10-Q
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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, 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 November 2, 2021

Common Stock, $0.001 par value per share

 

125,380,966 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, 2021

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, 2021 and 2020

 

3

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020

 

4

Unaudited Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020

 

5

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020

 

6

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

 

9

Notes to Unaudited Condensed Consolidated Financial Statements

 

10

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

50

Item 4. Controls and Procedures

 

51

 

Part II—Other Information

 

 

 

Item 1. Legal Proceedings

 

51

Item 1A. Risk Factors

 

51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

52

Item 3. Defaults Upon Senior Securities

 

52

Item 4. Mine Safety Disclosures

 

52

Item 5. Other Information

 

53

Item 6. Exhibits

 

53

Signatures

 

54

 

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue (Note 3)

 

$

303

 

 

$

151

 

 

$

661

 

 

$

488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1)(2)

 

 

23

 

 

 

13

 

 

 

54

 

 

 

42

 

Selling and marketing (2)

 

 

148

 

 

 

70

 

 

 

343

 

 

 

249

 

Technology and content (2)

 

 

52

 

 

 

46

 

 

 

161

 

 

 

166

 

General and administrative (2)

 

 

37

 

 

 

35

 

 

 

121

 

 

 

129

 

Depreciation and amortization

 

 

27

 

 

 

30

 

 

 

85

 

 

 

94

 

Impairment of goodwill

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Restructuring and other related reorganization costs (Note 1)

 

 

 

 

 

 

 

 

 

 

 

42

 

Total costs and expenses

 

 

287

 

 

 

197

 

 

 

764

 

 

 

725

 

Operating income (loss)

 

 

16

 

 

 

(46

)

 

 

(103

)

 

 

(237

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(12

)

 

 

(13

)

 

 

(34

)

 

 

(22

)

Interest income

 

 

 

 

 

1

 

 

 

1

 

 

 

3

 

Other income (expense), net (Note 12)

 

 

(1

)

 

 

 

 

 

(2

)

 

 

(9

)

Total other income (expense), net

 

 

(13

)

 

 

(12

)

 

 

(35

)

 

 

(28

)

Income (loss) before income taxes

 

 

3

 

 

 

(58

)

 

 

(138

)

 

 

(265

)

(Provision) benefit for income taxes (Note 6)

 

 

(2

)

 

 

10

 

 

 

19

 

 

 

48

 

Net income (loss)

 

$

1

 

 

$

(48

)

 

$

(119

)

 

$

(217

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to common stockholders (Note 10):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

(0.36

)

 

$

(0.87

)

 

$

(1.61

)

Diluted

 

$

0.01

 

 

$

(0.36

)

 

$

(0.87

)

 

$

(1.61

)

Weighted average common shares outstanding (Note 10):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

138

 

 

 

134

 

 

 

137

 

 

 

135

 

Diluted

 

 

144

 

 

 

134

 

 

 

137

 

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes amortization as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired technology included in amortization of intangible assets

 

$

1

 

 

$

1

 

 

$

2

 

 

$

2

 

Amortization of website development costs included in depreciation

 

 

16

 

 

 

16

 

 

 

48

 

 

 

50

 

 

 

$

17

 

 

$

17

 

 

$

50

 

 

$

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes stock-based compensation expense as follows (Note 8):

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

 

 

$

 

 

$

1

 

 

$

1

 

Selling and marketing

 

$

4

 

 

$

4

 

 

$

13

 

 

$

12

 

Technology and content

 

$

12

 

 

$

12

 

 

$

35

 

 

$

32

 

General and administrative

 

$

13

 

 

$

12

 

 

$

40

 

 

$

35

 

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

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

1

 

 

$

(48

)

 

$

(119

)

 

$

(217

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax (1)

 

 

(10

)

 

 

13

 

 

 

(19

)

 

 

7

 

Reclassification adjustments included in net income (loss), net of tax

 

 

2

 

 

 

 

 

 

2

 

 

 

1

 

Total other comprehensive income (loss), net of tax

 

 

(8

)

 

 

13

 

 

 

(17

)

 

 

8

 

Comprehensive income (loss)

 

$

(7

)

 

$

(35

)

 

$

(136

)

 

$

(209

)

 

(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)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents (Note 4)

 

$

682

 

 

$

418

 

Accounts receivable and contract assets, net of allowance for credit losses of $32 and $33, respectively (Note 3)

 

 

198

 

 

 

83

 

Income taxes receivable (Note 6)

 

 

52

 

 

 

50

 

Prepaid expenses and other current assets

 

 

28

 

 

 

22

 

Total current assets

 

 

960

 

 

 

573

 

Property and equipment, net of accumulated depreciation of $441 and $386, respectively

 

 

220

 

 

 

240

 

Operating lease right-of-use assets

 

 

43

 

 

 

54

 

Intangible assets, net of accumulated amortization of $215 and $206, respectively

 

 

69

 

 

 

86

 

Goodwill

 

 

846

 

 

 

862

 

Non-marketable investments (Note 4)

 

 

38

 

 

 

40

 

Deferred income taxes, net

 

 

37

 

 

 

10

 

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

 

 

99

 

 

 

104

 

TOTAL ASSETS

 

$

2,312

 

 

$

1,969

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

22

 

 

$

18

 

Deferred merchant payables

 

 

123

 

 

 

36

 

Deferred revenue (Note 3)

 

 

39

 

 

 

28

 

Accrued expenses and other current liabilities

 

 

179

 

 

 

160

 

Total current liabilities

 

 

363

 

 

 

242

 

Long-term debt (Note 5)

 

 

832

 

 

 

491

 

Finance lease obligation, net of current portion

 

 

66

 

 

 

71

 

Operating lease liabilities, net of current portion

 

 

33

 

 

 

46

 

Deferred income taxes, net

 

 

2

 

 

 

10

 

Other long-term liabilities

 

 

222

 

 

 

223

 

Total Liabilities

 

 

1,518

 

 

 

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: 144,177,649 and 140,775,221, respectively

 

 

 

 

 

 

Shares outstanding: 125,333,035 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

 

 

1,297

 

 

 

1,253

 

Retained earnings

 

 

270

 

 

 

389

 

Accumulated other comprehensive income (loss)

 

 

(51

)

 

 

(34

)

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

 

 

(722

)

 

 

(722

)

Total Stockholders’ Equity

 

 

794

 

 

 

886

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

2,312

 

 

$

1,969

 

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

5


 

TRIPADVISOR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions, except number of shares)

 

 

 

Three months ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2021

 

 

143,418,007

 

 

$

 

 

 

12,799,999

 

 

$

 

 

$

1,275

 

 

$

269

 

 

$

(43

)

 

 

(18,844,614

)

 

$

(722

)

 

$

779

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

 

 

(8

)

Issuance of common stock related to exercises of options and vesting of RSUs

 

 

759,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Withholding taxes on net share settlements of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32

 

Balance as of September 30, 2021

 

 

144,177,649

 

 

$

 

 

 

12,799,999

 

 

$

 

 

$

1,297

 

 

$

270

 

 

$

(51

)

 

 

(18,844,614

)

 

$

(722

)

 

$

794

 

 

6


 

 

 

Nine months ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2020

 

 

140,775,221

 

 

$

 

 

 

12,799,999

 

 

$

 

 

$

1,253

 

 

$

389

 

 

$

(34

)

 

 

(18,844,614

)

 

$

(722

)

 

$

886

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(119

)

 

 

 

 

 

 

 

 

 

 

 

(119

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

 

 

 

(17

)

Issuance of common stock related to exercises of options and vesting of RSUs