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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

OR

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 1st 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.

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

☐  

  

Smaller reporting company

 

 

 

 

 

 

 

 

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. 

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

 

 

 

2


 

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.

 

 

 

3


 

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.

 

 

 

4


 

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.

 

5


 

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

 

 

$

681