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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 March 31, 2021

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 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

 

 

 

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 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.

 

 

 

3


 

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.

 

 

 

4


 

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.

 

5


 

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.

 

 

 

6


 

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

 

 

 

(30

)

Deferred revenue

 

 

9

 

 

 

(1

)

Net cash provided by (used in) operating activities

 

 

(19

)

 

 

(70

)

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Capital expenditures, including internal-use software and website development

 

 

(10

)