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SEC Filings

6-K
TRIVAGO N.V. filed this Form 6-K on 07/25/2018
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levels of commercialization, partly offset by the positive effects from the attribution model and platform optimizations.


Expenses (€ millions)
 
Costs and Expenses
 
As a % of Revenue
 
Three months ended June 30,
 
Three months ended June 30,
 
2018
 
2017
 
Δ %
 
2018
 
2017
 
Δ in ppts
Cost of revenue
1.4

 
1.4

 
0%
 
1%
 
0%
 
1%
of which share-based compensation
0.1

 
0.0

 
0%
 
 
 
 
 
 
Selling and marketing
227.5

 
275.3

 
(17)%
 
97%
 
92%
 
5%
of which share-based compensation
1.0

 
0.9

 
11%
 
 
 
 
 
 
Technology and content
17.0

 
13.0

 
31%
 
7%
 
4%
 
3%
of which share-based compensation
1.3

 
1.0

 
30%
 
 
 
 
 
 
General and administrative
15.2

 
11.2

 
36%
 
6%
 
4%
 
2%
of which share-based compensation
3.0

 
2.1

 
43%
 
 
 
 
 
 
Amortization of intangible assets
0.4

 
0.4

 
0%
 
0%
 
0%
 
0%
Total costs and expenses
261.6

 
301.3

 
(13)%
 
111%
 
100%
 
11%

 
Costs and Expenses
 
As a % of Revenue
 
Six months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
Δ % Y/Y
 
2018
 
2017
 
Δ in ppts
Cost of revenue
3.0

 
2.5

 
20%
 
1%
 
—%
 
1%
of which share-based compensation
0.1

 
0.1

 
0%
 
 
 
 
 
 
Selling and marketing
483.7

 
506.8

 
(5)%
 
98%
 
90%
 
8%
of which share-based compensation
1.8

 
1.9

 
(5)%
 
 
 
 
 
 
Technology and content
32.5

 
24.7

 
32%
 
7%
 
4%
 
3%
of which share-based compensation
2.1

 
2.0

 
5%
 
 
 
 
 
 
General and administrative
30.1

 
20.1

 
50%
 
6%
 
4%
 
2%
of which share-based compensation
5.9

 
3.4

 
74%
 
 
 
 
 
 
Amortization of intangible assets
0.8

 
2.4

 
(67)%
 
0%
 
0%
 
0%
Total costs and expenses
550.2

 
556.4

 
(1)%
 
111%
 
98%
 
13%
Note: Some figures may not add due to rounding.

Cost of revenue
In the second quarter of 2018, cost of revenue remained stable compared to the same period in 2017 at €1.4 million.

In the six months ended June 30, 2018, cost of revenue increased by €0.5 million, or 20%, year-over-year, to €3.0 million, reflecting our continued investment in our data center and servers, higher personnel costs and depreciation.

Selling and marketing
Selling and marketing expense was 97% and 98% of total revenue in the second quarter of 2018 and in the six months ended June 30, 2018, respectively, compared to 92% and 90% in the same periods in 2017.

In the second quarter of 2018, selling and marketing expense decreased by €47.8 million, or by 17% year-over-year to €227.5 million, of which €209.8 million, or 92%, was advertising expense. The decrease was driven by reductions in advertising spend to €74.9 million, €72.8 million and €62.2 million in Americas, Developed Europe and RoW respectively, compared to €99.4 million, €97.3 million and €63.4 million in the same period in 2017. In the six months ended June 30, 2018, selling and marketing expense decreased by €23.1 million, or by 5% year-over-year to €483.7 million, of which €447.3 million, or 92% was advertising expenses. During the second quarter of 2018, we began making significant reductions in our advertising spend across all segments in order to stabilize our Return on Advertising Spend ("ROAS").

Advertising spend decreased by 25% in Americas, 25% Developed Europe and 2% in RoW in the second quarter of 2018, in each case compared to the same period in 2017. As mentioned above, we made significant reductions in advertising spend during the second quarter of 2018 to stabilize our ROAS. In addition, advertising spend in Americas and RoW in the second quarter of 2018 did not include a significant impact from the relevance assessment, the profits from which we invested in advertising spend in the second quarter of 2017. In Americas and RoW, advertising spend also benefited from favorable movements in foreign exchange rates, reflecting the relative weakening of the U.S. dollar and of certain currencies in the Asian Pacific region to the euro as a smaller part of the advertising spend in these regions is also invoiced in local currencies.

In the six months ended June 30, 2018, advertising spend decreased by 10% in Americas and 14% in Developed Europe while it increased by 9% in RoW, in each case compared to the same period in 2017. The reductions in advertising spend in Americas and Developed Europe were primarily due to the reductions we made during the second quarter of 2018 to stabilize ROAS. The decrease in Americas was partly offset by our decision to increase advertising spend in the first quarter of 2018 by lowering our ROAS targets to support revenue levels. In RoW, the increase was primarily due to lowering our ROAS targets as described above. Advertising spend in all segments was impacted by the non-recurrence of the significant impact from the relevance assessment, described above. In Americas and RoW, Advertising spend also benefited from favorable movements in foreign exchange rates, reflecting the relative weakening of the U.S. dollar and of certain currencies in the Asian Pacific region to the euro as a smaller part of the advertising spend in these regions is also invoiced in local currencies.

For the second quarter of 2018, other selling and marketing expense excluding share-based compensation increased by € 2.4 million to €16.7 million, or 17% period-over-period, and for the six months ended June 30, 2018, increased by €8.8 million to €34.6 million, or 34% period over period. Most of the increase was driven by higher investments in the production of television advertisements of €1.5 million and €5.5 million during the second quarter and six months ended June 30, 2018, compared to the same periods in 2017, as well as an increase in personnel costs of €0.7 million and €2.2 million. Share-based compensation increased by €0.1 million to €1.0 million in the second quarter of 2018 and decreased by €0.1 million to €1.8 million in the six months ended June 30, 2018, compared to the same periods in 2017.


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