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trip-10q_20210331.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 March 31, 2021

☐	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 April 30, 2021
Common Stock, $0.001 par value per share		124,109,641 shares
Class B common stock, $0.001 par value per share		12,799,999 shares

Tripadvisor, Inc.

Form 10-Q

For the Quarter Ended March 31, 2021

Table of Contents

		Page
Part I—Financial Information
Item 1. Unaudited Condensed Financial Statements
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020		3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020		4
Unaudited Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020		5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020		6
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020		7
Notes to Unaudited Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures about Market Risk		44
Item 4. Controls and Procedures		45
Part II—Other Information
Item 1. Legal Proceedings		45
Item 1A. Risk Factors		46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		46
Item 3. Defaults Upon Senior Securities		47
Item 4. Mine Safety Disclosures		47
Item 5. Other Information		47
Item 6. Exhibits		48
Signatures		49

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 March 31,
	2021			2020
Revenue (Note 3)	$	123		$	278

Costs and expenses:
Cost of revenue (1)		12			19
Selling and marketing (2)		73			125
Technology and content (2)		55			69
General and administrative (2)		38			51
Depreciation and amortization		29			32
Restructuring and other related reorganization costs		—			9
Total costs and expenses		207			305
Operating income (loss)		(84	)		(27	)
Other income (expense):
Interest expense		(11	)		(2	)
Interest income		—			1
Other income (expense), net		(1	)		1
Total other income (expense), net		(12	)		—
Income (loss) before income taxes		(96	)		(27	)
(Provision) benefit for income taxes (Note 6)		16			11
Net income (loss)	$	(80	)	$	(16	)

Earnings (loss) per share attributable to common stockholders (Note 10):
Basic	$	(0.59	)	$	(0.12	)
Diluted	$	(0.59	)	$	(0.12	)
Weighted average common shares outstanding (Note 10):
Basic		136			136
Diluted		136			136

(1) Excludes amortization as follows:
Amortization of acquired technology included in amortization of intangible assets	$	1		$	1
Amortization of website development costs included in depreciation		16			17
	$	17		$	18

(2) Includes stock-based compensation expense as follows (Note 8):
Selling and marketing	$	4		$	4
Technology and content	$	12		$	11
General and administrative	$	13		$	11

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

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	Three months ended
	March 31,
	2021			2020
Net income (loss)	$	(80	)	$	(16	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax (1)		(12	)		(17	)
Total other comprehensive income (loss), net of tax		(12	)		(17	)
Comprehensive income (loss)	$	(92	)	$	(33	)

(1)

Deferred income tax liabilities related to these amounts are 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)

	March 31,			December 31,
		2021			2020
ASSETS
Current assets:
Cash and cash equivalents (Note 4)	$	674		$	418
Accounts receivable and contract assets, net of allowance for credit losses of $34 and $33, respectively (Note 3)		97			83
Income taxes receivable		50			50
Prepaid expenses and other current assets		24			22
Total current assets		845			573
Property and equipment, net of accumulated depreciation of $398 and $386, respectively		229			240
Operating lease right-of-use assets		50			54
Intangible assets, net of accumulated amortization of $208 and $206, respectively		80			86
Goodwill		852			862
Non-marketable investments (Note 4)		39			40
Deferred income taxes, net		33			10
Other long-term assets, net of allowance for credit losses of $5 and $5, respectively		104			104
TOTAL ASSETS	$	2,232		$	1,969

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	13		$	18
Deferred merchant payables		71			36
Deferred revenue (Note 3)		38			28
Accrued expenses and other current liabilities		155			160
Total current liabilities		277			242
Long-term debt (Note 5)		831			491
Finance lease obligation, net of current portion		70			71
Operating lease liabilities, net of current portion		41			46
Deferred income taxes, net		2			10
Other long-term liabilities		226			223
Total Liabilities		1,447			1,083

Commitments and contingencies (Note 7)
Stockholders’ equity: (Note 9)
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: 142,914,851 and 140,775,221, respectively
Shares outstanding: 124,070,237 and 121,930,607, 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		1,244			1,253
Retained earnings		309			389
Accumulated other comprehensive income (loss)		(46	)		(34	)
Treasury stock-common stock, at cost, 18,844,614 and 18,844,614 shares, respectively		(722	)		(722	)
Total Stockholders’ Equity		785			886
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,232		$	1,969

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 March 31, 2021
																													Accumulated
									Class B								Additional												other
	Common stock								common stock								paid-in						Retained						comprehensive						Treasury Stock
	Shares				Amount				Shares				Amount				capital						earnings						income (loss)						Shares						Amount						Total
Balance as of December 31, 2020			140,775,221		$		—				12,799,999		$		—		$		1,253				$		389				$		(34		)				(18,844,614		)		$		(722		)		$		886
Net income (loss)																									(80		)																						(80		)
Other comprehensive loss																															(12		)																(12		)
Issuance of common stock related to exercises of options and vesting of RSUs			2,139,630				―												7																														7
Purchase of capped calls, net of tax of $9 million (Note 5)																			(26		)																												(26		)
Withholding taxes on net share settlements of equity awards																			(23		)																												(23		)
Stock-based compensation																			33																														33
Balance as of March 31, 2021			142,914,851		$		—				12,799,999		$		—		$		1,244				$		309				$		(46		)				(18,844,614		)		$		(722		)		$		785
	Three months ended March 31, 2020
																														Accumulated
										Class B								Additional												other
		Common stock								common stock								paid-in						Retained						comprehensive						Treasury Stock
		Shares				Amount				Shares				Amount				capital						earnings						income (loss)						Shares						Amount						Total
Balance as of December 31, 2019				138,698,307		$		—				12,799,999		$		—		$		1,150				$		681				$		(63		)				(14,116,534		)		$		(607		)		$		1,161
Net income (loss)																										(16		)																						(16		)
Cumulative effect adjustment from adoption of new accounting guidance																										(3		)																						(3		)
Other comprehensive loss																																(17		)																(17		)
Issuance of common stock related to exercises of options and vesting of RSUs				1,411,374				―												―																														―
Repurchase of common stock (Note 9)																																						(4,707,450		)				(115		)				(115		)
Withholding taxes on net share settlements of equity awards																				(14		)																												(14		)
Stock-based compensation																				31																														31
Balance as of March 31, 2020				140,109,681		$		—				12,799,999		$		—		$		1,167				$		662				$		(80		)				(18,823,984		)		$		(722		)		$		1,027

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

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Three months ended March 31,
	2021			2020
Operating activities:
Net income (loss)	$	(80	)	$	(16	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		29			32
Stock-based compensation expense (Note 8)		29			26
Deferred income tax expense (benefit)		(22	)		9
Provision for expected credit losses		2			5
Other, net		4			(2	)
Changes in operating assets and liabilities, net of effects from acquisitions and other investments:
Accounts receivable and contract assets, prepaid expenses and other assets		(21	)		14
Accounts payable, accrued expenses and other liabilities		(11	)		(21	)
Deferred merchant payables		36			(86	)
Income tax receivables/payables, net		6