美國
證券交易委員會
華盛頓特區20549
表格
截至2024年6月30日季度結束
或
在從 己 到
委員會檔案編號
（依照公司章程規定指定的登記證券名稱）
|
|
(註冊人主要行政辦公室的地址，包括郵政編碼)
註冊人電話號碼（包括區號）： (
根據法案第12(b)條規定註冊的證券：
請在核選方框中指示：公司（1）是否已按照1934年證券交易法第13或15(d)條的規定在過去12個月內提交了所有要提交的報告（或該公司被要求提交這些報告的較短時間段），並且（2）過去90天內是否受到過這些申報要求的約束。
請以勾選標記表示，登記者在過去12個月內（或登記者被要求提交這類文件的縮短期間）按照424條的規定提交了每一個應提交的互動數據文件。
請以√表示登記者是大型快速申報人、加速申報人、非快速申報人、較小的報告公司或新興成長公司。請參閱《交易所法》第2條中對“大型快速申報人”、“加速申報人”、“較小的報告公司”和“新興成長公司”的定義。 12b-這些板塊的定義位於交易所法規則2條中。
大型加速檔案提交者 ☐ | 加速歸檔者☐ | 較小的報告公司 | 新興成長公司 |
如果一家新興成長型公司，請用勾選標記表示該申報人已選擇不使用根據證交所法案13(a)條款提供的任何新的或修訂過的財務會計準則的延長過渡期。 ◻
請以核選標記表示，是否根據交易所法規第1202條的定義，登記人為空殼公司？ 是
提到戰央譯討語賣会社中所清楚的本公司晘力資產。
A輪融資 | 協議 | ||||
自由貓途鷹控股公司普通股 | | | |||
I-3
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Balance Sheets (Continued)
(unaudited)
| September 30, |
| December 31, |
| ||
2024 | 2023 |
| ||||
amounts in millions |
| |||||
Liabilities and Equity | ||||||
Current liabilities: | ||||||
Deferred merchant and other payables | $ | |
| | ||
Current portion of debt, including $ |
| |
| — | ||
Deferred revenue |
| |
| | ||
Series A Preferred Stock liability (note 6) | | — | ||||
Accrued liabilities and other current liabilities |
| |
| | ||
Total current liabilities |
| |
| | ||
Long-term debt, including $ |
| |
| | ||
Deferred income tax liabilities |
| |
| | ||
Financial instrument liabilities (note 4) | — | | ||||
Series A Preferred Stock liability (note 6) | — | | ||||
Other liabilities |
| |
| | ||
Total liabilities |
| |
| | ||
Equity: | ||||||
Series A common stock, $ | | | ||||
Series B common stock, $ | ||||||
Series C common stock, $ | ||||||
Additional paid-in capital | | | ||||
Accumulated other comprehensive earnings (loss), net of taxes |
| — |
| ( | ||
Retained earnings (deficit) |
| ( |
| ( | ||
Total stockholders' equity |
| ( |
| ( | ||
Noncontrolling interests in equity of subsidiaries |
| |
| | ||
Total equity |
| |
| | ||
Commitments and contingencies (note 8) | ||||||
Total liabilities and equity | $ | |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-4
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended |
| Nine months ended |
| |||||||
September 30, |
| September 30, |
| |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| ||
amounts in millions, except |
| |||||||||
per share amounts |
| |||||||||
$ | | | | | ||||||
Operating costs and expenses: | ||||||||||
Operating expense, including stock-based compensation (note 2) |
| |
| | | | ||||
Selling, general and administrative, including stock-based compensation (note 2) |
| |
| | | | ||||
Depreciation and amortization |
| |
| | | | ||||
Impairment of goodwill and intangible assets | — | | — | | ||||||
Restructuring and other related reorganization costs (benefits) | ( | | | | ||||||
| |
| | | | |||||
Operating income (loss) |
| |
| ( | | ( | ||||
Other income (expense): | ||||||||||
Interest expense |
| ( |
| ( | ( | ( | ||||
Dividend and interest income | | | | | ||||||
Realized and unrealized gains (losses) on financial instruments, net | | ( | | ( | ||||||
Other, net |
| ( |
| ( | ( | ( | ||||
| ( |
| ( | ( | ( | |||||
Earnings (loss) before income taxes |
| |
| ( | | ( | ||||
Income tax (expense) benefit |
| ( |
| | ( | ( | ||||
Net earnings (loss) |
| |
| ( | ( | ( | ||||
Less net earnings (loss) attributable to noncontrolling interests |
| |
| ( | | ( | ||||
Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ | |
| ( | ( | ( | ||||
Basic net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3): | $ | | ( | ( |
| ( | ||||
Diluted net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3): | $ | | ( | ( |
| ( | ||||
See accompanying notes to condensed consolidated financial statements.
I-5
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Earnings (Loss)
(unaudited)
Three months ended | Nine months ended | |||||||||
September 30, | September 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
amounts in millions | ||||||||||
Net earnings (loss) | $ | | ( | ( | ( | |||||
Other comprehensive earnings (loss), net of taxes: | ||||||||||
Foreign currency translation adjustments |
| | ( | | ( | |||||
Credit risk on fair value debt instruments gains (loss) | | ( | — | ( | ||||||
Reclassification adjustments included in net income (loss), net of tax | — | — | | — | ||||||
Other comprehensive earnings (loss) |
| | ( | | ( | |||||
Comprehensive earnings (loss) |
| | ( | | ( | |||||
Less comprehensive earnings (loss) attributable to the noncontrolling interests |
| | ( | | ( | |||||
Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders | $ | | ( | ( | ( | |||||
See accompanying notes to condensed consolidated financial statements.
I-6
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine months ended |
| |||||
September 30, |
| |||||
2024 | 2023 |
| ||||
amounts in millions |
| |||||
Cash flows from operating activities: |
|
|
|
| ||
Net earnings (loss) | $ | ( |
| ( | ||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities | ||||||
Depreciation and amortization |
| |
| | ||
Impairment of goodwill and intangible assets | — | | ||||
Stock-based compensation |
| |
| | ||
Realized and unrealized (gains) losses on financial instruments, net | ( | | ||||
Deferred income tax expense (benefit) |
| ( |
| ( | ||
Non-cash interest expense | | | ||||
Other charges (credits), net |
| |
| | ||
Changes in operating assets and liabilities | ||||||
Current and other assets |
| ( |
| ( | ||
Payables and other liabilities |
| |
| | ||
Net cash provided (used) by operating activities |
| |
| | ||
Cash flows from investing activities: | ||||||
Capital expended for property and equipment, including capitalized website development |
| ( |
| ( | ||
Net cash provided (used) by investing activities |
| ( |
| ( | ||
Cash flows from financing activities: | ||||||
Borrowings of debt | | — | ||||
Repayments of debt |
| ( |
| — | ||
Payment of withholding taxes on net share settlements of equity awards |
| ( |
| ( | ||
Shares repurchased by subsidiary | ( | ( | ||||
Other financing activities, net | ( | ( | ||||
Net cash provided (used) by financing activities |
| ( |
| ( | ||
Effect of foreign currency exchange rates 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 | $ | |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-7
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Statements of Equity
(unaudited)
Stockholders' equity | ||||||||||||||||||
Accumulated | Noncontrolling | |||||||||||||||||
Additional | other | interest in | ||||||||||||||||
Common Stock | paid-in | comprehensive | Retained | equity of | Total | |||||||||||||
Series A | Series B | Series C | capital | earnings (loss) | earnings (deficit) | subsidiaries | equity | |||||||||||
amounts in millions | ||||||||||||||||||
Balance at January 1, 2024 |
| $ | |
| — |
| — |
| |
| ( |
| ( |
| |
| | |
Net earnings (loss) | — | — | — | — |
| — |
| ( |
| |
| ( | ||||||
Other comprehensive earnings (loss) | — | — | — | — |
| |
| — |
| |
| | ||||||
Stock-based compensation | — | — | — | |
| — |
| — |
| |
| | ||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( |
| — |
| — |
| — |
| ( | ||||||
Shares issued by subsidiary | — | — | — | ( | — | — | | — | ||||||||||
Shares repurchased by subsidiary | — | — | — | ( | — | — | ( | ( | ||||||||||
Balance at September 30, 2024 | $ | |
| — |
| — |
| |
| — |
| ( |
| |
| | ||
Stockholders' equity | ||||||||||||||||||
Accumulated | Noncontrolling | |||||||||||||||||
Additional | other | interest in | ||||||||||||||||
Common Stock | paid-in | comprehensive | Retained | equity of | Total | |||||||||||||
Series A | Series B | Series C | capital | earnings (loss) | earnings (deficit) | subsidiaries | equity | |||||||||||
amounts in millions | ||||||||||||||||||
Balance at June 30, 2024 | $ | | — | — | | ( | ( | | | |||||||||
Net earnings (loss) | — | — | — | — | — | | | | ||||||||||
Other comprehensive earnings (loss) | — | — | — | — | | — | | | ||||||||||
Stock-based compensation | — | — | — | | — | — | | | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( | — | — | — | ( | ||||||||||
Balance at September 30, 2024 | $ | | — | — | | — | ( | | | |||||||||
See accompanying notes to condensed consolidated financial statements.
I-8
LIBERTY TRIPADVISOR HOLDINGS, INC.
Condensed Consolidated Statements of Equity (continued)
(unaudited)
Stockholders' equity | ||||||||||||||||||
Accumulated | Noncontrolling | |||||||||||||||||
Additional | other | interest in | ||||||||||||||||
Common Stock | paid-in | comprehensive | Retained | equity of | Total | |||||||||||||
Series A | Series B | Series C | capital | earnings (loss) | earnings (deficit) | subsidiaries | equity | |||||||||||
amounts in millions | ||||||||||||||||||
Balance at January 1, 2023 |
| $ | |
| — |
| — |
| |
| |
| ( |
| |
| | |
Net earnings (loss) | — | — | — | — |
| — |
| ( |
| ( |
| ( | ||||||
Other comprehensive earnings (loss) | — | — | — | — |
| ( |
| — |
| ( |
| ( | ||||||
Stock-based compensation | — | — | — | |
| — |
| — |
| |
| | ||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( | — | — | — | ( | ||||||||||
Shares issued by subsidiary | — | — | — | ( | — | — | | — | ||||||||||
Shares repurchased by subsidiary | — | — | — | | ( | ( | ||||||||||||
Balance at September 30, 2023 | $ | |
| — |
| — |
| |
| — |
| ( |
| |
| | ||
Stockholders' equity | ||||||||||||||||||
| ||||||||||||||||||
Accumulated | Noncontrolling |
| ||||||||||||||||
Additional | other | interest in |
| |||||||||||||||
Common Stock | paid-in | comprehensive | Retained | equity of | Total |
| ||||||||||||
Series A | Series B | Series C | capital | earnings (loss) | earnings (deficit) | subsidiaries | equity |
| ||||||||||
amounts in millions |
| |||||||||||||||||
Balance at June 30, 2023 | $ | |
| — |
| — |
| |
| |
| ( |
| |
| | ||
Net earnings (loss) | — | — | — | — | — | ( | ( | ( | ||||||||||
Other comprehensive earnings (loss) | — | — | — | — | ( | — | ( | ( | ||||||||||
Stock-based compensation | — | — | — | | — | — | | | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( | — | — | — | ( | ||||||||||
Shares issued by subsidiary | — | — | — | ( | — | — | | — | ||||||||||
Balance at September 30, 2023 | $ | |
| — |
| — |
| |
| — |
| ( |
| |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-9
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of Liberty TripAdvisor Holdings, Inc. and its controlled subsidiaries (collectively, "TripCo," "Consolidated TripCo," the "Company," "we," "us," or “our,” unless the context otherwise requires). TripCo does not have any operations outside of its controlling interest in its subsidiary Tripadvisor, Inc. (“Tripadvisor”).
The accompanying (a) condensed consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with the current period presentation, none of which were material to the presentation of the accompanying unaudited condensed consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2023 as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Under the accounting guidance in Accounting Standards Codification Topic 205, Presentation of Financial Statements (“ASC 205”), when preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As a result of the considerations articulated below, we believe there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
In applying the accounting guidance in ASC 205, TripCo considered its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its conditional and unconditional obligations due over the twelve months after the date that its financial statements were issued. The Company specifically considered the redemption of the Series A Preferred Stock and TripCo’s
As disclosed in note 6, TripCo’s
On February 9, 2024, TripCo’s board of directors authorized TripCo to engage in discussions with respect to a potential transaction (“Potential Transaction”), pursuant to which all of the outstanding stock of TripCo and all of the outstanding common stock and Class B common stock of Tripadvisor, would be acquired concurrently for cash. The board of directors of Tripadvisor has formed a special committee comprised of independent and disinterested directors of the board of directors of Tripadvisor (“Special Committee”). TripCo and the Special Committee have ceased discussions with third parties with respect to a Potential Transaction. Strategic alternatives with respect to TripCo remain under consideration. In light of current circumstances, management’s plans do not alleviate the substantial doubt that the entity will continue as a going concern.
I-10
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) recognition and recoverability of goodwill, intangible and long-lived assets and (ii) accounting for income taxes to be its most significant estimates.
Tripadvisor and the Company were negatively impacted by the risks and uncertainties related to the COVID-19 pandemic and Tripadvisor’s 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 have seen elevated and fluctuating levels of inflation and decreases in discretionary spending patterns by consumers. If macroeconomic conditions deteriorate, consumer demand and spending may decline, Tripadvisor may not be able to pass on increased costs to its customers and any inability to navigate the macroeconomic environment could harm its 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, Tripadvisor’s financial results in the future.
Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel partner advertising investments, and therefore Tripadvisor’s revenue and operating profits, have also historically followed a seasonal pattern. Tripadvisor’s 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 Tripadvisor’s business mix, adverse economic conditions, or public health-related events, as well as other factors.
TripCo has entered into certain agreements, including the services agreement, the facilities sharing agreement and the tax sharing agreement, with Qurate Retail, Inc. (“Qurate Retail”) and/or Liberty Media Corporation (“Liberty Media”) (or certain of their subsidiaries). Pursuant to the services agreement (except as described below in respect to Gregory B. Maffei), Liberty Media provides TripCo with general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. TripCo reimburses Liberty Media for direct, out-of-pocket expenses incurred by Liberty Media in providing these services and TripCo pays a services fee to Liberty Media under the services agreement that is subject to adjustment semi-annually, as necessary.
Pursuant to the services agreement, in connection with Liberty Media’s employment arrangement with Gregory B. Maffei, TripCo’s Chairman, President and Chief Executive Officer, components of Mr. Maffei’s compensation will either be paid directly to him or reimbursed to Liberty Media, in each case, based on allocations among Liberty Media and the Service Companies set forth in the amended services agreement, currently set at
Under the facilities sharing agreement, TripCo shares office space with Liberty Media and related amenities at Liberty Media’s corporate headquarters in Englewood, Colorado.
I-11
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and TripCo and other agreements related to tax matters.
Under these agreements approximately $
(2) Stock-Based Compensation
TripCo - Equity Awards
TripCo has granted to certain of its directors and employees restricted stock units (“RSUs”) and stock options to purchase shares of TripCo common stock (collectively, “Awards”). TripCo measures the cost of employee services received in exchange for an equity classified Award based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and re-measures the fair value of the Award at each reporting date.
TripCo has calculated the GDFV for all of its equity classified options and any subsequent re-measurement of its liability classified options using the Black-Scholes-Merton model. TripCo estimates the expected term of the options based on historical exercise and forfeiture data. The volatility used in the calculation for options is based on the historical volatility of TripCo common stock. TripCo uses a
Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, the majority of which relates to Tripadvisor as discussed below:
Three months ended |
| Nine months ended |
| |||||||
September 30, |
| September 30, |
| |||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 |
| ||
amounts in millions |
| |||||||||
Operating expense | $ | | | | | |||||
Selling, general and administrative expense |
| |
| | |
| | |||
$ | |
| | |
| | ||||
Stock-based compensation expense related to Tripadvisor was $
TripCo - Outstanding Awards
As of September 30, 2024, there were
As of September 30, 2024, there were
I-12
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
During the nine months ended September 30, 2024, pursuant to an agreement among TripCo, Liberty Media and our CEO, TripCo granted a cash award equal to $
As of September 30, 2024, the total unrecognized compensation cost related to unvested Awards was approximately $
As of September 30, 2024, TripCo reserved
Tripadvisor Equity Grant Awards
The following table presents the number and WAEP of the Awards to purchase Tripadvisor common stock (“TRIP common stock”) granted to certain officers, employees and directors of Tripadvisor.
Weighted | |||||||||||
average | |||||||||||
TRIP | remaining | Aggregate | |||||||||
common stock | contractual | intrinsic | |||||||||
options | WAEP | life | value | ||||||||
in thousands | in years | in millions | |||||||||
Outstanding at January 1, 2024 |
| | $ | | |||||||
Granted |
| | $ | | |||||||
Exercised |
| ( | | ||||||||
Cancelled or expired | ( | $ | | ||||||||
Outstanding at September 30, 2024 |
| | $ | |
| $ | — | ||||
Exercisable at September 30, 2024 |
| | $ | |
| $ | — | ||||
Vested and expected to vest after September 30, 2024 |
| | $ | |
| $ | — | ||||
Tripadvisor’s stock options generally have a term of
Additionally, during the nine months ended September 30, 2024, Tripadvisor granted approximately
I-13
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
September 30, 2024 was $
As of September 30, 2024, the total unrecognized compensation cost related to Tripadvisor stock-based awards, substantially RSUs, was approximately $
(3) Earnings (Loss) Per Common Share (“EPS”)
Basic EPS is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding (“WASO”) for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Excluded from EPS for both of the three months ended September 30, 2024 and 2023 are
TripCo Common Stock | ||||||||
Three months ended | Nine months ended | |||||||
September 30, | September 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
number of shares in millions | ||||||||
Basic WASO |
| |
| |
| | | |
Potentially dilutive shares (1) |
| |
| |
| | | |
Diluted WASO |
| |
| |
| | | |
| (1) | Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive. |
(4) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any material recurring assets or liabilities measured at fair value that would be considered Level 3.
The Company’s assets and liabilities measured at fair value are as follows:
September 30, 2024 | December 31, 2023 |
| ||||||||||||
Quoted prices | Significant | Quoted prices | Significant |
| ||||||||||
in active | other | in active | other |
| ||||||||||
markets for | observable | markets for | observable |
| ||||||||||
identical assets | inputs | identical assets | inputs |
| ||||||||||
Description | Total | (Level 1) | (Level 2) | Total | (Level 1) | (Level 2) |
| |||||||
amounts in millions |
| |||||||||||||
Cash equivalents |
| $ | |
| |
| — |
| | | — | |||
Variable Prepaid Forward | $ | | — | | | — | | |||||||
TripCo Exchangeable Senior Debentures due 2051 | $ | |
| — |
| |
| | — | | ||||
Preferred Stock Derivative | $ | | — | | | — | | |||||||
I-14
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Tripadvisor generally classifies cash equivalents and marketable securities, if any, within Level 1 and Level 2 as it values these financial instruments using quoted market prices (Level 1) or alternative pricing sources (Level 2). 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.
The fair value of the Debentures is based on quoted market prices but the Debentures are not considered to be traded on “active markets.” Accordingly, they are reported in the foregoing table as Level 2 fair value.
On August 10, 2022, TripSPV, a wholly owned subsidiary of the Company, amended its variable prepaid forward (“VPF”) with a financial institution with respect to
As a result of the Repurchase Agreement, as described in note 6, TripCo determined the Series A Preferred Stock required liability treatment and needed to be bifurcated between a debt host and derivative (the “Preferred Stock Derivative”). The Preferred Stock Derivative was recorded at fair value upon the reclassification from temporary equity. Changes in the fair values of the VPF and Preferred Stock Derivative are recognized in realized and unrealized gains (losses) on financial instruments in the condensed consolidated statements of operations. The Preferred Stock Derivative is included in accrued liabilities and other current liabilities in the condensed consolidated balance sheet as of September 30, 2024 and in financial instrument liabilities in the condensed consolidated balance sheet as of December 31, 2023.
The fair value of the VPF and Preferred Stock Derivative were derived from a Black-Scholes-Merton model using observable market data as the significant inputs.
Other Financial Instruments
Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, and long-term debt (excluding the Debentures). With the exception of debt, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our condensed consolidated balance sheets. See note 5 for a description of the fair value of the Company’s fixed rate debt. See note 6 for a description of the fair value of the debt host component of the Company’s Preferred Stock Derivative.
Realized and Unrealized Gains (Losses) on Financial Instruments
Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:
Three months ended | Nine months ended | ||||||||
September 30, | September 30, | ||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||
amounts in millions | |||||||||
Variable Prepaid Forward | $ | | — | | | ||||
TripCo Exchangeable Senior Debentures due 2051 | ( |
| ( |
| ( |
| ( | ||
Preferred Stock Derivative | | | | | |||||
Tripadvisor foreign currency forward contracts | ( | | ( | | |||||
$ | |
| ( |
| |
| ( | ||
The Company has elected to account for the Debentures using the fair value option. Changes in the fair value of the Debentures and financial instrument assets and liabilities recognized in the condensed consolidated statement of operations are primarily due to market factors primarily driven by changes in the fair value of the underlying shares of the financial instruments. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss). The change in the fair value of
I-15
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
the Debentures attributable to changes in the instrument specific credit risk was a gain of $
(5) Debt
Outstanding debt at September 30, 2024 and December 31, 2023 is summarized as follows:
September 30, | December 31, |
| ||||
2024 | 2023 |
| ||||
amounts in millions |
| |||||
TripCo Exchangeable Senior Debentures due 2051 | $ | | | |||
TripCo variable prepaid forward | | | ||||
Tripadvisor Credit Facility | — | — | ||||
Tripadvisor Term Loan B Facility due 2031 | | — | ||||
Tripadvisor Senior Notes due 2025 | — | | ||||
Tripadvisor Convertible Senior Notes due 2026 | | | ||||
Deferred financing costs | ( | ( | ||||
Total consolidated TripCo debt | |
| | |||
Debt classified as current |
| ( |
| — | ||
Total long-term debt | $ | |
| | ||
TripCo Exchangeable Senior Debentures due 2051
On March 25, 2021, TripCo issued $
TripCo Variable Prepaid Forward
The VPF matures in November 2025. At maturity, the accreted loan amount due will be approximately $
Tripadvisor Credit Agreement
Tripadvisor is party to a credit agreement with a group of lenders, initially entered into in June 2015 and, amended and restated in June 2023, which, among other things, provides for a $
I-16
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
“Credit Facility”). The Credit Facility has a maturity date of June 29, 2028 (unless, on any date that is
| ● | Does not change the aggregate amount of revolving commitments available at $ |
| ● | Makes certain adjustments to the definition of “Consolidated EBITDA”; |
| ● | Increases the Available Amount by the portion of excess cash flow and asset sale, casualty and condemnation mandatory prepayments declined by lenders under the Term Loan B Facility, which may be used to make restricted payments and investments; |
| ● | Adds a separate dollar basket not to exceed the greater of $ |
| ● | Adds a separate “ratio debt” basket for additional indebtedness up to |
| ● | Adds customary extension and modification and refinancing facility provisions. |
The Amended Credit Agreement includes certain customary restrictions on the ability of Tripadvisor and its subsidiaries to, among other things, incur additional indebtedness, grant additional liens, and make investments, acquisitions, dispositions, distributions, and other payments, with certain exceptions as more specifically described in the Amended Credit Agreement. The Amended Credit Agreement contains customary events of default and modifies the cross-default provision so that the Term Loan B Facility includes a customary cross-acceleration event of default with the Credit Facility under the Amended Credit Agreement. If an event of default occurs and is continuing, then, among other things, the lenders under the Credit Facility and/or the Term Loan B Facility, as applicable, may declare any outstanding Credit Facility and/or Term Loan B Facility obligations, as applicable, under the Amended Credit Agreement to be immediately due and payable and exercise their rights and remedies against the collateral. The obligations under the Amended Credit Agreement are secured by substantially all assets, whether personal, tangible or intangible, of Tripadvisor and the Subsidiary Loan Parties as granted under the Security Documents. Any term not otherwise defined herein shall have the meaning ascribed to it in the Amended Credit Agreement.
Credit Facility
As of September 30, 2024 and December 31, 2023, Tripadvisor had
In connection with the Amended Credit Agreement, Tripadvisor incurred lender fees and other debt financing costs of $
Term Loan B Facility
On July 8, 2024, under the Amended Credit Agreement, Tripadvisor issued a $
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LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
interest rate on the Term Loan B Facility was
In connection with the issuance of the Term Loan B Facility, Tripadvisor incurred $
Capped Call Transactions
In connection with the issuance of the
The Capped Calls are considered indexed to Tripadvisor’s own stock and are considered equity under GAAP. The Capped Calls are reported as a reduction to additional paid-in-capital and noncontrolling interest in equity of subsidiaries within stockholders’ equity as of September 30, 2024 and December 31, 2023.
Fair Value of Debt
As of September 30, 2024, Tripadvisor estimated the fair value of its Term Loan B Facility to be approximately $
(6) Redeemable Preferred Stock
On March 15, 2020, TripCo and Gregory B. Maffei entered into an investment agreement (the “Investment Agreement”) with Certares Holdings LLC, Certares Holdings (Blockable) LLC and Certares Holdings (Optional) LLC with respect to an investment in TripCo’s Series A Preferred Stock, which was later assigned to Certares LTRIP LLC (“Certares” or the “Purchaser”). Pursuant to the assigned Investment Agreement, on March 26, 2020, TripCo issued
On March 22, 2021, TripCo and Certares entered into a stock repurchase agreement (the “Repurchase Agreement”). Pursuant to the Repurchase Agreement, on March 29, 2021, TripCo repurchased
I-18
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
of Series A Preferred Stock from Certares, representing
There were
Priority
The Series A Preferred Stock ranks senior to the shares of TripCo common stock, with respect to dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of TripCo. The Series A Preferred Stock has a liquidation value equal to the sum of (i) $
Voting and Convertibility
Holders of Series A Preferred Stock are not entitled to any voting powers, except as otherwise specified in the Certificate of Designations or as required by Delaware law. Shares of Series A Preferred Stock are not convertible into TripCo common stock.
Dividends
Dividends on each share of Series A Preferred Stock accrue on a daily basis at a rate of
Redemption
The Company is required to redeem for cash shares of Series A Preferred Stock on the earlier of (i) the first business day after the fifth anniversary of March 26, 2020, or (ii) subject to certain exceptions, a change in control of TripCo. The “Redemption Price” in a mandatory redemption will equal the greater of (i) the sum of the liquidation value on the redemption date, plus all unpaid dividends accrued since the last dividend date, and (ii) the product of the (x) initial liquidation value, multiplied by (y) an accretion factor (determined based on a formula set forth in the Certificate of Designations) with respect to the TRIP common stock, less (z) the aggregate amount of all dividends paid in cash or shares of Eligible Common Stock from March 26, 2020 through the applicable redemption date. As a result of the redemption date, the Series A Preferred Stock is classified as a current liability in the condensed consolidated balance sheet as of September 30, 2024.
Put Right
Following March 26, 2021, during certain periods, the Purchaser had the right to cause TripCo to redeem all of the outstanding shares of Series A Preferred Stock at the Redemption Price for, at the election of TripCo, cash, shares of Eligible Common Stock, shares of TRIP common stock or any combination of the foregoing, subject to certain limitations (the “Put Option”). The Company evaluated the Put Option as an embedded derivative and determined it was not required to be bifurcated. As a result of the Repurchase Agreement, Certares has permanently waived the Put Option.
TripCo Call Right
Pursuant to the Repurchase Agreement, beginning March 27, 2024, TripCo has the option, from time to time, to call
I-19
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
and repurchase any and all of the outstanding shares of the Series A Preferred Stock at the optional repurchase price (the "Call Right"), which is the greater of (x) the sum of the liquidation value of a share of Series A Preferred Stock as of the optional repurchase date plus all unpaid dividends accrued on such share from the most recent dividend payment date through such optional repurchase date and (y) (i) the initial liquidation value of such share of Series A Preferred Stock as of the original issue date multiplied by an accretion factor with respect to the TRIP common stock (determined based on the Accretion Factor formula set forth in the Certificate of Designations as modified such that the Reference Stock VWAP is determined as of the date that is
Restriction on transfer of Series A Preferred Stock
Subject to exceptions contained in the Investment Agreement and the Repurchase Agreement, the shares of Series A Preferred Stock generally are non-transferable; provided that TripCo has agreed not to unreasonably withhold its consent to certain transfers of up to
Recognition
Prior to the partial redemption, as the Series A Preferred Stock was redeemable and the redemption triggers were outside of TripCo’s control, the Company was required to classify the shares outside of permanent equity. The Company calculated the carrying value of the Series A Preferred Stock pursuant to the Redemption Price calculation, and any changes in the carrying value of the Series A Preferred Stock were recorded directly to retained earnings. Immediately prior to the partial redemption, the Company recognized a $
(7) Stockholders’ Equity
Preferred Stock
TripCo’s preferred stock is issuable, from time to time, with such powers, designations, preferences and relative, participating, optional or other rights and qualifications, limitations or restrictions thereof, as shall be stated and expressed in a resolution or resolutions providing for the issue of such preferred stock adopted by TripCo’s board of directors. See note 6 for a description of the Series A Preferred Stock.
Common Stock
LTRPA entitles the holders to
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LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
except as otherwise required by applicable law, entitles the holder to
Subsidiary Purchases of Common Stock
During the nine months ended September 30, 2024, Tripadvisor repurchased
On September 7, 2023, Tripadvisor’s board of directors authorized the repurchase of $
(8) Commitments and Contingencies
Litigation
In the ordinary course of business, the Company and its subsidiaries are parties to legal proceedings and claims arising out of our operations. These matters may relate to claims involving patent and intellectual property rights (including alleged privacy, infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition and consumer matters), defamation and other claims. Although it is reasonably possible that the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.
As of September 30, 2024, Tripadvisor had an accrual in the amount of $
Income Tax Matters
Tripadvisor 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 2014 through 2016 tax years. The assessment was related to certain transfer pricing arrangements with foreign subsidiaries, for which Tripadvisor had requested competent authority assistance under the Mutual Agreement Procedure (“MAP”) for the 2014 through 2016 tax years. In January 2024, Tripadvisor received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which it accepted in February 2024. During the three and nine months ended September 30, 2024, Tripadvisor recorded an income tax benefit of $
I-21
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
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 $
As of December 31, 2023, Tripadvisor had recorded $
In addition, as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, Tripadvisor received a NOPA from the IRS for the 2009 through 2011 tax years relating to certain transfer pricing arrangements with its foreign subsidiaries. In response, Tripadvisor also requested competent authority assistance under MAP for the 2009 through 2011 tax years. In January 2023, Tripadvisor received a final notice from the IRS regarding a MAP resolution agreement for the 2009 through 2011 tax years, which Tripadvisor accepted in February 2023. In the first quarter of 2023, Tripadvisor recorded additional income tax expense as a discrete item, inclusive of interest, of $
(9) Segment Information
TripCo, through its ownership interests in Tripadvisor, is primarily engaged in the online commerce industries. TripCo identifies its reportable segments as (A) those operating segments that represent 10% or more of its consolidated annual revenue, annual adjusted operating income before depreciation and amortization (“Adjusted OIBDA”) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of TripCo’s annual pre-tax earnings.
TripCo evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, and revenue or sales per customer equivalent. In addition, TripCo reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.
We have
| ● | Brand Tripadvisor – This segment includes Tripadvisor-branded hotels revenue, which consists of hotel meta revenue, primarily click-based advertising revenue, and hotel business to business revenue, which includes primarily subscription-based advertising and hotel sponsored placements revenue; Media and advertising revenue, which consists primarily of display-based advertising revenue; Tripadvisor experiences and dining revenue, which consists of intercompany (intersegment) revenue related to affiliate marketing commissions earned 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; as well as other revenue, |
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LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| which consists of cruises, alternative accommodation rentals, flights and rental car revenue. |
| ● | Viator – Tripadvisor provides information and services for consumers to research and book tours, activities and experiences in popular travel destinations through Viator. |
| ● | TheFork – Tripadvisor provides information and services for consumers to research and book restaurants in popular travel destinations through this dedicated restaurant reservations offering. |
The segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by the Brand Tripadvisor segment to both the Viator and TheFork segments. These intersegment transactions are recorded by each segment at amounts that 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 Corporate and eliminations in the tables below.
Performance Measures
Tripadvisor disaggregates revenue from contracts with customers into major products/revenue sources. Tripadvisor has determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue is recognized primarily at a point in time for all reported segments.
Three months ended | Nine months ended | ||||||||||
|
| September 30, | September 30, | ||||||||
|
| 2024 |
| 2023 | 2024 |
| 2023 | ||||
Major Products/Revenue Sources: |
| amounts in millions | |||||||||
Brand Tripadvisor | |||||||||||
Tripadvisor-branded hotels | $ | | | | |||||||
Media and advertising | | | | ||||||||
Tripadvisor experiences and dining | | | | ||||||||
Other | | | | ||||||||
Total Brand Tripadvisor | | | |||||||||
Viator |
|
| | |
| | | ||||
TheFork | | | | | |||||||
Intersegment eliminations | ( | ( | ( | ( | |||||||
Total Revenue |
| $ | | | | | |||||
The following table provides information about the balances of accounts receivable and contract assets, net of allowance for credit losses, from contracts with customers:
|
| September 30, 2024 |
| December 31, 2023 | ||
amounts in millions | ||||||
Accounts receivable |
| $ |
| |||
Contract assets |
|
| |
| | |
Total |
| $ |
| |||
Accounts receivable are recognized when the right to consideration becomes unconditional. Contract assets are rights
I-23
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
to consideration in exchange for services that Tripadvisor has 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.
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 Tripadvisor presents as deferred revenue on its consolidated balance sheets, including amounts that are refundable. As of January 1, 2024, Tripadvisor had $
For segment reporting purposes, TripCo defines Adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses (excluding stock-based compensation), adjusted for specifically identified non-recurring transactions. TripCo believes this measure is an important indicator of the operational strength and performance of its businesses, by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results, and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, equity settled liabilities (including stock-based compensation), separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. TripCo generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.
Adjusted OIBDA is summarized as follows:
Three months ended September 30, | Nine months ended September 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
amounts in millions | ||||||||||
Brand Tripadvisor | $ | | | | | |||||
Viator | | | | ( | ||||||
TheFork | | ( | | ( | ||||||
Corporate and eliminations | ( | ( | ( | ( | ||||||
Consolidated TripCo | $ | | | | | |||||
In addition, we do not report assets, capital expenditures and related depreciation expense by segment as our Chief Operating Decision Maker (“CODM”) does not use this information to evaluate operating segments. Accordingly, we do not regularly provide such information by segment to our CODM.
I-24
LIBERTY TRIPADVISOR HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:
Three months ended | Nine months ended | |||||||||
September 30, | September 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
amounts in millions | ||||||||||
Adjusted OIBDA |
| $ | |
| |
| |
| | |
Stock-based compensation |
| ( |
| ( | ( |
| ( | |||
Depreciation and amortization |
| ( |
| ( | ( |
| ( | |||
Impairment of goodwill and intangible assets | — | ( | — | ( | ||||||
Legal reserves and settlements(1) | — | — | ( | — | ||||||
Restructuring and other related reorganization (costs) benefits (2) | | ( | ( | ( | ||||||
Non-recurring expenses (3) | ( | — | ( | ( | ||||||
Operating income (loss) | | ( | | ( | ||||||
Interest expense |
| ( |
| ( | ( |
| ( | |||
Dividend and interest income | | | | | ||||||
Realized and unrealized gains (losses) on financial instruments, net | | ( | | ( | ||||||
Other, net |
| ( |
| ( | ( |
| ( | |||
Earnings (loss) before income taxes | $ | |
| ( | |
| ( | |||
| (1) | See discussion in note 8 related to a $ |
| (2) | During the third quarter of 2023, Tripadvisor initiated a restructuring and reduced global headcount. Tripadvisor expects the majority of remaining unpaid restructuring costs as of September 30, 2024 to be disbursed during 2024. |
| (3) | Tripadvisor expensed $ |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business and marketing strategies; the impacts of the coronavirus pandemic (“COVID-19”); improvements in global travel, related spending and revenue; new products and service offerings; the impact of metasearch and search engines’ results placement and algorithms; changes in global economic conditions; consumer demand; increased inflation; our projected sources and uses of cash; anticipated debt obligations; our ability to continue as a going concern; strategic alternatives with respect to our company; statements regarding the carrying value of our intangible assets; fluctuations in interest rates and foreign exchange rates; and the anticipated impact of certain contingent liabilities related to tax rules and other matters arising in the ordinary course of business. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but such statements necessarily involve risks and uncertainties and there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:
| ● | our ability to obtain cash in amounts sufficient to service our financial obligations and other commitments due to the fact we are a holding company and our ability to continue as a going concern; |
| ● | our ability to access the cash that Tripadvisor, Inc. (“Tripadvisor”) generates from its operating activities; |
| ● | the ability of our Company and Tripadvisor to obtain additional financing, or refinance our existing indebtedness, on acceptable terms; |
| ● | the existence of our 8% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), and its rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders; |
| ● | our ability to realize the full value of our intangible assets; |
| ● | weak economic conditions or declines or interruptions in the worldwide travel industry, including health concerns (including COVID-19 or other pandemics and epidemics), natural disasters, cyber-attacks, technology system failures, regional hostilities, wars, terrorist attacks, civil or political unrest or other events outside Tripadvisor’s control; |
| ● | Tripadvisor’s ability to attract a significant number of visitors and cost-effectively convert these visitors into revenue-generating consumers; |
| ● | failure of internet search engines and application marketplaces to continue to prominently display links to Tripadvisor’s websites; |
| ● | Tripadvisor’s performance marketing efficiency and the general effectiveness of its advertising and marketing efforts; |
| ● | reduction in spending by advertisers on Tripadvisor’s platforms or the loss of Tripadvisor’s significant travel partners; |
| ● | Tripadvisor’s failure to maintain, protect or enhance its brands; |
| ● | Tripadvisor’s strategy may be unsuccessful, may expose it to additional risks, or may not achieve its expected benefits; |
| ● | declines or disruptions in the economy in general and in the travel industry in particular; |
| ● | failure of Tripadvisor to effectively compete in the global environment in which it operates; |
| ● | Tripadvisor’s failure to adapt to technological developments or industry trends, including artificial intelligence; |
| ● | the ability of Tripadvisor to innovate and provide products, services and features that are useful to consumers; |
| ● | Tripadvisor’s potential for prioritizing rapid innovation and consumer experience over short-term financial results; |
| ● | the ability of Tripadvisor to maintain a quality of traffic in its network to provide value to its travel partners; |
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| ● | real or perceived inaccuracies of the assumptions and estimates and data Tripadvisor relies on to calculate certain of its key metrics; |
| ● | the ability of Tripadvisor to hire, retain and engage the highly skilled work force on which it relies; |
| ● | risks associated with the composition of Tripadvisor’s work force and Tripadvisor’s ability to manage those risks; |
| ● | disruptions resulting from any acquisitions, investments, significant commercial arrangements and/or new business strategies; |
| ● | risks due to Tripadvisor operating in many jurisdictions inside and outside the U.S.; |
| ● | claims, lawsuits, government investigations and other proceedings to which Tripadvisor is regularly subject, whether in the ordinary course of business or otherwise; |
| ● | the ability of Tripadvisor to protect its intellectual property from copying or use by others; |
| ● | the impact of green house gas emissions on global climate change and its expected impacts on travel, including the world’s transportation infrastructure and tourist destinations; |
| ● | risks associated with environmental, social, and governance responsibilities; |
| ● | risks due to Tripadvisor’s processing, storage and use of personal information and other data; |
| ● | risks associated with the facilitation of payments from consumers, including fraud and compliance with evolving rules and regulations and reliance on third parties; |
| ● | risks resulting from system security issues, data protection breaches, cyberattacks and system outage issues; |
| ● | risks associated with evolving regulations, guidance and practices on the use of “cookies” and similar tracking technologies; |
| ● | Tripadvisor’s indebtedness and the resulting impacts on its business and financial condition; |
| ● | limitations imposed by the various covenants in Tripadvisor’s credit facilities and indenture; |
| ● | risks related to the 2026 Convertible Senior Notes (defined in note 5 to the accompanying condensed consolidated financial statements) and the associated capped calls; |
| ● | Tripadvisor’s ability to meet its publicly announced guidance or other expectations about its business and future operating results; |
| ● | fluctuation of Tripadvisor’s financial results; |
| ● | factors that determine Tripadvisor’s effective income tax rate; |
| ● | changes in tax laws that affect Tripadvisor or the examination of Tripadvisor’s tax positions; |
| ● | changes in the tax treatment of companies engaged in e-commerce; |
| ● | challenges by tax authorities in the jurisdictions where Tripadvisor operates; |
| ● | fluctuation in foreign currency exchange rates which affect Tripadvisor; and |
| ● | risks associated with our stock price being disproportionately affected by the results of operations of Tripadvisor and developments in its business. |
For additional risk factors, please see Part II, Item 1A. of this Quarterly Report, Part II, Item 1A. of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, Part II, Item 1A. of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, and Part I, Item 1A. Risk Factors of the Annual Report on Form 10-K for the year ended December 31, 2023. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.
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 condensed consolidated financial statements and the notes thereto.
Overview
The accompanying financial statements and the other information herein refer to Liberty TripAdvisor Holdings, Inc. and its controlled subsidiaries as “TripCo,” “Consolidated TripCo,” the “Company,” “us,” “we” and “our” unless the context otherwise requires. We own an approximate 21% economic interest and 57% voting interest in Tripadvisor as of
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September 30, 2024. All significant intercompany accounts and transactions have been eliminated in the accompanying condensed consolidated financial statements.
TripCo has several obligations due within twelve months that cause substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. See further discussion in note 1 to the accompanying condensed consolidated financial statements and “Liquidity and Capital Resources” below.
Trends
The online travel industry in which Tripadvisor operates is large, highly dynamic and competitive. Current trends affecting Tripadvisor’s overall business and segments, including uncertainties that may impact its ability to execute on its objectives and strategies, are described below. 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, Tripadvisor’s financial results in the future.
Prior to Google introducing changes to its search engine results page, Tripadvisor generated a significant amount of direct traffic from search engines, including Google, through strong search engine optimization (“SEO”) performance across all segments. Tripadvisor believes its 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 its business, most notably within its hotel meta offering within the 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, Tripadvisor is focused on driving a greater percentage of its bookings from direct channels. Tripadvisor is doing this by continuing to focus on increasing its brand recognition and improving the user experience across products on its 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. Tripadvisor is 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 partners, particularly in Europe. Given the competitive positioning of Tripadvisor’s businesses relative to the attractive growth prospects in the experiences and restaurant categories, Tripadvisor expects to continue to invest in these categories across the business and, in particular, within the Viator and TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.
Due to recent goodwill and trademark impairments related to the Brand Tripadvisor reporting unit (formerly Tripadvisor Core reporting unit), the fair values of such intangible assets do not significantly exceed their respective carrying values. TripCo will continue to monitor Tripadvisor’s current business performance versus the current and updated long-term forecasts, among other relevant considerations, to determine if the carrying value of its assets (including Goodwill and Trademarks) is appropriate. Future outlook declines in revenue, cash flows, or other factors could result in a sustained decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material.
Recent Developments
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, in August 2023, Tripadvisor received a Notice of Proposed Adjustment from the IRS for the 2014 through 2016 tax years relating to certain transfer pricing arrangements with its foreign subsidiaries. In response, Tripadvisor requested competent authority assistance under Mutual Agreement Procedure (“MAP”) for the 2014 through 2016 tax years. In January 2024, Tripadvisor received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which it accepted in February 2024. During the three and nine months ended September 30, 2024, Tripadvisor 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
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on the condensed consolidated statements of operations. During the three months ended June 30, 2024, Tripadvisor made a payment to the IRS of $141 million, inclusive of interest, and during the three months ended September 30, 2024, Tripadvisor made various state tax payments totaling $18 million, inclusive of estimated interest, related to this settlement. Tripadvisor anticipates 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. See note 8 to the accompanying condensed consolidated financial statements for further information regarding potential material contingencies related to ongoing audits regarding income taxes.
Results of Operations—Consolidated—September 30, 2024 and 2023
General. We provide in the tables below information regarding our consolidated Operating Results and Other Income and Expense.
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2024 | 2023 | 2024 | 2023 |
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amounts in millions |
| |||||||||
Revenue |
|
|
|
|
|
|
|
| ||
Brand Tripadvisor | $ | 255 |
| 290 | 745 |
| 813 | |||
Viator | 270 | 245 | 655 | 576 | ||||||
TheFork |
| 49 |
| 42 | 133 |
| 115 | |||
Intersegment eliminations | (42) | (44) | (109) | (106) | ||||||
Total revenue |
| 532 |
| 533 | 1,424 |
| 1,398 | |||
Operating expense |
| 107 | 99 | 313 | 287 | |||||
Selling, general and administrative expense |
| 307 | 309 | 872 | 872 | |||||
Stock-based compensation |
| 31 |
| 25 | 93 |
| 74 | |||
Depreciation and amortization |
| 21 |
| 21 | 63 |
| 63 | |||
Impairment of goodwill and intangible assets | — | 1,025 | — | 1,025 | ||||||
Restructuring and other related reorganization costs (benefits) | (1) | 18 | 1 | 18 | ||||||
Operating income (loss) | 67 |
| (964) | 82 |
| (941) | ||||
Other income (expense): | ||||||||||
Interest expense | (19) | (17) | (53) | (50) | ||||||
Dividend and interest income | 13 | 13 | 39 | 36 | ||||||
Realized and unrealized gains (losses) on financial instruments, net | 3 | (8) | 12 | (1) | ||||||
Other, net | (2) | (2) | (6) | (4) | ||||||
(5) | (14) | (8) | (19) | |||||||
Earnings (loss) before income taxes | 62 | (978) | 74 | (960) | ||||||
Income tax (expense) benefit | (27) | 14 | (84) | (63) | ||||||
Net earnings (loss) | $ | 35 | (964) | (10) | (1,023) | |||||
Adjusted OIBDA | $ | 119 |
| 125 | 257 |
| 242 | |||
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Revenue. Brand Tripadvisor revenue decreased $35 million and $68 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year. The components of Brand Tripadvisor revenue are detailed as follows:
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amounts in millions | ||||||||||
Tripadvisor-branded hotels | $ | 151 | 181 | 460 | 524 | |||||
Media and advertising | 40 | 38 | 114 | 110 | ||||||
Tripadvisor experiences and dining (1) | 51 | 55 | 135 | 138 | ||||||
Other | 13 | 16 | 36 | 41 | ||||||
Total Brand Tripadvisor | $ | 255 | 290 | 745 | 813 | |||||
Tripadvisor-branded hotels revenue decreased $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 Tripadvisor’s hotel meta revenue and, to a lesser extent, a decrease in hotel business to business revenue, as Tripadvisor transitions from a sales-led model to a self-service model. The decrease in Tripadvisor’s 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 rates, particularly in the U.S. The decrease in Tripadvisor’s hotel meta revenue during the nine months ended September 30, 2024, when compared to the same period in 2023, was driven by declines in U.S. hotel meta revenue and, to a lesser extent, 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 consists of revenue from display-based advertising (or “media advertising”) across Tripadvisor’s platform. Media and advertising revenue increased $2 million and $4 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in overall advertising campaigns and pricing.
Tripadvisor experiences and dining revenue includes intercompany (intersegment) revenue and external revenue generated from Tripadvisor’s restaurant service offerings. The intercompany revenue consists 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 is eliminated on a consolidated basis. 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 Tripadvisor moves 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 Tripadvisor’s 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 Tripadvisor moves 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 includes alternative accommodation rentals revenue, in addition to click-based advertising and display-based advertising revenue from 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, compared to the same periods in 2023, primarily due to a decline in alternative accommodation rentals revenue, as Tripadvisor continues to strategically de-emphasize this offering.
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Viator revenue increased $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. Tripadvisor continues to believe that Viator is also 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.
TheFork revenue increased $7 million and $18 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, driven by increased consumer demand for dining in Europe, including increased bookings and pricing. In addition, Tripadvisor estimates 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.
Operating expense. Operating expense increased $8 million and $26 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023, primarily due to cost of revenue increases of $4 million and $15 million, respectively. 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 the Viator segment in direct correlation with an 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 the Viator segment, as noted above, as well as increased direct revenue generation costs related to data center costs and media production costs in the Brand Tripadvisor segment. Additionally, technology and content costs increased $4 million and $11 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 in the Brand Tripadvisor and Viator segments, in support of product development, and in addition, increased licensing costs.
Selling, general and administrative. Selling, general and administrative expense decreased $2 million and remained flat for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year. The decrease for the three months ended September 30, 2024, compared to the same period in the prior year, was primarily driven by an $8 million decrease in Brand Tripadvisor’s overall marketing costs, partially offset by a $4 million increase in overall marketing costs in the Viator segment, in order to capture consumer demand, including increased investment within the Viator segment to focus on growing market share, acquiring new customers, and driving brand awareness.
For the nine months ended September 30, 2024, when compared to the same period in the prior year, a $28 million decrease in overall marketing costs in the Brand Tripadvisor segment was offset by a $21 million increase in overall marketing costs in the Viator segment, and a $10 million accrual for the potential settlement of a regulatory related matter during the first quarter of 2024 (as discussed in note 8 to the accompanying condensed consolidated financial statements).
Operating Income (Loss). Operating income increased $1,031 million and $1,023 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year, due to the impairments recorded to goodwill and intangible assets during the three months ended September 30, 2023, as well as the above explanations.
Adjusted OIBDA. To provide investors with additional information regarding our financial results, we also disclose Adjusted OIBDA, which is a non-GAAP financial measure. We define Adjusted OIBDA as Operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, restructuring, acquisition and other related costs and impairment charges. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our business and make decisions about our resources. We believe this is an important indicator of the operational strength and performance of our businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. Accordingly, Adjusted OIBDA should be considered
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in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles.
The following table provides a reconciliation of Operating income (loss) to Adjusted OIBDA.
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2024 | 2023 | 2024 | 2023 | |||||||
amounts in millions | ||||||||||
Operating income (loss) | $ | 67 | (964) | 82 | (941) | |||||
Stock-based compensation |
| 31 | 25 | 93 | 74 | |||||
Depreciation and amortization | 21 | 21 | 63 | 63 | ||||||
Legal reserves and settlements (1) | — | — | 14 | — | ||||||
Impairments of goodwill and intangible assets | — | 1,025 | — | 1,025 | ||||||
Restructuring and other related reorganization costs (benefits) (2) | (1) | 18 | 1 | 18 | ||||||
Non-recurring expenses (3) | 1 | — | 4 | 3 | ||||||
Adjusted OIBDA | $ | 119 |
| 125 | 257 | 242 | ||||
| (1) | See discussion in note 8 to the accompanying condensed consolidated financial statements related to a $10 million potential regulatory matter. During the second quarter of 2024 Tripadvisor recorded a one-time charge of $4 million to general and administrative, including stock-based compensation on the condensed consolidated statement of operations, resulting from legislation enacted 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 any liability subsequent to April 1, 2024 is included within Adjusted OIBDA. |
| (2) | During the third quarter of 2023, Tripadvisor initiated a restructuring and reduced global headcount. Tripadvisor expects the majority of remaining unpaid restructuring costs as of September 30, 2024 to be disbursed during 2024. |
| (3) | Tripadvisor expensed $1 million and $4 million of transaction costs during the three and nine months ended September 30, 2024, respectively, and $3 million of transaction costs during the nine months ended September 30, 2023, to selling, general and administrative, including stock-based compensation on the condensed consolidated statement of operations. Tripadvisor considers such costs to be non-recurring in nature. |
Adjusted OIBDA is summarized as follows:
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2024 | 2023 | 2024 | 2023 |
| ||||||
amounts in millions |
| |||||||||
Brand Tripadvisor | $ | 87 |
| 111 | 248 | 279 | ||||
Viator | 30 | 17 | 13 | (15) | ||||||
TheFork | 5 | (1) | 5 | (14) | ||||||
Corporate |
| (3) |
| (2) | (9) | (8) | ||||
Consolidated TripCo | $ | 119 |
| 125 | 257 | 242 | ||||
Consolidated Adjusted OIBDA decreased $6 million and increased $15 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year. Brand Tripadvisor Adjusted OIBDA decreased $24 million and $31 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year, while Adjusted OIBDA margin decreased 4% and 1% during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. The decline in Adjusted OIBDA was primarily due to a decrease in revenue, as noted above, and to a lesser extent, a decrease in the
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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 OIBDA 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.
Viator Adjusted OIBDA improved $13 million and $28 million, while Adjusted OIBDA margin improved 4% and 5% during the three and nine months ended September 30, 2024, respectively, when compared to the corresponding periods in 2023, primarily due to increased leverage as Tripadvisor scales the business and drives a greater number of bookings from more profitable repeat customers. These improvements were partially offset by Tripadvisor’s 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 Tripadvisor’s 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 OIBDA. The improvements in Adjusted OIBDA margin were primarily due to a decrease in selling and marketing costs as a percent of revenue.
TheFork Adjusted OIBDA improved $6 million and $19 million, while Adjusted OIBDA margin improved 12% and 16% during the three and nine months ended September 30, 2024, respectively, when compared to the corresponding period in the prior year. The improvements in Adjusted OIBDA were primarily due to increases in revenue, as noted above, and lower personnel and overhead costs. The improvements in Adjusted OIBDA margin were primarily due to lower personnel and overhead costs as a percent of revenue.
Corporate Adjusted OIBDA includes TripCo level selling, general and administrative expenses. Corporate Adjusted OIBDA loss remained relatively flat for the three and nine months ended September 30, 2024, when compared to the same periods in the prior year.
Impairment of goodwill and intangible assets. TripCo recorded goodwill impairments of $820 million and trademark impairments of $205 million during the nine months ended September 30, 2023, related to the Brand Tripadvisor reporting unit.
Restructuring and other related reorganization costs (benefits). Tripadvisor incurred restructuring and other related reorganization benefits of $1 million and costs of $1 million during the three and nine months ended September 30, 2024, respectively, and $18 million during the three and nine months ended September 30, 2023. These costs (benefits) consisted primarily of employee severance and related benefits.
Interest expense. Interest expense increased $2 million and $3 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year, primarily due to Tripadvisor’s issuance of the Term Loan B Facility in July 2024, which increased Tripadvisor’s cost of capital.
Dividend and interest income. Dividend and interest income remained flat and increased $3 million during the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year. The increase for the nine months ended September 30, 2024 was primarily due to an increase in the average amount of cash invested.
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Realized and unrealized gains (losses) on financial instruments, net. Realized and unrealized gains (losses) on financial instruments, net are comprised of changes in the fair value of the following:
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| 2024 |
| 2023 |
| 2024 |
| 2023 | ||
amounts in millions | |||||||||
Variable Prepaid Forward | $ | 9 | — | 15 | 3 | ||||
TripCo Exchangeable Senior Debentures due 2051 | (8) |
| (11) |
| (22) |
| (26) | ||
Preferred Stock Derivative | 3 | 2 | 20 | 21 | |||||
Tripadvisor foreign currency forward contracts | (1) | 1 | (1) | 1 | |||||
$ | 3 |
| (8) |
| 12 |
| (1) | ||
The changes in these accounts are primarily due to market factors and changes in the fair value of the underlying stocks or financial instruments to which these related. Realized and unrealized gains on financial instruments, net increased $11 million and $13 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year. The increased unrealized gains in the three and nine months ended September 30, 2024 compared to the same periods in the prior year were primarily due to increases in unrealized gains related to the variable prepaid forward (defined in note 4 of the accompanying condensed consolidated financial statements) of $9 million and $12 million, respectively, and decreases in unrealized losses related to the TripCo Exchangeable Senior Debentures due 2051 of $3 million and $4 million, respectively.
Other, net. Other, net expense remained flat and increased $2 million for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in the prior year. The increase for the nine months ended September 30, 2024, compared to the same period in the prior year, was primarily driven by losses on disposals of assets and a loss on early extinguishment of debt at Tripadvisor, partially offset by a decrease in foreign exchange losses at Tripadvisor.
Income taxes. Earnings (loss) before income taxes, income tax (expense) benefit, and the effective tax rates for the three and nine months ended September 30, 2024 and 2023 are summarized below:
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amounts in millions | |||||||||
Earnings (loss) before income taxes | $ | 62 |
| (978) | 74 |
| (960) | ||
Income tax (expense) benefit | $ | (27) |
| 14 | (84) |
| (63) | ||
Effective tax rate | 44% | 1% | 114% | (7)% | |||||
For the three months ended September 30, 2024, the Company’s tax rate was higher than the expected federal tax rate of 21% primarily due to unfavorable stock-based compensation tax effects. For the three months ended September 30, 2023, the Company’s tax rate was lower than the expected federal tax rate of 21% primarily due to goodwill impairments that are not deductible for tax purposes and unfavorable stock-based compensation tax effects. For the nine months ended September 30, 2024, the Company’s tax rate was higher than the expected federal tax rate of 21% primarily due to Tripadvisor’s IRS settlement on its 2014-2016 transfer pricing audit (see note 8 to the accompanying condensed consolidated financial statements). For the nine months ended September 30, 2023, the Company’s tax rate was lower than the expected federal tax rate of 21% primarily related to goodwill impairments that are not deductible for tax purposes, and Tripadvisor’s settlement with the IRS on its 2009-2011 transfer pricing audit and changes in unrecognized tax benefits resulting from the IRS settlement.
Net earnings (loss). We had net income of $35 million and net losses of $964 million for the three months ended September 30, 2024 and 2023, respectively, and net losses of $10 million and $1,023 million for the nine months ended September 30, 2024 and 2023, respectively. The changes in net earnings (loss) were the result of the above described fluctuations in our revenue and expenses.
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Liquidity and Capital Resources
As of September 30, 2024, substantially all of our cash and cash equivalents consist of cash on hand in global financial institutions, money market funds and marketable securities with maturities of 90 days or less at the date of purchase.
The following are potential sources of liquidity: available cash balances, proceeds from asset sales, monetization of our investments, outstanding or anticipated debt facilities, debt and equity issuances, and dividend and interest receipts.
As of September 30, 2024, TripCo had a cash and cash equivalents balance of $1,127 million. Approximately $1,112 million of the cash balance, at September 30, 2024, is held at Tripadvisor. Although TripCo has a 57% voting interest in Tripadvisor, Tripadvisor is a separate public company with a significant non-controlling interest, as TripCo has only a 21% economic interest in Tripadvisor. Even though TripCo controls Tripadvisor through its voting interest and board representation, decision making with respect to using Tripadvisor’s cash balances must consider Tripadvisor’s minority holders. Accordingly, any potential distributions of cash from Tripadvisor to TripCo would generally be on a pro rata basis based on economic ownership interests. Covenants in Tripadvisor’s debt instruments also restrict the payment of dividends and cash distributions to stockholders.
As of September 30, 2024, $216 million of the Tripadvisor cash and cash equivalents balance were held by foreign subsidiaries, with approximately 36% located in the United Kingdom. As of September 30, 2024, the significant majority of Tripadvisor’s cash was denominated in U.S. dollars. As of September 30, 2024, $556 million of Tripadvisor’s cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested. 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 Cuts and Jobs 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 condensed consolidated balance sheet, which was not material as of September 30, 2024.
Credit Facility
As of September 30, 2024, Tripadvisor is party to a credit agreement, which, among other things, provides for a $500 million revolving credit facility with a maturity date of June 29, 2028 (the “Credit Facility”). As of September 30, 2024 and December 31, 2023, Tripadvisor had no outstanding borrowings. The Credit Facility, among other things, requires Tripadvisor 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. While there can be no assurance that Tripadvisor will be able to meet the total net leverage ratio covenant, based on its current projections, Tripadvisor does not believe there is a material risk it will not remain in compliance throughout the next twelve months.
On July 8, 2024, Tripadvisor amended its Credit Facility, which among other things, provides for a new $500 million term loan B credit facility maturing July 8, 2031, with an interest rate based on the secured overnight financing rate plus 2.75% (the “Term Loan B Facility”). 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.
As of September 30, 2024, Tripadvisor was in compliance with its debt covenants.
Tax 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 Tripadvisor is not expected to be material at this time. Tripadvisor will continue to monitor developments to determine any potential impact of Pillar Two in the countries in which it operates.
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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 the condensed consolidated statement of operations. Tripadvisor will continue to monitor these developments to determine the financial impact. During the three and nine months ended September 30, 2024, Tripadvisor recorded $7 million and $18 million, respectively, of digital service tax, while during the three and nine months ended September 30, 2023, Tripadvisor recorded $6 million and $13 million, respectively, of digital service tax to general and administrative expense on the condensed consolidated statements of operations.
Nine months ended |
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| |||||
2024 | 2023 |
| ||||
amounts in millions |
| |||||
Cash flow information |
|
|
|
| ||
Tripadvisor cash provided (used) by operating activities | $ | 147 | 254 | |||
Corporate cash provided (used) by operating activities | (8) | (6) | ||||
Net cash provided (used) by operating activities | $ | 139 |
| 248 | ||
Tripadvisor cash provided (used) by investing activities | $ | (51) | (47) | |||
Corporate cash provided (used) by investing activities | — | — | ||||
Net cash provided (used) by investing activities | $ | (51) |
| (47) | ||
Tripadvisor cash provided (used) by financing activities | $ | (55) | (97) | |||
Corporate cash provided (used) by financing activities | — | — | ||||
Net cash provided (used) by financing activities | $ | (55) |
| (97) | ||
During the nine months ended September 30, 2024, Tripadvisor’s primary uses of cash were $51 million of capital expended for property and equipment, $25 million of share repurchases and $17 million related to payments of withholding taxes on net share settlement of equity awards.
The projected use of TripCo’s corporate cash will primarily be to pay fees to Liberty Media Corporation (“Liberty Media”) for providing certain services pursuant to the services agreement and the facilities sharing agreement that TripCo entered into with Liberty Media or certain of its subsidiaries (not expected to exceed approximately $4 million annually), payment of dividends on the Series A Preferred Stock (unless added to the liquidation preference or paid in shares of LTRPA), interest expense on TripCo’s 0.50% Exchangeable Senior Debentures due 2051 (the “Debentures”) (approximately $2 million annually), and to pay any other corporate level expenses. Debt service costs accrue on the VPF borrowing as described in note 5 to the accompanying condensed consolidated financial statements.
TripCo has several obligations due within the next twelve months. The Series A Preferred Stock is required to be redeemed for cash on March 27, 2025. As of September 30, 2024, the Redemption Price (as defined in note 6 to the accompanying condensed consolidated financial statements) of the Series A Preferred Stock was $266 million. In addition, the Debentures may be redeemed by TripCo, in whole or in part, on or after March 27, 2025. Holders of the Debentures also have the right to require TripCo to purchase their Debentures on March 27, 2025. As of September 30, 2024, the fair value of the Debentures was $309 million. If all holders exchanged their Debentures on March 27, 2025 and upon the redemption of the Company’s Series A Preferred Stock, TripCo would not have sufficient cash on hand to cover these
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obligations as of September 30, 2024. We note that Tripadvisor has sufficient cash to cover these obligations, but TripCo does not have ready access to Tripadvisor’s cash.
On February 9, 2024, TripCo’s board of directors authorized TripCo to engage in discussions with respect to a potential transaction (“Potential Transaction”), pursuant to which all of the outstanding stock of TripCo and all of the outstanding common stock and Class B common stock of Tripadvisor, would be acquired concurrently for cash. The board of directors of Tripadvisor has formed a special committee comprised of independent and disinterested directors of the board of directors of Tripadvisor (“Special Committee”). TripCo and the Special Committee have ceased discussions with third parties with respect to a Potential Transaction. Strategic alternatives with respect to TripCo remain under consideration. In light of current circumstances, management’s plans do not alleviate the substantial doubt that the entity will continue as a going concern.
Tripadvisor believes that its available cash and cash equivalents will be sufficient to fund Tripadvisor’s foreseeable working capital requirements, capital expenditures, existing business growth initiatives, debt and interest obligations, lease commitments, tax-related payments and other financial commitments through at least the next twelve months. Tripadvisor’s future capital requirements may also include capital needs for acquisitions, and/or other expenditures in support of its business strategy, and may potentially reduce Tripadvisor’s cash balance and/or require Tripadvisor to borrow under the Credit Facility or to seek other financing alternatives.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities and the conduct of operations by Tripadvisor in different foreign countries. Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.
We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future requirements, market conditions and other factors. We expect to manage our exposure to interest rates by maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We expect to achieve this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to maturity, (ii) issuing variable rate debt with appropriate maturities and interest rates, and (iii) entering into interest rate swap arrangements when we deem appropriate. As of September 30, 2024, our debt is comprised of the following amounts:
Variable rate debt | Fixed rate debt | |||||||||
Principal | Weighted avg | Principal | Weighted avg | |||||||
amount | interest rate | amount | interest rate | |||||||
amount in millions | ||||||||||
Tripadvisor |
| $ | 500 |
| 7.6% | 345 |
| 0.3% | ||
TripCo debt | $ | NA | NA | 385 |
| 1.0% | ||||
TripCo is exposed to foreign exchange rate fluctuations related primarily to the monetary assets and liabilities and the financial results of Tripadvisor’s foreign subsidiaries. Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S. dollars at period-end exchange rates, and the statements of operations are generally translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded in accumulated other comprehensive earnings (loss) as a separate component of stockholders’ equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period-end translations) or realized upon settlement of the transactions. Cash flows from our operations in foreign countries are translated at the average rate for the period. Accordingly, TripCo may experience economic loss and a negative impact on earnings and equity with
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respect to our holdings solely as a result of foreign currency exchange rate fluctuations. Tripadvisor enters into foreign currency forward contracts to manage its risk related to foreign currency exchange rates when it deems appropriate.
Item 4. Controls and Procedures
In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and its principal accounting and financial officer (the "Executives"), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company's disclosure controls and procedures were effective as of September 30, 2024 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
There has been no change in the Company's internal control over financial reporting that occurred during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
See note 8 to the accompanying condensed consolidated financial statements for information regarding legal proceedings.
Item 1A. Risk Factors
There are questions about our ability to continue operating as a going concern. As disclosed in note 1 to the accompanying condensed consolidated financial statements, we believe there is substantial doubt about our ability to continue as a going concern as a result of the required redemption for cash on March 27, 2025 of our 8% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) and the right of the holders of our 0.50% Exchangeable Senior Debentures due 2051 (the “Debentures”) to require us to purchase their Debentures on March 27, 2025. Although we are exploring alternatives to cover the obligations of the Series A Preferred Stock and Debentures, there can be no assurance that we will be able to enter into a transaction or find such an alternative, in which case we would be forced to cease operations. If we ceased operations, it is likely that our investors would lose their investment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended September 30, 2024, no shares of LTRPA and LTRPB were surrendered by our officers and employees to pay withholding taxes and other deductions in connection with the vesting or exercise of restricted stock, restricted stock units or options.
Item 5. Other Information
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Item 6. Exhibits
(a) | Exhibits |
Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):
Exhibit No. | Name | ||
31.1 | |||
31.2 | |||
32 | |||
101.INS | 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. | ||
101.SCH | Inline XBRL Taxonomy Extension Schema Document* | ||
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document* | ||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document* | ||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document* | ||
101.DEF | Inline XBRL Taxonomy Definition Document* | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
* Filed herewith
** Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LIBERTY TRIPADVISOR HOLDINGS, INC. | |||
Date: November 6, 2024 | By: | /s/ GREGORY B. MAFFEI | |
Gregory B. Maffei Chairman, President and Chief Executive Officer | |||
Date: November 6, 2024 | By: | /s/ BRIAN J. WENDLING | |
Brian J. Wendling Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||
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