TripAdvisor Inc. (NASDAQ:TRIP) Q2 2020 Earnings Conference Call - Final Transcript
Aug 07, 2020 • 08:30 am ET
that serve our stakeholders, Ernst?
Thank you, Steve, and good morning, everyone. In the face of this unprecedented uncertainty, during Q2, we took swift and concerted action to preserve cash and maintain our solid financial position. First, related to expense management, we are tracking in line with the targeted discretionary and workforce related savings levels that we discussed with you three months ago.
I'll note that these cost savings I'm about to reference do not consider depreciation, amortization, restructuring and related reorganization costs as well as stock-based compensation. So specifically, our expenses were $104 million lower in Q2 compared to Q1. $53 million of this was due to variable cost, which came down roughly in line with the revenue and $51 million was from savings from previously announced discretionary and workforce related cost measures.
We expect annualized savings of these more fixed, discretionary and workforce related cost will be in excess of $200 million this year versus 2019, positioning us very well as we enter 2021. The variable costs are expected to be lower this year as well, driven by reduced marketing spend and lower expected revenue but will go up again as revenue recovers.
We are executing as a leaner and more focused organization now and we are pursuing our highest business priorities. We believe the steps we've taken position the business for better flow through as consumer travel demand returns and the revenue recovers.
As for liquidity, we had close to $700 million of cash at the end of June. And in July, we completed a $500 million bond offering. This offering has provided us with a long-term debt capital, and together with our credit facility, ample liquidity to withstand even prolonged COVID scenarios.
We believe our actions to streamline operations, conserve cash, and raise long-term debt capital have the business appropriately capitalized now and positioned for covenant compliance even in the event of a prolonged downturn.
Looking ahead, significant year-over-year impacts persist and near-term visibility remains low. That said, we expect revenue declines will improve and EBITDA loss to narrow meaningfully in Q3 versus Q2. We remain cautious, but we believe we have taken the necessary steps to ensure we can emerge from this pandemic in solid financial as well as strategic shape.
With that, we will open it up for your questions.