TripAdvisorTRIP

Tripadvisor brought in 440 million dollars in revenue this past quarter, falling short of the 510 million dollars analysts expected. Earnings per share also came in lower than anticipated at 35 cents. These results highlight the ongoing struggle to stabilize the company's legacy hotel segment, which sells advertising to hotels and travel agencies, even as its newer booking platforms grow.

The core of the problem remains the shift in how people book travel. While the company owns Viator, a popular site for booking tours and activities, the older hotel reviews and ads business is still a large part of the company and is shrinking. For the business to turn around, the growth in tours and dining must eventually become large enough to outweigh the steady decline of the original hotel site.

See the full quarter, and how our tracked metrics did

The company reports its latest results today. Analysts expect revenue to reach about 510 million dollars. While the company has a history of beating these targets, the focus for long-term owners remains on the mix of the business rather than just the top-line number.

We are watching to see if Viator, the company's high-growth tours and experiences arm, can maintain its momentum. At the same time, it is important to see if the decline in the legacy hotel reviews business is slowing down. If the newer segments can grow fast enough to outweigh the shrinking older business, it would signal the turnaround is gaining traction.

See the full quarter, and how our tracked metrics did

Key highlights

• Profit boost from railcar deal: The company recorded a one-time gain of $132 million from completing a railcar partnership deal, which helped drive quarterly profit to $102.2 million. This shows the company's ability to turn its existing lease fleet into cash for shareholders.
• Stronger lease renewal rates: Success in renewing expiring leases improved to 75% this quarter, while the overall fleet utilization remained high at 97.3%. A positive 3.5% difference in future lease rates suggests that customers are willing to pay more as their current contracts expire.
• Manufacturing margins under pressure: The rail products division saw its profit margin drop to 1.3%, down from 3.0% a year ago, due to an interruption at one factory. Management expects this to recover as they aim for a full-year margin between 5% and 6%.
• Steady railcar demand: The company received orders for 1,560 new railcars during the quarter, nearly matching the 1,570 cars it delivered to customers. This balance helped maintain a total order backlog valued at $1.58 billion at the end of June.
• Full year earnings outlook: Management confirmed it expects full year earnings to be between $2.20 and $2.40 per share. This forecast relies on a busy second half of the year as the company predicts total industry deliveries will reach 25,000 railcars.

Our take: This was a mixed quarter where a massive accounting gain from a partnership deal masked some weakness in the core manufacturing business. While the leasing side is performing well with high utilization and rising rates, the factory interruption hit the bottom line. The long-term case remains solid as rail demand shows signs of turning.