased by €255.6 million, or 52.1%, compared to 2015. This growth was primarily due to an increase by 60.0% in the number of Qualified Referrals in the year ended December 31, 2016 compared to 2015. During the same period, RPQR decreased by 4.8%.
The breakdown of Referral Revenue by reportable segment is as follows:
 
Year ended December 31,
 
% Change
(in millions)
2015
 
 
2016
 
 
2017
 
 
2016 vs 2015

 
2017 vs 2016

Americas
 
171.9

 
 
286.4

 
 
391.7

 
66.6
%
 
36.8
%
Developed Europe
 
259.6

 
 
348.9

 
 
425.0

 
34.4
%
 
21.8
%
Rest of World
 
58.7

 
 
110.5

 
 
203.6

 
88.2
%
 
84.3
%
Total
 
490.2

 
 
745.8

 
 
1,020.3

 
52.1
%
 
36.8
%
Referral Revenue in the Americas in the year ended December 31, 2017 increased by €105.3 million, or 36.8%, compared to the year ended December 31, 2016. This growth was primarily due to an increase by 36.4% in the number of Qualified Referrals in the year ended December 31, 2017 compared to the year ended December 31, 2016. The increase in Referral Revenue was primarily driven by the positive impact of the relevance assessment in the first half of 2017 and our advertisers' response to the introduction of the relevance assessment as well as lower levels of commercialization and increased advertiser testing activities described above. We also faced significant headwinds towards the end of 2017 as a result of the relative weakening of the U.S. dollar against the euro.
During the same period, RPQR in the Americas increased by €0.01, or 0.5%, compared to 2016. The increase in RPR for the period of 8.6% was almost completely offset by a decline in the click-out rate of 7.7%. The decline in the click-out rate reflected the impacts of platform optimization measures and the new attribution model, which have led to fewer referrals per Qualified Referral. In addition, click-out rates tend to decrease

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