UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
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
(State or other jurisdiction of
incorporation or organization)
80-0743202
(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
Common stock
Trading Symbol
TRIP
Name of each exchange on which registered
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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, 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
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was
$1,755,043,826 based on the closing price on The Nasdaq Global Select Market on such date.
Class
Common Stock, $0.001 par value per share
Class B common stock, $0.001 par value per share
Outstanding Shares at February 9, 2024
125,099,694 shares
12,799,999 shares
Documents Incorporated by Reference
The registrant intends to file a proxy statement pursuant to Regulation 14A not later than 120 days after the close of the fiscal year ended December 31, 2023. Portions of such proxy statement are
incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
PART I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 1C.
Cybersecurity
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
[Reserved]
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibit and Financial Statement Schedules
Item 16.
Form 10-K Summary
SIGNATURES
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We refer to Tripadvisor, Inc. and our wholly-owned subsidiaries as “Tripadvisor,” “Tripadvisor group,” “the Company,” “us,” “we” and “our” in
this Annual Report on Form 10-K. The Company renamed our Tripadvisor Core segment to “Brand Tripadvisor”, and its “Tripadvisor-branded display and
platform” revenue stream within the Brand Tripadvisor segment, as “Media and advertising” revenue. These nomenclature changes had no impact on the
composition of our segments, revenue streams, or on any current or historic financial information.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they
never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The
statements contained in this Annual Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The
following words, when used, are intended to identify forward-looking statements: “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “plan,” “project,” “target,” “result,” “should,” “will,” and similar expressions which do not relate solely to historical matters. We caution investors
that any forward-looking statements in this report, or which management may make orally or in writing from time to time, are based on management’s
beliefs and on assumptions made by, and information currently available to, management. Such statements are subject to risks, uncertainties and
assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are
beyond our control. Risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or
implied by forward-looking statements include, but are not limited to, those described in Part I. Item 1A. "Risk Factors." Moreover, we operate in a rapidly
changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can we assess
the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. We caution you that, while forward-looking statements reflect our good faith beliefs, they are not
guarantees of future performance and are impacted by actual events when they occur after we make such statements. We expressly disclaim any
responsibility to update our forward-looking statements, whether as a result of new information, future events or otherwise.
Investors should also refer to our quarterly reports on Form 10-Q for future periods and current reports on Form 8-K as we file them with the U.S.
Securities and Exchange Commission (the "SEC"), and to other materials we may furnish to the public from time to time through SEC filings.
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Item 1. Business
Overview
PART I
The Tripadvisor group operates as a family of brands with the purpose of connecting people to experiences worth sharing. Our vision is to be the
world’s most trusted source for travel and experiences. The Company operates across three business segments: Brand Tripadvisor (formerly Tripadvisor
Core), Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering
rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.
Brand Tripadvisor’s purpose is to empower everyone to be a better traveler by serving as the world’s most trusted and essential travel guidance
platform. Since Tripadvisor’s founding in 2000, the Tripadvisor brand has developed a relationship of trust and community with travelers and experience
seekers by providing an online global platform for travelers to discover, generate, and share authentic user-generated content (“UGC”) in the form of
ratings and reviews for destinations, points-of-interest (“POIs”), experiences, accommodations, restaurants, and cruises in over 40 countries and in more
than 20 languages across the world. Tripadvisor offers more than 1 billion user-generated ratings and reviews on over 8 million experiences,
accommodations, restaurants, airlines, and cruises. Tripadvisor’s online platform attracts one of the world’s largest travel audiences, with hundreds of
millions of visitors annually.
Viator’s purpose is to bring extraordinary, unexpected, and forever memorable experiences to more people, more often, wherever they are traveling.
In doing so, Viator elevates tens of thousands of businesses, large and small. Viator delivers on its purpose by enabling travelers to discover and book
iconic, unique and memorable experiences from experience operators around the globe. Our online marketplace is comprehensive and easy-to-use,
connecting millions of travelers to the world’s largest supply of bookable tours, activities and attractions—over 350,000 experiences from more than 55,000
operators. Viator is a pure-play experiences online travel agency (“OTA”) singularly focused on the needs of both travelers and operators with the largest
supply of bookable experiences available to travelers.
TheFork’s purpose is to deliver happiness through amazing dining experiences. TheFork delivers on its purpose by providing an online marketplace
that enables diners to discover and book online reservations at approximately 55,000 restaurants in 11 countries across the U.K., western and central
Europe. TheFork has become an urban, gastronomic guide with a strong community that offers approximately 20 million restaurant reviews.
The COVID-19 pandemic had a significant negative impact on the travel and hospitality industries and, consequently, adversely and materially
affected our business, results of operations, liquidity and financial condition through the first quarter of 2022. Overall, in 2022, we generally experienced a
travel demand recovery fueled by the continued easing of government restrictions globally and increasing consumer travel demand. During 2023, we
continued to experience strong consumer demand for our offerings, particularly for our experiences offerings across our Viator and Brand Tripadvisor
segments. We believe that consumers will continue to seek connection with others, discover new places, and experience new things through travel.
Our Industry and Market Opportunity
We are one of the world’s largest online travel companies and our consolidated annual revenue in 2023 represents a small fraction of total worldwide
travel spending, which highlights the potential size of our global market opportunity. Phocuswright, an independent travel, tourism and hospitality research
firm, estimated global travel spending, exclusive of experiences, short-term vacation rentals, and dining, at approximately $1.6 trillion in 2020 prior to the
onset of COVID-19. Phocuswright estimates global travel spending will reach approximately $1.7 trillion by 2026, with an expected increasing share
booked through online channels each year.
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We believe that we are a compelling leader in the global experiences industry and well positioned to capture increased share in a large and growing
market that is estimated to reach approximately $280 billion by 2025 according to Arival’s October 2022 report (the “Arival Report”), a leading research
provider on the in-destination experiences industry. Moreover, we believe we are poised to benefit from increased online adoption in the global experiences
industry. While online penetration in experiences remains nearly a third below other major travel categories, such as hotel accommodations, the anticipated
total size of the online experiences market will continue to grow according to the Arival Report as travelers become increasingly aware of the category
online and operators continue to shift their business online. In addition, OTAs are the fastest growing channel in the travel experiences market and are
expected to undergo significant growth going forward, with the OTA channel expected to experience a compounded annual growth rate (“CAGR”) of 37%
from 2022 to 2025 according to the Arival Report.
Based on information in Euromonitor's February 2022 report, a leading provider of global business intelligence, market research data and analysis,
we estimate the full-service European restaurants industry may reach approximately $250 billion by 2025. In addition, based on this same data, this
industry is exhibiting a similar trend as the experiences industry in terms of online adoption; the majority of restaurant reservation bookings still take place
offline, but an increasing share is booked through online channels each year. We believe that we are still early in the global shift in consumer adoption
towards booking experiences and restaurants online, which provides an exciting future market opportunity for our business.
Our Business Strategy
The Tripadvisor group operates in a unique position in the travel and experiences ecosystem:
•
•
•
Large, global, and growing addressable markets including travel, experiences, and digital advertising;
A large, global, and engaged audience making meaningful contributions that reinforces a relationship of trust and community; and
A wealth of high-intent data that comes from serving our audience of travelers and experience seekers at different points along their
journey - whether they are engaging on our platforms for inspiration on their next experience, planning a trip, or making a purchasing
decision.
In our Brand Tripadvisor segment, we offer a compelling value proposition to both travelers and partners across a number of key offerings that
include accommodations, experiences, dining, and media. This value proposition is delivered through a collection of durable assets that we believe is
difficult to replicate: a trusted brand, authentic UGC, a large community of contributors, and one of the largest global travel audiences. Our strategy in this
segment is to leverage these core assets as well as our technology capabilities to provide travelers with a compelling user experience to help make the best
decisions in each phase of the travel journey, including pre-trip planning, in-destination, and post-trip sharing. We intend to drive new traveler acquisition
and repeat audience engagement on our platform by offering meaningful travel guidance solutions and services that reduce friction in the traveler journey
and create a deeper, more persistent relationship with travelers. We evaluate investment opportunities across data, product, marketing, and technology that
we believe will improve and diversify the monetization of our audience through deeper engagement, which, in turn, we expect will drive more value to our
partners.
The Brand Tripadvisor segment plays an important role in our portfolio. For over two decades, we believe we have built difficult to replicate assets
such as a trusted brand, authentic content, a large community of contributors, and one of the largest global travel audiences available. Our long-term
strategy for the Brand Tripadvisor segment builds on our heritage and the reasons hundreds of millions of travelers come to Tripadvisor each year.
Fundamental to this strategy will be: (1) innovating and enhancing world-class travel guidance and planning products to help travelers make confident
decisions in a world where it is hard to find advice you can trust; (2) prioritizing deeper engagement with travelers by leveraging our rich data and
technology assets to provide more relevant, curated, and contextual content throughout the traveler journey; and (3) driving a step change in the value we
can deliver to our partners by accelerating and diversifying the monetization of our valuable audience across key categories, including hotel meta, media
advertising, and experiences.
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In our Viator and TheFork segments, we provide two-sided marketplaces that connect travelers and diners to operators of bookable experiences and
restaurants, respectively. Within our Viator segment, we are investing in growth, future scale, and market share gains to accelerate our market leadership
position, while improving unit economics on both sides of the marketplace that provide visibility to sustainable future profitability. This means driving
awareness and higher quality audience engagement, which we believe will drive greater repeat behavior, more direct traffic, and translate into improved
unit economics over time. Our investments on both sides of our marketplace, as well as in our primary offerings, are intended to deliver a differentiated
value proposition that we believe will drive sustainable market leadership as our partners, operators, and travelers find themselves in an increasingly
competitive marketplace environment. We are focused on continuing to grow both our supplier base and our user base by offering innovative tools and
features on our branded platforms, and through continued awareness of our brand through marketing efforts.
We are focused on executing initiatives across the Tripadvisor group through organic investment in data, products, marketing and technology to
further enhance the value we deliver to travelers and partners across our brands, platforms, and segments. In addition, we may accelerate growth
inorganically by opportunistically pursuing strategic acquisitions.
Our Business Models
We manage our Brand Tripadvisor segment (formerly Tripadvisor Core segment) primarily through the following revenue sources and related
business models:
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Tripadvisor-branded Hotels Revenue. The largest source of Brand Tripadvisor segment revenue is generated from click-based
advertising on our hotel meta platform (also referred to as our hotel auction), which consists primarily of contextually-relevant
booking links to partner websites, which predominantly include OTAs and hotels. Click-based advertising is generally priced on a
cost-per-click (“CPC”) basis, with payments from partners determined by the number of clicks generated on a commerce link
multiplied by the CPC rate for each particular click. CPC rates are determined in a dynamic, competitive auction bidding process. We
also generate click-based advertising revenue on a cost-per-acquisition (“CPA”) basis, with payments from partners determined by a
contractual commission rate based on a traveler click generated on our platform that ultimately results in a hotel booking and stay via
the partners’ websites.
We provide additional business-to-business (“B2B”) offerings to hotels and related accommodation partners that deliver other unique
opportunities to further promote, advertise, and operate their businesses as well as merchandise their inventory on our platform. These
include a subscription-based advertising solution, with revenue determined by a contractual fee and time duration, or other CPC-
based advertising services through hotel sponsored placements on our platform.
• Media and Advertising Revenue. We offer endemic and non-endemic advertisers opportunities to promote their brands primarily
through display-based advertising (or “media advertising”) placements across our brands on our platform. Our advertising clients are
predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations (“DMOs”), OTAs, and
other travel related businesses. Display-based advertising placements are predominantly sold on a cost per thousand impressions
(“CPM”) basis.
•
Tripadvisor Experiences and Dining Revenue. We merchandise, on the Tripadvisor platform, bookable experiences available on
Viator and bookable dining reservations available on TheFork and earn affiliate marketing commission revenue on bookings that are
driven by our platform, which are fulfilled by Viator and TheFork, respectively. These transactions generate intercompany
(intersegment) revenue which is eliminated on a consolidated basis. The nature and economics of these transactions are consistent
with the Viator segment and TheFork segment, as described below.
We provide additional B2B offerings to restaurant partners that deliver other unique opportunities to further promote, advertise, and
operate their businesses as well as merchandise their businesses
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on our platform. These offerings can be subscription-based, with revenue determined by a contractual fee and time duration, or CPC-
based advertising services through restaurant sponsored placements on our platform.
•
Other Revenue. We provide travelers additional offerings across various other travel categories, including alternative
accommodations (e.g., short-term vacation rentals), cruises, flights, and rental cars. We provide these offerings across a collection of
brands that complement and reinforce our segment strategy of providing differentiated guidance that helps travelers reduce friction
and make better decisions. Our alternative accommodation rentals platform is a two-way marketplace that connect travelers with
owners and operators of short-term rental properties, generating commission revenue from both the traveler and the property owner
for each booking we facilitate across our branded platforms. Our cruise, flight, and rental cars offerings generate revenue primarily
through click-based and display-based advertising opportunities.
Our Viator segment offers travelers a comprehensive online marketplace that provides access to over 350,000 experiences and more than 55,000
experience operators. These experiences are instantly bookable online in over 200 countries. Our business model relies on the success of travelers and
operators who join our marketplace and generate consistent bookings over time. As experience operators become more successful on our platform and as
travelers return over time, we benefit from the recurring activity on our marketplace. We generate revenue through commissions for each booking
transaction we facilitate directly and indirectly through our platform. Through Viator, we also power traveler experience bookings on behalf of third-party
distribution partner websites, including the Tripadvisor platform as well as many of the world’s major OTAs, airlines, hotels, online and offline travel
agencies, and other prominent content and eCommerce brands. For the majority of experience bookings, we collect the full amount charged to the traveler
at the time of booking and remit the operator’s portion after the booked experience occurs. In addition, Viator offers our “Reserve Now, Pay Later”
payment option, which allows our travelers the option to reserve certain experiences and defer payment until a date no later than two days before the
experience date.
TheFork segment offers travelers and diners a comprehensive online marketplace that provides access to approximately 55,000 restaurants to
discover and book reservations in 11 countries across the U.K., western and central Europe. We primarily generate revenue for each booking reservation we
facilitate on our platform, calculated on a per seated diner fee basis and paid for by the restaurant partner. We also generate revenue on a subscription basis
from restaurant partners by providing, for a fee, access to premium online reservation booking software and related services offerings to help them more
effectively and efficiently manage their business.
Seasonality
Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel partner advertising investments, and therefore
our revenue and operating profits, have also historically followed a seasonal pattern. Our financial performance tends to be seasonally highest in the second
and third quarters of a given year, which includes the seasonal peak in consumer demand, including traveler accommodation stays, and travel experiences
taken, compared to the first and fourth quarters, which represent seasonal low points. In addition, during the first half of the year, experience bookings
typically exceed the amount of completed experiences, resulting in higher cash flow related to working capital, while during the second half of the year,
particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative. Other factors may also impact typical
seasonal fluctuations, such as significant shifts in our business mix, adverse economic conditions, public health-related events, as well as other factors.
Marketing
We have established world-renowned, widely used, and recognized brands through the innovative and efficient implementation of marketing and
promotional campaigns. Particularly, we believe we have been successful with the strategic use of a number of cost effective online and offline marketing
channels to reach travelers and diners, including our own platform channels (i.e., websites and apps), online search engines (primarily Google), social
media, email, media via public relations, partnerships, and content distribution. Our omni-channel marketing programs are intended to showcase the value
of our industry-leading travel brands; increase user traffic; efficiently
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drive transactions and engagement; optimize ongoing traveler acquisition costs; and strategically position our brands in relation to one another as we
continue to differentiate our offering versus those of our competitors. Our sustained scale and profitability depend on our ability to effectively maintain our
costs and increase the overall number of users engaged on our platforms and their subsequent transactions. We continue to focus on our ability to attract and
engage new and repeat users and encourage users to directly visit our websites and apps. We have the ability to manage our marketing investments across
our portfolio of brands to optimize results for the Company. Our relative flexibility enables us to make decisions on a brand-by-brand, market-by-market,
travel segment and customer basis that we think are appropriate based on the relative growth opportunity, the expected returns and the competitive
environment.
Competition
We operate in a very competitive set of market environments that constantly evolve and change. Some of our current and potential competitors,
listed below, have significantly more customers, data, and financial and other resources than we do, and may be able to leverage those strengths to compete
more aggressively with us.
Across our three segments, we primarily compete, and in some cases partner, with the following businesses:
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•
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General OTAs, such as Expedia, Booking Holdings, Airbnb, traveloka, Despegar, Trip.com, and their respective subsidiaries and operating
companies;
Experiences OTAs, such as GetYourGuide, Klook, and TUI Musement;
Hotel metasearch providers, such as trivago, Kayak and Skyscanner;
Online search, social media, and marketplace platforms for advertising spend, such as Google, Facebook, Twitter, Pinterest, and Snap;
Global and regional travel, experiences, and restaurant brands seeking to promote direct bookings;
Emerging online advertising businesses, such as ad-supported retail and entertainment platforms like Amazon, Spotify, and Walmart;
Artificial intelligence driven travel curators;
Traditional offline travel agencies; and
Global and regional restaurant technology providers for reservation management and related services, such as OpenTable, Resy, and Tock.
Commercial Relationships
We have commercial relationships with a majority of the world’s leading OTAs, as well as thousands of other travel partners, pursuant to which
these companies primarily purchase traveler leads from us, generally on a click-based advertising basis. Although these relationships are memorialized in
agreements, many of these agreements are for limited terms or are terminable at will or on short notice. As a result, we seek to ensure the mutual success of
these relationships.
For the years ended December 31, 2023, 2022 and 2021, our two most significant travel partners were Expedia (and its subsidiaries) and Booking
(and its subsidiaries), each of which accounted for 10% or more of our consolidated revenue and together accounted for approximately 25%, 31% and 34%
of our consolidated revenue, respectively. Nearly all of this concentration of revenue is recorded in our Brand Tripadvisor segment during these reporting
periods.
Additionally, our business is dependent on relationships with third-party service operators that we rely on to fulfill service obligations to our
customers where we are the merchant of record, such as our experience providers. However, no single operator’s inventory resulted in more than 10% of
our revenue on a consolidated basis or at a reportable segment level in any period presented.
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Operations and Technology
We have assembled a team of highly skilled software engineers, computer scientists, data scientists, network engineers and systems engineers whose
expertise spans a broad range of technical areas, including a wide variety of open source operating systems, databases, languages, analytics, networking,
scalable web architecture, operations and warehousing technologies. We make significant investments in product and feature development, data
management, personalization technologies, scalable infrastructures, networking, data warehousing, and search engine technologies.
Our systems infrastructure for Tripadvisor-branded websites is in a "hybrid-cloud" configuration in which parts of it are housed at a colocation
facility and managed by our operations team, while the rest is hosted on Amazon Web Services. Our infrastructure installations have multiple
communication links as well as continuous monitoring and engineering support. The co-location facility is protected with both network-level and
application-level defenses, using well known commercial solutions specifically tailored for such purposes. We make use of Amazon Web Services
availability zones to provide redundancy for the cloud portions of our infrastructure. Substantially all of our software components, data, and content are
replicated in multiple data centers and development centers, as well as backed up at offsite locations. Our systems are monitored and protected through
multiple layers of security. Several of our individual subsidiaries and businesses have their own technology teams to support business growth while
leveraging common assets, tools and processes for scale across the group.
Intellectual Property
Our intellectual property, including patents, trademarks, copyrights, domain names, trade dress, proprietary technology and trade secrets, is an
important component of our business. We rely on our intellectual property rights in our content, proprietary technology, software code, ratings indexes,
databases of reviews and forum content. We have acquired some of our intellectual property rights through licenses and content agreements with third
parties and these arrangements may place restrictions on the use of our intellectual property.
We protect our intellectual property by relying on our terms of use, confidentiality agreements and contractual provisions, as well as on
international, national, federal, state and common law rights. We protect our brands by pursuing the trademark registration of our core brands, as
appropriate, maintaining our trademark portfolio, securing contractual trademark rights protection when appropriate, and relying on common law trademark
rights when appropriate. We also register copyrights and domain names as deemed appropriate. Additionally, we protect our trademarks, domain names and
copyrights with the use of intellectual property licenses and an enforcement program.
We have considered, and will continue to consider, the appropriateness of filing for patents to protect future inventions, as circumstances may
warrant. However, many patents protect only specific inventions and there can be no assurance that others may not create new products or methods that
achieve similar results without infringing upon patents owned by us.
In connection with our copyrightable content, we post and institute procedures under the U.S. Digital Millennium Copyright Act and similar “host
privilege” statutes worldwide to gain immunity from copyright liability for photographs, text and other content loaded on our platform by consumers.
However, differences between statutes, limitations on immunity, political and regulatory efforts to amend relevant statutes, and moderation efforts in the
many jurisdictions in which we operate may affect our ability to claim immunity.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged
infringement by us of the trademarks, copyrights, patents, and other intellectual property rights of third parties. In addition, litigation may be necessary in
the future to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others.
Any such litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which
could materially harm our business.
7
Regulation
We are subject to a number of laws and regulations that affect companies conducting business on the internet as well as some relating to the travel
industry, the provision of travel services and the vacation rental industry. As we continue to expand the reach of our brands into additional international
markets and expand our product offerings, we are increasingly subject to additional laws and regulations. This includes laws and regulations regarding
privacy and data protection, libel and defamation, content, intellectual property, distribution, electronic contracts and other communications, consumer
protection, taxation, online payment services and competition, among others. These laws and regulations are constantly evolving and can be subject to
significant change. Many of these laws and regulations are being tested in courts, and could be interpreted by regulators and courts in ways that could harm
our business. In addition, the application and interpretation of these laws and regulations is often uncertain, particularly in the new and rapidly-evolving
industry in which we operate.
In addition, we provide advertising data and information and conduct marketing activities that are subject to consumer protection laws that regulate
unfair and deceptive practices, domestically and internationally, including, in some countries, pricing display requirements, licensing and registration
requirements and industry specific value-added tax regimes. The U.S. (as well as individual states), the E.U. (as well as member states) and other countries
have adopted legislation that regulates certain aspects of the internet, including online editorial and user-generated content, data privacy, behavioral
targeting and online advertising, taxation, and liability for third-party activities. It is difficult to accurately predict how such legislation will be interpreted
and applied or whether new taxes or regulations will be imposed on our services, and whether or how we might be affected. Increased regulation of the
internet could increase the cost of doing business or otherwise materially adversely affect our business, financial condition or operating results.
We are subject to laws that require protection of user privacy and user data. As our business has evolved, we have begun to receive and store a
greater volume of personally identifiable data. This data is increasingly subject to laws and regulations in numerous jurisdictions around the world. For
example, the E.U., in May 2018, adopted the General Data Protection Regulation, or GDPR, which requires companies, including ours, to meet enhanced
requirements regarding the handling and storage of personal data. In January 2020, the State of California adopted the Consumer Privacy Protection Act
which also enhances privacy rights and consumer protection for residents of California. In addition, several U.S. states have adopted similar laws or are
currently evaluating their own laws and regulations. The enactment, interpretation and application of these laws is still in a state of flux.
Compliance with these laws, rules and regulations has not had, and is not expected to have, a material effect on our business, results of operations
and financial condition. However, there are, and will likely continue to be, an increasing number of laws and regulations pertaining to the internet and
online commerce and/or information retrieved from or transmitted over the internet, online editorial and user-generated content, user privacy, behavioral
targeting and online advertising, liability for third-party activities. Likewise, the SEC, Department of Justice (“DOJ”) and Office of Foreign Assets Controls
(“OFAC”), as well as foreign regulatory authorities, have continued to increase the enforcement of economic sanctions and trade regulations, anti-money
laundering, and anti-corruption laws, across industries. As regulations continue to evolve and regulatory oversight continues to increase, we cannot
guarantee that our programs and policies will be deemed compliant by all applicable regulatory authorities.
Corporate History, Equity Ownership and Voting Control
Tripadvisor was founded in February 2000. In April 2004, Tripadvisor was acquired by IAC/InterActiveCorp, or IAC. In August 2005, IAC spun-off
its portfolio of travel brands, including Tripadvisor, into Expedia, at the time a separate newly-formed Delaware corporation. On December 20, 2011
Expedia completed a spin-off of Tripadvisor into a separate publicly-traded Delaware corporation. We refer to this second spin-off transaction as the “Spin-
Off.” Following the Spin-Off, on December 21, 2011, Tripadvisor began trading on The Nasdaq Global Select Market, or Nasdaq, as an independent public
company under the trading symbol “TRIP.”
On December 11, 2012, Liberty Interactive Corporation, or Liberty, purchased an aggregate of approximately 4.8 million shares of common stock of
Tripadvisor from Barry Diller, our former Chairman of the Board of Directors and Senior Executive, and certain of his affiliates. As a result, Liberty
beneficially owned approximately 18.2 million shares of our common stock and 12.8 million shares of our Class B common stock.
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On August 27, 2014, the entire beneficial ownership of our common stock and Class B common stock held by Liberty was acquired by Liberty
TripAdvisor Holdings, Inc., or LTRIP. Simultaneously, Liberty, LTRIP’s former parent company, distributed, by means of a dividend, to the holders of its
Liberty Ventures common stock, Liberty’s entire equity interest in LTRIP. We refer to this transaction as the “Liberty Spin-Off”. As a result of the Liberty
Spin-Off, effective August 27, 2014, LTRIP became a separate, publicly traded company holding 100% of Liberty’s interest in Tripadvisor.
As a result of these transactions, and as of December 31, 2023, LTRIP beneficially owned approximately 16.4 million shares of our common stock
and approximately 12.8 million shares of our Class B common stock, which constitute approximately 13% of the outstanding shares of common stock and
100% of the outstanding shares of Class B common stock. Assuming the conversion of all of LTRIP’s shares of Class B common stock into common stock,
LTRIP would beneficially own approximately 21% of the outstanding common stock. However, because each share of Class B common stock is entitled to
ten votes per share and each share of common stock is entitled to one vote per share, LTRIP may be deemed to beneficially own equity securities
representing approximately 57% of our voting power.
Human Capital Management
Employees
As of December 31, 2023, the Company had approximately 2,845 employees. Approximately 58%, 34%, and 8% are based in Europe, the U.S., and
the rest of world, respectively. Additionally, we use independent contractors to supplement our workforce. We believe we have good relationships with our
employees and contractors, including relationships with employees represented by international works councils or other similar organizations.
Talent Acquisition and Development
We believe our employees are essential to our success and that the Company’s success depends on our ability to attract, develop and retain key
talent. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance. Competition for qualified
personnel is intense, particularly for software engineers, computer scientists, and other technical staff, and constrained labor markets have increased
competition for personnel across other parts of our business. The Company's management and Board of Directors oversee various initiatives for talent
acquisition, retention and development.
Our talent philosophy is to both develop talent from within and to strategically recruit key external talent. This approach has yielded a deep
understanding, among our employee base, of our business, our products, and our customers, while adding new employees and ideas in support of our
continuous improvement mindset. Our overall talent acquisition and retention strategy is designed to attract and retain diverse and qualified candidates to
enable the success of the Company and achievement of our performance goals. We recruit the best people for the job without regard to gender, ethnicity or
other protected traits and it is our policy to comply fully with all domestic, foreign and local laws relating to discrimination in the workplace. Our talent
acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage employee referrals for open positions.
We support and develop our employees through global training and development programs that build and strengthen employees’ leadership and
professional skills. Leadership development includes programs for new leaders as well as programs designed to support more experienced leaders. We also
partner with external training organizations to help provide current and future workers with the knowledge and skills they need to succeed.
It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and
more inclusive. Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion. Our diversity and inclusion
initiatives support our goal that everyone throughout the Company is engaged in creating an inclusive workplace. We support inclusion through training on
topics including Unconscious Bias and Inclusive Leadership. We also support a network of active Employee Resource Groups reflecting many dimensions
of diversity across the Company.
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Total Rewards
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees
in order to attract, motivate and retain superior talent. These programs not only include base wages and incentives in support of our pay for performance
culture, but also health, welfare, and retirement benefits.
We design our benefit programs to meet the needs of our employees’ health while managing program costs for escalation rates at or below industry
trend factors. Our programs include but are not limited to wellness, mental health services, telemedicine, and partnerships with service providers that
support diverse family-care need solutions. We continuously refine, develop and implement proactive health care strategies and solutions that allow us to
enhance employee health and well-being while curbing costs.
Health and Safety
The health and safety of our employees is of utmost importance to us. We conduct regular self-assessments and audits designed to ensure
compliance with our health and safety guidelines and regulatory requirements.
Additional Information
We maintain a corporate website at ir.tripadvisor.com. Except as explicitly noted, the information on our website, as well as the websites of our
various brands, is not incorporated by reference in this Annual Report on Form 10-K, or in any other filings with, or in any information furnished or
submitted to, the SEC.
On our Investor Relations website (http://ir.tripadvisor.com), we provide our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, and amendments to these reports free of charge. These reports are available on our website as soon as reasonably practicable
after we electronically file or furnish these reports to the SEC or publish through press releases, public conference calls and certain webcasts. All
documents filed electronically with the SEC (including reports, proxy and information statements and other information) are also available at www.sec.gov.
Investors and others should be aware that in addition to required filings with the SEC, we use our investor relations website (http://ir.tripadvisor.com) to
announce material financial information to our investors as well as communicate with the public about our company, our results of operations and other
information.
We post our code of business conduct and ethics, which applies to all employees, including all executive officers, senior financial officers and
directors, on our corporate website at www.tripadvisor.com. We intend to disclose any waivers of the code of ethics for our executive officers, senior
financial officers or directors, on our corporate website.
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Item 1A. Risk Factors
You should consider carefully the risks described below together with all of the other information included in this Annual Report as they may impact
our business, results of operations and/or financial condition. The risks and uncertainties described below are not the only ones we face. Additional risks
and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business, results of operations or financial
condition. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially and adversely affected.
Risk Factors Summary
The following is a summary list of the principal risks that make an investment in our securities speculative or risky. For additional information,
please refer to the detailed descriptions following the summary.
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Declines or disruptions in the worldwide travel industry, including health concerns, natural disasters, terrorist attacks, civil or political unrest
or other events outside our control;
Our performance marketing efficiency and the general effectiveness of our advertising and marketing efforts;
Any change by our search and metasearch partners in how they present travel search results or conduct their auctions for search placement in
a manner that is competitively disadvantageous to us;
Our ability to adjust to consumer adoption of mobile devices and/or new technologies and product offerings;
Our ability to attract and retain qualified personnel;
Our ability to successfully manage growth and expand our global business;
Our ability to respond to and keep up with the rapid pace of technological and market changes;
IT systems-related failures or security breaches and data privacy risks and obligations;
Tax, legal and regulatory risks;
Risks associated with the facilitation of payments from consumers, including fraud and compliance with evolving rules and regulations and
reliance on third parties;
Fluctuations in foreign currency exchange rates and other risks associated with doing business in multiple currencies and jurisdictions;
Success of strategic initiatives, investments and acquisitions, including integration; and
Financial risks including increased debt levels and stock price volatility.
Risks Related to Our Business and Industry
If we are unable to continue to attract a significant number of visitors to our platform, to cost-effectively convert these visitors into revenue-
generating customers and to continue to engage consumers, our business and financial performance could be harmed. Our traffic and user engagement
could be adversely affected by a number of factors including, but not limited to, inability to provide quality content, lack of inventory or supply in amounts
or of sufficient quality to be attractive to our consumers, increasing use of metasearch engines which may impact the amount of traffic to our platform,
declines or inefficiencies in traffic acquisition and reduced awareness of our brands. Certain of our competitors have advertising campaigns expressly
designed to drive traffic directly to their websites, and these campaigns may negatively impact traffic to our platform. There can be no assurances that we
will continue to provide content and products in a manner that meets rapidly changing demand. Any failure to obtain and manage content and products in a
cost-effective manner that will engage consumers, or any failure to provide content and products that are perceived as useful, reliable and trustworthy, could
adversely affect user experiences and their repeat behavior, reduce traffic to our platform and negatively impact our business and financial performance.
We rely on internet search engines, metasearch engines and application marketplaces to drive traffic to our platform, certain providers of which
offer products and services that compete directly with ours. If we are unable to drive traffic cost-effectively, traffic to our platform could decline and our
business would be negatively affected. The number of consumers we attract to our platform is due in large part to how and where information from, and
links to, our platform are displayed on search engine results pages, or SERPs, and search aggregators, or metasearch engines. The display, including
rankings, of search results can be affected by a number of factors, many of which are not in our control. Search engines (including travel metasearch
engines) frequently change the logic
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that determines the placement and display of the results of a user’s search, such that the purchased or algorithmic placement of links to our platform can be
negatively affected. A search engine could alter its search algorithms or results causing our websites to place lower in search query results. For example,
Google, a significant source of traffic to our platform, frequently promotes its own competing products in its search results, which has negatively impacted
placement of references to our company and our platform on the SERP. If a major search engine changes its algorithms in a manner that negatively affects
the search engine ranking of our websites or those of our travel partners, or if competitive dynamics impact the cost or effectiveness of Search Engine
Optimization (“SEO”) or Search Engine Marketing (“SEM”) in a negative manner, our business and financial performance would be adversely affected.
Furthermore, our failure to successfully manage our SEO and SEM strategies and/or other traffic acquisition strategies could result in a substantial decrease
in traffic to our platform, as well as increased costs to the extent we replace free traffic with paid traffic.
We also rely on application marketplaces, or app stores such as Apple’s App Store and Google’s Play, to drive downloads of our apps. In the future,
Apple, Google or other marketplace operators may make changes that make access to our products more difficult or may limit our access to information
that would restrict our ability to provide the best user experience. For example, Google has entered various aspects of the online travel market, including by
establishing a flight metasearch product and hotel metasearch product as well as reservation functionality. Our apps may receive unfavorable treatment
compared to the promotion and placement of competing apps, such as the order in which they appear within marketplaces. In addition, Apple has
announced new features that limit who has access to consumer data, including location information which may negatively impact the effectiveness of our
consumer data and platform. Similarly, if problems arise in our relationships with providers of application marketplaces, traffic to our platform and our user
growth could be harmed.
Our strategy may be unsuccessful and may expose us to additional risks. If our strategy does not achieve its expected benefits, there could be
negative impacts to our business, financial condition and results of operations. We are implementing discrete strategies across each segment which are
connected and reinforcing to a cohesive strategy across the Tripadvisor group as described in “Our Business Strategy” herein. There are no assurances that
we will be successful in executing our strategies. Our efforts may prove more difficult than we currently anticipate. Further, we may not succeed in
realizing the benefits of these efforts on our anticipated timeline or at all. In addition, as we implement our strategies, the macroeconomic environment,
including but not limited to, inflationary pressures, higher labor costs, and changes in consumer and merchant behavior may make it more difficult to
effectively execute our strategy. Even if fully implemented, our strategy may not result in growth or the other anticipated benefits to our business, financial
condition and results of operations. If we are unable to effectively execute our strategy and realize its anticipated benefits, it could negatively impact our
business, financial condition and results of operations.
We derive a substantial portion of our revenue from advertising and any significant reduction in spending by advertisers on our platform could
harm our business. Our ability to grow advertising revenue with our existing or new travel partners is dependent in large part on our ability to provide
value to them relative to other alternatives. Our ability to provide value to our travel partners depends on a number of factors, including, but not limited to,
the following:
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Our ability to increase or maintain user engagement;
Our ability to increase or maintain the quantity and quality of ads shown to consumers;
The development of technologies that can block the display of our ads or our ad measurement tools;
The effectiveness of our advertising and the extent to which it generates sales leads, customers, bookings or financial results on a cost-
effective basis, including our mobile transaction conversion rate;
The competitiveness of our products, traffic quality, perception of our platform, including mobile applications, and availability and accuracy
of analytics and measurement solutions to demonstrate our value; and
Adverse government actions or legal developments relating to advertising, including limitations on our ability to deliver targeted advertising.
Any of these or other factors could result in a reduction in demand for our ads, which may reduce the prices we receive for our ads, or cause
marketers to stop advertising with us altogether, any of which would negatively affect our revenue and financial results.
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Click-based advertising revenue accounts for the majority of our advertising revenue. Our pricing for click-based advertising depends, in part, on
competition between advertisers. If our large advertisers become less competitive with each other, merge with each other or with our competitors, focus
more on cost-per-click, or CPC, profit than on traffic volume, or are able to reduce CPCs, this could have an adverse impact on our advertising revenue
which would, in turn, have an adverse effect on our business and financial results.
We rely on a relatively small number of significant travel partners and any reduction in spending by or loss of these partners could seriously
harm our business. For the year ended December 31, 2023, our two most significant travel partners, Expedia and Booking (and their subsidiaries),
accounted for a combined 25% of total revenue, with most of this revenue recorded within our Brand Tripadvisor segment. If any of our significant travel
partners were to cease or significantly curtail advertising on our platform, we could experience a rapid decline in our revenue over a relatively short period
of time which would have a material impact on our business.
Our business depends on strong brands and any failure to maintain, protect or enhance our brands could hurt our ability to retain and expand
our base of consumers and partners, the frequency with which consumers utilize our products and services and our ability to attract partners. Our
ability to maintain and protect our brands depends, in part, on our ability to maintain consumer trust in our products and services and in the quality,
integrity, reliability and usefulness of the content and other information found on our platform. If consumers do not view the content on our platform to be
useful and reliable, they may seek other sources to obtain the information they are looking for and may not return to our platform as often or at all. We
dedicate significant resources to protecting the quality of our content, primarily through our content guidelines, computer algorithms and human moderators
that are focused on identifying and removing inappropriate, unreliable or deceptive content.
Media, legal, or regulatory scrutiny of our user content, advertising practices, and other issues may adversely affect our reputation and brand.
Negative publicity about our company, including our content, technology and business practices, could diminish our reputation and confidence in our
brand, thereby negatively affecting the use of our products and our financial performance. For example, in the past, certain media outlets have alleged that
we have improperly filtered or screened reviews, that we have not properly verified reviews, or that we manipulate reviews, ranking and ratings in favor of
our advertisers. We expend significant resources to ensure the integrity of our reviews and to ensure that the most relevant reviews are available to our
consumers; we do not establish rankings and ratings in favor of our advertisers. Regulatory inquiries or investigations require management time and
attention and could result in further negative publicity, regardless of their merits or ultimate outcomes.
In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data protection could adversely affect our reputation
with our consumers and our partners. Such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our user base and
result in decreased revenue.
Weak economic conditions, including those that cause declines or disruptions in the travel industry or reduce consumer discretionary spending
have, in the past, had a material adverse impact on the Company’s business and financial performance and could have a material adverse impact on
our businesses, financial performance and the market price of our common stock. Our business and financial performance are affected by the health of
the worldwide travel industry, including macroeconomic conditions and events beyond our control. Events beyond our control, such as macroeconomic
factors (such as tightening of credit markets and declines in consumer confidence), health concerns (including epidemics or pandemics), unusual or extreme
weather or natural disasters (whether caused by climate change or otherwise), travel-related health concerns, restrictions related to travel, trade or
immigration policies, regional hostilities or instability, wars, terrorism, sources of political uncertainty, foreign policy changes, regional hostilities, natural
disasters, imposition of taxes or surcharges by regulatory authorities, significant increases in energy costs, labor unrest or travel-related accidents, can
disrupt travel globally or otherwise result in declines in travel demand. For example, recent conflicts between Ukraine and Russia and Israel and Hamas
have impacted travel to those regions and the surrounding regions.
Sales of travel and/or leisure products tend to decline or grow more slowly during economic downturns and times of inflation when consumers
engage in less discretionary spending, are concerned about unemployment or economic weakness, have reduced access to credit or experience other
concerns that reduce their ability or willingness to travel. In addition, the uncertainty of macroeconomic factors and their impact on consumer behavior
makes it more difficult to forecast industry and consumer trends, which in turn has in the past and could in the future adversely affect our ability to
effectively manage our business. Leisure travel, which accounts for a substantial majority of our current business, is particularly dependent on discretionary
consumer spending levels. For example, the United States and other countries have recently experienced elevated inflation which has created economic
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uncertainty and has impacted and may impact consumer demand in the travel industry. Economic downturn and adverse market conditions may also
negatively impact our partners, our partners’ access to capital, cost of capital and ability to meet liquidity needs. These challenges faced in a prolonged
economic downturn or deterioration in the travel industry could adversely impact our business, financial performance and share price. The extent and
duration of such impacts remain largely uncertain and dependent on future developments that cannot be accurately predicted at this time.
We operate in a competitive global environment and our failure to compete effectively could reduce our market share and harm our financial
performance. We compete with different types of companies in the various markets and geographies where we operate, including large and small
companies in the travel and leisure space as well as broader service providers. We face competition for content, consumers, advertisers, online travel search
and price comparison services and online reservations. We compete globally with both online and offline, established and emerging, providers of travel,
lodging, experiences and restaurant reservation and related services. Current and new competitors can launch new services at a relatively low cost. More
specifically:
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General OTAs, such as Expedia, Booking Holdings, Airbnb, traveloka, Despegar, Trip.com, and their respective subsidiaries and operating
companies;
Experiences OTAs, such as GetYourGuide, Klook, and TUI Musement;
Hotel metasearch providers, such as trivago, Kayak and Skyscanner;
Online search, social media, and marketplace platforms for advertising spend, such as Google, Facebook, Twitter, Pinterest, and Snap;
Global and regional travel, experiences, and restaurant brands seeking to promote direct bookings;
Emerging online advertising businesses, such as ad-supported retail and entertainment platforms like Amazon, Spotify, and Walmart;
Artificial intelligence driven travel curators, such as Travel Plan AI, Aitinerary, Wonderplan, Roam Around and similar websites;
Traditional offline travel agencies; and
Global and regional restaurant technology providers for reservation management and related services, such as OpenTable, Resy, and Tock.
There has been a proliferation of new channels through which service providers can offer accommodations, experiences and restaurant reservations.
Metasearch services may lower the cost for new companies to enter the market by providing a distribution channel without the cost of promoting the new
entrant’s brand to drive consumers directly to its website. Some of our competitors offer a variety of online services and, in some cases, are willing to make
little or no profit on a transaction, or offer travel services at a loss, in order to gain market share. Many of our competitors have significantly greater
financial, technical, marketing and other resources and have more expertise in developing online commerce and facilitating internet traffic as well as larger
client bases. They also have the ability to leverage other aspects of their business to enable them to compete more effectively.
In addition, Google and other large, established companies with substantial resources and expertise have launched travel or travel-related search,
metasearch and/or reservation booking services and may create additional inroads into online travel. Many of our competitors continue to expand their
voice and artificial intelligence capabilities, which may provide them with a competitive advantage in travel.
We compete with certain companies that we also do business with, including certain of our travel partners and related parties. The consolidation of
our competitors and travel partners may affect our relative competitiveness and our travel partner relationships. Competition and consolidation could result
in higher traffic acquisition costs, reduced margins on our advertising services, loss of market share, pricing pressure, reduced customer traffic to our
platform and reduced advertising by travel companies on our platform.
We rely on information technology to operate our business and remain competitive, and any failure to adapt to technological developments or
industry trends could harm our businesses. Our future success depends on our ability to continuously improve and upgrade our systems and infrastructure
to meet rapidly evolving consumer trends and demands while at the same time maintaining the reliability and integrity of our systems and infrastructure.
We may not be able to maintain or replace our existing systems or introduce new technologies and systems as quickly as we would like or in a cost-
effective manner. We may not be successful, or as successful as our competitors, in developing technologies and systems that operate effectively across
multiple devices and platforms in a way that is appealing to our consumers.
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The markets in which we operate are characterized by rapidly changing technology, evolving industry standards, frequent new service
announcements and enhancements, and changing consumer demands and preferences. Our future success will also depend on our ability to adapt to
emerging technologies such as tokenization; chatbot, new authentication technologies, such as biometrics, distributed ledger and blockchain technologies;
new and emerging payment methods, such as Alipay, Paytm and WeChat Pay; artificial intelligence; virtual and augmented reality; and cloud technologies.
For example, we incorporate artificial intelligence in certain of our operations. In July 2023, we launched an AI-powered travel itinerary generator which
creates personalized travel itineraries using OpenAI’s generative artificial intelligence technology. The use of artificial intelligence in our business presents
risks and challenges, including that algorithms may be flawed, datasets may be insufficient, erroneous, stale, or contain biased information, or content
chosen for display to consumers by artificial intelligence systems may be discriminatory, offensive, illegal, or otherwise harmful. These deficiencies and
other failures of artificial intelligence systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm. In
addition, there is no guarantee that our itinerary generator or other artificial intelligence focused initiatives will be competitive or attract more consumers to
our platform.
The emergence of alternative or new devices and the emergence of niche competitors who may be able to optimize products, services or strategies
for such platforms will require additional investments in technology. New developments in other areas could also make it easier for competitors to enter our
markets due to lower up-front technology costs. We may not be able to keep up with these rapid changes and our ability to integrate and develop new and
evolving technologies will require increased financial and personnel investments that could have an adverse impact on our operations unless and until we
achieve expected return on these investments. Our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our services
and platform to evolving industry standards and local preferences, and to continually innovate and improve the performance, features, and reliability of our
services and online platforms in response to competitive service offerings and the evolving demands of the marketplace.
If we are unable to adapt to the evolving demands of our customers, we may not remain competitive, and our business and financial
performance could suffer. Our competitors are continually developing innovations in services and features. As a result, we are continually working to
improve the user experience on our platform in order to engage our consumers and drive user traffic and conversion rates for our partners and provide our
business partners with the tools they need to succeed. We have invested, and expect to continue to invest, significant resources in developing and marketing
these innovations. We can give no assurances that the changes we make will yield the benefits we expect and will not have unintended or adverse impacts.
If we are unable to continue offering innovative products and services and quality features that customers want to use, existing customers may become
dissatisfied and use competitors’ offerings and we may be unable to attract additional customers, which could adversely affect our business and financial
performance.
Our dedication to making the consumer experience our highest priority may cause us to prioritize rapid innovation and consumer experience
over short-term financial results. We strive to create the best experience for our consumers. We believe that in doing so we will increase our traffic
conversion (i.e., visitors converting into clicks and/or bookings), revenue and financial performance. We have taken actions in the past, and may continue to
take actions in the future, that have the effect of reducing our short-term financial results if we believe the actions benefit the overall consumer experience.
These decisions may not produce the long-term benefits we expect, new or enhanced products may fail to engage consumers and/or we may be
unsuccessful in our efforts to monetize these initiatives, in which case our relationships with consumers and partners, and our business and financial
performance could be harmed.
We are dependent upon the quality of traffic in our network to provide value to our partners, and any failure in our ability to deliver quality
traffic and/or the metrics to demonstrate the value of the traffic could have a material and adverse impact on the value of our platform to our partners
and adversely affect our revenue. We use technology and processes to monitor the quality of the internet traffic that we deliver to our partners and have
identified metrics to demonstrate the quality of that traffic and identify low quality clicks such as non-human processes, including robots, spiders, the
mechanical automation of clicking and other types of invalid clicks or click fraud. Even with such monitoring in place, there is a risk that a certain amount
of low-quality traffic will be delivered to such online advertisers. Such low-quality or invalid traffic may be detrimental to our relationships with partners
and could adversely affect our advertising pricing and revenue.
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We rely on assumptions and estimates and data to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may
harm our reputation and negatively affect our business. Certain metrics are key to our business; as both the industry in which we operate and our
businesses continue to evolve, so too might the metrics by which we evaluate our businesses. While the calculation of the metrics we use is based on what
we believe to be reasonable estimates, our internal tools are not independently verified by a third-party and have a number of limitations; furthermore, our
methodologies for tracking these metrics may change over time. For example, a single person may have multiple accounts or browse the internet on
multiple browsers or devices, some consumers may restrict our ability to accurately identify them across visits, some mobile apps automatically contact our
servers for regular updates with no user action, and we are not always able to capture user information on our platform. As such, the calculations of our
unique users may not accurately reflect the number of people actually visiting our platform. If the internal tools we use to track these metrics under-count or
over-count performance or contain algorithm or other technical errors, the data we report may not be accurate. We continue to improve upon our tools and
methodologies to capture data; however, the improvement of our tools and methodologies could cause inconsistency between current data and previously
reported data, which could confuse investors or lead to questions about the integrity of our data. Finally, we may, in the future, identify new or other metrics
that enable us to more accurately evaluate our business. Accordingly, investors should not place undue reliance on these metrics.
Our future success depends on the performance of our key employees and our ability to attract, retain and engage senior management and a
highly skilled workforce. In particular, we are highly dependent on the services of our leadership team for the development of and our execution on our
vision and strategy. Over the last few years, we have made several changes to our senior leadership group. Our future performance will depend, in part, on
the successful integration of these new senior level executives into their roles. If we do not successfully manage these additions, it could be viewed
negatively by our investors, employees, and partners, and could have an adverse impact on our business and results of operations. We also heavily rely on
the continued service and performance of our senior management team, which provides leadership, contributes to the core areas of our business and helps
us to efficiently execute on mission, vision and strategic initiatives. If we are unable to retain members of our senior management team, including our
executive leadership, we may not be able to manage our business effectively and, as a result, our business and operating results could be harmed. If the
senior management team fails to work together effectively and to execute our plans and strategies on a timely basis, then our business and future growth
prospects could be harmed.
The success of our operations and the quality of our services are also highly dependent on our ability to attract, retain and engage skilled personnel.
For employees, we compete with companies that have far greater financial resources than we do as well as companies that promise short-term growth
opportunities and/or other benefits. If we do not succeed in attracting a well-qualified workforce or retaining or motivating existing talent, our business
would be adversely affected.
The composition of our work force, in terms of geographic location, in person or remote and full-time employees or independent contractors,
creates challenges and risks and failure to properly manage those risks could have a negative impact on our business. In response to the COVID-19
pandemic, much of our work force began working remotely and continue to work remotely today. In addition, following the COVID-19 pandemic, our
work force has increasingly shifted outside the U.S. and to independent contractors versus full-time employees. Managing a remote and independent work
force can give rise to cybersecurity, legal and regulatory issues and training and compliance issues, as well as create operational or other challenges, any of
which could harm our business. For example, our workers are classified as either employees or non-employees (including as independent contractors or
agency workers). Our employees in the U.S. are classified as either exempt from overtime or non-exempt (and therefore overtime eligible) and if we are
found to have misclassified employees including as independent contractors, agency workers or independent contractors, agency workers or non-exempt
employees as exempt, we could face penalties and have additional exposure under U.S. federal and state tax, workers’ compensation, unemployment
benefits, labor, employment and tort laws, as well as similar international laws, including for prior periods, as well as potential liability for employee
overtime and benefits and tax withholdings.
Acquisitions, investments, significant commercial arrangements and/or new business strategies could present new challenges and risks and
disrupt our ongoing business. We have acquired, invested in and/or entered into significant commercial arrangements with a number of businesses in the
past and our future growth may depend, in part, on future acquisitions, investments, commercial arrangements and/or changes in business strategies.
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Such endeavors have in the past and may in the future involve significant risks and uncertainties, including, but not limited to, the following:
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Costs incurred to identify, pursue and fund these endeavors that may or may not be successful and may limit other potential uses of cash;
Diversion of management’s attention or other resources from our existing business;
Difficulties and expenses in integrating the operations, products, technology or personnel;
Difficulties in implementing and retaining uniform standards, controls, procedures, policies and information systems;
Assumption of debt and liabilities, including costs associated with litigation, cybersecurity risks, and other claims;
Failure of any such strategy or target to achieve anticipated objectives, revenues or earnings;
Limited management or operational control and heightened reputational risk with respect to minority investments;
Entrance into markets in which we have no prior experience;
Amortization expenses related to acquired intangible assets and other adverse accounting consequences; and
Adverse market reaction to the transaction.
We have in the past invested, and may in the future invest, in privately-held companies. Such investments are inherently risky and our ability to
liquidate any such investments is typically difficult. Valuations of such privately-held companies are inherently complex and uncertain due to the lack of
liquid market for the companies’ securities. We cannot assure you that these investments will be successful or that such endeavors will result in the
realization of the synergies, cost savings and innovation that may be possible within a reasonable period of time, if at all. We could lose the full amount of
our investments; any impairment of our investments could have a material adverse effect on our financial results.
Risks Related to Legal and Regulatory Matters
We are a global company that operates in many different jurisdictions inside and outside the U.S. and these operations expose us to additional
risks. Many regions have different economic conditions, languages, currencies, legislation, regulatory environments, levels of political stability, and
consumer expectations. We are subject to risks typical of global businesses, including, but not limited to, the following:
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Compliance with additional laws and regulations, including but not limited to, those regarding data privacy, labor and employment,
advertising, anti-competition and tax;
Difficulties in managing our human capital and operations due to distance, time zones, language, status as an independent contractor or
agency worker versus employee and cultural differences;
Restrictions on repatriation of cash and on investments in operations;
Uncertainty regarding liability for services, content and intellectual property rights;
Increased risk and limits on enforceability of intellectual property rights;
Diminished ability to legally enforce contractual rights;
Currency exchange rate fluctuations;
Economic or political instability or laws involving economic or trade prohibitions or sanctions; and
Threatened or actual acts of terrorism.
Our strategy includes continued expansion in existing markets and potentially new markets. In addition to the risks mentioned above, international
markets have strong local competitors with established brands and travel service providers or relationships that may make expansion in certain markets
difficult and costly and take more time than anticipated. In some markets, legal and other regulatory requirements may prohibit or limit participation by
foreign businesses, such as by making foreign ownership or management of internet or travel-related businesses illegal or difficult or may make direct
participation in those markets uneconomic, which could make our entry or expansion in those markets difficult or impossible, require that we work with a
local partner or result in higher operating costs. If we are unsuccessful in expanding in existing and potentially new markets and effectively managing that
expansion, our business and financial results could be adversely affected.
We are regularly subject to claims, lawsuits, government investigations, and other proceedings which may result in adverse outcomes and,
regardless of the outcome, result in legal costs, diversion of management
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resources, injunctions or damage awards, and other negative results. It is possible that a resolution of one or more such proceedings could result in
substantial damages, fines or penalties that could adversely affect our business, financial results or financial position. These proceedings could also result in
reputational harm, criminal sanctions or consent decrees, the release of confidential information or orders preventing us from offering certain features,
functionalities, products, or services, requiring a change in our business practices. Any of these consequences could adversely affect our business and
financial results.
A failure to comply with existing or new laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties
may adversely affect our business or financial results. Our business and financial results could be adversely affected by unfavorable changes in or
interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including,
but not limited to, those relating to internet and online commerce, internet advertising, consumer protection, intermediary liability, cybersecurity, data
security and privacy. These laws continue to evolve. For example, there is, and will likely continue to be, an increasing number of laws and regulations
pertaining to internet and online commerce, cybersecurity, and liability for information retrieved from or transmitted over the internet, online editorial and
user-generated content, user privacy, behavioral targeting and online advertising and liability for third-party activities. Likewise, the SEC, DOJ and OFAC,
as well as foreign regulatory authorities, have continued to increase the enforcement of economic sanctions and trade regulations, anti-money laundering,
and anti-corruption laws, across industries. Operating in this dynamic regulatory environment requires significant management attention and financial
resources. As regulations continue to evolve and regulatory oversight continues to increase, we cannot guarantee that our programs and policies will be
deemed compliant by all applicable regulatory authorities. The failure of our businesses to comply with these laws and regulations could result in fines
and/or proceedings against us by governmental agencies, regulatory authorities, courts and/or consumers, which, if material, could adversely affect our
business and financial results.
The promulgation of new laws, rules and regulations, or new interpretations of existing laws, rules and regulations, could require us to change
certain aspects of our business, operations and relationships to ensure compliance, which could decrease demand for services, reduce revenues, increase
costs and/or subject the Company to additional liabilities. For example, many jurisdictions have adopted, and many jurisdictions are considering adopting,
privacy rights and consumer protections for their residents, which legislation will continue to change the landscape for the use and protection of data and
could increase the cost and complexity of delivering our services. Unfavorable changes could limit our marketing methods and capabilities, decrease
demand for our products and services, impede development of new products, require significant management time, increase costs and/or subject us to
additional liabilities. Violations of these laws and regulations could result in penalties, criminal sanctions and/or negative publicity against us, our officers
or our employees and/or restrictions on the conduct of our business.
We face risks related to our intellectual property. We rely on content, brands and technology, much of which is proprietary. We protect our content,
brands and technology by, among other things, a combination of maintenance and enforcement of registered and unregistered intellectual property rights
(e.g. trademarks, copyrights and trade secrets), technological solutions and contractual protections. Even with these precautions, it may be possible for
another party to copy or otherwise obtain and use our intellectual property, without authorization or to independently develop similar content, brands or
technology. Any misappropriation or violation of our rights could have a material adverse effect on our business.
Effective intellectual property protection may not be available in every jurisdiction in which our platform or services are made available and policing
unauthorized use of our intellectual property can be difficult and expensive. Therefore, in certain jurisdictions, we may be unable to adequately protect our
intellectual property against unauthorized third-party copying or use. We cannot be sure that the steps we have taken will prevent misappropriation or
infringement of our intellectual property. Furthermore, we may need to go to court or other tribunals in order to enforce our rights or the proprietary rights
that we have lawfully obtained from others. These proceedings might result in substantial costs and diversion of resources and management attention, and
we cannot accurately predict the likelihood of success in such proceedings. Our failure to protect our intellectual property in an effective manner could have
a material adverse effect on our business.
We currently license some of the intellectual property displayed on our platform from third parties. As we continue to introduce new services that
incorporate new intellectual property, we may be required or elect to license additional intellectual property. We cannot be sure that such licenses will be
available on commercially reasonable terms, if at all.
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From time to time, in the ordinary course of our business, we have been subject to, and are currently subject to, legal proceedings and claims relating
to third-party intellectual property rights, often related to user-generated content, and we expect that third parties will continue to assert intellectual property
claims against us, particularly as we expand the complexity and scope of our platform and services. Successful intellectual property claims against us could
result in significant monetary liability or prevent us from operating our business, or portions of our business, or require us to change business practices or
develop non-infringing intellectual property, which could require significant effort and expense. In addition, resolution of claims may require us to obtain
releases or licenses to use intellectual property assets belonging to third-parties, which may be expensive to procure, or possibly to cease using those assets
altogether. Any of these events could have a material adverse effect on our business, results of operations and financial condition.
Greenhouse gas emissions are driving global climate change that is expected to have various impacts on travel, including the world’s
transportation infrastructure and tourist destinations, and such impact could have a negative impact on our operations. The long-term effects of climate
change on the global economy and the industry in which we operate and our business, in particular, are unclear; however, we recognize that there are
inherent climate-related risks wherever business is conducted. For example, as climate change continues to warm the planet and make weather more
extreme, much of the world’s transportation infrastructure will become less safe and reliable. Some of today’s popular tourist destinations may become
intolerable as heat waves make some places unbearable and increase the chance of forest fires. Some may disappear altogether as rising seas flood low-
lying islands and coastal areas. Venice, a UNESCO World Heritage site, has always been vulnerable to flooding, but in the last 20 years, there have been
almost as many “high water” floods as during the previous 100 years. In other major cities, such as Amsterdam, Tokyo, Cape Town, Rio de Janeiro and
New York, extreme flooding could also become a regular occurrence.
Cruise ship tourism has a larger carbon footprint than any other kind of travel and extreme weather such as intense hurricanes and storms is making
cruising more dangerous. Rising sea levels can make it difficult for cruise ships to dock at coastal ports because they are vulnerable to changing sea levels,
as well as extreme weather. Rising seas also degrade beaches and pose significant risks to the very viability of some low-lying cruise destinations, such as
Key West, Fla., Fiji, Palau, Seychelles, and the Maldives. Coastal tourism, the largest component of the tourism industry, is threatened also by the
acidification of oceans. Half of the world’s coral reefs, which contribute billions annually to global tourism income each year, have already been lost or
seriously damaged. Australia’s Great Barrier Reef, which has sustained serious damage from ocean acidification caused by the ocean’s uptake of CO2,
coral bleaching, pollution, overfishing—and too much tourism—has lost more than half of its corals since 1995.
Shifts in consumer preferences and governmental policy developments have the potential individually or collectively to significantly disrupt travel
and impact our business as well as negatively affect our suppliers, business partners and members. Experiencing or addressing the various physical,
regulatory and adaptation/transition risks from climate change may impact our revenues and profitability.
Increased focus on our environmental, social, and governance ("ESG") responsibilities have and will likely continue to result in additional costs
and risks, and may adversely impact our reputation, employee retention, and willingness of customers and partners to do business with us. Institutional,
individual, and other investors, proxy advisory services, regulatory authorities, consumers and other stakeholders are increasingly focused on ESG practices
of companies. Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to
invest in us if they believe our policies and actions relating to ESG are inadequate. Our disclosures on these matters, or a failure to meet evolving
stakeholder expectations for ESG practices and reporting, may potentially harm our reputation and customer relationships.
As ESG best practices and reporting standards continue to develop, we may incur increasing costs relating to ESG monitoring and reporting and
complying with ESG initiatives. The standards for tracking and reporting on ESG matters and disclosure frameworks are relatively new, have not been
harmonized, and continue to evolve. Ensuring there are systems and processes in place to comply with the various ESG tracking and reporting obligations
may require management time and expense. As we look to respond to evolving standards for identifying, measuring, and reporting ESG metrics, our efforts
may result in a significant increase in costs and may nonetheless not meet investor or other stakeholder expectations and evolving standards or regulatory
requirements, which may negatively impact our financial results, our reputation, our ability to attract or retain employees, our attractiveness as a service
provider, investment, or business partner, or expose us to government enforcement actions, private litigation, and
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actions by stockholders or stakeholders. In addition, if our competitors’ ESG performance is perceived to be better than ours, potential or current investors
may elect to invest with our competitors.
Risks Related to Information Security, Cybersecurity and Data Privacy
Our processing, storage and use of personal information and other data subjects us to risks and laws and regulations and could give rise to
cyberattacks and other risks, including damage to our reputation and value of our brands. Information and data security is essential to maintaining
consumer and service provider confidence in our services and brands. We are subject to a variety of laws in the U.S. and abroad regarding privacy and the
storing, sharing, use, processing, disclosure and protection of personal information, the scope of which are changing, subject to differing interpretations,
and may be inconsistent between countries or conflict with other existing laws. In addition, practices regarding the collection, use, storage, transmission
and security of personal information by companies operating over the internet have recently come under increased public scrutiny.
Implementing and complying with these laws and regulations may be more costly or take longer than we anticipate, or could otherwise affect our
operations. Any failure or perceived failure by us to comply with our privacy and information security policies, privacy-related obligations to consumers or
other third parties, or privacy-related legal obligations, may result in fines, litigation or governmental enforcement actions that could harm our reputation
and cause our consumers and partners to lose trust in us, any of which could have an adverse effect on our business, brands, market share and financial
results.
System security issues, data protection breaches, cyberattacks and system outage issues could disrupt our operations or services provided to our
consumers, and any such disruption could damage our reputation and adversely affect our business, financial results and share price. Our reputation
and ability to attract, retain and service our consumers and partners is dependent upon the reliable performance and security of our computer systems and
those of third parties we utilize in our operations. Significant security issues, data breaches, cyberattacks and outages, interruptions or delays, in our
systems or third-party systems upon which we rely, could impair our ability to display content or process transactions and significantly harm our business.
Breaches of our security measures and those of our partners or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary
information or sensitive or confidential data about us, our consumers or our partners, could expose us, our consumers and partners to a risk of loss or
misuse of this information, damage our brand and reputation or otherwise harm our business and financial performance and could result in government
enforcement actions and litigation and potential liability for us. The costs of enhancing infrastructure to attain improved stability and redundancy may be
time consuming and expensive and may require resources and expertise that are difficult to obtain. In addition, to the extent that we do experience a data
breach, remediation may be costly and we may not have adequate insurance to cover such costs.
We and our third party partners and vendors are at constant risk of cyber-attacks or cyber intrusions via viruses, worms, break-ins, malware,
ransomware, phishing attacks, hacking, denial-of-service attacks or other attacks and similar disruptions from the unauthorized use of or access to computer
systems (including from internal and external sources) that attack our products or otherwise exploit any vulnerabilities in our systems or those of our third
party partners and vendors, or attempt to fraudulently induce our employees, consumers, third party partners and vendors or others to disclose passwords or
other sensitive information or unwittingly provide access to our systems or data. These types of incidents continue to be prevalent and pervasive across
industries, including in our industry, and such attacks on our systems have occurred in the past and are expected to occur in the future. In addition, we
expect the amount and sophistication of the perpetrators of these attacks to continue to expand, which could include nation-state actors. Any such incident
could lead to interruptions, delays or website outages, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other
confidential information. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties
may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. We
have in the past and may in the future need to expend significant resources to protect against security breaches or to investigate and address problems
caused by cyber or other security problems. There are no assurances that our programs and actions taken to protect against security breaches or to
investigate and address problems related to cyber or other security problems will be sufficient to prevent or limit the impact of any cyber intrusion or
related attack. Failure to adequately protect against attacks or intrusions, whether for our own systems or systems of vendors, could expose us to security
breaches that could have an adverse impact on our financial performance.
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Much of our business is conducted with third-party partners and vendors. A security breach at such third-party could be perceived by consumers as a
security breach of our systems and could result in negative publicity or reputational damage, expose us to risk of loss or litigation and subject us to
regulatory penalties and sanctions. In addition, such incidents may also result in a decline in our user base and client base or engagement levels.
Media coverage of data breaches and public exposure of consumer data rights has increased, in part because of the rise of enforcement actions,
investigations and lawsuits. Similarly, the increase in privacy activist groups is likely to give rise to further scrutiny, investigative actions and publicity.
Security breaches or the perceived threat of a breach or perceived breach could result in interruptions in service, negative publicity, damage to reputation,
cause our users, suppliers and/or partners to cease doing business with us or do business with us less frequently, exposure to risk of loss and possible
liability due to lawsuits, enforcement actions, investigations, regulatory penalties and sanctions. As this focus and attention on privacy and data protection
increases, we also risk exposure to potential liabilities and costs resulting from the compliance with, or any failure to comply with, applicable legal
requirements, conflicts among these legal requirements or differences in approaches to privacy and security. Security breaches could also cause travelers
and consumers to lose confidence in our data security, which would have a negative effect on the value of our brand.
Evolving regulations, guidance and practices on the use of "cookies" and similar tracking technologies could negatively impact the way we do
business. Cookies and similar technologies are common tools used by websites and apps, including ours, to store or gather information, improve site
security, improve and personalize the customer experience, market to consumers and increase conversion. Companies such as Apple and Google have
introduced new policies governing developers’ use of cookies and similar tracking technologies, including enhanced disclosure and opt in requirements.
Similarly, many states and countries have adopted data protection laws and regulations governing the use of cookies and other similar tracking technologies
by websites and app developers. Such regulations could limit our ability to serve certain customers in the manner we currently do, including with respect to
retargeting or personalized advertising, impair our ability to improve and optimize performance on our platform, negatively affect a consumer's experience
using our platform, which, in turn, could negatively impact our business.
Equally, privacy has been the impetus behind a move towards a cookie-less online ecosystem which poses a potential risk to our online behavioral
advertising strategy.
We are subject to risks associated with processing payment transactions and failure to manage those risks may subject us to fines, penalties
and/or additional costs and could have a negative impact on our business. We accept payments from consumers and our business partners using a variety
of methods, including credit, debit and invoicing. As we offer new payments options to customers, we may be subject to additional regulations, compliance
requirements and fraud. We rely on third parties to provide certain payment methods and payment processing services and our business could be disrupted
if these companies become unwilling or unable to provide these services to us. We are subject to laws, regulations and compliance requirements relating to
payments, international money transfers, privacy and information security and money laundering, including obligations to implement enhanced
authentication processes. We are also subject to payment card association operating rules, including data security rules, certification requirements, and rules
governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. These laws, regulations
and/or requirements result in significant costs. If we fail to comply or if our data security systems are breached or compromised, we may be liable for card
issuing banks’ costs, subject to fines, penalties and higher transaction fees, and/or lose our ability to accept credit and debit card payments, process
electronic funds transfers, or facilitate other types of online payments. In addition, for certain payment methods, including credit and debit cards, we pay
interchange and other fees and we are subject to receivable holdbacks, which may increase over time and raise our operating costs and lower profitability.
Additionally, our marketplace activities in the U.K. and Europe require us to obtain or operate under a payment institution license under the Payment
Services Directive Two (“PSD2”). PSD2 requires a license to perform certain defined “payment services” in a European Economic Area (“EEA”) member
state. Conditions for obtaining and complying with the license include minimum capital requirements, establishment of procedures for safeguarding funds,
and certain governance and reporting requirements. Certain obligations relating to internal controls and the conduct of business, in particular, consumer
disclosure requirements and certain rules regarding the timing and settlement of payments, must be met. We have obtained a payment institution license in
the U.K. As a result of Brexit, we are no longer able to passport our U.K. license to the EEA. Although our EU application has
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been submitted during 2023 and currently under consideration by the EU, we may not receive the EU license on a timely basis if at all.
It is possible that we could become subject to regulatory enforcement or other proceedings in those states or other jurisdictions with money
transmission, or other similar statutes or regulatory requirements, including an EEA member state, related to the handling or moving of money, which could
in turn have a significant impact on our business, even if we were to ultimately prevail in such proceedings. If we are ultimately deemed to be in violation
of one or more money transmitter or other similar statutes or regulatory requirements related to the handling or moving of money in the U.S., the EEA or
other jurisdictions, we may be subject to the imposition of fines or restrictions on our business, our ability to offer some or all of our services in the relevant
jurisdiction may be suspended, and we may be subject to civil or criminal liability and our business, results of operations and financial position could be
materially adversely affected.
Risks Related to Financial Matters
We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which could cause
our stock price to decline. From time to time, we release earnings guidance in our quarterly and annual earnings conference calls, quarterly and annual
earnings releases, or otherwise, regarding our future performance that represents our management’s estimates as of the date of release. This guidance
includes forward-looking statements based on projections prepared by our management. Projections are based upon a number of assumptions and estimates
that are based on information known when they are issued, and, while presented with numerical specificity, are inherently subject to significant business,
economic and competitive uncertainties and contingencies relating to our business, many of which are beyond our control and are based upon specific
assumptions with respect to future business decisions, some of which will change. Guidance is necessarily speculative in nature, and some or all of the
assumptions underlying the guidance furnished by us may not materialize or may vary significantly from actual outcomes. Accordingly, our guidance is
only an estimate of what management believes is realizable as of the date of release. Actual results may vary from our guidance and the variations may be
material. In light of the foregoing, investors are urged not to rely upon our guidance in making an investment decision regarding our common stock.
Our financial results are difficult to forecast; they have fluctuated in the past and will likely fluctuate in the future. Our financial results in any
given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:
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Our ability to maintain and grow our consumer base and to increase user engagement;
Increases in marketing, sales and other expenses that we will incur to grow and expand our operations and to remain competitive;
Fluctuations in the marketing spend of our travel partners due to seasonality, global or regional events or other factors;
User behavior or product changes that may reduce traffic to features or products that we successfully monetize;
System failure or outages, which would prevent us from serving ads for any period of time;
Breaches of security or privacy and the costs associated with any such breaches and remediation;
Fees paid to third parties for content or promotion of our products and services;
Adverse litigation judgments, settlement or other litigation related costs;
Changes in the legislative or regulatory environment or engagement by regulators;
Changes in tax laws, which may significantly affect our tax rates and taxes due;
Tax obligations that may arise from resolutions of tax examinations that may materially differ from the amounts we have anticipated;
Fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;
Changes in GAAP; and
Changes in global business and macroeconomic conditions.
As a result, you should not rely upon our quarterly financial results as indicators of future performance.
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If we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in our reported
financial information and our business and our share price may be adversely impacted. As a public company, we are required to maintain internal
control over financial reporting and our management is required to evaluate the effectiveness of our internal control over financial reporting as of the end of
each fiscal year. If we are not successful in maintaining effective internal control over financial reporting, there could be inaccuracies or omissions in the
financial information we file with the SEC. Additionally, even if there are no inaccuracies or omissions, we could be required to publicly disclose our
management’s conclusion that our internal control over financial reporting or disclosure controls and procedures are not effective. These events could cause
investors to lose confidence in our reported financial information, result in increased costs to remediate any deficiencies, attract regulatory scrutiny or
lawsuits that could be costly to resolve and distract management’s attention, limit our ability to access the capital markets, adversely impact our stock price,
or cause our stock to be delisted from The Nasdaq or any other securities exchange on which we are then listed.
We have indebtedness which could adversely affect our business and financial condition. With respect to the 2025 Senior Notes and 2026 Senior
Notes, we are subject to risks relating to our existing or potential indebtedness that include:
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Requirement to dedicate a portion of our cash flow to principal and interest payments, thereby reducing the availability of cash to fund
working capital, capital expenditures, acquisitions and investments and other general corporate purposes;
Difficulties to optimally capitalize and manage the cash flow for our businesses;
Possible competitive disadvantage compared to our competitors that have less debt;
Limitations on our ability to borrow additional funds on acceptable terms or at all; and
Exposure to increased interest rates to the extent our outstanding debt is subject to variable rates of interest.
Failure to comply with the various covenants contained in our Credit Agreement and the 2025 Indenture could have a material adverse effect on
our business. The various covenants contained in the Credit Agreement and 2025 Indenture include those that limit our ability to, among other things:
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Incur indebtedness;
Pay dividends on, redeem or repurchase our capital stock;
Effect share repurchases;
Effect investments;
Enter into secured financing arrangements;
Enter into sale and leaseback transactions; and
Enter into unrelated businesses.
These covenants may limit our ability to optimally operate our business. Any failure to comply with the restrictions of our Credit Facility or our
2025 Senior Notes and 2026 Senior Notes may result in an event of default under the agreements governing such debt instruments and such default may
allow the creditors to accelerate the debt incurred thereunder. In addition, lenders under the Credit Facility may be able to terminate any commitments they
had made to supply us with further funds.
We are subject to risks relating to our 2026 Senior Notes. If any of the conditions to the conversion of the 2026 Senior Notes is satisfied, then we
may be required under applicable accounting standards to reclassify the liability carrying value of the 2026 Senior Notes as a current, rather than a long-
term, liability, thereby materially reducing our reported working capital. This reclassification could be required even if no noteholders exchange their 2026
Senior Notes. Holders of our 2026 Senior Notes may convert the 2026 Senior Notes after the occurrence of certain dates or events. Settlement of the 2026
Senior Notes could adversely affect our liquidity.
We are subject to risks relating to the Capped Calls. In connection with the issuance of the 2026 Senior Notes, we entered into privately negotiated
capped call transactions (the “Capped Calls”) to reduce potential dilution to our common stock and/or offset cash payments we must make in excess of the
principal amount, in each case, upon any conversion of the 2026 Senior Notes, with such offset subject to a cap. We are subject to the risk that one or more
of the hedge counterparties may default under the Capped Calls. If any of the hedge counterparties become subject to insolvency proceedings, we will
become an unsecured creditor with a claim equal to our exposure at that time under our transactions with such counterparties. Our exposure will depend on
many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common
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stock. In addition, upon a default by a hedge counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with
respect to our common stock.
We may have future capital needs and may not be able to obtain additional financing on acceptable terms. Pursuant to the Credit Facility, we
agreed to pledge substantially all of our assets, including the equity interests of our subsidiaries. This agreement also includes restrictive covenants that may
limit our ability to secure additional financing in the future on favorable terms, if at all. Our ability to secure additional financing will also depend upon our
future operating performance, which is subject to then prevailing general economic and credit market conditions, and financial, business and other factors,
many of which are beyond our control.
Risks Related to Tax Matters
Our effective income tax rate is impacted by a number of factors that could have a material impact on our financial results and could increase
the volatility of those results. Due to the global nature of our business, we are subject to income taxes in the U.S. and other foreign jurisdictions. In the
event we incur taxable income in certain jurisdictions but incur losses in other jurisdictions, we generally cannot offset the income from one jurisdiction
with the loss from another. This lack of flexibility could affect our effective income tax rate. Furthermore, significant judgment is required to calculate our
worldwide provision for income taxes and depends on our ability to operate our business in a manner consistent with our corporate structure and
intercompany arrangements. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is
uncertain. Our future income tax rates could be affected by a number of matters outside of our control, including but not limited to changes in the mix of
earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or accounting for share-based compensation. If our
effective income tax rates were to increase, our financial results and cash flows would be adversely affected.
Application of U.S. state and local or international tax laws, changes in tax laws or tax rulings, or the examination of our tax positions, could
materially affect our financial position and results of operations. As an international business, we are subject to income taxes and non-income-based taxes
in the U.S. and various other international jurisdictions. Tax laws are subject to change as new laws are passed and new interpretations of the laws are
issued or applied. Due to economic and political conditions, tax rates and tax regimes may be subject to significant change and the tax benefits that we
intend to eventually derive could be undermined due to changing tax laws. Governments are increasingly focused on ways to increase tax revenues, which
has contributed to more aggressive positions taken by tax authorities and an increase in tax legislation. Any such additional taxes or other assessments may
be in excess of our current tax provisions or may require us to modify our business practices in order to reduce our exposure to additional taxes going
forward, any of which could have a material adverse effect on our business, results of operations and financial condition. Any changes to international tax
laws or any additional reporting requirements may increase the complexity and costs associated with tax compliance and adversely affect our cash flows
and results of operations.
For example, changes in the tax laws of foreign jurisdictions could arise as a result of the Organization for Economic Cooperation and Development
(“OECD”)’s Base Erosion and Profit Shifting Project to address the tax challenges arising from digitalization. Over the last several years, the OECD has
been developing its “two pillar” project to address the tax challenges arising from digitalization. The OECD project, if broadly implemented by
participating countries, will result in significant changes to the international taxation system under which our current tax obligations are determined. Pillar
Two of the project calls for a minimum tax rate on corporations of 15% and has begun to be implemented by a significant number of countries starting in
2024. The OECD and implementing countries are expected to continue to offer further guidance to the rules, however, the impact of Pillar Two is not
expected to be material at this time. The Company will continue to monitor developments to determine any potential impact of Pillar Two in the countries
in which we operate. Pillar One, which would reallocate profits from the largest and most profitable businesses to countries where the customers of those
businesses are located, remains under discussion at the OECD, and its implementation remains uncertain. If implemented, Pillar One would potentially
result in the removal of unilateral digital services tax initiatives, such as those enacted in France, Italy, Spain, and the U.K. In July 2023, more than 138
countries and jurisdictions agreed to refrain from imposing newly enacted digital service tax initiatives or similar measures before December 31, 2024,
provided the Pillar One negotiations have made sufficient progress by the end of 2023. In December 2023, the OECD Inclusive Framework reaffirmed their
commitment to achieve a consensus-based solution and to complete the multilateral agreement by June 2024, thereby extending the standstill on new digital
service tax initiatives. Furthermore, certain U.S. states, such as Maryland, have deployed comparable digital services tax initiatives. We will continue to
monitor these
24
developments to determine the financial impact to the Company. During the years ended December 31, 2023, 2022 and 2021, we recorded $18 million, $9
million and $1 million, respectively, of digital service tax to general and administrative expense on our consolidated statements of operations.
We are routinely under audit by federal, state and foreign taxing authorities. The ultimate outcome of these examinations (including the Internal
Revenue Service (“IRS") audit described below) cannot be predicted with certainty but could be materially different from our income tax provisions and
accruals and could have a material effect on our results of operations or cash flows in the period or periods for which that determination is made. Should the
IRS or other taxing authorities assess additional taxes as a result of examinations, we may be required to record charges to our results of operations, which
could harm our operating results and financial condition.
Changes in the tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our platform and our financial
results. Tax authorities at the international, federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in e-
commerce and it is possible that various jurisdictions may attempt to levy additional or new sales, income or other taxes relating to our activities. For
example, Congress is considering various approaches to legislation that would require companies engaged in e-commerce to collect sales tax on internet
revenue and a growing number of U.S. states and certain foreign jurisdictions have adopted or are considering proposals to impose obligations on remote
sellers and online marketplaces to collect taxes on their behalf. An increasing number of states have considered or adopted laws that attempt to impose tax
collection obligations on out-of-state companies. Additionally, the U.S. Supreme Court ruled in South Dakota v. Wayfair Inc. that remote sellers are not
required to collect state and local sales taxes. In response to Wayfair or otherwise, state or local governments have adopted and may continue to adopt, or
begin to enforce, laws requiring us to calculate, collect and remit taxes on sales in their jurisdictions. Also, as described in more detail above, certain U.S.
states and countries in which we do business have enacted or proposed digital services tax initiatives. In addition, we are subject to taxes in foreign
jurisdictions, such as value-added tax and goods and services tax, in connection with certain foreign sales transactions. New or revised international,
federal, state or local tax regulations or court decisions may subject us or our customers to additional sales, occupancy, income and other taxes. We cannot
predict the effect of these and other attempts to impose sales, income or other taxes on e-commerce; however, new or revised taxes and, in particular, sales
taxes, occupancy taxes, value added taxes (“VAT”), and similar taxes would likely increase the cost of doing business online and decrease the attractiveness
of selling products and services over the internet. New taxes could also create significant increases in internal costs necessary to capture data and collect
and remit taxes. A successful assertion by one or more tax authorities requiring us to collect taxes where we presently do not do so, or to collect more taxes
in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and
interest that we otherwise would have not accounted for in our financial statements. Any of these events could have a material adverse effect on our
business, financial results and financial condition.
Taxing authorities have in the past and may successfully in the future assert that we should have collected or in the future should collect sales
and use, occupancy, VAT or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our
operating results. We do not collect and remit sales and use, occupancy, VAT or similar taxes in all jurisdictions in which we have sales, based on our belief
that such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened us with assessments, alleging
that we are required to collect and remit certain taxes there. While we do not believe that we are subject to such taxes and intend to vigorously defend our
position in these cases, we cannot be sure of the outcome of our discussions and/or appeals with these states. In the event of an adverse outcome, we could
face assessments, plus any additional interest and penalties. We also expect additional jurisdictions may make similar assessments or pass similar new laws
in the future, and any of the jurisdictions where we have sales may apply more rigorous enforcement efforts or take more aggressive positions in the future
that could result in greater tax liability allegations. Such tax assessments, penalties and interest or future requirements may materially adversely affect our
business, financial condition and operating results.
We face risks associated with fluctuations in foreign currency exchange rates. As a result, we face exposure to movements in foreign currency
exchange rates including, but not limited to, re-measurement of gains and losses from changes in the value of foreign denominated assets and liabilities;
translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars upon consolidation; and planning risk related to
changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur. For example, in the event that one
or more European countries were to replace the Euro with another currency, our sales into such countries, or into Europe generally, would likely be
adversely affected until stable
25
exchange rates are established. Accordingly, fluctuations in foreign currency exchange rates, such as the strengthening of the U.S. dollar against the Euro or
the British pound, have in the past and could in the future adversely affect our revenue growth in future periods.
In the event of severe volatility in exchange rates, the impact of these exposures can increase and the impact on results of operations can be more
pronounced. In addition, the current environment and the increasingly global nature of our business have made hedging these exposures more complex. We
hedge certain short-term foreign currency exposures with the purchase of forward exchange contracts. These forward exchange contracts only help mitigate
the impact of changes in foreign currency rates that occur during the term of the related contract period and carry risks of counter-party failure. There can
be no assurance that our forward exchange contracts will have their intended effects.
Risks Related to Ownership of our Common Stock
Liberty TripAdvisor Holdings, Inc. currently is a controlling stockholder. Liberty TripAdvisor Holdings, Inc., or LTRIP, effectively controls the
outcome of all matters submitted to a vote or for the consent of our stockholders (other than with respect to the election by the holders of our common stock
of 25% of the members of our Board of Directors and matters as to which Delaware law requires separate class votes). Our Chairman, Gregory Maffei, and
Director Albert Rosenthaler, also serve as officers and directors of LTRIP. LTRIP may have interests that differ from those of our other stockholders and
may vote in a way with which our other stockholders may not agree or that may be adverse to other stockholders’ interests. LTRIP is not restricted from
investing in other businesses related to our business. LTRIP’s control of us, as well as the provisions of our organizational documents and Delaware law,
may discourage or prevent a change of control that might otherwise be beneficial, which may reduce the market price of our common stock.
The market price and trading volume of our common stock has experienced, and could continue to experience in the future, substantial
volatility. The market price of our common stock is affected by a number of factors, including:
•
•
•
•
•
•
•
Quarterly variations in our or our competitors’ results of operations;
Changes in earnings estimates or recommendations by securities analysts;
Failure to meet market expectations;
The announcement of new products or product enhancements by us or our competitors;
Repurchases of our common stock;
Developments in our industry, including changes in governmental regulations; and
General market conditions and other factors, such as macroeconomic conditions and geopolitical events.
In the past, the stock market has experienced price and volume fluctuations that have affected and continue to affect the market prices of equity
securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These
broad market and industry fluctuations and general economic, political and market conditions, such as recessions, interest rate changes or foreign currency
exchange fluctuations, may negatively impact the market price of our common stock regardless of our actual operating performance.
We are currently relying on the “controlled company” exemption under Nasdaq Stock Market Listing Rules, pursuant to which “controlled
companies” are exempt from certain corporate governance requirements otherwise applicable under Nasdaq listing rules. The Nasdaq Stock Market
Listing Rules exempt “controlled companies,” or companies of which more than 50% of the voting power is held by an individual, a group or another
company, from certain corporate governance requirements. We currently rely on the controlled company exemption for certain of the above requirements,
including the requirement that director nominees be selected or recommended to the Board of Directors by a majority of its independent directors or by a
nominating committee that is composed entirely of independent directors. Accordingly, our stockholders will not be afforded the same protections generally
as stockholders of other Nasdaq-listed companies with respect to corporate governance for so long as we rely on these exemptions from the corporate
governance requirements.
We do not pay regular quarterly or annual cash dividends on our stock. Any determination to pay dividends is at the discretion of our Board of
Directors and will depend on our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions and
other factors deemed relevant by our
26
Board of Directors. Therefore, investors should not rely on regular quarterly or annual dividend income from shares of our common stock and investors
should not rely on special dividends with any regularity or at all.
Future sales of shares of our common stock in the public market, or the perception that such sales may occur, may depress our stock price. Sales
of substantial amounts of our common stock in the public market, particularly sales by our directors, officers, employees and significant stockholders, or
the perception that these sales might occur, could depress the market price of our common stock and could impact our ability to raise capital through the
sale of additional securities. In addition, certain stockholders have rights, subject to some conditions, to require us to file registration statements covering
their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. A decline in the price of shares of our
common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.
Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an
acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or
remove our current management.
These provisions include:
•
•
•
•
Authorization and issuance of Class B common stock that entitles holders to ten votes per share;
Authorization of the issuance of preferred stock which can be created and issued by the Board of Directors without prior stockholder
approval, with rights senior to those of our common stock;
Prohibition of our stockholders to fill board vacancies or call special stockholder meetings; and
Limitations on who may call special meetings of stockholders.
These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential
acquirers to obtain control of our Board of Directors or initiate actions that are opposed by our then-current Board of Directors, including a merger, tender
offer or proxy contest involving our company. Any delay or prevention of a change of control transaction or changes in our Board of Directors could cause
the market price of our common stock to decline.
We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase programs or that our share repurchase
programs will enhance long-term stockholder value. On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of
our common stock under a new share repurchase program. The share repurchase program has a term of two years and does not obligate the Company to
acquire any particular number of shares and may be modified, suspended or discontinued at any time. The Executive Committee of our Board of Directors
will determine the price, timing, amount and method of such repurchases based on its evaluation of market conditions and other factors, and at prices
determined to be attractive and in the best interests of both the Company and its stockholders.
Although our Board of Directors has authorized the share repurchase programs, the share repurchase programs do not obligate the Company to
repurchase any specific dollar amount or to acquire any specific number of shares. The timing and amount of repurchases, if any, will depend upon several
factors, including market and business conditions, the trading price of the Company’s common stock and the nature of other investment opportunities. In
August 2022, Congress passed the Inflation Reduction Act, which imposes a one percent tax on stock repurchases, subject to certain adjustments, after
December 31, 2022 by publicly traded U.S. companies, including us, which may also impact our decision to engage in share repurchases. The repurchase
programs may be limited, suspended or discontinued at any time without prior notice. In addition, repurchases of our common stock pursuant to our share
repurchase programs could affect our stock price and increase its volatility. The existence of a share repurchase program could cause our stock price to be
higher than it would be in the absence of such a program. Additionally, our share repurchase programs could diminish our cash reserves, which may impact
our ability to finance future growth, and to pursue possible future strategic opportunities and acquisitions. There can be no assurance that any share
repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of
stock. Although our share repurchase programs are intended to enhance long-term stockholder value, there is no assurance that they will do so and short-
term stock price fluctuations could reduce the program’s effectiveness.
Item 1B. Unresolved Staff Comments
None.
27
Item 1C. Cybersecurity
In an era marked by rapid technological evolution, the business landscape is increasingly data-driven. Companies, including ours, collect, store, and
leverage data to glean valuable insights about our members and travel trends; deliver relevant content to our members, suppliers, and business partners and
enhance operational efficiency. This collection and leverage of data exposes us to potential cybersecurity threats. As a result, we have implemented a
cybersecurity risk management framework that is designed to identify, assess, and mitigate risks from cybersecurity threats related to this data and systems
and our business operations.
Risk Management Oversight and Governance
The Board of Directors is responsible for overseeing risks related to cybersecurity and has delegated to the Audit Committee oversight over
cybersecurity risks. The Audit Committee is responsible for reviewing and discussing with management the processes to identify, assess and manage
cybersecurity threats, as well as to identify, assess and, to the extent required, disclose material cybersecurity threats.
Management is responsible for the day-to-day risk management process, including the identification of risks and implementation of policies and
procedures designed to manage, mitigate or monitor cyber risks. In support of these responsibilities, management has designated a Chief Compliance
Officer and formed a Compliance Committee to implement, manage and oversee a corporate compliance program.
The Compliance Committee is responsible for understanding the global risk landscape of the company and for working to ensure that we have a
compliance program in place designed to mitigate, manage and/or monitor risks. The Compliance Committee consists of, among others, our Chief Financial
Officer (“CFO”), Chief Legal Officer (“CLO”) and Chief Compliance Officer (“CCO”). The CCO has established an Information Governance and Privacy
Committee responsible for oversight of privacy and cybersecurity risks. The Information Governance and Privacy Committee consists of our Chief
Information Security Officer (“CISO”) and CCO, as well as representatives from engineering, product development and data privacy. The Information
Governance and Privacy Committee meets regularly to discuss and monitor information uses and governance and risks associated with our information
assets, including prevention, detection, mitigation and remediation of risks from cybersecurity threats.
Our CISO reports to our CCO. The CCO reports to the Compliance Committee and the CLO. The CFO and CLO report directly to the company’s
Chief Executive Officer. Each of the CFO, CLO, CCO and CISO report regularly to our Board of Directors on, among other matters, our global risk
landscape and risk management efforts, including those related to cybersecurity risks.
Our CISO has primary responsibility for managing our cybersecurity threat management program. The CISO is a Certified Information Security
Systems Professional (CISSP), with more than 15 years of experience in building and leading information security teams and has worked at a variety of
companies to implement and manage cybersecurity programs. Those entities have included large, publicly-traded companies. His experience includes
developing and maintaining tools and processes to protect internal networks, customer payment systems and telecommunications networks used by
customers to transmit data.
Our CISO leads an Information Security team that meets regularly. The CISO updates the executive management team on cybersecurity
developments.
Our CISO meets at least annually with each of the Compliance Committee and the Audit Committee to discuss cybersecurity threats and the risk
management programs. The CISO provides information, as appropriate, about the sources and nature of risks the Company faces and how management
assesses such risks. Our CISO also provides a quarterly report to the Audit Committee on trends and observations concerning cyber threats and actions
being taken to mitigate those risks. The Chair of the Audit Committee reports quarterly to the full Board of Directors and that report includes a summary of
the CISO’s report.
28
Processes for the Identification of Risks from Cybersecurity Threats
The Compliance Committee, working with the CISO and the Information Security team, has developed a cybersecurity risk management program
that aims to address the following key areas:
•
•
•
•
•
Identification of assets at risk from cybersecurity threats;
Identification of potential sources of cybersecurity threats;
Assessment of the status of protections in place to prevent or mitigate cybersecurity threats;
Approaches to mitigating and managing the material cybersecurity risks; and
A process for regular reporting to the Compliance Committee and Board of Directors (directly and through the Audit Committee).
The Company’s risk assessment and mitigation program is centered on the following components:
•
•
•
•
Identification of material risks (primarily through enterprise risk assessments);
An evaluation of the likelihood of such risk occurring, the potential impact and the control strength, consideration for
compensating controls to mitigate the risk;
Prioritization of different material risk items based on, among other things, the results of our evaluation; and
Establishment of a process for addressing those risks.
Our Internal Audit team reviews, monitors and audits various aspects of the Company’s enterprise risk management program to evaluate whether
risks, including cybersecurity risks, are appropriately identified and managed. Internal Audit periodically reports to the Audit Committee on the Company’s
cybersecurity risk mitigation efforts. The Audit Committee Chair, in turn, reports to the full Board of Directors.
We have several employee training and development programs that are designed to, among others, raise awareness of cybersecurity risks impacting
the business to encourage consideration and facilitate managing those risks. To assess the effectiveness of our program, we periodically conduct
penetration testing and other vulnerability analyses. As part of the assessment of the protections we have in place to mitigate risks, we engage third parties
to conduct risk assessments on our systems.
Before purchasing third-party technology or other solutions and partnerships that involve exposure to the Company’s assets and electronic
information, our Information Security and Privacy team undertake due diligence to assess any key data privacy or information security risks.
For additional information about the cybersecurity risks, see “Risk Factors” under the section entitled "Risks Related to Information Security,
Cybersecurity and Data Privacy" in Part I, Item 1A of this Annual Report on Form 10-K.
Item 2. Properties
As of December 31, 2023, we do not own any real estate. We lease approximately 280,000 square feet of office space for our corporate headquarters
in Needham, Massachusetts, which has an expiration date of December 2030 and an option to extend the lease term for two consecutive terms of five years
each. We also lease an aggregate of approximately 340,000 square feet of office space at nearly 30 locations across North America, Europe and Asia
Pacific, in cities such as New York, London, Sydney, Barcelona and Paris, primarily used as sales offices, subsidiary headquarters, and for international
operations, pursuant to leases with various expiration dates. We believe that our current facilities are adequate for our current operations and that additional
leased space can be obtained on reasonable terms if needed.
Item 3. Legal Proceedings
Refer to “Note 11: Commitments and Contingencies” in the notes to the consolidated financial statements in Part II, Item 8 of this Annual Report on
Form 10-K, for further information regarding any legal proceedings. For an additional discussion of certain risks associated with legal proceedings, see
“Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
29
Item 4. Mine Safety Disclosures
Not applicable.
30
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is quoted on The Nasdaq Global Select Market under the ticker symbol “TRIP.” Our Class B common stock is not listed and
there is no established public trading market for that security. As of February 9, 2024, all of our Class B common stock was held by LTRIP.
Performance Comparison Graph
The following graph provides a comparison of the total stockholder return from December 31, 2018 to December 31, 2023, of an investment of $100
in cash on December 31, 2018 for Tripadvisor, Inc. common stock and an investment of $100 in cash on December 31, 2018 for (i) the Standard and Poor’s
500 Index (the “S&P 500 Index”), (ii) The Nasdaq Composite Index; and (iii) the Research Data Group (“RDG”) Internet Composite Index. The RDG
Internet Composite Index is an index of stocks representing the internet industry, including internet software and service companies, and e-commerce
companies. The stock price performance shown on the graph below is not necessarily indicative of future price performance. Data for the S&P 500 Index,
The Nasdaq Composite Index, and the RDG Internet Composite Index assume reinvestment of dividends.
31
This performance comparison graph is not “soliciting material,” is not deemed filed with the SEC and is not deemed to be incorporated by
reference into any filing of Tripadvisor, Inc. under the Securities Act or any filing under the Exchange Act.
Holders of Record
As of February 9, 2024, there were 125,099,694 outstanding shares of our common stock held by 1,732 stockholders of record, and 12,799,999
outstanding shares of our Class B common stock held by one stockholder of record: LTRIP.
Dividends
We did not declare or pay any dividends during the years ended December 31, 2023, 2022, or 2021. Any determination to pay dividends in the future
will be at the discretion of our Board of Directors and will depend on our results of operations, earnings, capital requirements, financial condition, future
prospects, contractual restrictions and other factors deemed relevant by our Board of Directors. In addition, our ability to pay dividends is limited by the
terms of our Credit Agreement and our 2025 Indenture. Refer to “Note 8: Debt” in the notes to our consolidated financial statements in Item 8 of this
Annual Report on Form 10-K for further information regarding our debt agreements. Therefore, investors should not rely on regular quarterly or annual
dividend income from shares of our common stock and investors should not rely on special dividends with any regularity, or at all. Investors should rely on
sales of their common stock after price appreciation, which may never occur, as the only way to realize future gains on their investments.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
Unregistered Sales of Equity Securities
During the quarter ended December 31, 2023, we did not issue or sell any shares of our common stock, Class B common stock or other equity
securities pursuant to unregistered transactions in reliance upon an exemption from the registration requirements of the Securities Act.
Issuer Purchases of Equity Securities
On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a new share
repurchase program. Our Board of Directors authorized and directed management, working with the Executive Committee of our Board of Directors, to
affect the share repurchase program in compliance with applicable legal requirements. The Executive Committee of our Board of Directors will determine
the price, timing, amount and method of such repurchases based on its evaluation of market conditions and other factors, and at prices determined to be
attractive and in the best interests of both the Company and its stockholders. This share repurchase program, which has a term of two years, does not
obligate the Company to acquire any particular number of shares and may be modified, suspended or discontinued at any time.
In light of the recent disclosure by Liberty Tripadvisor Holdings, Inc. (“LTRIP”) of its intent to evaluate potential alternatives and the Company’s
formation of a Special Committee to evaluate any proposals that may be brought forward, the Company has suspended its share repurchase program.
A summary of information regarding our common stock repurchases during the fourth quarter of 2023 is set forth in the table below:
32
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Number (or
Approximate U.S.
dollar Value) of Shares
that May Yet Be
Purchased Under the
Plans or Programs
Average Price Paid per
Share (1)
$
$
$
—
18.85
—
—
1,324,524
—
1,324,524
$
$
$
250,000,000
225,000,000
225,000,000
Total Number
of Shares
Purchased
—
1,324,524
—
1,324,524
Period
October 1 to October 31
November 1 to November 30
December 1 to December 31
Total
(1) Exclusive of fees, commissions and excise taxes.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be
read in conjunction with our accompanying consolidated financial statements including the notes in Item 8 of this Annual Report on Form 10-K, and the
Section entitled “Cautionary Note Regarding Forward-Looking Statements,” included elsewhere in this Annual Report on Form 10-K. Our actual results
may differ from the results discussed in any forward looking statements, which may be due to factors discussed in “Risk Factors” and elsewhere in this
Annual Report on Form 10-K.
The Company renamed our Tripadvisor Core segment to “Brand Tripadvisor”, and its “Tripadvisor-branded display and platform” revenue stream
within the Brand Tripadvisor segment, as “Media and advertising” revenue. These nomenclature changes had no impact on the composition of our
segments, revenue streams, or on any current or historic financial information.
Overview
The Tripadvisor group operates as a family of brands with a purpose of connecting people to experiences worth sharing. Our vision is to be the
world’s most trusted source for travel and experiences. The Company operates across three business segments: Brand Tripadvisor (formerly Tripadvisor
Core), Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering
rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.
Brand Tripadvisor’s purpose is to empower everyone to be a better traveler by serving as the world’s most trusted and essential travel guidance
platform. Since Tripadvisor’s founding in 2000, the Tripadvisor brand has developed a relationship of trust and community with travelers and experience
seekers by providing an online global platform for travelers to discover, generate, and share authentic user-generated content (“UGC”) in the form of
ratings and reviews for destinations, points-of-interest (“POIs”), experiences, accommodations, restaurants, and cruises in over 40 countries and in more
than 20 languages across the world. Tripadvisor offers more than 1 billion user-generated ratings and reviews on over 8 million experiences,
accommodations, restaurants, airlines, and cruises. Tripadvisor’s online platform attracts one of the world’s largest travel audiences, with hundreds of
millions of visitors annually.
33
Viator’s purpose is to bring extraordinary, unexpected, and forever memorable experiences to more people, more often, wherever they are traveling.
In doing so, Viator elevates tens of thousands of businesses, large and small. Viator delivers on its purpose by enabling travelers to discover and book
iconic, unique and memorable experiences from experience operators around the globe. Our online marketplace is comprehensive and easy-to-use,
connecting millions of travelers to the world’s largest supply of bookable tours, activities and attractions—over 350,000 experiences from more than 55,000
operators. Viator is a pure-play experiences OTA singularly focused on the needs of both travelers and operators with the largest supply of bookable
experiences available to travelers.
TheFork’s purpose is to deliver happiness through amazing dining experiences. TheFork delivers on its purpose by providing an online marketplace
that enables diners to discover and book online reservations at approximately 55,000 restaurants in 11 countries across the U.K., western and central
Europe. TheFork has become an urban, gastronomic guide with a strong community that offers approximately 20 million restaurant reviews.
Trends
The online travel industry in which we operate is large, highly dynamic and competitive. We describe below current trends affecting our overall
business and segments, including uncertainties that may impact our ability to execute on our objectives and strategies. Public health-related events, such as
a pandemic, political instability, geopolitical conflicts, including the evolving events in the Middle East, acts of terrorism, fluctuations in currency values,
and changes in global economic conditions, are examples of other events that could have a negative impact on the travel industry, and as a result, our
financial results in the future.
The COVID-19 pandemic had a significant negative impact on the travel and hospitality industries, and consequently, adversely and materially
affected our business, results of operations, liquidity and financial condition during the year ended December 31, 2021. In 2022, we generally experienced a
travel demand recovery fueled by the continued easing of government restrictions globally and increasing consumer travel demand, however, during the
first quarter of 2022, we experienced a negative impact from the Omicron variant across all segments which helped contribute to the year-over-year revenue
growth rate during 2023. During 2023, we continued to experience strong consumer demand, particularly for our experiences offerings, across our Viator
and Brand Tripadvisor segments. Asia-Pacific, which represents a small portion of our overall business, has been slower to recover due to longer and
sustained travel restrictions as a result of the COVID-19 pandemic. However, starting in the first quarter of 2023, travel restrictions across Asia began to
ease relative to 2022, contributing to increased year-over-year revenue growth within this region.
Prior to Google introducing changes to its SERP (search engine results page), we generated a significant amount of direct traffic from search
engines, such as Google, through strong SEO (search engine optimization) performance across all segments. We believe our SEO traffic acquisition
performance has been negatively impacted in the past, and may be impacted in the future, by metasearch and search engines (primarily Google) changing
their search result placement and underlying algorithms, including to increase the prominence of their own products in search results across our business,
most notably within our hotel meta offering within our Brand Tripadvisor segment.
In response to strong consumer demand for our experiences offerings across our Viator and Brand Tripadvisor segments, we continued to increase
investment in performance marketing and brand spend during 2023 to drive awareness and grow market share in this large underpenetrated market. Over
the long-term, we are focused on driving a greater percentage of our bookings from direct channels. We are doing this by continuing to focus on increasing
our brand recognition and improving the user experience across products on our website and mobile app, providing high quality customer service, and
offering leading customer choice for online bookable experiences supply.
The global experiences market is large, growing, and highly fragmented, with the vast majority of bookings still occurring through traditional offline
sources. We are observing a secular shift, however, as this market continues to grow and accelerate the pace of online adoption. Likewise, the global
restaurants category is also benefiting from increased online adoption by both consumers and restaurant partners, particularly in Europe. Given the
competitive positioning of our businesses relative to the attractive growth prospects in these categories, we expect to continue to invest in these categories
across the Tripadvisor group, and in particular, within the Viator and
34
TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.
For information regarding our business strategy and business models, see the discussion set forth in Part I, Item 1. “Business,” of this Form 10-K
under the captions “Our Business Strategy”, and “Our Business Models.”
Recent Developments
Restructuring and Related Reorganization Actions
During the third quarter of 2023, the Company approved and subsequently initiated a set of actions across its businesses in order to reduce its cost
structure, improve operational efficiencies, and realign its workforce with its strategic initiatives. These actions taken by the Company resulted in reduced
global headcount. Additional cost reduction measures taken included discretionary spend and real estate. As a result, the Company incurred estimated pre-
tax restructuring and other related reorganization costs of $22 million during the year ended December 31, 2023, consisting primarily of employee
severance and related benefits. Potential job position eliminations in each country remain subject to local law and consultation requirements, which have
extended beyond 2023 in certain countries. Therefore, actual costs incurred may differ from estimated costs recorded as of December 31, 2023. As of
December 31, 2023, the Company paid $9 million of these costs, and expect the majority of remaining unpaid costs as of December 31, 2023, to be
disbursed during the first quarter of 2024. Refer to “Note 7: Accrued Expenses and Other Current Liabilities” and “Note 18: Segment and Geographic
Information” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information regarding
restructuring and other related reorganization costs incurred for each reportable segment.
These cost reduction actions undertaken by the Company are anticipated to result in an estimated $35 million in annualized cost savings in the Brand
Tripadvisor segment, which includes corporate general and administrative expenses, and in addition, we estimate $10 million in annualized cost savings in
TheFork segment, primarily related to global workforce reduction measures. Although we expect the aforementioned, annualized cost savings in Brand
Tripadvisor and TheFork during 2024, these cost reduction measures did not materially impact our actual expenses during 2023 due to the timing of when
these actions occurred during the year.
Stock Buyback Program
On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a new share
repurchase program. This share repurchase program, which has a term of two years, does not obligate the Company to acquire any particular number of
shares and may be modified, suspended or discontinued at any time. During the three months ended December 31, 2023, we repurchased 1,324,524 shares
of our outstanding common stock at an average share price of $18.85 per share, exclusive of fees, commissions, and excise taxes, or $25 million in the
aggregate.
In light of the recent disclosure by Liberty Tripadvisor Holdings, Inc. (“LTRIP”) of its intent to evaluate potential alternatives and the Company’s
formation of a Special Committee to evaluate any proposals that may be brought forward, the Company has suspended its share repurchase program.
Income Taxes
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, the Company had received Notices of Proposed
Adjustments (“NOPA”) in January 2017 and April 2019 from the IRS with respect to income tax returns for the years 2009, 2010 and 2011 filed by Expedia
when Tripadvisor was part of Expedia Group Inc’s consolidated income tax return. This assessment was related to certain transfer pricing arrangements
with its foreign subsidiaries, and we requested competent authority assistance under the Mutual Agreement Procedure (“MAP”) for those years. In January
2023, the Company received a final notice from the IRS regarding a MAP settlement for the 2009 through 2011 tax years, which the Company accepted in
February 2023. During the second quarter of 2023, the Company made a U.S. federal tax payment of $113 million to Expedia related to this IRS audit
35
settlement pursuant to the Tax Sharing Agreement with Expedia. During the third quarter of 2023, we received a competent authority refund of $49 million
associated with this IRS audit settlement.
As previously disclosed, during August 2020 we received a NOPA issued by the IRS for the 2014, 2015, and 2016 tax years. These proposed
adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries. We have previously requested competent authority assistance
under MAP for these tax years. In January 2024, we received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which we
accepted in February 2024. We anticipate this MAP resolution will result in an estimated net operating cash outflow of $80 million to $130 million, net of
anticipated competent authority relief and inclusive of related interest expense, expected during 2024, and an increase to our worldwide income tax expense
in an estimated range of $30 million to $60 million in the first quarter of 2024.
Refer to “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K and the
“Contingencies” discussion below for further information regarding potential material contingencies related to ongoing audits regarding income taxes.
Critical Accounting Estimates
We prepare our consolidated financial statements and accompanying notes in accordance with GAAP. Preparation of the consolidated financial
statements and accompanying notes requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as revenue and expenses during the periods
reported. Management bases its estimates on historical experience, when applicable and other assumptions that it believes are reasonable under the
circumstances. Actual results may differ from estimates under different assumptions or conditions.
There are certain critical estimates that we believe require that management use significant judgment and estimates in applying those policies in the
preparation of our consolidated financial statements. We consider an accounting estimate to be critical if:
•
•
It requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the
time we were making the estimate; and/or
Changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of
operations.
Refer to “Note 2: Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-
K for an overview of our significant accounting policies and any new accounting pronouncements that we have adopted or that we plan to adopt that have
had or may have an impact on our financial statements.
A discussion of information about the nature and rationale for our critical accounting estimates is below:
Income Taxes
We record income taxes under the asset and liability method. Deferred tax assets and liabilities reflect our estimation of the future tax consequences
of temporary differences between the carrying amounts of assets and liabilities for book and tax purposes. We determine deferred income taxes based on the
differences in accounting methods and timing between financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or
liability for each temporary difference based on the enacted income tax rates expected to be in effect when we realize the underlying items of income and
expense. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings
experience by jurisdiction, expectations of future taxable income and the carryforward periods available to us for tax reporting purposes, as well as
assessing available tax planning strategies. We may establish a valuation allowance to reduce deferred tax assets to the amount we believe is more likely
than not to be realized. As of December 31, 2023, we had a valuation allowance of approximately $106 million related to certain NOL carryforwards and
other foreign deferred tax assets for which it is more likely than not, the tax benefit will not be realized. We classify deferred tax assets and liabilities
36
as noncurrent on our consolidated balance sheet. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law,
tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual
income taxes could materially vary from these estimates.
We record liabilities to address uncertain tax positions we have taken in previously filed tax returns or that we expect to take in a future tax return.
The determination for required liabilities is based upon an analysis of each individual tax position, taking into consideration whether it is more likely than
not that our tax position, based on technical merits, will be sustained upon examination. For those positions for which we conclude it is more likely than not
it will be sustained, we recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the taxing
authority. The difference between the amount recognized and the total tax position is recorded as a liability. The ultimate resolution of these tax positions
may be greater or less than the liabilities recorded.
Refer to “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K and the
“Contingencies” discussion below for further information, including certain uncertainties, critical estimates, and potential contingencies related to ongoing
audits regarding income taxes.
Certain Relationships and Related Party Transactions
For information on our related party transactions, refer to “Note 17: Related Party Transactions” in the notes to our consolidated financial
statements in Item 8 of this Annual Report on Form 10-K.
Consolidated Results of Operations
A discussion regarding our financial condition and results of operations for fiscal year 2023 compared to fiscal year 2022 is presented below. A
discussion regarding our financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021 can be found in Part II, Item 7.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended
December 31, 2022, filed with the SEC on February 17, 2023.
37
Results of Operations
Selected Financial Data
(in millions, except percentages)
Year ended December 31,
2022
2023
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
1,788 $
1,492 $
902
20 %
65 %
149
940
273
191
87
22
1,662
126
(44 )
47
(4 )
(1 )
125
(115 )
10 $
116
784
222
172
97
—
1,391
101
(44 )
15
(5 )
(34 )
67
(47 )
20 $
74
469
212
167
111
—
1,033
(131 )
(45 )
1
(10 )
(54 )
(185 )
37
(148 )
28 %
20 %
23 %
11 %
(10 )%
n.m.
19 %
25 %
0 %
213 %
(20 )%
(97 )%
87 %
145 %
(50 )%
57 %
67 %
5 %
3 %
(13 )%
n.m.
35 %
n.m.
(2 )%
1,400 %
(50 )%
(37 )%
n.m.
n.m.
n.m.
334 $
295 $
100
13 %
195 %
$
$
Revenue
Costs and expenses:
Cost of revenue
Selling and marketing
Technology and content
General and administrative
Depreciation and amortization
Restructuring and other related reorganization costs
Total costs and expenses:
Operating income (loss)
Other income (expense):
Interest expense
Interest income
Other income (expense), net
Total other income (expense), net
Income (loss) before income taxes
(Provision) benefit for income taxes
Net income (loss)
Other financial data:
Adjusted EBITDA (1)
n.m. = not meaningful
(1)
Consolidated Adjusted EBITDA is considered a non-GAAP measure as defined by the SEC. Please refer to the “Adjusted EBITDA” discussion below for more information,
including tabular reconciliations to the most directly comparable GAAP financial measure.
Revenue and Segment Information
Revenue by Segment:
Brand Tripadvisor (1)
Viator
TheFork
Intersegment Eliminations (1)
Total revenue
Adjusted EBITDA by Segment:
Brand Tripadvisor
Viator
TheFork
Total Adjusted EBITDA
Adjusted EBITDA Margin by Segment (2):
Brand Tripadvisor
Viator
TheFork
Year ended December 31,
2022
2023
(in millions)
2021
2023 vs. 2022
2022 vs. 2021
% Change
7 %
49 %
22 %
44 %
20 %
1 %
n.m.
(64 )%
13 %
45 %
168 %
48 %
191 %
65 %
95 %
(65 )%
(15 )%
195 %
966 $
493
126
(93 )
1,492 $
345 $
(11 )
(39 )
295 $
36 %
(2 %)
(31 )%
665
184
85
(32 )
902
177
(31 )
(46 )
100
27 %
(17 %)
(54 )%
$
$
$
$
1,031 $
737
154
(134 )
1,788 $
348 $
—
(14 )
334 $
34 %
0 %
(9 )%
38
n.m. = not meaningful
(1)
(2)
Brand Tripadvisor segment revenue figures are shown gross of intersegment (intercompany) revenue, which is eliminated on a consolidated basis. Refer to “Note 18: Segment and
Geographic Information” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a discussion of intersegment revenue for all periods
presented.
“Adjusted EBITDA Margin by Segment” is defined as Adjusted EBITDA by segment divided by revenue by segment.
Brand Tripadvisor Segment (formerly Tripadvisor Core Segment)
Brand Tripadvisor revenue increased by $65 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily
due to an increase in Tripadvisor experiences revenue, and to a lesser extent, an increase in hotel B2B revenue, media and advertising revenue, and
improved hotel meta revenue in the rest of world geographic markets, all of which were primarily driven by strong consumer demand, which was partially
offset primarily by a decrease in our European hotel meta revenue during the last three quarters of 2023. In addition, this segment’s revenue was negatively
impacted by the Omicron variant in the first quarter of 2022, which helped contribute to the year-over-year revenue growth rate during 2023.
Adjusted EBITDA in our Brand Tripadvisor segment increased $3 million during the year ended December 31, 2023 when compared to the same
period in 2022, while adjusted EBITDA margin decreased by 2 percentage points during the year ended December 31, 2023 when compared to the same
period in 2022. The increase in our Brand Tripadvisor segment revenue of $65 million, as noted above, substantially offset increases in personnel and
overhead costs to support business growth, despite the impact of our cost reduction measures which did not materially impact our segment expenses during
2023, as discussed above. In addition, Brand Tripadvisor experienced an increase in direct selling and marketing expenses related to paid online traffic
acquisition costs, direct revenue generation costs related to data center and other direct revenue related costs, and software licensing costs. The slight
decline in adjusted EBITDA margin during the year ended December 31, 2023 when compared to the same period in 2022, was largely impacted due to
increased cost of revenue and technology and content personnel and overhead costs as a percent of revenue.
The following is a detailed discussion of the revenue sources within our Brand Tripadvisor segment:
Brand Tripadvisor:
Tripadvisor-branded hotels
% of Brand Tripadvisor revenue*
Media and advertising
% of Brand Tripadvisor revenue*
Tripadvisor experiences and dining (1)
% of Brand Tripadvisor revenue*
Other
% of Brand Tripadvisor revenue*
Total Brand Tripadvisor Revenue
*Percentages may not total to 100% due to rounding
2023
Year ended December 31,
2022
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
$
(in millions, except percentages)
659 $
64 %
145
14 %
176
17 %
51
5 %
1,031 $
650 $
67 %
130
13 %
134
14 %
52
5 %
966 $
451
68 %
98
15 %
70
11 %
46
7 %
665
1 %
12 %
31 %
(2 %)
7 %
44 %
33 %
91 %
13 %
45 %
(1)
Tripadvisor experiences and dining revenue within the Brand Tripadvisor segment is shown gross of intersegment (intercompany) revenue, which is eliminated on a consolidated basis.
Refer to “Note 18: Segment and Geographic Information” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a discussion of
intersegment revenue for all periods presented.
Tripadvisor-branded Hotels Revenue
Tripadvisor-branded hotels revenue increased $9 million during the year ended December 31, 2023 when compared to the same period in 2022. This
increase was primarily driven by improved hotel B2B revenue, as well as to a lesser extent, improved hotel meta revenue in the rest of world geographic
markets, primarily driven by strong consumer travel demand when compared to the same period in 2022. In addition, our 2022 results were negatively
impacted by the Omicron variant during the first quarter of 2022, which contributed to year-over-year growth. The
39
Company saw sustained pricing strength in both free and paid traffic channels, including, continued strength in hotel meta monetization in the U.S., where
CPC rates remained robust when compared to 2022. This performance during 2023 was partially offset primarily by a decrease in our European hotel meta
revenue during the last three quarters of 2023, as described above, as well as an increased competitive environment in paid online marketing channels and
product decisions we have implemented to provide more qualified referrals to our partners, leading to a decrease in click volumes.
Media and Advertising Revenue
Media and advertising revenue consists of revenue from display-based advertising (or “media advertising”) across our platform and increased $15
million during the year ended December 31, 2023 when compared to the same period in 2022, primarily driven by an increase in marketing spend from
advertisers, in correlation with growth in consumer travel demand.
Tripadvisor Experiences and Dining Revenue
Tripadvisor experiences and dining revenue, which includes intercompany (intersegment) revenue consisting of affiliate marketing commissions
earned primarily from experience bookings, and to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps,
fulfilled by Viator and TheFork, respectively, and are eliminated on a consolidated basis, in addition to revenue earned from Brand Tripadvisor’s restaurant
offerings. Tripadvisor experiences and dining revenue increased $42 million during the year ended December 31, 2023 when compared to the same period
in 2022, primarily driven by strong consumer demand for experiences, combined with enhancements to our websites and mobile apps.
Other Revenue
Other revenue, which includes alternative accommodation rentals revenue, in addition to primarily click-based advertising and display-based
advertising revenue from our cruise, flights, and rental cars offerings on Tripadvisor websites and mobile apps, decreased by $1 million during the year
ended December 31, 2023 when compared to the same period in 2022.
Viator Segment
Viator segment revenue increased by $244 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily
driven by strong consumer demand for experiences across all geographies, including growth in both bookings and pricing of experiences, as well as,
enhancements to our websites and mobile apps. In addition, this segment’s revenue was negatively impacted by the Omicron variant in the first quarter of
2022, which helped contribute to the year-over-year revenue growth rate during 2023. Viator is also benefiting from a larger macro trend, or secular shift, as
the large global market in which it operates continues to grow and migrate online from traditional offline sources.
Adjusted EBITDA loss in our Viator segment improved by $11 million during the year ended December 31, 2023 when compared to the same
period in 2022, and adjusted EBITDA margin improved by 2 percentage points during the year ended December 31, 2023 when compared to the same
period in 2022. The improvement in adjusted EBITDA was primarily due to an increase in revenue as noted above, partially offset by an increase in selling
and marketing expenses related to SEM, other online paid traffic acquisition costs, and other marketing costs, including brand spend, in response to strong
consumer demand for experiences and increased investment to grow market share, acquire new customers, and drive brand awareness, and to a lesser
extent, an increase in revenue generation costs resulting from credit card payments and other revenue-related transaction costs in direct correlation with the
increase in revenue. In addition, Viator segment revenue growth was partially offset by increases in personnel and overhead costs to support business
growth related to strong consumer demand. The improvement in adjusted EBITDA margin during the year ended December 31, 2023 when compared to
the same period in 2022, was primarily due to decreased selling and marketing costs and cost of revenue as a percent of revenue.
40
TheFork Segment
TheFork segment revenue increased by $28 million during the year ended December 31, 2023 when compared to the same period in 2022. This
improvement was driven by increased consumer demand for dining, including increased bookings and pricing, during 2023 when compared to the same
period in 2022, as well as the negative impact of the Omicron variant that occurred during the first quarter of 2022, which helped contribute to the year-
over-year revenue growth rate during 2023. In addition, we estimate this segment's revenue growth rate was positively impacted by foreign currency
fluctuations of approximately 3% during the year ended December 31, 2023 when compared to the same period in 2022.
Adjusted EBITDA loss in TheFork segment improved by $25 million during the year ended December 31, 2023 when compared to the same period
in 2022, and adjusted EBITDA margin improved by 22 percentage points during the year ended December 31, 2023 when compared to the same period in
2022. The improvement in adjusted EBITDA was primarily due to an increase in revenue as noted above, and a decrease in selling and marketing expenses
related to SEM, other online paid traffic acquisition costs, and television advertising costs. These improvements were partially offset by $11 million of non-
income tax government assistance benefits related to COVID-19 relief received during the second quarter of 2022 recorded as a benefit to general and
administrative expenses, which did not reoccur in 2023, and an increase in personnel and overhead costs to support business growth related to the travel
demand recovery that began during 2022, despite the impact of our cost reduction measures which did not materially impact our segment expenses during
2023, as discussed above. The improvement in adjusted EBITDA margin during the year ended December 31, 2023 when compared to the same period in
2022, was primarily due to decreased selling and marketing costs as a percent of revenue, which more than offset the aforementioned $11 million of non-
income tax government assistance benefits related to COVID-19 relief received during the second quarter of 2022.
Consolidated Expenses
Cost of Revenue
Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as credit card
and other booking transaction payment fees, data center costs, ad serving fees, and other revenue generating costs. In addition, cost of revenue includes
personnel and overhead expenses, including salaries, benefits, stock-based compensation and bonuses for certain customer support personnel who are
directly involved in revenue generation.
Direct costs
Personnel and overhead
Total cost of revenue
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
$
121 $
28
149 $
8.3 %
89 $
27
116 $
7.8 %
50
24
74
8.2 %
36 %
4 %
28 %
78 %
13 %
57 %
Cost of revenue increased $33 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily due to
increased direct costs from credit card payment processing fees and other revenue-related transaction costs of $23 million in our Viator segment in direct
correlation with the increase in revenue, as Viator serves as the merchant of record for the significant majority of its experience booking transactions, and to
a lesser extent, increased direct revenue generation costs related to data center costs and other revenue-related transaction costs in our Brand Tripadvisor
segment.
Selling and Marketing
Selling and marketing expenses consist of direct costs, including traffic generation costs from paid online traffic acquisition costs (including SEM
and other online traffic acquisition costs), syndication costs and affiliate marketing commissions, social media costs, brand advertising (including television
and other offline advertising),
41
promotions and public relations. In addition, our selling and marketing expenses consist of indirect costs such as personnel and overhead expenses,
including salaries, commissions, benefits, stock-based compensation, and bonuses for sales, sales support, customer support and marketing employees.
Direct costs
Personnel and overhead
Total selling and marketing
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
$
727 $
213
940 $
52.6 %
589 $
195
784 $
52.5 %
294
175
469
52.0 %
23 %
9 %
20 %
100 %
11 %
67 %
Direct selling and marketing costs increased $138 million during the year ended December 31, 2023 when compared to the same period in 2022. In
addition, direct selling and marketing costs as a percentage of total consolidated revenue was 41% during the year ended December 31, 2023, an increase
from 39% when compared to the same period in 2022. This incremental expense was primarily driven by an increase of $137 million in paid online traffic
acquisition costs, including SEM and other paid online traffic acquisition spend, and other marketing costs, including brand spend, the substantial majority
of which was incurred within our Viator segment and to a lesser extent, our Brand Tripadvisor segment, in order to capture consumer demand, including
increased investment within these segments in order to grow market share, slightly offset by a decrease in SEM and other paid online traffic acquisition
spend in TheFork segment.
Personnel and overhead costs increased $18 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily
due to an increase in headcount and contingent staff to support business growth during the first half of 2023. The impact of our cost reduction measures, as
discussed above, did not materially impact our personnel and overhead costs during 2023.
Technology and Content
Technology and content expenses consist primarily of personnel and overhead expenses, including salaries and benefits, stock-based compensation
expense, and bonuses for salaried employees and contractors engaged in the design, development, testing, content support, and maintenance of our
platform. Other costs include licensing, maintenance, computer supplies, telecom, content translation and localization, and consulting costs.
Personnel and overhead
Other
Total technology and content
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
$
238 $
35
273 $
15.3 %
193 $
29
222 $
14.9 %
188
24
212
23.5 %
23 %
21 %
23 %
3 %
21 %
5 %
Technology and content costs increased $51 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily
due to increased personnel and overhead costs resulting from additional headcount and contingent staff to support business growth, primarily in the Brand
Tripadvisor and Viator segments. Other costs increased by $6 million during the year ended December 31, 2023, when compared to the same period in
2022, primarily due to increased software licensing costs in our Brand Tripadvisor segment.
General and Administrative
General and administrative expenses consist primarily of personnel and related overhead costs, including personnel engaged in leadership, finance,
legal, and human resources, as well as stock-based compensation expense for those same personnel. General and administrative costs also include
professional service fees and other fees
42
including audit, legal, tax and accounting, and other operating costs including bad debt expense, non-income taxes, such as sales, use, digital services, and
other non-income related taxes.
Personnel and overhead
Professional service fees and other
Total general and administrative
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
2023 vs. 2022
2022 vs. 2021
% Change
$
$
129 $
62
191 $
10.7 %
128 $
44
172 $
11.5 %
132
35
167
18.5 %
1 %
41 %
11 %
(3 %)
26 %
3 %
General and administrative costs increased $19 million during the year ended December 31, 2023 when compared to the same period in 2022.
Personnel and overhead costs did not materially change during the year ended December 31, 2023 when compared to the same period in 2022. Professional
service fees and other costs increased $18 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily due to
non-income tax related government assistance benefits related to COVID-19 relief of $11 million received by the Company during 2022 in TheFork
segment, which did not reoccur in 2023, incremental digital service tax costs of $9 million for the year ended December 31, 2023, as well as, and to a lesser
extent, a non-recurring cost of $3 million related to previously capitalized transaction costs during 2023. These increases were partially offset by an
approximate $8 million loss incurred during the fourth quarter of 2022 as the result of a fraud scheme resulting in payments to an external party, as
previously disclosed, which did not reoccur in 2023.
Depreciation and amortization
Depreciation expense consists of depreciation on computer equipment, leasehold improvements, furniture, office equipment and other assets, and
amortization of capitalized website development costs and right-of-use (“ROU”) assets related to our finance lease. Amortization consists of the
amortization of definite-lived intangibles purchased in business acquisitions.
Depreciation
Amortization of intangible assets
Total depreciation and amortization
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
$
$
78 $
9
87 $
4.9 %
84 $
13
97 $
6.5 %
91
20
111
12.3 %
Depreciation and amortization decreased $10 million during the year ended December 31, 2023 when compared to the same period in 2022,
primarily due to the completion of amortization related to certain capitalized website development costs and intangible assets purchased in business
acquisitions from previous years.
Restructuring and other related reorganization costs
Restructuring and other related reorganization costs consist primarily of employee severance and related benefits.
Restructuring and other related reorganization costs
$
% of revenue
2023
Year ended December 31,
2022
(in millions)
2021
22 $
1.2 %
— $
0.0 %
—
0.0 %
43
The Company incurred pre-tax restructuring and other related reorganization costs of $22 million during the year ended December 31, 2023, as
discussed above. These costs consist primarily of employee severance and related benefits.
Interest Expense
Interest expense primarily consists of interest incurred, commitment fees, and debt issuance cost amortization related to the Credit Facility, the 2025
Senior Notes, the 2026 Senior Notes, as well as imputed interest on finance leases.
Interest expense
2023
Year ended December 31,
2022
(in millions)
2021
$
(44 ) $
(44 ) $
(45 )
Interest expense did not change materially during the year ended December 31, 2023 when compared to the same period in 2022, as our capital
structure did not change significantly. The significant majority of interest expense incurred during the years ended December 31, 2023, 2022, and 2021, was
related to the 2025 Senior Notes. Refer to “Note 8: Debt” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-
K for further information.
Interest Income
Interest income primarily consists of interest earned from available on demand bank deposits, term deposits, money market funds, and marketable
securities, including amortization of discounts and premiums on our marketable securities.
Interest income
2023
Year ended December 31,
2022
(in millions)
2021
$
47 $
15 $
1
Interest income increased $32 million during the year ended December 31, 2023 when compared to the same period in 2022, primarily due to an
increase in the average amount of cash invested and increased interest rates received on bank and term deposits, as well as an increase in interest earned on
money market funds during 2023.
Other Income (Expense), Net
Other income (expense), net generally consists of net foreign exchange gains and losses, forward contract gains and losses, earnings/(losses) from
equity method investments, gain/(loss) and impairments on non-marketable investments, gain/(loss) on sale/disposal of businesses, and other non-operating
income (expenses).
Other income (expense), net
$
(4 ) $
(5 ) $
(10 )
2023
Year ended December 31,
2022
(in millions)
2021
Other expense, net primarily consists of the net result of foreign exchange gains and losses incurred as a result of foreign currency movements.
Refer to “Note 16: Other Income (Expense), Net” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for
additional information.
44
(Provision) Benefit for Income Taxes
(Provision) benefit for income taxes
Effective tax rate
2023
Year ended December 31,
2022
(in millions)
2021
$
(115 ) $
92.0 %
(47 ) $
70.1 %
37
20.0 %
Our effective tax rate differed from the U.S. federal statutory rate of 21% during the year ended December 31, 2023, primarily as a result of the IRS
audit settlement, as described below, during the first quarter of 2023.
We recorded a total income tax provision of $115 million for the year ended December 31, 2023. The change in our income taxes and our effective
tax rate during the year ended December 31, 2023, when compared to the same period in 2022, was primarily the result of an IRS audit settlement and
related adjustment to our existing transfer pricing income tax reserves for subsequent tax years, totaling $55 million, which was recognized during the three
months ended March 31, 2023. Refer to “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on
Form 10-K for further information.
Net income (loss)
Net income (loss)
Net income (loss) margin
2023
Year ended December 31,
2022
(in millions)
2021
$
10 $
0.6 %
20 $
1.3 %
(148 )
(16.4 %)
Net income decreased $10 million during the year ended December 31, 2023 when compared to the same period in 2022. The decrease in net
income was largely driven by increased direct selling and marketing costs in response to strong consumer travel demand and investment to grow market
share in our experiences offerings, increased personnel and overhead costs to help support business growth and consumer demand, as well as an
incremental income tax expense of $55 million recognized during the first quarter of 2023 as a result of an IRS audit settlement and related adjustment to
our existing transfer pricing income tax reserves for subsequent tax years and to a lesser extent, restructuring and other related reorganization costs,
primarily consisting of employee severance and related benefits, increased direct costs from credit card payment and other revenue-related transaction costs
in direct correlation with the increase in experiences revenue during the year ended December 31, 2023, all of which are described in more detail above
under “Consolidated Expenses”, largely offset by an increase in revenue, as described in more detail above under “Revenue and Segment Information.”
Adjusted EBITDA
To provide investors with additional information regarding our financial results, we also disclose consolidated Adjusted EBITDA, which is a non-
GAAP financial measure. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance,
financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure
calculated and presented in accordance with GAAP in such company’s financial statements.
Adjusted EBITDA is also our segment profit measure and a key measure used by our management and board of directors to understand and evaluate
the financial performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain
expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and better enables management and investors to
compare financial results between periods as these costs may vary independent of ongoing core business performance. Accordingly, we believe that
Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our
management and board of directors. We define Adjusted EBITDA as net income (loss) plus: (1) (provision) benefit for income taxes; (2) other income
(expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations;
45
(5) goodwill, long-lived asset, and intangible asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs;
and (8) other non-recurring expenses and income.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our
results reported in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance
measures, including net income (loss) and our other GAAP results.
Some of these limitations are:
•
•
•
•
•
•
•
•
•
Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
Adjusted EBITDA does not reflect the interest expense, or cash requirements necessary to service interest or principal payments on our debt;
Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation or other stock-settled obligations;
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the
future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure
requirements;
Adjusted EBITDA does not reflect certain income and expenses not directly tied to the ongoing core operations of our business, such as legal
reserves and settlements, restructuring and other related reorganization costs;
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
Adjusted EBITDA is unaudited and does not conform to SEC Regulation S-X, and as a result such information may be presented differently
in our future filings with the SEC; and
other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as
a comparative measure.
The following table presents a reconciliation of Adjusted EBITDA to Net Income (Loss), the most directly comparable financial measure calculated
and presented in accordance with GAAP, for the periods presented:
Net income (loss)
Add: Provision (benefit) for income taxes
Add: Other expense (income), net
Add: Restructuring and other related reorganization costs
Add: Legal reserves and settlements
Add: Other non-recurring expenses (income) (1)(2)
Add: Stock-based compensation
Add: Depreciation and amortization
Adjusted EBITDA
2023
Year ended December 31,
2022
(in millions)
2021
10 $
115
1
22
—
3
96
87
334 $
20 $
47
34
—
1
8
88
97
295 $
(148 )
(37 )
54
—
—
—
120
111
100
$
$
(1)
(2)
The Company expensed $3 million of previously capitalized transaction costs during 2023 to general and administrative expenses on our consolidated statement of operations.
The Company considers such costs to be non-recurring in nature.
The Company incurred a loss of approximately $8 million during the fourth quarter of 2022, as the result of a targeted payment fraud scheme by an external party, as previously
disclosed. The Company considers such costs to be non-recurring in nature. To the extent the Company recovers any losses in future periods related to this incident, the Company
plans to reduce Adjusted EBITDA by the recovery amount in that same period.
46
Liquidity and Capital Resources
Our principal source of liquidity is cash flow generated from operations and our existing cash and cash equivalents balance. Our liquidity needs can
also be met through drawdowns under the Credit Facility. As of December 31, 2023 and 2022, we had approximately $1.1 billion and $1.0 billion,
respectively, of cash and cash equivalents, and $496 million of available borrowing capacity under our Credit Facility as of December 31, 2023. As of
December 31, 2023, approximately $247 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which
approximately 50% was held in the U.K. As of December 31, 2023, the significant majority of our cash was denominated in U.S. dollars.
As of December 31, 2023, we had $483 million of cumulative undistributed earnings in foreign subsidiaries which were no longer considered to be
indefinitely reinvested. As of December 31, 2023, we maintained a deferred income tax liability on our consolidated balance sheet, which was not material,
for the U.S. federal and state income tax and foreign withholding tax liabilities on the cumulative undistributed foreign earnings that we no longer consider
indefinitely reinvested. Refer to “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-
K for further information.
As of December 31, 2023, we are party to a credit agreement, which, among other things, provides for a $500 million revolving credit facility (the
“Credit Facility”) with a maturity date of June 29, 2028 (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any
indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such specified debt is $200 million or more, then
the maturity date will be such business day). As of December 31, 2023 and 2022, we had no outstanding borrowings under the Credit Facility. The
Company may borrow from the Credit Facility in U.S dollars, Euros and Sterling. For information regarding interest rates on potential borrowings under
the Credit Facility refer to “Note 8: Debt” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K. We are
required to pay a quarterly commitment fee, at an applicable rate ranging from 0.25% to 0.40%, on the daily unused portion of the Credit Facility for each
fiscal quarter and in connection with the issuance of letters of credit. As of December 31, 2023, our unused revolver capacity was subject to a commitment
fee of 0.25%, given the Company’s total net leverage ratio. The Credit Facility, among other things, requires us to maintain a maximum total net leverage
ratio and contains certain customary affirmative and negative covenants and events of default, including for a change of control. As of December 31, 2023
and 2022, we were in compliance with our covenant requirements in effect under the Credit Facility. While there can be no assurance that we will be able to
meet the total net leverage ratio covenant in the future, based on our current projections, we do not believe there is a material risk that we will not remain in
compliance throughout the next twelve months.
As of December 31, 2023, the Company had an aggregate outstanding principal amount of $845 million in long-term debt, as a result of the 2025
Senior Notes and 2026 Senior Notes, as discussed below.
In July 2020, the Company completed the sale of $500 million in 2025 Senior Notes. The 2025 Senior Notes provide, among other things, that
interest, at an interest rate of 7.0% per annum, is payable on January 15 and July 15 of each year, until their maturity on July 15, 2025. The 2025 Senior
Notes are senior unsecured obligations of the Company, although unconditionally guaranteed on a joint and several basis by certain of the Company’s
domestic subsidiaries. In March 2021, the Company completed the sale of $345 million of the 2026 Senior Notes. The 2026 Senior Notes provide, among
other things, that interest, at an interest rate of 0.25% per annum, is payable on April 1 and October 1 of each year, until their maturity on April 1, 2026.
The 2026 Senior Notes are senior unsecured obligations of the Company, although unconditionally guaranteed on a joint and several basis, by certain of the
Company’s domestic subsidiaries.
The 2025 Senior Notes and 2026 Senior Notes are not registered securities and there are currently no plans to register these notes as securities in the
future. We may from time to time repurchase the 2025 Senior Notes or 2026 Senior Notes through tender offers, open market purchases, privately
negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions
and other factors.
For further information on the Credit Facility, 2025 Senior Notes, and 2026 Senior Notes, refer to “Note 8: Debt” in the notes to our consolidated
financial statements in Item 8 of this Annual Report on Form 10-K.
47
Significant uses of capital and other liquidity matters
On November 1, 2019, our Board of Directors authorized the repurchase of an additional $100 million in shares of our common stock under our
existing share repurchase program, which increased the amount available to the Company under this share repurchase program to $250 million. During the
three months ended June 30, 2023, we repurchased 4,724,729 shares of our outstanding common stock at an average price of $15.85 per share, exclusive of
fees, commissions, and excise taxes, or $75 million in the aggregate, which completed this share repurchase program.
On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a new share
repurchase program. This share repurchase program, which has a term of two years, does not obligate the Company to acquire any particular number of
shares and may be modified, suspended or discontinued at any time. During the three months ended December 31, 2023, we repurchased 1,324,524 shares
of our outstanding common stock at an average price of $18.85 per share, exclusive of fees, commissions, and excise taxes, or $25 million, under our share
repurchase program. As of December 31, 2023, we had $225 million remaining available to repurchase shares of our common stock under this share
repurchase program.
Our business typically experiences seasonal fluctuations that affect the timing of our annual cash flows during the year related to working capital. As
a result of our experience bookings, we generally receive cash from travelers at the time of booking or prior to the occurrence of an experience, and we
record these amounts, net of commissions, on our consolidated balance sheet as deferred merchant payables. We pay the experience operator, or the
supplier, after the travelers’ use. Therefore, we generally receive cash from the traveler prior to paying the experience operator and this operating cycle
represents a source or use of cash to us. During the first half of the year, experiences bookings typically exceed the amount of completed experiences,
resulting in higher cash flow related to working capital, while during the second half of the year, particularly in the third quarter, this pattern reverses and
cash flows from these transactions are typically negative. Other factors may also impact typical seasonal fluctuations, such as significant shifts in our
business mix, adverse economic conditions, public health-related events, as well as other factors, that could result in future seasonal patterns that are
different from historical trends. In addition, new or different payment options offered to our customers could impact the timing of cash flows. For example,
our “Reserve Now, Pay Later” payment option, which allows our travelers the option to reserve certain experiences and defer payment until a date no later
than two days before the experience date. Usage of this payment option may continue to increase, though it is still not used in a majority of bookings to
date, and affect the timing of our future cash flows and working capital.
As discussed in “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K, we
received a final notice regarding a MAP settlement with the IRS for the 2009 through 2011 tax years in January 2023, which the Company subsequently
accepted in February 2023. During the three months ended June 30, 2023, we made a U.S. federal tax payment of $113 million, inclusive of interest, to
Expedia related to this IRS audit settlement, pursuant to the Tax Sharing Agreement with Expedia. During the three months ended September 30, 2023, we
received a competent authority refund of $49 million, inclusive of interest income, related to the IRS audit settlement. We anticipate the federal tax benefits,
net of remaining state tax payments due, associated with this IRS audit settlement will be substantially settled during 2024, resulting in an estimated net
cash inflow of $5 million to $10 million.
Additionally, during August 2020 we received a NOPA issued by the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments are
related to certain transfer pricing arrangements with our foreign subsidiaries. In January 2024, we received notification of a MAP resolution agreement for
the 2014 through 2016 tax years, which we accepted in February 2024. We anticipate this MAP resolution will result in an estimated net operating cash
outflow of $80 million to $130 million, net of anticipated competent authority relief and inclusive of related interest expense, during 2024, and an increase
to our worldwide income tax expense in an estimated range of $30 million to $60 million in the first quarter of 2024. These estimated ranges take into
consideration competent authority relief, existing income tax reserves, transition tax regulations and estimated interest expense. This MAP resolution
supersedes the NOPA previously received for 2014 through 2016 from the IRS, described above. We will review the impact of this resolution to our transfer
pricing income tax reserves for the subsequent open tax years during the first quarter of 2024. Based on this new information received subsequent to year
end, adjustments for
48
open tax years subsequent to 2016 may also occur, which could be material and negatively impact our future operating cash flows.
In addition, we received an issue closure notice from HM Revenue & Customs (“HMRC”) relating to adjustments for the 2012 through 2016 tax
years in January 2021. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an
increase to income tax expense in an estimated range of $25 million to $35 million, exclusive of interest expense, at the close of the audit if HMRC
prevails. Although the ultimate timing for resolution of these matters is uncertain, any future payments required would negatively impact our operating cash
flows.
The CARES Act, enacted in March 2020, made tax law changes to provide financial relief to companies as a result of the impact to businesses
related to COVID-19. Key income tax provisions of the CARES Act include changes in NOL carryback and carryforward rules, increase of the net interest
expense deduction limit, and immediate write-off of qualified improvement property. The CARES Act allowed the Company to carryback our U.S. federal
NOLs incurred in 2020, generating an expected U.S. federal tax benefit of $76 million, of which $64 million was refunded during the year ended December
31, 2022 ($15 million of this refund is recorded in other long-term liabilities on our consolidated balance sheet as of December 31, 2023, reflecting future
transition tax payments to be made by the Company related to the 2017 Tax Act). The remaining refund of $12 million is expected to be received during the
year ending December 31, 2024.
We believe that our available cash and cash equivalents will be sufficient to fund our foreseeable working capital requirements, capital expenditures,
existing business growth initiatives, debt and interest obligations, lease commitments, and other financial commitments through at least the next twelve
months. Our future capital requirements may also include capital needs for acquisitions and/or other expenditures in support of our business strategy, which
may potentially reduce our cash balance and/or require us to borrow under the Credit Facility or to seek other financing alternatives.
Our cash flows from operating, investing and financing activities, as reflected in our consolidated statements of cash flows, are summarized in the
following table:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
2023
Year ended December 31,
2022
(in millions)
2021
$
235 $
(63 )
(127 )
400 $
(52 )
(27 )
108
(54 )
263
During the year ended December 31, 2023, our primary use of cash was used in operations, and from financing activities (including repurchases of
our outstanding common stock at an aggregate cost of $100 million under our share repurchase programs at the time and payment of withholding taxes on
net share settlements of our equity awards of $17 million) and investing activities (including capital expenditures of $63 million incurred during the year
ended December 31, 2023). This use of cash was funded with cash and cash equivalents, and operating cash flows during the period.
Net cash provided by operating activities for the year ended December 31, 2023, decreased by $165 million when compared to the same period in
2022, primarily due to a decrease in working capital of $149 million, as well as, and to a lesser extent, a decrease in net income of $10 million. The
decrease in working capital was largely driven by a U.S. federal tax payment of $113 million during the second quarter of 2023 related to the IRS audit
settlement, discussed above, a $64 million U.S. federal tax refund related to the CARES Act received in 2022, which did not reoccur in 2023, and increased
cash outflows from accounts payable due to timing of vendor payments. These changes were partially offset by the timing of and improvement in collection
from customers, resulting in increased operating cash flows from accounts receivable during the period, and a competent authority refund received of $49
million during the third quarter of 2023 related to the IRS audit settlement, discussed above.
49
Net cash used in investing activities for the year ended December 31, 2023 increased by $11 million when compared to the same period in 2022,
largely due to an increase in capital expenditures across the business.
Net cash used in financing activities for the year ended December 31, 2023 increased by $100 million when compared to the same period in 2022,
primarily due to the repurchase of shares of our common stock during 2023.
The following table summarizes our current and long-term material cash requirements, both accrued and off-balance sheet, as of December 31,
2023:
Total
Less than
1 year
1 to 3 years
(in millions)
3 to 5 years
More than
5 years
By Period
2025 Senior Notes (1)
Expected interest payments on 2025 Senior Notes (2)
2026 Senior Notes (3)
Expected interest payments on 2026 Senior Notes (4)
Finance lease obligations (5)
Operating lease obligations (6)
Expected commitment fee payments on Credit Facility (7)
Purchase obligations and other (8)
Total (9)(10)
$
$
500 $
55
345
2
66
16
6
42
1,032 $
— $
36
—
1
9
10
1
21
78 $
500 $
19
345
1
18
5
3
20
911 $
— $
—
—
—
20
1
2
1
24 $
—
—
—
—
19
—
—
—
19
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
Represents outstanding principal on our 2025 Senior Notes due July 2025 and assumes that our existing debt is repaid at maturity.
Expected interest payments on our 2025 Senior Notes are based on a fixed interest rate of 7.0%, as of December 31, 2023 and assumes that our existing debt is repaid at maturity.
Represents outstanding principal on our 2026 Senior Notes due April 2026 and assumes that our existing debt is repaid at maturity.
Expected interest payments on our 2026 Senior Notes are based on a fixed interest rate of 0.25%, as of December 31, 2023 and assumes that our existing debt is repaid at
maturity.
Estimated future lease payments for our corporate headquarters in Needham, Massachusetts. These amounts exclude expected rental income under non-cancelable subleases.
Estimated future lease payments for our operating leases, primarily for office space, with non-cancelable lease terms. These amounts exclude expected rental income under non-
cancelable subleases.
Expected commitment fee payments are based on the daily unused portion of the Credit Facility, issued letters of credit, and the effective commitment fee rate as of December
31, 2023; however, these variables could change significantly in the future.
Estimated purchase obligations that are fixed and determinable, primarily related to telecommunication and licensing contracts, with various expiration dates through
approximately June 2029. These contracts have non-cancelable terms or are cancelable only upon payment of significant penalty. Timing of payments and actual amounts paid
may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.
Excluded from the table was $153 million of unrecognized tax benefits, including interest, which is included in other long-term liabilities on our consolidated balance sheet as of
December 31, 2023, for which we cannot make a reasonably reliable estimate of the amount and period of payment.
Excluded from the table was $4 million of undrawn standby letters of credit, primarily as security deposits for certain property leases as of December 31, 2023.
As of December 31, 2023, other than the items discussed above, we did not have any off-balance sheet arrangements, that have, or are reasonably
likely to have, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Office Lease Commitments
As of December 31, 2023, we leased approximately 280,000 square feet of office space for our corporate headquarters in Needham, Massachusetts,
which has an expiration date of December 2030 and an option to extend the lease term for two consecutive terms of five years each. We account for this
lease as a finance lease as of December 31, 2023.
50
In addition to our corporate headquarters lease, we have contractual obligations in the form of operating leases for office space, in which we lease an
aggregate of approximately 340,000 square feet, at nearly 30 other locations across North America, Europe and Asia Pacific, in cities such as New York,
London, Sydney, Barcelona and Paris, primarily used for sales offices, subsidiary headquarters, and international management teams, pursuant to leases
with various expiration dates, with the latest expiring in October 2034.
Contingencies
In the ordinary course of business, we are party to legal, regulatory and administrative matters, including threats thereof, arising out of or in
connection with our operations. These matters may involve claims involving patent and other intellectual property rights (including privacy, alleged
infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes),
regulatory compliance (including competition, consumer matters and data privacy), defamation and reputational claims. Periodically, we review the status
of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has
been incurred; and (ii) the amount of the loss can be reasonably estimated and is material, we record the estimated loss in our consolidated statements of
operations. We provide disclosures in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if
there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. We base accruals on the
best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, we do not believe
that the final disposition of any of these matters will have a material adverse effect on our business, except for certain known income tax matters discussed
below. However, the final outcome of these matters could vary significantly from our estimates. Finally, there may be claims or actions pending or
threatened against us of which we are currently not aware and the ultimate disposition of which could have a material adverse effect on us.
We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and non-income tax matters. We
have reserved for potential adjustments to our provision for income taxes that may result from examinations by, or any negotiated agreements with, these
tax authorities. Although we believe our tax estimates are reasonable, the final determination of audits could be materially different from our historical
income tax provisions and accruals. The results of an audit could have a material effect on our financial position, results of operations, or cash flows in the
period for which that determination is made.
We are currently under examination by the IRS for the 2014 through 2016 and 2018 tax years, and have various ongoing audits for foreign and state
income tax returns. These audits include questioning of the timing and the amount of income and deductions and the allocation of income among various
tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax
authorities for years prior to 2014. As of December 31, 2023, no material assessments have resulted, except as noted below regarding our 2014 through
2016 standalone IRS audit, and our 2012 through 2016 HMRC audit.
During August 2020, we received a NOPA from the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments pertain to certain
transfer pricing arrangements with our foreign subsidiaries. We disagree with the proposed adjustments, and we intend to defend our position through
applicable administrative and, if necessary, judicial remedies. In addition to the risk of additional tax for the years discussed above, if the IRS were to seek
transfer pricing adjustments of a similar nature for transactions in subsequent years, we may be subject to significant additional tax liabilities. We have
previously requested competent authority assistance under MAP for the tax years of 2014 through 2016. We have reviewed our transfer pricing reserves as
of December 31, 2023, based on the facts and circumstances that existed as of the reporting date, and consider them to be the Company’s best estimate as of
December 31, 2023. In January 2024, we received notification regarding a MAP resolution agreement for the 2014 through 2016 tax years, which we
accepted in February 2024. We anticipate this will result in an increase to our worldwide income tax expense in an estimated range of $30 million to $60
million in the first quarter of 2024. This estimated range takes into consideration competent authority relief, existing income tax reserves, transition tax
regulations and estimated interest expense. This MAP resolution supersedes the NOPA for 2014 through 2016 previously received from the IRS, described
above. We will review the impact of this resolution to our transfer pricing income tax reserves for the subsequent open tax years during the first quarter of
2024. Based on this
51
new information received subsequent to year end, adjustments for the open tax years subsequent to 2016 may also occur, which could be material.
In January 2021, we received an issue closure notice from HMRC relating to adjustments for the 2012 through 2016 tax years. These proposed
adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to income tax expense in an
estimated range of $25 million to $35 million, exclusive of interest expense, at the close of the audit if HMRC prevails. We disagree with the proposed
adjustments and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update
tax reserves as facts and circumstances change.
Over the last several years, the Organization for Economic Cooperation and Development (“OECD”) has been developing its “two pillar” project to
address the tax challenges arising from digitalization. The OECD project, if broadly implemented by participating countries, will result in significant
changes to the international taxation system under which our current tax obligations are determined. Pillar Two of the project calls for a minimum tax rate
on corporations of 15% and has begun to be implemented by a significant number of countries starting in 2024. The OECD and implementing countries are
expected to continue to offer further guidance to the rules, however, the impact of Pillar Two is not expected to be material at this time. The Company will
continue to monitor developments to determine any potential impact of Pillar Two in the countries in which we operate.
Pillar One, which would reallocate profits from the largest and most profitable businesses to countries where the customers of those businesses are
located, remains under discussion at the OECD, and its implementation remains uncertain. If implemented, Pillar One would potentially result in the
removal of unilateral digital services tax initiatives, such as those enacted in France, Italy, Spain, and the U.K. In July 2023, more than 138 countries and
jurisdictions agreed to refrain from imposing newly enacted digital service tax initiatives or similar measures before December 31, 2024, provided the Pillar
One negotiations have made sufficient progress by the end of 2023. In December 2023, the OECD Inclusive Framework reaffirmed their commitment to
achieve a consensus-based solution and to complete the multilateral agreement by June 2024, thereby extending the standstill on new digital service tax
initiatives. Furthermore, certain U.S. states, such as Maryland, have deployed comparable digital services tax initiatives. We will continue to monitor these
developments to determine the financial impact to the Company. During the years ended December 31, 2023, 2022 and 2021, we recorded $18 million, $9
million and $1 million, respectively, of digital service tax to general and administrative expense on our consolidated statement of operations.
Due to the one-time transition tax on the deemed repatriation of undistributed foreign subsidiary earnings and profits in 2017, as a result of the 2017
Tax Act, the majority of previously unremitted earnings have been subjected to U.S. federal income tax. To the extent future distributions from these
subsidiaries will be taxable, a deferred income tax liability has been accrued on our consolidated balance sheet, which was not material as of December 31,
2023. As of December 31, 2023, $483 million of our cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested.
Refer to “Note 10: Income Taxes” in the notes to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further
information on potential tax contingencies, including current audits by the IRS and various other domestic and foreign tax authorities, and other income tax
and non-income tax matters.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. We are exposed
to market risks primarily due to our international operations, our ongoing investment and financial activities, as well as changes in economic conditions in
all significant markets in which we operate. The risk of loss can be assessed from the perspective of adverse changes in our future earnings, cash flows, fair
values of our assets, and financial condition. Our exposure to market risk, at any point in time, may include risks related to any borrowings under the Credit
Facility, or outstanding debt related to the 2025 Senior Notes and 2026 Senior Notes, derivative instruments, capped calls, cash and cash equivalents, short-
term and long-term marketable securities, if any, accounts receivable, intercompany receivables/payables, accounts payable, deferred merchant
52
payables and other balances and transactions denominated in foreign currencies. We have established policies, procedures and internal processes governing
our management of market risks and the use of financial instruments to manage and attempt to mitigate our exposure to such risks.
Interest Rates
Our primary exposure to changes in interest rates relates primarily to our cash, cash equivalents, investment portfolio at any point in time, 2025 and
2026 Senior Notes, and borrowings, if any, under our existing Credit Facility.
Changes in interest rates affect the amount of interest earned on our cash, cash equivalents, and marketable securities, if any, and the fair value of
those securities. Our interest income and expense are most sensitive to fluctuations in U.S. interest rates. We generally invest our excess cash in available
on demand bank deposits and term deposits at major global financial institutions, money market funds, and marketable securities. Our investment policy
and strategy is focused on capital preservation and supporting our liquidity requirements. We invest in highly-rated securities, and our investment policy
limits the amount of credit exposure to any one issuer. Our investment policy requires our investments to be investment grade, with the primary objective of
minimizing the potential risk of principal loss.
As of December 31, 2023 and 2022, respectively, we had no outstanding marketable securities in our investment portfolio, and no outstanding
borrowings under our Credit Facility. In July 2020, we issued 2025 Senior Notes with a principal balance of $500 million at a fixed rate of 7.0% and in
March 2021, we issued 2026 Senior Notes with a principal balance of $345 million at a fixed rate of 0.25%. As of December 31, 2023, the fair value of our
2025 Senior Notes and 2026 Senior Notes were approximately $502 million and $304 million, respectively, based on recently reported market transactions
and prices for identical or similar financial instruments obtained from a third-party pricing source. Since our 2025 Senior Notes and 2026 Senior Notes bear
interest at a fixed rate, we are more sensitive to the capital market conditions of our shares than changes in interest rates. The fair value of the 2025 Senior
Notes and 2026 Senior Notes will likely change based on the capital market conditions.
Refer to “Note 3: Financial Instruments and Fair Value Measurements” and “Note 8: Debt” in the notes to our consolidated financial statements in
Item 8 of this Annual Report on Form 10-K for further information on our cash and cash equivalents, investments and other financial instruments, 2026
Senior Notes, 2025 Senior Notes and our Credit Facility.
We currently do not hedge our interest rate risk; however, we are continually evaluating the interest rate market, and if we become increasingly
exposed to potentially volatile movements in interest rates, and if these movements are material, this could cause us to adjust our financing strategy. We did
not experience material changes in interest rate exposures or any material financial impact from adverse changes in interest rates for the years ended
December 31, 2023, 2022 or 2021.
Foreign Currency Exchange Rates
We conduct business in certain international markets, largely in the Europe, including the U.K., and also in countries such as Singapore and
Australia. Because we operate in international markets, we have exposure to different economic climates, political arenas, tax systems and regulations that
could affect foreign currency exchange rates.
Some of our subsidiaries maintain their accounting records in their respective local currencies other than the U.S. dollar. Consequently, changes in
foreign currency exchange rates may impact the translation of those subsidiary’s financial statements into U.S. dollars. As a result, we face exposure to
adverse movements in foreign currency exchange rates as the financial results of our non-U.S. dollar operations are translated from local currency, or
functional currency, into U.S. dollars upon consolidation. If the U.S. dollar weakens against the functional currency, the translation of these foreign
currency denominated balances will result in increased net assets, revenue, operating expenses, operating income and net income upon consolidation.
Similarly, our net assets, revenue, operating expenses, operating income and net income will decrease upon consolidation if the U.S. dollar strengthens
53
against the functional currency. The effect of foreign currency exchange on our business historically has varied from quarter to quarter and may continue to
do so, potentially materially. In order to provide a meaningful assessment of the foreign currency exchange rate risk associated with our consolidated
financial statements, we performed a sensitivity analysis. A hypothetical 10% decrease of the foreign currency exchange rates in our significant
international markets relative to the U.S. dollar, or strengthening of the U.S. dollar, would generate an estimated unrealized loss of approximately $34
million related to a decrease in our net assets as of December 31, 2023, which would initially be recorded to accumulated other comprehensive income
(loss) on our consolidated balance sheet.
In addition, foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in
transactional gains and losses. We recognize these transactional gains and losses (primarily Euro and British pound currency transactions) in our
consolidated statement of operations and have recorded net foreign currency exchange losses of $5 million, $9 million and $6 million for the years ended
December 31, 2023, 2022 and 2021, respectively, in “other income (expense), net” on our consolidated statements of operations. Future transactional gains
and losses are inherently difficult to predict as they are reliant on how the multiple currencies in which we transact fluctuate in relation to the U.S. dollar
and other functional currencies, and the relative composition and denomination of monetary assets and liabilities each period.
We manage our exposure to foreign currency risk through internally established policies and procedures. To the extent practicable, we minimize our
foreign currency exposures by maintaining natural hedges between our current assets and current liabilities in similarly denominated foreign currencies, as
well as, using derivative financial instruments. We use foreign currency forward exchange contracts (“forward contracts”) to manage certain short-term
foreign currency risk to attempt to reduce the effects of fluctuating foreign currency exchange rates on our cash flows denominated in foreign currencies.
We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. Our objective is to hedge only those foreign
currency exposures that can be confidently identified and quantified and that may result in significant impacts to our cash or the consolidated statement of
operations. Our policy does not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there are no
underlying exposures.
The forward contracts which we have entered into to date, have principally addressed foreign currency exchange fluctuation risk between the Euro
and the U.S. dollar. We account for these forward contacts, which have not been designated as hedges under GAAP to date, as either assets or liabilities and
carry them at fair value. We had outstanding forward contracts as of December 31, 2023 and 2022, with a total notional value of $9 million and $18 million,
respectively. These forward contracts were not designated as hedges and had maturities of less than 90 days. We recognize gains and losses from forward
contracts in other income (expense), net on our consolidated statement of operations upon settlement or a change in fair value, which was not material for
the year ended December 31, 2023. We recorded a net gain of $4 million and $2 million for the years ended December 31, 2022 and 2021, respectively,
related to our forward contracts. Refer to “Note 3: Financial Instruments and Fair Value Measurements” in the notes to the consolidated financial
statements in Item 8 of this Annual Report on Form 10-K for further detail on our derivative instruments.
Our exposure to potentially volatile movements in foreign currency exchange rates will increase as we increase our operations in international
markets. Foreign currency exchange rate movement is linked to variability in the macroeconomic environment such as inflation and interest rates,
governmental actions, and geopolitical events such as regional conflicts. We regularly monitor the macroeconomic environment, which has seen some
volatility from the conflict between Russia and Ukraine, sanctions and increased cyberattacks, and, more recently, the conflict in the Middle East.
Developments in the macroeconomic environment could cause us to adjust our foreign currency risk strategies. Continued uncertainty regarding our
international operations and U.K. and E.U. relations may result in future currency exchange rate volatility which may impact our business and results of
operations.
54
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements and Supplementary Data:
Report of Independent Registered Public Accounting Firm (KPMG LLP, Boston, Massachusetts, Auditor Firm ID: 185)
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
56
59
60
61
62
63
64
55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Tripadvisor, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Tripadvisor, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the
related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the
three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 16, 2024 expressed an unqualified opinion on
the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of unrecognized tax benefits related to transfer pricing
As discussed in Notes 2 and 10 to the consolidated financial statements, during the year ended December 31, 2023, the Company recorded
additional income tax expense and transfer pricing income tax reserves, inclusive of estimated interest, of $24 million for open tax periods based
on a review of the impact of a settlement for certain transfer pricing arrangements between its U.S. subsidiaries and foreign subsidiaries
56
for the 2009 through 2011 tax years. The Company records a liability to address uncertain tax positions taken in previously filed tax returns or
that the Company expects to take in a future tax return. The determination to record a liability is based upon an analysis of each individual tax
position, taking into consideration whether it is more likely than not that the tax position, based on technical merits, will be sustained upon
examination.
We identified the evaluation of certain inputs to the estimate of unrecognized tax benefits related to transfer pricing as a critical audit matter.
Complex auditor judgment, including specialized skills and knowledge, was required in assessing estimated unrecognized tax benefits related to
transfer pricing based on interpretation of tax laws and regulations and settlements.
The following are the primary procedures we performed to address this critical audit matter:
• We evaluated the design and tested the operating effectiveness of an internal control over the Company's process for estimating
unrecognized tax benefits related to transfer pricing, including a control related to certain inputs to the estimate.
• We involved tax professionals with specialized skills and knowledge, who assisted in analyzing certain inputs to the Company’s
determination of unrecognized tax benefits related to transfer pricing based on interpretation of tax laws and regulations and
settlements.
Sufficiency of audit evidence over revenue
As discussed in Notes 2 and 18 to the consolidated financial statements, and disclosed in the consolidated statements of operations, the Company
had $1,788 million in revenue, net of intersegment revenue of $134 million, for the year ended December 31, 2023, of which $1,031 million was
Brand Tripadvisor related, $737 million was Viator related and $154 million was TheFork related. Each of these categories of revenue has
multiple revenue streams and the Company's processes and information technology (IT) systems differ between each revenue stream.
We identified the evaluation of sufficiency of audit evidence over revenue as a critical audit matter. This matter required especially subjective
auditor judgment due to the number of revenue streams and the related IT applications utilized throughout the revenue recognition processes.
Subjective auditor judgment was required to evaluate that relevant revenue data was captured and aggregated throughout these various IT
applications. This matter also included determining the revenue streams over which procedures would be performed and evaluating the nature
and extent of evidence obtained over each revenue stream, both of which included the involvement of IT professionals with specialized skills and
knowledge.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature
and extent of procedures to be performed over revenue. For each revenue stream where procedures were performed:
• We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This
included controls related to accurate recording of amounts.
•
•
For certain revenue streams, we assessed the recorded revenue by selecting a sample of transactions and compared the amounts
recognized for consistency with underlying documentation, including evidence of contracts with customers.
For certain revenue streams, we assessed the recorded revenue by comparing the total cash received during the year to the revenue
recognized, including evaluating the relevance and reliability of the inputs to the assessment.
We involved IT professionals with specialized skills and knowledge, who assisted in:
•
Testing certain IT applications used by the Company in its revenue recognition processes.
57
•
Testing the transfer of relevant revenue data between certain systems used in the revenue recognition processes.
We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed.
/s/ KPMG LLP
We have served as the Company’s auditor since 2014.
Boston, Massachusetts
February 16, 2024
58
TRIPADVISOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Revenue (Note 2, Note 18)
Costs and expenses:
Cost of revenue (1) (exclusive of depreciation and amortization as shown separately
below)
Selling and marketing (1)
Technology and content (1)
General and administrative (1)
Depreciation and amortization
Restructuring and other related reorganization costs (Note 7)
Total costs and expenses
Operating income (loss)
Other income (expense):
Interest expense
Interest income
Other income (expense), net (Note 16)
Total other income (expense), net
Income (loss) before income taxes
(Provision) benefit for income taxes (Note 10)
Net income (loss)
Earnings (loss) per share attributable to common stockholders (Note 15):
Basic
Diluted
Numerator used to compute net income (loss) per share attributable to common
stockholders (Note 15):
Basic
Diluted
Weighted average common shares outstanding (Note 15):
Basic
Diluted
(1) Includes stock-based compensation expense as follows (Note 13):
Cost of revenue
Selling and marketing
Technology and content
General and administrative
2023
Year ended December 31,
2022
2021
$
1,788
$
1,492
$
902
149
940
273
191
87
22
1,662
126
(44 )
47
(4 )
(1 )
125
(115 )
10 $
116
784
222
172
97
—
1,391
101
(44 )
15
(5 )
(34 )
67
(47 )
20 $
0.07
0.08
$
$
0.14
0.14
$
$
10
11
$
$
20
21
$
$
139
145
140
146
1 $
16 $
40 $
39 $
1 $
12 $
36 $
39 $
74
469
212
167
111
—
1,033
(131 )
(45 )
1
(10 )
(54 )
(185 )
37
(148 )
(1.08 )
(1.08 )
(148 )
(148 )
137
137
1
16
46
57
$
$
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
59
TRIPADVISOR, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax (1)
Reclassification adjustments included in net income (loss), net of tax
Total other comprehensive income (loss), net of tax
Comprehensive income (loss)
2023
Year ended December 31,
2022
2021
10 $
11
—
11
21 $
20 $
(27 )
1
(26 )
(6 ) $
(148 )
(24 )
2
(22 )
(170 )
$
$
(1)
Deferred income tax liabilities related to these amounts are not material. Refer to “Note 10: Income Taxes” for further information.
The accompanying notes are an integral part of these consolidated financial statements.
60
TRIPADVISOR, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except number of shares and per share amounts)
December 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents (Note 3)
Accounts receivable, net (allowance for expected credit losses of $21 and $28, respectively) (Note 2, Note 3)
Prepaid expenses and other current assets
Total current assets
Property and equipment, net (Note 4, Note 5)
Operating lease right-of-use assets (Note 5)
Intangible assets, net (Note 6)
Goodwill (Note 6)
Non-marketable investments (Note 3)
Deferred income taxes, net (Note 10)
Other long-term assets, net of allowance for credit losses of $10 and $10, respectively
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Deferred merchant payables (Note 2)
Deferred revenue (Note 2)
Accrued expenses and other current liabilities (Note 7)
Total current liabilities
Long-term debt (Note 8)
Finance lease obligation, net of current portion (Note 5)
Operating lease liabilities, net of current portion (Note 5)
Deferred income taxes, net (Note 10)
Other long-term liabilities (Note 9)
Total Liabilities
Commitments and contingencies (Note 11)
Stockholders’ equity: (Note 14)
Preferred stock, $0.001 par value
Authorized shares: 100,000,000
Shares issued and outstanding: 0 and 0, respectively
Common stock, $0.001 par value
Authorized shares: 1,600,000,000
Shares issued: 149,775,361 and 146,891,538, respectively
Shares outstanding: 124,881,494 and 128,046,924, 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
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock-common stock, at cost, 24,893,867 and 18,844,614 shares, respectively
Total Stockholders’ Equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,067 $
192
38
1,297
191
15
43
829
32
86
44
2,537 $
28 $
237
49
258
572
839
51
6
1
197
1,666
—
—
—
1,493
271
(71 )
(822 )
871
2,537 $
$
$
$
1,021
205
44
1,270
194
27
51
822
34
78
93
2,569
39
203
44
247
533
836
58
15
1
265
1,708
—
—
—
1,404
261
(82 )
(722 )
861
2,569
The accompanying notes are an integral part of these consolidated financial statements.
61
TRIPADVISOR, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions, except number of shares)
Balance as of December 31, 2020
Net income (loss)
Other comprehensive income (loss), net of tax
Issuance of common stock related to exercise
of options and vesting of RSUs
Purchase of capped calls, net of tax of
$9 million (Note 8)
Withholding taxes on net share settlements of
equity awards
Stock-based compensation (Note 13)
Balance as of December 31, 2021
Net income (loss)
Other comprehensive income (loss), net of tax
Issuance of common stock related to exercise
of options and vesting of RSUs
Withholding taxes on net share settlements of
equity awards
Stock-based compensation (Note 13)
Balance as of December 31, 2022
Net income (loss)
Other comprehensive income (loss), net of tax
Issuance of common stock related to vesting
of RSUs
Repurchase of common stock (Note 14)
Withholding taxes on net share settlements of
equity awards
Stock-based compensation (Note 13)
Common stock
Class B
common stock
Amount
Shares
Amount
Shares
140,775,22
1
Additional
paid-in
capital
Accumulated
other
Retained
earnings
comprehensive
income (loss)
Treasury stock
Shares
(18,844,61
Amount
Total
$ —
12,799,999
$ —
$
1,253
$
$
389
(148 )
(34 )
(22 )
4 ) $ (722 ) $
3,881,428
—
8
(26 )
(44 )
135
144,656,64
9
$ —
12,799,999
$ —
$
1,326
$
$
241
20
(56 )
(26 )
(18,844,61
4 ) $ (722 ) $
2,234,889
—
—
(20 )
98
146,891,53
8
$ —
12,799,999
$ —
$
1,404
$
$
261
10
(82 )
11
(18,844,61
4 ) $ (722 ) $
2,883,823
—
—
(17 )
106
(6,049,253 )
(100 )
(24,893,86
886
(148 )
(22 )
8
(26 )
(44 )
135
789
20
(26 )
—
(20 )
98
861
10
11
—
(100 )
(17 )
106
Balance as of December 31, 2023
149,775,36
1
$ —
12,799,999
$ —
$
1,493
$
271
$
(71 )
7 ) $ (822 ) $
871
The accompanying notes are an integral part of these consolidated financial statements.
62
TRIPADVISOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Year ended December 31,
2022
2023
2021
$
10
$
20 $
(148 )
Depreciation and amortization
Stock-based compensation expense (Note 13)
Deferred income tax expense (benefit) (Note 10)
Provision for expected credit losses (Note 2)
Other, net
Changes in operating assets and liabilities, net:
Accounts receivable, prepaid expenses and other assets
Accounts payable, accrued expenses and other liabilities
Deferred merchant payables
Income tax receivables/payables, net
Deferred revenue
Net cash provided by (used in) operating activities
Investing activities:
Capital expenditures, including capitalized website development
Other investing activities, net
Net cash provided by (used in) investing activities
Financing activities:
Repurchase of common stock (Note 14)
Proceeds from issuance of 2026 Senior Notes, net of financing costs (Note 8)
Purchase of capped calls in connection with 2026 Senior Notes (Note 8)
Payment of financing costs related to Credit Facility (Note 8)
Proceeds from exercise of stock options (Note 13)
Payment of withholding taxes on net share settlements of equity awards
Payments of finance lease obligation and other financing activities, net (Note 5)
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Supplemental disclosure of cash flow information:
Cash paid (received) during the period for income taxes, net of refunds
Cash paid during the period for interest
Supplemental disclosure of non-cash investing and financing activities:
Stock-based compensation capitalized website development costs (Note 13)
87
96
(25 )
6
9
6
11
32
(1 )
4
235
(63 )
—
(63 )
(100 )
—
—
(3 )
—
(17 )
(7 )
(127 )
1
46
1,021
1,067
$
140
39
$
$
97
88
(19 )
6
7
(87 )
72
99
107
10
400
(56 )
4
(52 )
—
—
—
—
—
(20 )
(7 )
(27 )
(23 )
298
723
1,021 $
(40 ) $
40 $
10
$
10 $
111
120
(44 )
3
19
(73 )
30
81
1
8
108
(54 )
—
(54 )
—
340
(35 )
—
8
(44 )
(6 )
263
(12 )
305
418
723
5
43
13
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
63
TRIPADVISOR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND BUSINESS DESCRIPTION
We refer to Tripadvisor, Inc. and our wholly-owned subsidiaries as “Tripadvisor,” “Tripadvisor group,” “the Company,” “us,” “we” and “our” in
these notes to the consolidated financial statements. The Company renamed our Tripadvisor Core segment to “Brand Tripadvisor”, and its “Tripadvisor-
branded display and platform” revenue stream within the Brand Tripadvisor segment, as “Media and advertising” revenue. These nomenclature changes
had no impact on the composition of our segments, revenue streams, or on any current or historic financial information.
On December 20, 2011, Expedia Group, Inc. (“Expedia”) completed a spin-off of Tripadvisor into a separate publicly traded Delaware corporation.
We refer to this transaction as the “Spin-Off.” Tripadvisor’s common stock began trading on The Nasdaq as an independent public company on December
21, 2011, under the trading symbol “TRIP.”
On December 11, 2012, Liberty Interactive Corporation, or Liberty, purchased an aggregate of approximately 4.8 million shares of common stock of
Tripadvisor from Barry Diller, our former Chairman of the Board of Directors and Senior Executive, and certain of his affiliates. As a result, Liberty
beneficially owned approximately 18.2 million shares of our common stock and 12.8 million shares of our Class B common stock.
On August 27, 2014, the entire beneficial ownership of our common stock and Class B common stock held by Liberty was acquired by Liberty
TripAdvisor Holdings, Inc., or LTRIP. Simultaneously, Liberty, LTRIP’s former parent company, distributed, by means of a dividend, to the holders of its
Liberty Ventures common stock, Liberty’s entire equity interest in LTRIP. We refer to this transaction as the “Liberty Spin-Off”. As a result of the Liberty
Spin-Off, effective August 27, 2014, LTRIP became a separate, publicly traded company holding 100% of Liberty’s interest in Tripadvisor.
As a result of these transactions, and as of December 31, 2023, LTRIP beneficially owned approximately 16.4 million shares of our common stock
and 12.8 million shares of our Class B common stock, which constitute approximately 13% of the outstanding shares of common stock and 100% of the
outstanding shares of Class B common stock. Assuming the conversion of all of LTRIP’s shares of Class B common stock into common stock, LTRIP
would beneficially own approximately 21% of the outstanding common stock. However, because each share of Class B common stock is entitled to ten
votes per share and each share of common stock is entitled to one vote per share, LTRIP may be deemed to beneficially own equity securities representing
approximately 57% of our voting power.
Description of Business
The Tripadvisor group operates as a family of brands with a purpose of connecting people to experiences worth sharing. Our vision is to be the
world’s most trusted source for travel and experiences. The Company operates across three reportable segments: Brand Tripadvisor (formerly Tripadvisor
Core), Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering
rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.
Brand Tripadvisor’s purpose is to empower everyone to be a better traveler by serving as the world’s most trusted and essential travel guidance
platform. The Tripadvisor brand offers travelers and experience seekers an online global platform for travelers to discover, generate, and share authentic
user-generated content (“UGC”) in the form of ratings and reviews for destinations, points-of-interest (“POIs”), experiences, accommodations, restaurants,
and cruises in over 40 countries and in more than 20 languages across the world. Tripadvisor offers more than 1 billion user-generated ratings and reviews
on over 8 million experiences, accommodations, restaurants, airlines, and cruises.
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Viator enables travelers to discover and book iconic, unique and memorable experiences from experience operators around the globe. Our online
marketplace is comprehensive, connecting travelers to bookable tours, activities and attractions—consisting of over 350,000 experiences from more than
55,000 operators.
TheFork provides an online marketplace that enables diners to discover and book online reservations at approximately 55,000 restaurants in 11
countries, across the U.K., western and central Europe.
Risks and Uncertainties
Our business was negatively impacted by the risks and uncertainties related to the COVID-19 pandemic and our business would be adversely and
materially affected upon a resurgence of COVID-19 or the emergence of any new pandemic or other health crisis that results in reinstated travel bans and/or
other government restrictions and mandates. Following the lifting of restrictions in connection with the COVID-19 pandemic, travel demand increased. In
addition, the U.S. and other countries saw significant increased inflation and decreases in discretionary spending patterns by consumers. If macroeconomic
conditions deteriorate, consumer demand and spending may decline, we may not be able to pass on increased costs to our customers and our inability or
failure to navigate the macroeconomic environment could harm our business, results of operations and financial condition.
Additionally, natural disasters, public health-related events, political instability, geopolitical conflicts, including the evolving events in the Middle
East, acts of terrorism, fluctuations in currency values, and changes in global economic conditions, are examples of other events that could have a negative
impact on the travel industry, and as a result, our financial results in the future.
Seasonality
Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel partner advertising investments, and therefore
our revenue and operating profits, have also historically followed a seasonal pattern. Our financial performance tends to be seasonally highest in the second
and third quarters of a given year, which includes the seasonal peak in consumer demand, including traveler accommodation stays, and travel experiences
taken, compared to the first and fourth quarters, which represent seasonal low points. In addition, during the first half of the year, experience bookings
typically exceed the amount of completed experiences, resulting in higher cash flow related to working capital, while during the second half of the year,
particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative. Other factors may also impact typical
seasonal fluctuations, such as significant shifts in our business mix, adverse economic conditions, public health-related events, as well as other factors.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying consolidated financial statements include Tripadvisor, our wholly-owned subsidiaries, and entities we control, or in which we
have a variable interest and are the primary beneficiary of expected cash profits or losses. All inter-company accounts and transactions have been
eliminated in consolidation. Additionally, certain prior period amounts may have been reclassified for comparability with the current period presentation,
none of which were material. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”). We believe that the assumptions underlying our consolidated financial statements are reasonable. However, these
consolidated financial statements do not present our future financial position, or the results of our future operations and cash flows.
One of our subsidiaries that operates in China has variable interests in affiliated entities in China in order to comply with Chinese laws and
regulations, which restrict foreign investment in internet content provision businesses. Although we do not own the capital stock of these Chinese affiliates,
we consolidate their results as we are the primary beneficiary of the cash losses or profits of these variable interest affiliates and have the power to direct
the activity of these affiliates. Our variable interest entities’ financial results were not material for all periods presented. Investments in entities in which we
do not have a controlling financial interest are accounted for under
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the equity method, the fair value option, as available-for-sale securities, or at cost adjusted for observable price changes and impairments, as appropriate.
Accounting Estimates
We use estimates and assumptions in the preparation of our consolidated financial statements in accordance with GAAP. Our estimates and
assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated
financial statements. These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results
could differ significantly from these estimates. The significant estimates underlying our consolidated financial statements are within accounting for income
taxes. Refer to our accounting policy for income taxes disclosed below and “Note 10: Income Taxes” for information regarding our significant income tax
estimates.
Revenue Recognition
We generate all our revenue from contracts with customers. We recognize revenue when we satisfy a performance obligation by transferring control
of the promised services to a customer in an amount that reflects the consideration that we expect to receive in exchange for those services. When we act as
an agent in the transaction, we recognize revenue for only our commission on the arrangement. We determine revenue recognition through the following
steps:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
(1)
(2)
(3) Determination of the transaction price
(4) Allocation of the transaction price to the performance obligations in the contract
(5) Recognition of revenue when, or as, we satisfy a performance obligation.
At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to
transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, we consider all of the services promised in
the contract regardless of whether they are explicitly stated or are implied by customary business practices. We have provided qualitative information about
our performance obligations for our principal revenue streams discussed below. There was no significant revenue recognized in the years ended December
31, 2023, 2022 and 2021 related to performance obligations satisfied in prior periods, respectively. We have applied a practical expedient and do not
disclose the value of unsatisfied performance obligations that have an original expected duration of less than one year. The Company expects to complete
its performance obligations within one year from the initial transaction date. The value related to our remaining or partially satisfied performance
obligations relates to subscription services that are satisfied over time or services that are recognized at a point in time, but not yet achieved. Our timing of
services, invoicing and payments are discussed in more detail below and do not include a significant financing component. Our customer invoices are
generally due 30 days from the time of invoicing.
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one
year. Although the substantial majority of our contract costs have an amortization period of less than one year, we have determined contract costs arising
from certain sales incentives have an amortization period in excess of one year given the high likelihood of contract renewal. Sales incentives are not paid
upon renewal of these contracts and therefore are not commensurate with the initial sales incentive costs. As of December 31, 2023 and 2022, there was $3
million and $4 million, respectively, of unamortized contract costs in other long-term assets on our consolidated balance sheet. We amortize these contract
costs on a straight-line basis over the estimated customer life, which is based on historical customer retention rates. Amortization expense recorded to
selling and marketing expense on our consolidated statements of operations during each of the years ended December 31, 2023, 2022 and 2021, was $1
million. We assess such asset for impairment when events or circumstances indicate that the carrying amount may not be recoverable. No impairments were
recognized during the years ended December 31, 2023, 2022 and 2021.
The recognition of revenue may require the application of judgment related to the determination of the performance obligations and the timing of
when the performance obligations are satisfied. The determination of our
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performance obligations does not require significant judgment given that we generally do not provide multiple services to a customer in a transaction, and
the point in which control is transferred to the customer is readily determinable. In instances where we recognize revenue over time, we generally have
either a subscription service that is recognized over time on a straight-line basis using the time-elapsed output method, or based on other output measures
that provide a faithful depiction of the transfer of our services. When an estimate for cancellations is included in the transaction price, we base our estimate
on historical cancellation rates and current trends. Taxes assessed by a government authority that are both imposed on and concurrent with a specific
revenue–producing transaction, that are collected by us from a customer, are reported on a net basis, or in other words excluded from revenue on our
consolidated financial statements.
Practical Expedients and Exemptions
•
•
We expense costs to obtain a contract as incurred, such as sales incentives, when the amortization period would have been one year or
less.
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less
and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
The application of our revenue recognition policies and description of our principal activities, organized by reportable segment from which we
generate our revenue, are presented below.
Brand Tripadvisor Segment (formerly Tripadvisor Core Segment)
Tripadvisor-branded Hotels Revenue. Our largest source of Brand Tripadvisor segment revenue is generated from click-based advertising on
Tripadvisor-branded websites, which we refer to as our hotel meta (also referred to as hotel auction) revenue, which is primarily comprised of contextually-
relevant booking links to our travel partners’ websites. Our click-based travel partners are predominantly online travel agencies, or OTAs, and hotels. Click-
based advertising is generally priced on a cost-per-click, or “CPC” basis, with payments from travel partners determined by the number of travelers who
click on a link multiplied by the CPC rate for each specific click. CPC rates are determined in a dynamic, competitive auction process, where the travel
partner bids for rates and availability to be listed on our platform. When a CPC bid is submitted, the travel partner agrees to pay us the bid amount each
time a traveler clicks on the link to that travel partner’s website. Bids can be submitted periodically – as often as daily – on a property-by-property basis.
We record click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner’s website as our performance obligation is
fulfilled at that time. Click-based revenue is generally billed to our travel partners monthly, consistent with the timing of the service. We also generate
revenue from our cost-per-acquisition, or “CPA” model, which consists of contextually-relevant booking links to our travel partners’ websites which are
advertised on our platform. We earn a commission from our travel partners, based on a pre-determined contractual commission rate, for each traveler who
clicks to and books a hotel reservation on the travel partner's website, which results in a traveler stay. CPA revenue is billable only upon the completion of
each traveler’s stay resulting from a hotel reservation. The travel partners provide the service to the travelers and we act as an agent under GAAP. Our
performance obligation is complete at the time of the hotel reservation booking, and the commission earned is recognized upon booking, as we have no
post-booking service obligations. We recognize this revenue net of an estimate of the impact of cancellations, using historical cancellation rates and current
trends. Contract assets are recognized at the time of booking for commissions that are billable upon the completion of a traveler's stay. CPA revenue is
generally billed to our travel partners two months after traveler stays are completed.
In addition, we offer business-to-business, or “B2B,” solutions to hotels, including subscription-based advertising to hotels, owners of B&Bs, and
other specialty lodging properties. Our performance obligation is generally to enable subscribers to advertise their businesses on our platform, as well as to
manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription-based
advertising services are predominantly sold for a flat fee for a contracted period of time of one year or less and revenue is recognized on a straight-line
basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription-based advertising services are
generally billed at the inception of the service. When prepayments are received, we recognize deferred revenue initially on our consolidated balance sheet
for the amount of prepayment in excess of revenue recognized, until the performance obligation is satisfied. To a lesser extent, we offer travel partners the
opportunity to advertise and promote their
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business through hotel sponsored placements on our platform. This service is generally priced on a CPC basis, with payments from travel partners
determined by the number of travelers who click on the sponsored link multiplied by the CPC rate for each specific click. CPC rates for hotel sponsored
placements that our travel partners pay are generally based on bids submitted as part of an auction by our travel partners or a pre-determined contractual
CPC rate. The travel partner agrees to pay us the CPC rate amount each time a traveler clicks on a link to the travel partner’s website. We record this click-
based advertising revenue as the click occurs and traveler leads are sent to the travel partner as our performance obligation is fulfilled at that time. Hotel
sponsored placements revenue is generally billed to our travel partners monthly, consistent with the timing of the service.
Media and Advertising Revenue. We offer travel partners the ability to promote their brands through display-based advertising, or sometimes
referred to as “media advertising”, placements across our platform. Our display-based advertising clients are predominantly direct suppliers of hotels,
airlines and cruises, as well as destination marketing organizations. We also sell display-based advertising to OTAs and other travel related businesses, as
well as to advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions, or “CPM,” basis. The
performance obligation in our display-based advertising arrangements is to display a number of advertising impressions on our platform and we recognize
revenue for impressions as they are delivered. Services are generally billed monthly. We have applied the practical expedient to measure progress toward
completion, as we have the right to invoice the customer in an amount that directly corresponds with the value to the customer of our performance to date,
which is measured based on impressions delivered.
Tripadvisor Experiences and Dining Revenue. We generate revenue from our experiences and restaurant offerings on Tripadvisor-branded websites
and mobile apps. Tripadvisor receives intercompany (intersegment) revenue consisting of affiliate marketing commissions earned primarily from
experience bookings and, to a lesser extent, restaurant reservation bookings, on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and
TheFork, respectively, which are eliminated on a consolidated basis. The performance obligations, timing of customer payments for our experiences and
dining transactions, and methods of revenue recognition are consistent with the Viator and TheFork segments, as described below. In addition, Tripadvisor
restaurant offerings, or B2B restaurant offerings, generate subscription fees for subscription-based advertising to our restaurant partners that allow
restaurants to manage and promote their website URL, email address, phone number, special offers and other information related to their business, as well
as access to certain online reservation management services, marketing analytic tools, and menu syndication services. As the performance obligation is to
provide restaurants with access to these services over a subscription period, the subscription fee revenue is recognized over the subscription period on a
straight-line basis as efforts are expended evenly throughout the contract period. Subscription-based advertising services are generally billed at the
inception of the service. When prepayments are received, we recognize deferred revenue initially on our consolidated balance sheet for the amount of
prepayment in excess of revenue recognized, until the performance obligation is satisfied. In addition, we offer restaurant partners the opportunity to
advertise and promote their business through restaurant media advertising placements on our platform. This service is generally priced on a CPC basis, with
payments from restaurant partners determined by the number of clicks by consumers on the sponsored link multiplied by the CPC rate for each specific
click. CPC rates for media advertising placements agreed to by our restaurant partners are based on a pre-determined contractual rate. We record this click-
based advertising revenue as the click occurs and diner leads are sent to the restaurant partner as our performance obligation is fulfilled at that time. Click-
based revenue is generally billed to our restaurant partners monthly, consistent with the timing of the service.
Other Revenue. We also offer travelers alternative accommodation rentals, cruises, flights, and rental cars solutions on our platforms which
complement our end-to-end travel experience. Our alternative accommodation rentals offering provides information and services that allow travelers to
research and book vacation and short-term rental properties, including full homes, condominiums, villas, beach properties, cabins and cottages. Our
alternative accommodation rentals offering primarily generates revenue by offering individual property owners and managers the ability to list their
properties on our platform thereby connecting with travelers through a free-to-list, commission-based option. These properties are listed on our Tripadvisor-
branded websites and mobile apps, and Tripadvisor's portfolio of travel media brands, including, www.flipkey.com, www.holidaylettings.co.uk, and
www.niumba.com. We earn commissions associated with rental transactions through our free-to-list model from both the traveler and the property owner or
manager. We provide post-booking services to the travelers, property owners and managers until the time the rental commences, which is the time the
performance obligation is completed. Revenue from transaction fees is recognized at the time that the rental commences. Under GAAP, we act
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as an agent in the transactions, as we do not control any properties before the property owner provides the accommodation to the traveler and do not have
inventory risk. We generally collect payment from the traveler at the time of booking, representing the amount due to the property owner or manager, as
well as our commission. That portion of the payment representing our commission is recorded as deferred revenue on our consolidated balance sheet until
revenue is recognized, and that portion of the payment representing the amount due to the property owner is recorded as a deferred merchant payable on our
consolidated balance sheet until payment is made to the property owner after the completion of the rental.
In addition, Other Revenue includes revenue generated from cruises, flights, and rental cars offerings on Tripadvisor-branded websites and mobile
apps and Tripadvisor’s portfolio of brands, which primarily includes click-based advertising and display-based advertising revenue. The performance
obligations, timing of customer payments for these offerings, and methods of revenue recognition are generally consistent with click-based advertising and
display-based advertising revenue, as described above.
Viator Segment
We provide an online marketplace that allows travelers to research and book tours, activities and attractions in popular travel destinations across the
globe through our Viator-branded platform, which includes website, mobile web, and mobile app. Through Viator, we also power traveler bookings of
tours, activities and attractions on behalf of third-party distribution partner websites, including the Tripadvisor platform as well as many of the world’s
major OTA’s, airlines, hotels, online and offline travel agencies, and other prominent content and eCommerce brands.
We work with local tour, activity, and experience operators (“operators”) to provide travelers (“customers”) the ability to book tours, activities and
attractions, or “experiences”, in destinations around the world. We generate commissions for each booking transaction we facilitate through our online
reservation system, in exchange for certain activities, including the use of the Company’s booking platform, post-booking 24/7 customer support until the
time of the experience and payment processing activities as the merchant of record, which is the completion of the performance obligation. These activities
are not distinct from each other and are not separate performance obligations. As a result, the Company’s single performance obligation is to facilitate an
experience, which is complete upon the time the experience occurs, and when revenue is recognized. We do not control the experience or have inventory
risk before the operator provides the experience to our customer and therefore act as agent for substantially all of these transactions under GAAP.
We collect payment from the customer prior to the experience occurring, which includes both our commission and the amount due to the operator.
We record our commissions as deferred revenue on our consolidated balance sheet when payment is received, including amounts which are refundable
subject to cancellation, until the experience occurs and revenue is recognized. The amount due to the operator is recorded as a deferred merchant payable
on our consolidated balance sheet until completion of the experience, after which payment is remitted to the operator.
To a much lesser extent, we earn commissions from third-party distribution partners, in this case, the customers, who display and promote on their
websites the operator experiences available on our platform to generate bookings. In these transactions, we are not the merchant of record, and we generally
invoice and receive commissions directly from third-party distribution partners. Our performance obligation is to allow the third-party distribution partners
to display and promote on their website experiences offered by operators who utilize our platform, in exchange for which, we earn a commission when
travelers book and complete an experience on the third-party distribution partner's website. We do not control the service or have inventory risk, and
therefore act as an agent for these transactions under GAAP. We generally receive payment prior to the experience date for these transactions, and make
payments to the operators after the experience is complete. Our performance obligation is complete, and revenue is recognized at the time of the booking,
as we have no post-booking obligations to the customer. We recognize this revenue net of an estimate of the impact of cancellations, which is not material,
using historical cancellation rates and current trends. Contract assets are recognized for commissions that are contractually billable contingent upon
completion of the experience.
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TheFork Segment
We provide information and services for consumers to research and book restaurants through our online restaurant reservations platform, TheFork.
We primarily generate transaction fees (or per seated diner fees) that are paid by our restaurant customers for diners seated primarily from bookings through
TheFork’s online reservation system. The transaction fee is recognized as revenue after the reservation is fulfilled, or as diners are seated by our restaurant
customers. We invoice restaurants monthly for transaction fees. To a lesser extent, we also generate subscription fees for providing access to certain online
reservation management services, marketing analytic tools, and menu syndication services. For these services, our performance obligation is to provide
restaurants with access to these services over the subscription period, which generally is one-month, and we recognize revenue once our performance
obligation is met and invoice restaurants monthly for these subscription services.
Refer to “Note 18: Segment and Geographic Information” for disaggregation of the Company’s revenue by major products and revenue sources. We
have determined that disaggregating revenue into these categories achieves the disclosure objective under GAAP, which is to depict how the nature,
amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Deferred Revenue
Contract liabilities generally include payments received in advance of performance under the contract, and are realized as revenue as the
performance obligation to the customer is satisfied, which we present as deferred revenue on our consolidated balance sheet. As of January 1, 2023, we had
$44 million recorded as deferred revenue on our consolidated balance sheets, of which $41 million was recognized in revenue and $3 million was refunded
due to cancellations by travelers during the year ended December 31, 2023. As of January 1, 2022, we had $36 million recorded as deferred revenue on our
consolidated balance sheets, of which $34 million was recognized in revenue and $2 million was refunded due to cancellations by travelers during the year
ended December 31, 2022. The difference between the opening and closing balances of our deferred revenue primarily results from the timing differences
between when we receive customer payments and the time in which we satisfy our performance obligations. There were no significant changes in deferred
revenue during the years ended December 31, 2023 and 2022 related to business combinations, impairments, cumulative catch-ups or other material
adjustments.
Deferred Merchant Payables
In our experience offerings and free-to-list alternative accommodation rental offerings, we receive payment from travelers at the time of booking or
prior to the experience or property rental date, and we record these amounts, net of our commissions, on our consolidated balance sheet as deferred
merchant payables. We pay the experience operators and rental property owners, after the travelers’ use. Therefore, we receive payment from the traveler
prior to paying the experience operator or rental property owner and this operating cycle represents a working capital source or use of cash to us. Our
deferred merchant payables balance was $237 million and $203 million at December 31, 2023 and 2022, respectively, on our consolidated balance sheets.
The increase in our deferred merchant payables during the year ended December 31, 2023 was primarily due to increased consumer demand for our
experience offerings.
Cost of Revenue
Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as credit card
and other booking transaction payment fees, data center costs, ad serving fees, and other revenue generating costs. In addition, cost of revenue includes
personnel and overhead expenses, including salaries, benefits, stock-based compensation and bonuses for certain customer support personnel who are
directly involved in revenue generation.
Selling and Marketing
Selling and marketing expenses consist of direct costs, including traffic generation costs from paid online traffic acquisition costs (including SEM
and other online traffic acquisition costs), syndication costs and affiliate marketing commissions, social media costs, brand advertising (including television
and other offline advertising), promotions and public relations. In addition, our selling and marketing expenses consist of indirect costs such as
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personnel and overhead expenses, including salaries, commissions, benefits, stock-based compensation, and bonuses for sales, sales support, customer
support and marketing employees.
Advertising costs
We incur advertising costs consisting of online advertising expense, including SEM and other online channels, and offline advertising costs,
including television costs and other offline channels, to promote our brands. We expense the costs associated with communicating the advertisements in the
period in which the advertisement takes place. We expense the production costs associated with advertisements in the period in which the advertisement
first takes place. For the years ended December 31, 2023, 2022 and 2021, we recorded advertising expense of $706 million, $572 million, and $282 million,
respectively, in selling and marketing expense on our consolidated statements of operations. We include prepaid advertising expenses in prepaid expenses
and other current assets on our consolidated balance sheet, which was not material as of December 31, 2023 and 2022.
Technology and Content
Technology and content expenses consist primarily of personnel and overhead expenses, including salaries and benefits, stock-based compensation
expense, and bonuses for salaried employees and contractors engaged in the design, development, testing, content support, and maintenance of our
platform. Other costs include licensing, maintenance, computer supplies, telecom, content translation and localization, and consulting costs.
General and Administrative
General and administrative expenses consist primarily of personnel and related overhead costs, including personnel engaged in leadership, finance,
legal, and human resources, as well as stock-based compensation expense for those same personnel. General and administrative costs also include
professional service fees and other fees including audit, legal, tax and accounting, and other operating costs including bad debt expense, non-income taxes,
such as sales, use, digital services, and other non-income related taxes.
Stock-Based Compensation
Stock Options. Our employee stock options generally consist of service based awards. The exercise price is equal to the market price of the
underlying shares of our common stock at the date of grant. In this regard, when granting stock option awards, our practice is to determine the applicable
grant date and to specify that the exercise price shall be the closing price of our common stock on the date of grant. Our stock options generally have a term
of ten years from the date of grant and typically vest equally over a four-year requisite service period. We amortize the grant-date fair value of our stock
option grants as stock-based compensation expense over the vesting term on a straight-line basis, with the amount of compensation expense recognized at
any date at least equaling the portion of the grant-date fair value of the award that is vested at that date.
The estimated grant-date fair value of stock options is calculated using a Black-Scholes Merton option-pricing model (“Black-Scholes model”). The
Black-Scholes model incorporates assumptions to fair value stock-based awards, which includes the risk-free rate of return, expected volatility, expected
term, and expected dividend yield. Our risk-free interest rate is based on the yields currently available on zero-coupon U.S. Treasury issues, in effect at the
time of the grant, whose remaining maturity period most closely approximates the stock option’s expected term assumption. Our expected volatility is
calculated by equally weighting the historical volatility and implied volatility on our own common stock. Historical volatility is determined using actual
daily price observations of our common stock price over a period equivalent to or approximate to the expected term of our stock option grants to date.
Implied volatility represents the volatility calculated from the observed prices of our actively traded options on our common stock. When measuring
implied volatility for a specific employee stock option grant, we generally rely on traded contracts with six month maturities or more and exercise prices
approximately equal to the exercise price of the specific option grant. We estimate our expected term using historical exercise behavior and expected post-
vest termination data. Our expected dividend yield is zero as we have not historically paid regular cash dividends on our common stock and do not expect
to pay regular cash dividends for the foreseeable future.
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Restricted Stock Units. Restricted stock units (“RSUs”) are stock awards that are granted to employees entitling the holder to shares of our common
stock as the award vests. RSUs are measured at fair value based on the quoted price of our common stock at the date of grant. We amortize the fair value of
RSUs as stock-based compensation expense over the vesting term, which is typically over a four-year requisite service period on a straight-line basis, with
the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date.
Performance-Based Awards. Performance-based stock options and RSUs vest upon achievement of certain company-based performance conditions
and a requisite service period. On the date of grant, the fair value of a performance-based award is calculated using the same method as our service based
stock options and RSUs as described above. We then assess whether it is probable that the individual performance targets would be achieved. If assessed as
probable, compensation expense will be recorded for these awards over the estimated performance period. At each reporting period, we reassess the
probability of achieving the performance targets and the performance period required to meet those targets. The estimation of whether the performance
targets will be achieved and the performance period required to achieve the targets requires judgment, and to the extent actual results or updated estimates
differ from our current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised, or
the change in estimate will be applied prospectively depending on whether the change affects the estimate of total compensation cost to be recognized or
merely affects the period over which compensation cost is to be recognized. The ultimate number of shares issued and the related compensation expense
recognized will be based on a comparison of the final performance metrics to the specified targets.
Market-Based Awards. We issue market-based performance RSUs, or MSUs, which vest upon achievement of specified levels of market conditions.
The fair value of our MSUs is estimated at the date of grant using a Monte-Carlo simulation model. The probabilities of the actual number of market-based
performance units expected to vest and resultant actual number of shares of common stock expected to be awarded are reflected in the grant date fair
values; therefore, the compensation expense for these awards will be recognized assuming the requisite service period is rendered and are not adjusted
based on the actual number of awards that ultimately vest.
Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive these awards, and
subsequent events are not indicative of the reasonableness of our original estimates of fair value.
The Company accounts for forfeitures in the period in which they occur, rather than estimating expected forfeitures.
Income Taxes
We record income taxes under the asset and liability method. Deferred tax assets and liabilities reflect our estimation of the future tax consequences
of temporary differences between the carrying amounts of assets and liabilities for book and tax purposes. We determine deferred income taxes based on the
differences in accounting methods and timing between financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or
liability for each temporary difference based on the enacted income tax rates expected to be in effect when we realize the underlying items of income and
expense. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings
experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to us for tax reporting purposes, as well as
assessing available tax planning strategies. We may establish a valuation allowance to reduce deferred tax assets to the amount we believe is more likely
than not to be realized. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or
variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially
vary from these estimates. We classify deferred tax assets and liabilities as noncurrent on our consolidated balance sheet.
We record liabilities to address uncertain tax positions we have taken in previously filed tax returns or that we expect to take in a future tax return.
The determination for required liabilities is based upon an analysis of each
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individual tax position, taking into consideration whether it is more likely than not that our tax position, based on technical merits, will be sustained upon
examination.
Cash, Cash Equivalents, Restricted Cash and Marketable Securities
Our cash consists of available on demand bank deposits held in global financial institutions. Our cash equivalents generally consist of highly liquid
investments, generally including money market funds, term deposits and marketable securities, with maturities of 90 days or less at the date of purchase.
As of December 31, 2023 and 2022, our restricted cash, which primarily consists of legally restricted deposits and escrowed security deposits, was
not material.
We classify marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date and as to
whether and when we intend to sell a particular security prior to its maturity date. Marketable securities with maturities greater than 90 days at the date of
purchase and 12 months or less remaining at the balance sheet date will be classified as short-term and marketable securities with maturities greater than 12
months from the balance sheet date will generally be classified as long-term. We classify marketable equity securities, limited by policy to money market
funds and mutual funds, as either a cash equivalent, short-term or long-term based on the nature of each security and its availability for use in current
operations.
Our marketable securities are classified and accounted for as available-for-sale, and therefore are carried at fair value, with unrealized gains and
losses, net of taxes, reported in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Fair values are determined for each
individual security in the investment portfolio. We determine the appropriate classification of our marketable securities at the time of purchase and
reevaluate the designations at each balance sheet date. We invest in highly-rated securities, and our investment policy limits the amount of credit exposure
to any one issuer, industry group and currency. The policy requires investments to be investment grade, with the primary objective of minimizing the
potential risk of principal loss and providing liquidity of investments sufficient to meet our operating and capital spending requirements and debt
repayments. Realized gains and losses on the sale of marketable securities are determined by specific identification of each security’s cost basis. We may
sell certain of our marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration,
liquidity, and duration management. The weighted average maturity of our total invested cash shall not exceed 18 months, and no security shall have a final
maturity date greater than three years, according to our investment policy.
We continually review any available-for-sale securities to determine whether their fair value is below their carrying value. If the fair value of an
available-for-sale security is below their carrying value, and either we intend to sell the security or we will be required to sell before recovery, then the
difference between fair value and carrying value is recognized as a loss in other income (expense), net on our consolidated statements of operations. If we
do not intend to sell and we will not be required to sell before recovery, then we analyze whether a portion of the unrealized loss is the result of a credit
loss. When a portion of the unrealized loss is the result of a credit loss, we recognize an allowance for expected credit losses on our consolidated balance
sheet and a corresponding loss in other income (expense), net on our consolidated statements of operations. Any portion of the unrealized loss on the
available-for-sale securities that is not attributable to a credit loss would be recognized as an unrealized loss in accumulated other comprehensive income
(loss) within our consolidated statements of changes in stockholders’ equity.
The Company's investment portfolio at any point in time may contain various investments, including, in U.S. treasury and U.S. government agency
securities, taxable and tax-exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities, overnight
demand deposits, and money market funds. The Company segments its portfolio based on the underlying risk profiles of the securities and has a zero loss
expectation for U.S. treasury and U.S. government agency securities. The Company regularly reviews the securities in an unrealized loss position and
evaluates the expected credit loss risk by considering factors such as historical experience, market data, issuer-specific factors, and current economic
conditions. As of December 31, 2023 and 2022, the Company had no available-for-sale securities.
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Accounts Receivable and Allowance for Expected Credit Losses
Accounts receivable are recognized when the right to consideration becomes unconditional and are recorded net of an allowance for expected credit
losses. We record accounts receivable at the invoiced amount. Our customer invoices are generally due 30 days from the time of invoicing.
The Company uses the “expected credit loss” methodology, allowed under GAAP, in estimating its allowance for expected credit losses. We apply
the “expected credit loss” methodology by first assessing our historical losses based on credit sales and then adding in an assessment of expected changes in
the foreseeable future, whether positive or negative, to the Company’s ability to collect its outstanding accounts receivables, or the expectation for future
losses. The Company develops its expectation for future losses by assessing the profiles of its customers using their historical payment patterns, any known
changes to those customers’ ability to fulfill their payment obligations, and assessing broader economic conditions that may impact our customers’ ability
to pay their obligations. Where appropriate, the Company performs this analysis using a portfolio approach. Portfolios comprise customers with similar
characteristics and payment history, and we have concluded that the aggregation of these customers into various portfolios does not produce a result that is
materially different from considering the affected customers individually. Customers are assigned internal credit ratings, as determined by the Company,
based on our collection profiles. Customers whose outstanding obligations are less likely to experience a credit loss are assigned a higher internal credit
rating, and those customers whose outstanding obligations are more likely to experience a credit loss are assigned a lower credit rating. We recognize a
greater credit loss allowance on the accounts receivable due from those customers in the lower credit rating tranche, as determined by the Company. When
the Company becomes aware of facts and circumstances affecting an individual customer, it also takes that specific customer information into account as
part of its calculation of expected credit losses.
The Company's exposure to credit losses may increase if our customers are adversely affected by changes in macroeconomic pressures or
uncertainty associated with local or global economic recessions, or other customer-specific factors.
The following table presents the changes in our allowance for expected credit losses for the periods presented:
Allowance for expected credit losses:
Balance, beginning of period
Provision charged to expense
Write-offs, net of recoveries and other adjustments
Balance, end of period
2023
December 31,
2022
(in millions)
2021
$
$
28 $
6
(13 )
21 $
28 $
6
(6 )
28 $
33
3
(8 )
28
Property and Equipment
We record property and equipment at cost, net of accumulated depreciation. We capitalize certain costs incurred during the application development
stage related to the development of websites and internal use software when it is probable the project will be completed and the software will be used as
intended. Capitalized costs include internal and external costs, if direct and incremental, and deemed by management to be significant. We expense costs
related to the planning and post-implementation phases of website development as these costs are incurred. Maintenance and enhancement costs (including
those costs in the post-implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the
website or software resulting in added functionality, in which case the costs are capitalized.
We compute depreciation using the straight-line method over the estimated useful lives of the assets, which is three to five years for computer
equipment, capitalized website development, office furniture and other equipment. We depreciate leasehold improvements using the straight-line method,
over the shorter of the estimated useful life of the improvement or the remaining term of the lease.
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Leases
We lease office space in a number of countries around the world, generally under non-cancelable operating lease agreements. Our corporate
headquarters is our most significant office space lease and is accounted for as a finance lease under GAAP. The Company has also entered into data center
and certain equipment leases, such as network equipment and other leases, which are not material to our consolidated financial statements.
We determine whether a contract is or contains a lease at inception of a contract. We define a lease as a contract, or part of a contract, that conveys
the right to control the use of identified property or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use
of the identified asset means that we have both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct
the use of the asset.
Our lease contracts contain both lease and non-lease components which we combine as a single component under our accounting policy by asset
class, except for office space leases and certain other leases, such as colocation data center leases, which we account separately for the lease and non-lease
components. For leases which the consideration in the contract is allocated to lease and non-lease components, we base it on each component’s relative
standalone price. We determine standalone prices for the lease components based on the prices for which other lessors lease similar assets on a standalone
basis. We determine standalone prices for the non-lease component based on the prices that third-party suppliers charge for services for similar assets on a
standalone basis. If observable standalone prices are not readily available, we estimate the standalone prices based on other available observable
information. However, for certain categories of equipment leases, such as network equipment and others, we account for the lease and non-lease
components as a single lease component. Additionally, for certain equipment leases that have similar characteristics, we apply a portfolio approach to
effectively account for operating lease right-of-use ROU assets and operating lease liabilities.
The Company uses its estimated incremental borrowing rate as the discount rate in measuring the present value of our lease payments given the rate
implicit in our leases is not typically readily determinable. Given we do not currently borrow on a collateralized basis, our incremental borrowing rate is
estimated to approximate the interest rate in which the Company would expect to pay on a collateralized basis over a similar term and payments, and in
economic environments where the leased asset is located. We use the portfolio approach to determine the discount rate for leases with similar characteristics
or when the Company is reasonably certain that doing so would not materially affect the accounting for those leases to which a single discount rate is
applied.
We establish assets and liabilities for the estimated construction costs incurred under lease arrangements where we are considered the owner for
accounting purposes only, or build-to-suit leases, to the extent we are involved in the construction of structural improvements or take construction risk prior
to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, we assess whether these arrangements qualify for sales recognition
under the sale-leaseback accounting guidance under GAAP. If we continue to be the deemed owner, for accounting purposes, the facilities are accounted for
as finance obligations.
Finance Leases
Finance lease ROU assets and finance lease liabilities are recognized at the lease commencement date or the date the lessor makes the leased asset
available for use. Finance lease ROU assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of finance lease
liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable; and (2) reduced
to reflect lease payments made during the period. Amortization expense for finance lease ROU assets and interest accretion on finance lease liabilities are
recorded to depreciation and interest expense, respectively, in our consolidated statement of operations.
We lease approximately 280,000 square feet of office space for our corporate headquarters in Needham, Massachusetts. This lease has an expiration
date of December 2030, with an option to extend the lease term for two consecutive terms of five years each and is accounted for as a finance lease.
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Operating Leases
Our office space leases, exclusive of our corporate headquarters, are operating leases, which we lease an aggregate of approximately 340,000 square
feet at nearly 30 locations across North America, Europe and Asia Pacific, in cities such as New York, London, Sydney, Barcelona and Paris, primarily
used as sales offices, subsidiary headquarters, and for international operations, pursuant to leases with various expiration dates, with the latest expiring in
October 2034.
Operating lease ROU assets and liabilities are recognized at lease commencement date, or the date the lessor makes the leased asset available for
use, based on the present value of lease payments over the lease term using the Company’s estimated incremental borrowing rate. ROU assets associated
with operating leases comprise the initial lease liability, and are then adjusted for any prepaid or deferred rent payments, unamortized initial direct costs,
and lease incentives received. Amortization expense for operating lease ROU assets and interest accretion on operating lease liabilities are recognized as a
single operating lease cost in our consolidated statement of operations, which results effectively in recognition of rent expense on a straight-line basis over
the lease period. The carrying amount of operating lease liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit
in the lease is not readily determinable; and (2) reduced to reflect lease payments made during the period. We present the combination of both the
amortization of operating lease ROU assets and the change in the operating lease liabilities in the same line item within the adjustments to reconcile net
income (loss) to net cash provided by operating activities in our consolidated statement of cash flows. Lease incentives are recognized as reductions of
rental expense on a straight-line basis over the term of the lease. Our operating leases generally include options to extend the lease terms for up to
approximately 5 years and/or terminate the leases within 1 year, which we include in our lease term if we are reasonably certain to exercise these options.
Payments under our operating leases are primarily fixed, however, certain of our operating lease agreements include rental payments which are adjusted
periodically for inflation. We recognize these costs as variable lease costs on our consolidated statement of operations, which were not material during the
years ended December 31, 2023, 2022 and 2021. In addition, our short-term lease costs were not material in any period presented.
We also establish assets and liabilities at the present value of estimated future costs to return certain of our leased facilities to their original condition
to satisfy any asset retirement obligations. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted
to the future value of the estimated restoration costs and are included in other long-term liabilities on our consolidated balance sheet. Our asset retirement
obligations were not material as of both December 31, 2023 and 2022.
Non-Marketable Equity Investments
We account for non-marketable equity investments through which we exercise significant influence but do not have control over the investee under
the equity method. Under this method, the investment, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of
the investment as they occur rather than as dividends or other distributions are received. Losses are limited to the extent of the Company’s investment in,
advances to and commitments for the investee. In the event we are unable to obtain accurate financial information from the investee in a timely manner, we
record our share of earnings or losses of such equity investment on a lag.
Non-marketable equity investments that are not accounted for under the equity method and that do not have a readily determinable fair value are
accounted for under the measurement alternative, allowed under GAAP. Under the measurement alternative, the carrying value is measured at cost, less any
impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.
Adjustments are determined primarily based on a market approach as of the transaction date. We classify our non-marketable equity investments as long-
term assets on our consolidated balance sheet as those investments do not have stated contractual maturity dates.
On a quarterly basis, we perform a qualitative assessment considering impairment indicators, if any, to evaluate whether these investments are
impaired. Qualitative factors considered include industry and market conditions, financial performance, business prospects, and other relevant events and
factors. When indicators of impairment exist, we prepare a quantitative assessment of the fair value of our equity investments, which may
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include using both the market and income approaches which require judgment and the use of estimates, including discount rates, investee revenues and
costs, and available comparable market data of private and public companies, among others. When our assessment indicates that an impairment exists, we
measure our non-marketable equity investments at fair value.
Valuations of such privately-held companies are inherently complex and uncertain due to the lack of liquid market for such company’s securities. In
addition, such investments are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may
not be or may never become profitable, may not be able to secure additional funding or their technologies, services or products may not be successfully
developed or introduced into the market.
Business Combinations
We account for acquired businesses using the acquisition method of accounting which requires that tangible assets and identifiable intangible assets
acquired and assumed liabilities be recorded at the date of acquisition at their respective fair values. Any excess purchase price over the estimated fair value
of the net tangible and intangible assets acquired is allocated to goodwill. When determining the fair values of assets acquired and liabilities assumed,
management makes estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets may
include but are not limited to future expected cash flows from customer and supplier relationships, acquired technology and trade names from a market
participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but
which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Valuations are performed by management or
third-party valuation specialists under management's supervision, where appropriate. Any changes to provisional amounts identified during the
measurement period, calculated as if the accounting had been completed as of the acquisition date, are recognized in the consolidated financial statements
in the reporting period in which the adjustment amounts are determined.
Goodwill and Intangible Assets
Goodwill
We assess goodwill, which is not amortized, for impairment annually during the fourth quarter, or more frequently, if events and circumstances
indicate impairment may have occurred. We test goodwill for impairment at the reporting unit level. Goodwill is assigned to reporting units that are
expected to benefit from the synergies of the business combination in which such goodwill was generated as of the acquisition date. We evaluate our
reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach. Once
goodwill has been allocated to the reporting units, it no longer retains its identification with a particular acquisition and becomes identified with the
reporting unit in its entirety. Accordingly, the fair value of the reporting unit as a whole is available to support the recoverability of its goodwill.
The Company has the option to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying
value. In the evaluation of goodwill for impairment, we generally first perform a qualitative assessment to determine whether it is more likely than not (i.e.,
a likelihood of more than 50%) that the estimated fair value of the reporting unit is less than the carrying amount. Periodically, we may choose to forgo the
initial qualitative assessment and proceed directly to a quantitative analysis to assist in our annual evaluation. When assessing goodwill for impairment, our
decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, including, but
not limited to the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the
last quantitative assessment date, the amount of time in between quantitative fair value assessments from the date of acquisition or to establish an updated
baseline quantitative analysis, and other performance and market indicators. During a qualitative assessment, if we determine that it is not more likely than
not that the implied fair value of the goodwill is less than its carrying amount, no further testing is necessary. If, however, we determine that it is more
likely than not that the implied fair value of the goodwill is less than its carrying amount, we then perform a quantitative assessment and compare the
estimated fair value of the reporting unit to the carrying value. If the carrying value of a reporting unit exceeds its estimated fair value, the goodwill
impairment is measured using the difference between the carrying value and the estimated fair value of the reporting unit; however, any loss recognized
cannot exceed the total amount of goodwill allocated to that reporting unit.
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In determining the estimated fair values of reporting units in a quantitative goodwill impairment test, we generally use a blend, of the following
recognized valuation methods: the income approach (i.e. discounted cash flows model) and the market valuation approach, which we believe compensates
for the inherent risks of using either model on a stand-alone basis. The discounted cash flows model indicates the fair value of the reporting units based on
the present value of the cash flows that we expect the reporting units to generate in the future. Our significant estimates in the discounted cash flows model
include: weighted average cost of capital; long-term rate of growth and profitability of the reporting unit; income tax rates and working capital effects. The
market valuation approach indicates the fair value of the business based on a comparison to comparable publicly traded firms in similar lines of business
and other precedent transactions. Our significant estimates in the market valuation approach model include identifying similar companies with comparable
business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and/or income multiples in estimating
the fair value of the reporting units. Valuations are performed by management or third-party valuation specialists under management's supervision, where
appropriate. We believe that the estimated fair values assigned to our reporting units in impairment tests are based on reasonable assumptions that
marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates. The use of
substantially different assumptions, estimates or judgments could trigger the need for an impairment charge, or materially increase or decrease the amount
of any such impairment charge.
During the Company's annual goodwill impairment test in the fourth quarter of 2023, a qualitative assessment was performed for all our reporting
units, which are Brand Tripadvisor, Viator, and TheFork. We determined that it was not more likely than not that the fair value of any reporting unit was
less than its carrying value, and, accordingly, no impairment charges were recorded during the year ended December 31, 2023. As part of the qualitative
assessment for our annual 2023 goodwill impairment analysis of our reporting units, the factors that we considered included, but were not limited to: (a)
changes in macroeconomic conditions in the overall economy and the specific markets in which we operate, (b) our ability to access capital, (c) changes in
the online travel industry, (d) changes in the level of competition, (e) evaluation of current and future forecasted financial results of the reporting units, (f)
comparison of our current financial performance to historical and budgeted results of the reporting units, (g) change in excess of the Company’s market
capitalization over its book value, (h) changes in estimates, valuation inputs, and/or assumptions since the last quantitative analysis of the reporting units
during the second quarter of 2022, (i) changes in the regulatory environment, (j) changes in strategic outlook or organizational structure and leadership of
the reporting units; and (k) other relevant factors, and how these factors might impact specific performance in future periods.
Intangible Assets
Intangible assets with estimable useful lives, or definite-lived intangibles, are carried at cost and are amortized on a straight-line basis over their
estimated useful lives and reviewed for impairment upon certain triggering events. We routinely review the remaining estimated useful lives of our definite-
lived intangible assets. If we reduce the estimated useful life assumption, the remaining unamortized balance is amortized over the revised estimated useful
life.
Intangible assets that have indefinite lives are not amortized and are tested for impairment annually during the fourth quarter, or whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. Similar to the qualitative assessment for goodwill, we may assess
qualitative factors to determine if it is more likely than not that the implied fair value of the indefinite-lived intangible asset is less than its carrying amount.
If we determine that it is not more likely than not that the implied fair value of the indefinite-lived intangible asset is less than its carrying amount, no
further testing is necessary. If, however, we determine that it is more likely than not that the implied fair value of the indefinite-lived intangible asset is less
than its carrying amount, we compare the implied fair value of the indefinite-lived asset with its carrying amount. If the carrying amount of an individual
indefinite-lived intangible asset exceeds its implied fair value, the individual asset's carrying value is written down by an amount equal to such excess. The
assessment of qualitative factors is optional and at our discretion. We may bypass the qualitative assessment for any indefinite-lived intangible asset in any
period and resume performing the qualitative assessment in any subsequent period. We base our quantitative measurement of fair value of indefinite-lived
intangible assets, which consist of Tripadvisor-brand trade name and trademarks, using the relief-from-royalty method. This method assumes that the trade
name and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method
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requires us to estimate future revenues, the appropriate royalty rate and the weighted average cost of capital, however, such assumptions are inherently
uncertain and actual results could differ from those estimates.
During the Company's annual indefinite-lived intangible impairment test during the fourth quarter of 2023, a qualitative assessment was performed.
As part of our qualitative assessment we considered, amongst other factors, the amount of excess fair value of our trade names and trademarks to the
carrying value of those same assets, changes in estimates, and valuation input assumptions, since our previous quantitative analysis. After considering these
factors and the impact that changes in such factors would have on the inputs used in our previous quantitative assessment, we determined that it was more
likely than not that our indefinite-lived intangible assets were not impaired as of December 31, 2023.
Impairment of Long-Lived Assets
We periodically review the carrying amount of our definite-lived intangible assets and other long-term assets, including property and equipment, net
and operating lease right-of-use assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable.
Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a
significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market
value of an asset, among others. The Company’s impairment evaluation is performed at the asset group level or the lowest level for which identified cash
flows are largely independent, which the Company has defined as the reporting unit level. If such facts indicate a potential impairment, we assess the
recoverability of the asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected
to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset of the group. If the recoverability test
indicates that the carrying value of the asset group is not recoverable, we will estimate the fair value of the asset group using appropriate valuation
methodologies which would typically include an estimate of discounted cash flows, using an appropriate discount rate. Any impairment would be measured
by the amount that the carrying values, of such asset groups, exceed their estimated fair value and would be included in operating income (loss) on the
consolidated statement of operations. Considerable management judgment is necessary to estimate the fair value of asset groups. Accordingly, actual results
could vary significantly from such estimates. We have not identified any circumstances that would warrant an impairment charge for any recorded definite-
lived intangibles or other long-term assets on our consolidated balance sheet at December 31, 2023 or 2022.
Foreign Currency Translation and Transaction Gains and Losses
Our consolidated financial statements are reported in U.S. dollars. Certain of our subsidiaries outside of the U.S. use the local currency as their
functional currency and not the U.S. dollar. Therefore assets and liabilities of our foreign subsidiaries are translated at the spot rate in effect at the
applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable reporting
period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in
stockholders’ equity on our consolidated balance sheet.
In addition, our subsidiaries also engage in transactions in currencies other than its functional currency. Transactions denominated in currencies
other than the functional currency are recorded based on foreign currency exchange rates at the time such transactions arise. Subsequent changes in foreign
currency exchange rates result in transaction gains and losses which are reflected in our consolidated statements of operations as unrealized (based on the
applicable period-end exchange rate) or realized upon settlement of the transactions. Accordingly, we have recorded net foreign currency exchange losses
of $5 million, $5 million and $4 million, respectively, for the years ended December 31, 2023, 2022 and 2021, in other income (expense), net on our
consolidated statements of operations. These amounts also include transaction gains and losses, both realized and unrealized from forward contracts.
Derivative Financial Instruments
We account for derivative instruments that do not qualify for hedge accounting as either assets or liabilities and carry them at fair value, with any
subsequent adjustments to fair value recorded in other income (expense), net
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on our consolidated statements of operations. Monetary assets and liabilities denominated in a currency other than the functional currency of a given
subsidiary are remeasured at spot rates in effect on the balance sheet date with the effects of changes in foreign currency exchange rates reported in other
income (expense), net on our consolidated statements of operations. In certain circumstances, we enter into forward contracts to reduce, to the extent
practical, our potential exposure to the effects of fluctuating foreign currency exchange rates on our cash flows denominated in foreign currencies.
Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the remeasured assets and liabilities attributable to
changes in foreign currency exchange rates, except to the extent of the spot-forward differences. These differences are not expected to be significant due to
the short-term nature of the contracts, which to date, have typically had maturities at inception of 90 days or less. The net cash received or paid related to
our derivative instruments are classified in other investing activities in our consolidated statements of cash flows. Counterparties to forward contracts
consist of major global financial institutions. We monitor our positions and the credit ratings of the counterparties involved and, by policy limits, the
amount of credit exposure to any one party. We do not use derivatives for trading or speculative purposes. We did not enter into any cash flow, fair value or
net investment hedges during the years ended December 31, 2023, 2022 or 2021. Refer to “Note 3: Financial Instruments and Fair Value Measurements”
for additional information on our derivatives.
Fair Value Measurements and Disclosures
We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair
value in the financial statements on a recurring basis. We measure assets and liabilities at fair value based on the expected exit price, which is the amount
that would be received on the sale of an asset or amount paid to transfer a liability, as the case may be, in an orderly transaction between market participants
in the principal or most advantageous market in which we would transact. As such, fair value may be based on assumptions that market participants would
use in pricing an asset or liability at the measurement date. The authoritative guidance on fair value measurements establishes a consistent framework for
measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. GAAP
provides the following hierarchical levels of inputs used to measure fair value:
Level 1—Valuations are based on quoted market prices for identical assets and liabilities in active markets.
Level 2—Valuations are based on observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar
assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that
are observable or can be corroborated by observable market data.
Level 3—Valuations are based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions
made by other market participants. These valuations require significant judgment.
Debt Issuance Costs
We defer costs we incur to issue debt, which are presented in the balance sheet as a direct deduction from the carrying amount of the related debt
liability, and amortize these costs using the effective interest rate method to interest expense over the term of the debt. We also defer costs we incur to enter
into a credit facility or to amend our existing revolving credit facility, which are presented on the consolidated balance sheet as a long-term asset, and
amortize these costs using the effective interest rate method to interest expense over the term of the credit facility.
Certain Risks and Concentrations
Our business is subject to certain risks and concentrations, including a concentration related to dependence on our relationships with our customers.
For the years ended December 31, 2023, 2022 and 2021, our two most significant travel partners, Expedia (and its subsidiaries) and Booking (and its
subsidiaries), each accounted for 10% or more of our consolidated revenue and together accounted for approximately 25%, 31% and 34%, respectively, of
our consolidated revenue, with nearly all of this revenue concentrated in our Brand Tripadvisor segment.
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Additionally, our business is dependent on relationships with third-party service providers that we rely on to fulfill service obligations to our
customers where the Company is the merchant of record, such as our experience operators. However, no one operator’s inventory resulted in more than
10% of our revenue on a consolidated basis or at a reportable segment level in any period presented. Refer to “Note 18: Segment and Geographic
Information” for information regarding concentrations related to geographic and product revenues and fixed assets by geographic location. As of December
31, 2023 and 2022, Expedia accounted for approximately 10% and 19%, respectively, of our consolidated accounts receivable, net.
Financial instruments, which potentially subject us to concentration of credit risk, generally consist, at any point in time, of cash and cash
equivalents, corporate debt securities, forward contracts, capped calls, and accounts receivable. We maintain cash balances with financial institutions that
are in excess of Federal Deposit Insurance Corporation insurance limits in the U.S. and similar government programs outside the U.S. Our cash and cash
equivalents are generally composed of available on demand bank deposits or term deposits with several major global financial institutions, as well as
money market funds, primarily denominated in U.S. dollars, and to a lesser extent Euros, British pounds, and Australian dollars. We may invest in highly-
rated corporate debt securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. Our credit
risk related to corporate debt securities is also mitigated by the relatively short maturity period required by our investment policy. Forward contracts and
capped calls are transacted with major international financial institutions with high credit standings. Forward contracts, which, to date, have typically had
maturities of less than 90 days, also mitigate risk. Our overall credit risk related to accounts receivable is mitigated by the relatively short collection period.
Contingent Liabilities
Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an
asset has been impaired or a liability has been incurred; and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our
consolidated statement of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet
both these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements.
Significant judgment may be required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We
base accruals made on the best information available at the time which can be highly subjective. The final outcome of these matters could vary significantly
from the amounts included in the accompanying consolidated financial statements.
Treasury Stock
Shares of our common stock repurchased, including incremental direct costs to purchase treasury stock, including excise tax, are recorded at cost as
treasury stock and result in the reduction of stockholders' equity on our consolidated balance sheet. We may reissue these treasury shares. When treasury
shares are reissued, we use the average cost method for determining the cost of reissued shares. If the issuance price is higher than the cost, the excess of
the issuance price over the cost is credited to additional paid-in-capital. If the issuance price is lower than the cost, the difference is first charged against any
credit balance in additional paid-in-capital from the previous issuances of treasury stock and any remaining balance is charged to retained earnings.
Earnings Per Share (“EPS”)
Basic Earnings Per Share Attributable to Common Stockholders
We compute basic earnings per share, or Basic EPS, by dividing net income (loss) by the weighted average number of common shares outstanding
during the period. We compute the weighted average number of common shares outstanding during the reporting period using the total of common stock
and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted average of any additional shares
issued and outstanding less the weighted average of any common shares repurchased during the reporting period.
81
Diluted Earnings Per Share Attributable to Common Stockholders
Diluted earnings per share, or Diluted EPS, includes the potential dilution of common equivalent shares outstanding that could occur from stock-
based awards and other stock-based commitments using the treasury stock method. We compute Diluted EPS by dividing net income (loss) by the sum of
the weighted average number of common and common equivalent shares outstanding during the period. We compute the weighted average number of
common and common equivalent shares outstanding during the period using the sum of (i) the number of shares of common stock and Class B common
stock used in the Basic EPS calculation as indicated above; (ii) if dilutive, the incremental weighted average common stock that we would issue upon the
assumed exercise of outstanding common equivalent shares, primarily related to stock options and the vesting of restricted stock units using the treasury
stock method; and (iii) if dilutive, performance-based and market-based awards based on the number of shares that would be issuable as of the end of the
reporting period assuming the end of the reporting period was also the end of the contingency period.
Under the treasury stock method, the assumed proceeds calculation includes the actual proceeds to be received from the employee upon exercise of
outstanding equity awards and the average unrecognized compensation cost during the period. The treasury stock method assumes that a company uses the
proceeds from the exercise of an equity award to repurchase common stock at the average market price for the reporting period.
In periods of net income, shares of our common stock subject to the potential conversion of the 2026 Senior Notes outstanding during the period is
also included in our weighted average number of shares outstanding used to calculate Diluted EPS using the if-converted method under GAAP, as share
settlement is presumed. When convertible notes are dilutive, interest expense, net of tax, is added back to net income attributable to common stockholders
to calculate Diluted EPS. Capped Calls are excluded from the calculation of Diluted EPS, as they would be antidilutive. However, upon conversion of the
2026 Senior Notes, unless the market price of our common stock exceeds the cap price, an exercise of the Capped Calls would generally offset any dilution
from the 2026 Senior Notes from the conversion price up to the cap price. As of December 31, 2023, 2022, and 2021, the market price of a share of our
common stock did not exceed the $107.36 cap price. Refer to “Note 8: Debt” for further information regarding our 2026 Senior Notes and Capped Calls.
In periods of a net loss, common equivalent shares are excluded from the calculation of Diluted EPS as their inclusion would have an antidilutive
effect. Accordingly, for periods in which we report a net loss, such as for the year ended December 31, 2021, Diluted EPS is the same as Basic EPS, since
dilutive common equivalent shares are not assumed to have been issued if their effect is antidilutive.
New Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance requiring entities to provide additional
information in the income tax rate reconciliation and additional disclosures about income taxes paid. The new accounting guidance requires entities to
disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about
the reconciling items in some categories if the items meet a quantitative threshold. This guidance is effective for annual periods beginning after December
15, 2024, and should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. Early adoption is permitted
for annual financial statements that have not yet been issued or made available for issuance.
In November 2023, the FASB issued new accounting guidance which expands public entities’ segment disclosures by requiring disclosure of
significant segment expenses that are regularly provided to the chief operating decision maker (“CODM") and included within each reported measure of
segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss
and assets. This guidance is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after
December 15, 2024, with early adoption permitted, including adoption in any interim period.
We are currently considering our timing of adoption and are in the process of evaluating the impact of adopting these newly issued accounting rules
on our consolidated financial statements and related disclosures.
82
NOTE 3: FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Cash, Cash Equivalents and Marketable Securities
As of December 31, 2023 and 2022, we had approximately $1.1 billion and $1.0 billion of cash and cash equivalents, respectively, which consisted
of available on demand bank deposits, term deposits, and money market funds, with maturities of 90 days or less at the date of purchase, in each case, with
major global financial institutions. We had no outstanding investments classified as either short-term or long-term marketable securities as of December 31,
2023 and 2022, respectively, and there were no purchases or sales of any marketable securities during the years ended December 31, 2023, 2022 and 2021.
The following table shows our cash and cash equivalents, which are measured at fair value on a recurring basis and categorized using the fair value
hierarchy, as well as their classification on our consolidated balance sheets as of December 31, 2023 and 2022:
Cash
Level 1:
December 31, 2023
December 31, 2022
Amortized
Cost
Fair Value (1)
Cash and Cash
Equivalents
Amortized
Cost
Fair Value (1)
Cash and Cash
Equivalents
$
685 $
685 $
(in millions)
685 $
821 $
821 $
821
Money market funds
382
382
382
—
—
—
Level 2:
Term deposits
Total
—
1,067 $
—
1,067 $
—
1,067 $
200
1,021 $
200
1,021 $
200
1,021
$
(1)
We did not have any unrealized gains and losses related to our cash equivalents.
We generally classify cash equivalents and marketable securities, if any, within Level 1 and Level 2 as we value these financial instruments using
quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we use to measure the fair value of money market funds is
derived from quoted prices in active markets for identical assets or liabilities. Fair values for Level 2 investments are considered “Level 2” valuations
because they are obtained from independent pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in
active markets. Our procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from our
independent pricing services against fair values obtained from another independent source.
Derivative Financial Instruments
We generally use forward contracts to reduce the effects of foreign currency exchange rate fluctuations on our cash flows for the Euro versus the
U.S. Dollar. For the periods ended December 31, 2023, 2022 and 2021, respectively, our forward contracts have not been designated as hedges and
generally had maturities of less than 90 days. Our outstanding or unsettled forward contracts were carried at fair value on our consolidated balance sheets at
December 31, 2023 and 2022. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing
model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. We recognize any gain or loss
resulting from the change in fair value of our forward contracts in other income (expense), net on our consolidated statement of operations, which was not
material for the year ended December 31, 2023. We recorded a net gain of $4 million and $2 million for the years ended December 31, 2022 and 2021,
respectively, related to our forward contracts.
The following table shows the notional principal amounts of our outstanding derivative instruments for the periods presented:
Foreign currency exchange-forward contracts (1)(2)
$
December 31, 2023
December 31, 2022
(in millions)
9 $
18
83
(1)
(2)
Derivative contracts address foreign currency exchange fluctuations for the Euro versus the U.S. dollar. These outstanding derivatives are not designated as hedging
instruments and have an original maturity period of 90 days or less.
The fair value of our outstanding derivatives as of December 31, 2023 and 2022, respectively, was not material. The notional amount of a forward contract is the contracted
amount of foreign currency to be exchanged and is not recorded on the consolidated balance sheet.
Other Financial Assets and Liabilities
As of December 31, 2023 and 2022, financial instruments not measured at fair value on a recurring basis, including accounts payable, accrued
expenses and other current liabilities, and deferred merchant payables, were carried at cost on our consolidated balance sheet, which approximates their fair
values because of the short-term nature of these items. Accounts receivable, including contract assets, as described below, as well as certain other financial
assets, are measured at amortized cost and are carried at cost less an allowance for expected credit losses on our consolidated balance sheet to present the
net amount expected to be collected.
Accounts Receivable, net
The following table provides information about the opening and closing balances of accounts receivable, including contract assets, net of allowance
for expected credit losses, from contracts with customers as of the dates presented:
Accounts receivable
Contract assets
Total
$
December 31, 2023 December 31, 2022
(in millions)
177 $
15
192 $
173
32
205
$
Contract assets are rights to consideration in exchange for services that we have transferred to a customer when that right is conditional on
something other than the passage of time, such as commission payments that are contingent upon the completion of the service by the principal in the
transaction. The difference between the opening and closing balances of our contract assets primarily results from the timing difference between when we
satisfy our performance obligations and the time when the principal completes the service in the transaction. There were no significant changes in contract
assets during the years ended December 31, 2023 and 2022 related to business combinations, impairments, cumulative catch-ups or other material
adjustments.
Fair Value of Long-Term Debt
The following table shows the aggregate principal and fair value amount of our outstanding 2025 Senior Notes and 2026 Senior Notes as of the dates
presented, which are classified as long-term debt on our consolidated balance sheet, and considered Level 2 fair value measurements. Refer to “Note 8:
Debt” for additional information related to our 2025 Senior Notes and 2026 Senior Notes.
2025 Senior Notes
Aggregate principal amount
Carrying value amount (1)
Fair value amount (2)
2026 Senior Notes
Aggregate principal amount
Carrying value amount (3)
Fair value amount (2)
December 31, 2023
December 31, 2022
(in millions)
500 $
497
502
345 $
342
304
500
495
498
345
341
281
$
$
(1)
Net of $3 million and $5 million of unamortized debt issuance costs as of December 31, 2023 and 2022, respectively.
84
(2)
(3)
We estimate the fair value of our outstanding 2025 Senior Notes and 2026 Senior Notes based on recently reported market transactions and/or prices for identical or similar
financial instruments obtained from a third-party pricing source.
Net of $3 million and $4 million of unamortized debt issuance costs as of December 31, 2023 and 2022, respectively.
The Company did not have any assets or liabilities measured at fair value on a recurring basis using Level 3 unobservable inputs at both December
31, 2023 and 2022.
Assets Measured at Fair Value on a Non-recurring Basis
Non-Marketable Investments
Equity Securities Accounted for under the Equity Method
In November 2019, the Company and Ctrip Investment Holding Ltd, a majority-owned subsidiary of Trip.com Group Limited, entered into an
agreement to combine certain assets in China through the creation of a new entity, Chelsea Investment Holding Company PTE, Ltd. Tripadvisor contributed
a portion of its business in China, including a long-term exclusive brand and content license and other assets, in return for a 40% equity investment in
Chelsea Investment Holding Company PTE Ltd. This investment resulted in the Company recording an initial equity method investment of $41 million and
a $39 million deferred income liability attributable to the brand and content license in the fourth quarter of 2019. The Company expects to earn the deferred
income ratably over a 15-year period, congruent with the initial term of the brand and content license, which is recorded in other income (expense), net on
the consolidated statement of operations.
The Company accounts for this minority investment under the equity method, given it has the ability to exercise significant influence over, but not
control, the investee. The carrying value of this minority investment was $30 million and $32 million as of December 31, 2023 and 2022, respectively, and
is included in non-marketable investments on our consolidated balance sheets. During the years ended December 31, 2023, 2022 and 2021, we recognized a
loss of $2 million, $2 million and $3 million, respectively, representing our share of the investee’s net loss in other income (expenses), net within the
consolidated statements of operations. The Company evaluates this investment for impairment when factors indicate that a decline in the value of its
investment has occurred and the carrying amount of its investment may not be recoverable. An impairment loss, based on the excess of the carrying value
over the estimated fair value of the investment based on Level 3 inputs, is recognized in earnings when an impairment is deemed to be other than
temporary. Due to ongoing operating losses, we performed a qualitative assessment to evaluate whether this equity investment is impaired as of December
31, 2023. During the years ended December 31, 2023, 2022 and 2021, respectively, we did not record any impairment loss on this equity investment. The
remaining deferred income liability of $28 million is presented in accrued expenses and other current liabilities and other long-term liabilities on our
consolidated balance sheet of $3 million and $25 million, respectively, as of December 31, 2023.
The Company has various commercial agreements with Chelsea Investment Holding Company PTE Ltd. and/or its subsidiaries. Transactions under
these agreements with the equity method investee are considered related-party transactions, and were not material for the years ended December 31, 2023,
2022 and 2021, respectively.
Other Equity Investments
We also hold a minority investment in equity securities of a privately-held company, which is at an early stage of development and does not have a
readily determinable fair value. As of both December 31, 2023 and 2022, the total carrying value of this investment was $2 million, and included in non-
marketable investments on our consolidated balance sheets.
Our policy is to measure this equity investment at cost less impairment, if any, plus or minus changes resulting from observable price changes in
orderly transactions for the identical or a similar investment of the same issuer such observable price changes may include instances where the investee
issues equity securities to new investors, thus creating a new indicator of fair value, as an example. On a quarterly basis, we perform a qualitative
assessment considering impairment indicators, if any, to evaluate whether this investment is impaired and monitor for any
85
observable price changes. During the years ended December 31, 2023, 2022 and 2021, we did not record any impairment loss on this equity investment or
note any observable price change indicators.
Other Long-Term Assets
In June 2020, the Company was issued collateralized notes (the “Notes Receivable”) with a total principal amount of $20 million from a privately-
held company, in exchange for an existing equity investment held in the investee by the Company, and other-long term receivables, net, which the
Company held due from the same investee. The Company has classified the Notes Receivable as held-to-maturity, as the Company has concluded it has the
positive intent and ability to hold the Notes Receivable until maturity, with 50% due in eight years and remaining 50% due in 10 years from issuance date
or the date on which there is a change of control, whichever is earlier. The Company recorded a $5 million allowance for credit losses under GAAP during
the year ended December 31, 2021, in other income (expense), net on the consolidated statement of operations, related to the Notes Receivable. As of both
December 31, 2023 and 2022, the carrying value of the Notes Receivable was $9 million, net of accumulated allowance for credit losses, and is classified in
other long-term assets, net on our consolidated balance sheet at amortized cost. On a quarterly basis, we perform a qualitative assessment considering
impairment indicators to evaluate whether the Notes Receivable are impaired and monitor for changes to our allowance for expected credit losses.
Other non-financial assets, such as property and equipment, goodwill, intangible assets, and operating lease right-of-use assets are adjusted to fair
value when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements, if necessary, are based predominately
on Level 3 inputs. Refer to “Note 4: Property and Equipment, Net”, “Note 5: Leases” and “Note 6: Goodwill and Intangibles Assets, Net” for additional
information regarding those assets.
NOTE 4: PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following as of the dates presented:
December 31, 2023
December 31, 2022
Capitalized website development
Finance lease right-of-use asset (Note 5)
Leasehold improvements
Computer equipment and purchased software
Furniture, office equipment and other
Less: accumulated depreciation
Total
$
$
$
(in millions)
510
114
37
64
17
742
(551 )
191
$
445
114
46
82
19
706
(512 )
194
As of December 31, 2023 and 2022, the carrying value of our capitalized website development costs, net of accumulated amortization, was $103
million and $91 million, respectively. For the years ended December 31, 2023, 2022 and 2021, we capitalized $66 million, $56 million and $55 million,
respectively, related to website development costs. For the years ended December 31, 2023, 2022 and 2021, we recorded amortization of capitalized
website development costs of $55 million, $61 million and $64 million, respectively, which is included in depreciation expense on our consolidated
statements of operations.
86
NOTE 5: LEASES
Operating and finance lease assets and liabilities consists of the following as of the dates presented:
Noncurrent Lease Assets:
Finance lease
Operating lease
Current Lease Liabilities:
Finance lease
Operating lease
Noncurrent Lease Liabilities:
Finance lease
Operating lease
Presentation on Consolidated Balance Sheet
December 31,
December 31,
2023
2022
(in millions)
Property and equipment, net
Operating lease right-of-use-assets
Total lease assets
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities
Total current lease liabilities
Finance lease liability, net of current portion
Operating lease liabilities, net of current portion
Total noncurrent lease liabilities
Total lease liabilities
$
$
$
$
67 $
15
82 $
6 $
10
16
51
6
57
73 $
76
27
103
6
14
20
58
15
73
93
As of December 31, 2023, we did not have any additional operating or finance leases that have not yet commenced but that create significant rights
and obligations for us.
The components of lease expense were as follows for the periods presented:
Operating lease cost (1)
Finance lease cost:
Amortization of right-of-use assets (2)
Interest on lease liabilities (3)
Total finance lease cost
Sublease income (1)
Total lease cost, net
$
$
$
$
2023
Year ended December 31,
2022
(in millions)
2021
17 $
10 $
3
13 $
(5 )
25 $
19 $
10 $
3
13 $
(9 )
23 $
21
10
4
14
(5 )
30
(1) Operating lease costs, net of sublease income, are included within operating expenses in our consolidated statements of operations.
(2) Amount is included in depreciation expense in our consolidated statements of operations.
(3) Amount is included in interest expense in our consolidated statements of operations.
87
Additional information related to our leases is as follows for the periods presented:
Supplemental Cash Flows Information:
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash outflows from operating leases $
Operating cash outflows from finance lease
Financing cash outflows from finance lease
Right-of-use assets obtained in exchange for
lease liabilities:
2023
Year ended December 31,
2022
(in millions)
2021
17 $
4
8
22 $
3
6
Operating leases
$
4 $
2 $
25
3
6
6
Weighted-average remaining lease term:
Operating leases
Finance lease
Weighted-average discount rate:
Operating leases
Finance lease
Year ended December 31,
2023
2022
2.0 years
7.0 years
2.5 years
8.0 years
4.1 %
4.5 %
3.7 %
4.5 %
Future lease payments under non-cancelable leases as of December 31, 2023 were as follows:
Year Ending December 31,
Operating Leases
Finance Lease
2024
2025
2026
2027
2028
Thereafter
Total future lease payments
Less imputed interest
Total lease liabilities
$
$
(in millions)
10 $
3
2
1
—
—
16
—
16 $
9
9
9
10
10
19
66
(9 )
57
88
NOTE 6: GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The following table summarizes our goodwill activity by reportable segment for the periods presented:
Hotels, Media
& Platform
Experiences
& Dining
Other (1)
Brand
Tripadvisor
(in millions)
Viator
TheFork
Total
Balance as of December 31, 2021
$
Foreign currency translation adjustments
Allocation to new segments
Balance as of December 31, 2022
$
Foreign currency translation adjustments
$
Balance as of December 31, 2023
407 $
—
(407 )
— $
—
— $
344 $
(18 )
(326 )
— $
—
— $
92 $
(5 )
(87 )
— $
—
— $
— $
—
599
599 $
2
601 $
— $
(1 )
120
119 $
1
120 $
— $
3
101
104 $
4
108 $
843
(21 )
—
822
7
829
(1)
Other consists of the combination of alternative accommodation rentals, flights, car, and cruises offerings, and did not previously constitute a reportable segment.
There were no goodwill impairment charges recognized on our consolidated statements of operations during the years ended December 31, 2023,
2022, or 2021. Refer to “Note 2: Significant Accounting Policies” for discussion regarding the Company’s 2023 goodwill impairment assessment. As of
both December 31, 2023 and 2022, accumulated goodwill impairment losses totaled $3 million, which was associated with the Brand Tripadvisor segment.
Intangibles
Intangible assets, acquired in business combinations and recorded at fair value on the date of purchase, consisted of the following as of the dates
presented:
Intangible assets with definite lives
Less: accumulated amortization
Intangible assets with definite lives, net
Intangible assets with indefinite lives (1)
Total
December 31,
2023
2022
(in millions)
221 $
(208 )
13
30
43 $
219
(198 )
21
30
51
$
$
(1)
Indefinite-lived intangible assets include trade names and trademarks for the Tripadvisor brand.
Amortization expense for definite-lived intangible assets was $9 million, $13 million, and $20 million, for the years ended December 31, 2023, 2022
and 2021, respectively.
There were no impairment charges recognized to our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021
related to our intangible assets. Refer to “Note 2: Significant Accounting Policies” for discussion regarding the Company’s 2023 indefinite-lived intangible
impairment assessment.
89
The following table presents the components of our intangible assets with definite lives as of the dates presented:
Trade names and trademarks
Customer lists and supplier relationships
Subscriber relationships
Technology and other
Total
Weighted
Average
Remaining Life
(in years)
Gross
Carrying
Amount
December 31, 2023
December 31, 2022
Accumulated
Amortization
(in millions)
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
(in millions)
Net
Carrying
Amount
0.9 $
3.8
2.3
1.8
2.7 $
$
48
97
34
42
221
$
(45 ) $
(90 )
(33 )
(40 )
(208 ) $
3 $
7
1
2
13 $
47 $
95
34
43
219 $
(40 ) $
(87 )
(33 )
(38 )
(198 ) $
7
8
1
5
21
Our definite-lived intangible assets are being amortized on a straight-line basis. The straight-line method of amortization is currently our best
estimate, or approximates to date, the distribution of the economic use of these intangible assets.
The estimated amortization expense for intangible assets with definite lives for each of the next five years, and the expense thereafter, assuming no
subsequent impairment of the underlying assets or change in estimate of remaining lives, is expected to be as follows (in millions):
2024
2025
2026
2027
2028
2029 and thereafter
Total
$
$
6
3
2
2
—
—
13
NOTE 7: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following as of the dates presented:
Accrued salary, bonus, and other employee-related benefits
Accrued marketing costs
Interest payable (1)
Income taxes payable - current (2)
Finance lease liability - current portion (3)
Operating lease liabilities - current portion (3)
Restructuring and other related reorganization costs (4)
Non-income taxes payable
Other
Total
December 31, 2023
December 31, 2022
$
$
(in millions)
70 $
67
17
6
6
10
13
16
53
258 $
65
68
17
16
6
14
—
7
54
247
(1) Amount relates primarily to unpaid interest accrued on our 2025 Senior Notes. Refer to “Note 8: Debt” for further information.
(2)
(3)
(4) During the third quarter of 2023, the Company approved and subsequently initiated a set of actions across its businesses in order to reduce its cost structure, improve
Refer to “Note 10: Income Taxes” for further information regarding our income tax liabilities.
Refer to “Note 5: Leases” for further information regarding our lease obligations.
operational efficiencies, and realign its workforce with its strategic initiatives. These actions taken by the Company resulted in reduced global headcount. As a result, the
Company incurred estimated pre-tax restructuring and other related reorganization costs of $22 million during the year ended December 31, 2023, consisting primarily of
employee severance and related benefits. Potential job position eliminations in each country remain subject to local law and consultation requirements, which have extended
beyond 2023 in certain countries. Therefore, actual costs incurred may differ
90
from estimated costs recorded as of December 31, 2023. We expect the majority of remaining unpaid costs as of December 31, 2023 to be disbursed during the first quarter of
2024.
The following table summarizes our restructuring and other related reorganization costs for the year ended December 31, 2023:
Accrued liability as of December 31, 2022
Charges
Payments
Accrued liability as of December 31, 2023
NOTE 8: DEBT
The Company’s outstanding debt consisted of the following as of the dates presented:
Carrying Value
(in millions)
—
22
(9 )
13
$
$
December 31, 2023
Long-Term Debt:
2025 Senior Notes
2026 Senior Notes
Total Long-Term Debt
December 31, 2022
Long-Term Debt:
2025 Senior Notes
2026 Senior Notes
Total Long-Term Debt
Outstanding
Principal Amount
Unamortized Debt
Issuance Costs
(in millions)
Carrying Value
$
$
500
345
845
$
$
(3 ) $
(3 )
(6 ) $
497
342
839
Outstanding
Principal Amount
Unamortized Debt
Issuance Costs
(in millions)
Carrying Value
$
$
500
345
845
$
$
(5 ) $
(4 )
(9 ) $
495
341
836
Credit Facility
We are party to a credit agreement with a group of lenders initially entered into in June 2015 and amended and restated in June 2023 (as amended,
the “Credit Agreement”), which, among other things, provides for a $500 million secured revolving credit facility (the “Credit Facility”). As of December
31, 2023 and 2022, we had no outstanding borrowings from the Credit Facility. In addition, the Credit Facility includes $15 million of borrowing capacity
available for letters of credit and $40 million for swing-line borrowings on same-day notice. As of December 31, 2023 and 2022, we had issued $4 million
of undrawn standby letters of credit under the Credit Facility. For the years ended December 31, 2023, 2022 and 2021, we recorded total commitment fees
on the Credit Facility of $1 million, $1 million and $3 million, respectively, to interest expense on our consolidated statements of operations. The Credit
Agreement, among other things, requires us to maintain a maximum total net leverage ratio and contains certain customary affirmative and negative
covenants and events of default, including a change of control. As of December 31, 2023 and 2022, the Company was in compliance with its existing
covenants.
We amended the Credit Facility during 2020 to, among other things: suspend the leverage ratio covenant for quarterly testing of compliance
beginning in the second quarter of 2020, replacing it with a minimum liquidity covenant through June 30, 2021 (requiring the Company to maintain $150
million of unrestricted cash, cash equivalents and short-term investments less deferred merchant payables plus available revolver capacity), until the earlier
of (a) the first day after June 30, 2021 through maturity on which borrowings and other revolving credit
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utilizations under the revolving commitments exceed $200 million, and (b) the election of the Company, at which time the leverage ratio covenant will be
reinstated (the “Leverage Covenant Holiday”).
On May 8, 2023, the Company declared a “Covenant Changeover Date” (as defined in the Credit Agreement as in effect prior to the amendment and
restatement), thereby declaring the Company out of the Leverage Covenant Holiday and no longer subject to certain of the restrictive covenants contained
in the Credit Agreement. Following that, on June 29, 2023, we amended and restated the Credit Agreement (the "Restated Credit Agreement") to, among
other things, (i) extend the maturity date of the Credit Facility from May 12, 2024 to June 29, 2028 (unless, on any date that is 91 days prior to the final
scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such
specified debt is $200 million or more, then the maturity date will be such business day); (ii) maintain the aggregate amount of revolving commitments
available at $500 million; (iii) increase the total net leverage ratio from 3.5 to 1.0 to 4.5 to 1.0; and (iv) replace the LIBOR interest rate benchmark with a
secured overnight financing rate ("SOFR") interest rate benchmark.
The Company may borrow from the Credit Facility in U.S dollars, Euros and Sterling. Borrowings under the Credit Facility generally bear interest,
at the Company’s option, at a rate per annum equal to either (i) the Adjusted Term SOFR rate for the interest period in effect for such borrowing in U.S.
dollars, the EURIBO rate for the interest period in effect for such borrowings in Euro and the Daily Simple SONIA rate for the interest period in effect for
such borrowings in Sterling; plus, in each case, an applicable margin ranging from 1.75% to 2.50% (“Term Benchmark/RFP Spread”), based on the
Company’s total net leverage ratio; or (ii) the Alternate Base Rate (“ABR”), which is the greatest of (a) the Prime Rate in effect on such day, (b) the New
York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum, and (c) the Adjusted Term SOFR for an interest period of one month as published
two US Government Securities Business Days prior to such day (or if such day is not a US Government Securities Business Day, the immediately
preceding US Government Securities Business Day) plus 1.00% plus an applicable margin ranging from 0.75% to 1.50%, based on the Company’s total net
leverage ratio. In addition, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.25% to 0.40%, on the daily unused
portion of the Credit Facility for each fiscal quarter and in connection with the issuance of letters of credit. As of December 31, 2023, our unused revolver
capacity was subject to a commitment fee of 0.25%, given the Company’s total net leverage ratio.
In connection with the Restated Credit Agreement, we incurred lender fees and other debt financing costs of approximately $3 million. These costs
were capitalized as deferred financing costs in other long-term assets on our consolidated balance sheet, while deferred financing costs incurred in previous
amendments, which were immediately recognized to interest expense on our consolidated statements of operations, were not material. As of December 31,
2023 and 2022, the Company had $4 million and $2 million, respectively, remaining in deferred financing costs in connection with the Credit Facility.
These costs will be amortized over the remaining term of the Credit Facility, using the effective interest rate method, and recorded to interest expense on
our consolidated statement of operations.
There is no specific repayment date prior to the maturity date for any borrowings under the Credit Agreement. We may voluntarily repay any
outstanding borrowing under the Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Term
Benchmark loans. Additionally, the Company believes that the likelihood of the lender exercising any subjective acceleration rights, which would permit
the lenders to accelerate repayment of any outstanding borrowings, is remote. As such, we intend to classify any future borrowings under this facility as
long-term debt. The Credit Agreement contains a number of covenants that, among other things, restrict our ability to incur additional indebtedness, create
liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make
investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend
material agreements governing certain subordinated indebtedness, and change our fiscal year. In addition, to secure the obligations under the Credit
Agreement, the Company and certain subsidiaries have granted security interests and liens in and on substantially all of their assets as well as pledged
shares of certain of the Company’s subsidiaries. If an event of default occurs, the lenders under the Credit Agreement will be entitled to take various
actions, including the acceleration of all amounts due under the Credit Facility.
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2025 Senior Notes
On July 9, 2020, the Company completed the sale of $500 million aggregate principal amount of 7.0% Senior Notes due 2025 (the “2025 Senior
Notes”), pursuant to a purchase agreement, dated July 7, 2020, among the Company, the guarantors party thereto and the initial purchasers party thereto in a
private offering to qualified institutional buyers. The 2025 Senior Notes were issued pursuant to an indenture, dated July 9, 2020 (the “2025 Indenture”),
among the Company, the guarantors and the trustee. The 2025 Indenture provides, among other things, that interest is payable on the 2025 Senior Notes
semiannually on January 15 and July 15 of each year, and continues until their maturity date of July 15, 2025. The 2025 Senior Notes are senior unsecured
obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.
The Company has the option to redeem all or a portion of the 2025 Senior Notes at any time on or after July 15, 2022 at the redemption prices set
forth in the 2025 Indenture, plus accrued and unpaid interest, if any. Subject to certain limitations, in the event of a Change of Control Triggering Event (as
defined in the 2025 Indenture), the Company will be required to make an offer to purchase the 2025 Senior Notes at a price equal to 101% of the aggregate
principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. These features have been
evaluated as embedded derivatives under GAAP; however, the Company has concluded they do not meet the requirements to be accounted for separately.
As of both December 31, 2023 and 2022, unpaid interest on our 2025 Senior Notes was $16 million and was included in accrued expenses and other
current liabilities on our consolidated balance sheets, and $35 million was recorded as interest expense on our consolidated statements of operations for
each of the years ended December 31, 2023, 2022 and 2021.
The 2025 Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, restrict the ability of the
Company and certain of its subsidiaries to incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock; pay dividends
and make other distributions or repurchase stock; make certain investments; create or incur liens; sell assets; create restrictions affecting the ability of
restricted subsidiaries to make distributions, loans or advances or transfer assets to the Company or the restricted subsidiaries; enter into certain transactions
with the Company’s affiliates; designate restricted subsidiaries as unrestricted subsidiaries; and merge, consolidate or transfer or sell all or substantially all
of the Company’s assets.
2026 Senior Notes
On March 25, 2021, we entered into a purchase agreement for the sale of $300 million aggregate principal amount of 0.25% Convertible 2026
Senior Notes due 2026 (the “2026 Senior Notes”) in a private offering to qualified institutional buyers. The 2026 Senior Notes included an over-allotment
option that provided the initial purchasers of the 2026 Senior Notes with the option to purchase an additional $45 million aggregate principal amount of the
2026 Senior Notes; such over-allotment option was fully exercised. In connection with the issuance of the 2026 Senior Notes, the Company entered into an
Indenture, dated March 25, 2021 (the “2026 Indenture”), among the Company, the guarantors party thereto and the trustee. The terms of the 2026 Senior
Notes are governed by the 2026 Indenture. The 2026 Senior Notes mature on April 1, 2026, unless earlier converted, redeemed or repurchased. The 2026
Senior Notes are senior unsecured obligations of the Company, although guaranteed by certain of the Company’s domestic subsidiaries, with interest
payable semiannually in arrears on April 1 and October 1 of each year, which began on October 1, 2021. As of December 31, 2023 and 2022, unpaid
interest on our 2026 Senior Notes was not material.
The 2026 Senior Notes will be redeemable, in whole or in part, at our option at any time, and from time to time, on or after April 1, 2024 and on or
before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Senior
Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of our common stock exceeds 130% of the
conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the
trading day immediately before the date we send the related redemption notice; and (2) the trading day immediately before the date we send such notice. In
addition, calling any such note for redemption will constitute a make-whole fundamental change with respect to that note, in which case the
93
conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption.
The 2026 Senior Notes are unconditionally guaranteed, on a joint and several basis, by the guarantors on a senior, unsecured basis. The 2026 Senior
Notes are our general senior unsecured obligations and rank equally in right of payment with all of our existing and future senior indebtedness, and senior
in right of payment to all of our future subordinated indebtedness. The 2026 Senior Notes will be effectively subordinated to any of our existing and future
secured indebtedness, including borrowings under the Credit Facility, to the extent of the value of the assets securing such indebtedness.
Holders may convert their 2026 Senior Notes at any time prior to the close of business on the business day immediately preceding January 1, 2026,
in multiples of $1,000 principal amount, only under the following conditions and circumstances:
•
•
•
during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the
last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive
trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion
price on each applicable trading day;
during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per
$1,000 principal amount of 2026 Senior Notes for each trading day of the measurement period was less than 98% of the product of the last
reported sale price of our common stock and the conversion rate on each such trading day; or
upon the occurrence of specified corporate events as described in the 2026 Indenture.
In addition, holders may convert their 2026 Senior Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after
January 1, 2026, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the 2026 Senior
Notes, without regard to the foregoing circumstances.
The initial conversion rate for the 2026 Senior Notes is 13.5483 shares of common stock per $1,000 principal amount of 2026 Senior Notes, which
is equivalent to an initial conversion price of approximately $73.81 per share of common stock, or approximately 4.7 million shares of common stock,
subject to adjustment upon the occurrence of certain specified events as set forth in the 2026 Indenture. Upon conversion, the Company may choose to pay
or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.
The Company accounts for the 2026 Senior Notes as a liability measured at its amortized cost, and no other features of the 2026 Senior Notes are
bifurcated and recognized as a derivative. The proceeds from the issuance of the 2026 Senior Notes were approximately $340 million, net of debt issuance
costs of $5 million comprised primarily of the initial purchasers’ discount, and the Company used a portion of the proceeds from the 2026 Senior Notes to
enter into capped call transactions, as discussed below. The Company intends to use the remainder of the proceeds from this offering for general corporate
purposes, which may include repayment of debt, including the partial redemption and/or purchase of our 2025 Senior Notes prior to maturity. The debt
issuance costs are being amortized over the remaining term of the 2026 Senior Notes, using the effective interest rate method, and recorded to interest
expense on our consolidated statement of operations. During the years ended December 31, 2023, 2022 and 2021, our effective interest rate on our 2026
Senior Notes, including debt issuance costs, was approximately 0.40%, 0.47% and 0.53%, respectively, and $1 million was recorded as interest expense on
our consolidated statements of operations for each of the years ended December 31, 2023, 2022 and 2021.
The 2026 Senior Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other
indebtedness, or restrictions on the issuance or repurchase of securities by the Company.
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Capped Call Transactions
In connection with the issuance of the 2026 Senior Notes, the Company entered into privately negotiated capped call transactions (the “Capped
Calls”) with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions (the “Option
Counterparties”) at a cost of approximately $35 million. The Capped Calls are separate transactions entered into by the Company with each of the Option
Counterparties, and are not part of the terms of the 2026 Senior Notes and therefore will not affect any noteholder’s rights under the 2026 Senior Notes.
Noteholders will not have any rights with respect to the Capped Calls.
The Capped Calls cover, subject to anti-dilution adjustments, substantially similar to those applicable to the conversion rate of the 2026 Senior
Notes, the number of shares of common stock initially underlying the 2026 Senior Notes, or up to approximately 4.7 million shares of our common stock.
The Capped Calls are expected generally to reduce potential dilution to the common stock upon any conversion of 2026 Senior Notes and/or offset any
potential cash payments the Company is required to make in excess of the principal amount of such converted 2026 Senior Notes, as the case may be, with
such reduction and/or offset subject to a cap. The strike price of the Capped Calls is $73.81, while the cap price of the Capped Calls will initially be
$107.36 per share of our common stock, which represents a premium of 100% over the close price of our common stock of $53.68 per share on March 22,
2021 and is subject to certain customary adjustments under the terms of the Capped Calls.
The Capped Calls are considered indexed to our own stock and are considered equity classified under GAAP, and included as a reduction to
additional paid-in-capital within stockholders’ equity on our consolidated balance sheet as of both December 31, 2023 and 2022. The Capped Calls are not
accounted for as derivatives and their fair value is not remeasured each reporting period. In addition, upon entering into the Capped Calls we recorded an
associated deferred tax asset of $9 million, as we made an income tax election allowable under the IRS regulations in order to recover the cost of the
Capped Calls as interest expense for income tax purposes only over the term of the 2026 Senior Notes.
NOTE 9: OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the following as of the dates presented:
Unrecognized tax benefits (1)
Deferred gain on equity method investment (2)
Long-term income taxes payable (3)
Other
Total
December 31, 2023
December 31, 2022
$
$
(in millions)
153 $
25
15
4
197 $
204
28
27
6
265
(1) Refer to “Note 10: Income Taxes” for information regarding our unrecognized tax benefits. Amounts include accrued interest related to this liability.
(2) Amount relates to long-term portion of a deferred income liability recorded as a result of an equity method investment made in the fourth quarter of 2019.
Refer to “Note 3: Financial Instruments and Fair Value Measurements” for additional information.
(3) Amount relates to the long-term portion of transition tax payable related to the 2017 Tax Act. Refer to “Note 10: Income Taxes,” for additional information.
95
NOTE 10: INCOME TAXES
The following table presents a summary of our domestic and foreign income (loss) before income taxes for the periods presented:
Domestic
Foreign
Income (loss) before income taxes
2023
Year Ended December 31,
2022
(in millions)
2021
$
$
95 $
30
125 $
37 $
30
67 $
(127 )
(58 )
(185 )
The components of our provision (benefit) for income taxes consisted of the following for the periods presented:
Current income tax expense (benefit):
Federal
State
Foreign
Current income tax expense (benefit)
Deferred income tax expense (benefit):
Federal
State
Foreign
Deferred income tax expense (benefit)
Provision (benefit) for income taxes
2023
Year Ended December 31,
2022
(in millions)
2021
$
$
94 $
25
21
140
(9 )
6
(22 )
(25 )
115 $
37 $
3
26
66
(19 )
1
(1 )
(19 )
47 $
6
(1 )
2
7
(21 )
(5 )
(18 )
(44 )
(37 )
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The significant components of our deferred tax assets and deferred tax liabilities consisted of the following as of the dates presented:
Deferred tax assets:
Stock-based compensation
Net operating loss carryforwards
Provision for accrued expenses
Lease financing obligation
Foreign advertising spend
Tax credit carryforward
Capitalized research expenses
Interest carryforward
Other
Total deferred tax assets
Less: valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible assets
Property and equipment
Prepaid expenses
Building - corporate headquarters
Other
Total deferred tax liabilities
Net deferred tax asset (liability)
2023
December 31,
(in millions)
2022
14 $
96
8
13
14
10
52
32
14
253 $
(106 )
147 $
(42 ) $
(3 )
(4 )
(12 )
(1 )
(62 ) $
85 $
28
83
6
17
14
7
39
53
19
266
(114 )
152
(48 )
(6 )
(4 )
(16 )
(1 )
(75 )
77
$
$
$
$
$
$
At December 31, 2023, we had federal, state, and foreign net operating loss carryforwards (“NOLs”) of approximately $2 million, $54 million, and
$364 million, respectively. U.S. federal NOLs of $2 million expire at various times starting from 2029. State NOLs of $11 million may be carried forward
indefinitely, while the remaining state NOLs of $43 million expire at various times starting from 2024. Foreign NOLs of $339 million may be carried
forward indefinitely, while the remaining foreign NOLs of $25 million expire at various times starting from 2024.
As of December 31, 2023, we had a valuation allowance of approximately $106 million related to certain NOL carryforwards and other foreign
deferred tax assets for which it is more likely than not, the tax benefit will not be realized. This amount represented a decrease of $8 million, as compared
to the balance as of December 31, 2022. The decrease was primarily related to a change in a deferred tax asset in our U.K. subsidiaries.
Except for such foreign deferred tax assets, discussed above, we expect to realize all of our deferred tax assets. Due to economic uncertainty and
global inflationary pressures, we will continue to monitor our financial performance to determine if the valuation allowance against our deferred tax assets
may be necessary in the future.
97
A reconciliation of the provision (benefit) for income taxes to the amounts computed by applying the statutory federal income tax rate to income
(loss) before income taxes is as follows for the periods presented:
Income tax expense at the federal statutory rate
Foreign rate differential (1)
State income taxes, net of effect of federal tax benefit
Unrecognized tax benefits and related interest
IRS audit settlement
Transfer pricing reserve adjustment
FDII, GILTI and other provisions
Research tax credit
Stock-based compensation
Change in valuation allowance
Executive compensation
Other, net
Provision (benefit) for income taxes
2023
Year Ended December 31,
2022
(in millions)
2021
$
$
26 $
—
6
27
31
24
(9 )
(4 )
22
(6 )
2
(4 )
115 $
14 $
—
5
17
—
—
(2 )
(2 )
11
5
1
(2 )
47 $
(39 )
(14 )
(2 )
4
—
—
—
(7 )
(1 )
8
6
8
(37 )
(1)
During 2021, intercompany debt was extinguished, which resulted in a reduction of our overall foreign rate differential.
The CARES Act allowed the Company to carryback our U.S. federal NOLs incurred in 2020, generating an expected U.S. federal tax benefit of $76
million, of which $64 million was refunded during the year ended December 31, 2022 ($15 million of this refund is recorded in other long-term liabilities
on our consolidated balance sheet as of December 31, 2023, reflecting future transition tax payments to be made by the Company related to the 2017 Tax
Act). The remaining refund of $12 million is included in accrued expenses and other current liabilities on our consolidated balance sheet as of December
31, 2023 and 2022, and is expected to be received during the year ending December 31, 2024.
In addition, certain governments have passed legislation to assist businesses during the COVID-19 pandemic through loans, wage subsidies, wage
tax relief or other financial aid. We participated in several of these programs, including the CARES Act in the U.S., the United Kingdom's job retention
scheme, as well as similar programs in other global jurisdictions. In addition, in certain countries, such as within the European Union, Singapore, Australia,
and other global jurisdictions, we also participated in programs where government assistance was in the form of wage subsidies and reductions in wage-
related employer taxes paid by us. We recognize these government assistance benefits when there is a reasonable assurance of compliance with the
conditions associated with the assistance and the amount is received. During the years ended December 31, 2022 and 2021, we recognized government
grants and other assistance benefits of $12 million and $9 million, respectively, while this amount was not material during the year ended December 31,
2023. These amounts are not income tax related and were recorded as a reduction of personnel and overhead costs within operating expenses in the
consolidated statements of operations. The Company does not expect any additional future benefits of this nature.
Due to the one-time transition tax on the deemed repatriation of undistributed foreign subsidiary earnings and profits in 2017, the majority of
previously unremitted earnings have been subjected to U.S. federal income tax. To the extent future distributions from these subsidiaries will be taxable, a
deferred tax liability has been accrued which was not material as of December 31, 2023. As of December 31, 2023, $483 million of our cumulative
undistributed foreign earnings were no longer considered to be indefinitely reinvested.
For purposes of governing certain of the ongoing relationships between Tripadvisor and Expedia at and after the Spin-Off, and to provide for an
orderly transition, Tripadvisor and Expedia entered into various agreements at the time of the Spin-Off, and Tripadvisor has satisfied its obligations under
such agreements. However, Tripadvisor continues to be subject to certain post Spin-Off obligations under the Tax Sharing Agreement. Under the Tax
Sharing Agreement between Tripadvisor and Expedia, Tripadvisor is generally required to indemnify Expedia for any taxes resulting from the Spin-Off
(and any related interest, penalties, legal and professional fees, and all costs and damages associated with related stockholder litigation or controversies) to
the extent such amounts resulted from (i) any act or failure to act by Tripadvisor described in the covenants in the tax sharing agreement, (ii) any
98
acquisition of Tripadvisor equity securities or assets or those of a member of the Tripadvisor group, or (iii) any failure of the representations with respect to
Tripadvisor or any member of our group to be true or any breach by Tripadvisor or any member of the Tripadvisor group of any covenant, in each case,
which is contained in the separation documents or in the documents relating to the IRS private letter ruling and/or the opinion of counsel.
We are currently under examination by the IRS for the 2014 through 2016 and 2018 tax years and have various ongoing audits for foreign and state
income tax returns. These audits include questions regarding or review of the timing and amount of income and deductions and the allocation of income
among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax
examinations by tax authorities for years prior to 2014. As of December 31, 2023, no material assessments have resulted, except as noted below regarding
our 2009, 2010, and 2011 IRS audit with Expedia, our 2014 through 2016 standalone IRS audit, and our 2012 through 2016 HM Revenue & Customs
(“HMRC”) audit.
As disclosed in previous filings, including in our Annual Report on Form 10-K for the year ended December 31, 2022, we received Notices of
Proposed Adjustments ("NOPA") from the IRS with respect to income tax returns filed by Expedia when Tripadvisor was part of Expedia Group’s
consolidated income tax return for the 2009, 2010, and 2011 tax years. The assessment was related to certain transfer pricing arrangements with foreign
subsidiaries, for which we had requested competent authority assistance under the Mutual Agreement Procedure (“MAP”) for the 2009 through 2011 tax
years. In January 2023, we received a final notice from the IRS regarding a MAP settlement for the 2009 through 2011 tax years, which the Company
accepted in February 2023. In the first quarter of 2023, we recorded additional income tax expense as a discrete item, inclusive of interest, of $31 million
specifically related to this settlement. During the first quarter of 2023, we reviewed the impact of the acceptance of this settlement position against our
existing transfer pricing income tax reserves for the subsequent tax years, which resulted in incremental income tax expense, inclusive of estimated interest,
of $24 million. The total impact of these adjustments resulted in an incremental income tax expense of $55 million, which was recognized during the three
months ended March 31, 2023. During the three months ended June 30, 2023, we made a U.S. federal tax payment of $113 million, inclusive of interest, to
Expedia related to this IRS audit settlement, pursuant to the Tax Sharing Agreement with Expedia. During the three months ended September 30, 2023, we
received the expected competent authority refund of $49 million, inclusive of interest income. We anticipate the federal tax benefits, net of remaining state
tax payments due, associated with this IRS audit settlement will be substantially settled during 2024, resulting in an estimated net cash inflow of $5 million
to $10 million.
Separately, during August 2020, we received a NOPA from the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments pertain to
certain transfer pricing arrangements with our foreign subsidiaries. We disagree with the proposed adjustments, and we intend to defend our position
through applicable administrative and, if necessary, judicial remedies. In addition to the risk of additional tax for the years discussed above, if the IRS were
to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we may be subject to significant additional tax liabilities. We
have previously requested competent authority assistance under MAP for the tax years 2014 through 2016. We reviewed our transfer pricing reserves as of
December 31, 2023 and, based on the facts and circumstances that existed as of the reporting date, consider them to be the Company’s best estimate as of
December 31, 2023. In January 2024, we received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which we accepted in
February 2024. We anticipate this will result in an increase to our worldwide income tax expense in an estimated range of $30 million to $60 million in the
first quarter of 2024, and will result in an estimated net operating cash outflow of $80 million to $130 million expected during 2024. These estimated
ranges take into consideration competent authority relief, existing income tax reserves, transition tax regulations and estimated interest expense. This MAP
resolution supersedes the NOPA for 2014 through 2016 from the IRS, described above. We will review the impact of this resolution in relation to our
transfer pricing income tax reserves for the subsequent open tax years during the first quarter of 2024. Based on this new information received subsequent
to December 31, 2023, adjustments for the open tax years subsequent to 2016 may also occur, which could be material.
As of December 31, 2022, we had recorded $204 million of unrecognized tax benefits, inclusive of interest, classified as other long-term liabilities
on our consolidated balance sheet. As a result of the Company's acceptance of MAP with the IRS for the tax years 2009 through 2011, and its impact on
other ongoing IRS audits, as described above, during the first quarter of 2023, we reduced this unrecognized tax benefits liability by $59 million,
reclassifying this balance to accrued expenses and other current liabilities on our consolidated balance sheet, which
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was subsequently paid during 2023. We also reduced our long-term income taxes receivable by $45 million, representing our estimate of competent
authority relief, or payment due from a foreign jurisdiction, which was received during the third quarter of 2023, as noted above, previously recorded to
other long-term assets on our consolidated balance sheet as of December 31, 2022.
In January 2021, we received from HMRC an issue closure notice relating to adjustments for 2012 through 2016 tax years. These proposed
adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our worldwide income tax
expense in an estimated range of $25 million to $35 million, exclusive of interest expense, at the close of the audit if HMRC prevails. We disagree with the
proposed adjustments and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review
and update tax reserves as facts and circumstances change.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (excluding interest and penalties) is as follows during the
periods presented:
Balance, beginning of year
Increases to tax positions related to the current year
Increases to tax positions related to the prior year
Decreases due to lapsed statute of limitations
Decreases due to tax positions related to the prior year
Settlements during current year
Balance, end of year
2023
December 31,
2022
(in millions)
2021
157 $
8
17
—
(6 )
(40 )
136 $
144 $
5
29
(20 )
(1 )
—
157 $
144
5
1
—
—
(6 )
144
$
$
As of December 31, 2023, we had $153 million of unrecognized tax benefits, inclusive of interest, which is classified as long-term and primarily
included in other long-term liabilities on our consolidated balance sheet. The amount of unrecognized tax benefits, if recognized, would reduce income tax
expense by $114 million, due to correlative adjustments in other tax jurisdictions. We recognize interest and penalties related to unrecognized tax benefits
in income tax expense on our consolidated statement of operations. As of December 31, 2023, total gross interest accrued was $50 million, of which $45
million was recorded in unrecognized tax benefits in other long-term liabilities and $5 million was recorded in income taxes receivable in other long-term
assets, net on the consolidated balance sheet. As of December 31, 2022, total gross interest accrued was $47 million and was recorded to unrecognized tax
benefits in other long-term liabilities on the consolidated balance sheet.
NOTE 11: COMMITMENTS AND CONTINGENCIES
As of December 31, 2023, we have contractual obligations and commercial commitments that include expected interest payments on our 2026
Senior Notes and 2025 Senior Notes, expected commitment fees on our Credit Facility, and non-cancellable long-term purchase obligations, as summarized
in the table below. The expected amounts and timing of payments discussed below were estimated based on information available to us as of December 31,
2023.
Expected interest payments on 2025 Senior Notes (1)
Expected interest payments on 2026 Senior Notes (2)
Expected commitment fee payments on Credit Facility (3)
Purchase obligations and other (4)
Total (5)
(1)
By Period
Total
Less than
1 year
1 to 3 years
(in millions)
3 to 5 years
More than
5 years
$
$
55 $
2
6
42
105 $
36 $
1
1
21
59 $
19 $
1
3
20
43 $
— $
—
2
1
3 $
—
—
—
—
—
Expected interest payments on our 2025 Senior Notes are based on a fixed interest rate of 7.0% as of December 31, 2023 and assumes that our existing debt is repaid at maturity.
Refer to “Note 8: Debt” for additional information on our 2025 Senior Notes.
100
(2)
(3)
(4)
(5)
Expected interest payments on our 2026 Senior Notes are based on a fixed interest rate of 0.25% as of December 31, 2023 and assumes that our existing debt is repaid at maturity.
Refer to “Note 8: Debt” for additional information on our 2026 Senior Notes.
Expected commitment fee payments are based on the daily unused portion of our Credit Facility, issued letters of credit, and the effective commitment fee rate as of December 31,
2023; however, these variables could change significantly in the future. Refer to “Note 8: Debt” for additional information on our Credit Facility.
Estimated purchase obligations that are fixed and determinable, primarily related to telecommunication and licensing contracts, with various expiration dates through
approximately June 2029. These contracts have non-cancelable terms or are cancelable only upon payment of significant penalty. Timing of payments and actual amounts paid may
be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.
Excluded from the table was $4 million of undrawn standby letters of credit, primarily as security deposits for certain property leases as of December 31, 2023.
Legal Proceedings
In the ordinary course of business, we are party to legal, regulatory and administrative matters, including threats thereof, arising out of, or in
connection with our operations. These matters may involve claims involving, but not limited to, intellectual property rights (including privacy rights and
alleged infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes),
regulatory compliance (including competition, consumer protection matters and data privacy or cybersecurity matters), defamation and reputational claims,
personal injury claims, labor and employment matters and commercial disputes. Periodically, we review the status of all significant outstanding matters to
assess any potential financial exposure. We record the estimated loss in our consolidated statements of operations when (i) it is probable that an asset has
been impaired or a liability has been incurred; and (ii) the amount of the loss can be reasonably estimated and is material. We provide disclosures in the
notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss
may have been incurred that would be material to the consolidated financial statements. We base accruals on the best information available at the time,
which can be highly subjective. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of any of these
matters will have a material adverse effect on our business. However, the final outcome of these matters could vary significantly from our estimates.
Finally, there may be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which could
have a material adverse effect on us. All legal fees incurred by the Company related to any regulatory and legal matters are expensed in the period incurred.
Income and Non-Income Taxes
We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and non-income tax matters. We
have reserved for potential adjustments that may result from examinations by, or any negotiated agreements with, these tax authorities. Although we believe
our tax estimates are reasonable, the final determination of audits could be materially different from our historical tax provisions and accruals. The results
of an audit could have a material effect on our financial position, results of operations, or cash flows in the period for which that determination is made.
Refer to “Note 10: Income Taxes” for further information on potential contingencies surrounding income taxes.
NOTE 12: EMPLOYEE BENEFIT PLANS
Retirement Savings Plan
The Tripadvisor Retirement Savings Plan (the “401(k) Plan”), qualifies under Section 401(k) of the Internal Revenue Code. The 401(k) Plan allows
participating employees, which includes most of our U.S. employees, to make contributions of a specified percentage of their eligible compensation.
Participating employees may contribute up to 50% of their eligible salary on a pre-tax basis, but not more than statutory limits. Employee-participants age
50 and over may also contribute an additional amount of their salary on a pre-tax tax basis up to the IRS Catch-Up Provision Limit (or “catch-up
contributions”). Employees may also contribute into the 401(k) Plan on an after-tax basis up (or “Roth 401(k) contributions”) to an annual maximum of
10%. The 401(k) Plan has an automatic enrollment feature at 6% pre-tax. We match 50% of the first 6% of employee contributions to the plan for a
maximum employer contribution of 3% of a participant’s eligible earnings. The catch-up contributions are not eligible for employer matching contributions.
The matching contributions portion of an employee’s account, vests after two years of service. Additionally, at the end of the 401(k) Plan year, we make a
discretionary matching
101
contribution to eligible participants. This additional discretionary matching employer contribution (or “true up”) is limited to match only contributions up to
3% of eligible compensation.
We also have various defined contribution plans for our non-U.S. employees. Our contribution to the 401(k) Plan and our non-U.S. defined
contribution plans which are recorded in our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were $12
million, $11 million, and $10 million, respectively.
Deferred Compensation Plan for Non-Employee Directors
The Company has a deferred compensation plan for non-employee directors (the “Deferred Compensation Plan”). Under the Deferred Compensation
Plan, eligible directors who defer their directors’ fees may elect to have such deferred fees (i) applied to the purchase of share units, representing the
number of shares of our common stock that could have been purchased on the date such fees would otherwise be payable, or (ii) credited to a cash fund.
The cash fund will be credited with interest at an annual rate equal to the weighted average prime or base lending rate of a financial institution selected in
accordance with the terms of the Deferred Compensation Plan and applicable law. Upon termination of service as a director of Tripadvisor, a director will
receive (i) with respect to share units, such number of shares of our common stock as the share units represent, and (ii) with respect to the cash fund, a cash
payment. Payments upon termination will be made in either one lump sum or up to five annual installments, as elected by the eligible director at the time of
the deferral election.
Under the Deferred Compensation Plan, 100,000 shares of Tripadvisor common stock are available for issuance to non-employee directors. From
the inception of the Deferred Compensation Plan through December 31, 2023, a total of 557 shares have been issued for such purpose.
Executive Severance Plan and Summary Plan Description
The Company also maintains its Executive Severance Plan and Summary Plan Description (the “Severance Plan”) which is applicable to certain
employees of the Company and its subsidiaries. The Severance Plan formalizes and standardizes the Company’s severance practices for certain designated
employees (each, a “Participant” and, collectively, the “Participants”). Participants covered by the Severance Plan generally will be eligible to receive
severance benefits in the event of a termination by the Company without cause or, under certain circumstances, by the Participant for good reason. The
severance benefits differ if there is a termination of employment in connection with a change in control. The severance benefits provided pursuant to the
Severance Plan are determined based on the job classification of the Participants (as reflected in internal job profile designations) and, in certain cases, their
years of service with the Company. During the years ended December 31, 2023, 2022 and 2021, respectively, we recognized $2 million, $1 million and $1
million of expense under the Severance Plan on our consolidated statements of operations.
NOTE 13: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS
Stock-based Compensation Expense
The following table presents the amount of stock-based compensation expense and the related income tax benefit included in our consolidated
statements of operations during the periods presented:
Cost of revenue
Selling and marketing
Technology and content
General and administrative
Total stock-based compensation expense
Income tax benefit from stock-based compensation expense
Total stock-based compensation expense, net of tax effect
2023
Year ended December 31,
2022
(in millions)
2021
1 $
16
40
39
96
(21 )
75 $
1 $
12
36
39
88
(18 )
70 $
1
16
46
57
120
(23 )
97
$
$
102
We capitalized $10 million, $10 million and $13 million of stock-based compensation expense as website development costs during the years ended
December 31, 2023, 2022 and 2021, respectively.
Stock and Incentive Plans
On December 20, 2011, our 2011 Stock and Annual Incentive Plan (the “2011 Plan”) became effective and we filed a Registration Statement
registering a total of 17,500,000 shares of our common stock, of which 17,400,000 shares were issuable in connection with grants of equity-based awards
under our 2011 Plan and 100,000 shares were issuable under our Deferred Compensation Plan for Non-Employee Directors (refer to “Note 12: Employee
Benefit Plans” for information on our Deferred Compensation Plan for Non-Employee Directors). At our annual meeting of stockholders held on June 28,
2013, our stockholders approved an amendment to our 2011 Plan to, among other things, increase the aggregate number of shares of common stock
authorized for issuance thereunder by 15,000,000 shares.
On June 21, 2018, our stockholders approved the 2018 Stock and Annual Incentive Plan (the “2018 Plan”) and we filed a Registration Statement
registering 6,000,000 shares plus the number of shares available for issuance (and not subject to outstanding awards) under the 2011 Plan. As of the
effective date of the 2018 Plan, the Company ceased granting awards under the 2011 Plan. On June 8, 2021, our stockholders approved an amendment to
the Company’s 2018 Plan to, among other things, increase the aggregate number of shares reserved and available for issuance under the 2018 Plan by
10,000,000 shares. The purpose of this amendment was to provide sufficient reserves of shares of our common stock to ensure our ability to continue to
provide new hires, employees and management with equity incentives.
On June 6, 2023, our stockholders approved the TripAdvisor, Inc. 2023 Stock and Annual Incentive Plan (the “2023 Plan”) primarily for the purpose
of providing sufficient reserves of shares of our common stock to ensure our ability to continue to provide new hires, employees, and other participants
with equity incentives. The 2023 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and
other stock-based awards. As of the effective date of the 2023 Plan, the Company ceased granting awards under the 2018 Plan.
As of December 31, 2023, the total number of shares reserved for future stock-based awards under the 2023 Plan was approximately 19 million
shares, calculated as follows: 12 million shares plus the number of shares available for issuance (and not subject to outstanding awards) under the 2018
Plan. All shares of common stock issued to date in respect of the exercise of options, RSUs, or other equity awards have been issued from authorized, but
unissued common stock.
Stock Based Award Activity and Valuation
2023 Stock Option Activity
A summary of our stock option activity, consisting of service-based non-qualified stock options, is presented below:
Options outstanding as of December 31, 2022
Granted
Cancelled or expired (1)
Options outstanding as of December 31, 2023
Exercisable as of December 31, 2023
Vested and expected to vest after December 31, 2023 (2)
Weighted
Average
Exercise
Price Per
Share
Weighted
Average
Remaining
Contractua
l
Life
(in years)
Aggregate
Intrinsic
Value
(in millions)
Options
Outstanding
(in thousands)
5,462 $
164 $
(1,699 ) $
3,927 $
2,893 $
3,781 $
43.48
20.15
59.54
35.56
39.30
35.88
5.2 $
4.1 $
5.1 $
2
1
2
103
(1)
(2)
Inclusive of 1,100,000 stock options awarded in August 2013 to our former CEO, Stephen Kaufer, that expired during the third quarter of 2023. The expiration of these stock options had
no impact to our stock-based compensation expense under GAAP during the third quarter of 2023.
The Company accounts for forfeitures as they occur, rather than estimate expected forfeitures as allowed under GAAP and therefore do not include a forfeiture rate in our vested and
expected to vest calculation unless necessary for a performance condition award.
Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-
the-money options. Our closing stock price as reported on Nasdaq as of December 31, 2023 was $21.53. The total intrinsic value of stock options exercised
for the years ended December 31, 2023 and 2022 was not material, and for the year ended December 31, 2021 was $9 million.
The fair value of stock option grants has been estimated at the date of grant using the Black–Scholes option pricing model with the following
weighted average assumptions for the periods presented:
Risk free interest rate
Expected term (in years)
Expected volatility
Expected dividend yield
Weighted-average grant date fair value
2023
December 31,
2022
2021
3.70 %
5.16
53.43 %
— %
10.18 $
3.07 %
5.42
51.63 %
— %
9.93 $
0.83 %
5.45
49.61 %
— %
18.40
$
The total fair value of stock options vested for the years ended December 31, 2023, 2022 and 2021 were $7 million, $16 million, and $31 million,
respectively. Cash received from stock option exercises for the years ended December 31, 2023 and 2022 was not material, and for the year ended
December 31, 2021 was $8 million.
2023 RSU Activity
A summary of our RSU activity, consisting of service-based vesting terms, is presented below:
Unvested RSUs outstanding as of December 31, 2022
Granted
Vested and released (1)
Cancelled
Unvested RSUs outstanding as of December 31, 2023 (2)
Weighted
Average
Grant-
Date Fair
Value Per Share
Aggregate
Intrinsic
Value
(in millions)
28.41
20.80
29.62
25.59
23.06 $
248
RSUs
Outstanding
(in thousands)
8,572 $
8,043
(3,688 )
(1,407 )
11,520 $
(1)
(2)
Inclusive of approximately 840,000 RSUs withheld due to net share settlement to satisfy required employee tax withholding requirements. Potential shares which had been convertible
under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2023 Plan and can be reissued by the Company. Total payments for the
employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the consolidated statements of cash flows.
The Company accounts for forfeitures as they occur, rather than estimate expected forfeitures as allowed under GAAP and therefore do not include a forfeiture rate in our vested and
expected to vest calculation unless necessary for a performance condition award.
The total fair value of RSUs vested for the years ended December 31, 2023, 2022 and 2021 was $109 million, $108 million, and $144 million,
respectively.
On December 31, 2021, the Section 16 Committee of our Board of Directors approved and granted to Stephen Kaufer, the Company’s CEO at the
time, the following: (i) stock option to purchase 115,200 shares of common stock, 25% of which vested and became exercisable on August 1, 2022, while
the balance vests in quarterly installments over the following three years; with an estimated grant-date fair value per option of $12.59, using a Black-
Scholes option pricing model; (ii) stock option to purchase 110,026 shares of common stock, which will vest and become exercisable in full on August 1,
2024; with an estimated grant-date fair value per option of $13.18,
104
using a Black-Scholes option pricing model; and (iii) 106,382 RSUs, 25% of which vested and settled on August 1, 2022, while the balance vests in
quarterly installments over the following three years, with an estimated grant-date fair value of $27.26 per RSU, based on the quoted price of our common
stock on the date of grant. The estimated fair value of these awards totaled $6 million and was fully recognized as stock-based compensation expense to the
consolidated statement of operations for the year ended December 31, 2021, given the Company concluded there was no substantive future requisite service
condition for these awards that existed at grant date for GAAP purposes. During the year ended December 31, 2022, the Company reversed $3 million of
this previously recorded stock-based compensation expense related to these awards as the Company concluded that certain awards scheduled to vest were
no longer achievable as a result of new terms executed in Mr. Kaufer's Consulting Service Agreement entered into on May 3, 2022.
A summary of our performance-based RSUs ("PSUs") and market-based RSUs (“MSUs”) activity is presented below:
PSUs (1)
Weighted
Average
Grant-
Date Fair
Value Per
Share
Aggregate
Intrinsic
Value
(in millions)
Outstanding
(in thousands)
MSUs (2)
Weighted
Average
Grant-
Date Fair
Value Per
Share
Aggregate
Intrinsic
Value
(in millions)
Outstanding
(in thousands)
Unvested and outstanding as of December 31, 2022
Granted
Cancelled
Unvested and outstanding as of December 31, 2023
— $
546
(27 )
519 $
—
18.45
18.45
18.45 $
11
592 $
34
(54 )
572 $
10.00
14.80
9.26
10.35 $
12
(1)
(2)
Represents PSUs awarded in February 2023. The PSU awards provide for vesting in two equal annual installments on each of December 31, 2024 and December 31, 2025, based on the
extent to which the Company achieves certain financial metrics relative to targets established by the Company’s Compensation Committee of its Board of Directors. The estimated grant-
date fair value per PSU was measured based on the quoted price of our common stock at the date of grant, calculated upon the establishment of performance targets, and will be
amortized on a straight-line basis over the requisite service period. Based upon actual attainment relative to the target financial metrics, employees have the ability to receive up to 200%
of the target number originally granted, or to be issued none at all. Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating
results or expected achievement of performance goals, as applicable, and the impact of modifications, if any.
MSUs shall vest three years from grant date, generally with 25% vesting if the weighted-average stock price over a 30-day trading period during the vesting period is equal to or greater
than $35.00 but less than $45.00, 50% vesting if equal to or greater than $45.00 but less than $55.00, and 100% vesting if equal to or greater than $55.00, subject to continuous
employment with, or performance of services for, the Company. A Monte-Carlo simulation model, which simulated the present value of the potential outcomes of future stock prices was
used to calculate the grant-date fair value of our MSU awards. The estimated grant-date fair value of these awards is amortized on a straight-line basis over the requisite service period
and is not adjusted based on the actual number of awards that ultimately vest.
As of December 31, 2023, total unrecognized compensation cost related to stock-based awards, substantially RSUs, was $241 million, which the
Company expects to recognize over a weighted-average period of 2.6 years.
NOTE 14: STOCKHOLDERS’ EQUITY
Preferred Stock
In addition to common stock, we are authorized to issue up to 100 million preferred shares, with $ 0.001 par value per share, with terms determined
by our Board of Directors, without further action by our stockholders. As of December 31, 2023, no preferred shares had been issued.
Common Stock and Class B Common Stock
Our authorized common stock consists of 1.6 billion shares of common stock with par value of $0.001 per share, and 400 million shares of Class B
common stock with par value of $0.001 per share. Both classes of common stock qualify for and share equally in dividends, if declared by our Board of
Directors. Common stock is entitled to one vote per share and Class B common stock is entitled to 10 votes per share. Holders of Tripadvisor common
105
stock, acting as a single class, are entitled to elect a number of directors equal to 25% of the total number of directors, rounded up to the next whole
number, which was three directors as of December 31, 2023. Class B common stockholders may, at any time, convert their shares into common stock, on a
one for one share basis. Upon conversion, the Class B common stock is retired and is not available for reissue. In the event of liquidation, dissolution,
distribution of assets or winding-up of Tripadvisor the holders of both classes of common stock have equal rights to receive all the assets of Tripadvisor
after the rights of the holders of the preferred stock have been satisfied. There were 149,775,361 and 124,881,494 shares of common stock issued and
outstanding, respectively, and 12,799,999 shares of Class B common stock issued and outstanding at December 31, 2023.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) is comprised of accumulated foreign currency translation adjustments, as follows as of the dates
presented:
Cumulative foreign currency translation adjustments, net of tax (1)
Accumulated other comprehensive income (loss)
(1) Deferred income tax liabilities related to these amounts are not material.
Treasury Stock
December 31, 2023
December 31, 2022
$
$
(in millions)
(71 ) $
(71 ) $
(82 )
(82 )
On November 1, 2019, our Board of Directors authorized the repurchase of an additional $100 million in shares of our common stock under an
existing share repurchase program, which increased the amount available to the Company under this share repurchase program to $250 million. Our Board
of Directors authorized and directed management, working with the Executive Committee of our Board of Directors, to affect the share repurchase program
in compliance with applicable legal requirements. As of December 31, 2022, the Company had $75 million remaining under this existing share repurchase
program to repurchase shares of its common stock. During the three months ended June 30, 2023, we repurchased 4,724,729 shares of our outstanding
common stock at an average price of $15.85 per share, exclusive of fees, commissions, and excise taxes or $75 million in the aggregate, which completed
this share repurchase program.
On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a new share
repurchase program. Our Board of Directors authorized and directed management, working with the Executive Committee of our Board of Directors, to
affect the share repurchase program in compliance with applicable legal requirements. The Executive Committee will determine the price, timing, amount
and method of such repurchases based on its evaluation of market conditions and other factors, and at prices determined to be attractive and in the best
interests of both the Company and its stockholders. This share repurchase program, which has a term of two years, does not obligate the Company to
acquire any particular number of shares and may be modified, suspended or discontinued at any time. During the three months ended December 31, 2023,
we repurchased 1,324,524 shares of our outstanding common stock at an average price of $18.85 per share, exclusive of fees, commissions, and excise
taxes, or $25 million, under this share repurchase program. As of December 31, 2023, we had $225 million remaining available to repurchase shares of our
common stock under this share repurchase program.
As of December 31, 2023, the Company held 24,893,867 shares of its common stock in treasury with an aggregate cost of $822 million.
On August 16, 2022, the Inflation Reduction Act was signed into law, and imposed a nondeductible 1% excise tax on the net value of certain stock
repurchases made after December 31, 2022. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair
market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. For the year ended December
31, 2023, the excise tax liability incurred and recorded to accrued expenses and other current liabilities on our consolidated balance sheet was not material.
106
Dividends
During the years ended December 31, 2023, 2022 and 2021, our Board of Directors did not declare any dividends on our outstanding common stock.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend on our results of operations, earnings,
capital requirements, financial condition, future prospects, contractual restrictions and other factors deemed relevant by our Board of Directors.
NOTE 15: EARNINGS PER SHARE
Below is a reconciliation of the weighted average number of shares of common stock outstanding in calculating Diluted EPS for the periods
presented:
Numerator:
Net income (loss) used to compute Basic EPS
Interest expense on 2026 Senior Notes, net of tax
Net income (loss) used to compute Diluted EPS
Denominator:
Weighted average shares used to compute Basic EPS
Weighted average effect of dilutive securities:
Stock-based awards (Note 13)
2026 Senior Notes (Note 8)
Weighted average shares used to compute Diluted EPS
Basic EPS
Diluted EPS
Year ended December 31,
2022
(shares in thousands and $ in millions, except per share amounts)
2023
2021
$
$
$
$
10 $
1
11 $
20 $
1
21 $
(148 )
—
(148 )
139,412
139,923
137,234
729
4,674
144,815
0.07 $
0.08 $
1,073
4,674
145,670
0.14 $
0.14 $
—
—
137,234
(1.08 )
(1.08 )
Potential common shares, consisting of outstanding stock options, RSUs and those issuable under the 2026 Senior Notes, totaling approximately
14.8 million, 11.4 million, and 16.1 million, for the years ended December 31, 2023, 2022 and 2021, respectively, have been excluded from the calculations
of Diluted EPS because their effect would have been antidilutive. In addition, potential common shares of certain performance-based awards of
approximately 1.1 million, 0.3 million, and 0.1 million, for the years ended December 31, 2023, 2022 and 2021, respectively, for which all targets required
to trigger vesting had not been achieved, were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting
periods.
The earnings per share amounts are the same for our common stock and Class B common stock because the holders of each class are legally entitled
to equal per share distributions whether through dividends or in liquidation. In addition, our non-vested RSUs are entitled to dividend equivalents, which
are payable to the holder subject to, and only upon vesting of, the underlying awards and are therefore forfeitable. Given such dividend equivalents are
forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two‑class method of determining earnings
per share.
NOTE 16: OTHER INCOME (EXPENSE), NET
Other income (expense), net, consists of the following for the periods presented:
Foreign currency exchange gains (losses), net (1)
Earnings (losses) from equity investment, net
Other, net
Total
2023
Year Ended December 31,
2022
(in millions)
2021
(5 ) $
(2 )
3
(4 ) $
(5 ) $
(2 )
2
(5 ) $
(4 )
(3 )
(3 )
(10 )
$
$
107
(1)
Foreign currency exchange gains (losses), net, are related to foreign exchange transaction gains and losses due to required conversion from transaction currency to functional
currency, offset by any foreign currency forward contract gains and losses.
NOTE 17: RELATED PARTY TRANSACTIONS
Relationship between Liberty TripAdvisor Holdings, Inc. and Tripadvisor
LTRIP is a controlling stockholder of Tripadvisor. We consider LTRIP a related party. Refer to “Note 1: Organization and Business Description”,
which describes the evolution of our relationship with LTRIP, including LTRIP’s stock ownership of Tripadvisor and deemed voting power as of December
31, 2023. We had no related party transactions with LTRIP during the years ended December 31, 2023, 2022 and 2021.
Relationship between Chelsea Investment Holding Company PTE Ltd. and Tripadvisor
Refer to the discussion regarding our equity method investment in Chelsea Investment Holding Company PTD Ltd. in the section titled “Non-
Marketable Investments” within “Note 3: Financial Instruments and Fair Value Measurements” for a description of our relationship and existing
commercial arrangements with Chelsea Investment Holding Company PTE Ltd and/or its subsidiaries. We had no material related party transactions with
Chelsea Investment Holding Company PTE Ltd or its subsidiaries during the years ended December 31, 2023, 2022 and 2021.
NOTE 18: SEGMENT AND GEOGRAPHIC INFORMATION
We have three reportable segments: (1) Brand Tripadvisor (formerly Tripadvisor Core); (2) Viator; and (3) TheFork. Our Brand Tripadvisor segment
includes the following revenue sources: (1) Tripadvisor-branded hotels – consisting of hotel meta revenue, primarily click-based advertising revenue, and
also hotel B2B revenue, which includes primarily subscription-based advertising and hotel sponsored placements revenue; (2) Media and advertising
revenue – consisting primarily of display-based advertising revenue (also referred to as “media advertising”); (3) Tripadvisor experiences and dining
revenue – consisting of intercompany (intersegment) revenue related to affiliate marketing commissions earned primarily from experience bookings, and to
a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, which are
eliminated on a consolidated basis, in addition to external revenue generated from Tripadvisor restaurant offerings; and (4) Other revenue – consisting of
cruises, alternative accommodation rentals, flights, and rental cars revenue. The nature of the services provided and related revenue recognition policies are
summarized by reportable segment in “Note 2: Significant Accounting Policies.”
Our operating segments are determined based on how our chief executive officer, who also serves as our chief operating decision maker (“CODM")
manages our business, regularly accesses information, and evaluates performance for operating decision-making purposes, including allocation of
resources. Adjusted EBITDA is our segment profit measure and a key measure used by our CODM and Board of Directors to understand and evaluate the
operating performance of our business and on which internal budgets and forecasts are based and approved. We define Adjusted EBITDA as net income
(loss) plus: (1) (provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and
other stock-settled obligations; (5) goodwill, long-lived asset, and intangible assets impairments; (6) legal reserves and settlements; (7) restructuring and
other related reorganization costs; and (8) non-recurring expenses and income.
Direct costs are included in the applicable operating segments, including certain corporate general and administrative personnel costs, which have
been allocated to each segment. We base these allocations on time-spent analyses, headcount, and other allocation methods we believe are reasonable. We
do not allocate certain shared expenses to our reportable segments, such as certain information system costs, technical infrastructure costs, and other costs
supporting the Tripadvisor platform and operations, that we do not believe are a material driver of individual segment performance, which is consistent
with the financial information used by our CODM. We include these expenses in our Brand Tripadvisor segment. Our allocation methodology is
periodically evaluated and may change.
108
The following tables present our reportable segment information for the years ended December 31, 2023, 2022 and 2021 and includes a
reconciliation of Adjusted EBITDA to Net income (loss). We record depreciation and amortization, stock-based compensation and other stock-settled
obligations, goodwill, long-lived asset and intangible asset impairments, legal reserves and settlements, and other non-recurring expenses and income, net,
which are excluded from segment operating performance, in "Corporate & Eliminations". In addition, we do not report total assets, capital expenditures and
related depreciation expense by segment as our CODM does not use this information to evaluate operating segment performance. Accordingly, we do not
regularly provide such information by segment to our CODM.
Our segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by our Brand Tripadvisor
segment to both our Viator and TheFork segments. These intersegment transactions are recorded by each segment at amounts that we believe approximate
fair value as if the transactions were between third parties and, therefore, impact segment performance. However, the revenue and corresponding expense
are eliminated in consolidation. The elimination of such intersegment transactions is included within the “Corporate & Eliminations” column in the tables
below.
Brand
Tripadvisor (1)
Viator (2)
Year ended December 31, 2023
TheFork (3)
(in millions)
Corporate &
Eliminations
Total
External revenue
Intersegment revenue
Total Revenue
Adjusted EBITDA
Depreciation and amortization
Stock-based compensation
Restructuring and other related reorganization costs (4)
Other non-recurring expenses (income) (5)
Operating income (loss)
Other income (expense), net
Income (loss) before income taxes
(Provision) benefit for income taxes
Net income (loss)
$
$
$
$
897
134
1,031
348
$
$
737
—
737
—
$
154
—
154
$
(14 )
(10 )
(3 )
(9 )
—
$
(134 )
(134 ) $
—
(87 )
(96 )
—
(3 )
Brand Tripadvisor
(1)
Viator (2)
Year ended December 31, 2022
TheFork (3)
(in millions)
Corporate &
Eliminations
Total
$
$
$
$
873
93
966
345
$
$
493
—
493
(11 )
External revenue
Intersegment revenue
Total Revenue
Adjusted EBITDA
Depreciation and amortization
Stock-based compensation
Legal reserves and settlements
Other non-recurring expenses (income) (6)
Operating income (loss)
Other income (expense), net
Income (loss) before income taxes
(Provision) benefit for income taxes
Net income (loss)
109
$
126
—
126
$
(39 )
—
$
(93 )
(93 ) $
—
(97 )
(88 )
(1 )
(8 )
1,788
—
1,788
334
(87 )
(96 )
(22 )
(3 )
126
(1 )
125
(115 )
10
1,492
—
1,492
295
(97 )
(88 )
(1 )
(8 )
101
(34 )
67
(47 )
20
Brand Tripadvisor
(1)
Viator (2)
Year ended December 31, 2021
TheFork (3)
(in millions)
Corporate &
Eliminations
Total
$
$
$
$
633
32
665
177
$
$
184
—
184
(31 )
External revenue
Intersegment revenue
Total Revenue
Adjusted EBITDA
Depreciation and amortization
Stock-based compensation
Operating income (loss)
Other income (expense), net
Income (loss) before income taxes
(Provision) benefit for income taxes
Net income (loss)
$
85
—
85
$
(46 )
—
$
(32 )
(32 ) $
—
(111 )
(120 )
902
—
902
100
(111 )
(120 )
(131 )
(54 )
(185 )
37
(148 )
(1)
(2)
(3)
(4)
(5)
(6)
Corporate general and administrative personnel costs of $6 million, $5 million and $6 million for the years ended December 31, 2023, 2022 and 2021, respectively, were
allocated to the Viator and TheFork segments.
Includes allocated corporate general and administrative personnel costs from our Brand Tripadvisor segment of $3 million, $2 million and $3 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
Includes allocated corporate general and administrative personnel costs from our Brand Tripadvisor segment of $3 million, $3 million and $3 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
Refer to “Note 7: Accrued Expenses and Other Current Liabilities” for information regarding restructuring and other related reorganization costs.
The Company expensed $3 million of previously capitalized transaction costs during 2023, to general and administrative expenses on our consolidated statement of operations.
The Company considers such costs to be non-recurring in nature.
The Company incurred a loss of approximately $8 million during the fourth quarter of 2022, as the result of external fraud. This loss was recorded to general and administrative
expenses on the consolidated statement of operations for December 31, 2022. The Company considers such costs to be non-recurring in nature. To the extent the Company
recovers any losses in future periods related to this incident, the Company plans to reduce Adjusted EBITDA by the recovery amount in that same period.
Product and Geographic Information
We disaggregate revenue into major products and revenue sources, as follows, for the periods presented:
Major products/revenue sources (1):
Brand Tripadvisor
Tripadvisor-branded hotels
Media and advertising
Tripadvisor experiences and dining (2)
Other
Total Brand Tripadvisor
Viator
TheFork
Intersegment eliminations (2)
Total Revenue
2023
Year ended December 31,
2022
2021
(in millions)
$
659 $
145
176
51
1,031
737
154
(134 )
1,788 $
$
650 $
130
134
52
966
493
126
(93 )
1,492 $
451
98
70
46
665
184
85
(32 )
902
(1) Our revenue is recognized primarily at a point in time for all reported segments.
(2)
Tripadvisor experiences and dining revenue within the Brand Tripadvisor segment is shown gross of intersegment (intercompany) revenue, which is eliminated on a
consolidated basis.
The Company measures its geographic revenue based on the physical location of the Tripadvisor subsidiary which generates the revenue, which is
consistent with our measurement of long-lived physical assets, or property
110
and equipment, net. As such, this geographic classification does not necessarily align with where the consumer resides, where the consumer is physically
located while using the Company's services, or the location of the travel service provider, experience operator or restaurant.
The Company’s revenue based on geographic location consists of the following for the periods presented:
Revenue
United States
United Kingdom
All other countries
Total revenue
2023
Year ended December 31,
2022
(in millions)
2021
$
$
1,198 $
349
241
1,788 $
905 $
402
185
1,492 $
526
259
117
902
The Company’s property and equipment, net for the United States and all other countries based on the geographic location of the assets consists of
the following as of the dates presented:
Property and equipment, net
United States
All other countries
Total
Customer Concentrations
December 31,
2023
2022
(in millions)
$
$
147 $
44
191 $
156
38
194
Refer to “Note 2: Significant Accounting Policies” under the section entitled “Certain Risks and Concentrations” for information regarding our
major customer concentrations.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of December 31, 2023, our management, with the participation of our Chief Executive Officer and President and our Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act.
Based upon that evaluation, our Chief Executive Officer and President and our Chief Financial Officer concluded that, as of December 31, 2023, our
disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that
such material information is accumulated and communicated to our management, including our Chief Executive Officer and President and our Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
111
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of
the Exchange Act. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting
for external purposes in accordance with GAAP. Under the supervision and with the participation of the Company’s management, including the Chief
Executive Officer and President and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company’s management evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.
Pursuant to Exchange Act Rule 13a-15(d) or 15d-15(d), management has concluded that, as of December 31, 2023, our internal control over financial
reporting was effective. Management has reviewed its assessment with the Audit Committee. KPMG LLP, an independent registered public accounting
firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report which is included
below.
Limitations on Effectiveness of Controls and Procedures
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all
error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not
absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud
will not occur or that all control issues and instances of fraud, if any, within our company have been detected.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Tripadvisor, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Tripadvisor, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss),
changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively,
the consolidated financial statements), and our report dated February 16, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
112
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Boston, Massachusetts
February 16, 2024
Item 9B. Other Information
During the fourth quarter of 2023, none of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-
Rule 10b5-1 trading arrangement (each as defined in Item 408(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
Item 11. Executive Compensation
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
113
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
Item 14. Principal Accounting Fees and Services
The information required under this item is incorporated herein by reference to our 2024 Proxy Statement, which proxy statement will be filed with
the SEC not later than 120 days after the close of our fiscal year ended December 31, 2023.
114
Item 15. Exhibit and Financial Statement Schedules
(a) The following is filed as part of this Annual Report on Form 10-K:
PART IV
1. Consolidated Financial Statements: The consolidated financial statements and report of independent registered public accounting firms
required by this item are included in Part II, Item 8.
All other schedules are omitted because they are not applicable or not required, or because the required information is shown either in the
consolidated financial statements or in the notes thereto.
(b) Exhibits:
Exhibit
No.
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3
Exhibit Description
Restated Certificate of Incorporation of
Tripadvisor, Inc.
Amended and Restated Bylaws of Tripadvisor,
Inc.
Amendment No. 1 to Amended and Restated
Bylaws of Tripadvisor, Inc.
Specimen Tripadvisor, Inc. Common Stock
Certificate
Description of the Registrant’s Securities
Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934
Indenture, dated July 9, 2020, among Tripadvisor,
Inc., the guarantors party thereto and U.S. Bank
National Association, as trustee (as successor
trustee to Wilmington Trust, National Association)
Form of Senior Note (included in Exhibit 4.1)
Indenture, dated as of March 25, 2021, by and
among Tripadvisor, Inc., the guarantors party
thereto and U.S. Bank National Association, as
trustee
Form of 0.25% Convertible Senior Notes due
2026 (included as Exhibit A to Exhibit 4.1)
Governance Agreement, by and among
Tripadvisor, Inc., Liberty Interactive Corporation
and Barry Diller, dated as of December 20, 2011
Assignment and Assumption of Governance
Agreement by and among Tripadvisor, Inc. and
Liberty Tripadvisor Holdings, dated as of August
12, 2014
Tax Sharing Agreement by and between
Tripadvisor, Inc. and Expedia, Inc., dated as of
December 20, 2011
Filed
Herewith
Incorporated by Reference
Form
8-K
8-K
8-K
SEC File No.
001-35362
001-35362
001-35362
S-4/A
333-175828-01
10-K
001-35362
8-K
001-35362
Exhibit
No.
3.1
3.2
3.1
4.6
4.2
4.1
4.2
4.1
Filing
Date
12/27/11
12/27/11
2/12/13
10/24/11
2/19/20
7/9/20
7/9/20
3/25/21
001-35362
001-35362
8-K
8-K
8-K
8-K
001-35362
4.2
3/25/21
001-35362
10.1
12/27/11
8-K
001-35362
10.2
12/27/11
X
115
10.4+
10.5
10.6
10.7
10.8+
10.9+
10.10+
10.11+
10.12+
10.13+
10.14+
10.15+
10.16
10.17+
10.18
10.19+
10.20+
10.21+
Tripadvisor, Inc. Deferred Compensation Plan for
Non-Employee Directors
Corporate Headquarters Lease with Normandy
Gap-V Needham Building 3, LLC, as landlord,
dated as of June 20, 2013
Guaranty dated June 20, 2013 by Tripadvisor, Inc.
for the benefit of Normandy Gap-V Needham
Building 3, LLC, as landlord
Amendment and Restatement Agreement, dated as
of June 29, 2023, to the Credit Agreement dated as
of June 26, 2015 (as amended as of May 12, 2017,
May 5, 2020 and December 17, 2020, among
Tripadvisor, Inc., Tripadvisor Holdings, LLC,
Tripadvisor, LLC, the other Borrowers party
thereto, the Lenders party thereto and JPMorgan
Chase Bank, N.A., as Administrative Agent
Executive Severance Plan and Summary Plan
Description
Form of Option Agreement (Domestic)
Form of Option Agreement (International)
Form of Restricted Stock Unit Agreement
(Domestic)
Form of Restricted Stock Unit Agreement
(International)
Form of Restricted Stock Unit Agreement
(French)
Form of Restricted Stock Unit Agreement
(Performance Based)
Form of Restricted Stock Unit Agreement (Non-
Employee Directors)
Governance Agreement dated as of November 6,
2019 between Tripadvisor, Inc. and Trip.com
Group Limited
Employment Agreement, dated as of March 29,
2021 between Tripadvisor, LLC and Seth Kalvert
Form of Capped Call Confirmation
Employment Letter Agreement dated May 2, 2022
between Tripadvisor LLC and Matt Goldberg
Employment Letter Agreement dated October 10,
2022 between Tripadvisor LLC and Michael
Noonan
Tripadvisor, Inc. 2023 Stock and Annual Incentive
Plan
X
116
S-8
10-Q
333-178637
4.6
12/20/11
001-35362
10.1
7/24/13
10-Q
001-35362
10.2
7/24/13
8-K
001-35362
10.1
7/6/23
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
8-K
001-35362
10.4
8/8/17
001-35362
001-35362
001-35362
10.2
10.3
10.1
5/6/21
5/6/21
5/3/23
001-35362
10.2
5/3/23
001-35362
10.3
5/3/23
001-35362
10.4
5/3/23
001-35362
10.2
8/1/18
001-35362
10.1
11/6/19
10-Q
001-35362
10.7
5/6/21
8-K
8-K
8-K
001-35362
001-35362
10.1
10.1
3/25/21
5/4/22
001-35362
10.1
10/11/22
21.1
23.1
24.1
31.1
31.2
32.1
32.2
97.1
101.INS
101.SCH
104
Subsidiaries of the Registrant
Consent of KPMG LLP, Independent Registered
Public Accounting Firm
Power of Attorney (included in signature page)
Certification of the Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Certification of the Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Certification of the Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
Certification of the Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
Tripadvisor, Inc. Incentive Compensation
Clawback Policy, dated November 1, 2023
Inline XBRL Instance Document - the instance
document does not appear in the Interactive Data
File because its XBRL tags are embedded within
the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema with
Embedded Linkbases Document.
Cover Page Interactive Data File (embedded
within the Inline XBRL document).
X
X
X
X
X
X
X
X
X
X
X
+ Indicates a management contract or a compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary
Not applicable.
117
Pursuant to the requirements of the Section 13 or 15(d) of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized.
Signatures
February 16, 2024
TRIPADVISOR, INC.
By:
/s/ MATT GOLDBERG
Matt Goldberg
Chief Executive Officer and President
POWER OF ATTORNEY
We, the undersigned officers and directors of Tripadvisor, Inc., hereby severally constitute and appoint Matt Goldberg and Michael Noonan, and
each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated
below, all amendments to this report, and generally to do all things in our names and on our behalf in such capacities to enable Tripadvisor, Inc. to comply
with the provisions of the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated as of February 16, 2024.
Signature
/s/ MATT GOLDBERG
Matt Goldberg
/s/ MICHAEL NOONAN
Michael Noonan
/s/ GEOFFREY GOUVALARIS
Geoffrey Gouvalaris
/s/ GREGORY B. MAFFEI
Gregory B. Maffei
/s/ TRYNKA SHINEMAN BLAKE
Trynka Shineman Blake
/s/ JAY C. HOAG
Jay C. Hoag
/s/ BETSY MORGAN
Betsy Morgan
/s/ GREG O’HARA
Greg O’Hara
/s/ JEREMY PHILIPS
Jeremy Philips
/s/ ALBERT E. ROSENTHALER
Albert E. Rosenthaler
Title
Chief Executive Officer, President and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Chief Accounting Officer
(Principal Accounting Officer)
Chairman of the Board
Director
Director
Director
Director
Director
Director
118
Jane Jie Sun
/s/ ROBERT S. WIESENTHAL
Robert S. Wiesenthal
Director
Director
119
[Type here]
Exhibit 10.2
EXECUTION VERSION
ASSIGNMENT AND ASSUMPTION OF GOVERNANCE AGREEMENT
This Assignment and Assumption of Governance Agreement (this “Assignment”) is made as
of August 12, 2014 by and among Liberty TripAdvisor Holdings, Inc., a Delaware corporation
(“Assignee”), Liberty Interactive Corporation, a Delaware corporation (“Liberty”), and TripAdvisor,
Inc., a Delaware corporation (“TripAdvisor”). Capitalized terms used and not otherwise defined
herein have the meanings given such terms in the Governance Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, TripAdvisor and Liberty are parties to that certain Governance Agreement,
dated as of December 20, 2011 (the “Governance Agreement”);
WHEREAS, Liberty has determined to engage in a transaction, pursuant to which all
Company Common Shares Beneficially Owned by Liberty, together with certain other assets, will
be contributed to Assignee and then all of the capital stock of Assignee will be distributed by means
of a dividend (the “TripCo Spin-Off”) to holders of Liberty’s Series A Liberty Ventures common
stock, par value $0.01 per share, and Liberty’s Series B Liberty Ventures common stock, par value
$0.01 per share, as described more fully in the Registration Statement on Form S-1, as amended
(Registration No. 333-195705), filed by Assignee with the Securities and Exchange Commission;
WHEREAS, in accordance with Section 5.01 of the Governance Agreement, the parties
desire to effect the assignment by Liberty and assumption by Assignee of Liberty’s rights, benefits
and obligations under the Governance Agreement in connection with the TripCo Spin- Off; and
WHEREAS, on or prior to the date hereof, pursuant to Section 5.01(b)(ii) of the Governance
Agreement, the board of directors of TripAdvisor has approved the Transfer of Company Common
Shares to Assignee in the TripCo Spin-Off for purposes of Section 203(a)(1) of the Delaware General
Corporation Law.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1.
Representations and Warranties of TripAdvisor. TripAdvisor represents and
warrants to Liberty and Assignee that:
a. TripAdvisor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and authority to enter
into this Assignment and to carry out its obligations hereunder and under the Governance
Agreement;
TripAdvisor has been duly authorized by all necessary corporate action on the part of
b. the execution, delivery and performance of this Assignment by
Active 16238788.5
W/2306689
TripAdvisor and no other corporate proceedings on the part of TripAdvisor are necessary to
authorize this Assignment or the matters contemplated hereby or by the Governance Agreement;
c.
this Assignment has been duly executed and delivered by TripAdvisor and
constitutes a valid and binding obligation of TripAdvisor, and, assuming this Assignment constitutes
a valid and binding obligation of Liberty and Assignee, is enforceable against TripAdvisor in
accordance with its terms;
d.
the execution and delivery of this Assignment by TripAdvisor, and the
performance of its obligations hereunder and under the Governance Agreement, do not constitute a
breach or violation of, or conflict with, TripAdvisor’s restated certificate of incorporation or
amended and restated by-laws; and
e. prior to the execution of this Assignment, the board of directors of
TripAdvisor has duly adopted a resolution in the form attached hereto as Exhibit A, which
resolution has not been amended, modified or rescinded.
2.
TripAdvisor that:
Representations and Warranties of Liberty. Liberty represents and warrants to
a. Liberty is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and authority to enter into
this Assignment and to carry out its obligations hereunder and under the Governance Agreement;
b.
the execution, delivery and performance of this Assignment by Liberty has been
duly authorized by all necessary corporate action on the part of Liberty and no other corporate
proceedings on the part of Liberty are necessary to authorize this Assignment or the matters
contemplated hereby or by the Governance Agreement;
c.
this Assignment has been duly executed and delivered by Liberty and constitutes a
valid and binding obligation of Liberty, and, assuming this Assignment constitutes a valid and
binding obligation of TripAdvisor, is enforceable against Liberty in accordance with its terms;
d.
the execution and delivery of the Assignment by Liberty and the performance of
its obligations hereunder and under the Governance Agreement, do not constitute a breach or
violation of, or conflict with, Liberty’s restated certificate of incorporation or amended and restated
bylaws;
e.
this Assignment is being entered into in connection with the TripCo Spin- off,
which constitutes a Distribution Transaction involving Assignee, a Qualified Distribution
Transferee, pursuant to Section 5.01 of the Governance Agreement; and
Company Common Shares Beneficially Owned by it to TripCo.
f.
in connection with the TripCo Spin-Off, Liberty has contributed all
3.
Representations and Warranties of Assignee and Liberty. Assignee and Liberty each
represent and warrant to TripAdvisor that:
Active 16238788.5 2
a. Assignee is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and authority to
enter into this Assignment and to carry out its obligations hereunder and, following the TripCo
Spin-Off, under the Governance Agreement;
b.
the execution, delivery and performance of this Assignment by Assignee has
been duly authorized by all necessary corporate action on the part of Assignee and no other
corporate proceedings on the part of Assignee are necessary to authorize this Assignment or the
matters contemplated hereby or by the Governance Agreement;
c.
this Assignment has been duly executed and delivered by Assignee and constitutes
a valid and binding obligation of Assignee, and, assuming this Assignment constitutes a valid and
binding obligation of TripAdvisor, is enforceable against Assignee in accordance with its terms; and
d.
the execution and delivery of this Assignment by the Assignee, and, following
the TripCo Spin-Off, the performance by the Assignee of its obligations hereunder and under the
Governance Agreement, do not constitute a breach or violation of, or conflict with, Assignee’s
certificate of incorporation or bylaws.
4.
Assignment and Assumption, Certain Acknowledgements.
consummation of the TripCo Spin-Off):
a. Effective immediately prior to the TripCo Spin-Off (but subject to the
i. Liberty assigns all of its rights and obligations under the
Governance Agreement (including its rights pursuant to Articles II
and III and Section 7.08 thereof) to Assignee;
ii. Assignee accepts such assignment of rights hereunder and assumes
and agrees to perform all liabilities and obligations of Liberty
under the Governance Agreement to be performed following the
effectiveness of the TripCo Spin-Off; and
iii. Assignee is substituted for Liberty as “Liberty” for all purposes
under the Governance Agreement and upon the TripCo Spin-Off,
all references in the Governance Agreement to “Liberty” will be
deemed to refer to Assignee, and references to the “Liberty
Stockholder Group” will be deemed to refer to the stockholder
group composed of Assignee and those Subsidiaries of Assignee,
that, from time to time, hold Equity Securities of TripAdvisor.
b. Liberty acknowledges that (i) it shall not be entitled to any benefits under the
Governance Agreement following the TripCo Spin-Off (including, for the avoidance of doubt, any
benefits available to Liberty prior to the TripCo Spin-Off arising from the approval of
Active 16238788.5 3
the Board of Directors of the receipt of common stock of TripAdvisor as a result of TripAdvisor’s
spin-off from Expedia, Inc. for purposes of Section 203(a)(1) of the Delaware General Corporation
Law (“DGCL”)) and (ii) TripAdvisor shall not be subject to any liability to Liberty under the
Governance Agreement following the TripCo Spin-Off (except for any liability arising from any
breach of the Governance Agreement by TripAdvisor or relating to any actions or events occurring,
in each case, on or prior to the date of the TripCo Spin-Off).
c. TripAdvisor acknowledges that Liberty shall not be subject to any liability to it
under the Governance Agreement following the TripCo Spin-Off (except for any liability arising
from any breach of the Governance Agreement by Liberty or relating to any actions or events
occurring, in each case, on or prior to the date of the TripCo Spin-Off).
d. TripAdvisor and Liberty acknowledge that the Chairman Termination Date
occurred on December 11, 2012, and, as a result, Mr. Diller’s rights under the Governance
Agreement were terminated as of December 11, 2012.
e. Assignee acknowledges and confirms that, as of the time of the TripCo
Spin-Off, Gregory B. Maffei and Christopher W. Shean shall be the members on the Board of
Directors whom Assignee has designated as its nominees pursuant to Section 2.01(a) of the
Governance Agreement.
f. Pursuant to Section 7.01 of the Governance Agreement, effective upon the
completion of the TripCo Spin-Off, the address for all notices, requests and other communications to
Assignee pursuant to the Governance Agreement will be:
Liberty TripAdvisor Holdings, Inc.
12300 Liberty Boulevard
Englewood, CO 80112
Attention: Richard N. Baer, Senior Vice President and General Counsel Facsimile:
720-875-5300
5.
Miscellaneous.
a. From and after the execution and delivery of this Assignment, the Governance
Agreement shall be deemed to be assigned and assumed as herein provided (it being understood that
no assignment, assumption or substitution hereunder shall be effective until immediately prior to the
TripCo Spin-Off (and subject to the consummation of the TripCo Spin- Off)), and the Governance
Agreement shall continue in full force and effect and is hereby ratified and confirmed.
b. This Assignment may be amended, modified and supplemented, and any of
the provisions contained herein may be waived, only by a written instrument signed by the parties
hereto or their successors and permitted assigns; provided, however, that following the TripCo
Spin-Off, Liberty’s execution of such amendment, modification or supplement will not be required
for the effectiveness thereof, except to the extent such amendment, modification or supplement
would have, or would reasonably be expected to have, an adverse effect upon Liberty.
Assignment will be assigned, in whole or in part, by any party hereto without the prior
c. Neither this Assignment nor any of the rights, interests or obligations under this
Active 16238788.5 4
written consent of the other parties hereto; provided, however, that following the TripCo Spin- Off,
Liberty’s consent will not be required for such assignment, except to the extent such assignment
would have, or would reasonably be expected to have, an adverse effect upon Liberty. Any purported
assignment without such prior written consent will be void. Subject to the preceding sentences, this
Assignment will be binding upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns. This Assignment shall not confer any rights or remedies upon any
Person other than the parties to this Assignment and their respective successors and permitted
assigns.
d. This Assignment sets forth the entire agreement and understanding between
the parties as to the subject matter hereof and merges and supersedes all prior representations,
agreements and understandings, written or oral, of any and every nature among them, other than as
set forth in the Governance Agreement.
e. This Assignment shall be governed by and construed in accordance with the
Laws of the State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the
application of the Law of any jurisdiction other than the State of Delaware.
f. The headings in this Assignment are for convenience of reference only and
shall not constitute a part of this Assignment, nor shall they affect its meaning, construction or
effect.
g. This Assignment may be executed via facsimile or pdf and in any number of
counterparts, each of which shall be deemed to be an original instrument and all of which together
shall constitute one and the same instrument.
Active 16238788.5 5
Active 16238788.5 6
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed
by their respective authorized officers and made effective as of the day and year first above written.
LIBERTY TRIVISOR HOLDINGS, INC.
By: /s/ Richard N. Baer
Names: Richard N. Baer
Title: Senior Vice President
LIBERTY INTERACTIVE CORPORATION
By: /s/ Richard N. Baer
Names: Richard N. Baer
Title: Senior Vice President
TRIPADVISOR, INC.
By: /s/ Seth Kalvert
Names: Senior Vice President
Title: General Counsel and Secretary
[Signature Page to Assignment and Assumption of Governance Agreement]
[…]
Exhibit A to
Assignment and Assumption of Governance Agreement
RESOLVED, further, that, based upon Liberty’s representations to the Company that the Liberty Spin-off qualifies
as a Distribution Transaction involving a Qualified Distribution Transferee (each as defined in the Governance
Agreement), the Board hereby approves, for purposes of Section 203(a)(1) of the DGCL, the Liberty Spin-off such
that immediately upon the Liberty Spin-off, by virtue of the receipt of shares of common stock, $0.001 par value
per share, of the Company and Class B common stock, $0.001 par value per share, of the Company pursuant to the
Liberty Spin-off, the restrictions on “business combinations” contained in Section 203 of the DGCL shall not apply
to Liberty SpinCo, its wholly owned subsidiaries (existing now or in the future to the extent such subsidiary
remains a wholly-owned subsidiary of Liberty SpinCo) or its current “affiliates” and “associates” (as both terms
are defined in Section 203 of the DGCL); and
[…]
Active 16238788.5
TRIPADVISOR, INC.
2023 STOCK AND ANNUAL INCENTIVE PLAN
Exhibit 10.21
SECTION 1. PURPOSE
The purpose of this Plan is to give the Company a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or
consultants by providing the Company with short and long-term incentive programs providing incentives related to stockholder value, the achievement of
financial and strategic targets and other objectives.
This Plan supersedes and replaces the Prior Plans in their entirety. Awards may not be granted under the Prior Plans on or following the Effective
Date. Awards granted under the Prior Plans prior to the Effective Date will remain subject to the terms and conditions set forth in the Prior Plans in which
such Award was granted.
SECTION 2. DEFINITIONS
Certain terms used herein have definitions given to them in the first place in which they are used. In addition, for purposes of this Plan, the following
terms are defined as set forth below:
“2011 Plan” means the TripAdvisor, Inc. Amended and Restated 2011 Stock and Annual Incentive Plan, as amended.
“2018 Plan” means the TripAdvisor, Inc. 2018 Stock and Annual Incentive Plan, as amended.
“Affiliate” means a corporation or other entity controlled by, controlling or under common control with, the Company.
“Applicable Exchange” means The NASDAQ Stock Market LLC, or such other securities exchange as may at the applicable time be the principal
market for the Common Stock.
“Applicable Law” means the requirements relating to the administration of equity-based awards and the related shares under U.S. state corporate
law, U.S. federal and state securities laws, the rules of any stock exchange or quotation system on which the shares are listed or quoted, and any other
applicable laws, including tax laws, of any U.S. or non-U.S. jurisdictions where Awards are, or will be, granted under this Plan.
“Award” means an Option, SAR, Restricted Stock, RSU, Performance Award, other stock-based award or Bonus Award granted or assumed
pursuant to the terms of this Plan.
“Award Agreement” means a written or electronic document or agreement setting forth the terms and conditions of a specific Award.
“Board” means the Board of Directors of the Company.
“Bonus Award” means a bonus award made pursuant to Section 11.
“Cause” means, unless otherwise provided in an Award Agreement, (i) “Cause” as defined in any Individual Agreement to which the applicable
Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) the willful or gross neglect by a Participant of his
employment duties; (B) the plea of guilty or nolo contendere to, or conviction for, the commission of a felony offense by a Participant; (C) a material
breach by a Participant of a fiduciary duty owed to the Company or any of its subsidiaries; (D) a material breach by a Participant of any nondisclosure, non-
solicitation or non-competition obligation or any other restrictive covenant obligation owed to the Company or any of its Affiliates; (E) before a Change in
Control, such other events as shall be determined by the Committee and set forth in a Participant’s Award Agreement; (F) a Participant’s material violation
of the Company’s written policies or code of conduct, including policies related to discrimination, harassment or retaliation; or (G) a Participant’s conduct
that brings, or is reasonably likely to bring, the Company or an Affiliate negative publicity or into public disgrace, embarrassment, or disrepute.
Notwithstanding the general rule of Section 3(a), following a Change in Control, any determination by the Committee as to whether “Cause” exists shall be
subject to de novo review.
“Change in Control” has the meaning set forth in Section 13(a).
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“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, the Treasury Regulations thereunder
and other relevant interpretive guidance issued by the Internal Revenue Service or the Treasury Department. Reference to any specific section of the Code
shall be deemed to include such regulations and guidance, as well as any successor provision of the Code.
Exhibit 10.21
“Committee” has the meaning set forth in Section 3(a).
“Common Stock” means common stock, par value $0.001 per share, of the Company.
“Company” means TripAdvisor, Inc., a Delaware corporation, or its successor.
“Corporate Transaction” has the meaning set forth in Section 4(d).
“Disability” means (i) “Disability” as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual
Agreement or it does not define “Disability,” (A) permanent and total disability as determined under the Company’s long- term disability plan applicable to
the Participant, or (B) if there is no such plan applicable to the Participant or the Committee determines otherwise in an applicable Award Agreement,
“Disability” as determined by the Committee. Notwithstanding the above, with respect to an Incentive Stock Option, Disability shall mean Permanent and
Total Disability as defined in Section 22(e)(3) of the Code and, with respect to all Awards, to the extent required by Section 409A of the Code, Disability
shall mean “disability” within the meaning of Section 409A of the Code.
“Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any reason (including, without limitation, as a result of
a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.
“Eligible Individuals” means directors, officers, employees and consultants (including independent contractors) of the Company or any of its
Subsidiaries or Affiliates.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. Reference to a specific
section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such
section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.
“Fair Market Value” means, unless otherwise determined by the Committee, the closing price of a share of Common Stock on the Applicable
Exchange on the date of measurement, or if Shares were not traded on the Applicable Exchange on such or (C) a material and demonstrable adverse change
in the nature and scope of the Participant’s duties from those in effect immediately prior to the Change in Control. In order to invoke a Termination of
Employment for Good Reason, a Participant shall provide written notice to the Company of the existence of one or more of the conditions described in
clauses (A) through (C) within 90 days following the Participant’s knowledge of the initial existence of such condition or conditions, and the Company
shall have 30 days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition. In the event that the Company
fails to remedy the condition constituting Good Reason during the Cure Period, the Participant must terminate employment, if at all, within 90 days
following the Cure Period in order for such Termination of Employment to constitute a Termination of Employment for Good Reason.
“Grant Date” means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award and determines
the number of Shares to be subject to such Award or the formula for earning a number of shares or cash amount, or (ii) such later date as the Committee
shall provide in such resolution.
“Incentive Stock Option” means any Option that is designated in the applicable Award Agreement as an “incentive stock option” within the meaning
of Section 422 of the Code, and that in fact so qualifies.
“Individual Agreement” means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries or
Affiliates.
“Nonqualified Stock Option” means any Option that is not an Incentive Stock Option.
“Option” means an Award described under Section 6(a).
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Exhibit 10.21
“Participant” means an Eligible Individual to whom an Award is or has been granted.
“Performance Award” means an Award granted under this Plan of Common Stock, that is based upon, payable in, or otherwise related to, Shares
(including Restricted Stock, RSUs or cash), as the Committee may determine, at the end of a specified Performance Period based on the attainment of one
or more Performance Goals.
“Performance Goals” means the performance goals established by the Committee in connection with the grant of Performance Awards. Such
Performance Goals also may be based upon the attaining of specified levels of Company, Subsidiary, Affiliate, business unit or divisional performance
under one or more of the measures including but not limited to, revenue, earnings per share, total shareholder return, earnings before interest, taxes,
depreciation and amortization (EBITDA), adjusted EBITDA or return on capital). Performance goals established by the Committee may also include
individual strategic goals.
“Performance Period” means with respect to a Performance Award the period established by the Committee or its designee at the time the Award is
granted, or at any time thereafter, during which the performance of the Company, a Subsidiary, or any Affiliate is measured for the purpose of determining
whether and to what extent the Performance Award’s Performance Goal has been achieved.
“Plan” means this Tripadvisor, Inc. 2023 Stock and Annual Incentive Plan, as set forth herein and as hereafter amended from time to time.
“Plan Year” means the calendar year or, with respect to Bonus Awards, the Company’s fiscal year if different.
“Prior Plans” means, collectively, the 2011 Plan and 2018 Plan.
“Restricted Stock” means an Award described under Section 7.
“Retirement” means retirement from active employment with the Company, a Subsidiary or Affiliate at or after the Participant’s attainment of age
65.
“RS Restriction Period” has the meaning set forth in Section 7(b)(ii).
“RSU” means an Award described under Section 8.
“RSU Restriction Period” has the meaning set forth in Section 8(b)(ii).
“Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.
“SAR” has the meaning set forth in Section 7(b).
“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor thereto.
“Share” means a share of Common Stock.
“Subsidiary” means any corporation, partnership, joint venture, limited liability company or other entity during any period in which at least a 50%
voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.
“Tandem SAR” has the meaning set forth in Section 6(b).“Ten Percent Stockholder” means a Person owning stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company, or its parent corporation (within the meaning of Section 424(e) of
the Code) or any of its Subsidiaries.
“Term” means the maximum period during which an Option or SAR may remain outstanding, subject to earlier termination upon Termination of
Employment or otherwise, as specified in the applicable Award Agreement.
“Termination of Employment” means the termination of the applicable Participant’s employment with, or performance of services for, the Company
and any of its Subsidiaries or Affiliates. Unless otherwise determined by the Committee, if a Participant’s employment with, or membership on a board of
directors of, the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a non-
employee or non-director capacity, as applicable, such change in status shall not be deemed a Termination of Employment. A Participant employed by, or
performing services for, a Subsidiary or an Affiliate or a division
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Exhibit 10.21
of the Company and its Affiliates shall be deemed to incur a Termination of Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or
division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the Participant does not immediately thereafter become an employee of (or
service provider for), or member of the board of directors of, the Company or another Subsidiary or Affiliate. Temporary absences from employment of 90
days or less because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered
Termination of Employment. Notwithstanding the foregoing, with respect to any Award that constitutes “nonqualified deferred compensation” within the
meaning of Section 409A of the Code, “Termination of Employment” shall mean a “separation from service” as defined under Section 409A of the Code.
SECTION 3. ADMINISTRATION
(a) Committee. This Plan shall be administered by the Compensation Committee of the Board or such other committee of the Board as the
Board may from time to time designate (the “Committee”), which shall be composed of not less than two directors, and shall be appointed by and serve at
the pleasure of the Board. The Committee shall have plenary authority to grant Awards pursuant to the terms of this Plan to Eligible Individuals. Among
other things, the Committee shall have the authority, subject to the terms of this Plan:
(i) to select the Eligible Individuals to whom Awards may from time to time be granted;
(ii) to determine the number of Shares to be covered by each Award granted hereunder or the amount of any Bonus Award;
(iii) to determine the terms and conditions of each Award granted hereunder, based on such factors as the Committee shall
determine;
(iv) subject to Section 16, to modify, amend or adjust the terms and conditions of any Award, at any time or from time to time;
(v) subject to Section 14, to accelerate the vesting or lapse of restrictions of any outstanding Award, based in each case on such
considerations as the Committee in its sole discretion determines;
(vi) to interpret the terms and provisions of this Plan and any Award issued under this Plan (and any agreement relating thereto);
(vii) to establish any “blackout” period that the Committee in its sole discretion deems necessary or advisable;
(viii) to decide all other matters that must be determined in connection with an Award;
(ix) determine whether and under what circumstances an Award may be settled in cash, Shares, other property, or a combination of
the foregoing;
(x) determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of
Shares acquired pursuant to the exercise or vesting of an Award for a period of time as determined by the Committee, in its sole discretion,
following the date of the acquisition of such Award or Shares; and
(xi) to otherwise administer this Plan.
(b) Procedures.
(i) The Committee may act only by a majority of its members then in office, except that the Committee may, except to the extent
prohibited by applicable law or the listing standards of the Applicable Exchange, allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.
(ii) Subject to Section 3(d), any authority granted to the Committee may also be exercised by the full Board. To the extent that any
permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
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Exhibit 10.21
(c) Delegation of Authority. Subject to applicable law, the Committee may delegate any or all of its powers under this Plan to one or more other
committees or officers of the Company (including persons other than members of the Committee) as it shall appoint with respect to the granting of Awards
to individuals who are not (i) subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) members of the delegated committee
or the delegated individual(s). Any such delegation by the Committee shall include limitations as to the amount of Common Stock underlying Awards that
may be granted during specified periods and shall contain guidelines as to the determination of the exercise price. The delegated officer may correct any
defect, supply any omission, or reconcile any inconsistency in this Plan or in any agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of this Plan. Any determination made by the Committee or by an appropriately delegated officer pursuant to
delegated authority under the provisions of this Plan with respect to any Award shall be made in the sole discretion of the Committee or such delegate at the
time of the grant of the Award or, unless in contravention of any express term of this Plan, at any time thereafter. All decisions made by the Committee or
any appropriately delegated officer pursuant to the provisions of this Plan shall be final and binding on all persons, including the Company, Participants,
and Eligible Individuals.
(d) Section 16(b) Compliance. The provisions of this Plan are intended to ensure that no transaction under this Plan is subject to (and all such
transactions will be exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act (“Section 16(b)”). Accordingly, the composition of
the Committee shall be subject to such limitations as the Board deems appropriate to permit transactions pursuant to this Plan to be exempt (pursuant to
Rule 16b-3 promulgated under the Exchange Act) from Section 16(b), and no delegation of authority by the Committee shall be permitted if such
delegation would cause any such transaction to be subject to (and not exempt from) Section 16(b).
(e) Award Agreements. The terms and conditions of each Award (other than any Bonus Award), as determined by the Committee, shall be set
forth in an Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following,
the grant of such Award. The effectiveness of an Award shall not be subject to the Award Agreement’s being signed by the Company and/or the Participant
receiving the Award unless specifically so provided in the Award Agreement. Award Agreements may be amended only in accordance with Section 14
hereof.
SECTION 4. COMMON STOCK SUBJECT TO PLAN
(a) Shares Available for Awards. The maximum number of Shares that may be delivered pursuant to Awards under this Plan shall be (i)
12,000,000 Shares, plus (ii) any Shares available for issuance under the Prior Plans not issued or subject to outstanding Awards under the Prior Plans as of
the Effective Date. For purposes of this limitation, Shares underlying any Awards (including after the Effective Date, awards previously granted under the
Prior Plans, as applicable) that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax
withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Common Stock or otherwise terminated (other than by exercise)
under this Plan or the Prior Plans shall be added back (or newly added, as applicable) to the Shares available for issuance under this Plan and, to the extent
permitted under Section 422 of the Code and the regulations promulgated thereunder, the Shares that may be issued as Incentive Stock Options. The Shares
available for delivery under this Plan may consist of authorized and unissued Shares, Shares held in treasury, Shares of Common Stock purchased or held
by the Company for purposes of this Plan, or any combination thereof.
(b) Plan Maximums. The maximum number of Shares that may be granted pursuant to Options intended to be Incentive Stock Options shall be
6,000,000 Shares.
(c) Director Compensation Limit. During a calendar year, no non-employee director may be granted any compensation for service as a non-
employee director (including cash and an Award) with a fair value, as determined under accounting rules, as of the Grant Date, in excess of $1,000,000.
(d) Adjustment Provisions.
(i) In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, Disaffiliation, or
similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board may in its
discretion make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of Shares or
other securities reserved for issuance and delivery under this Plan, (B) the various maximum limitations set forth in Sections 4(a) and 4(b)
upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other
securities subject to outstanding Awards; and (D) the exercise price of outstanding Options and SARs.
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Exhibit 10.21
(ii) In the event of a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of
cash or other property, share combination, or recapitalization or similar event affecting the capital structure of the Company (each, a “Share
Change”), the Committee or the Board shall make such substitutions or adjustments as it deems appropriate and equitable to (A) the
aggregate number and kind of Shares or other securities reserved for issuance and delivery under this Plan, (B) the maximum limitations set
forth in Sections 4(a) and 4(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, the number and
kind of Shares or other securities subject to outstanding Awards; and (C) the exercise price of outstanding Options and SARs.
(iii) In the case of Corporate Transactions, the adjustments contemplated by clause (i) of this paragraph (d) may include, without
limitation, any of the following, as determined by the Committee: (A) the cancellation of outstanding Awards in exchange for payments of
cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the
Board in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which holders of Common Stock
receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee
that the value of an Option or SAR shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid
for each Share pursuant to such Corporate Transaction over the exercise price of such Option or SAR shall conclusively be deemed valid);
provided, however, that if the exercise price of an Option or SAR exceeds the value of such Award, such Award may be canceled for no
consideration; (B) the substitution, assumption or replacement of other property (including, without limitation, cash or other securities of the
Company and securities of entities other than the Company) for the Shares subject to outstanding Awards; (C) in connection with any
Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities
(including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Subsidiary,
Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation (as well as any
corresponding adjustments to Awards that remain based upon Company securities); (D) the termination of all outstanding and unexercised
Options or SARs, effective as of the date of the Corporate Transaction, by delivering notice of termination to each Participant at least twenty
(20) days prior to the date of consummation of the Corporate Transaction, in which case during the period from the date on which such notice
of termination is delivered to the consummation of the Corporation Transaction, each such Participant shall have the right to exercise in full
all of such Participant’s Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the
Award Agreements), but any such exercise shall be contingent on the occurrence of the Corporate Transaction, and, provided that, if the
Corporation Transaction does not take place within a specified period after giving such notice for any reason whatsoever, the notice and
exercise pursuant thereto shall be null and void; and (F) the acceleration of vesting or lapse of restrictions, of an Award at any time.
(iv) Any adjustment under this Section 4(d) need not be the same for all Participants.
(v) Any adjustments made pursuant to this Section 4(d) to Awards that are considered “deferred compensation” within the
meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code. Any adjustments
made pursuant to this Section 4(d) to Awards that are not considered “deferred compensation” subject to Section 409A of the Code shall be
made in such a manner as to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A of the Code
or (B) comply with the requirements of Section 409A of the Code. In any event, neither the Committee nor the Board shall have the authority
to make any adjustments pursuant to this Section 4(d) to the extent the existence of such authority would cause an Award that is not intended
to be subject to Section 409A of the Code at the Grant Date to be subject thereto.
(e) Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s
property or stock, the Committee may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or
consolidation by such entity or its affiliate (“Substitute Awards”). Substitute Awards may be granted on such terms as the Committee deems appropriate,
notwithstanding limitations on Awards in this Plan. Substitute Awards will not count against the Shares authorized for grant under this Plan (nor shall
Shares subject to a Substitute Award be added to the Shares available for Awards under this Plan as provided under Section 4(a) above), except that Shares
acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of
Incentive Stock Options under this Plan, as set forth in Section 4(a) above. Additionally, in the event that a Person acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the shares available for grants pursuant to the terms of such pre-existing plan (as adjusted, to
the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under this Plan and
shall not reduce the Shares authorized for grant under this Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards
under this Plan as provided under Section 4(a) above);
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Exhibit 10.21
provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to individuals who were not Eligible Individuals prior to such acquisition or
combination.
(f) Minimum Vesting Schedule. A vesting period of at least one (1) year shall apply to all Awards issued under this Plan; provided, that up to
five percent (5%) of the Shares reserved for issuance under this Plan as of the Effective Date may be issued pursuant to Awards that do not comply with
such minimum one (1) year vesting period.
SECTION 5. ELIGIBILITY
Awards may be granted under this Plan to Eligible Individuals; provided, however, that Incentive Stock Options may be granted only to employees
of the Company and its subsidiaries or parent corporation (within the meaning of Section 424(f) of the Code).
SECTION 6. OPTIONS AND STOCK APPRECIATION RIGHTS
(a) Types of Options. Options may be of two types: Incentive Stock Options and Nonqualified Stock Options. The Award Agreement for an
Option shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.
(b) Types and Nature of SARs. SARs may be “Tandem SARs,” which are granted in conjunction with an Option, or “Free-Standing SARs,”
which are not granted in conjunction with an Option. Upon the exercise of an SAR, the Participant shall be entitled to receive an amount in cash, Shares, or
both, in value equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price of the applicable SAR, multiplied by (ii)
the number of Shares in respect of which the SAR has been exercised. The applicable Award Agreement shall specify whether such payment is to be made
in cash or Common Stock or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise of
the SAR.
(c) Tandem SARs. A Tandem SAR may be granted at the Grant Date of the related Option. A Tandem SAR shall be exercisable only at such
time or times and to the extent that the related Option is exercisable in accordance with the provisions of this Section 6, and shall have the same exercise
price as the related Option. A Tandem SAR shall terminate or be forfeited upon the exercise or forfeiture of the related Option, and the related Option shall
terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.
(d) Exercise Price. The exercise price per Share subject to an Option or Free- Standing SAR shall be determined by the Committee and set forth
in the applicable Award Agreement, and shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder,
110%) of the Fair Market Value of a share of the Common Stock on the applicable Grant Date. In no event may any Option or Free-Standing SAR granted
under this Plan be amended, other than pursuant to Section 4(d), to decrease the exercise price thereof, be canceled in conjunction with the grant of any new
Option or Free-Standing SAR with a lower exercise price, be canceled for cash or other Award or otherwise be subject to any action that would be treated,
for accounting purposes or under the applicable listing standards of the Applicable Exchange, as a “repricing” of such Option or Free-Standing SAR, unless
such amendment, cancellation, or action is approved by the Company’s stockholders.
(e) Term. The Term of each Option and each Free-Standing SAR shall be fixed by the Committee, but shall not exceed ten years from the Grant
Date (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, five years from the Grant Date). Notwithstanding the foregoing, if,
by its terms, an Option, other than an Incentive Stock Option, would expire when trading in Shares is otherwise prohibited by law or by the Company’s
Insider Trading Policy, as such may be amended from time to time, then the term of the Option will be automatically extended until the close of trading on
the 30thtrading day following the expiration of such prohibition; provided, that, in no event will the Option be extended beyond ten years from the Grant
Date.
(f) Vesting and Exercisability. Except as otherwise provided herein, Options and Free-Standing SARs shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Option or Free-Standing SAR will
become exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such
factors as the Committee may determine. In addition, the Committee may at any time accelerate the exercisability of any Option or Free-Standing SAR. In
the event of a temporary absence exceeding 90 days, the Company shall have authority to suspend the vesting period for such period of time and on such
terms as management of the Company shall deem appropriate.
(g) Method of Exercise. Subject to the provisions of this Section 6, Options and Free-Standing SARs may be exercised, in whole or in part, at
any time during the applicable Term by giving written notice of exercise to the Company or through the procedures established with the Company’s
appointed third-party Option administrator specifying the number of Shares as to which the Option or
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Exhibit 10.21
Free-Standing SAR is being exercised; provided, however, that, unless otherwise permitted by the Committee, any such exercise must be with respect to a
portion of the applicable Option or Free-Standing SAR relating to no less than the lesser of the number of Shares then subject to such Option or Free-
Standing SAR or 100 Shares. In the case of the exercise of an Option, such notice shall be accompanied by payment in full of the purchase price (which
shall equal the product of such number of Shares multiplied by the applicable exercise price) by certified or bank check or such other instrument as the
Company may accept. If approved by the Committee, payment, in full or in part, may also be made as follows:
(i) Payments may be made in the form of unrestricted Shares (by delivery of such Shares or by attestation) of the same class as the
Common Stock subject to the Option already owned by the Participant (based on the Fair Market Value of the Common Stock on the date the
Option is exercised); provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already
owned Shares of the same class as the Common Stock subject to the Option may be authorized only at the time the Option is granted.
(ii) To the extent permitted by applicable law, payment may be made by delivering a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the purchase price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To
facilitate the foregoing, the Company may, to the extent permitted by applicable law, enter into agreements for coordinated procedures with
one or more brokerage firms. To the extent permitted by applicable law, the Committee may also provide for Company loans to be made for
purposes of the exercise of Options.
(iii) For Options that are not Incentive Stock Options, payment may be made by “net exercise” arrangement, pursuant to which a
Participant instructs the Committee to withhold a whole number of Shares having a Fair Market Value (based on the Fair Market Value of the
Common Stock on the date the applicable Option is exercised) equal to the product of (A) the exercise price multiplied by (B) the number of
Shares in respect of which the Option shall have been exercised.
(h) Delivery; Rights of Stockholders. No Shares shall be delivered pursuant to the exercise of an Option until the exercise price therefor has been
fully paid and applicable taxes have been withheld. The applicable Participant shall have all of the rights of a stockholder of the Company holding the class
or series of Common Stock that is subject to the Option or SAR (including, if applicable, the right to vote the applicable Shares and the right to receive
dividends), when the Participant (i) has given written notice of exercise, (ii) if requested, has given the representation described in Section 16(a), and (iii) in
the case of an Option, has paid in full for such Shares.
(i) Nontransferability of Options and SARs. No Option or Free-Standing SAR shall be transferable by a Participant other than (i) by will or by
the laws of descent and distribution, or (ii) in the case of a Nonqualified Stock Option or Free-Standing SAR, pursuant to a qualified domestic relations
order or as otherwise expressly permitted by the Committee including, if so permitted, pursuant to a transfer to the Participant’s family members or to a
charitable organization, whether directly or indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless otherwise
determined by the Committee, “family member” shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the
Securities Act and any successor thereto. A Tandem SAR shall be transferable only with the related Option as permitted by the preceding sentence. Any
Option or SAR shall be exercisable, subject to the terms of this Plan, only by the applicable Participant, the guardian or legal representative of such
Participant, or any person to whom such Option or SAR is permissibly transferred pursuant to this Section 6(i), it being understood that the term
“Participant” includes such guardian, legal representative and other transferee; provided, however, that the term “Termination of Employment” shall
continue to refer to the Termination of Employment of the original Participant.
SECTION 7. RESTRICTED STOCK
(a) Nature of Awards and Certificates. Shares of Restricted Stock are actual Shares issued to a Participant, and shall be evidenced in such
manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. Any certificate issued in
respect of Shares of Restricted Stock shall be registered in the name of the applicable Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the following form:
“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the
Tripadvisor, Inc. 2023 Stock and Annual Incentive Plan and an Award Agreement. Copies of such Plan and Agreement are on file at the offices of
TripAdvisor, Inc.”
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The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have
lapsed and that, as a condition of any Award of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
(b) Terms and Conditions. Shares of Restricted Stock shall be subject to the following terms and conditions:
Exhibit 10.21
(i) The Committee shall, prior to or at the time of grant, condition the vesting or transferability of an Award of Restricted Stock
upon the continued service of the applicable Participant or the attainment of Performance Goals, or the attainment of Performance Goals and
the continued service of the applicable Participant. In the event that the Committee conditions the grant or vesting of an Award of Restricted
Stock upon the attainment of Performance Goals or the attainment of Performance Goals and the continued service of the applicable
Participant, the Committee may, prior to or at the time of grant, designate such an Award as a Performance Award. The conditions for grant,
vesting, or transferability and the other provisions of Restricted Stock Awards (including without limitation any Performance Goals) need not
be the same with respect to each Participant.
(ii) Subject to the provisions of this Plan and the applicable Award Agreement, during the period, if any, set by the Committee,
commencing with the date of such Restricted Stock Award for which such vesting restrictions apply and until the expiration of such vesting
restrictions (the “RS Restriction Period”), the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares
of Restricted Stock.
(iii) Except as provided in this Section 7 and in the applicable Award Agreement, the applicable Participant shall have, with respect
to the Shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of Common Stock that is the
subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the right to receive any cash dividends. If so
determined by the Committee in the applicable Award Agreement and subject to Section 16(e), (A) cash dividends on the class or series of
Common Stock that is the subject of the Restricted Stock Award shall be automatically reinvested in additional Restricted Stock, held subject
to the vesting of the underlying Restricted Stock, and (B) subject to any adjustment pursuant to Section 4(d), dividends payable in Common
Stock shall be paid in the form of Restricted Stock of the same class as the Common Stock with which such dividend was paid, held subject
to the vesting and forfeiture of the underlying Restricted Stock.
(iv) Except as otherwise set forth in the applicable Award Agreement, upon a Participant’s Termination of Employment for any
reason (other than death) during the RS Restriction Period or before the applicable Performance Goals are satisfied, all Shares of Restricted
Stock still subject to restriction shall be forfeited by such Participant; provided, however, the Committee shall have the discretion to waive, in
whole or in part, any or all remaining restrictions with respect to any or all of such Participant’s Shares of Restricted Stock. Upon a
Participant’s Termination of Employment by reason of death, during the RS Restriction Period or before the applicable Performance Goals
are satisfied, all Shares of Restricted Stock reflected in the Participant’s account shall immediately and automatically vest.
(v) If and when any applicable Performance Goals are satisfied and the RS Restriction Period expires without a prior forfeiture of
the Shares of Restricted Stock for which legended certificates have been issued, unlegended certificates for such Shares shall be delivered to
the Participant upon surrender of the legended certificates.
SECTION 8. RESTRICTED STOCK UNITS
(a) Nature of Awards. RSUs are Awards denominated in Shares that will be settled, subject to the terms and conditions of the RSUs, in an
amount in cash, Shares or both, based upon the Fair Market Value of a specified number of Shares.
(b) Terms and Conditions. RSUs shall be subject to the following terms and conditions:
(i) The Committee shall, prior to or at the time of grant, condition the grant, vesting, or transferability of RSUs upon the continued
service of the applicable Participant or the attainment of Performance Goals, or the attainment of Performance Goals and the continued
service of the applicable Participant. In the event that the Committee conditions the grant or vesting of RSUs upon the attainment of
Performance Goals or the attainment of Performance Goals and the continued service of the applicable Participant, the Committee may, prior
to or at the time of grant, designate such Awards as Performance Awards. The conditions for grant, vesting or transferability and the other
provisions of RSUs (including without limitation any Performance Goals) need not be the same with respect to each Participant. In the event
of a temporary
E - 9
Exhibit 10.21
absence exceeding 90 days, the Company shall have authority to suspend the vesting of such RSUs for such period of time and on such terms
as management of the Company shall deem appropriate.
(ii) Subject to the provisions of this Plan and the applicable Award Agreement, during the period, if any, set by the Committee,
commencing with the date of such RSUs for which such vesting restrictions apply and until the expiration of such vesting restrictions (the
“RSU Restriction Period”), the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber RSUs.
(iii) The Award Agreement for RSUs shall specify whether, to what extent and on what terms and conditions the applicable
Participant shall be entitled to receive current or delayed payments of cash, Common Stock or other property corresponding to the dividends
payable on the Common Stock (subject to Section 16(e) below).
(iv) Except as otherwise set forth in the applicable Award Agreement, upon a Participant’s Termination of Employment for any
reason during the RSU Restriction Period or before the applicable Performance Goals are satisfied, all RSUs still subject to restriction shall
be forfeited by such Participant; provided, however, the Committee shall have the discretion to waive, in whole or in part, any or all
remaining restrictions with respect to any or all of such Participant’s RSUs; and; provided, further, upon a Participant’s Termination of
Employment by reason of death, during the RSU Restriction Period or before the applicable Performance Goals are satisfied, all RSUs
reflected in the Participant’s account shall immediately and automatically vest.
(v) Except to the extent otherwise provided in the applicable Award Agreement, an award of RSUs shall be settled as and when the
RSUs vest (but in no event later than 60 days thereafter).
SECTION 9. PERFORMANCE AWARDS
(a) Generally. An Award under this Plan may be in the form of a Performance Award.
(b) Performance Goals. Each Performance Award shall be earned, vested and payable (as applicable) only upon the achievement of one or more
Performance Goals, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be
appropriate. Performance Goals applicable to the Performance Award will be established by the Committee.
(c) Other Restrictions. The Committee will determine any other terms and conditions applicable to any Performance Award, including any
vesting conditions or restrictions on the delivery of Common Stock payable in connection with the Performance Award and restrictions that could result in
the future forfeiture of all or part of any Common Stock earned. The Committee may provide that shares of Common Stock issued in connection with a
Performance Award be held in escrow and/or legended.
(d) Measurement of Performance Against Performance Goals. The Committee will, as soon as practicable after the close of a Performance
Period, determine the extent to which the Performance Goals for such Performance Period have been achieved, and the percentage of the Performance
Awards, if any, earned as a result. All determinations of the Committee will be absolute and final as to the facts and conclusions therein made and are
binding on all parties. As promptly as practicable after the Committee has made the foregoing determination, each Eligible Individual who has earned
Performance Award will be notified thereof. Subject to Section 16(i), an Eligible Individual may not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of all or any portion of a Performance Awards during the Performance Period.
SECTION 10. OTHER STOCK-BASED AWARDS
Other Awards of Common Stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon or settled in,
Common Stock, including (without limitation), unrestricted stock, performance units, dividend equivalents, and convertible debentures, may be granted
under this Plan.
SECTION 11. BONUS AWARDS
(a) Determination of Awards. The Committee shall determine the total amount of Bonus Awards for each Plan Year or such shorter performance
period as the Committee may establish in its sole discretion. Bonus Awards that are Performance Awards shall be subject to the provisions of Section 9 of
this Plan.
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Exhibit 10.21
(b) Payment of Awards. Bonus Awards under this Plan shall be paid in cash or in Shares (valued at Fair Market Value as of the date of payment)
as determined by the Committee, as soon as practicable following the close of this Plan Year or such shorter performance period as the Committee may
establish. It is intended that a Bonus Award will be paid no later than the fifteenth (15th) day of the third month following the later of: (i) the end of the
Participant’s taxable year in which the requirements for such Bonus Award have been satisfied by the Participant or (ii) the end of the Company’s fiscal
year in which the requirements for such Bonus Award have been satisfied by the Participant. Subject to Section 16(k), the Committee may at its option
establish procedures pursuant to which Participants are permitted to defer the receipt of Bonus Awards payable hereunder. The Bonus Award to any
Participant for any Plan Year or such shorter performance period may be reduced or eliminated by the Committee in its discretion.
SECTION 12. TERMINATION OF EMPLOYMENT
(a) Generally. A Participant’s Awards shall be forfeited upon such Participant’s Termination of Employment, except as set forth below:
(i) Upon a Participant’s Termination of Employment by reason of death, all Awards reflected in the Participant’s account that were
unvested at the time of death shall automatically vest and all such Options or SARs held by the Participant may be exercised at any time until
the earlier of (A) the first anniversary of the date of such death and (B) the expiration of the Term thereof;
(ii) Upon a Participant’s Termination of Employment by reason of Disability or Retirement, any Option or SAR held by the
Participant that was exercisable immediately before the Termination of Employment may be exercised at any time until the earlier of (A) the
first anniversary of such Termination of Employment and the (B) expiration of the Term thereof;
(iii) Upon a Participant’s Termination of Employment for Cause, any unvested Award held by the Participant shall be forfeited,
effective as of such Termination of Employment;
(iv) Upon a Participant’s Termination of Employment for any reason other than death, Disability, Retirement or for Cause, any
Option or SAR held by the Participant that was exercisable immediately before the Termination of Employment may be exercised at any time
until the earlier of (A) the 90th day following such Termination of Employment and (B) expiration of the Term thereof; and
(v) Notwithstanding the above provisions of this Section 12(a), if a Participant dies after such Participant’s Termination of
Employment but while any Option or SAR remains exercisable as set forth above, such Option or SAR may be exercised at any time until the
later of (A) the earlier of (1) the first anniversary of the date of such death and (2) expiration of the Term thereof and (B) the last date on
which such Option or SAR would have been exercisable, absent this Section 12(a).
(b) Exception. Notwithstanding the foregoing, the Committee shall have the power, in its discretion, to apply different rules concerning the
consequences of a Termination of Employment; provided, however, that if such rules are less favorable to the Participant than those set forth above, such
rules are set forth in the applicable Award Agreement. If an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonqualified Stock Option.
SECTION 13. CHANGE IN CONTROL PROVISIONS
(a) Definition of Change in Control. Except as otherwise may be provided in an applicable Award Agreement, for purposes of this Plan, a
“Change in Control” shall mean any of the following events:
(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”), other than Liberty TripAdvisor Holdings, Inc., and its affiliates, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of equity securities of the Company representing more than 50% of the voting power of the then
outstanding equity securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control:
(A) any acquisition by the Company, (B) any acquisition directly from the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or
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Exhibit 10.21
maintained by the Company or any corporation controlled by the Company, or (D) any acquisition pursuant to a transaction which would
qualify as a transaction described in clauses (A), (B) or(C) of subsection (iii) below; or
(ii) During the period of two consecutive years, individuals who, at the beginning of such period, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the beginning of such period, whose election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets
of the Company or the purchase of assets or stock of another entity (a “Business Combination”), in each case, unless immediately following
such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of
the then outstanding combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or
equivalent governing body, if applicable) of the entity resulting from such Business Combination (including, without limitation, an entity
which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, (B) no Person (excluding Liberty TripAdvisor Holdings, Inc., and its affiliates, any employee
benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) will beneficially own, directly or
indirectly, more than a majority of the combined voting power of the then outstanding voting securities of such entity except to the extent that
such ownership of the Company existed prior to the Business Combination and (C) at least a majority of the members of the board of
directors (or equivalent governing body, if applicable) of the entity resulting from such Business Combination (I) will have been members of
the Incumbent Board at the time of the initial agreement, or action of the Board, providing for such Business Combination, or (II) would have
been elected, or nominated for election by the Company’s stockholders, by an approval vote of at least a majority of the directors then
comprising the Incumbent Board; or
(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, unless provided otherwise in an Award Agreement, with respect to any Award that is characterized as
“nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in
Control under this Plan for purposes of payment of such Award unless such event is also a “change in ownership,” a “change in effective
control,” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the
Code.
(b) Impact of Event/Double Trigger on Vice Presidents and Above. Unless otherwise provided in the applicable Award Agreement and subject to
Sections 4(d), 13(d) and 16(k), notwithstanding any other provision of this Plan to the contrary, upon the Termination of Employment, within three months
prior to a Change in Control or within twelve months following a Change in Control, of a Participant who, as of the date of termination, has a title of Vice
President or above, by the Company other than for Cause or Disability or by the Participant for Good Reason, then:
(i) any Options and SARs outstanding as of such Termination of Employment which were outstanding as of the date of such
Change in Control shall be fully exercisable and vested and shall remain exercisable until the later of (i) the last date on which such Option or
SAR would be exercisable in the absence of this Section 13(b) and (ii) the earlier of (A) the first anniversary of such Change in Control and
(B) expiration of the Term of such Option or SAR;
(ii) all Restricted Stock outstanding as of such Termination of Employment which was outstanding as of the date of such Change
in Control shall become free of all restrictions and become fully vested and transferable;
(iii) all RSUs outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control
shall be considered to be earned and payable in full, and any restrictions shall lapse and such RSUs shall be settled as promptly as is
practicable (but in no event later than March 15 of the calendar year following the end of the calendar year in which the RSUs vest); and
E - 12
Exhibit 10.21
(iv) all Performance Awards outstanding as of such Termination of Employment which were outstanding as of the date of such
Change in Control shall be considered to be earned and payable in full, vesting shall accelerate assuming the Performance Goals have been
met at target and any restrictions shall lapse and any such RSUs shall be settled as promptly as is practicable (but in no event later than March
15 of the calendar year following the end of the calendar year in which the RSUs vest).
(c) Impact of Event/Double Trigger on Other Participants. Unless otherwise provided in the applicable Award Agreement and subject to
Sections 4(d), 13(d) and 16(k), notwithstanding any other provision of this Plan to the contrary, upon the Termination of Employment, within three months
prior to a Change in Control or within twelve months following a Change in Control, of any other Participant, by the Company other than for Cause or
Disability or by the Participant for Good Reason:
(i) Fifty percent (50%) of any Options and SARs outstanding as of such Termination of Employment which were outstanding as
of the date of such Change in Control shall be fully exercisable and vested and shall remain exercisable until the later of (i) the last date on
which such Option or SAR would be exercisable in the absence of this Section 13(b) and (ii) the earlier of (A) the first anniversary of such
Change in Control and (B) expiration of the Term of such Option or SAR;
(ii) Fifty percent (50%) of all Restricted Stock outstanding as of such Termination of Employment which were outstanding as of
the date of such Change in Control shall become free of all restrictions and become fully vested and transferable;
(iii) Fifty percent (50%) of all RSUs outstanding as of such Termination of Employment which were outstanding as of the date of
such Change in Control shall be considered to be earned and payable in full, and any restrictions shall lapse and such RSUs shall be settled as
promptly as is practicable (but in no event later than March 15 of the calendar year following the end of the calendar year in which the RSUs
vest); and
(iv) Fifty percent (50%) of all Performance Awards outstanding as of such Termination of Employment which were outstanding as
of the date of such Change in Control shall be considered to be earned and payable in full, vesting shall accelerate assuming the Performance
Goals have been met at target and any restrictions shall lapse and any such RSUs shall be settled as promptly as is practicable (but in no event
later than March 15 of the calendar year following the end of the calendar year in which the RSUs vest).
Notwithstanding the foregoing, the Committee will continue to have plenary authority and complete discretion to, among other things, accelerate the
vesting of a greater percentage of Awards.
SECTION 14. TERM, AMENDMENT AND TERMINATION
(a) Effectiveness. This Plan shall be effective as of April 19, 2023 (the “Effective Date”), subject to approval by the affirmative vote of a
majority of the outstanding shares of Common Stock present by person or by proxy at the Company’s 2023 Annual Meeting that are entitled to vote on a
proposal to approve the adoption of this Plan.
(b) Termination. This Plan will terminate on the tenth anniversary of the Effective Date. Awards outstanding as of such date shall not be affected
or impaired by the termination of this Plan.
(c) Amendment of Plan. The Board may amend, alter, or discontinue this Plan, but no amendment, alteration or discontinuation shall be made
which would materially impair the rights of the Participant with respect to a previously granted Award without such Participant’s consent, except such an
amendment made to comply with applicable law (including without limitation Section 409A of the Code), stock exchange rules or accounting rules. In
addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law
or the listing standards of the Applicable Exchange or to the extent determined by the Committee to be required by the Code to ensure that Incentive Stock
Options granted under this Plan are qualified under Section 422 of the Code.
(d) Amendment of Awards. Subject to Section 6(d), the Committee may unilaterally amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall, without the Participant’s consent, materially impair the rights of any Participant with respect to
an Award, except such an amendment made to cause this Plan or Award to comply with applicable law, stock exchange rules or accounting rules.
SECTION 15. UNFUNDED STATUS OF PLAN
E - 13
Exhibit 10.21
It is presently intended that this Plan constitute an “unfunded” plan. Solely to the extent permitted under Section 409A, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under this Plan to deliver Common Stock or make payments; provided,
however, that the existence of such trusts or other arrangements is consistent with the “unfunded” status of this Plan. Notwithstanding any other provision
of this Plan to the contrary, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of
the Code, no trust shall be funded with respect to any such Award if such funding would result in taxable income to the Participant by reason of Section
409A(b) of the Code and in no event shall any such trust assets at any time be located or transferred outside of the United States, within the meaning of
Section 409A(b) of the Code. With respect to any payment as to which a Participant has a fixed and vested interest but which is not yet made to a
Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of
the Company.
SECTION 16. GENERAL PROVISIONS
(a) Conditions for Issuance. The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates for such Shares may
include any legend which the Committee deems appropriate to reflect any restrictions on transfer. Notwithstanding any other provision of this Plan or
agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for Shares under this Plan prior to
fulfillment of all of the following conditions: (i) listing or approval for listing upon notice of issuance, of such Shares on the Applicable Exchange; (ii) any
registration or other qualification of such Shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii)
obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after
receiving the advice of counsel, determine to be necessary or advisable.
(b) Additional Compensation Arrangements. Nothing contained in this Plan shall prevent the Company or any Subsidiary or Affiliate from
adopting other or additional compensation arrangements for its employees.
(c) No Contract of Employment or Service. Neither this Plan nor the grant of any Award hereunder shall constitute a contract of employment or
service, and neither the adoption of this Plan nor the grant of any Award hereunder shall confer upon any employee, consultant, independent contractor or
service provider any right to continued employment or service, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate
to terminate the employment or service of any employee, consultant, independent contractor or service provider at any time.
(d) Required Taxes. No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state,
local or foreign income or employment or other tax purposes with respect to any Award under this Plan, such Participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld
with respect to such amount. If determined by the Company, withholding obligations may be settled with Common Stock, including Common Stock that is
part of the Award that gives rise to the withholding requirement; provided, however, that the amount withheld does not exceed the maximum statutory tax
rate or such lesser amount as is necessary to avoid liability accounting treatment. The required tax withholding obligation may also be satisfied, in whole or
in part, by an arrangement whereby a certain number of Shares issued pursuant to any Award are immediately sold and proceeds from such sale are remitted
to the Company in an amount that would satisfy the withholding amount due. In addition, the Committee may require Awards to be subject to mandatory
share withholding up to the required withholding amount. The obligations of the Company under this Plan shall be conditional on such payment or
arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise
due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.
(e) Limitation on Dividend Reinvestment and Dividend Equivalents. Reinvestment of dividends in additional Restricted Stock at the time of any
dividend payment, and the payment of Shares with respect to dividends to Participants holding Awards of RSUs, shall only be permissible if sufficient
Shares are available under Section 4 for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient Shares are
not available for such reinvestment or payment, such reinvestment or payment shall be made in the form of a grant of RSUs equal in number to the Shares
that would have been obtained by such payment or reinvestment, the terms of which RSUs shall provide for settlement in cash and for dividend equivalent
reinvestment in further RSUs on the terms contemplated by this Section 16(e). Any dividend equivalents granted with respect to an Award will be payable
to the Participant only if, when and to the extent such underlying Award vests, and that dividend equivalent rights granted with respect to Awards that do
not vest will be forfeited. For the avoidance of doubt, dividends and dividend equivalents shall not be payable with respect to Options or SARs.
E - 14
Exhibit 10.21
(f) Designation of Death Beneficiary. The Committee shall establish such procedures as it deems appropriate for a Participant to designate a
beneficiary to whom any amounts payable in the event of such Participant’s death are to be paid or by whom any rights of such eligible Individual, after
such Participant’s death, may be exercised.
(g) Subsidiary Employees. In the case of a grant of an Award to any employee of a Subsidiary of the Company, the Company may, if the
Committee so directs, issue or transfer the Shares, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Committee may
specify, upon the condition or understanding that the Subsidiary will transfer the Shares to the employee in accordance with the terms of the Award
specified by the Committee pursuant to the provisions of this Plan. All Shares underlying Awards that are forfeited or canceled should revert to the
Company.
(h) Governing Law and Interpretation. This Plan and all Awards made and actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Plan are not part of the
provisions hereof and shall have no force or effect.
(i) Non-Transferability. Except as otherwise provided in Section 6(i) or by the Committee, Awards under this Plan are not transferable except by
will or by laws of descent and distribution.
(j) Foreign Employees and Foreign Law Considerations. The Committee may grant Awards to Eligible Individuals who are foreign nationals,
who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or
could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and
conditions different from those specified in this Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote
achievement of the purposes of this Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, or
subplans as may be necessary or advisable to comply with such legal or regulatory provisions.
(k) Section 409A of the Code. This Plan and Awards are intended to comply with or be exempt from the applicable requirements of Section
409A of the Code and shall be limited, construed, and interpreted in accordance with such intent. The terms and conditions governing any Awards that the
Committee determines will be subject to Section 409A of the Code, including any rules for elective or mandatory deferral of the delivery of cash or Shares
pursuant thereto and any rules regarding treatment of such Awards in the event of a Change in Control, shall be set forth in the applicable Award
Agreement, and shall comply in all respects with Section 409A of the Code. Notwithstanding any contrary provision in this Plan or Award Agreement, any
payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under this
Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment
that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, until the
date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period. In
no event may a Participant, directly or indirectly, designate the calendar year of any payment to be made under any Award. Notwithstanding anything
herein to the contrary, any provision in this Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with or be
exempt from Section 409A of the Code and, to the extent such provision cannot be amended to comply therewith or be exempt therefrom, such provision
shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant
with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company. The Participant shall be solely
responsible for the payment of any taxes, penalties, interest, or other expenses incurred by the Participant with respect to any Award that is not compliant
with or exempt from Section 409A, and the Company shall have no responsibility to the Participant or any other party for the payment of such taxes,
penalties interest or other expense.
(l) Indemnification. Each person who is or will have been a member of the Board or of the Committee and any designee of the Board or
Committee will be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed on or
reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be made party or in which he may
be involved by reason of any determination, interpretation, action taken or failure to act under this Plan and against and from any and all amounts paid by
him in settlement thereof, with the Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him,
provided he will give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his
own behalf. The foregoing right of indemnification will not be exclusive and will be independent of any other rights of indemnification to which such
persons may be entitled under the Company’s Articles of Incorporation, By-laws, by contract, as a matter of law, or otherwise.
(m) Compensation Recoupment or “Clawback” Policy. All Awards, amounts, or benefits received or outstanding under this Plan will be subject
to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with any Company clawback or similar policy
or any Applicable Law related to such actions. A Participant’s acceptance of an Award will
E - 15
Exhibit 10.21
constitute the Participant’s acknowledgment of and consent to the Company’s application, implementation, and enforcement of any applicable Company
clawback or similar policy that may apply to the Participant, whether adopted before or after the Effective Date, and any Applicable Law relating to
clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take any
actions that may be necessary to effectuate any such policy or Applicable Law, without further consideration or action.
(n) Deferral of Awards. The Committee may establish one or more programs under this Plan to permit selected Participants the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle
the Participant to payment or receipt of Shares or other consideration under an Award. The Committee may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules, and procedures that the Committee deems advisable for the administration of any such deferral program.
(o) Data Privacy. As a condition of receipt of any Award, each Participant explicitly and unambiguously consents to the collection, use, and
transfer, in electronic or other form, of personal data as described in this Section 16(o) by and among, as applicable, the Company and its Affiliates, for the
exclusive purpose of implementing, administering, and managing this Plan and Awards and the Participant’s participation in this Plan. In furtherance of
such implementation, administration, and management, the Company and its Affiliates may hold certain personal information about a Participant,
including, but not limited to, the Participant’s name, home address, telephone number, date of birth, social security or insurance number or other
identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its Affiliates, and details of all Awards
(the “Data”). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of
this Plan and Awards and the Participant’s participation in this Plan, the Company and its Affiliates may each transfer the Data to any third parties assisting
the Company in the implementation, administration, and management of this Plan and Awards and the Participant’s participation in this Plan. Recipients of
the Data may be located in the Participant’s country or elsewhere, and the Participant’s country and any given recipient’s country may have different data
privacy laws and protections. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain, and transfer the Data, in
electronic or other form, for the purposes of assisting the Company in the implementation, administration, and management of this Plan and Awards and the
Participant’s participation in this Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the
Company or the Participant may elect to deposit any shares of Common Stock. The Data related to a Participant will be held only as long as is necessary to
implement, administer, and manage this Plan and Awards and the Participant’s participation in this Plan. A Participant may, at any time, view the Data held
by the Company with respect to such Participant, request additional information about the storage and processing of the Data with respect to such
Participant, recommend any necessary corrections to the Data with respect to the Participant, or refuse or withdraw the consents herein in writing, in any
case without cost, by contacting his or her local human resources representative. The Company may cancel the Participant’s eligibility to participate in this
Plan, and in the Committee’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents described
herein. For more information on the consequences of refusal to consent or withdrawal of consent, Participants may contact their local human resources
representative
E - 16
Subsidiaries of the Registrant
DOMESTIC
Entity
TripAdvisor Holdings, LLC
TripAdvisor LLC
FlipKey, LLC
TAMG Ventures Co.
Viator, Inc.
The Independent Traveler, Inc.
TripAdvisor APAC Holdings Corp.
TripAdvisor GP1 LLC
TripAdvisor GP2 LLC
TripAdvisor Finance LLC
TripAdvisor LP2 LLC
Restorando, Inc.
TripAdvisor Securities Corporation
SinglePlatform, LLC
Owl Analytics, Inc.
Bokun LLC
INTERNATIONAL
Entity
TripAdvisor UK1 LP
TripAdvisor UK2 LP
Bokun ehf
Viator Systems Pty Limited
Viator Limited
TripAdvisor Canada Corp.
TripAdvisor Travel India Private Limited
TripAdvisor Cayman Holdings II Limited
TripAdvisor UK Holdco Limited
LF Holdings (France) SAS
Owl Payments Limited
TripAdvisor Limited
Holiday Lettings (Holdings) Ltd.
Holiday Lettings Ltd.
HouseTrip SA
TripAdvisor Australia Pty. Ltd.
TripAdvisor GmbH
TripAdvisor France SAS
TripAdvisor Italy Srl
TripAdvisor Spain S.L.
Guia de Apartamentos Niumba, S.L.
TA Innovation Services Romania S.R.L.
TripAdvisor Portugal, Unipessoal Lda
TripAdvisor Ireland Ltd
Owl Payments Europe Limited
TA Innovations Croatia d.o.o.
TA LF Australia Pty Limited
Dimmi Pty Ltd
BestTables Brasil Internet Servicos de Informacao e Technologia Ltda.
Exhibit 21.1
Jurisdiction of
Formation
MA
DE
DE
DE
DE
NJ
DE
DE
DE
DE
DE
DE
MA
DE
NV
DE
Jurisdiction of
Formation
United Kingdom
United Kingdom
Iceland
Australia
United Kingdom
Canada
India
Cayman
United Kingdom
France
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Switzerland
Australia
Germany
France
Italy
Spain
Spain
Romania
Portugal
Ireland
Ireland
Croatia
Australia
Australia
Brazil
BestTables II Portugal, Unipessoal Lda.
La Fourchette SAS
La Fourchette Espana S.L.
Restorando SA
LaFourchette Swiss SA
La Fourchette (Belgium) SA
La Fourchette Netherlands B.V.
IENS Independent Index B.V.
LaFourchette (Italy) SRL
Livebookings Holdings Limited
Bookatable AB
2Book AB
Livebookings AG
Bookatable GmbH & Co KG
Bookatable Verwaltungs GmbH
Bookatable Limited
Bookatable ApS
Loghos Limited
Easy Pre-Orders Limited
LaFourchette Sweden AB
Lerumar SA
Restorando SPA
Restorando Peru SAC
Restorando Reservas SACV
Singaba SA
La Fourchette (UK) Ltd.
TripAdvisor K.K.
TripAdvisor Singapore Private Limited
TripAdvisor Korea Co., Ltd.
TripAdvisor Hong Kong Limited
TripAdvisor China Cayman Holdings Limited
TripAdvisor Consulting Service (Beijing) Co. Ltd
Tuqu Net Information Technology (Beijing) Co., Ltd. (beneficial ownership)
Beijing Tuqu Business Consulting Co., Ltd. (beneficial ownership)
Portugal
France
Spain
Argentina
Switzerland
Belgium
The Netherlands
The Netherlands
Italy
United Kingdom
Sweden
Sweden
Switzerland
Germany
Germany
United Kingdom
Denmark
United Kingdom
United Kingdom
Sweden
Uruguay
Chile
Peru
Mexico
Uruguay
United Kingdom
Japan
Singapore
Korea
Hong Kong
Cayman
China
China
China
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
The Board of Directors
Tripadvisor, Inc.:
We consent to the incorporation by reference in the registration statements (No. 333-260877, 333‑178637, 333-190384, 333-198726, 333-226749, 333-
273738) on Form S-8 of Tripadvisor, Inc. of our reports dated February 16, 2024, with respect to the consolidated financial statements of Tripadvisor, Inc.
and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Boston, Massachusetts
February 16, 2024
Exhibit 31.1
I, Matt Goldberg, Chief Executive Officer and President of Tripadvisor, Inc., certify that:
1.
I have reviewed this Annual Report on Form 10-K of Tripadvisor, Inc.;
Certification
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: February 16, 2024
/s/ MATT GOLDBERG
Matt Goldberg
Chief Executive Officer
Exhibit 31.2
I, Michael Noonan, Chief Financial Officer of Tripadvisor, Inc. certify that:
1.
I have reviewed this Annual Report on Form 10-K of Tripadvisor, Inc.;
Certification
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
Date: February 16, 2024
/s/ MICHAEL NOONAN
Michael Noonan
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Tripadvisor, Inc. (the “Company”) for the year ended December 31, 2023, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Matt Goldberg, Chief Executive Officer and President of the Company, certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.
the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 16, 2024
/s/ MATT GOLDBERG
Matt Goldberg
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report on Form 10-K of Tripadvisor, Inc. (the “Company”) for the year ended December 31, 2023, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Noonan, Chief Financial Officer of the Company, certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.
the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 16, 2024
/s/ MICHAEL NOONAN
Michael Noonan
Chief Financial Officer
Clawback Policy
Effec ve Date: November 1, 2023
Exhibit 97.1
Tripadvisor, Inc. (together with its subsidiaries, the “Company”) has adopted this Clawback Policy (this “Policy”) to provide for
the recovery of erroneously awarded incen ve-based compensa on in the event that the Company is required to prepare an accoun ng
restatement of its financial statements due to material noncompliance with any financial repor ng requirement under the federal
securi es laws. This Policy is designed to comply with the Nasdaq lis ng rules (the “Nasdaq Rules”), including but not limited to Rule
4508, and the rules and regula ons adopted by the SEC (the “SEC Rules”), including but not limited to Sec on 10D. All capitalized terms
used and not otherwise defined herein shall have the meanings set forth in Sec on III below.
This Policy shall apply to, and shall be binding and enforceable against, the Company’s current and former Execu ve Officers
and such other employees who may from me to me be deemed subject to this Policy (collec vely, the “Covered Persons”) by majority
of independent directors serving on the Board (the “Independent Directors”).
This Policy applies to all Incen ve-Based Compensa on Received by a Covered Person:
on or a er the Effec ve Date;
a er beginning service as a Covered Person;
i)
ii)
iii) who served as a Covered Person at any me during the performance period rela ng to the applicable Incen ve-Based
Compensa on; and
iv) during the Clawback Period.
Incen ve-Based Compensa on shall be deemed “Received” in the Company’s fiscal period during which the Financial
Repor ng Measure specified in the Incen ve-Based Compensa on award is a ained, even if the payment or grant of the Incen ve-
Based Compensa on occurs a er the end of that period.
I.
Recovery of Erroneously Awarded Compensa on
A.
In the event that the Company is required to prepare an Accoun ng Restatement, the Independent Directors will
reasonably promptly require recovery of the Erroneously Awarded Compensa on Received by any Covered Person as follows:
i)
ii)
The Independent Directors shall determine the amount of any Erroneously Awarded Compensa on Received by each
Covered Person and shall reasonably promptly no fy each Covered Person with a wri en no ce containing the
amount of any Erroneously Awarded Compensa on and a demand for repayment or return of such compensa on, as
applicable.
For Incen ve-Based Compensa on based on (or derived from) the Company’s stock price or total shareholder return,
where the amount of Erroneously Awarded Compensa on is not subject to mathema cal recalcula on directly from
the informa on in the applicable Accoun ng Restatement:
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a.
b.
the amount to be repaid or returned shall be based on a reasonable es mate of the effect of the
Accoun ng Restatement on the Company’s stock price or total shareholder return upon which the
Incen ve-based Compensa on was paid; and
The Company shall maintain documenta on of the determina on of such reasonable es mate and
provide the relevant documenta on as required to Nasdaq.
iii) The Independent Directors shall have discre on to determine the appropriate means of recovering Erroneously
Awarded Compensa on based on the par cular facts and circumstances. Notwithstanding the foregoing, except as set
forth in Sec on I(B) below, in no event shall the Company accept an amount that is less than the amount of the
Erroneously Awarded Compensa on Received by a Covered Person in sa sfac on of such Covered Person’s
obliga ons hereunder.
iv) To the extent that the Covered Person has already reimbursed the Company for any Erroneously Awarded
Compensa on Received under any duplica ve recovery obliga ons established by the Company or applicable law, it
shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded
Compensa on that is subject to recovery under this Policy.
v)
To the extent that a Covered Person fails to repay all Erroneously Awarded Compensa on to the Company when due,
the Company shall take all ac ons reasonable and appropriate to recover such amount from the applicable Covered
Person. The applicable Covered Person shall be required to reimburse the Company for any and all expenses
reasonably incurred (including legal fees) by the Company in recovering such Erroneously Awarded Compensa on in
accordance with the immediately preceding sentence.
B. Notwithstanding anything herein to the contrary, the Company shall not be required to take the ac ons contemplated
above if the Independent Directors determine that recovery would be imprac cable because:
i) The direct expenses paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered.
Before making this determina on, the Company must make a reasonable a empt to recover the Erroneously
Awarded Compensa on, document such a empt(s) and provide such documenta on to Nasdaq.
ii) Recovery would likely cause an otherwise tax-qualified re rement plan, under which benefits are broadly available to
employees of the Company, to fail to meet the requirements of Sec on 401(a)(13) or Sec on 411(a) of the Internal
Revenue Code of 1986, as amended, and the regula ons promulgated thereunder.
C. The Company intends that this Policy will be applied to the fullest extent of the law. The Independent Directors may
require that any employment or service agreement, cash-based bonus plan or program, equity award agreement, or similar agreement
entered into on or a er the adop on of this Policy shall, as a condi on to the grant of any benefit thereunder, require a Covered Person
to agree to abide by
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the terms of this Policy. Any right of recovery under this Policy is in addi on to, and not in lieu of, any other remedies or rights of
recovery that may be available to the Company under applicable law, regula on, or rule or pursuant to the terms of any policy of the
Company or any provision in any employment agreement, equity award agreement, compensatory plan, agreement or other
arrangement.
II.
Prohibi on of Indemnifica on
The Company shall not be permi ed to insure or indemnify any Covered Person against (i) the loss of any Erroneously Awarded
Compensa on that is repaid, returned, or recovered pursuant to the terms of this Policy, or (ii) any claims rela ng to the Company’s
enforcement of its rights under this Policy. Further, the Company shall not enter into any agreement that exempts any Incen ve-Based
Compensa on that is granted, paid or awarded to a Covered Person from the applica on of this Policy or that waives the Company’s
right to recovery of any Erroneously Awarded Compensa on, and this Policy shall supersede any such agreement (whether entered into
before, on or a er the Effec ve Date of this Policy).
III.
Defini ons
For purposes of this Policy, the following capitalized terms shall have the meanings set forth below.
“Accoun ng Restatement” means an accoun ng restatement due to the material noncompliance of the Company with any
financial repor ng requirement under the securi es laws, including any required accoun ng restatement (i) to correct an error in
previously issued financial statements that is material to the previously issued financial statements, or (ii) that would result in a material
misstatement if the error were corrected in the current period or le uncorrected in the current period.
“Board” means the Board of Directors of the Company.
“Clawback Period” means, with respect to any Accoun ng Restatement, the three completed fiscal years of the Company
immediately preceding the Restatement Date, and if the Company changes its fiscal year, any transi on period of less than nine months
within or immediately following those three completed fiscal years.
“Effec ve Date” means the date that this Policy is adopted by the Board. Notwithstanding the foregoing, this Policy shall only
apply to Incen ve-Based Compensa on Received on and a er October 2, 2023.
“Erroneously Awarded Compensa on” means, with respect to each Covered Person in connec on with an Accoun ng
Restatement, the amount of Incen ve-Based Compensa on Received by such Covered Person that exceeds the amount of Incen ve-
Based Compensa on that otherwise would have been Received had it been determined based on the restated amounts, computed
without regard to any taxes paid.
“Execu ve Officer” means an execu ve officer of the Company, as determined by the Independent Directors in accordance
with the Nasdaq Rules and the SEC Rules.
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“Financial Repor ng Measure” means (i) any measure that is determined and presented in accordance with the accoun ng
principles used in preparing the Company’s financial statements, or any other measure that is derived wholly or in part from such
measure, such as revenues, EBITDA, or net income, or (ii) stock price and total shareholder return. Financial Repor ng Measures
include, but are not limited to: revenues; net income; opera ng income; profitability of one or more reportable segments; financial
ra os; net assets or net asset value per share; earnings before interest, taxes, deprecia on and amor za on; funds from opera ons and
adjusted funds from opera ons; liquidity measures (e.g., working capital, opera ng cash flow); return measures (e.g., return on invested
capital, return on assets); earnings measures (e.g., earnings per share); revenue per user, or average revenue per user, where revenue is
subject to an accoun ng restatement; any of such financial repor ng measures rela ve to a peer group, where the Company’s financial
repor ng measure is subject to an accoun ng restatement; and tax basis income. For the avoidance of doubt, a Financial Repor ng
Measure need not be presented in the Company’s financial statements or included in a filing with the SEC.
“Incen ve-Based Compensa on” means any compensa on that is granted, earned or vested based wholly or in part upon the
a ainment of a Financial Repor ng Measure, including, but not limited to: (i) non-equity incen ve plan awards that are earned solely or
in part by sa sfying a Financial Repor ng Measure performance goal; (ii) bonuses paid from a bonus pool, where the size of the pool is
determined solely or in part by sa sfying a Financial Repor ng Measure performance goal; (iii) other cash awards based on sa sfac on
of a Financial Repor ng Measure performance goal; (iv) restricted stock, restricted stock units, stock op ons, stock apprecia on rights,
and performance share units that are granted or vest solely or in part based on sa sfac on of a Financial Repor ng Measure
performance goal; and (v) proceeds from the sale of shares acquired through an incen ve plan that were granted or vested solely or in
part based on sa sfac on of a Financial Repor ng Measure performance goal. Compensa on that would not be considered Incen ve-
Based Compensa on includes, but is not limited to: (i) salaries; (ii) bonuses paid solely based on sa sfac on of subjec ve standards,
such as demonstra ng leadership, and/or comple on of a specified employment period; (iii) non-equity incen ve plan awards earned
solely based on sa sfac on of strategic or opera onal measures; (iv) wholly me-based equity awards; and (v) discre onary bonuses or
other compensa on that is not paid from a bonus pool that is determined by sa sfying a Financial Repor ng Measure performance
goal.
“Nasdaq” means the Nasdaq Global Market.
“Restatement Date” means the earlier to occur of (i) the date the Board, a commi ee of the Board or the officers of the
Company authorized to take such ac on if Board ac on is not required, concludes, or reasonably should have concluded, that the
Company is required to prepare an Accoun ng Restatement, and (ii) the date a court, regulator or other legally authorized body directs
the Company to prepare an Accoun ng Restatement.
“SEC” means the U.S. Securi es and Exchange Commission.
IV.
Modifica on and Interpreta on
The Company reserves the right to modify, discon nue or replace this Policy or any terms of the Policy at any me, with or without no ce. In the
event of a conflict between this Policy and applicable law, applicable law will prevail.
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V.
Enforcement
Any alleged or actual viola on of this Policy (a “Viola on”) shall be treated as a serious ma er and must be immediately reported to the
Compliance Team. The Compliance Team shall inves gate the facts and circumstances surrounding any and all alleged Viola ons. In addi on, any Viola on
can be expected to result in serious sanc ons by the Company, including dismissal, suspension without pay, loss of pay or bonus, loss of benefits,
demo on, or other sanc ons, whether or not the viola on of Company policy or procedure also cons tuted a viola on of law.
VI. Administra on
This Policy shall be administered by the Independent Directors, and any determina ons made by the Independent Directors
shall be final and binding on all affected individuals. The Independent Directors are authorized to interpret and construe this Policy and
to make all determina ons necessary, appropriate, or advisable for the administra on of this Policy. It is intended that this Policy be
interpreted in a manner that is consistent with the Nasdaq Rules, the SEC Rules, and any other applicable law, regula on, rule or
interpreta on of the SEC or Nasdaq, promulgated or issued in connec on therewith. The Board may amend this Policy from me to
me in its discre on. The Board may terminate this Policy at any me.
If you have any ques ons regarding the Policy, please do not hesitate to contact the Compliance Team at
compliance@tripadvisor.com.
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