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trip-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35362

TRIPADVISOR, INC.

(Exact name of registrant as specified in its charter)

Delaware

80-0743202

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

400 1^st Avenue

Needham, MA 02494

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code:

(781) 800-5000

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	TRIP	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class		Outstanding Shares at November 2, 2020
Common Stock, $0.001 par value per share		121,725,450 shares
Class B common stock, $0.001 par value per share		12,799,999 shares

Tripadvisor, Inc.

Form 10-Q

For the Quarter Ended September 30, 2020

Table of Contents

		Page
Part I—Financial Information
Item 1. Unaudited Condensed Financial Statements
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019		3
Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019		4
Unaudited Condensed Consolidated Balance Sheets at September 30, 2020 and December 31, 2019		5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019		6
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019		8
Notes to Unaudited Condensed Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures about Market Risk		48
Item 4. Controls and Procedures		49
Part II—Other Information
Item 1. Legal Proceedings		49
Item 1A. Risk Factors		49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		61
Item 3. Defaults Upon Senior Securities		61
Item 4. Mine Safety Disclosures		61
Item 5. Other Information		61
Item 6. Exhibits		62
Signatures		63

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Revenue (Note 3)	$	151		$	428		$	488		$	1,225

Costs and expenses:
Cost of revenue (1)(2)		13			25			42			73
Selling and marketing (2)		70			176			249			534
Technology and content (2)		46			76			166			224
General and administrative (2)		35			51			129			138
Depreciation and amortization		30			32			94			92
Impairment of goodwill (Note 7)		3			—			3			—
Restructuring and other related reorganization costs (Note 10)		—			—			42			—
Total costs and expenses:		197			360			725			1,061
Operating income (loss)		(46	)		68			(237	)		164
Other income (expense):
Interest expense		(13	)		(2	)		(22	)		(5	)
Interest income		1			5			3			14
Other income (expense), net (Note 14)		—			2			(9	)		—
Total other income (expense), net		(12	)		5			(28	)		9
Income (loss) before income taxes		(58	)		73			(265	)		173
(Provision) benefit for income taxes (Note 9)		10			(23	)		48			(63	)
Net income (loss)	$	(48	)	$	50		$	(217	)	$	110

Earnings (loss) per share attributable to common stockholders (Note 4):
Basic	$	(0.36	)	$	0.36		$	(1.61	)	$	0.79
Diluted	$	(0.36	)	$	0.36		$	(1.61	)	$	0.78
Weighted average common shares outstanding (Note 4):
Basic		134			139			135			139
Diluted		134			140			135			141

(1) Excludes amortization as follows:
Amortization of acquired technology included in amortization of intangible assets	$	1		$	3		$	2		$	7
Amortization of website development costs included in depreciation		16			15			50			47
	$	17		$	18		$	52		$	54

(2) Includes stock-based compensation expense as follows (Note 5):
Cost of revenue	$	—		$	—		$	1		$	1
Selling and marketing	$	4		$	5		$	12		$	17
Technology and content	$	12		$	13		$	32		$	40
General and administrative	$	12		$	11		$	35		$	33

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

	Three months ended						Nine months ended
	September 30,						September 30,
	2020			2019			2020			2019
Net income (loss)	$	(48	)	$	50		$	(217	)	$	110
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax (1)		13			(10	)		7			(13	)
Reclassification adjustment for net losses included in net income (loss)		—			—			1			—
Total other comprehensive income (loss), net of tax		13			(10	)		8			(13	)
Comprehensive income (loss)	$	(35	)	$	40		$	(209	)	$	97

(1)

The deferred income tax liability related to foreign currency translation adjustments is not material.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

	September 30,			December 31,
		2020			2019
ASSETS
Current assets:
Cash and cash equivalents (Note 6)	$	446		$	319
Accounts receivable and contract assets, net of allowance for credit losses of $33 and $25, respectively (Note 2, Note 3)		91			183
Income taxes receivable		50			4
Prepaid expenses and other current assets		26			27
Total current assets		613			533
Property and equipment, net of accumulated depreciation of $365 and $319, respectively		250			270
Operating lease right-of-use assets		60			74
Intangible assets, net of accumulated amortization of $194 and $173, respectively		91			110
Goodwill (Note 7)		843			840
Deferred income taxes, net		5			7
Non-marketable investments (Note 6)		40			55
Other long-term assets, net of allowance for credit losses of $5 and $0, respectively		94			95
TOTAL ASSETS	$	1,996		$	1,984

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14		$	11
Deferred merchant payables		38			159
Deferred revenue (Note 3)		31			62
Accrued expenses and other current liabilities (Note 10)		148			203
Total current liabilities		231			435
Long-term debt (Note 8)		490			—
Deferred income taxes, net		10			8
Other long-term liabilities		357			380
Total Liabilities		1,088			823

Commitments and contingencies (Note 11)
Stockholders’ equity: (Note 12)
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: 140,515,819 and 138,698,307, respectively
Shares outstanding: 121,671,205 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		1,224			1,150
Retained earnings		461			681
Accumulated other comprehensive income (loss)		(55	)		(63	)
Treasury stock-common stock, at cost, 18,844,614 and 14,116,534 shares, respectively		(722	)		(607	)
Total Stockholders’ Equity		908			1,161
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,996		$	1,984

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions, except number of shares)

		Three months ended September 30, 2020
																											Accumulated
																		Additional									other
										Class B								paid-in					Retained				comprehensive
		Common stock								common stock								capital					earnings				income (loss)				Treasury Stock
		Shares				Amount				Shares				Amount																	Shares				Amount				Total
Balance as of June 30, 2020				140,412,251		$		—				12,799,999		$		—		$		1,193			$	509			$	(68	)			(18,844,614	)		$	(722	)		$	912
Net income (loss)																								(48	)															(48	)
Other comprehensive income (loss)																												13												13
Issuance of common stock related to exercises of options and vesting of RSUs				103,568				—												—																				—
Withholding taxes on net share settlements of equity awards																				(1	)																			(1	)
Stock-based compensation																				32																				32
Balance as of September 30, 2020				140,515,819		$		—				12,799,999		$		—		$		1,224			$	461			$	(55	)			(18,844,614	)		$	(722	)		$	908
		Nine months ended September 30, 2020
																										Accumulated
																	Additional									other
									Class B								paid-in					Retained				comprehensive
	Common stock								common stock								capital					earnings				income (loss)				Treasury Stock
	Shares				Amount				Shares				Amount																	Shares				Amount				Total
Balance as of December 31, 2019			138,698,307		$		—				12,799,999		$		—		$		1,150			$