# TripAdvisor, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [TripAdvisor, Inc.](/companies/trip.md) (CIK 1526520)
- Form: 10-Q
- Filed: 2024-11-06
- Accepted by EDGAR: Nov 6, 2024, 16:05 ET
- Period: 2024-09-30
- Accession: 0000950170-24-122267
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1526520/000095017024122267/trip-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1526520/000095017024122267/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $532.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $1.42bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $70.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $92.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $13.0m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $35.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $27.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $84.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $39.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $4.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.27 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.03 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.28 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.03 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 144,193,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 144,971,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $147.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $51.0m | us-gaap:PaymentsToAcquireProductiveAssets |
| Share repurchases | 9 months, 2024-01-01 to 2024-09-30 | $25.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-09-30 | $1.11bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $1.46bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $2.73bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $792.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $1.79bn | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $832.0m | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2024-09-30 | $5.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-09-30 | $944.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 79,719 characters.

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q (this “Quarterly Report”), and the consolidated financial statements and accompanying notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2023 Annual Report.

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in our 2023 Annual Report, Part I, Item 1A, “*Risk Factors,”* our subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”) as well as those discussed elsewhere in this Quarterly Report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words such as “anticipates,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “will” and “believes,” among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements other than historical statements of fact are forward-looking statements, including statements that refer to expectations, projections or other characterizations of future events or circumstances. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation to, and do not intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

### Overview

The Tripadvisor Group operates as a family of brands with the purpose of connecting people to experiences worth sharing. The Company's vision is to be the world’s most trusted source for travel and experiences. The Company operates across three reportable segments: Brand Tripadvisor, 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, Brand Tripadvisor 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. Brand Tripadvisor offers more than 1 billion user-generated ratings and reviews on over 8 million experiences, accommodations, restaurants, airlines, and cruises. Brand 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 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. and western and central Europe. TheFork has become an urban, gastronomic guide with a strong community that offers approximately 20 million restaurant reviews.

### 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 are 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, increasing members, and repeat customers 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, experiences, and restaurants. As we continue to focus on offering a more compelling product that better meets travelers’ needs across their end-to-end travel journey, we believe we are better able to drive deeper engagement which drives more direct channel growth, including via our mobile app. As this direct engagement with users improves and scales, we are able to collect valuable data and create more relevant opportunities to monetize, which we believe will result in a meaningfully higher average revenue per user over time.

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 and TheFork segments, we are investing in growth, future scale, and market share gains to accelerate our market leadership position, while working to improve unit economics on both sides of the marketplace with the goal of sustainable future profitability. This means driving awareness and higher quality audience engagement, which we believe will drive greater repeat bookings, 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.

### 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.

Prior to Google introducing changes to its search engine results page (“SERP”), we generated a significant amount of direct traffic from search engines, including Google, through strong search engine optimization (“SEO”) 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 the large underpenetrated market for experiences, Viator continues to invest in marketing to drive awareness and grow market share. 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 the experiences and restaurant categories, we expect to continue to invest in these categories across Tripadvisor Group and, in particular, within the Viator and TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.

### Recent Developments

As disclosed in our 2023 Annual Report, in August 2023, we received a NOPA from the IRS for the 2014 through 2016 tax years relating to certain transfer pricing arrangements with our foreign subsidiaries. In response, we requested competent authority assistance under the MAP for the 2014 through 2016 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. During the three and nine months ended September 30, 2024, we recorded an income tax benefit of $4 million and an income tax expense of $41 million, respectively, as discrete items, inclusive of interest, related to this settlement on our unaudited condensed consolidated statements of operations. During the three months ended June 30, 2024, we made a payment to the IRS of $141 million, inclusive of estimated interest, and during the three months ended September 30, 2024, we made various state tax payments of $18 million, inclusive of estimated interest, related to this settlement. We anticipate a competent authority refund from a foreign jurisdiction and certain federal tax benefits, net of state tax payments due, associated with this IRS audit settlement which will be substantially settled in the next twelve months, resulting in an estimated net cash inflow of $50 million to $60 million, inclusive of related interest. Refer to “Note 8: *Income Taxes”* in the notes to our unaudited condensed consolidated financial statements in Item 1 of this Quarterly Report for further information regarding potential material contingencies related to ongoing audits regarding income taxes.

On July 8, 2024, under the Amended Credit Agreement, the Company issued a $500 million Term Loan B Facility maturing July 8, 2031, with an interest rate based on secured overnight financing rate ("SOFR") plus 2.75%. On July 15, 2024, the Company used these borrowed funds to fully redeem its outstanding $500 million, 2025 Senior Notes. The Term Loan B Facility was offered at 99.75% of par and is required to be paid down at 1.00% of the aggregate principal amount per year, repayable in quarterly installments on the last day of each calendar quarter, commencing December 31, 2024, equal to 0.25% of the original principal amount with the balance due on the maturity date. Refer to “Note 6: *Debt”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information.

### Employees

As of September 30, 2024, the Company had approximately 2,890 employees. Approximately 60%, 35%, and 5% of the Company’s current employees are based in Europe, the U.S., and the rest of world (“ROW”), 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.

### 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.

### Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they require that management use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance with GAAP. Preparation of the consolidated financial statements and accompanying notes requires management to 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 significant judgment 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.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2023 Annual Report.

### Significant Accounting Policies and New Accounting Pronouncements

There have been no material changes to our significant accounting policies or new accounting pronouncements that we have been required to adopt that may have an impact on our unaudited condensed consolidated financial statements since December 31, 2023, as compared to those described under “Note 2: *Significant Accounting Policies,”* in the notes to consolidated financial statements in Item 8 of our 2023 Annual Report.

### Statements of Operations

### Selected Financial Data

### (in millions, except percentages)

|  | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $532 | $533 | 0% | $1,424 | $1,398 | 2% |
| Costs and expenses: |  |  |  |  |  |  |
| Cost of revenue | 47 | 43 | 9% | 128 | 113 | 13% |
| Selling and marketing | 271 | 272 | 0% | 755 | 761 | (1)% |
| Technology and content | 73 | 66 | 11% | 224 | 205 | 9% |
| General and administrative | 51 | 49 | 4% | 161 | 144 | 12% |
| Depreciation and amortization | 21 | 21 | 0% | 63 | 63 | 0% |
| Restructuring and other related organization costs (benefit) | (1) | 18 | n.m. | 1 | 18 | (94)% |
| Total costs and expenses: | 462 | 469 | (1)% | 1,332 | 1,304 | 2% |
| Operating income (loss) | 70 | 64 | 9% | 92 | 94 | (2)% |
| Other income (expense): |  |  |  |  |  |  |
| Interest expense | (13) | (11) | 18% | (35) | (33) | 6% |
| Interest income | 13 | 13 | 0% | 38 | 35 | 9% |
| Other income (expense), net | (4) | (2) | 100% | (7) | (3) | 133% |
| Total other income (expense), net | (4) | — | n.m. | (4) | (1) | 300% |
| Income (loss) before income taxes | 66 | 64 | 3% | 88 | 93 | (5)% |
| (Provision) benefit for income taxes | (27) | (37) | (27%) | (84) | (115) | (27)% |
| Net income (loss) | $39 | $27 | 44% | $4 | $(22) | n.m. |
| Other Financial Data: |  |  |  |  |  |  |
| Adjusted EBITDA (1) | $122 | $127 | (4)% | $266 | $250 | 6% |

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

*($ in millions)*

*($ in millions)*

| Revenue by Segment: | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Brand Tripadvisor (1) | $255 | $290 | (12)% | $745 | $813 | (8)% |
| Viator | 270 | 245 | 10% | 655 | 576 | 14% |
| TheFork | 49 | 42 | 17% | 133 | 115 | 16% |
| Intersegment eliminations (1) | (42) | (44) | (5)% | (109) | (106) | 3% |
| Total revenue | $532 | $533 | 0% | $1,424 | $1,398 | 2% |
| Adjusted EBITDA by Segment: |  |  |  |  |  |  |
| Brand Tripadvisor | $87 | $111 | (22)% | $248 | $279 | (11)% |
| Viator | 30 | 17 | 76% | 13 | (15) | n.m. |
| TheFork | 5 | (1) | n.m. | 5 | (14) | n.m. |
| Total Adjusted EBITDA | $122 | $127 | (4)% | $266 | $250 | 6% |
| Adjusted EBITDA Margin by Segment (2): |  |  |  |  |  |  |
| Brand Tripadvisor | 34% | 38% |  | 33% | 34% |  |
| Viator | 11% | 7% |  | 2% | (3)% |  |
| TheFork | 10% | (2)% |  | 4% | (12)% |  |

n.m. = *not meaningful*

(1) Brand Tripadvisor segment revenue figures are shown gross of intersegment (intercompany) revenue, which is eliminated on a consolidated basis. Refer to “Note 13: *Segment Information”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for a discussion of intersegment revenue for all periods presented.

(2) “Adjusted EBITDA Margin by Segment” is defined as Adjusted EBITDA by segment divided by revenue by segment.

### Brand Tripadvisor Segment

Brand Tripadvisor segment revenue decreased by $35 million and $68 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue.

Adjusted EBITDA in our Brand Tripadvisor segment decreased by $24 million and $31 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, while Adjusted EBITDA margin decreased 4 percentage points and 1 percentage point during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. The decrease in Adjusted EBITDA was primarily due to a decrease in revenue, as noted above, and to a lesser extent a decrease in the segment's operating expenses during the three and nine months ended September 30, 2024, when compared to the same periods in 2023, of $11 million and $37 million, respectively, primarily related to a decrease in direct selling and marketing expenses, primarily paid online traffic acquisition costs, and to a lesser extent a decrease in overall personnel and overhead costs. The decrease in Adjusted EBITDA margin during the three and nine months ended September 30, 2024, when compared to the same periods in 2023, was largely due to an increase in technology and content personnel and overhead costs, and to a lesser extent, an increase in direct costs within cost of revenue, as a percent of revenue.

The following is a detailed discussion of the revenue sources within our Brand Tripadvisor segment:

*($ in millions)*

*($ in millions)*

| Brand Tripadvisor: | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Tripadvisor-branded hotels | $151 | $181 | (17%) | $460 | $524 | (12%) |
| % of Brand Tripadvisor revenue\* | 59% | 62% |  | 62% | 64% |  |
| Media and advertising | 40 | 38 | 5% | 114 | 110 | 4% |
| % of Brand Tripadvisor revenue\* | 16% | 13% |  | 15% | 14% |  |
| Tripadvisor experiences and dining (1) | 51 | 55 | (7%) | 135 | 138 | (2%) |
| % of Brand Tripadvisor revenue\* | 20% | 19% |  | 18% | 17% |  |
| Other | 13 | 16 | (19%) | 36 | 41 | (12%) |
| % of Brand Tripadvisor revenue\* | 5% | 6% |  | 5% | 5% |  |
| Total Brand Tripadvisor Revenue | $255 | $290 | (12%) | $745 | $813 | (8%) |

31

#### \*Percentages may not total to 100% due to rounding.

(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 13: *Segment Information”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for a discussion of intersegment revenue for all periods presented.

#### Tripadvisor-branded Hotels Revenue

Tripadvisor-branded hotels revenue decreased by $30 million and $64 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue, as the Company transitions from a sales-led model to a self-service model. The decrease in our hotel meta revenue during the three months ended September 30, 2024, when compared to the same period in 2023, was primarily driven by continued headwinds impacting free channels, including SEO traffic, contributing to a decrease in click volumes, and to a lesser extent, a deceleration in cost-per-click (“CPC”) rates, particularly in the U.S. The decrease in our hotel meta revenue during the nine months ended September 30, 2024, when compared to the same period in 2023, was driven by declines in our U.S. hotel meta revenue and, to a lesser extent, our European hotel meta revenue, primarily due to weaker demand related to increased competition in paid online marketing channels and continued headwinds impacting free channels, including SEO traffic, during the second and third quarters of 2024, contributing 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 Tripadvisor Group platform. Media and advertising revenue increased $2 million and $4 million during the three and nine months ended September 30, 2024, when compared to the same periods in 2023, primarily due to an increase in overall advertising campaigns and pricing.

#### 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, are eliminated on a consolidated basis, in addition to revenue earned from Tripadvisor's restaurants service offerings. Tripadvisor experiences and dining revenue decreased $4 million during the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decline in dining revenue as we move from a sales-led model to a self-service model, and to a lesser extent some deceleration in experiences growth during the third quarter of 2024, as our near-term segment marketing strategy emphasizes profitability. Tripadvisor experiences and dining revenue decreased $3 million during the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to a decline in dining revenue as we move from a sales-led model to a self-service model, as noted above, partially offset by an increase in experiences revenue, despite some deceleration in experiences revenue growth, as noted above, during the second and third quarters of 2024.

#### Other Revenue

Other revenue includes alternative accommodation rentals revenue, in addition to click-based advertising and display-based advertising revenue from our cruise, flights, and rental cars offerings on Tripadvisor websites and mobile apps. Other revenue decreased $3 million and $5 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decline in alternative accommodation rentals revenue as we continue to strategically de-emphasize this offering.

### Viator Segment

Viator segment revenue increased by $25 million and $79 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, driven by consumer demand for experiences across all geographies, driving growth in bookings, partially offset by some deceleration in revenue growth in the Brand Tripadvisor point-of-sale during the second and third quarters of 2024, as noted above. We continue to believe that Viator is benefiting from a larger macro trend, as the large global market in which it operates continues to grow and migrate online from traditional offline sources.

Adjusted EBITDA in our Viator segment improved by $13 million and $28 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, and Adjusted EBITDA margin improved by 4 percentage points and 5 percentage points during three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. These improvements in Adjusted EBITDA were primarily due to increased leverage as we scale the business and drive a greater number of bookings from more profitable repeat customers. These improvements were partially offset by our continued investment in marketing, primarily paid online traffic acquisition costs, in response to consumer demand for experiences and increased investment focusing on growing market share, acquiring new customers, and driving brand awareness. In addition, increased personnel and overhead costs to support business growth and invest in our product experience and, to a lesser extent, increased licensing costs, and an increase in revenue generation costs resulting from credit card payments in direct correlation with the increase in revenue, all negatively impacted Adjusted EBITDA. The improvements in Adjusted EBITDA margin were primarily due to a decrease in selling and marketing costs, largely brand marketing, as a percent of revenue.

### TheFork Segment

TheFork segment revenue increased by $7 million and $18 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. These improvements were driven by increased consumer demand for dining in Europe, including increased bookings and pricing, during the three and nine months ended September 30, 2024, when compared to the same periods in 2023. In addition, we estimate this segment's revenue growth rate was positively impacted by foreign currency fluctuations of approximately 2% during both the three and nine months ended September 30, 2024 when compared to the same periods in 2023.

Adjusted EBITDA in TheFork segment improved by $6 million and $19 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, while Adjusted EBITDA margin improved by 12 percentage points and 16 percentage points during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. The improvement in Adjusted EBITDA was primarily due to an increase in revenue as noted above, and lower personnel and overhead costs. The improvement in Adjusted EBITDA margin was primarily due to lower personnel and overhead costs as a percent of revenue.

### 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, including cloud-based solutions, media production 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.

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Direct costs | $39 | $36 | 8% | $106 | $92 | 15% |
| Personnel and overhead | 8 | 7 | 14% | 22 | 21 | 5% |
| Total cost of revenue | $47 | $43 | 9% | $128 | $113 | 13% |
| % of revenue | 8.8% | 8.1% |  | 9.0% | 8.1% |  |

Cost of revenue increased $4 million and $15 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. The increase in cost of revenue during the three months ended September 30, 2024, when compared to the same period in 2023, was primarily due to increased direct costs from credit card payment processing fees and other revenue-related transaction costs 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. The increase in cost of revenue during the nine months ended September 30, 2024, when compared to the same period in 2023, was primarily due to increased direct costs from credit card payment processing fees and other revenue-related transaction costs in our Viator segment, as noted above, as well as, increased direct revenue generation costs related to data center costs and media production 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), 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, bonuses for sales, sales support, customer support and marketing employees.

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Direct costs | $217 | $219 | (1%) | $593 | $596 | (1%) |
| Personnel and overhead | 54 | 53 | 2% | 162 | 165 | (2%) |
| Total selling and marketing | $271 | $272 | 0% | $755 | $761 | (1%) |
| % of revenue | 50.9% | 51.0% |  | 53.0% | 54.4% |  |

Direct selling and marketing costs as a percentage of consolidated revenue was 41% during both the three months ended September 30, 2024 and 2023. Direct selling and marketing costs decreased by $2 million during the three months ended September 30, 2024, when compared to the same period in 2023, primarily driven by a decrease in overall marketing costs in Brand Tripadvisor of $8 million, partially offset by an increase in overall marketing costs in our Viator segment of $4 million, in order to capture consumer demand, including increased investment within our Viator segment focused on growing market share, acquiring new customers, and driving brand awareness.

Direct selling and marketing costs as a percentage of consolidated revenue was 42% during the nine months ended September 30, 2024, compared to 43% in the same period in 2023. Direct selling and marketing costs decreased by $3 million during the nine months ended September 30, 2024, when compared to the same period in 2023, primarily driven by a decrease in overall marketing costs in Brand Tripadvisor of $28 million, partially offset by an increase in overall marketing costs in our Viator segment of $21 million, in order to capture consumer demand, including increased investment within our Viator segment focused on growing market share, acquiring new customers, and driving brand awareness.

Personnel and overhead costs decreased $3 million during the nine months ended September 30, 2024, when compared to the same period in 2023, primarily driven by a reduction in headcount related to our cost-reduction measures taken during 2023 in Brand Tripadvisor and TheFork, partially by offset by an increase in personnel and overhead costs to support business growth in Viator, as well as, an increase in stock-based compensation.

### 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.

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Personnel and overhead | $62 | $58 | 7% | $194 | $179 | 8% |
| Other | 11 | 8 | 38% | 30 | 26 | 15% |
| Total technology and content | $73 | $66 | 11% | $224 | $205 | 9% |
| % of revenue | 13.7% | 12.4% |  | 15.7% | 14.7% |  |

Technology and content costs increased $7 million and $19 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to higher personnel and overhead costs, including stock-based compensation costs, in our Brand Tripadvisor and Viator segments, in support of product development, and in addition, increased licensing 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.

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 | Nine months ended September 30, 2024 | 2023 | % Change 2024 vs. 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Personnel and overhead | $33 | $31 | 6% | $98 | $98 | 0% |
| Professional service fees and other | 18 | 18 | 0% | 63 | 46 | 37% |
| Total general and administrative | $51 | $49 | 4% | $161 | $144 | 12% |
| % of revenue | 9.6% | 9.2% |  | 11.3% | 10.3% |  |

Personnel and overhead costs increased by $2 million and did not materially change during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily driven by an increase in stock-based compensation, largely offset by a reduction in headcount related to cost reduction measures taken during 2023 in our Brand Tripadvisor segment.

Professional service fees and other costs increased by $17 million during the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to an estimated accrual for the potential settlement of a regulatory related matter of $10 million during the first quarter of 2024, and to a lesser extent, incremental digital service tax costs of $5 million, primarily resulting from enacted tax legislation in Canada during June 2024.

### 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.

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Depreciation | $19 | $19 | $58 | $56 |
| Amortization of intangible assets | 2 | 2 | 5 | 7 |
| Total depreciation and amortization | $21 | $21 | $63 | $63 |
| % of revenue | 3.9% | 3.9% | 4.4% | 4.5% |

Depreciation and amortization did not change materially during both the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023.

### Restructuring and other related reorganization costs (benefit)

Restructuring and other related reorganization costs (benefit) consist primarily of employee severance and related benefits.

*(in millions)*

*(in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Restructuring and other related reorganization costs (benefit) | $(1) | $18 | $1 | $18 |

The Company incurred pre-tax restructuring and other related reorganization costs of $18 million during the three and nine months ended September 30, 2023. These costs consisted primarily of employee severance and related benefits. Refer to “Note 5: *Accrued Expenses and Other Current Liabilities”* and “Note 13: *Segment Information”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for more information regarding restructuring and other related reorganization costs incurred by each reportable segment.

### Interest Expense

Interest expense primarily consists of interest incurred, commitment fees, and debt issuance cost amortization related to the Credit Facility, the Term Loan B Facility, the 2025 Senior Notes, the 2026 Senior Notes, as well as imputed interest on finance leases.

*(in millions)*

*(in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Interest expense | $(13) | $(11) | $(35) | $(33) |

Interest expense increased $2 million during both the three and nine months ended September 30, 2024 when compared to the same periods in 2023, primarily due to the issuance of our Term Loan B Facility in July 2024, which has currently increased our cost of capital. The majority of interest expense reported during the three months ended September 30, 2024 was primarily related to the Term Loan B Facility, while during the three ended September 30, 2023 and both the nine months ended September 30, 2024 and 2023, interest expense incurred was primarily related to the 2025 Senior Notes which were redeemed in July 2024. Refer to “Note 6: *Debt”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on material capital structure changes and cost of capital during the third quarter of 2024.

### 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.

*(in millions)*

*(in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $13 | $13 | $38 | $35 |

Interest income increased $3 million during the nine months ended September 30, 2024, respectively, when compared to the same period in 2023, primarily due to an increase in the average amount of cash invested.

### 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, gain/(loss) on extinguishment of debt, and other non-operating income (expenses).

*(in millions)*

*(in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Other income (expense), net | $(4) | $(2) | $(7) | $(3) |

Other expense, net increased $2 million during the three months ended September 30, 2024, when compared to the same period in 2023, primarily due to a $2 million loss on extinguishment of the 2025 Senior Notes. Other expense, net increased $4 million during the nine months ended September 30, 2024, when compared to the same period in 2023, primarily due to a loss on disposal of certain assets and aforementioned loss on extinguishment of debt of $2 million, partially offset by net foreign exchange gains incurred as a result of foreign currency movements.

### (Provision) Benefit for Income Taxes

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| (Provision) benefit for income taxes | $(27) | $(37) | $(84) | $(115) |
| Effective tax rate | 40.9% | 57.8% | 95.5% | 123.7% |

Our effective tax rate for the three months ended September 30, 2024 differs from the U.S. federal statutory rate of 21%, primarily due to unfavorable stock-based compensation tax effects. Our effective tax rate for the nine months ended September 30, 2024 differs from the U.S. federal statutory rate of 21%, primarily as a result of a discrete item recorded during the first quarter of 2024, as described below.

We recorded an income tax provision of $27 million and $84 million for the three and nine months ended September 30, 2024, respectively. The change in our income tax provision and our effective tax rate during the nine months ended September 30, 2024, when compared to the same period in 2023, was primarily the result of an IRS audit settlement, which we recorded an income tax expense of $41 million, as a discrete item, inclusive of interest, primarily during the first quarter of 2024, related to this settlement on our unaudited condensed consolidated statement of operations. In addition, we reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent open tax years during the first quarter of 2024, which resulted in an income tax benefit, inclusive of estimated interest, of $4 million. During the nine months ended September 30, 2023, specifically in the first quarter of 2023, we recorded a net income tax expense of $55 million related to an IRS audit settlement and related adjustment to existing transfer pricing income tax reserves for subsequent tax years. Refer to “Note 8: *Income Taxes”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information.

### Net income (loss)

*($ in millions)*

*($ in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $39 | $27 | $4 | $(22) |
| Net income (loss) margin | 7.3% | 5.1% | 0.3% | (1.6%) |

Net income increased $12 million during the three months ended September 30, 2024 when compared to the same period in 2023. Improvements in net income were largely driven by restructuring costs incurred of $18 million in the three months ended September 30, 2023, which did not reoccur during the three months ended September 30, 2024, a decrease in income tax expense of $10 million, as well as a decrease in direct selling and marketing costs primarily in our Brand Tripadvisor segment. These improvements were largely offset by increased direct revenue generation costs related to data center costs and media production costs in our Brand Tripadvisor segment, an increase in direct selling and marketing costs in our Viator segment, as well as, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue. All drivers discussed above are described in more detail above under “*Consolidated Expenses.”*

Net loss improved by $26 million during the nine months ended September 30, 2024 when compared to the same period in 2023. The improvement in net loss was largely driven by increased revenue, as described in more detail above under “*Revenue and Segment Information”*, a decrease in income tax expense of $31 million, as described in more detail above under “*(Provision) Benefit for Income Taxes”,* restructuring costs incurred of $18 million in the nine months ended September 30, 2023, which did not reoccur during the nine months ended September 30, 2024. In addition, a decrease in direct selling and marketing costs in our Brand Tripadvisor segment, as well as a decrease in personnel and overhead costs primarily in our Brand Tripadvisor segment, also contributed to the net loss improvement during the nine months ended September 30, 2024. These improvements were largely offset by increased direct selling and marketing costs in our Viator segment, increased direct revenue generation costs related to data center costs and media production costs in our Brand Tripadvisor segment, as well as, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue, and increased personnel and overhead costs to support growth in our Viator segment, and an estimated accrual for the potential settlement of a regulatory related matter of $10 million during the first quarter of 2024. All drivers discussed above are described in more detail above under “*Consolidated Expenses.”*

### 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 expense (income), 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, including indirect tax reserves related to audit settlements and the impact of one-time changes resulting from enacted tax legislation; (7) restructuring and other related reorganization costs (benefit); and (8) non-recurring expenses (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, as well as restructuring and other related reorganization costs (benefit);
- 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:

*(in millions)*

|  | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net income (loss)** | **$39** | **$27** | **$4** | **$(22)** |
| Add: Provision (benefit) for income taxes | 27 | 37 | 84 | 115 |
| Add: Other expense (income), net | 4 | — | 4 | 1 |
| Add: Non-recurring expense (income) (1) | 1 | — | 4 | 3 |
| Add: Restructuring and other related reorganization costs (benefit) | (1) | 18 | 1 | 18 |
| Add: Legal reserves and settlements (2) | — | — | 14 | — |
| Add: Stock-based compensation | 31 | 24 | 92 | 72 |
| Add: Depreciation and amortization | 21 | 21 | 63 | 63 |
| Adjusted EBITDA | $122 | $127 | $266 | $250 |

(1) The Company expensed certain transaction costs of $1 million and $4 million during the three and nine months ended September 30, 2024, respectively, to general and administrative expenses on our unaudited condensed consolidated statements of operations. The Company expensed $3 million of previously capitalized transaction costs during the first quarter of 2023 to general and administrative expenses on our unaudited condensed consolidated statement of operations. The Company considers such costs to be non-recurring in nature.

(2) Includes a one-time charge of $4 million during the second quarter of 2024, resulting from enacted tax legislation in Canada during June 2024 related to digital services taxes, which requires retrospective application back to January 1, 2022. This amount represents the one-time retrospective liability for the periods prior to April 1, 2024, while all prospective periods are included within Adjusted EBITDA. In addition, this amount includes an estimated accrual for the potential settlement of a regulatory related matter of $10 million, expensed during the first quarter of 2024. These costs are reflected in general and administrative expenses on our unaudited condensed consolidated statements of operations.

### Related Party Transactions

For information on our relationship with LTRIP, which may be deemed to beneficially own equity securities representing approximately 57% of our voting power as of September 30, 2024, refer to “Note 1: *Basis of Presentation”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report. We had no related party transactions with LTRIP during both of the three and nine months ended September 30, 2024 and 2023.

### Stock-Based Compensation

Refer to “Note 10: *Stock Based Awards and Other Equity Instruments”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on current year equity award activity, including the issuance of approximately 5.7 million service-based RSUs with a weighted average grant-date fair value of $25.80 during the nine months ended September 30, 2024.

### 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 both September 30, 2024 and December 31, 2023, we had approximately $1.1 billion of cash and cash equivalents, and $497 million of available borrowing capacity under the Credit Facility. As of September 30, 2024, $216 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which approximately 36% was held in the U.K. As of September 30, 2024, the significant majority of our cash was denominated in U.S. dollars.

As of September 30, 2024, we had $556 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of September 30, 2024, we maintained a deferred income tax liability on our unaudited condensed 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.

As of September 30, 2024, we are party to a credit agreement (“Amended Credit Agreement”), which, among other things, provides for a $500 million revolving credit facility (“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 September 30, 2024 and December 31, 2023, we had no outstanding borrowings under the Credit Facility. 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 September 30, 2024, 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 September 30, 2024 and December 31, 2023, 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 September 30, 2024, the Company had an aggregate outstanding principal amount of $5 million and $832 million in short-term and long-term debt, respectively, pertaining to the 2026 Senior Notes and Term Loan B Facility, both of which are discussed below.

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.

On July 8, 2024, under the Amended Credit Agreement, the Company issued a $500 million Term Loan B Facility maturing July 8, 2031, with an interest rate based on secured overnight financing rate (“SOFR”) plus 2.75%, payable monthly. On July 15, 2024, the Company used these funds to fully redeem its outstanding $500 million, 2025 Senior Notes. The Term Loan B Facility was offered at 99.75% of par and is required to be paid down at 1.00% of the aggregate principal amount per year, repayable in quarterly installments on the last day of each calendar quarter, commencing December 31, 2024, equal to 0.25% of the original principal amount with the balance due on the maturity date.

The 2026 Senior Notes and Term Loan B Facility 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 2026 Senior Notes and Term Loan B Facility 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 Amended Credit Agreement, the Credit Facility, the Term Loan B Facility, 2025 Senior Notes and 2026 Senior Notes, refer to “Note 6: *Debt”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report.

On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a 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 September 30, 2024, the Company did not repurchase any shares of outstanding common stock under this share repurchase program. During the nine months ended September 30, 2024, the Company repurchased 1,366,385 shares of its common stock at an average price of $18.28 per share, exclusive of fees and commissions, or $25 million in the aggregate. As of September 30, 2024, there was $200 million remaining available to repurchase shares of its common stock under this share repurchase program. During the nine months ended September 30, 2023, the Company repurchased 4,724,729 shares of its common stock at an average price of $15.85 per share, exclusive of fees and commissions, or $75 million in the aggregate, which completed a previous 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 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, such as our “Reserve Now, Pay Later” payment option, which allows 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 8: *Income Taxes”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report, we received a final notice regarding a MAP resolution agreement for the 2014 through 2016 tax years in January 2024, which we subsequently accepted in February 2024. During the three months ended June 30, 2024, we made a payment to the IRS of $141 million, inclusive of estimated interest, and during the three months ended September 30, 2024, we made various state tax payments totaling $18 million, inclusive of estimated interest, related to this audit settlement. We anticipate a competent authority refund from a foreign jurisdiction and certain federal tax benefits, net of certain state tax payments due, associated with this IRS audit settlement which will be substantially settled in the next twelve months, resulting in an estimated net cash inflow of $50 million to $60 million, inclusive of related interest.

Additionally, as discussed in “Note 8: *Income Taxes”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report, we received a final notice regarding a MAP settlement 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 this IRS audit settlement.

In addition, in January 2021, we received an issue closure notice from HMRC in the U.K. 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. Although the ultimate timing for resolution of this matter is uncertain, any future payments required would negatively impact our operating cash flows.

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 for the nine months ended September 30, 2024 and 2023, as reflected in our unaudited condensed consolidated statements of cash flows, are summarized in the following table:

*(in millions)*

| Net cash provided by (used in): | Nine months ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $147 | $254 |
| Investing activities | (51) | (47) |
| Financing activities | (55) | (97) |

During the nine months ended September 30, 2024, our primary source of cash was from operations, while our primary use of cash was from financing activities (including repurchases of our outstanding common stock at an aggregate cost of $25 million under our existing share repurchase program, payment of withholding taxes on net share settlements of our equity awards of $17 million, and financing costs related to the issuance of our Term Loan B Facility of $7 million) and investing activities (including capital expenditures of $51 million incurred during the nine months ended September 30, 2024). This use of cash was funded with cash and cash equivalents and operating cash flows during the period.

During the nine months ended September 30, 2023, our primary source of cash was from operations, while our primary use of cash was from financing activities (including repurchases of our outstanding common stock at an aggregate cost of $75 million under a previous share repurchase program and payment of withholding taxes on net share settlements of our equity awards of $14 million) and investing activities (including capital expenditures of $47 million incurred during the nine months ended September 30, 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 nine months ended September 30, 2024, decreased by $107 million when compared to the same period in 2023, primarily due to a decrease in working capital of $144 million, partially offset by an improvement in net income (loss) of $26 million and an increase in non-cash items of $11 million, primarily due to an increase in stock-based compensation expense. The decrease in working capital was driven primarily by a net increase in U.S. federal and various state tax payments of $80 million, combined with a decrease of $13 million in our income tax provision, both related to the IRS audit settlements, discussed above, when compared to the same period in 2023. Also contributing to the decrease in working capital was a decrease in deferred merchant payables, reflecting the timing of when cash is received from travelers and then remitted to experiences operators. In addition, changes in working capital related to accounts receivable and accounts payable were due to the timing of customer payments and vendor payments, respectively, and contributed to the fluctuation in working capital.

Net cash used in investing activities for the nine months ended September 30, 2024 increased by $4 million when compared to the same period in 2023, due to an increase in capital expenditures across the business.

Net cash used in financing activities for the nine months ended September 30, 2024 decreased by $42 million when compared to the same period in 2023, primarily due to a decrease in net cash used to purchase shares of our common stock under share repurchase programs of $50 million, partially offset by financing costs related to the issuance of our Term Loan B Facility of $7 million in the third quarter of 2024.

### Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

There have been no material changes outside the normal course of business to our contractual obligations and commercial commitments since December 31, 2023. As of September 30, 2024, other than our contractual obligations and commercial commitments, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC. Refer to “*Liquidity and Capital Resources”* in Part II, Item 7. —Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report for a discussion of our contractual obligations and commercial commitments.

### 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), contractual disputes (including breach of a covenant or disagreements as to interpretation), 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.

Refer to “Note 8: *Income Taxes”* and “Note 9: *Commitments and Contingencies”* in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on other potential contingencies, including ongoing audits by the IRS and various other domestic and foreign tax authorities, and other tax and legal matters.

The Organization for Economic Cooperation and Development (“OECD”) has been developing its “two pillar” project to address certain perceived tax challenges arising from digitalization of the economy. Many countries have implemented or are in the process of implementing the Pillar Two legislation, which will result in significant changes to the international taxation system under which our current income tax obligations are determined. Pillar Two of this project calls for a minimum income tax rate on corporations of 15% and has begun to be implemented by an increasing number of countries. The OECD and implementing countries are expected to continue to offer further guidance on the impact of Pillar Two on their respective local corporate income tax rules, however, such impact for the Company 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. The June 2024 extended deadline has since expired, thereby enabling countries to introduce new unilateral digital service taxes. For example, in June 2024, Canada enacted tax legislation related to digital services taxes, which requires retrospective application back to January 1, 2022, resulting in a one-time charge of $4 million during the second quarter of 2024, reflected in general and administrative expenses on our unaudited condensed consolidated statement of operations. We will continue to monitor these developments to determine the financial impact to the Company. During the three and nine months ended September 30, 2024, we recorded $7 million and $18 million, respectively, of digital service tax, while during the three and nine months ended September 30, 2023, we recorded $6 million and $13 million, respectively, of digital service tax to general and administrative expense on our unaudited condensed consolidated statements 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 unaudited condensed consolidated balance sheet, which was not material as of September 30, 2024. As of September 30, 2024, $556 million of our cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested.

## Market risk

As filed, 2,617 characters.

There has been no material change in our market risk profile during the nine months ended September 30, 2024 since December 31, 2023. For additional information about our market risk profile, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A. in Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.

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, outstanding debt related to the 2026 Senior Notes and Term Loan B Facility, 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 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.

We expect that we will continue to increase our operations internationally. Our exposure to potentially volatile movements in foreign currency exchange rates will increase as we increase our operations in international markets. The economic impact of 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 as a result of geopolitical tensions resulting from Russia’s invasion of Ukraine, the escalating conflict in the Middle East, as well as increased cyberattacks, military conflicts and sanctions. 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.

## Controls and procedures

As filed, 1,400 characters.

### Evaluation of Disclosure Controls and Procedures

As of September 30, 2024, our management, with the participation of our Chief Executive Officer 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 Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of September 30, 2024, 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 Securities and Exchange Commission’s, or 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 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 September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,049 characters.

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent reports with the SEC for a description of the risks and uncertainties which could materially and adversely affect our business, financial condition, cash flows and results of operations, and the trading price of our common stock. The risks and uncertainties described 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. During the quarter ended September 30, 2024, there were no material changes in our risk factors from those disclosed in Part 1, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Filed Nov 6, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-122267. Last ingested by Listed: Nov 3, 2026, 19:00 ET. No prices; not investment advice.