What's happening: Shares of TripAdvisor were down 12% as of 12:20 p.m. Friday after the online travel specialist reported disappointing second-quarter earnings.
Why it's happening:Quarterly revenue rose 25% year over year to $405 million, which translated to a 2.5% decline in adjusted net income to $79 million, or $0.54 per diluted share. Analysts, on average, were anticipating adjusted earnings of $0.55 per share on higher revenue of $413 million.
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That's not to say TripAdvisor is struggling. In North America, revenue rose 31% to $211 million, representing 52% of total revenue. But foreign currencies had a significant negative effect on its results elsewhere, as total revenue wold have climbed a much more impressive 35% on a constant-currency basis. In addition, TripAdvisor generated $200 million in cash flow from operations, or 49% of revenue during the quarter, more than doubling sequentially from last quarter and up 27% year over year. Free cash flow came in at $177 million, an increase of 160% from last quarter, and 27% from the year-ago period.
TripAdvisor CEO Steve Kaufer said:
Of course, currency fluctuations are an unfortunate consequence of running a global business, but they're also temporary and not a symptom of broader problem's with TripAdvisor's business. So while it's hard to blame the market for taking a step back today given TripAdvisor's top- and bottom-line miss, long-term investors should focus on how the underlying business is doing.
The article Why TripAdvisor Inc. Stock Dropped Today originally appeared on Fool.com.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends TripAdvisor. The Motley Fool owns shares of TripAdvisor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.