trip-8k_20200806.htm
false 0001526520 0001526520 2020-08-06 2020-08-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2020

 

TRIPADVISOR, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-35362

80-0743202

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

400 1st Avenue

Needham, MA 02494

(Address of Principal Executive Offices) (Zip Code)

(781) 800-5000

Registrant’s Telephone Number, Including Area Code

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

TRIP

 

Nasdaq

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02.

Results of Operations and Financial Condition.

On August 6, 2020, Tripadvisor, Inc. issued a press release announcing its preliminary financial results for the three and six months ended June 30, 2020. Tripadvisor, Inc. also posted a letter to shareholders from Stephen Kaufer, President and Chief Executive Officer, and Ernst Teunissen, Chief Financial Officer, on the “Investor Relations” section of its website at http://ir.Tripadvisor.com/events-and-presentations. The full text of this press release and letter are furnished as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K.

Pursuant to General Instruction B.2. to Form 8-K, the information set forth in Items 2.02 and Exhibit 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

  

 

Number

  

Description

 

 

 

99.1

  

Press Release of Tripadvisor, Inc. dated August 6, 2020.

 

 

 

99.2

  

Q2 2020 Shareholders Letter dated August 6, 2020.

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

1


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 


TRIPADVISOR, INC.

 

 

 

 

Date: August 6, 2020

 

By:

/S/ ERNST TEUNISSEN

 

 

 

Ernst Teunissen

 

 

 

Chief Financial Officer

 

2

trip-ex991_8.htm

Exhibit 99.1

Tripadvisor Reports Second Quarter 2020 Financial Results

 

NEEDHAM, MA, August 6, 2020 — Tripadvisor, Inc. (NASDAQ: TRIP) today announced financial results for the second quarter ended June 30, 2020.

 

“Our second quarter results reflect the historic impact the COVID-19 pandemic is having on our business and on the travel industry. Significant year-over-year impacts persist and near-term visibility remains low. That said, we are encouraged that consumer travel demand trends have been gradually improving since the April nadir. Travel’s recovery path will likely be uneven by geography and by sector as businesses and borders reopen and consumer confidence in their own health and safety is restored. Accordingly, we are leveraging our platform’s core strengths to help customers, and redoubling strategic efforts to emerge in a strong position on the other side of this pandemic,” said Chief Executive Officer Steve Kaufer.

 

Chief Financial Officer Ernst Teunissen added, “In light of the unknowns, we have planned with conservatism. During Q2 we took swift, concerted action to preserve cash and maintain our solid financial position. We are operating prudently and are well prepared for a variety of recovery scenarios.”

 

Update on COVID-19 impacts, and Tripadvisor’s response

 

Consumer demand. Since late February, the COVID-19 pandemic has significantly impacted consumer demand for travel. In April, May, and June, monthly unique users on Tripadvisor sites were approximately 33%, 45%, and 60%, respectively, of last year’s comparable period.

 

Revenue. Q2 revenue of $59 million was modestly better than we anticipated, and we observed an improving monthly trend in the back half of the quarter. April and May consolidated revenue was approximately 10% of last year’s comparable period and June revenue was approximately 20% of last year’s comparable period.

 

Expense Management. Last quarter, we outlined significant discretionary and workforce-related cost reduction measures and identified target savings levels in Q2 and Q3. We are tracking in line with those targets.

 

Additionally, in Q2, the Company incurred pre-tax restructuring and related reorganization costs of $33 million, which was in line with previously communicated expectations.

 

Liquidity. As of June 30, 2020, Tripadvisor had $698 million of cash and cash equivalents, a decrease of $100 million from March 31, 2020 and had $700 million of outstanding borrowings from our revolving credit facility. As previously announced, on May 5, 2020, we amended our revolving credit facility to, among other things, replace the leverage ratio covenant with a minimum liquidity covenant ending prior to the fiscal quarter ending September 30, 2021 (or such earlier date as elected by the Company), as well as downsize its capacity to $1.0 billion from $1.2 billion.

 

Subsequent to the end of the quarter, on July 9, 2020, we completed the sale of $500 million aggregate principal amount of 7.000% senior notes due July 15, 2025 (the "Senior Notes") in a private offering. The Indenture provides, among other things, that interest will be payable on the Senior Notes on January 15 and July 15 of each year, beginning on January 15, 2021, until their maturity date of July 15, 2025. The Senior Notes will be senior unsecured obligations of the Company and will be guaranteed by each of its domestic subsidiaries that guarantees the Company’s 2015 Credit Facility. In the third quarter of 2020, the Company used all the net proceeds from the Senior Notes, or $490 million, net of approximately $10 million in debt issuances costs, to repay a portion of our 2015 Credit Facility borrowings that existed as of June 30, 2020.

 

Cares Act Relief.  Based on our preliminary evaluation of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), we qualify for certain employee retention payroll tax credits and the deferral of payroll and other tax payments in the future, as well as certain income tax related provisions. We expect to receive a cash refund of federal income taxes in the second or third quarter of 2021 when our 2020 tax return is filed due to a five-year carryback of net operating loss incurred in 2020.

 

 

1

 


Second Quarter 2020 Summary

 

 

Three months ended June 30,

 

 

 

 

(In millions, except percentages and per share amounts)

 

2020

 

 

2019

 

% Change

 

Total Revenue

 

$

59

 

 

$

422

 

 

(86

)%

  Hotels, Media & Platform

 

$

38

 

 

$

254

 

 

(85

)%

  Experiences & Dining

 

$

14

 

 

$

125

 

 

(89

)%

  Other

 

$

7

 

 

$

43

 

 

(84

)%

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (Loss)

 

$

(153

)

 

$

34

 

n.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDA (1)

 

$

(74

)

 

$

128

 

n.m.

 

  Hotels, Media & Platform

 

$

(33

)

 

$

108

 

n.m.

 

  Experiences & Dining

 

$

(38

)

 

$

7

 

n.m.

 

  Other

 

$

(3

)

 

$

13

 

n.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income (Loss) (1)

 

$

(102

)

 

$

64

 

n.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings (Loss) per Share:

 

 

 

 

 

 

 

 

 

 

 

  GAAP

 

$

(1.14

)

 

$

0.24

 

n.m.

 

  Non-GAAP (1)

 

$

(0.76

)

 

$

0.45

 

n.m.

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

$

(78

)

 

$

181

 

n.m.

 

Free cash flow (1)

 

$

(93

)

 

$

160

 

n.m.

 

 

n.m. = not meaningful

 

 

(1)

“Adjusted EBITDA”, “Non-GAAP Net Income (Loss)”, “Non-GAAP Diluted Earnings (Loss) per Share”, and “Free cash flow” are non-GAAP measures as defined by the U.S. Securities and Exchange Commission (the “SEC”). Please refer to “Non-GAAP Financial Measures” below for definitions and explanations of these non-GAAP financial measures, as well as tabular reconciliations to the most directly comparable GAAP financial measures.

 

 

Second Quarter 2020 Revenue by Source

 

 

Three months ended June 30,

 

 

 

 

(In millions, except percentages)

 

2020

 

 

2019

 

% Change

 

  Hotels, Media & Platform

 

 

 

 

 

 

 

 

 

 

 

     Tripadvisor-branded hotels

 

$

31

 

 

$

211

 

 

(85

)%

     Tripadvisor-branded display and platform

 

 

7

 

 

 

43

 

 

(84

)%

Experiences & Dining

 

 

14

 

 

 

125

 

 

(89

)%

Other (1)

 

 

7

 

 

 

43

 

 

(84

)%

Total Revenue

 

$

59

 

 

$

422

 

 

(86

)%

 

(1)

Other consists of our Rentals, Flights & Car, Cruises, and Tripadvisor China business units.

 

 

2

 


Conference Call

Tripadvisor posted prepared remarks and supplemental financial information on the Investor Relations section of Tripadvisor’s website at http://ir.tripadvisor.com. Tripadvisor will host a conference call tomorrow, August 7, 2020, at 8:30 a.m., Eastern Time, to discuss Tripadvisor’s second quarter 2020 operating results, as well as other forward-looking information about Tripadvisor’s business. Domestic callers may access the earnings conference call by dialing (877) 224-9081 (International callers, dial (224) 357-2223). Investors and other interested parties may also go to the Investor Relations section of Tripadvisor’s website at http://ir.tripadvisor.com for a live webcast of the conference call. Please access the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the conference call will be available on Tripadvisor’s website noted above or by phone (dial (855) 859-2056 and enter the passcode 5898743) until August 14, 2020 and the webcast will be accessible at http://ir.tripadvisor.com/events-and-presentations for at least twelve months following the conference call.

 

About Tripadvisor

Tripadvisor, the world's largest travel platform*, helps 463 million travelers each month** make every trip their best trip. Travelers across the globe use the Tripadvisor site and app to browse more than 867 million reviews and opinions of 8.7 million accommodations, restaurants, experiences, airlines and cruises. Whether planning or on a trip, travelers turn to Tripadvisor to compare low prices on hotels, flights and cruises, book popular tours and attractions, as well as reserve tables at great restaurants. Tripadvisor, the ultimate travel companion, is available in 49 markets and 28 languages.

The subsidiaries of Tripadvisor, Inc. (NASDAQ:TRIP), own and operate a portfolio of travel media brands and businesses, operating under various websites and apps, including the following websites: www.bokun.io, www.cruisecritic.com, www.flipkey.com, www.thefork.com (including www.lafourchette.com, www.eltenedor.com, www.bookatable.co.uk, and www.delinski.com), www.helloreco.com, www.holidaylettings.co.uk, www.housetrip.com, www.jetsetter.com, www.niumba.com, www.seatguru.com, www.singleplatform.com, www.vacationhomerentals.com, and www.viator.com.

*   Source: Jumpshot for Tripadvisor Sites, worldwide, November 2019

** Source: Tripadvisor internal log files, average monthly unique visitors, Q3 2019

3

 


Tripadvisor, Inc.

SELECTED FINANCIAL INFORMATION

Condensed Consolidated Statements of Operations

(in millions, except per share amounts)

(Unaudited)

 

  

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Revenue

 

$

59

 

 

$

422

 

 

$

337

 

 

$

798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)

 

 

10

 

 

 

27

 

 

 

29

 

 

 

48

 

Selling and marketing (1)

 

 

54

 

 

 

180

 

 

 

179

 

 

 

357

 

Technology and content (1)

 

 

51

 

 

 

74

 

 

 

120

 

 

 

148

 

General and administrative (1)

 

 

43

 

 

 

45

 

 

 

94

 

 

 

88

 

Depreciation and amortization

 

 

32

 

 

 

30

 

 

 

64

 

 

 

61

 

Restructuring and other related reorganization costs

 

 

33

 

 

 

 

 

 

42

 

 

 

 

Total costs and expenses

 

 

223

 

 

 

356

 

 

 

528

 

 

 

702

 

Operating income (loss)

 

 

(164

)

 

 

66

 

 

 

(191

)

 

 

96

 

Total other income (expense), net

 

 

(15

)

 

 

2

 

 

 

(16

)

 

 

5

 

Income (loss) before income taxes

 

 

(179

)

 

 

68

 

 

 

(207

)

 

 

101

 

(Provision) benefit for income taxes

 

 

26

 

 

 

(34

)

 

 

38

 

 

 

(41

)

Net income (loss)

 

$

(153

)

 

$

34

 

 

$

(169

)

 

$

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(1.14

)

 

$

0.24

 

 

$

(1.25

)

 

$

0.43

 

Diluted

 

$

(1.14

)

 

$

0.24

 

 

$

(1.25

)

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

134

 

 

 

139

 

 

 

135

 

 

 

139

 

Diluted

 

 

134

 

 

 

141

 

 

 

135

 

 

 

141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

 

 

$

 

 

$

1

 

 

$

 

Selling and marketing

 

$

4

 

 

$

6

 

 

$

7

 

 

$

11

 

Technology and content

 

$

9

 

 

$

14

 

 

$

20

 

 

$

27

 

General and administrative

 

$

12

 

 

$

12

 

 

$

23

 

 

$

22

 

4

 


 

 

 

Tripadvisor, Inc.

Condensed Consolidated Balance Sheets

(in millions, except number of shares and per share amounts)

(Unaudited)

 

 

June 30,

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

698

 

 

$

319

 

Accounts receivable and contract assets, net of allowance for credit losses of $32 and $25, respectively

 

 

74

 

 

 

183

 

Income taxes receivable

 

 

55

 

 

 

4

 

Prepaid expenses and other current assets

 

 

26

 

 

 

27

 

Total current assets

 

 

853

 

 

 

533

 

Property and equipment, net of accumulated depreciation of $347 and $319, respectively

 

 

259

 

 

 

270

 

Operating lease right-of-use assets

 

 

63

 

 

 

74

 

Intangible assets, net of accumulated amortization of $184 and $173, respectively

 

 

95

 

 

 

110

 

Goodwill

 

 

837

 

 

 

840

 

Deferred income taxes, net

 

 

6

 

 

 

7

 

Non-marketable investments

 

 

41

 

 

 

55

 

Other long-term assets, net of allowance for credit losses of $5 and $0, respectively

 

 

95

 

 

 

95

 

TOTAL ASSETS

 

$

2,249

 

 

$

1,984

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

13

 

 

$

11

 

Deferred merchant payables

 

 

57

 

 

 

159

 

Deferred revenue

 

 

38

 

 

 

62

 

Accrued expenses and other current liabilities

 

 

141

 

 

 

203

 

Total current liabilities

 

 

249

 

 

 

435

 

Long-term debt

 

 

700

 

 

 

 

Deferred income taxes, net

 

 

13

 

 

 

8

 

Other long-term liabilities

 

 

375

 

 

 

380

 

Total Liabilities

 

 

1,337

 

 

 

823

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value

 

 

 

 

 

 

Authorized shares: 100,000,000

 

 

 

 

 

 

 

 

Shares issued and outstanding: 0 and 0

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

 

 

 

 

 

 

Authorized shares: 1,600,000,000

 

 

 

 

 

 

 

 

Shares issued: 140,412,251 and 138,698,307, respectively

 

 

 

 

 

 

 

 

Shares outstanding: 121,567,637 and 124,581,773, respectively

 

 

 

 

 

 

 

 

Class B common stock, $0.001 par value

 

 

 

 

 

 

Authorized shares: 400,000,000

 

 

 

 

 

 

 

 

Shares issued and outstanding: 12,799,999 and 12,799,999, respectively

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

1,193

 

 

 

1,150

 

Retained earnings

 

 

509

 

 

 

681

 

Accumulated other comprehensive income (loss)

 

 

(68

)

 

 

(63

)

Treasury stock-common stock, at cost, 18,844,614 and 14,116,534 shares, respectively

 

 

(722

)

 

 

(607

)

Total Stockholders’ Equity

 

 

912

 

 

 

1,161

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

2,249

 

 

$

1,984

 

5

 


 

Tripadvisor, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(153

)

 

$

34

 

 

$

(169

)

 

$

60

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

32

 

 

 

30

 

 

 

64

 

 

 

61

 

Stock-based compensation expense

 

 

25

 

 

 

32

 

 

 

51

 

 

 

60

 

Deferred income tax expense (benefit)

 

 

(3

)

 

 

8

 

 

 

6

 

 

 

17

 

Provision for expected credit losses and other, net

 

 

20

 

 

 

3

 

 

 

24

 

 

 

6

 

Changes in operating assets and liabilities, net of effects from acquisitions and other investments:

 

 

1

 

 

 

74

 

 

 

(124

)

 

 

159

 

Net cash provided by (used in) operating activities

 

 

(78

)

 

 

181

 

 

 

(148

)

 

 

363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures, including internal-use software and website development

 

 

(15

)

 

 

(21

)

 

 

(36

)

 

 

(38

)

Purchases of marketable securities

 

 

 

 

 

(30

)

 

 

 

 

 

(69

)

Maturities of marketable securities

 

 

 

 

 

5

 

 

 

 

 

 

20

 

Other investing activities, net

 

 

1

 

 

 

 

 

 

2

 

 

 

 

Net cash used in investing activities

 

 

(14

)

 

 

(46

)

 

 

(34

)

 

 

(87

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

 

 

 

 

(115

)

 

 

 

Proceeds from 2015 credit facility

 

 

 

 

 

 

 

 

700

 

 

 

 

Payment of financing costs from 2015 credit facility

 

 

(4

)

 

 

 

 

 

(4

)

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Payment of withholding taxes on net share settlements of equity awards

 

 

(3

)

 

 

(4

)

 

 

(17

)

 

 

(26

)

Payments of finance lease obligation

 

 

(1

)

 

 

(1

)

 

 

(3

)

 

 

(3

)

Net cash provided by (used in) financing activities

 

 

(8

)

 

 

(4

)

 

 

561

 

 

 

(28

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

 

 

 

(1

)

 

 

 

 

 

(2

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(100

)

 

 

130

 

 

 

379

 

 

 

246

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

798

 

 

 

771

 

 

 

319

 

 

 

655

 

Cash, cash equivalents and restricted cash at end of period

 

$

698

 

 

$

901

 

 

$

698

 

 

$

901

 

6

 


 

Tripadvisor, Inc.

Segment Information

(in millions, except percentages)

(Unaudited)

 

  

 

Three Months Ended

 

 

 

 

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

% Change

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Hotels, Media & Platform

 

$

38

 

 

$

254

 

 

 

(85

)%

Experiences & Dining

 

 

14

 

 

 

125

 

 

 

(89

)%

Other (1)

 

 

7

 

 

 

43

 

 

 

(84

)%

Total revenue

 

$

59

 

 

$

422

 

 

 

(86

)%

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Hotels, Media & Platform

 

$

(33

)

 

$

108

 

 

n.m.

 

Experiences & Dining

 

 

(38

)

 

 

7

 

 

n.m.

 

Other (1)

 

 

(3

)

 

 

13

 

 

n.m.

 

Total Adjusted EBITDA (2)

 

$

(74

)

 

$

128

 

 

n.m.

 

Adjusted EBITDA Margin:

 

 

 

 

 

 

 

 

 

 

 

 

Hotels, Media & Platform

 

 

(87

)%

 

 

43

%

 

 

 

 

Experiences & Dining

 

 

(271

)%

 

 

6

%

 

 

 

 

Other (1)

 

 

(43

)%

 

 

30

%

 

 

 

 

Total Adjusted EBITDA Margin (2)

 

 

(125

)%

 

 

30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (3)

 

$

(153

)

 

$

34

 

 

 

 

 

Net Income (Loss) Margin

 

 

(259

)%

 

 

8

%

 

 

 

 

 

 

  

 

Six Months Ended

 

 

 

 

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

% Change

 

Revenue:

 

 

 

Hotels, Media & Platform

 

$

207

 

 

$

508

 

 

 

(59

)%

Experiences & Dining

 

 

97

 

 

 

206

 

 

 

(53

)%

Other (1)

 

 

33

 

 

 

84

 

 

 

(61

)%

Total revenue

 

$

337

 

 

$

798

 

 

 

(58

)%

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Hotels, Media & Platform

 

$

20

 

 

$

212

 

 

 

(91

)%

Experiences & Dining

 

 

(57

)

 

 

(17

)

 

 

235

%

Other (1)

 

 

3

 

 

 

22

 

 

 

(86

)%

Total Adjusted EBITDA (2)

 

$

(34

)

 

$

217

 

 

n.m.

 

Adjusted EBITDA Margin:

 

 

 

 

 

 

 

 

 

 

 

 

Hotels, Media & Platform

 

 

10

%

 

 

42

%

 

 

 

 

Experiences & Dining

 

 

(59

)%

 

 

(8

)%

 

 

 

 

Other (1)

 

 

9

%

 

 

26

%

 

 

 

 

Total Adjusted EBITDA Margin (2)

 

 

(10

)%

 

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (3)

 

$

(169

)

 

$

60

 

 

 

 

 

Net Income (Loss) Margin

 

 

(50

)%

 

 

8

%

 

 

 

 

 

n.m. = not meaningful

 

(1)

Other consists of the combination of our Rentals, Flights & Car, Cruises, and Tripadvisor China business units.

 

(2)

Please refer to “Non-GAAP Financial Measures” below for definitions of these non-GAAP financial measures, as well as reconciliations to the most directly comparable GAAP measure.

 

(3)

This amount reflects our consolidated GAAP Net Income (Loss) for the periods presented. Tripadvisor does not calculate or report net income (loss) by segment.

 

7

 


Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with GAAP in our press release and related conference call, we also report certain non-GAAP financial measures. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company’s financial statements. We may use the following non-GAAP measures: Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share, free cash flow, non-GAAP revenue before effects of foreign exchange, and Adjusted EBITDA before effects of foreign exchange, as well as other measures.

 

The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of Tripadvisor’s liquidity. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, as defined in our non-GAAP definitions below, which are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, even where similarly titled, limiting their usefulness for comparison purposes and therefore should not be used to compare Tripadvisor’s performance to that of other companies. We endeavor to compensate for the limitation of the non-GAAP financial measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP financial measures.

 

We believe these non-GAAP financial measures provide investors and analysts with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key measures used by management to operate and analyze our business over different periods of time.

 

We define our non-GAAP financial measures as below:

 

Tripadvisor defines “Adjusted EBITDA” as Net Income (Loss) plus: (1) provision (benefit) for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived assets and intangible asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income. These items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount is not driven by core operating results and renders comparisons with prior periods less meaningful. During the fourth quarter of 2019, the Company revised its Adjusted EBITDA definition to exclude restructuring and other related reorganization costs, as the Company believes these costs are not directly tied to the ongoing core operations of our business. The Company believes that excluding these amounts better enables management and investors to compare financial results between periods as these costs may vary independent of business performance. This revision to our Adjusted EBITDA definition did not have a material impact on our segment or non-GAAP financial results for any period prior to the three months and year ended December 31, 2019, and therefore no reclassifications have been made to conform the prior periods to the current period presentation. This revision had no effect on consolidated GAAP results in any period.

 

Tripadvisor defines “Adjusted EBITDA margin” as Adjusted EBITDA divided by revenue.

 

Adjusted EBITDA and Adjusted EBITDA margin are key operating performance measures used by our management and board of directors to understand and evaluate the financial performance of our business as a whole and our individual business segments, and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and better enables management and investors to compare financial results between periods as these costs may vary independent of core business performance. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors and allows for another useful comparison of our performance with our historical results from prior periods.

8

 


Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results reported in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results.

Some of these limitations are:

 

Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

 

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 

Adjusted EBITDA does not reflect the interest expense or cash requirements necessary to service interest or principal payments on our debt, if any;

 

Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation or other stock-settled obligations;

 

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

 

Adjusted EBITDA does not reflect certain income and expenses not directly tied to the ongoing core operations of our business, such as legal reserves and settlements and restructuring and other related reorganization costs;

 

Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and

 

Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

 

Tripadvisor defines “non-GAAP net income (loss)” as GAAP net income (loss) excluding, net of their related tax effects (which excludes the impact of significant one-time changes resulting from tax legislation or significant legislation that impacts tax, such as the CARES Act): (1) stock-based compensation expense and other stock-settled obligations; (2) amortization of intangible assets; (3) goodwill, intangible asset, and other long-lived asset impairments; (4) legal reserves and settlements; (5) restructuring and other related reorganization costs; and (6) certain gains, losses, and other non-recurring income or expenses that we do not believe are indicative of our ongoing operating results. We believe non-GAAP net income (loss) is an operating performance measure which provides investors and analysts with useful supplemental information about the financial performance of our business, as it incorporates our unaudited condensed consolidated statement of operations, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of certain expenses, infrequently occurring items and items not directly tied to the ongoing core operations of our businesses, and also enables comparison of financial results between periods where certain items may vary independent of business performance. During the fourth quarter of 2019, the Company revised its non-GAAP net income (loss) definition to exclude restructuring and other related reorganization costs, as the Company believes these costs are not directly tied to the ongoing core operations of our businesses. The Company believes this change better enables management and investors to compare financial results between periods as these costs may vary independent of business performance. This revision to our non-GAAP net income (loss) definition did not have a material impact on our segment or non-GAAP financial results for any period prior to the three months and year ended December 31, 2019, and therefore no reclassifications have been made to conform the prior periods to the current period presentation. This revision had no effect on consolidated GAAP results in any period.

 

Tripadvisor defines “non-GAAP net income (loss) per diluted share”, or non-GAAP diluted EPS, as non-GAAP net income (loss) divided by GAAP diluted shares. We believe non-GAAP diluted EPS is useful to investors because it represents, on a per share basis, our unaudited condensed consolidated statement of operations, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest expense, interest income, income taxes and foreign exchange gains or losses, but excluding the effects of certain expenses not directly tied to the ongoing core operations of our businesses. Tripadvisor calculates non-GAAP diluted EPS using GAAP diluted shares determined under the treasury stock method.

 

Non-GAAP net income (loss) and non-GAAP diluted EPS have some of the same limitations as Adjusted EBITDA. In addition, non-GAAP net income (loss) does not include all items that affect our net income (loss) and GAAP diluted EPS for the period. Therefore, we think it is important to evaluate these measures along with our unaudited condensed consolidated statements of operations.

 

Tripadvisor defines “free cash flow” as net cash provided by operating activities less capital expenditures, which are purchases of property and equipment, including capitalization of internal-use software development costs. We believe this financial measure can provide useful supplemental information to help investors better understand underlying trends in our business, as it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash

9

 


movements that are not directly tied to the ongoing core operations of our businesses, such as financing activities, foreign exchange or certain investing activities. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with the unaudited condensed consolidated statements of cash flows.

 

Tripadvisor calculates our foreign exchange effect of revenue, or “non-GAAP revenue before effects of foreign exchange” on a constant currency basis by excluding the estimated effects of foreign currency exchange on revenue by translating actual revenue for the current year three months ended using the prior period foreign currency exchange rates. We believe this is a useful measure that facilitates management's internal comparison to our historical performance because it excludes the effects of foreign currency volatility that is not indicative of our ongoing core operating results.

 

Tripadvisor calculates our foreign exchange effect of Adjusted EBITDA, or “Adjusted EBITDA before effects of foreign exchange,” on a constant currency basis, by excluding the estimated effects of foreign currency exchange by translating all amounts included in Adjusted EBITDA for the current year three months ended using the prior period foreign currency exchange rates. We believe this is a useful measure that facilitates management's internal comparison to our historical performance because it excludes the effects of foreign currency volatility that is not indicative of our ongoing core operating results.

 

Pursuant to the requirements of Regulation G, we present reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure below.

10

 


Tripadvisor, Inc.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in millions, except per share amounts and percentages)

(Unaudited)  

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (Loss)

 

$

(153

)

 

$

34

 

 

$

(169

)

 

$

60

 

Add: Provision (benefit) for income taxes

 

 

(26

)

 

 

34

 

 

 

(38

)