瑞银-美股-互联网服务行业-美国互联网与娱乐业3季度预览：事情会有变化么？ 32页

'GlobalResearch10October2017USInternet&InteractiveEntertainmentEquitiesQ3"17Preview:WillTheNarrativeChange?AmericasInternetServicesEricJ.SheridanAfteraSolidYTDPerformance,EarningsNeedtoTellaSustainedNarrativeAnalystAsweheadintoQ3"17earnings,investorsaregenerallyoverweight&constructiveoneric.sheridan@ubs.comUSlargecapInternet(albeitnottothesamedegreeasenteringthesummer).Twokey+1-212-7139310debateshavedominatedrecentinvestorconversations:a)willbusinessperformanceinAlexandraKasper2H"17allowforcontinuedpositivestockmoves?;&b)willanythingontheregulatoryAssociateAnalysthorizondisrupttheInternetoperatingenvironment?Ourenddemandchecks&alexandra.kasper@ubs.commodelingworksay"yes"totheformerandaseriesofcalls/meetingswithregulatory+1-212-7132968experts(bothUS&EU)allowustosay"no"tothelatter(althoughtheriskfactorneedsBridgetHanmonitoringandattentionasweturnto2018).WestillremainconstructiveontheAssociateAnalystsectorfromanumberofperspectives:a)enddemandtrendscontinuetopointtobridget.han@ubs.cominline/strongerresultsformostcompaniesinourcoverage;b)investments&impacton+1-212-7133309margins/FCFseemwellunderstood;&c)valuationremainscompelling(especiallyBenjaminMillerrelativetotheoverallmarketwhenpeggedtogrowth).AssociateAnalystbenjamin-h.miller@ubs.comSolidEndMarketDemand;InvestmentsStillRemainFrontofMind+1-212-7133629Channelchecks&fundamentalanalysiscontinuetopointtosolidendmarketdemand:1)Digitalad–socialmedia,digitalvideo&mobilesearchallsolidlyoutgrowingtheonline/offlineadindustry,withcheckspointingtoinlineorbettertoplineresults–mostnotableforGOOG&FB(see:SMI&AdWeektakeaways);2)eCommerce–consumerconsumptioninlinewithexpectations(NAcheckstrackingbetterforeCommerce&couldpointtoare-accelforAMZN&EBAYin2H17);&3)OnlineTravel–solidhotelenddemandwhichshouldproduceinline(ish)corehoteltrendsforOTAswithsharedaccommodationtrends(see:Expedia&AirBnB)showingsustainedrevmomentum.KeyConcernsDominateLargeCaps;UnderperformersinFocusforReversalWecontinuetopreferlargecapnames(thatarebroadlyownedbyinvestors).Inourview,thelargecapcompaniesshouldallproduceresultsthatallowforsustainedperformancein2H"17–aswesurveythemid/largecapnames,thegreatestwallofworry/concernsitswithGOOG(TAC+opex+regulatory),AMZN(opextrends+AWS)&EXPE/PCLN(roomnightgrowthtrends).Themostvolatileearningsreportsarelikelytobethreestocksthathavebeenconsistentinvestorfocusaroundmeanreversioninoperating/stockperformancethatcouldbreakfromrecenttrends-SNAP,TWTR&TRIP.Figure1:PerformancesinceStartofQ2’17Earnings–TheHavesvs.Have-NotsCurrent%to%ChgSinceBegofQ2CompanyTickerRatingPriceTargetTargetEarningsYelpYELPSell$47$30-36%47%MatchGroupMTCHBuy$25$2810%43%GrouponGRPNSell$5$3.10-38%30%BiggestAltabaAABABuy$68$7713%18%OutperformersPayPalPYPLNeutral$66$62-6%15%TwitterTWTRSell$18$14-22%-10%ExpediaEXPEBuy$148$17015%-3%QVCQVCABuy$23$2717%-3%BiggestSnapSNAPNeutral$15$12-19%-2%UnderperformersAmazonAMZNBuy$990$1,20021%-2%Source:Companyreports,UBSNote:Asof10/06/17close*Performancesince7/17/17www.ubs.com/investmentresearchThisreporthasbeenpreparedbyUBSSecuritiesLLC.ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURESBEGINONPAGE27.UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision. ContentsEricJ.SheridanAnalysteric.sheridan@ubs.comQ32017EarningsSeason–KeyIssues&Sentiment.....................................3+1-212-7139310EstimatesChanges.......................................................................................6AlexandraKasperAssociateAnalystSectorTakeaways–WhereDoWeSitToday?..............................................7alexandra.kasper@ubs.com+1-212-7132968SelectIndustryData.....................................................................................9BridgetHanAssociateAnalystUBSInternet&InteractiveEntertainmentSummary&Comps....................23bridget.han@ubs.com+1-212-7133309BenjaminMillerAssociateAnalystbenjamin-h.miller@ubs.com+1-212-7133629USInternet&InteractiveEntertainment10October20172 Q32017EarningsSeason–KeyIssues&SentimentAdvertisingServicesFacebook-WeexpectcontinuedmomentumincoreNewsFeedadvertising(ledbyvideo&directresponseunitssuchasDPAs)andInstagram;industrychecksandconversations(e.g.,duringNYAdWeek)pointtoYoYFXNadrevenuegrowthinthemid-40srangeorbetter;investordebatescontinuetoevolvearoundlevelofforwardinvestments(i.e.,opexgrowthinQ3andchangestoFYguide),magnitudeofadrevgrowthdecelinH2"17andbeyond,commentary/dataonengagementtrends(particularlyforvideo/Watchtab),InstagramrevenuegrowthandLTmonetizationopportunities(Messenger,WhatsApp,Oculusetc).Alphabet-WhiletheEUregulatoryenvironmentremainsanoverhang(i.e.,rulingsinAndroid&AdSensecasesyettobeannounced),ourindustrycheckspointtoanotherstrongquarterinparticularformobilesearch(&lessthanfeareddesktopdecel)andYouTube(i.e.,brandsafetyconcernslargelyresolved)withFXNsitesrevsgrowthinthelow20%s;investorslookingforclarityonthepotentialbusinessimpactofrecentchangestoGoogleShoppinginEurope,GOOG"sinvestmentpriorities,usesofcashin2H"17&beyondandseekinganupdateoncoreSearchbusinessmomentum,Cloud&hardwarestrategy(incl.,commentaryondemandforrecentlylauncheddevices),andcadenceofannounced~$7bnbuyback.IAC-StockwillreacttoMatchGroupandANGIHomeservicesresults(firstquarterlyresultsasapubliccompany);outsideofMTCH&ANGI,investorsarefocusedonthecontinuedmomentumwithinVimeoandanupdateonPublishing&Appsrestructuringeffortsandstrategytoreturnbusinessestogrowth;updateonVimeo"slong-termgrowth,contentacquisitionandmonetizationstrategy(afternewCEOjoinedinJuly);thoughtsaroundthepotentialtospin-offassets,futureM&Aopportunities,andupdatedcommentaryoncapitalallocationpriorities.Match-Weexpectinvestorstofocusona)PMCtrajectoryforcore-Match(continuedimpactfromAffinityroll-offvs.mgmtcommentsofNAre-accelerationinthe2H)andARPPUtrendsincoreMatch;b)commentary&impactofTinderGoldlaunchonPMCgrowthandmonetization(andmargin)upside;discussionaroundrampinTinderadvertising(flaggedasanareaofincrementalspendin"17permgmtcommentary)andOpExgrowthgivencontinuedinvestmentsinmarketing(e.g.,tosupportTindergrowthinROW).Snap-Ourindustrychecks&conversationspointtoweakerQ3revgrowthdrivenbylacklustreadvertisersdemandtodeployincrementaladdollarstotheplatformpairedwithcontinuedpricingpressuredrivenbythemixshifttoprogrammatic&self-serve(Q3UBSerevof$241mm);inaddition,investorfocuswillbeonDAUgrowth(UBSeof~9mmnetadds/4mmintheUS)andcoloraroundDAUpenetrationofnon-coredemos(i.e.35+yearolds,developedmarkets);investorswillalsolookforanycommentaryonengagement,updatesonsaleschannelexpansion,generalcompetitiveenvironment,andcoloraroundthetiming/arcofoperatingleverage.Twitter-Continuedfocusonadrevenuetrends(incl.,growthinadvertiserbase&productinnovations(video)vs.headwindfromdecommissionedDRbusiness),usernetaddsintheUSandinternational(UBSe+2mmtotalnetadds);investorsarealsolookingforincreasedclarityonengagementtrends,strategicdirectionunderaUSInternet&InteractiveEntertainment10October20173 newmanagementteam(newCFONedSegaljoinedinQ3)incl.newproductinitiatives,updateonTwitter"slivevideo/contentstrategy(incl.tractionofautoplayvideoads)&expectedinvestmentlevelgoingforwardincl.,thoughtsonmargintrajectory.eCommerceAmazon-ChannelcheckspointtoanothersolidquarterforNAeCommercerevenuegrowth(UBSe+26%YoY)andcontinuedpressureonCSOIgivenincreasedinvestmentsindistribution/logistics,mediacontentandinternational;investorsarealsolookingforclarityontheWholeFoodsacquisitionincl.,expectedrevenueandcostsynergies,long-termstrategicambitionsinthegrocerycategoryandimplicationsforfutureM&A;updatedthoughtsoncadenceofinvestmentsgoingforwardaswellascommentaryonthecompetitivedynamicsincloudandtheresultingimpactonAWSgrowth.eBay-WeexpectUSGMV(ex-StubHub)toaccelerateintothebackhalfoftheyear(UBSe+5.4%YoYinQ3&+8%YoYinQ4)drivenbycontinuedprogressofstructureddatainitiatives;investorfocuswillbeonQ4"17guideandearlythoughtsonFY2018revenuegrowthincl.commentsonStructuredDataadoption,impactonconversionandtrafficgrowth;commentaryonthestatusofdevelopmentofin-housefirstpartyadbusiness;thoughtsonStubHubtoplinetrendsweighedagainsttoughcomps&challengedeventslandscapeandadd"lcoloronbothClassifieds&StubHubmarginprofiles;updateonmarketinginvestmentstodrivetraffic&brandawarenessandviewsaroundshareholderreturnswouldbeviewedasapositive.HSN-UpdateontheprogressofregulatoryapprovalaswellasexpectedclosingdateoftheproposedacquisitionbyQVC.QVC-WeexpectinvestorstobefocusedonUSoperatingtrends(UBSe:flatYoYUSrevgrowthvs.lowsingledigitdeclineinQ2"17)incl.discussionofplannedinitiativestoreturnbusinesstogrowth;inaddition,investorswillbefocusedona)anyupdateontheplannedacquisitionofHSNincludingadditionalgranularityaroundbothrevenueandcostsynergies,b)useofcredittodrivesalesgrowth;c)paceofbuybacksandnewsharerepurchaseauthorization;andd)broaderthoughtsonthecompetitivelandscapeandconsumerspendingpatterns.Yelp-Stockwillreacttolocaladvertisinggrowthincl.netaddsinpayingadvertisingaccounts(UBSe+3.7k)andQ4outlook;Focuswillbeonforwardstrategicpriorities(incl.thoughtsoncompetitiveenvironment)aswellassalesforcegrowthandproductivitytrends;updateonrevstrajectoryofnational&self-servechannels,saleofEat24toGRUB(&rev/marginimplications)andtractionofrequest-a-quotewouldbeapositive;ongoingdebatearoundinvestmentneeds&potentialimpacttoEBITDAmargins(especiallytrajectoryofQ4"17&FY2018marketingspend).Groupon-Updateonforwardguide(incl.pace/depthofgrowthinvestments),driversbehindgrossprofitdollargrowth,customernetadds&commentaryonGrouponPlusadoption,tractionandimpactonconversionareexpectedtobeafocusamonginvestors;updateonLivingSocialintegrationandanysignsofreturnfromplanned/elevatedadvertisingexpensestopromotegrowthinkeymarkets(particularlyNAcustomergrowth);commentaryontheroleofGoodsbusiness(incl.1Pvs.3Pmix)goingforward,generalthoughtsoncompetitionaswellasimpactfromOrderUpsaletoGRUB(&rev/marginimplications).USInternet&InteractiveEntertainment10October20174 TravelExpedia-Focuswillbeonmgmtupdateofroomnighttrends(bothcore&HomeAwaycontribution);updateonHomeAwayplatformintegration&investmentsandresultingEBITDAimpactbothnear-termand2018/2019,progressofcloudmigrationandthoughtsonshareholderreturns&potentialforM&A.Priceline-Focuswillbeonanybroadermacrocommentary(especiallydemand/competitioninEuropeandSEAsia),updateonroomnightsgrowth/hotelsupplygrowth(especiallyQ4guidevswhereStreetestimatessit;updateonadvertisingROIs(especiallydynamicofshiftsbetweenperformance/brandmarketing)aswellasonstrategy/demandonsharedaccommodation.TripAdvisor-FocuswillbeonthetoplineimpactfromshifttosharedIB&metaemphasisinadditiontoearlyresultsofbrandspendbehindbuildingawareness&impactonmargins;commentaryaroundhotelshoppergrowth,repeatrates,returnvisitsandconversion/monetizationlevelswithinIBvs.meta;updateontheNon-Hotelsegment(investmentfocus,revenueprofile,margintrajectory).InteractiveEntertainmentActivisionBlizzard-InvestorswillbefocusedonunitexpectationsforCoD:WWII&Destiny2,CoDdigitalperformance(incl.,theBlackOpsIIIDLCpacklaunchedinQ2)&plansforthefranchise,andcommentaryaroundeSports&Kingadvertisingprogress;investorswillalsolookforrecentindicatorsofportfoliostrength(Overwatchusergrowth,Kingmobilebookings,Destinyengagementgrowth,Blizzardincubationefforts)andanyaddedcoloron2017titleslateorupdateto2017guidance.ElectronicArts-Focuswillbeonunit/revenueexpectationsforFY18titleslate(esp.,BattlefrontII)&contentpipelineandanyupdatetoFY18guidance;discussionaroundpace&competitionofkeytitlelaunches(esp.mobile/UltimateTeamaspectsofthesportsfranchises)andfurtherclarificationonliveservicesstrategy;commentaryonindustrytailwinds(digital&eSports)&potentialforadd"lcashreturns.Zynga-Emphasiswillbeongrossbookingsgrowth&adj.EBITDAmarginachievedanddiscussionofprogressonturnaroundeffortsgroundedinmobilefirst&liveopsstrategy(incl.progresstowardsthemedium-term20%EBITDAmargingoalby2018);commentaryonthehealthofcorefranchises,adbusinessmomentum,assetvalues(cash&realestate),andtheimplicationontherelativecontributionfromtitlestrengthvs.marketingspendtothetitles"success.USInternet&InteractiveEntertainment10October20175 EstimatesChangesInthetablebelow,wehighlighttherationalebehindourestimatechanges:Figure2:Summary–RationaleBehindEstimatesChangesCompanySub-SectorPriceTargetChangesEstimateChangesRationaleNewQ3estsarerevsof$241mm(fromWereviseourQ3andFY2017revenue$257m;DAU:9mmnetadds/4mminNA)estimatesdownwardsdrivenbya)industryandEBITDAof$(195)mm(from$(200)mm).checkspointingtoweakerthanexpectedDigitalOurnewFY17estsarerevsof$877mmdemand/adrevgrowth;andb)lowerARPUSNAPNoneAdvertising(from$914mm)andEBITDAof$(755)mmassumptionsasthemixshiftto(from$(762)mm).programmatic&self-servecontinuestopressurepricingontheplatform.NewQ3estsarerevsof$40.86b(noWhileourrevenueestimatesremainchange,vs.mgmtguidanceof$39.25-unchanged(reflecting25%YoYgrowthin$41.75b)andoperatingincomeof$205mmQ3),wemodestlyreviseourQ3operating(from$357mmandmgmtguidanceofexpenseexpectationsupwardstoreflectAMZNeCommerceNone$(400)-300mm)/CSOIof$1.30b.NewFY17continuedinvestmentsinfulfillment("17estsarerevsof$168.18b(nochange)andHolidaySeason,WholeFoodsetc.),operatingincomeof$3.00b(fromInternational(i.e.,India),andmediacontent$3.27b)/CSOIof$7.39b)(i.e.,streamingrights,AmazonOriginals).NewQ3estsareadj.revsof$1.73b(fromWetakeupourQ3andQ4revseststo$1.71;vs.guideof$1.70b),adj.EBITDA(asaccountfor1mincrementalunitsalesforpreviouslydefined)of$566m(from$550m),Destiny2andCoD:WWII,respectively.Weandadj.EPS(aspreviouslydefined)of0.48modestlytakeupgrossmarginforQ3andInteractiveATVINone(from0.47;vs.guideof0.45);NewFY17Q4tokeepourCOGS(inabsolutedollarEntertainmentestsareadj.revsof$6.73b(from$6.62b;terms)roughlyinlinewithpreviousests.vs.guideof6.58b),adj.EBITDAof$2.43b(from$2.36b),andadj.EPSof$2.10(from$2.04;vs.guideof$2.0)NewFQ2estsareadj.revsof$1.17b(fromWemodestlyshift~$15mofrevsfromFQ3$1.16;vs.guideof$1.16b),adj.EBITDA(astoFQ2onthebackofastrongFIFAlaunchpreviouslydefined)of$242m(from$228m),(expectingmorefrontloadedsellthroughandadj.EPS(aspreviouslydefined)of0.54vs.previousestimates)whileourfullyearInteractive(from0.50;vs.guideof0.50);NewFY18revsestsremainunchanged.WeonlyreviseEANoneEntertainmentestsareadj.revsof$5.22b(nochange;vs.ourFQ3grossmarginassumptionsslightlytoguideof5.10b),adj.EBITDAof$1.86b(nomodelheaviergrossmargincompressionchange),andadj.EPSof$4.33(nochange;givenStarWarsBattlefront2tendtoskewvs.guideof$4.10)lowerondigitalunitmixvs.Battlefield1&Titanfall2fromayearago.Source:UBSUSInternet&InteractiveEntertainment10October20176 SectorTakeaways–WhereDoWeSitToday?Q3"17Setup–StockPerformanceYear-to-DateAstoabroadermeasureofInternetstockperformance,wenotethatourUBSInternetIndexoutperformedthemarket(definedastheS&P500)by2,360bpssincethebeginningoftheyear.Specifically,ourindexof49Internetcompaniesisup37.5%,whiletheS&P500isup13.9%duringtheyear.Onasectorlevel:Advertisingcompaniesinourcoverageoutperformedthemarketby2,210bpswithIAC,AABA,FBandMTCHseeingthelargestgainssincethebeginningoftheyear.TheeCommercesectorhasoutperformedthemarketwithPYPLandGRPNseeingthegreatestincreases(up67.3%and51.5%,respectively)whileHSNIhasbeentheonlyunderperformeryear-to-date(-290bpsvs.SPXYTD)despiteitsacquisition.Theonlinetravelsectorhasseena2,700bpsincreaseonanabsolutebasis(up1,310bpsvs.theS&P)year-to-datewithEXPEandPCLNmorethanoffsettingweaknessintheperformanceofTRIPandTVPT.InteractiveEntertainmentcompanies(ATVI,EAandZNGA)outperformedtheS&P500bythewidestmargin(5,300bps)drivenprimarilybyATVI(up75.2%YTDonanabsolutebasis).Figure3:PricePerformanceSinceJanuary1,2017SinceJanuary1,2017PriceReturnReltoSPXReltoInternetIndexS&P500SPX13.9%---23.6%UBSInternetIndex37.5%23.6%--FacebookFB49.7%35.8%12.2%GoogleGOOG26.8%13.0%-10.6%IACIAC88.7%74.8%51.2%MatchGroupMTCH48.4%34.6%11.0%TwitterTWTR9.5%-4.4%-27.9%Snap*SNAP-39.6%-53.5%-77.0%AltabaAABA75.5%61.6%38.0%AdvertisingServicesAverage**36.0%22.1%-1.5%AmazonAMZN32.0%18.1%-5.5%eBayEBAY30.7%16.8%-6.7%GrouponGRPN51.5%37.6%14.1%HSNiHSNI10.9%-2.9%-26.5%QVCGroupQVCA15.5%1.6%-21.9%YelpYELP22.6%8.7%-14.9%PayPalPYPL67.3%53.5%29.9%eCommerceAverage35.8%22.0%-1.6%ExpediaEXPE30.6%16.8%-6.8%PricelinePCLN30.8%17.0%-6.6%TripAdvisorTRIP-10.3%-24.1%-47.7%TravelportTVPT10.0%-3.9%-27.5%OnlineTravelAverage27.0%13.1%-10.5%ActivisionBlizzardATVI75.2%61.3%37.7%ElectronicArtsEA52.5%38.6%15.0%ZyngaZNGA47.5%33.6%10.0%InteractiveEntertainmentAverage66.9%53.0%29.4%Source:FactSet,UBS;Note:Asof10/06/17close,*Performancesince3/02/2017,**ex-SNAPUSInternet&InteractiveEntertainment10October20177 Valuation&SentimentAsweheadintoQ3"17earnings,investorsaregenerallyoverweightandconstructiveonUSlargecapInternet.Twokeydebateshavedominatedrecentinvestorconversationsonthegroup–a)willbusinessperformancein2H"17allowforcontinued+stockperformance?;&b)willanythingontheregulatoryhorizondisrupttheInternetoperatingenvironment?Ourenddemandchannelchecks&modelingworkssay"yes"totheformerandarecentseriesofcalls/meetingswithregulatoryexperts(bothUS&EU)allowustosay"no"tothelatter(althoughtheriskfactorneedsmonitoringandattentionasweturnto2018).Westillremainveryconstructiveonthesectorfromanumberofperspectives:a)enddemandtrendscontinuetopointtoinline/strongerresultsformostcompaniesinourcoverage;b)investments&impactonmargins/FCFseemwellunderstood;c)valuationremainscompelling(especiallyrelativetotheoverallmarketwhenpeggedtosolidgrowth).Wecontinuetopreferthelargecapnamesinourcoverage&thosenamesarebroadlyownedbyinvestors.Inourview,thelargecapcompaniesshouldallproduceresultsthatallowforsustainedperformancein2H17–aswesurveythemid/largecapnames,thegreatestwallofworry/concernsitswithGOOG(TAC+opex+regulatory),AMZN(opextrends+AWS)&EXPE/PCLN(roomnightgrowthtrends).Themostvolatileearningsreportsarelikelytobethreestocksthathavebeenconsistentinvestorfocusaroundmeanreversioninoperating/stockperformancethatcouldbreakfromrecenttrends-SNAP,TWTR&TRIP.Figure4:UBSInternetRisk-RewardMatrix60%HSNIZNGA40%QVCAMTCHAMZNPCLNGOOGFBEXPE20%TRIPAABAATVIIACEBAYEA0%TVPT-20%SNAPPYPLUpside/DownsideSkewTWTR-40%-60%YELPGRPN-80%-100%-50%-40%-30%-20%-10%0%10%20%30%%toTargetSource:FactSet,UBSestimates;Note:asof10/06/17close.USInternet&InteractiveEntertainment10October20178 Fromatechnicalperspective,wenotethatthe14-DayRSIsforourcoverageexhibitamoderatelevelofskewonbothtailsandonaveragearehighercomparedtolastquarter,indicatingthatourcompanieshavebeengenerallyslightlyoverbought.AmongourBuy-ratedstocks,ATVI,ZNGA&EAappearthemostoversold,whileGOOG&IACIhaveseenthemostpositivemomentum.Figure5:14-DayRSI10080Avg=58.546040200TRIPATVIZNGASNAPEATVPTHSNITWTRQVCAFBAABAEBAYAMZNEXPEPCLNMTCHPYPLYELPGRPNIACIGOOGNote:Asof10/06/2017closeSource:FactSet,UBSSelectIndustryDataHerewehighlightaselectionofbroaderindustry-leveldatarelevanttoQ32017results.TheConferenceBoardConsumerConfidenceIndexConsumersentimentreadingsforJuly,AugustandSeptember2017wereallaboveprior-yearlevels(up16-25%+YoYinallthreemonths)andalsoslightlyabovetheQ2average(120inQ3vs.118inQ2).Figure6:U.S.ConsumerConfidenceIndex—Long-TermFigure7:U.S.ConsumerConfidenceIndex—Short-TermTrendTrend1401301251201191201201201201181171161001131121091108010410160100409020080Sep-Oct-Nov-Dec-Jan-Feb-Mar-Apr-May-Jun-Jul-Aug-Sep-Sep-01Sep-02Sep-03Sep-04Sep-05Sep-06Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Sep-15Sep-16Sep-1716161616171717171717171717Source:TheConferenceBoard,UBSSource:TheConferenceBoard,UBSUSInternet&InteractiveEntertainment10October20179 SearchQueriesForU.S.desktopsearch,comScoreAugustdatabroadlyshowedacontinuationoftrendsobservedinthepreviousyear.Google,Yahoo,AOL&AskhavecontinuedtolosedesktopshareonaYoYbasis(-29bps,-43bps,-31bps&-19bpsrespectively)whileMicrosoftcontinuedtogainshare(+121bps).ForMicrosoft,webelieveoneofthemaindriversofBing"scontinuingmarketsharegainshasbeentherolloutofMicrosoft"sWindows10operatingsystemondesktopPCs,whichfeaturesMicrosoftEdgeandBingasthedefaultbrowserandsearchenginerespectively.Figure8:DesktopSearchQueryMarketShareandYoYQueryGrowthAug-17Jul-17TrailingTwelveMonths%Y/YShareShrY/Y%Y/YShareShrY/Y%Y/YShareShrY/YGoogle1.5%63.3%-29bps-0.1%63.1%-28bps-9.3%63.4%-40bpsMicrosoft7.6%23.2%121bps5.8%23.1%119bps-3.1%22.7%132bpsYahoo-1.7%11.5%-43bps-3.5%11.6%-46bps-13.2%11.7%-60bpsAsk-11.3%1.3%-19bps-10.6%1.3%-17bps-21.5%1.4%-22bpsAOL-28.3%0.7%-31bps-25.9%0.8%-28bps-18.9%0.9%-11bpsTotal2.0%100%0bps0.4%100%0bps-8.7%100%0bpsSource:comScoreqSearch,UBSFigure9:YoYChangeinDesktopSearchQueries(%):Figure10:YoYChangeinDesktopSearchQueries(%):2-YearTrendShort-TermTrend40%10%20%0%-10%0%-20%-20%-30%-40%-40%Aug-15Feb-16Aug-16Feb-17Aug-17Jul-17Aug-17GoogleSitesMicrosoftSitesYahoo!SitesGoogleSitesMicrosoftSitesYahoo!SitesAskNetworkAOL,Inc.AskNetworkAOL,Inc.Source:comScoreqSearch,UBSSource:comScoreqSearch,UBSSMI–AdvertisingSpendingGrowthincoredigitalcameinat+15.4%Y/YinAugust(vs.+19.5%Y/YinJuly),a~420bpsdecelona~560bpstoughercompfromOlympicspendlastyear.QTD,Y/YgrowthforQ32017of17.3%representsa~610bpsacceleration(onthebackofa~240bpseasiercomp)fromQ22017Y/Ygrowthof11.2%.OurbroaderindustrycheckscontinuetobeconstructiveforthescaledplatformsinourcoverageYTD(GOOG&FB),whichreportedbetterthanexpectedadrevenuesforQ2despiteinvestorworries.Wenotethatgiven"back-to-school"adspend,SeptembertypicallyrepresentsthebiggestmonthinQ3.Accordingly,welooktoSeptemberforamorecompletepictureofthehealthofQ3demand.USInternet&InteractiveEntertainment10October201710 Withindigital,Augustsawsharegainsforsocial,programmatic,anddirect-solddisplay&searchadvertising(classifiedbySMIas"PurePlay–ContentandPurePlay–Search")whilevideowastheonlycategorythatlostshare.ProgrammaticandvideostarttoseeslowingY/YgrowthonaTTMbasiscorrespondingtosharelosstosocialwhilesocialdemonstratespersistentmomentum.Withthatsaid,Augustalsosawacontinuedstrongperformancefromdirect-solddisplay&searchadvertising(+14.3%Y/Yvs.TTMgrowthrateof8.3%Y/Y).Wenotethatourindustrycheckscontinuetopointtostronggrowthinmobilesearchastheyhaveinthepast(onarelatednote,pleaseseeourAprilnoteDeepDivin":MovetoGAAPforAlphabet;GoogleTACAnalysis).WecontinuetobelieveincreasedmarketeradoptionofnewadformatsincludingInstagramads&DAslikelycontributedtothesharegainsforthesocialcategory(forthelatestsocialmediaconsumptiontrendsandanupdateonsocialmediaadproducts,seeourJune2017report).WhilethegrowthtrendofVideohasweakenedinthepastfewmonths,wewouldnotethatSocialvideoinventoryiscapturedwithinthePurePlaySocialbucket.WebelievethegeneraltrendofincrementalbudgetshiftfromTVtodigitalwillcontinuetofuelgrowthinonlinevideobroadly.Lastly,wenotethatgiventhedirect-responsenatureofsearchbudgets,searchadspenddisproportionatelyflowstosearchprovidersdirectly(e.g.,Google,Bing,Yahoo,etc.)andtospecializedmarketingagencies,whichmaylieoutsidethescopeofbudgetscapturedbySMI.Figure11:AdAgencyAdvertisingSpending,perSMIData,AugustSummary-DigitalAugust2017July20172Q17TrailingTwelveMonths%Y/YShare(2)ShrY/Y%Y/YShare(2)ShrY/Y%Y/YShare(2)ShrY/Y%Y/YShare(2)ShrY/YPurePlayContent/Search14.3%36.2%73bps16.5%36.8%-78bps10.3%35.2%-11bps8.3%35.3%-30bpsTotalAdNetwork/AdExchange16.0%29.1%100bps19.4%29.1%11bps7.9%29.3%-75bps6.3%28.6%-57bpsPurePlay-Video3.3%6.8%-57bps16.4%7.1%-16bps-3.1%6.9%-99bps16.7%7.4%27bpsPurePlay-Social25.9%11.3%125bps33.1%10.8%115bps44.1%11.4%265bps52.2%11.3%192bpsPurePlay-InternetRadio36.0%3.4%60bps27.8%2.9%20bps6.0%2.9%-13bps10.9%2.8%2bpsCoreDigital15.4%90.5%267bps19.5%91.2%42bps11.2%90.1%45bps14.5%89.8%192bpsDigitalTV-20.2%6.2%-249bps12.8%5.8%-32bps9.2%6.8%-9bps2.4%6.8%-30bpsDigitalPrint6.3%3.3%-18bps15.2%3.0%-10bps-0.6%3.1%-35bps8.1%3.4%-3bpsTotalDigital12.0%100%0bps19.0%100%0bps10.7%100%0bps9.8%100%159bps(2)ShareoftotaltelevisionincludingDigitalTV.Source:SMI;UBSUSInternet&InteractiveEntertainment10October201711 eCommercecomScoreeCommercedata–ForJulyandAugust2017,comScoreindicatesaYoYgrowthof14.3%and16.5%innon-travelUSdesktopeCommercesalesrespectively.ThisgrowthestimatecomparestoaQ2YoYgrowthrateof13.3%.Wewouldnotethatthesegrowthratesarelikelyunderstatedduetotheirlackofmobileinclusion,whichisafaster-growingcomponent.Figure12:comScoreeCommerceNon-Travel—Long-TermFigure13:comScoreeCommerceNon-Travel—Short-TermTrend(YoYGrowth%)Trend(YoYGrowth%)40%18%17%30%15%15%15%14%14%14%14%14%12%20%11%10%0%5%-10%-20%Aug-Sep-Oct-Nov-Dec-Jan-Feb-Mar-Apr-May-Jun-Jul-Aug-Aug-07Aug-09Aug-11Aug-13Aug-15Aug-1716161616161717171717171717Source:comScore,UBSSource:comScore,UBSOnlineTravelcomScoreeCommerceTraveldata–ForJulyandAugust2017,comScoreindicatesYoYgrowthof7.8%and11.0%inUStravelspend,respectively.Thesecomparetothe10.9%YoYgrowthreportedforQ2.WenotethattheonlinetravelspenddataprovidedbycomScoreisdefinedasworldwidebuyingonUSdesktopsites.Mobilecontinuestobecomeanincreasinglyimportantcontributortohotelbookings(webelievemobilemakesuproughlyathirdofhotelbookingsforExpedia&Priceline).Figure14:comScoreeCommerceTravel—Long-TermFigure15:comScoreeCommerceTravel—Short-TermTrend(YoYGrowth%)Trend(YoYGrowth%)15%13%13%11.0%10%10%5%8%7.8%7%7%7%7%7%7%0%5%-5%-10%-15%Aug-Sep-Oct-Nov-Dec-Jan-Feb-Mar-Apr-May-Jun-Jul-Aug-Aug-07Aug-09Aug-11Aug-13Aug-15Aug-1716161616161717171717171717Source:comScore,UBSSource:comScore,UBSUSInternet&InteractiveEntertainment10October201712 SmithTravel–BasedondataprovidedbySmithTravel,UShoteloccupancyratesthroughthefirst2monthsofQ32017wereup0.2%YoY(basedonmonthlyaveragegrowthrates)versustheprioryearquarter-to-date,whileUSADRswereup1.7%.Weexpectthatcertainmacro&weatherrelatedeventswillaffecttravelincertaingeographies,butwecontinuetoexpectsolidenddemandintheaggregate.ForEurope,throughthefirsttwomonthsofQ32017hoteloccupancyratesareestimatedtobeup2.6%YoY,whileEuropeanADRs(inUSDterms)areestimatedtobeup4.6%onaconstantcurrencybasis.Figure16:USHotelOccupancyRates(YoY)—Long-TermFigure17:USHotelOccupancyRates(YoY)—Short-TermTrendTrend3.2%10%8%6%4%2%1.6%0%1.3%1.2%-2%1.0%-4%0.6%0.6%-6%0.5%-8%0.2%0.0%-10%-12%3Q013Q023Q033Q043Q053Q063Q073Q083Q093Q103Q113Q123Q133Q143Q153Q16-0.5%1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q173Q17QTDQTDSource:SmithTravel,UBSSource:SmithTravel,UBSFigure18:USADRs—Long-TermTrendFigure19:USADRs—Short-TermTrend10%8%6%4.8%4.4%4%4.2%2%0%3.3%3.2%3.3%-2%2.9%2.8%2.6%-4%2.4%-6%1.7%-8%-10%-12%3Q013Q023Q033Q043Q053Q063Q073Q083Q093Q103Q113Q123Q133Q143Q153Q161Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q173Q17QTDQTDSource:SmithTravel,UBSSource:SmithTravel,UBSUSInternet&InteractiveEntertainment10October201713 Figure20:EuropeHotelOccupancyRates(YoY)—Long-Figure21:EuropeHotelOccupancyRates(YoY)—Short-TermTrendTermTrend7%4.2%6%5%3.2%4%2.6%2.6%3%2.1%2%1.3%1%1.0%0.7%0%-1%-2%-0.3%Q310Q111Q311Q112Q312Q113Q313Q114Q314Q115Q315Q116Q316Q117Q315Q415Q116Q216Q316Q416Q117Q217Q317QTDQ317QTDSource:SmithTravel,UBS,Note:BeginningofDec"14,dataisconstantcurrencySource:SmithTravel,UBS,Note:BeginningofDec"14,dataisconstantcurrencybasedonachangeinUBSdatasubscriptionbasedonachangeinUBSdatasubscriptionFigure22:EuropeADRs(in$)—Long-TermTrendFigure23:EuropeADRs—Short-TermTrend25%6.6%20%15%4.6%4.3%4.3%10%5%2.4%2.4%2.3%0%2.2%-5%1.1%-10%Q310Q111Q311Q112Q312Q113Q313Q114Q314Q115Q315Q116Q316Q117Q315Q415Q116Q216Q316Q416Q117Q217Q317QTDQ317QTDSource:SmithTravel,UBS,Note:BeginningofDec"14,dataisconstantcurrencySource:SmithTravel,UBS,Note:BeginningofDec"14,dataisconstantcurrencybasedonachangeinUBSdatasubscriptionbasedonachangeinUBSdatasubscriptionUSInternet&InteractiveEntertainment10October201714 InteractiveEntertainmentFigure24:KeyLaunchesforATVI,EA&ZNGATitlePlatformPublisherDateCoD:InfiniteWarfareAbsolution(DLCMapPack)PS4,XBO,PCActivisionBlizzard7/6/2017HearthstoneKnightsoftheFrozenThrone(ExpansionPack)PC,Windows,iOS,AndroidActivisionBlizzard8/10/2017StarCraft:RemasteredPC,MacActivisionBlizzard8/14/2017Battlefield1Revolution(specialedition)PS4,XBO,PCElectronicArts8/21/2017MaddenNFL18PS4,XBO,PCElectronicArts8/25/2017Destiny2PS4,XBO,PCActivisionBlizzard9/6/2017CoD:InfiniteWarfareRetribution(DLCMapPack)PS4,XBO,PCActivisionBlizzard9/12/2017NBALIVE18PS4,XBOElectronicArts9/15/2017NHL18PS4,XBOElectronicArts9/15/2017Battlefield1:InTheNameoftheTsar(DLCpack)PS4,XBO,PCElectronicArts9/19/2017FIFA18PS4,XBO,PC,Switch,PS3,Xbox360ElectronicArts9/29/2017Source:UBS,companyreportsNext-GenVideoGameConsoleAdoptionPlayStation4:BasedonthelatestdisclosurefromSony,morethan63.3mPlayStation4unitshavebeensold-throughtoconsumersglobally(asofJune30,2017)sincelaunchinNovember2013,inclusiveoftheoriginalPS4,PS4Slim(retailsat$299,releasedSeptember15,2016),andPS4Pro(retailsat$399,releasedonNovember10,2016).PS4softwaresalesalsoremainstrongwithmorethan487.8mcopiessoldatretailanddigitally(asofJune11,2017),foranaverageattachrateof8.07gamespersystem(upfrom6.77inDecember2016).Inaddition,SonylaunchedPlayStationVRonOctober13,2016,whichiscompatiblewithallcurrentgenPlayStationconsoles.Accordingtothecompany,PSVRhascumulativelysoldmorethan1munitsgloballyasofJune5,2017.XboxOne:Basedonindustryreports(mostrecentlySuperData),XboxOnehasaninstalledbaseofapproximately26mmasof2016yearend.AccordingtoVGChartz(avideogamesalestrackingservice)thenumberwasjustnorthofthe30mmmarkinAugust2017.SimilartoSony,Microsoftintroducedtwomid-cycleupgrades–XboxOneS(retailsat$299,releasedOctober7,2016)andXboxOneX(retailsat$499,tobereleasedonNovember7,2017).NintendoSwitch:NintendolaunchedSwitch,itsnewesthybridconsole,onMarch3,2017.Basedoncompanydisclosure,Nintendosold4.7mSwitchunitsworldwidethroughtheendofJune,makingitthefastestsellingconsoleincompanyhistory.AsEA"sCFOBlakeJorgensennotedonthecompany"sFQ4"17quarterearningscall(May9th,2017),heestimatesthattheinstalledbaseofcurrent-genconsolestogrowto105munitsbytheendofcalendar2017,upfrom79mtheprioryear.Comparatively,lastgenconsoles(ex-Wii)soldthrough~180munitsintotalfortheentirecycle(roughlyevenspiltbetweenPS3andXbox360).Basedoncompanydisclosure,PS3(launchedNov2006)soldthrough~21munitsattheendofcalendaryear2008whileXbox360(launchedNov2005)soldthrough28munits,whichbringsthetotallastgeninstalledbaseto~50munitsthreeyearsintothecycle.Thiswouldindicatethecurrentgenconsolecycleisstilltracking~50-60%aheadoflastgen.Sony"srecentdisclosureindicatesthatPS4continuestobethefastestsellingPlayStationconsole.AccordingtoNPD,asofAugust2017,totalcumulativeUSvideogamehardwaresaleswerejustshyof$18bn(sinceNovember2013).USInternet&InteractiveEntertainment10October201715 Weviewthisstrongadoptionasapositivesignforpublishersandavalidationthatvideogameconsoleshavenotbeendisplacedbyothermethodsofgaming.Forthemid-cyclehardwarelaunches,webelievebackwardscompatibilitywillmuteanydisruptionindemandforthepublishers.Additionally,havingdigitalcontent,mobileandsubscriptionrevenuestreamswillhelpmutedisruptionfromtransitionsbetweenconsolecyclesthatoccurredinthepast.Figure25:CumulativeUSVideoGameHardwareSalesSinceNov2013($B)$20$18$16$14$12$10$8$6$4$2$0Nov-13Mar-14Jul-14Nov-14Mar-15Jul-15Nov-15Mar-16Jul-16Nov-16Mar-17Jul-17Source:NPD,UBSUSInternet&InteractiveEntertainment10October201716 CurrencyHeadwindsinQ32017andBeyondSincetheendofQ22017,theUSDhasweakened~3%onaQoQbasisand~1%onaYoYbasisversusabasketofdevelopedmarketcurrencies,representingapotentialeasingofthepersistentcurrencyheadwindstomanycompaniesinourcoverage.Fromtheselectionofmajorcurrenciesbelow,thelargestQoQchangewasobservedfortheEUR,AUDandCAD(allthreestrengthenedagainsttheUSDby4-5%YoY).ForthelatestUBShouseviewonforwardglobalFXtrajectories,pleaseseetheSeptember2017notepublishedbyourMacroStrategyteam.Figure26:CurrencyChanges(YoYChanges&QoQChanges)YoYChangesQoQChangesYoYChanges201520162017Q416Q117Q217Q317Q317Q417Q118Q218DevelopedMarketsGBP1.531.361.281.241.241.281.311.311.311.311.31Change-7%-11%-5%-5%0%3%2%0%5%6%2%EUR1.111.111.131.081.071.101.181.181.181.181.18Change-16%0%2%-3%-1%3%7%5%9%10%7%KRW0.000880.000860.000.000860.000870.000880.000880.000880.000880.000880.00088Change-7%-2%2%-3%1%2%0%-1%2%2%0%AUD0.750.740.770.750.760.750.790.790.790.790.79Change-17%-1%4%-1%1%-1%5%4%5%4%5%JPY0.0080.0090.010.0090.0090.0090.0090.0090.0090.0090.009Change-13%12%-3%-6%-4%2%0%-8%-2%2%0%CAD0.780.760.770.750.760.740.800.800.800.800.80Change-13%-4%2%-2%1%-1%7%4%6%6%7%SGD0.730.720.720.710.710.720.740.740.740.740.74Change-8%0%0%-4%0%2%2%-1%4%4%2%MixedDevelopedMarketBasketChange-12%-1%0%-4%-1%1%3%1%4%5%3%BRICMarketsBRL0.310.290.320.300.320.310.320.320.320.320.32Change-28%-5%9%-2%5%-2%2%3%4%-1%2%RUB0.020.020.020.020.020.020.020.020.020.020.02Change-38%-9%14%3%7%3%-3%9%7%-1%-3%INR0.020.010.020.010.010.020.020.020.020.020.02Change-5%-5%3%-1%1%4%0%4%5%4%0%CNY0.160.150.150.150.150.150.150.150.150.150.15Change-2%-5%-2%-2%-1%0%3%0%2%3%3%MixedBRICMarketBasketChange-18%-6%6%-1%3%1%0%4%5%2%0%Note:DecreaseindicatesdollarstrengtheningSource:FactSet,UBSestimatesUSInternet&InteractiveEntertainment10October201717 USInternet&InteractiveEntertainmentFigure27:USDesktopUniqueVisitors(millions)Jul-16Aug-16Sep-163Q16Oct-16Nov-16Dec-164Q16Jan-17Feb-17Mar-171Q17Apr-17May-17Jun-172Q17Jul-17Aug-173Q17QTDGoogle194.1196.2190.3193.6190.3192.2192.4191.7186.4179.3183.9183.2178.5182.0178.6179.7177.4174.3175.8YOY%-4.1%-5.1%-8.6%-6.0%-6.5%-5.7%-7.6%-6.6%-9.9%-11.3%-8.6%-9.9%-8.8%-6.3%-7.0%-7.4%-8.6%-11.2%-9.9%Facebook134.1134.8125.5131.5129.4133.9132.2131.9120.9117.1117.2118.4113.2116.2112.6114.0110.9108.3109.6YOY%-5.8%-5.8%-11.1%-7.6%-9.6%-7.3%-7.4%-8.1%-16.9%-16.4%-18.8%-17.4%-19.6%-19.1%-20.3%-19.7%-17.3%-19.7%-18.5%IACSites73.079.586.679.789.486.083.286.281.378.784.681.676.176.067.873.363.765.764.7YOY%-11.8%-5.2%0.4%-5.5%-1.6%-3.3%-6.4%-3.7%-6.6%-9.6%-1.4%-5.9%-2.8%-0.5%-5.8%-3.0%-12.8%-17.4%-15.2%Match.com2.22.11.82.01.81.61.81.72.02.12.22.12.02.11.81.91.91.91.9YOY%8.3%-40.1%-9.3%-18.7%-9.2%-18.8%-15.0%-14.4%-5.7%14.2%6.2%4.4%4.1%11.1%-17.3%-1.5%-13.2%-10.8%-12.0%Snapchat1.31.3.91.21.0.91.11.01.0.91.21.01.21.31.31.21.01.01.0YOY%195.4%191.8%26.9%118.7%41.3%60.4%64.7%55.0%33.1%48.8%44.8%42.0%37.5%33.3%3.4%22.2%-19.6%-20.2%-19.9%Twitter38.936.432.235.930.433.032.331.932.628.129.930.229.130.230.329.929.630.730.1YOY%3.2%-4.4%-9.1%-3.3%-13.7%-7.5%-10.9%-10.7%-10.6%-22.9%-20.5%-18.0%-19.8%-17.5%-21.7%-19.7%-24.1%-15.7%-20.1%10October2017Amazon103.3107.5101.0104.099.4107.9114.4107.2102.996.4103.9101.0103.7106.1101.9103.9101.6102.6102.1YOY%-1.7%1.2%-4.4%-1.6%-6.9%-3.7%-3.6%-4.7%-4.2%-0.5%0.4%-1.5%1.3%2.7%-1.8%0.7%-1.7%-4.6%-3.2%eBay55.758.153.055.651.354.253.953.147.744.649.147.146.547.746.747.044.844.644.7YOY%5.8%7.8%-1.7%3.9%-5.4%-3.5%-3.6%-4.1%-4.8%-7.4%-1.2%-4.4%-3.2%-5.2%-14.7%-8.0%-19.6%-23.2%-21.4%Groupon16.215.412.914.911.614.215.113.613.110.813.712.511.712.612.112.211.610.411.0YOY%21.5%14.4%-15.1%6.0%-22.7%-20.6%-14.4%-19.1%-16.6%-28.5%-12.0%-18.9%-19.3%-14.8%-22.4%-18.9%-28.5%-32.4%-30.4%Yelp33.132.629.831.830.028.429.029.131.129.534.531.733.333.833.733.632.234.033.1YOY%-7.9%-7.9%-16.5%-10.8%-17.0%-13.8%-17.2%-16.0%-11.4%-16.6%-3.2%-10.4%-3.1%-1.3%-2.7%-2.4%-2.6%4.4%0.8%ExpediaInc.33.933.126.931.325.224.824.024.727.426.730.028.027.329.530.829.230.627.128.8YOY%-1.0%9.2%-1.9%2.1%0.4%4.4%0.0%1.5%17.2%3.2%1.1%6.6%-4.3%-1.5%-7.9%-4.7%-9.8%-18.2%-14.0%PricelineInc.21.519.614.618.613.613.913.913.816.814.917.016.214.715.717.115.815.913.714.8YOY%13.0%16.1%-7.2%7.9%-6.4%3.0%3.8%0.0%9.9%-3.9%2.6%2.8%-6.6%-9.7%-17.6%-11.8%-26.0%-30.4%-28.1%TripAdvisor35.133.029.132.428.425.626.426.832.529.834.432.230.831.832.331.733.031.732.3YOY%-4.5%-9.7%-23.8%-12.8%-18.4%-19.7%-19.5%-19.2%8.3%-3.1%2.3%2.4%-1.2%-6.9%-8.2%-5.6%-6.2%-4.0%-5.1%Zynga2.72.72.22.51.91.81.81.91.61.41.31.41.21.31.21.21.11.21.1YOY%-37.5%-34.3%-45.2%-39.0%-53.2%-51.0%-44.7%-49.9%-49.7%-49.5%-56.0%-51.7%-58.2%-57.5%-56.1%-57.3%-59.0%-56.5%-57.7%HSN2.52.12.12.22.22.93.12.71.91.41.61.61.31.61.41.41.51.31.4YOY%-11.9%-10.2%-17.5%-13.2%-21.8%-11.6%-11.0%-14.4%-16.0%-15.4%-24.4%-18.7%-30.4%-16.1%-39.4%-29.5%-38.2%-38.0%-38.1%QVC3.43.53.13.33.34.64.54.12.82.52.92.72.52.42.62.52.12.42.3YOY%1.1%1.1%-18.0%-5.7%-18.5%-8.7%-11.5%-12.5%-14.8%-22.7%-11.2%-16.2%-20.9%-21.1%-21.8%-21.3%-37.9%-30.2%-34.0%Source:comScore,UBSestimates.Note:Quarterlyfigurescorrespondtothe3-monthaverageMostsignificantQoQacceleration(USDesktop):YELP,FB,ZNGA,TRIP,TWTRMostsignificantQoQdeceleration(USDesktop):SNAP,PCLN,MTCH,EBAY,HSNI18 USInternet&InteraFigure28:WorldwideDesktopUniqueVisitors(millions)Jul-16Aug-16Sep-163Q16Oct-16Nov-16Dec-164Q16Jan-17Feb-17Mar-171Q17Apr-17May-17Jun-172Q17Jul-17Aug-173Q17QTDGoogle1238.31261.31236.91245.51206.51220.01202.61209.71202.61165.11199.51189.11184.81188.61178.81184.11203.41201.81202.6YOY%-0.1%0.0%0.2%0.0%-2.1%-1.2%-2.4%-1.9%-2.7%-4.8%-4.0%-3.8%-4.3%-4.4%-4.4%-4.4%-2.8%-4.7%-3.8%Facebook798.3804.4767.2790.0759.3773.3765.9766.2765.9723.8726.6738.8705.9704.0687.9699.3719.4717.0718.2YOY%-2.7%-1.7%-7.7%-4.1%-10.6%-8.7%-6.9%-8.8%-8.5%-8.9%-12.4%-9.9%-14.1%-13.8%-15.5%-14.4%-9.9%-10.9%-10.4%ctiveEntertainment10October2017IACSites226.4227.0232.1228.5241.4241.6221.2234.7221.2230.6248.9233.6236.0241.7226.6234.8226.7234.5230.6YOY%-26.6%-26.1%-23.7%-25.5%-21.2%-18.4%-21.3%-20.3%-20.9%-15.0%-8.4%-14.8%-6.6%-2.9%1.7%-2.8%0.1%3.3%1.7%Match.com3.63.32.93.32.82.52.62.62.62.83.12.82.83.02.52.82.92.82.8YOY%6.9%-35.7%-4.6%-15.2%-5.3%-20.7%-21.4%-16.1%-19.0%-0.4%-3.4%-7.9%-7.0%2.8%-29.1%-12.1%-19.1%-16.5%-17.8%Snapchat3.93.93.33.73.03.23.53.23.52.83.63.33.53.33.43.43.53.53.5YOY%189.7%187.7%48.1%124.8%n/an/an/a50.5%35.1%17.7%12.5%21.2%-0.4%-10.6%-20.8%-11.2%-8.4%-8.3%-8.3%Twitter162.1157.4134.0151.1132.1146.1144.4140.9144.4124.6135.5134.8131.2136.9132.6133.5141.6138.4140.0YOY%7.1%6.2%-12.9%0.0%-13.6%-7.2%-5.7%-8.8%-7.6%-19.7%-17.3%-14.9%-14.9%-14.7%-16.7%-15.4%-12.7%-12.0%-12.3%Amazon350.6359.8335.9348.8343.6368.3376.1362.7376.1326.9353.0352.0339.9341.8340.8340.9345.8341.8343.8YOY%-4.9%-3.6%-9.7%-6.1%-10.4%-8.4%-7.9%-8.9%-3.4%-9.2%-7.9%-6.8%-8.3%-5.6%-2.1%-5.4%-1.4%-5.0%-3.2%eBay201.5207.9199.3202.9204.7209.1201.2205.0201.2176.9191.5189.9179.3183.0175.9179.4180.1174.9177.5YOY%1.2%-0.2%-7.2%-2.1%-5.2%-2.7%-5.4%-4.4%-3.8%-10.4%-7.6%-7.2%-9.7%-8.0%-14.3%-10.7%-10.6%-15.9%-13.3%Groupon44.241.336.440.634.937.337.536.637.529.534.333.730.330.828.029.728.226.427.3YOY%-6.2%-10.3%-25.9%-14.3%-32.6%-32.8%-30.0%-31.8%-28.5%-36.5%-25.2%-30.0%-27.0%-26.4%-33.8%-29.1%-36.3%-35.9%-36.1%Yelp36.535.532.234.732.931.331.631.931.632.538.434.236.737.437.137.135.938.137.0YOY%-10.3%-10.9%-19.7%-13.6%-19.9%-15.5%-18.4%-18.0%-19.3%-17.1%-3.9%-13.4%-3.8%-2.3%-3.4%-3.2%-1.6%7.4%2.8%ExpediaInc.94.193.479.188.974.174.268.272.268.273.484.175.279.686.191.385.795.689.392.4YOY%-11.5%8.4%2.8%-1.1%-2.7%5.7%2.7%1.7%-2.1%-5.5%3.2%-1.4%-0.4%5.1%6.3%3.7%1.5%-4.4%-1.4%PricelineInc.114.8109.085.3103.183.982.475.480.675.478.793.982.780.284.990.985.397.292.795.0YOY%-1.8%1.2%-8.6%-2.8%-8.5%-5.1%-13.8%-9.1%-25.5%-16.1%-2.5%-14.9%-11.6%-9.9%-10.1%-10.5%-15.3%-14.9%-15.1%TripAdvisor139.7130.1117.0128.9115.1109.2101.8108.7101.8114.3128.2114.8118.1121.4121.5120.3128.9126.9127.9YOY%-11.6%-18.8%-24.8%-18.3%-21.6%-20.3%-24.3%-22.1%-19.6%-4.8%0.2%-8.1%-3.4%-6.1%-6.8%-5.5%-7.7%-2.4%-5.2%Zynga9.99.48.09.17.78.08.48.18.46.77.07.46.56.26.16.36.56.46.5YOY%-26.8%-26.0%-35.6%-29.4%-40.1%-30.7%-27.6%-33.1%-25.3%-35.9%-37.0%-32.7%-38.2%-39.7%-41.9%-40.0%-33.8%-31.9%-32.9%HSN2.62.22.22.32.23.03.12.73.11.51.62.11.41.71.51.51.71.41.5YOY%-12.4%-9.7%-17.7%-13.4%-23.1%-13.1%-12.6%-15.8%33.7%-14.5%-25.9%-0.5%-28.2%-15.9%-39.2%-28.4%-35.9%-36.2%-36.0%QVC5.05.14.64.94.86.36.35.86.33.74.44.83.93.83.73.83.43.83.6YOY%6.5%15.7%-12.6%2.3%-19.2%-12.5%-7.3%-12.7%34.8%-18.2%-4.7%4.2%-16.9%-14.2%-25.3%-19.0%-31.0%-25.2%-28.0%Source:comScore,UBSestimates.Note:Quarterlyfigurescorrespondtothe3-monthaverageMostsignificantQoQacceleration(WWDesktop):IAC,ZNGA,YELP,AMZN,FBMostsignificantQoQdeceleration(WWDesktop):MTCH,HSNI,QVCA,GRPN,PCLN19 USInternet&InteractiveEntertainmentFigure29:USMobileUniqueVisitors(millions)Jul-16Aug-16Sep-163Q16Oct-16Nov-16Dec-164Q16Jan-17Feb-17Mar-171Q17Apr-17May-17Jun-172Q17Jul-17Aug-173Q17QTDGoogle166.4167.7169.7167.9169.5171.2170.5170.4170.1169.8170.5170.1170.8171.712.4118.3175.3176.6175.9YOY%8.4%8.8%9.5%8.9%8.6%9.5%9.2%9.1%5.3%5.0%4.9%5.1%4.7%1.1%-92.5%-28.8%5.3%5.3%5.3%Facebook152.3156.1156.7155.0157.3157.3159.0157.9158.5156.9157.1157.5155.7155.712.4107.9154.3159.0156.7YOY%9.4%10.8%9.9%10.0%9.4%8.9%9.8%9.4%5.6%4.2%4.4%4.8%1.9%0.3%-92.1%-30.4%1.3%1.9%1.6%IACSites98.8104.6103.0102.2101.4103.9107.2104.293.789.695.693.091.984.812.463.072.674.773.6YOY%1.8%6.0%5.1%4.3%4.9%6.1%6.4%5.8%-9.5%-7.8%-4.5%-7.3%-2.4%-10.9%-86.7%-33.0%-26.6%-28.6%-27.6%Match.com3.63.03.63.43.82.94.23.73.93.03.53.53.94.412.46.94.83.64.2YOY%43.7%32.3%46.7%41.1%45.4%1.9%107.6%45.7%29.0%10.2%13.0%17.7%53.9%26.6%211.8%107.5%35.6%20.4%28.6%Snapchat52.158.759.856.962.268.373.568.073.680.179.977.980.580.912.457.985.185.585.3YOY%54.1%73.0%64.1%63.7%66.4%81.4%100.1%82.5%99.5%100.5%81.9%93.4%70.0%64.2%-75.3%18.4%63.5%45.5%53.9%Twitter73.974.774.974.574.573.371.072.975.469.866.570.668.973.212.451.583.683.183.410October2017YOY%7.7%3.7%5.9%5.7%2.6%5.0%10.2%5.8%8.1%2.3%-2.9%2.5%3.8%1.9%-82.4%-25.9%13.1%11.3%12.2%Amazon129.4133.9132.0131.8129.7130.6138.1132.8134.8129.3132.4132.2129.2130.012.490.5131.7131.0131.4YOY%9.1%14.4%11.2%11.6%8.0%6.9%8.9%8.0%7.2%17.2%6.2%9.9%0.4%1.0%-90.3%-29.6%1.8%-2.2%-0.2%eBay60.964.467.264.260.562.061.361.358.352.357.556.157.056.512.442.057.748.753.2YOY%-20.2%16.5%22.3%3.2%10.8%8.1%0.8%6.4%1.4%-6.8%-2.4%-2.6%-7.7%-9.3%-80.7%-33.2%-5.2%-24.4%-15.1%Groupon47.045.543.745.442.340.442.141.638.137.737.537.737.337.412.429.139.136.337.7YOY%31.3%20.9%18.3%23.4%15.9%-12.7%-5.7%-2.0%-12.2%-12.7%-16.0%-13.7%-18.1%-19.1%-73.3%-37.0%-16.8%-20.1%-18.4%Yelp67.364.959.864.057.154.259.757.059.961.266.462.566.365.612.448.168.065.866.9YOY%15.4%15.6%6.2%12.4%1.4%5.5%9.5%5.4%2.7%4.7%7.2%4.9%8.0%2.8%-80.4%-23.4%1.1%1.3%1.2%ExpediaInc.34.629.825.129.922.821.223.422.527.325.030.227.528.531.012.424.033.327.730.5YOY%68.3%41.6%34.8%48.6%22.5%24.5%7.5%17.4%-9.5%-2.7%6.1%-2.2%3.5%8.1%-61.4%-18.6%-3.9%-6.9%-5.3%PricelineInc.13.711.79.811.78.88.310.09.010.49.712.310.811.312.612.412.116.016.516.2YOY%48.5%37.0%45.9%43.8%29.7%40.3%36.2%35.2%13.4%12.4%32.6%19.6%17.2%17.4%5.7%13.1%16.7%41.2%28.0%TripAdvisor51.552.045.249.642.437.741.440.547.446.253.348.952.051.612.438.765.164.364.7YOY%27.2%37.1%38.5%33.9%35.7%35.9%35.8%35.8%29.4%26.0%30.2%28.6%35.2%23.4%-73.6%-8.8%26.3%23.7%25.0%Zynga17.818.819.318.618.618.119.618.819.519.020.819.821.820.912.418.423.022.122.6YOY%-12.6%0.6%6.7%-2.1%-4.1%-6.6%7.0%-1.4%-0.4%-3.9%10.8%2.0%12.2%6.8%-33.9%-4.6%29.3%17.6%23.3%HSN5.33.54.74.54.25.64.64.83.31.42.42.32.53.112.46.03.31.42.4YOY%-8.4%-13.3%1.6%-6.6%-16.8%-6.7%-11.6%-11.4%18.2%-32.0%-20.7%-9.7%3.9%34.1%177.2%95.8%-37.4%-59.9%-46.4%QVC7.06.75.86.55.47.66.26.42.92.23.73.03.63.112.46.43.52.93.2YOY%67.5%62.5%1.2%38.9%42.4%32.1%31.9%34.7%-37.4%-60.7%-28.1%-42.7%-32.6%-63.3%24.8%-19.3%-49.2%-56.4%-52.7%Source:comScore,UBSestimates.Note:Quarterlyfigurescorrespondtothe3-monthaverageMostsignificantQoQacceleration(USMobile):ZNGA,PCLN,TWTR,GOOG,FBMostsignificantQoQdeceleration(USMobile):HSNI,IACI,SNAP,EXPE,MTCH20 USInternet&InteractiveEntertainmentFigure30:USMultiplatformUniqueVisitors(millions)Jul-16Aug-16Sep-163Q16Oct-16Nov-16Dec-164Q16Jan-17Feb-17Mar-171Q17Apr-17May-17Jun-172Q17Jul-17Aug-173Q17QTDGoogle240.5240.7245.7242.3246.4246.2246.7246.4243.3239.3241.5241.4241.4241.5241.4241.4241.8241.1241.4YOY%-1.2%-1.9%0.3%-0.9%0.2%-0.4%-0.7%-0.3%-0.7%-1.8%-0.8%-1.1%0.3%0.0%-0.2%0.0%0.5%0.2%0.3%Facebook204.3203.5202.4203.4203.8205.1206.1205.0202.3198.1200.0200.1199.5199.8200.0199.8197.0201.8199.4YOY%-3.5%-5.4%-5.3%-4.8%-5.8%-5.6%-4.7%-5.4%-1.8%-3.1%-2.8%-2.6%-2.6%-3.5%-3.3%-3.1%-3.5%-0.9%-2.2%IACSites164.9171.9173.3170.0175.1171.7172.5173.1162.4157.2164.6161.4156.0150.2138.0148.1126.2128.5127.4YOY%-3.8%-1.5%-2.2%-2.4%-1.7%-5.1%-6.2%-4.4%-8.6%-7.6%-6.3%-7.5%-7.0%-9.9%-15.5%-10.8%-23.5%-25.2%-24.4%Match.com6.35.55.85.95.84.86.25.66.15.15.75.66.06.66.46.47.05.96.4YOY%34.1%-10.4%25.6%13.9%18.1%-8.6%42.4%15.8%8.5%4.7%8.9%7.5%17.7%17.7%-5.5%8.7%10.4%6.7%8.7%Snapchat55.663.965.661.767.976.883.776.183.191.991.488.891.491.995.392.997.997.897.8YOY%55.7%78.9%67.8%67.5%70.7%90.2%113.7%91.4%113.4%118.4%98.9%109.8%79.0%76.1%78.7%77.9%76.0%53.0%63.7%Twitter111.4109.8108.6109.9105.3105.7101.2104.0105.697.895.499.696.0101.0109.5102.2112.3113.1112.7YOY%0.2%-5.7%-3.1%-2.9%-6.6%-4.6%-5.2%-5.5%-4.2%-11.2%-11.1%-8.8%-8.9%-7.8%0.2%-5.5%0.9%3.1%2.0%10October2017Amazon183.5186.3183.6184.4182.2184.1189.0185.1184.0176.7183.0181.3180.7181.9180.0180.9180.8180.6180.7YOY%-2.1%-1.1%-2.1%-1.8%-4.0%-4.5%-4.9%-4.5%0.6%2.8%1.1%1.5%-0.8%0.2%-1.0%-0.5%-1.5%-3.0%-2.3%eBay106.9110.4109.2108.8102.1105.2104.7104.097.189.496.294.292.893.790.192.293.085.889.4YOY%7.8%12.4%12.6%10.9%4.5%2.9%0.7%2.6%-1.6%-7.1%-4.3%-4.3%-8.5%-8.7%-17.2%-11.6%-13.0%-22.3%-17.7%Groupon64.962.759.462.456.155.958.556.852.150.451.751.450.050.846.048.951.748.350.0YOY%23.7%15.9%9.3%16.2%4.6%-15.1%-9.1%-7.2%-13.8%-15.8%-15.7%-15.1%-20.2%-19.8%-27.9%-22.7%-20.3%-23.1%-21.7%Yelp94.892.685.390.981.876.782.980.585.685.693.988.491.691.892.692.093.792.693.1YOY%3.8%4.4%-3.4%1.6%-7.4%-5.7%-3.2%-5.5%-1.2%-2.2%3.3%0.0%2.1%0.0%0.5%0.9%-1.2%0.0%-0.6%ExpediaInc.65.860.750.759.146.845.346.446.253.951.158.154.454.959.659.858.161.654.458.0YOY%16.5%16.5%7.4%13.7%4.8%8.6%-1.7%3.7%-3.6%-2.8%0.9%-1.8%-1.2%4.6%-5.5%-0.9%-6.4%-10.3%-8.3%PricelineInc.33.330.024.129.121.521.822.922.026.124.528.326.325.927.529.827.731.230.430.8YOY%15.0%16.2%3.1%11.8%1.0%10.1%9.5%6.8%4.1%2.4%12.2%6.3%3.7%0.3%-4.7%-0.5%-6.3%1.6%-2.5%TripAdvisor84.382.175.780.771.163.767.567.479.576.985.780.781.181.587.983.595.894.295.0YOY%9.6%10.8%9.1%9.9%9.3%7.7%7.8%8.3%20.8%15.2%18.2%18.1%18.9%10.6%10.6%13.2%13.6%14.7%14.2%Zynga24.325.425.325.024.524.025.724.824.723.726.024.827.925.526.426.628.127.928.0YOY%-15.4%-5.1%-1.1%-7.5%-8.3%-9.5%3.9%-4.8%-2.7%-5.1%6.6%-0.5%7.7%-2.8%5.9%3.6%15.6%9.9%12.7%HSN9.16.67.97.87.29.68.58.45.43.44.34.34.25.54.74.85.83.04.4YOY%-11.7%-15.4%-6.8%-11.2%-22.8%-15.3%-18.9%-18.8%-11.7%-21.1%-30.2%-21.0%-11.9%19.1%-38.9%-15.7%-36.1%-54.4%-43.8%QVC13.112.110.912.09.814.712.312.36.45.47.86.56.86.16.06.36.05.75.9YOY%46.9%41.2%-11.0%21.4%13.1%19.9%10.6%14.8%-31.5%-49.6%-29.9%-37.1%-40.7%-59.4%-66.5%-57.4%-54.0%-53.2%-53.6%Source:comScore,UBSestimates.Note:Quarterlyfigurescorrespondtothe3-monthaverageMostsignificantQoQacceleration(USMultiplatform):TWTR,ZNGA,FB,GOOG,TRIPMostsignificantQoQdeceleration(USMultiplatform):HSNI,IACI,SNAP,EXPE,EBAY21 USInternet&InteractiveEntertainmentFigure31:USDesktopVideoUniqueViewers(millions)Jul-2016Aug-2016Sep-20163Q16Oct-2016Nov-2016Dec-20164Q16Jan-2017Feb-2017Mar-20171Q17Apr-2017May-2017Jun-20172Q17Jul-2017Aug-20173Q17QTDAmazonSites10.19.69.09.58.811.013.311.010.58.59.29.410.611.111.911.213.110.311.7YOY%12.7%7.1%34.0%16.5%30.8%15.5%30.1%25.0%35.6%-4.5%7.3%11.9%29.4%27.6%20.7%25.6%30.0%7.9%19.3%AOL163.6151.7142.4152.6140.4137.0116.2131.237.541.937.438.935.934.431.233.836.034.735.3YOY%86.1%66.6%9.0%47.8%-1.8%-5.5%-25.6%-11.4%-72.1%-70.7%-79.4%-74.5%-79.4%-80.5%-82.1%-80.7%-78.0%-77.2%-77.6%BrightRoll103.993.594.197.2113.4117.4109.1113.3n/an/an/an/a115.015.312.547.66.25.96.0YOY%32.5%-18.8%-23.6%-8.0%-8.4%-13.2%-26.6%-16.6%n/an/an/an/a29.9%-84.3%-87.7%-50.3%-94.1%-93.7%-93.9%Facebook86.284.475.582.173.278.580.077.270.568.669.469.569.070.670.470.068.865.867.3YOY%-3.8%-5.2%-17.5%-8.9%-19.7%-13.4%-9.7%-14.3%-16.4%-15.4%-16.8%-16.2%-10.6%-11.1%-16.2%-12.7%-20.3%-22.1%-21.2%GoogleSites166.2176.8193.2178.7207.0197.0191.9198.7184.7183.3163.3177.1153.6156.1147.7152.5146.3151.6149.0YOY%-9.1%-2.0%10.7%-0.3%16.0%11.2%2.4%9.7%4.5%-2.6%-13.1%-3.9%-14.8%-17.3%-17.7%-16.6%-12.0%-14.2%-13.1%Twitter23.622.519.822.015.116.215.115.514.814.013.514.112.613.012.512.712.112.412.2YOY%-5.6%-17.5%-25.9%n/a-45.4%-45.9%-53.3%n/a-58.6%-63.5%-56.8%-59.8%-55.4%-48.2%-49.5%-51.2%-48.9%-45.1%-47.0%Snapchat.1.4.3.3.3.2.2.3.2.4.3.3.3.5.3.4.3.3.3YOY%n/an/an/an/an/a41.3%-22.8%65.2%-19.2%136.3%44.5%43.5%2.0%88.8%46.7%42.6%197.6%-25.4%25.6%Vimeo41.743.742.442.642.840.038.740.541.441.043.842.141.741.136.239.618.920.219.610October2017YOY%9.3%1.0%-19.7%-4.8%-14.4%-29.1%-34.0%-26.4%-12.0%8.2%-14.8%-7.4%-13.4%-12.5%-26.0%-17.4%-54.6%-53.8%-54.2%Yahoo65.880.472.973.071.872.867.870.855.552.756.554.952.746.348.549.159.057.658.3YOY%34.9%60.4%13.4%34.3%23.1%15.2%-6.8%9.3%-7.2%-14.9%-17.3%-13.3%-15.7%-23.8%-28.0%-22.7%-10.2%-28.4%-20.2%Source:comScore,UBSestimates.Note:Includescontent&ads;Quarterlyfigurescorrespondtothe3-monthaverage22 USInternet&InteractiveEntertainmentUBSInternet&InteractiveEntertainmentSummary&CompsCompanyTickerRatingCurrentTarget%toTargetUpsideDownsideProsandConsFacebookFBBuy$172$19010%$235$133Pros:Highlypersonal/socialinnature;Potentialtodisrupttangentialbusinesses(search,businesslistings,etc.);ArrayofLTgrowthdriversCons:Lackofusers"intenttoconsume;Privacyconcerns;PotentialmarginheadwindsoverneartomediumtermAlphabetGOOGBuy$979$1,08010%$1,410$745Pros:Digitaladvertisingleader(mobile/desktop);Strongpositioninmobile(OS,hardware)andenterprise(GCP,apps);Historyofinnovation/disruptionCons:Pressuresonmarginsduetolong-tailedinvestments;RegulatoryconcernsIACIACBuy$122$13510%$192$72Pros:Strongmomentumingrowthproperties;Diversecollectionofadvertising-driven,local,andsocialbusinesses;ContinuedshareholderreturnsCons:Delayedinvestmentinmobile(mayposemonetizationchallenges);Dependenceondesktopengagement;SearchbusinessvolatilityMatchGroupMTCHBuy$25$2810%$42$16Pros:Strategicstrengths:scale,breath,profitability,demographics&accesstocapital;PotentialforTindermonetization&B/SleverageCons:Shifttomobile,mixshiftbetweenbrands,int"linvestmentsanduncertaincompetitiveenvironmentraiseconcernsaroundsustainabilityofprofitgrowthTwitterTWTRSell$18$14-22%$20$9Pros:Mobile-first;Personal/socialinnature;Uniquecharacteristics(real-time,public)Cons:Slowusergrowth;Challengedmgmt.adexecution;Heightenedcompetitionindigitaladvertising;InvestmentneededtoscaleinternationalAdvertising/ServicesAltabaAABABuy$68$7713%$107$42Pros:StakesinYahooJapanandAlibaba;Prospectsforcashreturns;PotentialtaxefficientoutcomesnotpricedinbythemarketCons:Inabilityformanagementtotaxefficientlymonetizenon-coreassetsSnapSNAPNeutral$15$12-19%$18$8Pros:Highlyengagedmillennialuserbasewithsignificantmonetizationrunwayahead;UniquecoststructureallowsforoutsideleverageLTCons:Coredemohighlypenetrated&usergrowthslowedinQ3/Q4"16;Intensifiedcompetitivelanscape;Unprofitableinnearterm10October2017AmazonAMZNBuy$990$1,20021%$1,715$630Pros:Users"intenttoconsume;Suiteofseamlesslyconnectedapps;Historyofinnovationanddisruption(AWS,Kindle,Prime,Echo)Cons:Ongoinginvestmentinfulfillment,mediacontent,hardware,India&AWS;Questionsonmobilecomputing(devices/platform)eBayEBAYBuy$39$403%$51$28Pros:Users"intenttoconsume;Personalizationeffortsandstructureddatainitiatives;TrackrecordofstrategicacquisitionsCons:Ongoingrecoveryfromtrafficheadwinds(securitybreach,Googlealgochange);Upcominginvestmentyear;StillemerginglocalpresenceGrouponGRPNSell$5.03$3.10-38%$5.00$1.30Pros:Globalscaleofusersandmerchantrelationships;DiversifyingbusinesswithPayments,Rewards,Getaways,etc.Cons:Businessmixtransitionandmanagementchange;PotentialformarginpressureduetocompetitionandinvestmentinuseracquisitionHSNInc.HSNIBuy$38$4621%$66$29Pros:Strongmanagementteam;Marginexpansionpotential(i.e.,increasingscale,investmentsindataanalytics,warehouseautomation)Cons:Challengingmacro;Lowerrelativemargins(vs.QVC)duetoUS-onlyfocus;IncreasingcapexduetoinvestmentinoperationseCommerceQVCGroupQVCABuy$23$2717%$38$16Pros:Impressiveglobalscaleandmarginlevels;Potentialupsidefromzulilysynergies;Shareholderreturns(buyback,M&A,etc.)Cons:Challengingmacro(especiallyintheUS);MorenascentInternationalbusinessescurrentlyadragonoverallmarginsYelpYELPSell$47$30-36%$41$21Pros:Scaleofuserreviewsandlocalmerchantrelationships;Effectivemobileimplementation;Highlysocial/personalinnatureCons:Potentialcompetitiveentrybylargerplayers;Unstablesalesforceproductivity;LackofInternationalpresencePayPalPYPLNeutral$66$62-6%$79$36Pros:Globalleaderinonlinepayments;No.ofupcomingcatalystsincl.Venmomonetization/merchantadoptionCons:Visa,MC,&Discoveragreementspressuringmargins;Competitiveentrybylargerplayersincl.Apple&Google;HighrelativevaluationExpediaEXPEBuy$148$17015%$242$91Pros:Users"intenttoconsume;Trackrecordofinnovation;Technologyupgradelargelycomplete;SolidseculargrowthCons:Increasingcompetitivepressures;Hotelindustryconsolidation&pushfordirectbooking;LimitedEuropeanexposurePricelinePCLNBuy$1,918$2,1009%$2,710$1,580Pros:Users"intenttoconsume;Exposuretoonlineinternationaltraveltrends;KayakacquisitionprovidesdiversificationCons:Increasingcompetitivepressures;Globalmacrorisk;Hotelindustryconsolidation&pushfordirectbooking;OpenTableImpairmentTravelTripAdvisorTRIPNeutral$42$433%$59$29Pros:Impressivebaseofuserreviews;Effectivemobileimplementation;Highlysocial/personalinnatureCons:NeartermInstantBookingdilution&margincompression;LTbalancebetweenbooking&infofunctionality;CompetitionfromlargecapplayersTravelportTVPTNeutral$16$15-3%$21$8Pros:Globallywell-diversifiedGDSplatform;Leaderinhotelattachments;Shareholderreturns(buybacks)oncecompanyreachesleveragetargetsCons:NeartermtechinvestmentsandeNettgrowthcompressmargins;SecularthreatofcontinueddisintermediationActivisionBlizzardATVIBuy$63$7214%$95$43Pros:Demonstratedabilitytodeliverinnovativetitles;Multiplepathstomonetization;Recapitalizationviabuybackand/orleverageCons:Emergenceofmobileandsocialgames;Long-termtentpolefranchisescouldfacepossibilityofdeclineElectronicArtsEABuy$120$13210%$174$78Pros:Strongmobilepresence;Proprietarydigitaldistributionplatform;ManagementcostdisciplineCons:RelianceoncostlylicensesforIP;BroadportfoliopressuresmarginsInteractiveZyngaZNGABuy$3.79$4.8027%$6.70$2.50Pros:Leveredtothethemeofsocial&mobile;ProprietaryIPfromNaturalMotionacquisition;DevelopingfranchiseapproachEntertainmentCons:Historicallylowvisibilityinforwardtitleslate;Risingmarketingcosts;Unprovennewfranchises23Source:FactSet,Companyreports,UBSestimatesNote:AsofOctober6thclose USInternet&InteractiveEntertainmentUBSInternet&InteractiveValuationCompsTTMEV/SalesEV/EBITDAEV/FCFPrice/EarningsCompanyTickerRatingTargetTotalReturn20162017E2018E20162017E2018E20162017E2018E20162017E2018EFacebookFBBuy$19033.5%17.1x12.2x9.5x32.0x22.9x17.3x41.4x33.6x26.2x49.3x33.0x25.8xAlphabetGOOGBuy$1,08022.3%8.1x6.8x5.8x20.0x18.4x14.9x22.9x25.3x18.4x35.1x32.1x25.7xIACIACBuy$13598.6%3.3x3.3x2.9x20.6x17.7x13.7x48.1x30.6x22.6x41.4x40.1x26.2xMatchGroupMTCHBuy$2847.4%6.5x6.2x5.3x19.6x17.3x14.0x42.7x26.6x20.5x32.0x35.0x27.4xTwitterTWTRSell$14-10.1%4.2x4.4x4.1x14.2x15.0x13.6x19.6x24.7x20.2x38.0x59.9x47.4xAltabaAABABuy$7757.0%n/an/an/an/an/an/an/an/an/an/an/an/aSnapSNAPNeutral$12-39.6%n/m17.4x10.2xn/mn/mn/mn/mn/mn/mn/mn/mn/mAdvertisingServicesAverage7.8x8.4x6.3x21.3x18.3x14.7x35.0x28.1x21.6x39.2x40.0x30.5x10October2017AmazonAMZNBuy$1,20017.9%3.5x2.8x2.3x30.6x25.1x18.6x83.0x57.3x37.1x97.9x99.3x64.4xeBayEBAYBuy$4022.7%4.5x4.2x3.9x11.7x11.7x10.7x18.2x17.6x15.6x20.6x19.6x17.8xGrouponGRPNSell$3.10-2.3%0.9x1.0x0.9x15.6x12.8x11.9xn/m52.7x26.9x100.4x71.4x38.6xHSNInc.HSNIBuy$46-0.7%0.7x0.7x0.7x8.2x8.7x7.9x12.6x15.8x15.3x14.5x16.1x13.8xQVCGroupQVCABuy$2718.8%1.6x1.6x1.5x8.3x8.2x7.9x15.2x14.2x13.9x23.4x21.7x16.0xYelpYELPSell$3014.9%4.8x4.0x3.5x28.8x23.6x18.8x33.2x27.5x21.4xn/m1207.4x174.2xPayPalPYPLNeutral$6265.6%6.8x5.7x4.8x26.7x21.8x18.0x29.6x25.2x20.5x44.1x36.0x29.1xeCommerceAverage4.6x3.6x3.0x27.5x19.6x15.0x37.8x28.3x20.1x92.5x178.9x48.0xExpediaEXPEBuy$17026.6%3.2x2.8x2.4x17.5x15.4x13.0x34.8x34.2x23.0x32.8x29.1x22.4xPricelinePCLNBuy$2,10029.6%8.2x7.1x6.2x21.4x18.9x16.1x23.9x21.3x18.7x29.2x26.1x21.8xTripAdvisorTRIPNeutral$43-35.0%3.5x3.3x2.9x14.9x15.3x14.4x20.7x21.5x18.5x29.6x31.8x34.4xTravelportTVPTNeutral$158.2%1.7x1.6x1.5x8.1x7.2x7.1x20.3x18.9x16.3x114.5x19.9x20.4xOnlineTravelAverage4.2x3.7x3.3x15.5x14.2x12.6x24.9x24.0x19.1x51.5x26.7x24.8xActivisionBlizzardATVIBuy$7244.7%7.5x7.3x6.7x20.1x20.4x18.4x24.5x21.5x19.0x28.6x30.1x27.5xElectronicArtsEABuy$13243.3%6.9x6.5x6.1x20.2x18.3x16.4x21.6x21.4x18.8x30.6x27.7x24.5xZyngaZNGABuy$4.8028.9%3.5x3.1x2.7x42.4x21.5x15.7x52.8x24.5x16.2x144.4x51.3x37.7xInteractiveEntertainmentAverage6.0x5.7x5.2x27.6x20.1x16.8x33.0x22.5x18.0x67.9x36.4x29.9xSource:FactSet,Companyreports,UBSestimatesNote:AsofOctober6thclose24 USInternet&InteractiveEntertainmentUBSInternet&InteractiveEntertainmentEstimatesRevenues($M)EBITDA($M)EPS($)FCF($M)Valuation($B)UBSCAGRUBSCAGRMarginUBSConsensusUBSCAGRCompanyTickerRatingMktCapEntVal20162017E2018E"16-"1820162017E2018E"16-"1820162017E2017E2018E2017E2018E20162017E2018E"16-"18FacebookFBBuy$508.3$472.8$27,638$38,804$49,70934.1%$14,785$20,632$27,37436.1%53%53%$5.22$6.68$5.33$6.50$11,411$14,087$18,04225.7%AlphabetGOOGBuy$688.7$597.9$73,479$88,038$102,37818.0%$29,860$32,467$40,14716.0%41%37%$30.47$38.09$30.59$40.12$26,064$23,674$32,45911.6%IACIACBuy$10.3$10.3$3,140$3,157$3,5876.9%$501$583$75122.4%16%18%$3.05$4.66$3.07$4.46$214$338$45746.0%MatchGroupMTCHBuy$7.2$7.9$1,223$1,280$1,48710.3%$404$457$56618.4%33%36%$0.73$0.93$0.79$0.97$185$297$38644.3%TwitterTWTRSell$13.2$10.7$2,530$2,450$2,6101.6%$751$714$7852.2%30%29%$0.30$0.38$0.34$0.36$544$432$528-1.6%Advertising/ServicesAltabaAABABuy$65.4n/an/an/an/an/an/an/an/an/an/an/an/an/an/an/an/an/an/an/aSnapSNAPNeutral$18.1$15.3$404$877$1,49792.4%($459)($755)($730)n/m-114%-86%($0.70)$(0.68)($0.64)$(0.50)($678)($794)($837)n/a10October2017AmazonAMZNBuy$486.9$473.1$135,987$168,181$202,14021.9%$15,444$18,825$25,42528.3%11%11%$9.97$15.37$3.66$7.82$5,701$8,251$12,76849.7%eBayEBAYBuy$42.3$40.0$8,979$9,484$10,2016.6%$3,416$3,428$3,7404.6%38%36%$1.98$2.17$2.00$2.23$2,201$2,272$2,5688.0%GrouponGRPNSell$2.8$2.8$3,014$2,885$3,009-0.1%$180$219$23614.4%6%8%$0.07$0.13$0.12$0.17$49$53$10446.1%HSNInc.HSNIBuy$2.0$2.5$3,568$3,499$3,5940.4%$299$283$3132.2%8%8%$2.37$2.76$2.47$2.83$195$155$160-9.2%eCommerceQVCGroupQVCABuy$10.5$16.2$10,219$10,170$10,5081.4%$1,939$1,972$2,0472.7%19%19%$1.06$1.44$1.09$1.44$1,067$1,139$1,1684.6%YelpYELPSell$4.0$3.5$713$860$97917.2%$120$147$18323.5%17%17%$0.04$0.27$0.06$0.26$104$126$16124.6%PayPalPYPLNeutral$80.3$73.6$10,842$12,875$15,21018.4%$2,759$3,378$4,09721.9%25%26%$1.84$2.27$1.84$2.20$2,489$2,922$3,58720.1%ExpediaEXPEBuy$23.5$28.3$8,774$10,197$11,61915.1%$1,616$1,835$2,17916.1%18%18%$5.09$6.60$5.00$6.55$815$830$1,23423.0%PricelinePCLNBuy$96.7$88.5$10,743$12,394$14,32815.5%$4,139$4,680$5,50315.3%39%38%$73.36$87.95$74.82$86.35$3,705$4,151$4,72312.9%TravelTripAdvisorTRIPNeutral$5.9$5.2$1,480$1,601$1,80210.4%$352$343$3621.5%24%21%$1.31$1.21$1.14$1.15$252$243$2836.0%TravelportTVPTNeutral$2.0$3.9$2,351$2,452$2,5494.1%$481$542$5517.0%20%22%$0.78$0.76$0.72$0.92$192$206$23811.4%ActivisionBlizzardATVIBuy$48.3$49.4$6,599$6,730$7,3345.4%$2,456$2,426$2,6914.7%37%36%$2.10$2.30$2.12$2.52$2,019$2,298$2,59813.4%ElectronicArtsEABuy$37.6$34.1$4,942$5,219$5,5816.3%$1,687$1,862$2,07610.9%34%36%$4.33$4.91$4.25$5.08$1,578$1,591$1,8177.3%InteractiveEntertainmentZyngaZNGABuy$3.4$2.6$755$842$97413.6%$62$122$16764.2%8%15%$0.07$0.10$0.10$0.13$50$107$16280.4%Source:FactSet,Companyreports,UBSestimatesNote:AsofOctober6thclose25 ValuationMethodandRiskStatementThepotentialrisksintheInteractiveEntertainmentsectormayinclude,butarenotlimitedto:aslowdowninconsumerspending;changestotheretailchannel;operationaldifficulties;competition;consumerfatigueinparticulargamegenres;releasedateslips;theimpactoflegalandlicensingissues;softwarepiracy;andforeignexchangeandcurrencyrates.RisksinonlineadvertisingandeCommerceincludeapotentialinabilityfortheindustrytogrowduetoweaknessinconsumerdiscretionaryspendingaswellasalackofexecution.Risksthatcouldpotentiallyimpactonlinetravelsectorsharesincludeglobalmacroheadwinds,FXfluctuations,unpredictabledisruptioninthetravelindustry,unpredictableinterruptionofinformationtechnology&communicationssystems,increasedcompetitionfromlargesearchenginesorotherinternationalOTAs,searchenginealgorithmchanges,andanyincreasedemphasisbysuppliers(hotels,airlines)toluremoretrafficdirectlytotheirownwebsites.OurInternetvaluationsarebasedonacombinationofEV/Sales,EV/GrossProfit,EV/EBITDA,EV/FCF,EV/(FCF-SBC)andinsomecases,sum-of-the-partsmethodologies.USInternet&InteractiveEntertainment10October201726 RequiredDisclosuresThisreporthasbeenpreparedbyUBSSecuritiesLLC,anaffiliateofUBSAG.UBSAG,itssubsidiaries,branchesandaffiliatesarereferredtohereinasUBS.ForinformationonthewaysinwhichUBSmanagesconflictsandmaintainsindependenceofitsresearchproduct;historicalperformanceinformation;andcertainadditionaldisclosuresconcerningUBSresearchrecommendations,pleasevisitwww.ubs.com/disclosures.Thefigurescontainedinperformancechartsrefertothepast;pastperformanceisnotareliableindicatoroffutureresults.Additionalinformationwillbemadeavailableuponrequest.UBSSecuritiesCo.LimitedislicensedtoconductsecuritiesinvestmentconsultancybusinessesbytheChinaSecuritiesRegulatoryCommission.UBSactsormayactasprincipalinthedebtsecurities(orinrelatedderivatives)thatmaybethesubjectofthisreport.Thisrecommendationwasfinalizedon:09October201710:04PMGMT.AnalystCertification:Eachresearchanalystprimarilyresponsibleforthecontentofthisresearchreport,inwholeorinpart,certifiesthatwithrespecttoeachsecurityorissuerthattheanalystcoveredinthisreport:(1)alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthosesecuritiesorissuersandwerepreparedinanindependentmanner,includingwithrespecttoUBS,and(2)nopartofhisorhercompensationwas,is,orwillbe,directlyorindirectly,relatedtothespecificrecommendationsorviewsexpressedbythatresearchanalystintheresearchreport.UBSInvestmentResearch:GlobalEquityRatingDefinitions12-MonthRatingDefinitionCoverage1IBServices2BuyFSRis>6%abovetheMRA.45%26%NeutralFSRisbetween-6%and6%oftheMRA.39%23%SellFSRis>6%belowtheMRA.16%11%Short-TermRatingDefinitionCoverage3IBServices4StockpriceexpectedtorisewithinthreemonthsfromthetimeBuy<1%<1%theratingwasassignedbecauseofaspecificcatalystorevent.StockpriceexpectedtofallwithinthreemonthsfromthetimeSell<1%<1%theratingwasassignedbecauseofaspecificcatalystorevent.Source:UBS.Ratingallocationsareasof30September2017.1:Percentageofcompaniesundercoveragegloballywithinthe12-monthratingcategory.2:Percentageofcompanieswithinthe12-monthratingcategoryforwhichinvestmentbanking(IB)serviceswereprovidedwithinthepast12months.3:PercentageofcompaniesundercoveragegloballywithintheShort-Termratingcategory.4:PercentageofcompanieswithintheShort-Termratingcategoryforwhichinvestmentbanking(IB)serviceswereprovidedwithinthepast12months.KEYDEFINITIONS:ForecastStockReturn(FSR)isdefinedasexpectedpercentagepriceappreciationplusgrossdividendyieldoverthenext12months.MarketReturnAssumption(MRA)isdefinedastheone-yearlocalmarketinterestrateplus5%(aproxyfor,andnotaforecastof,theequityriskpremium).UnderReview(UR)StocksmaybeflaggedasURbytheanalyst,indicatingthatthestock"spricetargetand/orratingaresubjecttopossiblechangeinthenearterm,usuallyinresponsetoaneventthatmayaffecttheinvestmentcaseorvaluation.Short-TermRatingsreflecttheexpectednear-term(uptothreemonths)performanceofthestockanddonotreflectanychangeinthefundamentalvieworinvestmentcase.EquityPriceTargetshaveaninvestmenthorizonof12months.EXCEPTIONSANDSPECIALCASES:UKandEuropeanInvestmentFundratingsanddefinitionsare:Buy:Positiveonfactorssuchasstructure,management,performancerecord,discount;Neutral:Neutralonfactorssuchasstructure,management,performancerecord,discount;Sell:Negativeonfactorssuchasstructure,management,performancerecord,discount.CoreBandingExceptions(CBE):Exceptionstothestandard+/-6%bandsmaybegrantedbytheInvestmentReviewCommittee(IRC).FactorsconsideredbytheIRCincludethestock"svolatilityandthecreditspreadoftherespectivecompany"sdebt.Asaresult,stocksdeemedtobeveryhighorlowriskmaybesubjecttohigherorlowerbandsastheyrelatetotherating.Whensuchexceptionsapply,theywillbeidentifiedintheCompanyDisclosurestableintherelevantresearchpiece.USInternet&InteractiveEntertainment10October201727 Researchanalystscontributingtothisreportwhoareemployedbyanynon-USaffiliateofUBSSecuritiesLLCarenotregistered/qualifiedasresearchanalystswithFINRA.SuchanalystsmaynotbeassociatedpersonsofUBSSecuritiesLLCandthereforearenotsubjecttotheFINRArestrictionsoncommunicationswithasubjectcompany,publicappearances,andtradingsecuritiesheldbyaresearchanalystaccount.Thenameofeachaffiliateandanalystemployedbythataffiliatecontributingtothisreport,ifany,follows.UBSSecuritiesLLC:EricJ.Sheridan;AlexandraKasper;BridgetHan;BenjaminMiller.CompanyDisclosuresCompanyNameReuters12-monthratingShort-termratingPricePricedateActivisionBlizzard16ATVI.OBuyN/AUS$63.2506Oct2017AlphabetInc.6b,6c,7,16,22GOOG.OBuyN/AUS$978.8906Oct2017AltabaInc16AABA.OBuyN/AUS$67.8506Oct2017Amazon.com16,22,26cAMZN.OBuyN/AUS$989.5806Oct2017eBay6b,7,16EBAY.OBuyN/AUS$38.8106Oct2017ElectronicArts4,6a,6b,7,16EA.OBuyN/AUS$120.0906Oct2017Expedia2,4,16EXPE.OBuyN/AUS$147.9906Oct2017Facebook16,22FB.OBuyN/AUS$172.2306Oct2017Groupon16GRPN.OSellN/AUS$5.0306Oct2017HSNInc16HSNI.OBuyN/AUS$38.0506Oct2017IACInterActive16IAC.OBuyN/AUS$122.2406Oct2017MatchGroupInc16MTCH.OBuyN/AUS$25.3806Oct2017PayPalHoldingsInc16PYPL.ONeutralN/AUS$66.0506Oct2017QVCGroup4,6a,16,26aQVCA.OBuyN/AUS$23.0806Oct2017SnapInc2,4,6a,16SNAP.NNeutralN/AUS$14.7906Oct2017ThePricelineGroupInc.16PCLN.OBuyN/AUS$1,918.0006Oct2017TravelportWorldwideLtd4,6a,7,16TVPT.NNeutralN/AUS$15.5106Oct2017TripAdvisor16,26dTRIP.ONeutralN/AUS$41.6106Oct2017Twitter6b,7,16,26bTWTR.NSellN/AUS$17.8506Oct2017VisaInc6c,7,16,22V.NBuyN/AUS$106.7306Oct2017Yelp16YELP.KSellN/AUS$46.7306Oct2017Zynga13,16ZNGA.OBuyN/AUS$3.7906Oct2017Source:UBS.Allpricesasoflocalmarketclose.Ratingsinthistablearethemostcurrentpublishedratingspriortothisreport.Theymaybemorerecentthanthestockpricingdate2.UBSAG,itsaffiliatesorsubsidiarieshasactedasmanager/co-managerintheunderwritingorplacementofsecuritiesofthiscompany/entityoroneofitsaffiliateswithinthepast12months.4.Withinthepast12months,UBSAG,itsaffiliatesorsubsidiarieshasreceivedcompensationforinvestmentbankingservicesfromthiscompany/entityoroneofitsaffiliates.6a.Thiscompany/entityis,orwithinthepast12monthshasbeen,aclientofUBSSecuritiesLLC,andinvestmentbankingservicesarebeing,orhavebeen,provided.6b.Thiscompany/entityis,orwithinthepast12monthshasbeen,aclientofUBSSecuritiesLLC,andnon-investmentbankingsecurities-relatedservicesarebeing,orhavebeen,provided.6c.Thiscompany/entityis,orwithinthepast12monthshasbeen,aclientofUBSSecuritiesLLC,andnon-securitiesservicesarebeing,orhavebeen,provided.7.Withinthepast12months,UBSSecuritiesLLCand/oritsaffiliateshavereceivedcompensationforproductsandservicesotherthaninvestmentbankingservicesfromthiscompany/entity.13.UBSAG,itsaffiliatesorsubsidiariesbeneficiallyowned1%ormoreofaclassofthiscompany`scommonequitysecuritiesasoflastmonth`send(orthepriormonth`sendifthisreportisdatedlessthan10daysafterthemostrecentmonth`send).16.UBSSecuritiesLLCmakesamarketinthesecuritiesand/orADRsofthiscompany.USInternet&InteractiveEntertainment10October201728 22.UBSAG,itsaffiliatesorsubsidiariesheldothersignificantfinancialinterestsinthiscompany/entityasoflastmonth`send(orthepriormonth`sendifthisreportisdatedlessthan10workingdaysafterthemostrecentmonth`send).26a.AU.S.-basedglobalequitystrategist,amemberofhisteam,oroneoftheirhouseholdmembershasalongcommonstockpositionintheLibertyInteractiveCorpQVCGroup.26b.AU.S.-basedglobalequitystrategist,amemberofhisteam,oroneoftheirhouseholdmembershasalongcommonstockpositioninTwitterInc.26c.TheU.S.equitystrategist,amemberofhisteam,oroneoftheirhouseholdmembershasalongcommonstockpositioninAmazon.comInc.26d.TheU.S.equitystrategist,amemberofhisteam,oroneoftheirhouseholdmembershasalongcommonstockpositioninTripAdvisorInc.Unlessotherwiseindicated,pleaserefertotheValuationandRisksectionswithinthebodyofthisreport.Foracompletesetofdisclosurestatementsassociatedwiththecompaniesdiscussedinthisreport,includinginformationonvaluationandrisk,pleasecontactUBSSecuritiesLLC,1285AvenueofAmericas,NewYork,NY10019,USA,Attention:InvestmentResearch.AdditionalPrices:AlibabaGroup,US$180.89(09Oct2017);JD.com,US$38.89(09Oct2017);Source:UBS.Allpricesasoflocalmarketclose.USInternet&InteractiveEntertainment10October201729 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ThedisclosurescontainedinresearchdocumentsproducedbyUBSLimitedshallbegovernedbyandconstruedinaccordancewithEnglishlaw.UBSspecificallyprohibitstheredistributionofthisdocumentinwholeorinpartwithoutthewrittenpermissionofUBSandUBSacceptsnoliabilitywhatsoeverfortheactionsofthirdpartiesinthisrespect.Imagesmaydepictobjectsorelementsthatareprotectedbythirdpartycopyright,trademarksandotherintellectualpropertyrights.©UBS2017.ThekeysymbolandUBSareamongtheregisteredandunregisteredtrademarksofUBS.Allrightsreserved.USInternet&InteractiveEntertainment10October201732'