☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒


	Three months ended						Nine months ended
	September 30,						September 30,						Three months ended March 31,
	2022			2021			2022			2021			2023			2022
Revenue (Note 3)	$	459			303		$	1,138		$	661		$	371		$	262

Costs and expenses:
Cost of revenue (1) (exclusive of depreciation and amortization as shown separately below)		32			23			85			54
Cost of revenue (exclusive of depreciation and amortization as shown separately below)														29			22
Selling and marketing (1)		234			148			591			343			219			141
Technology and content (1)		55			52			162			161			68			54
General and administrative (1)		45			37			114			121			48			40
Depreciation and amortization		23			27			73			85			21			25
Total costs and expenses		389			287			1,025			764			385			282
Operating income (loss)		70			16			113			(103	)		(14	)		(20	)
Other income (expense):
Interest expense		(11	)		(12	)		(33	)		(34	)		(11	)		(12	)
Interest income		4			—			7			1			11			1
Other income (expense), net		(1	)		(1	)		(4	)		(2	)		(1	)		(2	)
Total other income (expense), net		(8	)		(13	)		(30	)		(35	)		(1	)		(13	)
Income (loss) before income taxes		62			3			83			(138	)		(15	)		(33	)
(Provision) benefit for income taxes (Note 9)		(37	)		(2	)		(61	)		19
(Provision) benefit for income taxes (Note 8)														(58	)		(1	)
Net income (loss)	$	25		$	1		$	22		$	(119	)	$	(73	)	$	(34	)

Earnings (loss) per share attributable to common stockholders (Note 13):
Earnings (loss) per share attributable to common stockholders (Note 12):
Basic	$	0.18		$	0.01		$	0.16		$	(0.87	)	$	(0.52	)	$	(0.24	)
Diluted	$	0.17		$	0.01		$	0.15		$	(0.87	)	$	(0.52	)	$	(0.24	)
Weighted average common shares outstanding (Note 13):
Weighted average common shares outstanding (Note 12):
Basic		140			138			140			137			141			139
Diluted		146			144			144			137			141			139

(1) Includes stock-based compensation expense as follows (Note 11):
Cost of revenue	$	—		$	—		$	1		$	1
(1) Includes stock-based compensation expense as follows (Note 10):
Selling and marketing	$	3		$	4		$	9		$	13		$	4		$	3
Technology and content	$	9		$	12		$	27		$	35		$	10		$	9
General and administrative	$	10		$	13		$	28		$	40		$	9		$	10

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


	September 30,			December 31,
	2022			2021			March 31, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents (Note 4)	$	1,066		$	723		$	1,132		$	1,021
Accounts receivable and contract assets, net of allowance for credit losses of $28 and $28, respectively (Note 3)		205			142
Income taxes receivable (Note 9)		—			49
Accounts receivable and contract assets, net of allowance for credit losses of $24 and $28, respectively (Note 3)								210			205
Income taxes receivable (Note 8)								48			—
Prepaid expenses and other current assets		38			26			49			44
Total current assets		1,309			940			1,439			1,270
Property and equipment, net of accumulated depreciation of $512 and $460, respectively		195			215
Property and equipment, net of accumulated depreciation of $529 and $512, respectively								194			194
Operating lease right-of-use assets		28			42			24			27
Intangible assets, net of accumulated amortization of $197 and $202, respectively		55			65
Goodwill (Note 5)		803			843
Intangible assets, net of accumulated amortization of $200 and $198, respectively								49			51
Goodwill								825			822
Non-marketable investments (Note 4)		34			36			33			34
Deferred income taxes, net		51			54			70			78
Other long-term assets, net of allowance for credit losses of $10 and $10, respectively		90			94
Other long-term assets, net of allowance for credit losses of $10 and $10, respectively (Note 4, Note 8)								50			93
TOTAL ASSETS	$	2,565		$	2,289		$	2,684		$	2,569

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	67		$	27		$	34		$	39
Deferred merchant payables		240			113			311			203
Deferred revenue (Note 3)		51			36			81			44
Accrued expenses and other current liabilities (Note 6)		215			181
Income taxes payable (Note 8)								126			16
Accrued expenses and other current liabilities (Note 5)								211			231
Total current liabilities		573			357			763			533
Long-term debt (Note 7)		836			833
Long-term debt (Note 6)								837			836
Finance lease obligation, net of current portion		60			65			56			58
Operating lease liabilities, net of current portion		16			29			13			15
Deferred income taxes, net		1			1			1			1
Other long-term liabilities (Note 8)		266			215
Other long-term liabilities (Note 7)								206			265
Total Liabilities		1,752			1,500			1,876			1,708

Commitments and contingencies (Note 10)
Stockholders’ equity: (Note 12)
Commitments and contingencies (Note 9)
Stockholders’ equity: (Note 11)
Preferred stock, $0.001 par value		—			—			—			—
Authorized shares: 100,000,000
Shares issued and outstanding: 0 and 0, respectively
Shares issued and outstanding: 0 and 0
Common stock, $0.001 par value		—			—			—			—
Authorized shares: 1,600,000,000
Shares issued: 146,591,387 and 144,656,649, respectively
Shares outstanding: 127,746,773 and 125,812,035, respectively
Shares issued: 148,090,833 and 146,891,538, respectively
Shares outstanding: 129,246,219 and 128,046,924, respectively
Class B common stock, $0.001 par value		—			—			—			—
Authorized shares: 400,000,000
Shares issued and outstanding: 12,799,999 and 12,799,999, respectively
Additional paid-in capital		1,380			1,326			1,420			1,404
Retained earnings		263			241			188			261
Accumulated other comprehensive income (loss)		(108	)		(56	)		(78	)		(82	)
Treasury stock-common stock, at cost, 18,844,614 and 18,844,614 shares, respectively		(722	)		(722	)		(722	)		(722	)
Total Stockholders’ Equity		813			789			808			861
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,565		$	2,289		$	2,684		$	2,569

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


																										Three months ended March 31, 2023
																																								Accumulated
																														Class B				Additional						other
																										Common stock				common stock				paid-in			Retained			comprehensive			Treasury Stock
																										Shares		Amount		Shares		Amount		capital			earnings			income (loss)			Shares			Amount			Total
Balance as of December 31, 2022																											146,891,538	$	—		12,799,999	$	—	$	1,404		$	261		$	(82	)		(18,844,614	)	$	(722	)	$	861
Net income (loss)																																						(73	)											(73	)
Other comprehensive income (loss), net of tax																																									4									4
Issuance of common stock related to exercises of options and vesting of RSUs																											1,199,295		—						—															—
Withholding taxes on net share settlements of equity awards																																			(9	)														(9	)
Stock-based compensation																																			25															25
Balance as of March 31, 2023																											148,090,833	$	—		12,799,999	$	—	$	1,420		$	188		$	(78	)		(18,844,614	)	$	(722	)	$	808
	Nine months ended September 30, 2022
														Accumulated												Three months ended March 31, 2022
									Additional					other																										Accumulated
					Class B				paid-in			Retained		comprehensive																Class B				Additional						other
	Common stock				common stock				capital			earnings		income (loss)			Treasury Stock									Common stock				common stock				paid-in			Retained			comprehensive			Treasury Stock
	Shares		Amount		Shares		Amount										Shares			Amount			Total			Shares		Amount		Shares		Amount		capital			earnings			income (loss)			Shares			Amount			Total
Balance as of December 31, 2021		144,656,649	$	—		12,799,999	$	—	$	1,326		$	241	$	(56	)		(18,844,614	)	$	(722	)	$	789			144,656,649	$	—		12,799,999	$	—	$	1,326		$	241		$	(56	)		(18,844,614	)	$	(722	)	$	789
Net income (loss)													22											22														(34	)											(34	)
Other comprehensive income (loss), net of tax															(52	)								(52	)																(4	)								(4	)
Issuance of common stock related to exercises of options and vesting of RSUs		1,934,738		—						—														—			980,051		—						—															—
Withholding taxes on net share settlements of equity awards										(18	)													(18	)										(8	)														(8	)
Stock-based compensation										72														72											24															24
Balance as of September 30, 2022		146,591,387	$	—		12,799,999	$	—	$	1,380		$	263	$	(108	)		(18,844,614	)	$	(722	)	$	813
Balance as of March 31, 2022																											145,636,700	$	—		12,799,999	$	—	$	1,342		$	207		$	(60	)		(18,844,614	)	$	(722	)	$	767

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

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

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


	Nine months ended September 30,						Three months ended March 31,
	2022			2021			2023			2022
Operating activities:
Net income (loss)	$	22		$	(119	)	$	(73	)	$	(34	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		73			85			21			25
Stock-based compensation expense (Note 11)		65			89
Stock-based compensation expense (Note 10)								23			22
Deferred income tax expense (benefit)		8			(26	)		8			—
Provision for expected credit losses		3			1
Other, net		6			10			(1	)		4
Changes in operating assets and liabilities, net:
Accounts receivable and contract assets, prepaid expenses and other assets		(81	)		(131	)		(9	)		(45	)
Accounts payable, accrued expenses and other liabilities		78			30			(26	)		3
Deferred merchant payables		143			90			107			86
Income tax receivables/payables, net		106			3			48			1
Deferred revenue		17			11			37			24
Net cash provided by (used in) operating activities		440			43			135			86

Investing activities:
Capital expenditures, including capitalized website development		(41	)		(40	)		(16	)		(14	)
Other investing activities, net		4			(1	)
Net cash provided by (used in) investing activities		(37	)		(41	)		(16	)		(14	)

Financing activities:
Proceeds from issuance of 2026 Senior Notes, net of financing costs (Note 7)		—			340
Purchase of capped calls in connection with 2026 Senior Notes (Note 7)		—			(35	)
Proceeds from exercise of stock options		—			8
Payment of withholding taxes on net share settlements of equity awards		(18	)		(39	)		(9	)		(8	)
Payments of finance lease obligation and other financing activities, net		(5	)		(5	)
Payments of finance lease obligation								(2	)		(2	)
Net cash provided by (used in) financing activities		(23	)		269			(11	)		(10	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(37	)		(7	)		3			(4	)
Net increase (decrease) in cash, cash equivalents and restricted cash		343			264			111			58
Cash, cash equivalents and restricted cash at beginning of period		723			418			1,021			723
Cash, cash equivalents and restricted cash at end of period	$	1,066		$	682		$	1,132		$	781

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

NOTE 3: REVENUE RECOGNITION

We generate all our revenue from contracts with customers. We recognize revenue when we satisfy a performance obligation by transferring control of the promised services to a customer in an amount that reflects the consideration that we expect to receive in exchange for those services. When we act as an agent in the transaction, we recognize revenue for only our commission on the arrangement. We determine revenue recognition through the following steps:

(1) Identification of the contract, or contracts, with a customer

(2) Identification of the performance obligations in the contract

(3) Determination of the transaction price

(4) Allocation of the transaction price to the performance obligations in the contract

(5) Recognition of revenue when, or as, we satisfy a performance obligation

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a service (or a bundle of services) that is distinct. To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We have provided qualitative information about our performance obligations for our principal revenue streams discussed below. There was no significant revenue recognized in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively,~~ related to performance obligations satisfied in prior periods. We have applied a practical expedient and do not disclose the value of unsatisfied performance obligations that have an original expected duration of less than one year. The Company expects to complete its

performance obligations within one year from the initial transaction date. The value related to our remaining or partially satisfied performance obligations relates to subscription services that are satisfied over time or services that are recognized at a point in time, but not yet achieved. Our timing of services, invoicing and payments are discussed in more detail below and do not include a significant financing component. Our customer invoices are generally due 30 days from the time of invoicing.

The application of our revenue recognition policies and a description of our principal activities, organized by reportable segment, from which we generate our revenue, isare presented below.

Tripadvisor Core Segment

Tripadvisor-branded Hotels Revenue. Our largest source of Tripadvisor Core segment revenue is generated from click-based advertising onTripadvisor-branded websites, which ~~is our~~we refer to as hotel ~~auction (or hotel meta)~~meta revenue, ~~which~~and is primarily comprised of contextually-relevant booking links to our travel partners’ websites. Our click-based travel partners are predominantly online travel agencies, or OTAs, and hotels. Click-based advertising is generally priced on a cost-per-click, or ~~“CPC,”~~“CPC” basis, with payments from travel partners determined by the number of travelers who click on a link multiplied by the CPC rate for each specific click. CPC rates are determined in a dynamic, competitive auction process, where ~~our~~the travel partner ~~CPC~~ bids for rates and availability to be listed on our platform. When a CPC bid is submitted, the travel partner agrees to pay us the bid amount each time a traveler clicks on the link to that travel partner’s ~~websites.~~website. Bids can be submitted periodically – as often as daily – on a property-by-property basis. We record click-based advertising revenue as the click occurs and traveler leads are sent to the travel ~~partner websites~~partner’s website as our performance obligation is fulfilled at that time. Click-based revenue is generally billed to our travel partners ~~on a~~ monthly, ~~basis~~ consistent with the timing of the service. We also generate revenue from our cost-per-action, or ~~“CPA,”~~“CPA” model, which consists of contextually-relevant booking links to our travel partners’ websites which are advertised on our platform. We earn a commission from our travel partners, based on a pre-determined contractual commission rate, for each traveler who clicks to and books a hotel reservation on the travel ~~partners’~~partner's website, which results in a traveler stay. CPA revenue is billable only upon the completion of each traveler’s stay resulting from a hotel reservation. The travel partners provide the service to the travelers and we act as an agent under ~~ASC 606 – Revenue from Contracts with Customers (“ASC 606”).~~GAAP. Our performance obligation is complete at the time of the hotel reservation booking, and the commission earned is recognized upon booking, as we have no post-booking service obligations. We recognize this revenue net of an estimate of the impact of cancellations, using historical cancellation rates and current trends. Contract assets are recognized at the time of booking for commissions that are billable upon the completion of a traveler's stay. CPA revenue is generally billed to our travel partners monthly for traveler stays completed in that month.

In addition, we offer ~~hotel business~~business-to-business, or “B2B”, solutions to ~~business (“hotel B2B”) solutions,~~hotels, including subscription-based advertising to hotels, owners of B&Bs, and other specialty lodging properties. Our performance obligation is generally to enable subscribers to advertise their businesses on our platform, as well as to manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription-based advertising services are predominantly sold for a flat fee for a contracted period of time of one year or less and revenue is recognized on a straight-line basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription-based advertising services are generally billed at the inception of the service. When prepayments are received, we recognize deferred revenue initially on our ~~unaudited condensed~~ consolidated balance sheet for the amount of prepayment in excess of revenue recognized, until the performance obligation is satisfied. To a lesser extent, we offer travel partners the opportunity to advertise and promote their business through hotel sponsored

placements on our platform. This service is generally priced on a CPC basis, with payments from travel partners determined by the number of travelers who click on the sponsored link multiplied by the CPC rate for each specific click. CPC rates for hotel sponsored placements that our travel partners pay are generally based on bids submitted as part of an auction by our travel partners. When a CPC bid is submitted, the travel partner agrees to pay us the bid amount each time a traveler clicks on a link to ~~our~~the travel partner’s ~~websites.~~website. Bids may be submitted periodically – as often as daily – on a property-by-property basis. We record this click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner as our performance obligation is fulfilled at that time. Hotel sponsored placements revenue is generally billed to our travel partners monthly, consistent with the timing of the service.

Tripadvisor-branded Display and Platform ~~Revenue~~Revenue. . We offer travel partners the ability to promote their brands through display-basedadvertising, or sometimes referred to as “media advertising”, placements across our platform. Our display-based advertising clients are predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations. We also sell display-based advertising to OTAs and other travel related businesses, as well as to advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions, or ~~CPM,~~"CPM", basis. The performance obligation in our display-based advertising arrangements is to display a number of advertising impressions on our platform and we recognize revenue for impressions as they are delivered. Services are generally billed monthly. We have applied the practical expedient to measure progress toward completion, as we have the right to invoice the customer in an amount that directly corresponds with the value to the customer of our performance to date, which is measured based on impressions delivered.

Tripadvisor Experiences and Dining Revenue. We generate revenue from our experiences and restaurant service offerings on Tripadvisor-brandedwebsites and mobile apps. Tripadvisor receives intercompany (intersegment) revenue consisting of affiliate marketing commissions earned primarily from experience bookings and, to a lesser extent, restaurant reservation bookings, on

Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, which are eliminated on a consolidated basis. The performance obligations, timing of customer payments for our experiences and dining transactions, and methods of revenue recognition are consistent with the Viator ~~segment~~ and TheFork ~~segment, respectively,~~segments, as described below. In addition, Tripadvisor restaurant service offerings, or B2B ~~dining~~restaurant offerings, generate subscription fees for subscription-based advertising to our restaurant partners that allow restaurants to manage and promote their website URL, email address, phone number, special offers and other information related to their business, as well as access to certain online reservation management services, marketing analytic tools, and menu syndication services. As the performance obligation is to provide restaurants with access to these services over ~~the~~a subscription period, the subscription fee revenue is recognized over the ~~period of the~~ subscription ~~service~~period on a straight-line basis as efforts are expended evenly throughout the contract period. Subscription-based advertising services are generally billed at the inception of the service. When prepayments are received, we recognize deferred revenue initially on our ~~unaudited condensed~~ consolidated balance sheet for the amount of prepayment in excess of revenue recognized, until the performance obligation is satisfied. In addition, we offer restaurant partners the opportunity to advertise and promote their business through restaurant media advertising placements on our platform. This service is generally priced on a CPC basis, with payments from restaurant partners determined by the number of clicks by consumers ~~who click~~ on the sponsored link multiplied by the CPC rate for each specific click. CPC rates for media advertising placements agreed to by our restaurant partners are based on a pre-determined contractual rate. We record this click-based advertising revenue as the click occurs and diner leads are sent to the restaurant partner as our performance obligation is fulfilled at that time. Click-based revenue is generally billed to our restaurant partners monthly, consistent with the timing of the service.

Other Revenue. We ~~provide~~also offer travelers alternative accommodation rentals, cruises, flights, and rental carssolutions on our platforms which complement our end-to-end travel experience. Our alternative accommodation rentals offering provides information and services that allow travelers to research and book vacation and short-term rental properties, including full homes, condominiums, villas, beach properties, cabins and cottages. Our alternative accommodation rentals offering primarily generates revenue by offering individual property owners and managers the ability to list their properties on our platform thereby connecting with travelers through a free-to-list, commission-based option. These properties are listed on our Tripadvisor-branded websites and mobile apps, ~~such as~~and Tripadvisor's portfolio of travel media brands, including, www.flipkey.com, www.holidaylettings.co.uk, ~~www.housetrip.com,~~ www.niumba.com, and www.vacationhomerentals.com. We earn commissions associated with rental transactions through our free-to-list model from both the traveler and the property owner or manager. We provide post-booking ~~service~~services to the travelers, property owners and managers until the time the rental commences, which is the time the performance obligation is completed. Revenue from transaction fees is recognized at the time that the rental commences. WeUnder GAAP, we act as an agent ~~under ASC 606,~~ in the transactions, as we do not control any properties before the property owner provides the accommodation to the traveler and do not have inventory risk. We generally collect payment from the traveler at the time of booking, representing the amount due to the property owner or manager, as well as our commission. That portion of the payment representing our commission is recorded as deferred revenue on our ~~unaudited condensed~~ consolidated balance sheet until revenue is recognized, and that portion of the payment representing the amount due to the property owner is recorded as a deferred merchant ~~payables~~payable on our ~~unaudited condensed~~ consolidated balance sheet until payment is made to the property owner after the completion of the rental.

In addition, Other Revenue includes revenue generated from cruises, flights, and rental cars offerings on Tripadvisor-branded websites and mobile apps and Tripadvisor’s portfolio of ~~travel media~~ brands, which primarily includes click-based advertising and display-based advertising revenue. The performance obligations, timing of customer payments for these offerings, and methods of revenue recognition are generally consistent with click-based advertising and display-based advertising revenue, as described above.

Viator Segment

We provide an online marketplace that allows travelers to research and book tours, activities and attractions in popular travel destinations across the globe through our ~~stand-alone~~ Viator-branded platform, which includes website, mobile web, and mobile app. Through Viator, we also power traveler bookings of tours, activities and attractions on behalf of third-party distribution partner websites, including the Tripadvisor platform as well as many of the world’s major OTA, airlines, hotels, online and offline travel agencies, and other prominent content and eCommerce brands.

We work with local tour, ~~activities,~~activity, and ~~attraction~~experience operators ~~(the “operator”~~(“operators”) to provide travelers ~~(the “customer”~~(“customers”) the ability to book tours, activities and attractions, ~~(the “experience”)~~or “experiences”, in destinations ~~worldwide.~~around the world. We generate commissions for each booking transaction we facilitate through our online reservation system, in exchange for certain activities, including the use of the Company’s booking platform, post-booking 24/7 customer support ~~(24/7)~~ until the time of the experience and payment processing activities as the merchant of record, which is the completion of the performance obligation. These activities are not distinct from each other and are not separate performance obligations. As a result, the Company’s single performance obligation is to facilitate an experience, which is complete upon the time the experience occurs, and when revenue is recognized. We do not control the experience or have inventory risk before the operator provides the experience to our customer and therefore act as agent for substantially all of these transactions under ~~ASC 606.~~GAAP.

We collect payment from the customer prior to the experience occurring, which includes both our commission and the amount due to the operator. We record our commissions as deferred revenue on our ~~unaudited condensed~~ consolidated balance sheet when payment is received, including amounts which are refundable subject to cancellation, until the experience occurs ~~when~~and revenue is recognized. The amount due to the operator is recorded as a deferred merchant ~~payables~~payable on our ~~unaudited condensed~~ consolidated balance sheet until completion of the experience, after which payment is made to the operator.

To a much lesser extent, we earn commissions from third-party distribution partners, ~~(the “customer”)~~in this case, the customers, who display and promote on their websites the operator experiences available on our platform to generate bookings. In these transactions, we are not the merchant of record, and we generally invoice and receive commissions directly from ~~the~~ third-party distribution partners. Our performance obligation is to allow the third-party distribution partners to display and promote on their website experiences offered by operators who utilize our platform, ~~and~~in exchange for which, we earn a commission when travelers book and complete an experience on the third-party distribution ~~partner~~partner's website. We do not control the service or have inventory risk, and therefore act as an agent for these transactions under ~~ASC 606.~~GAAP. We generally receive payment ~~shortly after~~prior to the ~~booking in the majority of~~experience date for these transactions, and make payments to the operators after the experience is complete. Our performance obligation is complete, and revenue is recognized at the time of the booking, as we have no post-booking obligations to the customer. We recognize this revenue net of an estimate of the impact of cancellations, which is not material, using historical cancellation rates and current trends. Contract assets are recognized for commissions that are contractually billable contingent upon completion of the experience.

TheFork Segment

We provide information and services for consumers to research and book ~~restaurant reservations~~restaurants through our ~~dedicated~~ online restaurant reservations platform, TheFork. We primarily generate transaction fees (or per seated diner fees) that are paid by our restaurant customers for diners seated primarily from bookings through TheFork’s online reservation system. The transaction fee is recognized as revenue after the reservation is fulfilled, or as diners are seated by our restaurant customers. We invoice restaurants monthly for transaction fees. To a lesser extent, we also generate subscription fees for providing access to certain online reservation management services, marketing analytic tools, and menu syndication services. ~~Our~~For these services, our performance obligation is to provide restaurants with access to these services over the subscription period, which generally is one-month, and we recognize revenue once our performance obligation is met and invoice restaurants monthly for these subscription services.

~~Disaggregation of Revenue~~

We disaggregate revenue from contracts with customers into major products/revenue sources. We have determined that disaggregating revenue into these categories achieves the disclosure objective under GAAP, which is to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in “Note ~~14:~~13: Segment Information,” our business consists of three reportable segments – (1) Tripadvisor Core; (2) Viator; and (3) TheFork. A reconciliation of disaggregated revenue to segment revenue is also included ~~below.~~below:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2022			2021			2022			2021			2023			2022
Major products/revenue sources (1):	(in millions)												(in millions)
Tripadvisor Core
Tripadvisor-branded hotels	$	188		$	143		$	510		$	347		$	168		$	135
Tripadvisor-branded display and platform		33			29			97			69			30			26
Tripadvisor experiences and dining (2)		45			23			101			51			33			20
Other		18			17			41			36			13			10
Total Tripadvisor Core		284			212			749			503			244			191

Viator		174			73			366			125			115			56
TheFork		35			30			93			55			35			26
Intersegment eliminations (2)		(34	)		(12	)		(70	)		(22	)		(23	)		(11	)
Total Revenue	$	459		$	303		$	1,138		$	661		$	371		$	262

(1)

Our revenue is recognized primarily at a point in time for all ~~reportable~~reported segments.

(2)

Tripadvisor experiences and dining revenue within the Tripadvisor Core segment are shown gross of intersegment (intercompany) revenue, which is eliminated on a consolidated basis. See “Note ~~14:~~13: Segment Information” for a discussion of intersegment revenue for all periods presented.

Accounts receivable are recognized when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for services that we have transferred to a customer when that right is conditional on something other than the passage of time, such as commission payments that are contingent upon the completion of the service by the principal in the transaction. The difference between the opening and closing balances of our contract assets primarily results from the timing difference between when we satisfy our performance obligations and the time when the principal completes the service in the transaction. ~~Our contract assets have increased due to the increase in consumer travel demand and increased utilization of our CPA model by travel partners.~~

Contract liabilities generally include payments received in advance of performance under the contract and are realized as revenue as the performance obligation to the customer is satisfied, which we present as deferred revenue on our consolidated balance sheet. As of January 1, 2023 and 2022, we had $44 million and $36 million, respectively, recorded as deferred revenue on our unaudited condensed consolidated balance ~~sheet,~~sheets, of which $528 million and $3118 million, ~~were~~respectively, was recognized asin revenue ~~during the three~~ and ~~nine months ended September 30, 2022, respectively. During the three months ended September 30, 2022, refunds due to cancellations by travelers were not material, while~~ $2 million was refunded due to cancellations by travelers during ~~the nine months ended September 30, 2022. As~~each of ~~January 1, 2021, we had $~~28 ~~million recorded as deferred revenue on our unaudited condensed consolidated balance sheet, of which $~~4 ~~million and $~~21 ~~million were recognized as revenue during the three and nine months ended September 30, 2021, respectively. During~~ the three months ended ~~September 30, 2021, refunds due to cancellations by travelers were not material, while $~~3 ~~million was refunded due to cancellations by travelers during the nine months ended September 30, 2021.~~March 31, 2023 and 2022. The difference between the opening and closing balances of our deferred revenue primarily results from the timing ~~difference~~differences between when we receive customer payments and the time in which we satisfy our performance obligations.

There were no significant changes in contract assets or deferred revenue during ~~both~~each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021~~ related to business combinations, impairments, cumulative catch-ups or other material adjustments. ~~However, to the extent the COVID-19 pandemic resurges, or new variants emerge, we may incur additional significant and unanticipated cancellations~~

by consumers related to future travel, accommodations, and tour bookings, which have been prepaid by travelers and recorded as deferred revenue on our unaudited condensed consolidated balance sheet as of September 30, 2022.

NOTE 4: FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

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—Valuations are based on quoted market prices for identical assets and liabilities in active markets.

Level 2—Valuations are based on observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations are based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Cash, Cash Equivalents and Marketable Securities

As of ~~September 30,~~March 31, 2023 and December 31, 2022, we had approximately $~~1.07~~1.1 billion and $1.0 billion of cash and cash equivalents, respectively, which consisted of available on demand cash deposits and term deposits, as well as money market funds, with maturities of 90 days or less at the date of purchase, in each case, with~~major global financial institutions. As of December 31, 2021, we had $723~~ ~~million of cash and cash equivalents, which consisted of available on demand cash deposits with~~ major global financial institutions. We had no outstanding investments classified as either short-term or long-term marketable securities as of ~~September 30, 2022 and~~March 31, 2023 or December 31, ~~2021,~~2022, and there were no purchases or sales of any marketable securities during and for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The following table shows our cash and cash equivalents ~~which~~that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy, as well as their classification on our unaudited condensed consolidated balance sheet as of ~~September 30, 2022 (in millions):~~March 31, 2023 and December 31, 2022:


	Amortized Cost		Fair Value (1)		Cash and Cash Equivalents		March 31, 2023						December 31, 2022
							Amortized Cost		Fair Value (1)		Cash and Cash Equivalents		Amortized Cost		Fair Value (1)		Cash and Cash Equivalents
							(in millions)
Cash							$	630	$	630	$	630	$	821	$	821	$	821
Level 1:
Money market funds								302		302		302		—		—		—
Level 2:
Term deposits	$	60	$	60	$	60		200		200		200		200		200		200
Total	$	60	$	60	$	60	$	1,132	$	1,132	$	1,132	$	1,021	$	1,021	$	1,021

(1)

~~We did not have any unrealized~~Unrealized gains and losses related to our cash ~~equivalents.~~equivalents were not material.

~~We had~~ no ~~material financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2021.~~

We generally classify cash equivalents and marketable securities, if any, within Level 1 and Level 2 as we value these financial instruments using quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we use to measure the fair value of money market funds is derived from quoted prices in active markets for identical assets or liabilities. Fair values for Level 2 investments are considered “Level 2” valuations because they are obtained from independent pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Our procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from our independent pricing services against fair values obtained from another independent source.

Derivative Financial Instruments

We ~~generally~~ use forward contracts to reduce the effects of foreign currency exchange rate fluctuations on our cash flows primarily for the Euro versus the U.S. Dollar. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ our forward contracts have not been designated as hedges and generally had maturities of less than 90 days. Our outstanding ~~(or unsettled)~~or unsettled forward contracts are carried at fair value on our unaudited condensed consolidated balance ~~sheets at September 30, 2022~~sheet as of both March 31, 2023 and December 31, ~~2021.~~2022. We measure the fair value of our outstanding ~~forward contracts~~or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. We recognize any gain or loss resulting from the change in fair value of our foreign currency forward contracts in other income (expense), net on our unaudited condensed consolidated ~~statements~~statement of ~~operations. We recorded a net gain of $~~4 ~~million and $~~6 ~~million for the three and nine months ended September 30, 2022, respectively, and a net gain of $~~1 ~~million for~~operations, which was not material during both the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2023 and 2022.

The following table shows the net notional principal amounts of our outstanding derivative instruments as of the ~~periods~~dates presented:

September 30, 2022

December 31, 2021

(in millions)

Foreign currency exchange-forward contracts (1) (2)
$
28

$
9

(1)

Derivative contracts address foreign currency exchange fluctuations for the Euro versus the U.S. dollar. These outstanding derivatives are not designated as hedging instruments and have an original maturity period of 90 days or less.

(2)

The fair value of our outstanding derivatives as of ~~September 30,~~March 31, 2023 and December 31, 2022, ~~was $1 million and is included in prepaid expenses and other current assets on our unaudited condensed consolidated balance sheet, while this amount~~respectively, was not ~~material as of December 31, 2021.~~material. The notional amount of a forward contract is the contracted amount of foreign currency to be exchanged and is not recorded on the unaudited condensed consolidated balance sheet.

Counterparties to our outstanding forward contracts consist of major global financial institutions. We monitor our positions and the credit ratings of the counterparties involved and, by policy limits, the amount of credit exposure to any one party. We do not use derivatives for trading or speculative purposes. We were not entered into any cash flow, fair value or net investment hedges as of ~~September 30, 2022 or~~March 31, 2023 and December 31, ~~2021.~~2022.

Other Financial Assets and Liabilities

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, financial instruments not measured at fair value on a recurring basis including accounts payable, accrued expenses and other current liabilities, and deferred merchant payables, were carried at cost on our unaudited condensed consolidated balance sheets, which approximates their fair values because of the short-term nature of these items. Accounts receivable and contract assets, on our unaudited condensed consolidated balance sheets, as well as certain other financial assets, were measured at amortized cost and are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected.

The following table shows the aggregate principal and fair value amount of ~~our~~the outstanding 2025 Senior Notes and 2026 Senior Notes as of the ~~periods~~dates presented, which are classified as long-term debt on our unaudited condensed consolidated balance sheets and considered Level 2 fair value measurements. Refer to “Note 7:6: Debt” for additional information on ~~our~~the 2025 Senior Notes and 2026 Senior Notes.

September 30, 2022

December 31, 2021

(in millions)

2025 Senior Notes

   Aggregate principal amount
$
500

$
500

   Carrying value amount (1)

495

493

   Fair value amount (2)

491

531

2026 Senior Notes

   Aggregate principal amount
$
345

$
345

   Carrying value amount (3)

341

340

   Fair value amount (2)

279

305


	March 31, 2023		December 31, 2022
	(in millions)
2025 Senior Notes
Aggregate principal amount	$	500	$	500
Carrying value amount (1)		496		495
Fair value amount (2)		503		498

2026 Senior Notes
Aggregate principal amount	$	345	$	345
Carrying value amount (3)		341		341
Fair value amount (2)		283		281

(1)

Net of $54 million and $75 million of unamortized debt issuance costs as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

(2)

We estimate the fair value of ~~our outstanding~~the 2025 Senior Notes and 2026 Senior Notes based on recently reported market transactions and/or prices for identical or similar financial instruments obtained from a third-party pricing source.

(3)

Net of $4 million ~~and $~~5 ~~million of~~in unamortized debt issuance costs as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021, respectively.~~2022.

The Company did not have any assets or liabilities measured at fair value on a recurring basis using Level 3 unobservable inputs as of March 31, 2023 and December 31, 2022.

Risks and Concentrations

~~In addition to the risks and uncertainties discussed in “Note 1:~~ ~~Business Description and Basis of Presentation”,~~ ~~our~~Our business is subject to certain financial risks and concentrations, including concentration related to dependence on our relationships with our customers. For the year ended December 31, ~~2021,~~2022, our two most significant travel partners, Expedia Group, Inc. (and its subsidiaries) and Booking Holdings, Inc. (and its subsidiaries), each accounted for 10% or more of our consolidated revenue and together accounted for approximately 3435% of our consolidated revenue, with nearly all of this revenue concentrated in our Tripadvisor Core segment.

Financial instruments, which potentially subject us to concentration of credit risk, generally consist, at any point in ~~time;~~time, of cash and cash equivalents, corporate debt securities, forward contracts, capped calls, and accounts receivable. We maintain cash balances with financial institutions that are in excess of Federal Deposit Insurance Corporation insurance limits in the U.S. and similar programs outside the U.S. Our cash is generally composed of available on demand bank deposits or term deposits with major global financial institutions, as well as money market funds, primarily

denominated in U.S. dollars, and to a lesser extent Euros, British pounds, and Australian dollars. We may invest in highly-rated corporate debt securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. Our credit risk related to corporate debt securities is also mitigated by the relatively short maturity period required by our investment policy. Forward contracts and capped calls are transacted with major international financial institutions with high credit standings. Forward contracts, which, to date, have typically had maturities of less than 90 days, also mitigates risk. ~~Our overall credit risk related to accounts receivable is mitigated by the relatively short collection period.~~

Assets Measured at Fair Value on a Non-recurring Basis

Non-Marketable Investments

Equity Securities Accounted for under the Equity Method

The Company owns a 40% equity investment in Chelsea Investment Holding Company PTE Ltd, which is majority owned by Ctrip Investment Holding Ltd, a majority-owned subsidiary of Trip.com Group Limited. The Company accounts for this minority investment under the equity method, given it has the ability to exercise significant influence, but not control, over the investee. The carrying value of this minority investment was $3231 million and $3432 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and is included in non-marketable investments on our unaudited condensed consolidated balance sheets. During the three ~~and nine~~ months ended ~~September 30, 2022 and 2021,~~March 31, 2023, we recognized $1 million, ~~and $~~2 ~~million, respectively,~~ representing our share of the investee’s net loss in other income (expenses), net within the unaudited condensed consolidated ~~statements~~statement of ~~operations.~~operations, while this amount was not material during the three months ended March 31, 2022. The Company evaluates this investment for impairment when factors indicate that a decline in the value of its investment has occurred and the carrying amount of its investment may not be recoverable. An impairment loss, ~~calculated as~~based on the excess of the carrying value over the estimated fair value of the investment based on Level 3 inputs, is recognized in earnings when an impairment is deemed to be other than temporary. During both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we did not record any impairment loss on this equity investment.

The Company maintains various commercial agreements with Chelsea Investment Holding Company PTE Ltd. and/or its subsidiaries. Transactions under these agreements are considered related-party transactions, and were not material during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Other Long-Term Assets

The Company holds collateralized notes (the “Notes Receivable”) issued by a privately held company with a total principal amount of $20 million. The Company has classified the Notes Receivable as held-to-maturity, as the Company has concluded it has the positive intent and ability to hold the Notes Receivable until maturity, with 50% due in ~~five years~~June 2025 and the remaining 50% due in ~~10 years from the issuance date in~~ June ~~2020.~~2030. As of both ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the carrying value of the Notes Receivable was $9 million, net of accumulated allowance for credit losses, and is classified in other long-term assets, net on our unaudited condensed consolidated balance sheets at amortized cost. On a quarterly basis, we perform a qualitative assessment considering impairment indicators to evaluate whether the Notes Receivable are impaired and monitor for changes to our allowance for credit losses.

NOTE 7:6: DEBT

The Company’s outstanding debt consisted of the following ~~for~~as of the ~~periods~~dates presented:


September 30, 2022		Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
March 31, 2023										Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
(in millions)	(in millions)								(in millions)
Long-Term Debt:
2025 Senior Notes		$	500	$	(5	)	$	495		$	500	$	(4	)	$	496
2026 Senior Notes			345		(4	)		341			345		(4	)		341
Total Long-Term Debt		$	845	$	(9	)	$	836		$	845	$	(8	)	$	837

December 31, 2021		Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
December 31, 2022										Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
(in millions)	(in millions)								(in millions)
Long-Term Debt:
2025 Senior Notes		$	500	$	(7	)	$	493		$	500	$	(5	)	$	495
2026 Senior Notes			345		(5	)		340			345		(4	)		341
Total Long-Term Debt		$	845	$	(12	)	$	833		$	845	$	(9	)	$	836

Credit Facility

We are party to a credit agreement with a group of lenders initially entered into in June 2015 (as amended, the “Credit Agreement”), which, among other things, provides for a $500 million secured revolving credit facility (the “Credit Facility”) with a maturity date of May 12, 2024. As of March 31, 2023 and December 31, 2022, the Company had no outstanding borrowings under the Credit Facility and had issued $4 million of undrawn standby letters of credit under the Credit Facility. For the three months ended

March 31, 2023, total interest expense and commitment fees recorded on the Credit Facility was not material. For the three months ended March 31, 2022, we recorded total interest expense and commitment fees on the Credit Facility of $1 million to interest expense on our unaudited condensed consolidated statements of operations.

The Company may borrow from the Credit Facility in U.S. dollars and Euros. In addition, the Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swing Line borrowings on same-day notice. The Credit Facility, among other things, requires us to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control.

~~As of September 30, 2022 and December 31, 2021, the Company had~~ no ~~outstanding borrowings under the Credit Facility and had issued $~~4 ~~million and $~~3 million, respectively, of undrawn standby letters of credit under the Credit Facility. For the three months ended September 30, 2022, total interest expense and commitment fees on the Credit Facility were not material, while during the nine months ended September 30, 2022, we recorded total interest expense and commitment fees on the Credit Facility of $1 million to interest expense on our unaudited condensed consolidated statements of operations. For the three and nine months ended September 30, 2021, we recorded total interest expense and commitment fees on the Credit Facility of $1 ~~million and $~~2 ~~million, respectively, to interest expense on our unaudited condensed consolidated statements of operations.~~

We amended the Credit Facility during 2020 to, among other ~~things:~~things, suspend the leverage ratio covenant for quarterly testing of compliance beginning in the second quarter of 2020, replacing it with a minimum liquidity covenant through June 30, 2021 (requiring the Company to maintain $150 million of unrestricted cash, cash equivalents and short-term investments less deferred merchant payables plus available revolver capacity), until the earlier of (a) the first day after June 30, 2021 through maturity on which

borrowings and other revolving credit utilizations under the revolving commitments exceed $200 million, and (b) the election of the Company, at which time the leverage ratio covenant will be reinstated (the “Leverage Covenant Holiday”).

The Company remained in the Leverage Covenant Holiday as of ~~September 30, 2022.~~March 31, 2023. Based on the Company’s existing leverage ratio, any outstanding or future borrowings under the Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBO rate for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00% with a London Inter-Bank Offered Rate (“~~LIBO~~LIBOR rate”) floor of 1.00% per annum; or (ii) the Alternate Base Rate Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum, and (c) the Adjusted ~~LIBO Rate~~LIBOR (or ~~LIBO rate~~LIBOR multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00%. In addition, based on the Company’s existing leverage ratio,, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30% as of ~~September 30, 2022,~~March 31, 2023, on the daily unused portion of the Credit Facility for each fiscal quarter during the Leverage Covenant Holiday and in connection with the issuance of letters of ~~credit.~~credit.

There is no specific repayment date prior to the maturity date for any borrowings under the Credit Agreement. We may voluntarily repay any outstanding borrowing under the Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Additionally, the Company believes that the likelihood of the lender exercising any subjective acceleration rights, which would permit the lenders to accelerate repayment of any outstanding borrowings, is remote. As such, we classify any borrowings under this facility as long-term debt. The Credit Agreement contains a number of covenants that, among other things, restrict our ability to incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change our fiscal year. The Credit Agreement also limits the Company from repurchasing shares of its common stock and paying dividends, among other restrictions, during the Leverage Covenant Holiday. In addition, to secure the obligations under the Credit Agreement, the Company and certain subsidiaries have granted security interests and liens in and on substantially all of their assets as well as pledged shares of certain of the Company’s subsidiaries. The Credit Agreement also contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of all amounts due under the Credit Facility. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we were in compliance with our covenants.

2025 Senior Notes

On July 9, 2020, the Company completed the sale of $500 million aggregate principal amount of 7.0% Senior Notes due 2025 (the “2025 Senior Notes”), pursuant to a purchase agreement, dated July 7, 2020, among the Company, the guarantors party thereto and the initial purchasers party thereto in a private offering to qualified institutional buyers. The 2025 Senior Notes were issued pursuant to an indenture, dated July 9, 2020 (the “2025 Indenture”), among the Company, the guarantors and the trustee. The 2025 Indenture provides, among other things, that interest is payable on the 2025 Senior Notes semiannually on January 15 and July 15 of each year, ~~which began on~~ ~~January 15, 2021~~, and ~~continue~~continues until their maturity date of July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.

The Company has the option to redeem all or a portion of the 2025 Senior Notes at any time on or after July 15, 2022 at the redemption prices set forth in the 2025 Indenture, plus accrued and unpaid interest, if any.Subject to certain limitations, in the event of a Change of Control Triggering Event (as defined in the 2025 Indenture), the Company will be required to make an offer to purchase the 2025 Senior Notes at a price equal to 101% of the aggregate principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. These features have been evaluated as embedded derivatives under GAAP; however, the Company has concluded they do not meet the requirements to be accounted for separately.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, unpaid interest on ~~our~~the 2025 Senior Notes ~~totaled approximately~~of $7 million and $16 million, respectively, ~~and is~~was included in accrued expenses and other current liabilities on our unaudited condensed consolidated balance ~~sheet. During the three~~sheet, and ~~nine months ended September 30, 2022 and 2021, we recorded interest expense of~~ $9 million ~~and $~~26 ~~million, respectively, to~~was recorded as interest expense on our unaudited condensed consolidated statements of ~~operations.~~operations for both the three months ended March 31, 2023 and 2022.

The 2025 Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, restrict the ability of the Company and ~~the ability of~~ certain of its subsidiaries to incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock; pay dividends and make other distributions or repurchase stock; make certain investments; create or incur liens; sell assets; create restrictions affecting the ability of restricted subsidiaries to make distributions, loans or advances or transfer assets to the Company or the restricted subsidiaries; enter into certain transactions with the Company’s affiliates; designate restricted subsidiaries as unrestricted subsidiaries; and merge, consolidate or transfer or sell all or substantially all of the Company’s assets.

2026 Senior Notes

On March 25, 2021, we entered into a purchase agreement for the sale of $300 million aggregate principal amount of 0.25% Convertible 2026 Senior Notes due 2026 (the “2026 Senior Notes”) in a private offering to qualified institutional buyers. The 2026 Senior Notes included an over-allotment option that provided the initial purchasers of the 2026 Senior Notes with the option to purchase an additional $45 million aggregate principal amount of the 2026 Senior Notes; such over-allotment option was fully exercised. In connection with the issuance of the 2026 Senior Notes, the Company entered into an Indenture, dated March 25, 2021 (the “2026 Indenture”), among the Company, the guarantors party thereto and the trustee. The terms of the 2026 Senior Notes are governed by the 2026 Indenture. The 2026 Senior Notes mature on April 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Senior Notes are senior unsecured obligations of the Company, although guaranteed by certain of the Company’s domestic subsidiaries, with interest payable semiannually in arrears on April 1 and October 1 of each ~~year, which began on~~year. During the three months ended March 31, 2023 and 2022, our effective interest rate, including debt issuance costs, was 0.45~~October 1, 2021~~% and 0.52%, respectively, and total interest expense incurred from the 2026 Senior Notes was not material in any period. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, unpaid interest on ~~our~~the 2026 Senior Notes was also not material.

The 2026 Senior Notes will be redeemable, in whole or in part, at our option at any time, and from time to time, on or after April 1, 2024 and on or before the ~~30th~~30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Senior Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (2) the trading day immediately before the date we send such notice. In addition, calling any such note for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption.

The 2026 Senior Notes are unconditionally guaranteed, on a joint and several basis, by the guarantors on a senior, unsecured basis. The 2026 Senior Notes are our general senior unsecured obligations and rank equally in right of payment with all of our existing and future senior indebtedness, and senior in right of payment to all of our future subordinated indebtedness. The 2026 Senior Notes will be effectively subordinated to any of our existing and future secured indebtedness, including borrowings under the Credit Facility, to the extent of the value of the assets securing such indebtedness.

Holders may convert their 2026 Senior Notes at any time prior to the close of business on the business day immediately preceding January 1, 2026, in multiples of $1,000 principal amount, only under the following conditions and circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•

during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2026 Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

•

upon the occurrence of specified corporate events as described in the 2026 Indenture.

In addition, holders may convert their 2026 Senior Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after January 1, 2026, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the 2026 Senior Notes, without regard to the foregoing circumstances.

The initial conversion rate for the 2026 Senior Notes is 13.5483 shares of common stock per $1,000 principal amount of 2026 Senior Notes, which is equivalent to an initial conversion price of approximately $73.81 per share of common stock, or approximately 4.7 million shares of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the 2026 Indenture. Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.

The Company accounts for the 2026 Senior Notes as a liability measured at its amortized cost, and no other features of the 2026 Senior Notes are bifurcated and recognized as a derivative. ~~The proceeds from the issuance of the 2026 Senior Notes were approximately $340~~ ~~million, net of debt issuance costs of $~~5 million comprised primarily of the initial purchasers’ discount, and the Company used a portion of the proceeds from the 2026 Senior Notes to enter into capped call transactions, as discussed below. The Company intends to use the remainder of the proceeds from this offering for general corporate purposes, which may include repayment of debt, including the partial redemption and/or purchase of our 2025 Senior Notes prior to maturity. The debt issuance costs will be amortized over the remaining term of the 2026 Senior Notes, using the effective interest rate method, and recorded to interest expense on our unaudited condensed consolidated statements of operations. During both the three and nine months ended

~~September 30, 2022, our effective interest rate, including debt issuance costs, was approximately~~ ~~0.50% and total interest expense on our 2026 Senior Notes was not material during the three months ended September 30, 2022, while this amount was $~~1 ~~million during the nine months ended September 30, 2022~~. ~~During both the three and nine months ended September 30, 2021, our effective interest rate, including debt issuance costs, was approximately~~ ~~0.55% and total interest expense on our 2026 Senior Notes was not material in either period.~~

The 2026 Senior Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other indebtedness, or restrictions on the issuance or repurchase of securities by the Company.

Capped Call Transactions

In connection with the issuance of the 2026 Senior Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”) at a cost of approximately $35 million. The Capped Calls are separate transactions entered into by the Company with each of the Option Counterparties, and are not part of the terms of the 2026 Senior Notes and therefore will not affect any noteholder’s rights under the 2026 Senior Notes. Noteholders will not have any rights with respect to the Capped Calls.

The Capped Calls cover, subject to anti-dilution adjustments, substantially similar to those applicable to the conversion rate of the 2026 Senior Notes, the number of shares of common stock initially underlying the 2026 Senior Notes, or up to approximately 4.7 million shares of our common stock. The Capped Calls are expected generally to reduce potential dilution to the common stock upon any conversion of 2026 Senior Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted 2026 Senior Notes, as the case may be, with such reduction and/or offset subject to a cap. The strike price of the Capped Calls is $73.81, while the cap price of the Capped Calls will initially be $107.36 per share of our common stock, which represents a premium of 100% over the close price of our common stock of $53.68 per share on March 22, 2021 and is subject to certain customary adjustments under the terms of the Capped Calls.

The Capped Calls are considered indexed to our own stock and are considered equity classified under GAAP, and are included as a reduction to additional paid-in-capital within stockholders’ equity on the unaudited condensed consolidated balance sheets as of ~~September 30, 2022~~both March 31, 2023 and December 31, ~~2021.~~2022. The Capped Calls are not accounted for as derivatives and their fair value is not remeasured each reporting period. ~~In addition, we recorded a deferred tax asset of $~~9 million associated with the Capped Calls on our unaudited condensed consolidated balance sheet during the three months ended March 31, 2021, as we made an income tax election allowable under Internal Revenue Service (the “IRS”) regulations in order to recover the cost of the Capped Calls as interest expense for income tax purposes only over the term of the 2026 Senior Notes.

NOTE 9:8: INCOME TAXES

Each interim period is considered an integral part of the annual period; accordingly, we measure our income tax expense using an estimated annual effective tax rate. An enterprise is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act made tax law changes to provide financial relief to companies as a result of the business impacts of COVID-19. Key19

Our income tax provisions of the CARES Act include changes in net operating losses (“NOL”) carryback and carryforward rules, increase of the net interest expense deduction limit, and immediate write-off of qualified improvement property. The CARES Act allowed the

~~Company to carryback our U.S. federal NOLs incurred in 2020, generating an expected U.S. federal tax benefit of~~provision was $76 ~~million, of which $~~64 ~~million was refunded during the three months ended June 30, 2022. The remaining refund of $~~12 million is included in current income taxes payable within accrued expenses and other current liabilities on our unaudited condensed consolidated balance sheet as of September 30, 2022 and is expected to be received in the next twelve months. In addition, $25 million of this refund received was recorded to long-term taxes payable within other long-term liabilities on our unaudited condensed consolidated balance sheet as of September 30, 2022, which reflects future transition tax payments related to the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).

In addition, certain governments have passed legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, wage tax relief or other financial aid. Some of these governments have extended or are considering extending these programs. We have participated in several of these programs, including the CARES Act in the U.S., the United Kingdom's job retention scheme, as well as programs in other jurisdictions. In addition, in certain countries, such as within the European Union, Singapore, Australia, and other jurisdictions, we are also participating in programs where government assistance is in the form of wage subsidies and reductions in wage-related employer taxes paid by us. We recognize these government assistance benefits when there is a reasonable assurance of compliance with the conditions associated with the assistance and the amount is received. During the three months ended September 30, 2022, non-income tax related government assistance benefits recognized was not material, while we recognized $12 million of non-income tax related government assistance benefits during the nine months ended September 30, 2022. During the three and nine months ended September 30, 2021, we recognized non-income tax related government assistance benefits of $258 million and $7 ~~million, respectively. These amounts are not income tax related and were recorded as a reduction of personnel and overhead costs in the unaudited condensed consolidated statements of operations.~~

~~We recorded total income tax provisions of $~~37 ~~million and $~~61 ~~million for the three and nine months ended September 30, 2022, respectively. We recorded a total income tax provision of $~~21 million for the three months ended ~~September 30, 2021, while we recorded a total income tax benefit of $~~19 ~~million for the nine months ended September 30, 2021.~~March 31, 2023 and 2022, respectively. The change in our income tax ~~provisions~~provision during the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same period in ~~2021,~~2022, was primarily the result of an Internal Revenue Service ("IRS") audit settlement and the adjustment to our existing transfer pricing income tax reserves for subsequent tax years recorded during the three months ended March 31, 2023. Our effective tax rate for the three months ended March 31, 2023 differs from the U.S. federal statutory rate of 21%, primarily due to ~~an increase in pretax~~the reasons noted above.

A reconciliation of the provision (benefit) for income ~~recognized during both~~taxes to the ~~three and nine months ended September 30, 2022.~~amounts computed by applying the statutory federal income tax rate to income (loss) before income taxes is as follows for the periods presented:


	Three months ended March 31,
	2023			2022
	(in millions)
Income tax expense (benefit) at the federal statutory rate	$	(3	)	$	(7	)
State income taxes, net of effect of federal tax benefit		—			(1	)
Unrecognized tax benefits and related interest		1			2
Stock-based compensation		2			4
Research tax credit		—			1
Change in valuation allowance		2			3
IRS audit settlement		31			—
Transfer pricing reserves adjustment		24			—
Other, net		1			(1	)
Provision (benefit) for income taxes	$	58		$	1

Our accounting policy is to recognize accrued interest and penalties related to unrecognized tax benefits and income tax liabilities as part of our income tax expense. As of ~~September 30, 2022,~~March 31, 2023, we had an accrued interest liability of $4640 million, which was included in unrecognized tax benefits in other long-term liabilities on our unaudited condensed consolidated balance sheet, and no penalties ~~have been~~were accrued.

By virtue of consolidated income tax returns previously filed with Expedia, we are currently under an IRS audit for the 2009, 2010 and short-period 2011 tax years. We are separately under examination by the IRS for the ~~short-period 2011,~~ 2014 through 2016 and 2018 tax years, and have various ongoing audits for foreign and state income tax returns. These audits include questioning the timing and amount of income and deductions and the allocation of income among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax authorities for years prior to 2009. As of ~~September 30, 2022,~~March 31, 2023, no material assessments have resulted, except as noted below regarding our 2009, 2010, and 2011 IRS audit with Expedia, our 2014 through 2016 standalone IRS audit, and our 2012 through 2016 HM Revenue & Customs (“HMRC”) audit.

~~In January 2017 and April 2019, as part of~~As disclosed in previous filings, including in our Annual Report on Form 10-K for the ~~IRS audit of Expedia,~~year ended December 31, 2022, we had received Notices of Proposed ~~Adjustment~~Adjustments ("NOPA") from the IRS for the 2009, 2010, and 2011 tax years relating to certain transfer pricing arrangements with our foreign subsidiaries. In response, we had requested competent authority assistance under the Mutual Agreement Procedure (“MAP”) for the 2009 through 2011 tax years. ~~Subsequently, in September 2019, as part of our standalone audit,~~In January 2023, we received ~~Notices of Proposed Adjustment~~a final notice from the IRS regarding a MAP settlement for the ~~2012~~2009 through 2011 tax years, which the Company accepted in February 2023. In the first quarter of 2023, we recorded additional income tax expense as a discrete item, inclusive of interest, of $31 million specifically related to this settlement. We reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent tax years during the first quarter of 2023, which resulted in incremental income tax expense, inclusive of estimated interest, of $24 million. The total impact of these adjustments resulted in an incremental income tax expense of $55 million for the three months ended March 31, 2023.

In addition, and ~~2013 tax years; and in~~separately, during August 2020, we received ~~Notices of Proposed Adjustment~~a NOPA from the IRS for the 2014, 2015, and 2016 tax years. ~~The statute of limitation of assessment for all years subject to the Notices of Proposed Adjustment remain open, with the exception of the 2012 and 2013 tax years.~~ These proposed adjustments ~~are related~~pertain to certain transfer pricing arrangements with our foreign subsidiaries and would result in ~~an increase to our worldwide~~additional income tax expense ~~for the open~~above our existing tax ~~years,~~reserves in an estimated range of $9055 million to $~~100~~65 million at the close of the audit if the IRS ~~prevails, which includes $~~25 ~~million to $~~35 ~~million related to the 2009 through 2011 pre Spin-Off tax years. The~~prevails. This estimated ~~ranges take~~range takes into consideration competent authority relief, existing income tax reserves, and transition tax regulations and is exclusive of deferred tax consequences and interest expense, which would also be significant. We disagree with the proposed adjustments, and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. ~~Our policy is to review and update tax reserves as facts and circumstances change.~~ Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable. In addition to the risk of additional tax for the ~~open~~ years ~~outlined~~discussed above, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we ~~would~~may be subject to significant additional tax liabilities. We have previously requested competent authority assistance under MAP for the ~~Mutual Agreement Procedure (“MAP”)~~years of 2014 through 2016 tax years. As discussed above, we reviewed our transfer pricing reserves as of March 31, 2023, based on the facts and circumstances that existed as of the reporting date, and consider them to be the Company’s best estimate as of March 31, 2023.

As of December 31, 2022, we had recorded $204 million of unrecognized tax benefits, inclusive of interest, classified as other long-term liabilities on our unaudited condensed consolidated balance sheet. As a result of the Company's acceptance of MAP with the IRS for ~~tax~~the years 2009 through ~~2016, for which the statutes remain open for all but the 2012~~2011, and 2013 tax years. We expect the competent authorities to present a resolution for the 2009 through 2011 tax years in the near future. Upon receipt, we will assess the resolution provided by the competent authorities as well as its impact on other ongoing IRS audits, as described above, we reduced this unrecognized tax benefits liability by $59 million during the three months ended March 31, 2023, while increasing our ~~existing~~current income ~~tax reserves for all open subsequent years.~~taxes payable by $

23109

million, representing a short-term payment obligation to the IRS, and increasing our current income taxes receivable balance by $46 million, representing short-term competent authority relief, or payment due from a foreign jurisdiction. In addition, we reduced our long-term income taxes receivable, previously recorded to other long-term assets on our unaudited condensed consolidated balance sheet as of December 31, 2022, by $45 million, which represented our previous estimate of competent authority relief.

In January 2021, we received ~~from HMRC~~ an issue closure notice from HMRC relating to adjustments for the 2012 through 2016 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our ~~worldwide~~consolidated income tax expense in an estimated range of $25 million to $35 million, exclusive of interest expense, ~~and potential U.S. transition tax adjustments,~~ at the close of the audit if HMRC prevails. We disagree with the proposed adjustments and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position ~~we have~~the Company has taken with regard to transfer pricing with our foreign subsidiaries is sustainable.

NOTE ~~11:~~10: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS

Stock-Based Compensation Expense

The following table presents the amount of stock-based compensation expense related to stock-based awards, primarily stock options and ~~RSUs,~~restricted stock units (“RSUs"), on our unaudited condensed consolidated statements of operations during the periods presented:

Three months ended

Nine months ended

September 30,

September 30,

2022

2021

2022

2021

(in millions)

(in millions)

Cost of revenue

$
—

$
—

$
1

$
1

Selling and marketing

3

4

9

13

Technology and content

9

12

27

35

General and administrative

10

13

28

40

Total stock-based compensation expense

22

29

65

89

Income tax benefit from stock-based compensation

(4
)

(6
)

(14
)

(18
)
Total stock-based compensation expense, net of tax

$
18

$
23

$
51

$
71


	Three months ended
	March 31,
	2023			2022
	(in millions)
Selling and marketing	$	4		$	3
Technology and content		10			9
General and administrative		9			10
Total stock-based compensation		23			22
Income tax benefit from stock-based compensation		(5	)		(4	)
Total stock-based compensation, net of tax effect	$	18		$	18

We capitalized $2 ~~million and $~~7 million of stock-based compensation expense as website development costs during both the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 and $3 ~~million and $~~10 ~~million during the three and nine months ended September 30, 2021, respectively.~~2022.

Stock-Based Award Activity and Valuation

~~2022~~2023 Stock Option Activity

A summary of our stock option activity, consisting of service-based non-qualified stock options, is presented below:

Weighted

Weighted

Average

Average

Exercise

Remaining

Aggregate

Options

Price Per

Contractual

Intrinsic

Outstanding

Share

Life

Value

(in thousands)

(in years)

(in millions)

Options outstanding at December 31, 2021

5,671

$
47.03

Granted (1)

647

19.14

Exercised (2)

(13
)

24.94

Cancelled or expired

(956
)

44.36

Options outstanding at September 30, 2022

5,349

$
44.19

5.4

$
2

Exercisable as of September 30, 2022

3,893

$
49.28

4.0

$
—

Vested and expected to vest after September 30, 2022 (3)

5,203

$
44.66

5.2

$
2


				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Options			Price Per		Contractual		Intrinsic
	Outstanding			Share		Life		Value
	(in thousands)					(in years)		(in millions)
Options outstanding at December 31, 2022		5,462		$	43.48
Granted		100			22.49
Cancelled or expired		(125	)		42.92
Options outstanding at March 31, 2023		5,437		$	43.11		4.8	$	1
Exercisable as of March 31, 2023		3,953		$	49.19		3.2	$	—
Vested and expected to vest after March 31, 2023 (1)		5,292		$	43.54		4.7	$	1

(1)

~~Inclusive of approximately~~ ~~516,000~~ ~~stock options awarded to Matt Goldberg, our CEO, during July 2022. The estimated grant-date fair value per option, using a Black-Scholes option pricing model was $9.23~~. ~~These stock options shall vest over four years, with~~ 25~~% vesting on July 1, 2023 and~~ ~~6.25% of the remaining award vesting in equal quarterly installments commencing thereafter, subject to the CEO’s continuous employment with the Company.~~ ~~The estimated grant-date fair value of this award will be amortized on a straight-line basis over the requisite service period through~~ ~~July 1, 2026~~.

~~(2)~~

~~Inclusive of approximately~~ ~~10,000~~ stock options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the required amount of employee withholding taxes. Potential shares which had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2018 Stock and Annual Incentive Plan (the “2018 Plan”) and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the consolidated statements of cash flows.

~~(3)~~

The Company accounts for forfeitures as they occur, rather than estimate expected forfeitures as allowed under GAAP and therefore dodoes not include a forfeiture rate in our vested and expected to vest calculation unless necessary for a performance condition award.

Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on Nasdaq as of ~~September 30, 2022~~March 31, 2023 was $~~22.08~~19.86. The total intrinsic value of stock options exercised was not material for both the ~~nine~~three months ended ~~September 30, 2022 was not material,~~March 31, 2023 and ~~for the nine months ended September 30, 2021 was $~~8 ~~million.~~2022.

The fair value of stock option grants has been estimated at the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions for the periods presented:


	Nine months ended						Three months ended
	September 30,						March 31,
	2022			2021			2023			2022
Risk free interest rate		2.79	%		0.67	%		3.56	%		1.53	%
Expected term (in years)		5.51			5.32			5.14			5.15
Expected volatility		51.48	%		49.69	%		52.28	%		50.32	%
Expected dividend yield	— %			— %			— %			— %
Weighted-average grant date fair value	$	9.47		$	20.24		$	11.16		$	12.26

Our stock options generally have a term of ten years from the date of grant and typically vest equally over a four-year requisite service period. We amortize the grant-date fair value of our stock option grants as stock-based compensation expense over the vesting term on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date. The total fair value of stock options vested was $152 million and $196 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

2522

~~2022~~2023 RSU Activity

A summary of our ~~restricted stock units (“RSUs”)~~RSUs activity, consisting ~~primarily~~ of service-based vesting terms, is presented below:

Weighted

Average

Grant-

Aggregate

RSUs

Date Fair

Intrinsic

Outstanding

Value Per Share

Value

(in thousands)

(in millions)

Unvested RSUs outstanding as of December 31, 2021

5,786

$
36.82

Granted (1)

6,412

25.75

Vested and released (2)

(2,668
)

36.12

Cancelled

(1,020
)

33.42

Unvested RSUs outstanding as of September 30, 2022 (3)

8,510

$
29.11

$
188


				Weighted
				Average
				Grant-		Aggregate
	RSUs			Date Fair		Intrinsic
	Outstanding			Value Per Share		Value
	(in thousands)					(in millions)
Unvested RSUs outstanding as of December 31, 2022		8,572		$	28.41
Granted		5,994			22.13
Vested and released (1)		(1,548	)		32.17
Cancelled		(263	)		28.01
Unvested RSUs outstanding as of March 31, 2023 (2)		12,755		$	25.01	$	253

(1)

Inclusive of approximately ~~258,000~~ ~~RSUs awarded to our CEO during July 2022. The estimated grant-date fair value per RSU, based on the quoted price of our common stock on the date of grant, was $18.47~~. ~~This service-based RSU award shall vest over four years, with~~ 25~~% vesting on July 1, 2023 and~~ ~~6.25% of the remaining award vesting in equal quarterly installments commencing thereafter, subject to the CEO’s continuous employment with the Company.~~ ~~The estimated grant-date fair value of this award will be amortized on a straight-line basis over the requisite service period through~~ ~~July 1, 2026~~.

~~(2)~~

~~Inclusive of approximately~~ ~~706,000~~358,000 RSUs withheld due to net share settlement to satisfy required employee tax withholding requirements. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2018 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the consolidated statements of cash flows.

~~(3)~~(2)

RSUs are measured at fair value based on the quoted price of our common stock at the date of grant. We amortize the grant-date fair value of RSUs as stock-based compensation expense over the vesting term, which is typically over a four-year requisite service period on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date.

A summary of our performance-based RSUs ("PSUs") and market-based RSUs (“MSUs”) activity is presented below:

Weighted

Average

Grant-

Aggregate

MSUs

Date Fair

Intrinsic

Outstanding

Value Per Share

Value

(in thousands)

(in millions)

Unvested MSUs outstanding as of December 31, 2021

120

$
28.15

Granted (1)

432

9.26

Cancelled

(35
)

28.15

Unvested MSUs outstanding as of September 30, 2022 (2)

517

$
12.36

$
11


	PSUs (1)						MSUs (2)
			Weighted						Weighted
			Average						Average
			Grant-		Aggregate				Grant-		Aggregate
			Date Fair		Intrinsic				Date Fair		Intrinsic
	Outstanding		Value Per Share		Value		Outstanding		Value Per Share		Value
	(in thousands)				(in millions)		(in thousands)				(in millions)
Unvested and outstanding as of December 31, 2022		—	$	—				592	$	10.00
Granted		546		18.45				34		14.80
Unvested and outstanding as of March 31, 2023		546	$	18.45	$	11		626	$	10.26	$	12

(1)

~~Inclusive~~Represents PSUs awarded in February 2023. The PSU awards provide for vesting in two equal annual installments on each of ~~approximately~~ February 15, 2024 and February 15, 2025, based on the extent to which the Company achieves certain financial metrics relative to targets established by the Company’s Compensation Committee. The estimated grant-date fair value per PSU was measured based on the quoted price of our common stock at the date of grant, calculated upon the establishment of performance targets, and will be amortized on a straight-line basis over the requisite service period. Based upon actual attainment relative to the target financial metrics, employees have the ability to receive up to 200% of the target number originally granted, or to be issued none at all.

(2)

MSUs shall vest three years from their grant date, with 25% vesting if our stock price is equal to or greater than $35.00 but less than $45.00, 50% if our stock price is equal to or greater than $45.00 but less than $55.00 and 100% if our stock price is equal to or greater than $55.00~~378,000~~ ~~MSUs awarded~~, subject to ~~our CEO during July 2022.~~continuous employment with, or performance of services for, the Company. A Monte-Carlo simulation model, which simulated the present value of the potential outcomes of future stock prices was used to calculate the grant-date fair value of our MSU awards. ~~These MSUs shall vest on July 1, 2025, with~~ 25~~% vesting if our stock price is equal to or greater than $35.00~~ ~~but less than $45.00~~, 50~~% if our stock price is equal to or greater than $45.00~~ ~~but less than $55.00~~ ~~and~~ ~~100% if our stock price is equal to or greater than $55.00, subject to the CEO’s continuous employment with, or performance of services for, the Company.~~The estimated grant-date fair value of ~~this award will be~~these awards is amortized on a straight-line basis over the requisite service ~~period through~~ ~~July 1, 2026~~period..

~~(2)~~

A~~pproximately~~ ~~85,000~~ ~~outstanding MSUs provide for vesting based upon the Company’s total shareholder return, or TSR, performance over the period commencing~~ ~~January 1, 2020~~ ~~through~~ ~~December 31, 2022~~ ~~relative to the TSR performance of The Nasdaq Composite Total Return Index. Based upon actual attainment relative to the target performance metric, the grantees have the ability to receive up to~~ ~~200% of the target number of MSUs originally granted, or to receive~~ ~~none~~ ~~at all.~~

Total current income tax benefits associated with the exercise or settlement of Tripadvisor stock-based awards held by our employees was $43 million and $72 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and $~~6 ~~million and $~~20 ~~million during the three and nine months ended September 30, 2021,~~ respectively.

NOTE ~~13:~~12: EARNINGS PER SHARE

Basic Earnings Per Share Attributable to Common Stockholders

We compute basic earnings per share, or Basic EPS, by dividing net income (loss) by the weighted average number of common shares outstanding during the period. We compute the weighted average number of common shares outstanding during the reporting period using the total of common stock and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted average of any additional shares issued and outstanding less the weighted average of any common shares repurchased during the reporting period.

Diluted Earnings Per Share Attributable to Common Stockholders

Diluted earnings per share, or Diluted EPS, includes the potential dilution of common equivalent shares outstanding that could occur from stock-based awards and other stock-based commitments using the treasury stock method. We compute Diluted EPS by dividing net income (loss) by the sum of the weighted average number of common and common equivalent shares outstanding during the period. We ~~computed~~compute the weighted average number of common and common equivalent shares outstanding during the period using the sum of (i) the number of shares of common stock and Class B common stock used in the Basic EPS calculation as indicated above, ~~and~~ (ii) if dilutive, the incremental weighted average common stock that we would issue upon the assumed exercise of outstanding common equivalent shares, primarily related to stock options and the vesting of service-based restricted stock units using the treasury stock method, and (iii) if dilutive, performance-based and market-based awards based on the number of shares that would be issuable as of the end of the reporting period assuming the end of the reporting period was also the end of the contingency period.

Under the treasury stock method, the assumed proceeds calculation includes the actual proceeds to be received from the employee upon exercise of outstanding equity awards and the average unrecognized compensation cost during the period. The treasury stock method assumes that a company uses the proceeds from the exercise of an equity award to repurchase common stock at the average market price for the reporting period.

In periods of net income, shares of our common stock subject to the potential conversion of the 2026 Senior Notes outstanding during the period is also included in our weighted average number of shares outstanding used to calculate Diluted EPS using the if-converted method under GAAP, as share settlement is presumed. When the convertible notes are dilutive, interest expense, net of tax, is added back to net income attributable to common stockholders to calculate diluted net income per share. The Capped Calls are excluded from the calculation of Diluted EPS, as they would be antidilutive. However, upon conversion of the 2026 Senior Notes, unless the market price of our common stock exceeds the cap price, an exercise of the Capped Calls would generally offset any

dilution from the 2026 Senior Notes from the

conversion price up to the cap price. As of ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the market price of a share of our common stock did not exceed the $107.36 cap price.

In periods of a net loss, common equivalent shares are excluded from the calculation of Diluted EPS as their inclusion would have an antidilutive effect. Accordingly, for periods in which we report a net loss, such as for the three months ended March 31, 2023 and 2022, Diluted EPS is the same as Basic EPS, since dilutive common equivalent shares are not assumed to have been issued if their effect is antidilutive.

Below is a reconciliation of the weighted average number of shares of common stock outstanding used in calculating Diluted EPS ~~(shares in thousands and dollars in millions, except per share amounts)~~ for the periods presented:

Three months ended September 30,

Nine months ended September 30,

2022

2021

2022

2021

Numerator:

Net income (loss) (1)

$
25

$
1

$
22

$
(119
)
Denominator:

Weighted average shares used to compute Basic EPS

140,219

137,789

139,668

136,870

Weighted average effect of dilutive securities:

Stock options

1

130

5

—

RSUs/MSUs

854

1,892

1,204

—

2026 Senior Notes (Note 7)

4,674

4,674

3,116

—

Weighted average shares used to compute Diluted EPS

145,748

144,485

143,993

136,870

Basic EPS

$
0.18

$
0.01

$
0.16

$
(0.87
)
Diluted EPS

$
0.17

$
0.01

$
0.15

$
(0.87
)

~~(1)~~

Interest expense, net of taxes, related to the 2026 Senior Notes which was included in the Diluted EPS calculation for the three months ended September 30, 2022 and 2021, and for the nine months ended September 30, 2022, respectively, was not material.


	Three months ended March 31,
	2023			2022
	(shares in thousands and dollars in millions, except per share amounts)
Numerator:
Net income (loss)	$	(73	)	$	(34	)
Denominator:
Weighted average shares used to compute Basic EPS		141,451			139,092
Weighted average effect of dilutive securities:
Stock options		—			—
RSUs (including PSUs and MSUs)		—			—
2026 Senior Notes (Note 6)		—			—
Weighted average shares used to compute Diluted EPS		141,451			139,092
Basic EPS	$	(0.52	)	$	(0.24	)
Diluted EPS	$	(0.52	)	$	(0.24	)

Potential common shares, consisting of outstanding stock options, RSUs, ~~MSUs,~~ and those ~~shares~~ issuable under the 2026 Senior Notes, totaling approximately ~~11.8~~22.9 million shares and ~~14.1~~19.0 million shares for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and approximately~~ ~~6.8~~ ~~million shares and~~ ~~16.9~~ ~~million shares for the three and nine months ended September 30, 2021,~~ respectively, have been excluded from the calculation of Diluted EPS because their effect would have been antidilutive. In addition, potential common shares from certain performance-based awards of approximately ~~0.5~~1.2 million ~~shares~~ and ~~0.2~~0.1 million ~~shares~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and approximately~~ ~~0.2~~ ~~million shares for both the three and nine months ended September 30, 2021,~~ respectively, for which all targets required to trigger vesting had not been achieved, were also excluded from the calculation of weighted average shares used to compute Diluted EPS.

The earnings per share amounts are the same for common stock and Class B common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. In addition, our non-vested RSUs ~~and MSUs~~ are entitled to dividend equivalents, which are payable to the holder subject to, and only upon vesting of, the underlying awards and are therefore forfeitable. Given such dividend equivalents are forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two‑class method of determining earnings per share.

NOTE ~~14:~~13: SEGMENT INFORMATION

~~In the second quarter of 2022, we revised our segment reporting structure.~~ We ~~now measure our business within~~have three ~~operating segments, which are also our~~ reportable segments: (1) Tripadvisor Core; (2) Viator; and (3) TheFork. Our Tripadvisor Core segment includes the following revenue sources: (1) Tripadvisor-branded hotels – consisting of hotel ~~auction (or hotel meta)~~meta revenue, primarily click-based advertising revenue, and hotel B2B revenue, which includes primarily subscription-based advertising and hotel sponsored placements revenue; (2) Tripadvisor-branded display and platform revenue – consisting primarily of display-based advertising revenue; (3) Tripadvisor experiences and dining revenue – consisting of intercompany (intersegment) revenue related to affiliate marketing commissions earned primarily from experience bookings, and to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork segments, respectively, which are eliminated on a consolidated basis, in addition to external revenue generated from Tripadvisor restaurant service offerings; and (4) Other revenue – consisting of cruises, alternative accommodation rentals, flights, and rental cars revenue. The nature of the services provided and related revenue recognition policies are summarized by reportable segment in “Note 3: Revenue Recognition.” All prior period segment disclosure information has been reclassified to conform to the current reporting structure in this Form 10-Q. These reclassifications had no effect on our unaudited condensed consolidated financial statements in any period. Our segment profit measure (Adjusted EBITDA), including its definition, and other information provided to our CODM remain consistent with prior periods, except for certain segment expense allocations, which are described below.

Our operating segments are determined based on how our ~~CODM~~chief executive officer, who also serves as our chief operating decision maker (“CODM") manages our business, regularly accesses information, and evaluates performance for operating decision-making purposes, including allocation of resources. Adjusted EBITDA is our segment profit measure and a key measure used by our CODM and Board of Directors to understand and evaluate the operating performance of our business and on which internal budgets and forecasts are based and approved. We define Adjusted EBITDA as net income (loss) plus: (1) (provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled

obligations; (5) goodwill, ~~intangible~~long-lived asset, and ~~long-lived asset~~intangible assets impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income.

Direct costs are included in the applicable operating segments, including certain corporate general and administrative personnel costs, which have been allocated to each segment. We base these allocations on time-spent analyses, headcount, and other allocation methods we believe are reasonable. We do not allocate certain shared expenses to our reportable segments, such as certain information system costs, technical infrastructure costs, and other costs supporting the Tripadvisor platform and operations, that we do not believe are a material driver of individual segment performance, which is consistent with the financial information ~~viewed~~used by our CODM. We include these expenses in our Tripadvisor Core segment. Our allocation methodology is periodically evaluated and may change.

The following tables present our reportable segment information for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 and ~~2021 and includes~~include a reconciliation of Adjusted EBITDA to Net income (loss). We record depreciation and amortization, ~~and~~ stock-based compensation and other stock-settled obligations, goodwill, ~~intangible~~long-lived asset and ~~other long-lived~~intangible asset impairments, legal reserves and settlements, restructuring and other related reorganization costs, and other non-recurring expenses and income, net, which are excluded from segment operating performance, in Corporate and Eliminations. In addition, we do not report total assets, capital expenditures and related depreciation expense by segment as our CODM does not use this information to evaluate operating segment performance. Accordingly, we do not regularly provide such information by segment to our CODM.

Our segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by our Tripadvisor Core segment to both our Viator and TheFork segments. These intersegment transactions are recorded by each segment at amounts that we believe approximate fair value as if the transactions were between third parties and, therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within ~~Corporate and Eliminations~~the “Corporate & Eliminations” columns in the ~~table~~tables below.


	Three months ended September 30, 2022													Three months ended March 31, 2023
	Tripadvisor Core (1)		Viator (2)		TheFork (3)			Corporate & Eliminations			Total			Tripadvisor Core (1)		Viator (2)			TheFork (3)			Corporate & Eliminations			Total
	(in millions)													(in millions)
External revenue	$	250	$	174	$	35		$	—		$	459		$	221	$	115		$	35		$	—		$	371
Intersegment revenue		34		—		—			(34	)		—			23		—			—			(23	)		—
Total Revenue	$	284	$	174	$	35		$	(34	)	$	459		$	244	$	115		$	35		$	(23	)	$	371
Adjusted EBITDA		112		12		(9	)		—			115			72		(30	)		(9	)		—			33
Depreciation and amortization									(23	)		(23	)										(21	)		(21	)
Stock-based compensation									(22	)		(22	)										(23	)		(23	)
Non-recurring income (expense) (4)																							(3	)		(3	)
Operating income (loss)												70														(14	)
Other income (expense), net												(8	)													(1	)
Income (loss) before income taxes												62														(15	)
(Provision) benefit for income taxes												(37	)													(58	)
Net income (loss)												25														(73	)

Three months ended September 30, 2021

Tripadvisor Core (1)

Viator (2)

TheFork (3)

Corporate &
Eliminations

Total

(in millions)

External revenue

$
200

$
73

$
30

$
—

$
303

Intersegment revenue

12

—

—

(12
)

—

Total Revenue

$
212

$
73

$
30

$
(12
)

$
303

Adjusted EBITDA

73

1

(2
)

—

72

Depreciation and amortization

(27
)

(27
)
Stock-based compensation

(29
)

(29
)
Operating income (loss)

16

Other income (expense), net

(13
)
Income (loss) before income taxes

3

(Provision) benefit for income taxes

(2
)
Net income (loss)

1

Nine months ended September 30, 2022

Tripadvisor Core (1)

Viator (2)

TheFork (3)

Corporate &
Eliminations

Total

(in millions)

External revenue

$
679

$
366

$
93

$
—

$
1,138

Intersegment revenue

70

—

—

(70
)

—

Total Revenue

$
749

$
366

$
93

$
(70
)

$
1,138

Adjusted EBITDA

284

(8
)

(24
)

—

252

Depreciation and amortization

(73
)

(73
)
Stock-based compensation

(65
)

(65
)
Legal reserves and settlements

(1
)

(1
)
Operating income (loss)

113

Other income (expense), net

(30
)
Income (loss) before income taxes

83

(Provision) benefit for income taxes

(61
)
Net income (loss)

22


	Nine months ended September 30, 2021														Three months ended March 31, 2022
	Tripadvisor Core (1)		Viator (2)			TheFork (3)			Corporate & Eliminations			Total			Tripadvisor Core (1)		Viator (2)			TheFork (3)			Corporate & Eliminations			Total
	(in millions)														(in millions)
External revenue	$	481	$	125		$	55		$	—		$	661		$	180	$	56		$	26		$	—		$	262
Intersegment revenue		22		—			—			(22	)		—			11		—			—			(11	)		—
Total Revenue	$	503	$	125		$	55		$	(22	)	$	661		$	191	$	56		$	26		$	(11	)	$	262
Adjusted EBITDA		128		(25	)		(32	)		—			71			55		(20	)		(8	)		—			27
Depreciation and amortization										(85	)		(85	)										(25	)		(25	)
Stock-based compensation										(89	)		(89	)										(22	)		(22	)
Operating income (loss)													(103	)													(20	)
Other income (expense), net													(35	)													(13	)
Income (loss) before income taxes													(138	)													(33	)
(Provision) benefit for income taxes													19														(1	)
Net income (loss)													(119	)													(34	)

(1)

Corporate general and administrative personnel costs of $2 million ~~and $~~4 ~~million~~ for both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively,~~ were allocated to the Viator and TheFork segments.

(2)

Includes allocated corporate general and administrative personnel costs from ~~our~~the Tripadvisor Core segment of $1 million ~~and $~~2 ~~million for~~each of the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, respectively.~~2022.

(3)

Includes allocated corporate general and administrative personnel costs from ~~our~~the Tripadvisor Core segment of $1 million each of the three months ended March 31, 2023 and 2022.

(4)

The Company expensed $23 million ~~for~~of previously capitalized transaction costs during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 to general and ~~2021, respectively.~~administrative expenses on our unaudited condensed consolidated statement of operations. The Company considers such costs to be non-recurring in nature.

Refer to “Note 4:Financial Instruments and Fair Value Measurements” under the section entitled “Risks and Concentrations” for information regarding our major customer concentrations.

Revenue sources within our Tripadvisor Core segment, consisting of Tripadvisor-branded hotels revenue, Tripadvisor-branded display and platform revenue, Tripadvisor experiences and dining revenue, and other revenue, along with our Viator and TheFork segment revenue sources, comprise our products. Refer to “Note 3: Revenue Recognition” for our revenue by product.

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

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q, and the consolidated financial statements and accompanying notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

This Quarterly Report ~~on Form 10-Q~~ contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, Part I, Item 1A, “Risk Factors,” as well as those discussed elsewhere in this report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation to, and do not intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

The Tripadvisor group operates as a family of brands with a purpose of connecting people to experiences worth sharing. Our vision is to be the world’s most trusted source for travel and experiences. The Company operates across three reportable segments: Tripadvisor Core, Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.

Tripadvisor ~~operates~~Core’s purpose is to empower everyone to be a better traveler by serving as the world’s most trusted and essential travel guidance platform. Since Tripadvisor’s founding in 2000, the Tripadvisor brand has developed a relationship of trust and community with travelers and experience seekers by providing an online global platform for travelers to discover, generate, and share authentic user-generated content, or UGC, in the form of ratings and reviews for destinations, points-of-interest, or POIs, experiences, alternative accommodation rentals, restaurants, and cruises in over 40 countries and over 20 languages across the world. As of December 31, 2022, Tripadvisor offered more than 1 billion user-generated ratings and reviews on nearly 8 million experiences, accommodations, restaurants, airlines, and cruises. Tripadvisor’s online platform attracts one of the world’s largest travel ~~guidance platform, connecting a global audience~~audiences, with hundreds of prospective travelers with travel partners through rich content, price comparison tools, and online reservation and related services for destinations, accommodations, travel activities and experiences, and restaurants. Our mission is to help people around the world plan, book and experience the perfect trip.millions of visitors annually.

Viator’s purpose is to bring more wonder into the world—to bring extraordinary, unexpected, and forever memorable experiences to more people, more often, wherever they are traveling. In ~~2000, under our flagship brand Tripadvisor, we launched www.tripadvisor.com in the U.S. Since then, we have built a portfolio~~doing so, Viator elevates tens of ~~travel guidance brands and~~thousands of businesses, ~~seamlessly connecting travelers to destinations, accommodations, travel activities and experiences, and restaurants in over 40 markets and over 20 languages worldwide.~~

large and small. Viator delivers on its purpose by enabling travelers to discover and book iconic, unique and memorable experiences from operators around the globe. Viator's online marketplace is comprehensive and easy-to-use, connecting millions of travelers to the world’s largest supply of bookable tours, activities and attractions—over 300,000 experiences from more than 50,000 operators as of December 31, 2022. Viator is an experiences OTA singularly focused on the needs of both travelers and operators with the largest supply of bookable experiences available to travelers.

TheFork’s purpose is to deliver happiness through amazing dining experiences. TheFork delivers on its purpose by providing an online marketplace that enables diners to discover and book online reservations at more than 55,000 restaurants in 12 countries, as of December 31, 2022, across the UK, western and central Europe, and Australia. TheFork has become an urban, gastronomic guide with a strong community that offers more than 20 million restaurant reviews.

The Tripadvisor group operates ~~the world’s largest travel guidance platform, as measured by~~in a unique users de-duplicated monthly, according to SimilarWeb. As a result, Tripadvisor represents an attractive platform for travel partners – including hotel chains, independent hoteliers, OTAs, destination marketing organizations, experience operators, restaurants, and other travel-related and non-travel related product and service providers – who seek to market and sell their products and services to a global audience. Tripadvisor’s platform and product offerings enable consumers to discover, research and price shop a variety of travel products, including hotels, cruises, vacation rentals, flights, cars, tours, travel activities and other experiences, and restaurants; and book a number of these travel experiences either directly on our platform, or on our travel partners’ websites or mobile apps.

In the second quarter of 2022, as part of our continuous review of the business and in consultation with our CEO, who also serves as our CODM, we evaluated our operations and realigned the reportable segment information which our CODM regularly assesses to evaluate performance for operating decision-making purposes, including allocation of resources. The revised segment reporting structure includes the following reportable segments: (1) Tripadvisor Core; (2) Viator; and (3) TheFork. For further information, including the change in segments and principal revenue streams within these segments, refer to “Note 3: ~~Revenue Recognition,” “Note 5:~~ ~~Goodwill,” and “Note 14:~~ ~~Segment Information~~,” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q. All prior period segment disclosure information has been reclassified to conform to the current reporting structure in this Form 10-Q. These reclassifications had no effect on our unaudited condensed consolidated financial statements in any period.

The global travel market (which excludes dining) is expected to reach $1.4 trillion of bookings in 2024, according to Phocuswright, an independent travel, tourism and hospitality research firm. Given we have the world’s largest travel audience, we believe that Tripadvisor’s influenceposition in the travel ~~ecosystem is significant. Our long-term growth strategy aims to increase consumer engagement on our platform~~ and ~~drive profitable growth through:~~experiences ecosystem:

The Tripadvisor group is united in a shared purpose and vision, but operates different value creation strategies for each segment. We manage priorities and levels of investment based upon factors that include the size and maturity of each segment, the size and maturity of the addressable market, growth opportunities, and competitive positioning.

In our Tripadvisor Core segment, we offer a compelling value proposition to both travelers and partners across a number of key categories that include accommodations, experiences, and ~~restaurants~~media. This value proposition is delivered through a collection of durable assets that we believe is difficult to replicate: a trusted brand, authentic UGC, a large community of contributors, and one of the largest global travel audiences. Our strategy in ~~top destinations worldwide;~~

We expect to ~~enable our~~drive growth across the Tripadvisor group through ~~investment in:~~

In particular, the Tripadvisor Core segment plays an important role in our portfolio. For over two decades, we believe we have built difficult to replicate assets such as a trusted brand, authentic content, a large community of contributors, and one of the largest global travel audiences available. Our long-term strategy for the Tripadvisor Core segment builds on our heritage and the reasons hundreds of millions of travelers come to Tripadvisor each year. Fundamental to this strategy will be: (1) innovating world-class travel guidance and planning products to help travelers make confident decisions in a world where it is hard to find advice you can trust; (2) prioritizing deeper engagement with travelers by leveraging our rich data and technology assets to provide more relevant, curated, and contextual content throughout the traveler journey; and (3) driving a step change in the value we can deliver to our partners by

accelerating and diversifying the monetization of our valuable audience across key categories, including hotel meta, media advertising, and experiences. Taken together, and underpinned by a foundation of operational execution excellence, these strategic priorities are integrated and reinforcing, powered by first party data and signals of intent. We believe an increasingly personalized experience delivers more relevance, greater engagement, and more opportunities for monetization; and that with each interaction we can serve travelers better.

The online travel industry in which we operate is large, ~~and also~~ highly dynamic and competitive. Our overall strategy is to deliver more value to consumers and travel partners in order to generate more monetization on our platform. While we operate with a long-term growth focus, our specific growth objectives and resource allocation strategies can differ in both duration and magnitude within our segments. We describe below ~~these dynamics, as well as the~~ current trends affecting our overall business and reportable segments, ~~key drivers of our financial results, and~~including uncertainties that may impact our ability to execute on our objectives and strategies.

~~The COVID-19~~ Health-related events, such as a pandemic, ~~caused significant~~political instability, geopolitical conflicts, acts of terrorism, fluctuations in currency values, changes in global economic conditions, including the impact of a potential U.S. recession, and increased inflation, are examples of other events that could have a negative impact on the travel ~~leisure, hospitality,~~industry, and ~~restaurant industries (collectively,~~as a result, our financial results in the “travel industry”), and consequently adversely and materially affected our business, results of operations, liquidity and financial condition beginning in early 2020 and throughout that year. Although the pandemic continued to materially impact our business, these trends generally improved, although unevenly at times throughout 2021, with continued improvement being experienced during the first three quarters of 2022. The Company exceeded parity with pre-COVID-19 revenue levels during the third quarter of 2022 on a consolidated basis, given what we believe to be primarily increased consumer demand for travel industry related services, combined with the easing of government travel restrictions.future.

Traffic trends on our platform, a leading indicator of consumer travel demand, have improved substantially since the trough of significant declines seen in March and April 2020. By means of showing a comparison to a pre-COVID-19 timeframe, average monthly unique users on Tripadvisor-branded websites during the third quarter of 2022 was approximately 82% of 2019’s comparable period, an increase from approximately 76% of 2019’s comparable period during the third quarter of 2021. Our consolidated revenue for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 was ~~$459~~$371 million, an increase of ~~51%~~42%, ~~and approximately $1.1 billion, an increase of 72%, respectively,~~ when compared to the same ~~periods~~period in ~~2021, despite~~2022. In the ~~impact~~first quarter of ~~foreign currency fluctuations which~~2023, we ~~estimate negatively impacted consolidated revenue~~continued to observe strong consumer travel demand for our products and services in our core geographies of North America and Europe across all our segments. During the ~~amount of $34 million and $62 million, respectively. In addition, by means of showing a comparison to a pre-COVID-19 timeframe, consolidated revenue for the third~~first quarter of 2022, ~~exceeded parity with 2019’s comparable period, an increase~~we experienced a significant negative impact from ~~approximately 71% of 2019’s comparable period~~the Omicron variant, across our business, which also contributed to the year-over-year revenue growth rate during the ~~third~~first quarter of ~~2021.~~

~~We continue~~2023. Asia-Pacific, which represents a small portion of our overall business, has been slower to ~~be subject~~recover due to ~~risks~~longer and ~~uncertainties related to~~sustained travel restrictions as a result of the COVID-19 pandemic. ~~Continued widespread vaccine distributions, efficacy against existing variants (e.g., Delta, Omicron, and BA.5) and future variants, if any,~~However, in the first quarter of ~~COVID-19, whether there will be resurgences~~2023, travel restrictions across Asia began to ease relative to 2022, contributing to increased year-over-year revenue growth within this region.

In response to increased consumer travel demand across all our segments, we continued to increase performance marketing investments during the first quarter of ~~the virus and subsequent government restrictions, the extent and effectiveness of containment actions taken, and whether consumers' demand for travel and hospitality services~~2023. In Tripadvisor Core, we continue to observe strong performance in hotel meta primarily driven by increased CPC pricing. This environment continued to allow us to increase performance marketing at a profitable ROAS (return on advertising spend), while our direct traffic, including SEO (search engine optimization) or free traffic, continued to be ~~or become negatively impacted remain uncertain. We continue~~slower to ~~believe the travel industry, and our financial~~recover. Prior to Google introducing changes to its SERP (search engine results ~~would be adversely and materially affected upon a resurgence of existing COVID-19 variants (e.g.~~page), Delta, Omicron, and BA.5) or if new variants emerge, which result in reinstated travel bans and/or other government restrictions and mandates, all of which negatively impact consumer demand, sentiment and discretionary spending patterns.

Our Tripadvisor Core segment is comprised of: (1) Tripadvisor-branded hotels – consisting of hotel auction (or hotel meta) revenue, primarily click-based advertising revenue, in addition to hotel B2B revenue, which primarily consists of subscription-based advertising and hotel sponsored placements revenue; (2) Tripadvisor-branded display and platform revenue – which primarily consists of display-based advertising revenue; (3) Tripadvisor experiences and dining revenue – which consists of intercompany (intersegment) revenue related to affiliate marketing commissions earned primarily from experience bookings, and to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, which are eliminated on a consolidated basis, in addition to revenue generated from Tripadvisor restaurant service offerings (or B2B dining offerings); and (4) Other revenue – which consists of cruises, rentals, flights, and cars revenue. For further information on the principal revenue streams within this segment refer to “Note 3: ~~Revenue Recognition” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q.~~

Our overall strategic objective in our Tripadvisor Core segment is to drive revenue and profits while delivering compelling services to consumers and driving a holistic user experience, increased customer engagement and monetization, as well as offering travel partners a diverse set of advertising opportunities on the Tripadvisor platform.

~~For consumers,~~ we test and implement product enhancements that deliver a more engaging and comprehensive hotel shopping experience. This includes providing rich, immersive content – reviews, photos, videos and ratings, among other contributions, increasing the number of travel partners and properties as well as the available hotel supply on our platform. We believe providing consumers tools to discover, research, price shop and book a comprehensive selection of accommodations helps increase brand awareness and brand loyalty and, over time, can result in deeper consumer engagement, more qualified leads delivered to travel partners and greater monetization on our platform.

~~We seek to monetize our influence through hotel-related product improvements, supply and marketing efforts and customer advertising opportunities. Historically, we have~~ generated a significant amount of ~~hotel shoppers~~direct traffic from search engines, such as ~~Google. A hotel shopper is a visitor to~~Google, through strong SEO performance. We believe our ~~platform that views either a listing of hotels in a city or a specific hotel page. Our key ongoing objective related to~~SEO traffic acquisition ~~is to attract or acquire hotel shoppers at or above our desired marketing return on investment targets.~~performance has been negatively impacted in the past, and may be impacted in the future by search engines (primarily Google) increasing the prominence of their own products in search results. Over the long-term, we are focused on driving a greater percentage of our traffic from direct ~~traffic~~ sources ~~rather~~and channels which are more profitable than ~~search engines, which comes with little to no traffic acquisition costs.~~performance marketing channels.

As noted in the discussion above regarding COVID-19, easing of travel restrictions across the world and an increase in consumer travel demand drove improved financial results during the first nine months of 2022, as Tripadvisor Core revenue increased by 34% and 49% during the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 2021, despite the significant impact from the Omicron variant in the month of January 2022, as travel demand and revenue rebounded significantly during the first three quarters of 2022. By means of showing a comparison to a pre-COVID-19 timeframe, during the three months ended September 30, 2022, Tripadvisor Core revenue reached approximately 88% of 2019’s comparable period, an increase from approximately 66% of 2019’s comparable period during the third quarter of 2021, while during the nine months ended September 30, 2022, Tripadvisor Core revenue reached approximately 77% of 2019’s comparable period, an increase from approximately 52% of 2019’s comparable period during the nine months ended September 30, 2021.

Tripadvisor-branded hotels revenue increased 31% and 47%, respectively, during the three and nine months ended September 30, 2022, when compared to the same periods in 2021, primarily driven by growth in our hotel auction (or hotel meta) revenue. During the three months ended September 30, 2022, Tripadvisor-branded hotels revenue reached approximately 95% of 2019’s comparable period, an increase from approximately 73% of 2019’s comparable period during the third quarter of 2021. The Company saw continued strength of recovery in our U.S. hotel auction revenue during the third quarter of 2022 on strong consumer travel demand, exceeding parity with 2019’s comparable period and increased sequentially during the third quarter of 2022 when compared as a percentage to 2019's comparable period. During the third quarter of 2022, our European hotel auction revenue was below 2019's comparable period. In correlation with the increase in consumer travel demand and more favorable hotel auction environment than in 2021, we increased our performance marketing investment during the first nine months of 2022. Relative strength in CPC pricing allowed us to increase spend in marketing channels at a profitable ROAS (return on ad spend), while our free traffic, in particular SEO traffic, has been slower to recover.

While slower to recover than Tripadvisor-branded hotels revenue, our display and platform revenue increased by 14% and 41% during the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 2021. In addition, and by means of also showing a comparison to a pre-COVID-19 timeframe, Tripadvisor-branded display and platform revenue for both the three and nine months ended September 30, 2022 was approximately 80% of 2019’s comparable periods, an increase from approximately 71% and 57% of 2019’s comparable periods during the three and nine months ended September 30, 2021, respectively. This overall improvement during the first three quarters of 2022 was primarily driven by an increase in marketing spend from our advertisers in correlation with increasing consumer travel demand, as discussed above.

Our Tripadvisor experiences and dining revenue increased by 96% and 98% during the three and nine months ended September 30, 2022, respectively, when compared to the same periods in 2021, primarily driven by our experiences offering as a result of the growing travel demand recovery fueled by the easing of government restrictions and increasing consumer travel demand. In addition, and by means of also showing a comparison to a pre-COVID-19 timeframe, Tripadvisor experiences and dining revenue for the three months ended September 30, 2022 was approximately 125% of 2019’s comparable period, an increase from approximately 64% of 2019’s comparable period during the three months ended September 30, 2021, while during the nine months ended September 30, 2022, Tripadvisor experiences and dining revenue reached approximately 116% of 2019’s comparable period, an increase from approximately 59% of 2019’s comparable period during the nine months ended September 30, 2021.

Similar to our other revenue streams, financial results in Other revenue, also improved during the three and nine months ended September 30, 2022, when compared to the same periods in 2021, as a result of increased consumer travel demand as part of the growing travel demand recovery. We continue to operate these businesses opportunistically as they complement our overall strategic objectives to deliver more value to consumers and travel partners.

Over the long-term, we believe that improving our offerings to deepen consumer engagement on our platform will enable us to more effectively monetize our influence. For example, in Tripadvisor-branded display and platform revenue, we enable travel partners to amplify their brand, generate brand impressions, and potentially drive qualified leads and bookings for their businesses. We continue to work on initiatives to better leverage our audience, content, data, travel influence and platform breadth to open up new media advertising opportunities through a more modern, high-powered advertising suite spanning native, video and programmatic solutions. Our platform is open to advertising from travel endemic and non-travel endemic partners. On the consumer side, we are focused on making Tripadvisor membership more valuable for consumers. As an example, during 2021, we launched Tripadvisor Plus, an annual subscription-based membership that offers financial incentives, benefits and perks to members who book hotels and experiences on our platform.

These efforts demonstrate our continued focus on increasing the quality of customer engagement on our platform, including driving membership growth, increasing personalization, and innovating our mobile app experience. We believe delivering – and improving upon – a great experience for users will encourage more users to use our services more frequently, increase member growth and member engagement, and drive loyalty to our brand and services. In turn, we believe this makes our platform more attractive for travel partners, which can result in increased monetization over time for us and our travel partners.

We provide an online marketplace that allows travelers to research and book tours, activities and attractions in popular travel destinations across the globe through our stand-alone Viator-branded platform, which includes website, mobile web, and mobile app. Through Viator, we also power traveler bookings of tours, activities and attractions on behalf of third-party distribution partner websites, including the Tripadvisor platform as well as many of the world’s major OTA, airlines, hotels, online and offline travel agencies, and other prominent content and eCommerce brands.

Our Viator segment contributes to the comprehensive user experience Tripadvisor delivers to its travelers, which we believe helps to increase awareness of, loyalty to, and engagement with our products. Viator also drives more bookings to our travel partners, such as tour operators, which helps them generate greater revenue and increased profitability on our platform. The global ~~tours, activities, and attractions~~experiences market is large, growing, and highly fragmented, with the vast majority of bookings still occurring through traditional offline sources. ~~However, there is~~We are observing a secular shift, ~~occurring~~however, as this market continues to grow and ~~moves more~~accelerate the pace of online adoption. Likewise, the global restaurants category is also benefiting from increased online adoption by both consumers and ~~we believe Viator is well positioned to benefit from this trend.~~partners, particularly in Europe. Given the ~~significant~~competitive positioning of our businesses relative to the attractive growth prospects in ~~this large under-penetrated global market,~~these categories, we expect to continue to invest in these categories across the Tripadvisor group, and in particular, within the Viator ~~business~~and TheFork segments, to ~~take advantage of these opportunities to increase consumer engagement, bookings~~continue accelerating revenue growth, operating scale, and ~~revenue growth~~market share gains for the long-term.

This segment was negatively and materially impacted at varying levels by a significant reduction in consumer demand due to the COVID-19 pandemic beginning in the first quarter of 2020 and throughout that year, which had reduced consumer willingness to research, purchase, and consume travel activities. This negative impact was driven by a wide variety of government-instituted actions and restrictions around the globe aimed at limiting the spread of the virus, all of which have impacted consumer access to experience offerings.

We began to see improvement in our Viator segment’s financial results during the third quarter of 2021, and this trend has continued through the third quarter of 2022, as revenue increased by 138% during the three months ended September 30, 2022, when compared to the same period in 2021, primarily driven by the travel demand recovery, combined with the easing of government restrictions. By means of showing a comparison to a pre-COVID-19 timeframe, our Viator segment revenue for the third quarter of 2022 was approximately 179% of 2019’s comparable period, an increase from approximately 75% of 2019’s comparable period during the third quarter of 2021. As a result of strong consumer demand in our Viator segment with the growing travel demand recovery during the first three quarters of 2022, we significantly increased investments in performance marketing channels in order to

capture additional market share while maintaining a positive return on investment measured over the projected lifetime of a customer. From a geographical perspective, we continued to see strong consumer demand for experiences in both the U.S. and Europe as a destination during the third quarter of 2022, as travel between North America and Europe increased, in particular as U.S. consumers continued to travel internationally.

We continue to execute on new initiatives to delight and engage new and repeat travelers. For example, we recently improved our site navigation, recommendations, sort orders, and quality of our bookable products. We also created traveler support improvements, as new customer acquisition remains a key growth opportunity during the growing travel recovery. We also remain focused on improving the traveler experience by enhancing the performance and capabilities of Viator’s mobile app. For travel partners on Viator’s platform, we are focused on scaling a new advertising program, Viator Accelerate, which is aimed at helping operators increase their visibility on the platform through targeted advertising, ultimately with the goal of increasing a travel partner’s bookings and traveler reach.

We provide information and services for consumers to research and book restaurant reservations through our stand-alone TheFork business in our dedicated online restaurant reservations platform, TheFork. TheFork segment contributes to and complements the comprehensive user experience we deliver, which we believe helps to increase awareness and loyalty to our products, which in turn drives more bookings to our restaurant partners and generates greater revenue and increased profitability on our restaurant reservations platform. TheFork is primarily European based, with operations in all major European markets. We largely generate transaction fees (or per seated diner fees) that are paid by our restaurant customers for diners seated primarily from bookings through TheFork’s online reservation system.

This segment was negatively and materially impacted at varying levels by a significant reduction in consumer demand due to the COVID-19 pandemic beginning in the first quarter of 2020. This negative impact has also been driven by a wide variety of government-instituted actions and restrictions around the globe aimed at limiting the spread of the virus, all of which have impacted consumer access to restaurants.

During the first quarter of 2021, restaurants in most of the European countries in which TheFork operates were ordered to remain closed. In TheFork segment, we saw a notable recovery beginning in mid-May 2021, as restaurants in most European countries in which TheFork operates began reopening for in-restaurant dining. However, late in the fourth quarter of 2021 and early into the first quarter of 2022, Omicron-related restrictions and related impact to consumer demand within Europe again began to impact TheFork. These Omicron-related restrictions were again lifted late in the first quarter of 2022, bringing a recovery of consumer demand and revenue, although European consumer demand and restaurant openings remain below pre-pandemic levels through the third quarter of 2022. TheFork segment revenue during the third quarter of 2022 increased by approximately 17%, primarily driven by improving consumer demand, when compared to the same period in 2021. By means of showing a comparison to a pre-COVID-19 timeframe, TheFork revenue during the third quarter of 2022 slightly exceeded parity with 2019's comparable period, an increase from approximately 88% of 2019’s comparable period during the third quarter of 2021.

Given the significant market opportunities in this large category, we expect to continue to invest in building this offering, including online traffic acquisition, in building out TheFork brand, in order to drive consumer engagement, bookings for our restaurant partners, obtain additional restaurant supply, and revenue growth for the long-term. Furthermore, we are actively investing in, including additional personnel, to support increased payment options and technology integration in our TheFork app to allow users to increase engagement beyond booking and into payment offerings such as TheFork PAY.

As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~nearly 3,000~~approximately 3,115 employees. Approximately ~~55%~~56%, ~~35%~~34%, and 10% of the Company’s current employees are based in Europe, the U.S., and the rest of world, respectively. ~~Our number of employees increased approximately 10% as compared to September 30, 2021.~~ Additionally, we use ~~contingent workers, including temporary employees, agency employees and~~ independent contractors to supplement our workforce. We believe we have good relationships with our employees and contractors, including relationships with employees represented by international works councils or other similar organizations.

~~Consumers’~~Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel ~~partners’~~partner advertising investments, and therefore our revenue and operating profits, have also historically followed a seasonal pattern. Our financial performance tends to be seasonally highest in the second and third quarters of a given year, which includes the seasonal peak in

consumer demand, including traveler ~~hotel and rental~~accommodation stays, and travel ~~activities and~~ experiences taken, compared to the first and fourth quarters, which represent seasonal low points. ~~During~~In addition, during the first half of the year, experience ~~and rentals~~ bookings typically exceed the amount of completed experiences, ~~and rental stays,~~ 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, which factors include further significant shifts in our business mix, or adverse economic conditions, ~~that could result in future seasonal patterns that are different from historical trends. For example, although~~ consumer travel demand was materially lower than historic levels due to the impact of COVID-19 on our business during 2020, these trends generally improved, albeit unevenly, during 2021, resulting in increased revenues, and working capital and operating cash flow more akin to typical historical seasonality trends, which has continued during the first three quarters of 2022. However, it is difficult to predict the seasonality for the upcoming quarters, given the sustained uncertainty related to the COVID-19 pandemic and whether there will be resurgences, or ~~if new variants will emerge, and the pace of continued recovery in our key markets.~~health-related events.

Critical accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they require that management use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance with GAAP. Preparation of the consolidated financial statements and accompanying notes requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as revenue and expenses during the periods reported. Management bases its estimates on historical experience, when applicable and other assumptions that it believes are reasonable under the circumstances. Actual results may differ from estimates under different assumptions or conditions.

There are certain critical estimates that we believe require significant judgment in the preparation of our consolidated financial statements. We consider an accounting estimate to be critical if:

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

There have been no material changes to our significant accounting policies since December 31, ~~2021,~~2022, as compared to those described under “Note 2: Significant Accounting Policies”, in the notes to consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change				Three months ended March 31,						% Change
	2022			2021			2022 vs. 2021			2022			2021			2022 vs. 2021				2023			2022			2023 vs. 2022
Revenue	$	459		$	303			51	%	$	1,138		$	661			72	%		$	371		$	262			42	%

Costs and expenses:
Cost of revenue		32			23			39	%		85			54			57	%			29			22			32	%
Selling and marketing		234			148			58	%		591			343			72	%			219			141			55	%
Technology and content		55			52			6	%		162			161			1	%			68			54			26	%
General and administrative		45			37			22	%		114			121			(6	)%			48			40			20	%
Depreciation and amortization		23			27			(15	)%		73			85			(14	)%			21			25			(16	)%
Total costs and expenses:		389			287			36	%		1,025			764			34	%			385			282			37	%
Operating income (loss)		70			16			338	%		113			(103	)	n.m.					(14	)		(20	)		(30	)%
Other income (expense):
Other income (expense)
Interest expense		(11	)		(12	)		(8	)%		(33	)		(34	)		(3	)%			(11	)		(12	)		(8	)%
Interest income		4			—		n.m.				7			1			600	%			11			1			1000	%
Other income (expense), net		(1	)		(1	)		0	%		(4	)		(2	)		100	%			(1	)		(2	)		(50	)%
Total other income (expense), net		(8	)		(13	)		(38	)%		(30	)		(35	)		(14	)%			(1	)		(13	)		(92	)%
Income (loss) before income taxes		62			3			1,967	%		83			(138	)	n.m.					(15	)		(33	)		(55	)%
(Provision) benefit for income taxes		(37	)		(2	)		1,750	%		(61	)		19		n.m.					(58	)		(1	)		5700	%
Net income (loss)	$	25		$	1			2,400	%	$	22		$	(119	)	n.m.				$	(73	)	$	(34	)		115	%

Other Financial Data:
Adjusted EBITDA (1)	$	115		$	72			60	%	$	252		$	71			255	%		$	33		$	27			22	%

n.m. = not meaningful
(1) Consolidated Adjusted EBITDA is considered a non-GAAP measure as defined by the SEC. Please refer to “Adjusted EBITDA” below for more information, including tabular reconciliations to the most directly comparable GAAP financial measure.
(1) Adjusted EBITDA is considered a non-GAAP measure as defined by the SEC. Please refer to “Adjusted EBITDA” below for more information, including tabular reconciliations to the most directly comparable GAAP financial measure.																			(1) Adjusted EBITDA is considered a non-GAAP measure as defined by the SEC. Please refer to “Adjusted EBITDA” below for more information, including tabular reconciliations to the most directly comparable GAAP financial measure.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change			Three months ended March 31,						% Change
	2022			2021			2022 vs. 2021			2022			2021			2022 vs. 2021			2023			2022			2023 vs. 2022
Revenue by Segment:	(in millions)									(in millions)									(in millions)
Tripadvisor Core (1)	$	284		$	212			34	%	$	749		$	503			49	%	$	244		$	191			28	%
Viator		174			73			138	%		366			125			193	%		115			56			105	%
TheFork		35			30			17	%		93			55			69	%		35			26			35	%
Intersegment eliminations (1)		(34	)		(12	)		183	%		(70	)		(22	)		218	%		(23	)		(11	)		109	%
Total revenue	$	459		$	303			51	%	$	1,138		$	661			72	%	$	371		$	262			42	%
Adjusted EBITDA by Segment:
Tripadvisor Core	$	112		$	73			53	%	$	284		$	128			122	%	$	72		$	55			31	%
Viator		12			1			1,100	%		(8	)		(25	)		(68	)%		(30	)		(20	)		50	%
TheFork		(9	)		(2	)		350	%		(24	)		(32	)		(25	)%		(9	)		(8	)		13	%
Total Adjusted EBITDA	$	115		$	72			60	%	$	252		$	71			255	%	$	33		$	27			22	%
Adjusted EBITDA Margin by Segment (2):
Tripadvisor Core		39	%		34	%					38	%		25	%					30	%		29	%
Viator		7	%		1	%					(2	)%		(20	)%					(26	)%		(36	)%
TheFork		(26	)%		(7	)%					(26	)%		(58	)%					(26	)%		(31	)%

Tripadvisor Core segment revenue increased by ~~$72~~$53 million, ~~and $246 million~~or 28%, during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to increased hotel ~~auction (or hotel meta)~~meta revenue, and, to a lesser extent, an increase in Tripadvisor experiences and dining and Tripadvisor-branded display and platform revenue, all of which was ~~due to the impact of growing~~primarily driven by increased consumer travel demand, ~~and the travel industry recovery on our business, as discussed above. In~~in addition ~~we estimate this segment's revenue performance was negatively impacted by foreign currency fluctuations of $15 million during the three months ended September 30, 2022, when compared~~ to the ~~same period~~negative impact on this segment’s revenue from the Omicron variant in ~~2021.~~the first quarter of 2022.

Adjusted EBITDA in our Tripadvisor Core segment increased ~~$39~~$17 million, ~~and $156 million~~or 31%, during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021.~~2022. This was primarily due to an increase in revenue as noted above, partially offset by an increase in direct selling and marketing expenses related to ~~search engine marketing, or~~ SEM and other online paid traffic acquisition costs in response to ~~increasing~~increased consumer travel demand, ~~as travel restrictions have eased and the travel industry recovers,~~ and to a lesser extent, increased personnel and overhead costs to ~~help~~ support business growth ~~during~~related to the ~~growing~~ travel demand ~~recovery.~~recovery during 2022.

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

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~66%~~69% and ~~68%, respectively, of our Tripadvisor Core segment revenue was derived from Tripadvisor-branded hotels revenue. For the three and nine months ended September 30, 2021, 67% and 69%~~71%, respectively, of our Tripadvisor Core segment revenue was derived from Tripadvisor-branded hotels revenue. Tripadvisor-branded hotels revenue increased ~~$45 million and $163~~$33 million during the three ~~and nine~~

months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021.~~2022. This increase was primarily driven by ~~our~~improved hotel ~~auction (or hotel meta)~~meta revenue across all geographic markets, ~~and, to a lesser extent,~~as well as improved hotel B2B revenue, ~~due to growing~~primarily driven by increased consumer travel demand ~~and travel industry recovery and easing~~compared to the first quarter of ~~government travel and leisure restrictions related to COVID-19.~~2022, which was negatively impacted by the Omicron variant. As consumer travel demand ~~continued to increase during the first three quarters of 2022,~~increased, the Company saw continued improvement in hotel ~~auction~~meta monetization, as CPC rates ~~during~~increased when compared to the ~~first three quarters~~same quarter of 2022, ~~were near or exceeded parity of 2019's comparable period,~~ which enabled increased efficient marketing investment on performance ~~channels, enhancing our 2022 hotel auction revenue growth. See “~~channels.~~Trends” above for further discussion.~~

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, 12% and ~~13%~~14%, respectively, of ~~our~~ Tripadvisor Core segment revenue was derived from our Tripadvisor-branded display and platform revenue, which consists of revenue from Tripadvisor-branded display-based advertising (or “media advertising”) across our platform. ~~For both the three and nine months ended September 30, 2021, 14% of our Tripadvisor Core segment revenue was derived from our~~ Tripadvisor-branded display and platform ~~revenue.~~

~~Tripadvisor-branded display-based advertising~~ revenue increased by $4 million ~~and $28 million~~ during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily driven by an increase in marketing spend from our advertisers, in correlation with ~~increasing~~increased consumer travel ~~demand, as discussed above.~~demand.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~16%~~14% and ~~14%~~10%, respectively, of our Tripadvisor Core segment revenue was derived from our Tripadvisor experiences and dining revenue, which includes intercompany (intersegment) revenue consisting of affiliate marketing commissions earned primarily from experience bookings, and to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, which are eliminated on a consolidated basis, in addition to revenue earned from Tripadvisor's ~~restaurant~~restaurants service offerings. ~~For the three and nine months ended September 30, 2021, 11% and 10%, respectively, of our Tripadvisor Core segment revenue was derived from our Tripadvisor experiences and dining revenue.~~

Tripadvisor experiences and dining revenue increased by ~~$22 million and $50~~$13 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily driven by marketing investment on performance channels to capture increased demand, conversion rate improvements and enhancements to our ~~experiences offering due to the impact of growing consumer travel demand and travel industry recovery on our business, as discussed above.~~online user experience.

For each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~6% and~~ 5%~~, respectively,~~ of our Tripadvisor Core segment revenue was derived from Other revenue, which includes alternative accommodation rentals revenue, in addition to primarily click-based advertising and display-based advertising revenue from our ~~cruises,~~cruise, flights, and rental cars offerings on Tripadvisor websites and mobile apps. ~~For the three and nine months ended September 30, 2021, 8% and 7%, respectively, of our Tripadvisor Core segment revenue was derived from Other revenue.~~

Other revenue increased by ~~$1 million and $5~~$3 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to strong performance in our cruise category as the ~~impact of growing consumer travel demand and travel~~cruise industry ~~recovery on our business, as discussed above.~~continues to recover.

Viator segment revenue increased by ~~$101~~$59 million, ~~and $241 million~~or 105%, during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily driven by ~~the~~increased consumer ~~travel demand recovery and pent-up~~ demand for experiences across all ~~geographies, in conjunction with the lifting of various government restrictions on experience activities during the same time period, which is discussed further in “Trends” above. In addition,~~geographies. Viator is also benefitting from ~~the~~a larger macro trend, or secular shift, as the large global market in which it operates continues to grow and ~~in addition,~~ migrate online from traditional offline sources. ~~We also~~In addition, we estimate this segment's revenue ~~performance~~growth rate was negatively impacted by foreign currency fluctuations of ~~$13 million~~approximately 10% during the three months ended ~~September 30, 2022,~~March 31, 2023 when compared to the same period in ~~2021.~~2022.

Adjusted EBITDA loss in our Viator segment increased by ~~$11~~$10 million during the three months ended ~~September 30, 2022, while Adjusted EBITDA loss decreased by $17 million during the nine months ended September 30, 2022,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022. This increase was primarily due to ~~an increase in revenue as noted above, largely offset by~~ an increase in selling and marketing expenses related to SEM, other online paid traffic acquisition costs, and other marketing costs in response to increased consumer demand for experiences ~~as part of the growing consumer travel demand recovery~~ and to grow market share, and, to a lesser extent, an increase in direct costs from credit card payments and other revenue-related transaction costs in direct correlation with the increase in ~~revenue, as well as increased~~revenue. In addition, personnel and overhead costs increased to ~~help~~ support business growth ~~during the~~related to consumer demand and travel demand ~~recovery.~~recovery during 2022. This was largely offset by an increase in revenue as noted above.

TheFork segment revenue increased by $5$9 million, ~~and $38 million~~or 35%, during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022. This improvement was driven by ~~the~~increased consumer travel demand ~~recovery and various government restrictions on restaurants being lifted during~~compared to the ~~same time period,~~first quarter of 2022, which ~~is discussed further in “Trends” above, despite~~was negatively impacted by the ~~impact of~~

Omicron variant. In addition, we estimate this segment's revenue growth rate was negatively impacted by foreign currency fluctuations ~~which we estimate negatively impacted this segment's revenue performance~~of approximately 6% during the three months ended ~~September 30, 2022~~March 31, 2023 when compared to the same period in ~~the amount of $6 million.~~2022.

Adjusted EBITDA loss in TheFork segment increased by $7$1 million during the three months ended ~~September 30, 2022~~March 31, 2023 when compared to the same period in ~~2021,~~2022, primarily due to an increase in selling and marketing expenses related to ~~online paid traffic acquisition costs, in addition to~~ television advertising costs, in response to ~~increased demand as part of the~~ consumer travel and local demand recovery as COVID-19 related government restrictions on restaurants were

lifted during 2022 and, to a lesser extent, an increase in personnel and overhead costs to ~~help~~ support business growth ~~during~~related to the travel demand recovery ~~partially~~during 2022. This was largely offset by an increase in revenue as noted above.

Adjusted EBITDA loss in TheFork segment decreased by $8 million during the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to an increase in revenue as noted above, and to a lesser extent, non-income tax related government assistance benefits related to COVID-19 relief received during the second quarter of 2022 of approximately $11 million recorded as a benefit to general and administrative expenses, largely offset by an increase in selling and marketing expenses related to online paid traffic acquisition costs, in addition to television advertising costs, in response to increased demand as part of the consumer travel demand recovery and, to a lesser extent, an increase in personnel and overhead costs to help support business growth during the travel demand recovery.

Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as credit card and other booking transaction payment fees, data center costs, costs associated with prepaid tour tickets, ad serving fees, flight search fees, and other transaction costs. In addition, cost of revenue includes personnel and overhead expenses, including salaries, benefits, stock-based compensation and bonuses for certain customer support personnel who are directly involved in revenue generation.

Cost of revenue increased ~~$9 million and $31~~$7 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, the majority of which iswas due to increased direct costs from credit card payment processing fees and other revenue-related transaction costs in our Viator segment in direct correlation with the increase in revenue, as Viator serves as the merchant of record for the majority of its experience booking transactions.

Selling and marketing expenses consist of direct costs, including traffic generation costs from SEM and other online traffic acquisition costs, syndication costs and affiliate marketing commissions, social media costs, brand advertising (including television and other offline advertising), promotions and public relations. In addition, our selling and marketing expenses consist of indirect costs such as personnel and overhead expenses, including salaries, commissions, benefits, stock-based compensation, and bonuses for sales, sales support, customer support and marketing employees.

Direct selling and marketing costs increased ~~$79 million and $236~~$70 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, while direct selling and marketing costs as a percentage of consolidated revenue was 44% during the three months ended March 31, 2023, an increase from 36% when compared to the same period in 2022, primarily due to increased marketing investments related to growth opportunities in our experiences category.

The increase in direct selling and marketing costs was primarily due to an increase of ~~$74~~approximately $63 million ~~and $220 million,~~

~~respectively,~~ in paid online traffic acquisition costs, including SEM and other paid online traffic acquisition spend, and also other marketing costs, the substantial majority of which was incurred within our Viator and Tripadvisor Core ~~and Viator~~ segments, in ~~response~~order to ~~increasing~~capture increased consumer travel demand ~~as travel activity restrictions have eased~~ and investment in the ~~travel industry recovers,~~marketing of our experiences offerings within these segments, as well as, and to a lesser extent, increased television advertising costs of ~~$5 million and $12~~$6 million in TheFork segment ~~during the three and nine months ended September 30, 2022, respectively, when compared~~in order to ~~the same periods in 2021.~~increase brand awareness.

Personnel and overhead costs increased ~~$7 million and $12~~$8 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to an increase in headcount and contingent staff ~~and additional headcount~~ to ~~help~~ support business growth ~~during~~related to the ~~growing~~ travel demand ~~recovery.~~recovery during 2022.

Technology and content expenses consist primarily of personnel and overhead expenses, including salaries and benefits, stock-based compensation expense, and bonuses for salaried employees and contractors engaged in the design, development, testing, content support, and maintenance of our platform. Other costs include licensing, maintenance, ~~expense,~~ computer supplies, telecom, ~~costs,~~ content translation and localization, ~~costs,~~ and ~~consulting costs.~~consulting.

~~Personnel~~Technology and ~~overhead~~content costs increased $1$14 million during the three months ended ~~September 30, 2022,~~March 31, 2023 when compared to the same period in ~~2021,~~2022, primarily due to increased personnel and overhead costs resulting from additional headcount and contingent staff to ~~help~~ support business growth ~~during~~related to the travel demand recovery ~~partially offset by a decrease in stock-based compensation expense of $3 million~~ during ~~the three months ended September 30,~~ 2022. Personnel and overhead costs decreased $3 million during the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to a decrease in stock-based compensation expense of $8 million during the nine months ended September 30, 2022, partially offset by additional headcount to help support business growth during the travel demand recovery.

General and administrative expenses consist primarily of personnel and related overhead costs, including personnel engaged in leadership, finance, legal, and human resources, as well as stock-based compensation expense for those same personnel. General and administrative costs also include professional service fees and other fees including audit, legal, tax and accounting, and other operating costs including bad debt expense, non-income taxes, such as sales, use, digital services, and other non-income related taxes.

General and administrative costs increased $8 million during the three months ended ~~September 30, 2022,~~March 31, 2023 when compared to the same period in ~~2021. Personnel and overhead costs increased $1 million during~~2022, the ~~three months ended September 30, 2022, when compared to the same period in 2021, primarily~~majority due to ~~additional headcount to help support business growth during the travel demand recovery, partially offset by~~ a ~~decrease~~$5 million increase in ~~stock-based compensation expense of $3 million during the three months ended September 30, 2022. Professional~~professional service fees and other costs, increased $7 million during the three months ended September 30, 2022, when compared to the same period in 2021, primarily due to an increase in digital service taxes in Europe of $4 million and, to a lesser extent, bad debt expense.

General and administrative costs decreased $7 million during the nine months ended September 30, 2022, when compared to the same period in 2021. Personnel and overhead costs decreased $2 million during the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to a ~~decrease~~non-recurring cost of $3 million related to previously capitalized transaction costs and increased digital service tax costs. In addition, an increase in ~~stock-based compensation expense~~personnel and overhead costs of ~~$12~~$3 million ~~during the nine months ended September 30, 2022, partially offset~~was driven by additional headcount to help support business growth ~~during~~related to the travel demand ~~recovery. Professional service fees and other costs decreased $5 million~~recovery during the nine months ended September 30, 2022, when compared to the same period in 2021, primarily due to an increase in non-income tax related government assistance benefits related to COVID-19 relief of $10 million during the nine months ended September 30, 2022, as $11 million was received by the Company during the second quarter of 2022, partially offset primarily by an increase in digital service taxes in Europe of $6 million.2022.

Depreciation expense consists of depreciation on computer equipment, leasehold improvements, furniture, office equipment and other assets, and amortization of capitalized website development costs and right-of-use (“ROU”) assets related to our finance lease. Amortization consists of the amortization of definite-lived intangibles purchased in business acquisitions.

Depreciation and amortization decreased $4 million ~~and $12 million~~ during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to the completion of amortization related to certain intangible assets from business acquisitions and capitalized website development costs in previous years.

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

~~Interest expense did not change materially during the three and nine months ended September 30, 2022, when compared to the same periods in 2021.~~ The majority of interest expense reported ~~in all periods,~~during the three months ended March 31, 2023 and 2022 was ~~incurred under~~related to the 2025 Senior Notes. Refer to “Note 7:6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report ~~on Form 10-Q~~ for further ~~information.~~information on the 2025 Senior Notes.

Interest income primarily consists of interest earned from bank deposits available on demand, term deposits, money market funds, and marketable securities, including amortization of discounts and premiums on our marketable securities.

Interest income increased ~~$4 million and $6~~$10 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021,~~2022, primarily due to an increase in the average amount of cash invested and increased interest rates received on bank and term deposits, and return on money market funds during ~~2022.~~the quarter.

Other income (expense), net generally consists of net foreign exchange gains and losses, forward contract gains and losses, earnings/(losses) from equity method investments, gain/(loss) and impairments on non-marketable investments, gain/(loss) on sale/disposal of businesses, and other non-operating income (expenses).

Other expense, net ~~increased $2~~decreased $1 million during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023 when compared to the same period in ~~2021,~~2022, primarily due to ~~increased~~ net foreign exchange gains and losses related to foreign currency ~~transaction losses as a result of the fluctuation of foreign exchange rates during 2022, partially offset by forward contract gains.~~fluctuations.

Our first quarter of 2023 effective tax rate differs from the U.S. federal statutory rate of 21%, primarily as a result of a discrete item recorded during the quarter, as described below.

We recorded ~~total income tax provisions of $37 million and $61 million for the three and nine months ended September 30, 2022, respectively. We recorded a total~~an income tax provision of $2$58 million for the three months ended ~~September 30, 2021, while we recorded a total income tax benefit of $19 million for the nine months ended September 30, 2021.~~March 31, 2023. The change in our income ~~taxes~~tax provision and our effective tax rate during the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, when compared to the same ~~periods~~period in ~~2021,~~2022, was primarily ~~due~~the result of an IRS audit settlement and the adjustment to ~~an increase in pretax~~our existing transfer pricing income ~~recognized~~tax reserves for subsequent tax years, totaling $55 million, recorded during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. Refer to “Note 9:8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report ~~on Form 10-Q~~ for further information.

Net ~~income (loss) improved~~loss increased by ~~$24 million and $141~~$39 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 when compared to the same ~~periods~~period in ~~2021, primarily due to an~~2022. The increase in ~~revenue, as described in more detail above under “Revenue and Segment Information~~”,net loss was largely ~~offset~~driven by ~~an increase in~~increased direct selling and marketing ~~expenses~~costs in response to increasing consumer travel demand and to grow market share, as ~~travel activity restrictions eased~~well as an incremental income tax expense of $55 million during the first quarter as a result of an IRS audit settlement and the ~~travel industry recovers,~~adjustment to our existing transfer pricing income tax reserves for subsequent tax years and, to a lesser extent, an increase in personnel and overhead costs to help support business growth ~~during the consumer travel demand recovery~~ and increased direct costs from credit card payment ~~fees~~ and other revenue-related transaction costs in direct correlation with the increase in experiences revenue during the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, all of which is described in more detail above under “Consolidated ~~Expenses.~~Expenses,” largely offset by an increase in revenue, as described in more detail above under “Revenue and Segment Information.”

To provide investors with additional information regarding our financial results, we also disclose consolidated Adjusted EBITDA, which is a non-GAAP financial measure. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company’s financial statements.

Adjusted EBITDA is also our segment profit measure and a key measure used by our management and ~~board~~Board of ~~directors~~Directors to understand and evaluate the financial performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and better enables management and investors to compare financial results between periods as these costs may vary independent of ongoing core business performance. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and ~~board~~Board of ~~directors.~~Directors. We define Adjusted EBITDA as net income (loss) plus: (1) (provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, ~~intangible~~long-lived asset, and ~~long-lived asset~~intangible assets impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) other non-recurring expenses and income.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results reported in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to Net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented:

For information on our relationship with LTRIP, which may be deemed to beneficially own equity securities representing ~~nearly 57%~~56% of our voting power as of ~~September 30, 2022,~~March 31, 2023, refer to “Note 1: ~~Business Description and~~ Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly ~~Report on Form 10-Q.~~Report. We had no related party transactions with LTRIP during both the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Refer to “Note ~~11:~~10: Stock Based Awards and Other Equity Instruments” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report ~~on Form 10-Q~~ for further information on current year equity award activity, including the issuance of ~~approximately 0.6 million service-based stock options with a weighted average grant-date fair value per option of $9.47 and approximately 6.4~~nearly 6.0 million service-based RSUs with a weighted average grant-date fair value of ~~$25.75~~$22.13 during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

Our principal source of liquidity is cash flow generated from operations and our existing cash and cash equivalents balance. Our liquidity needs can also be met through drawdowns under the Credit Facility. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had approximately ~~$1.07~~$1.1 billion and ~~$723 million,~~$1.0 billion, respectively, of cash and cash equivalents, and $496 million of available borrowing capacity under the Credit Facility. As of ~~September 30, 2022,~~March 31, 2023, approximately ~~$224~~$210 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which ~~approximately 55%~~nearly 45% was ~~held~~located in the U.K. As of ~~September 30, 2022,~~March 31, 2023, the significant majority of our cash was denominated in U.S. dollars.

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$479~~$471 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of ~~September 30, 2022,~~March 31, 2023, we maintained a deferred income tax liability on our unaudited condensed consolidated balance sheet, which was not material, for the U.S. federal and state income tax and foreign withholding tax liabilities on the cumulative undistributed foreign earnings that we no longer consider indefinitely reinvested.

As of ~~September 30, 2022,~~March 31, 2023, we are party to the Credit ~~Facility,~~Agreement, which, among other things, provides for a $500 million revolving credit facility with a maturity date of May 12, 2024. The Company may borrow from the Credit Facility in U.S. dollars and Euros. The Credit Facility requires us to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control.

We amended the Credit Facility ~~in May 2020 and December~~during 2020 to, among other things, suspend the leverage ratio covenant for quarterly testing of compliance beginning in the second quarter of 2020, replacing it with a minimum liquidity covenant through June 30, 2021 (requiring the Company to maintain $150 million of unrestricted cash, cash equivalent and short-term investments less deferred merchant payables plus available revolver capacity), until the earlier of (a) the first day after June 30, 2021 through maturity on which borrowings and other revolving credit utilizations under the revolving commitments exceed $200 million, and (b) the election of the Company, at which time the leverage ratio covenant ~~(the “Leverage Covenant Holiday”)~~ will be reinstated.

The Company remained in the Leverage Covenant Holiday as of ~~September 30, 2022.~~March 31, 2023. Based on the Company’s existing leverage ratio, any outstanding or future borrowings under the Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBO rate for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00% with a London Inter-Bank Offered Rate (“~~LIBO~~LIBOR rate”) floor of 1.00% per annum; or (ii) the Alternate Base Rate Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum, and (c) the Adjusted ~~LIBO Rate~~LIBOR (or ~~LIBO rate~~LIBOR multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00%. In addition, based on the Company’s existing leverage ratio, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30% as of ~~September 30, 2022,~~March 31, 2023, on the daily unused portion of the Credit Facility for each fiscal quarter during the Leverage Covenant Holiday and in connection with the issuance of letters of credit. The Credit Facility includes restrictions on the Company’s ability to make certain payments and distributions, including share repurchases and dividends.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had no outstanding borrowings and were in compliance with our covenant requirements in effect under the Credit Facility. While there can be no assurance that we will be able to meet the leverage ratio covenant after the Leverage Covenant Holiday ceases, based on our current projections, we do not believe there is a material risk that we will not remain in compliance throughout the next twelve months.

As of ~~September 30, 2022,~~March 31, 2023, the Company had $845 million in long-term debt, as a result of the issuance of ~~our~~the 2025 Senior Notes in July 2020 and 2026 Senior Notes in March 2021, as discussed below.

In July 2020, the Company completed the sale of $500 million ~~of our~~in 2025 Senior Notes. The 2025 Senior Notes provide, among other things, that interest, at an interest rate of 7.0% per annum, is payable on January 15 and July 15 of each year ~~which began on January 15, 2021,~~ until their maturity on July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.

In March 2021, the Company completed the sale of $345 million of ~~our~~the 2026 Senior Notes. The 2026 Senior Notes provide, among other things, that interest, at an interest rate of 0.25% per annum, is payable on April 1 and October 1 of each year ~~which began on October 1, 2021,~~ until their maturity on April 1, 2026. Concurrently, the Company used a portion of the proceeds from the 2026 Senior Notes to enter into privately negotiated capped call transactions with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions at a cost of approximately $35 million. The Company intends to use the remainder of the proceeds from this offering for general corporate purposes, which may include repayment of debt, including the partial redemption and/or purchase of the 2025 Senior Notes prior to maturity. The 2026 Senior Notes are senior unsecured obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.

The 2025 Senior Notes and 2026 Senior Notes are not registered securities and there are currently no plans to register these notes as securities in the future. ~~As a result, no separate financial statements are required for the guarantor subsidiaries of these notes.~~ We may from time to time repurchase our outstanding 2025 Senior Notes or 2026 Senior Notes through tender offers, open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

For further information onrelated to the Credit Facility, 2025 Senior Notes, and 2026 Senior Notes, refer to “Note 7:6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly ~~Report on Form 10-Q.~~Report.

As of ~~September 30, 2022,~~March 31, 2023, we had $75 million remaining available to repurchase shares of our common stock under our existing share repurchase program authorized by our Board of Directors. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company did not repurchase any shares of outstanding common stock under the share repurchase program. The terms of the Credit Agreement were amended to limit the Company from share repurchases during the Leverage Covenant Holiday and the terms of the 2025 Indenture related to the 2025 Senior Notes also impose certain limitations and restrictions on share repurchases.

Our business typically experiences seasonal fluctuations that affect the timing of our annual cash flows during the year related to working capital. InFrom our ~~Experiences and Rentals free-to-list models,~~experience bookings, we receive cash from travelers at the time of booking or prior to the occurrence of an experience, ~~or rental,~~ and we record these amounts, net of commissions, on our consolidated balance sheet as deferred merchant payables. We pay the experience operator, or the experience supplier, ~~and/or property rental owners,~~ after the travelers’ use. Therefore, we generally receive cash from the traveler prior to paying the experience operator and this operating cycle represents a source or use of cash to us. During the first half of the year, experiences ~~and rentals~~ bookings typically exceed the amount of completed experiences, ~~and rental stays,~~ 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. ~~Although consumer travel demand remained materially lower than historic levels due to the impact~~Other factors, such as a resurgence of COVID-19, on our business during 2020, these trends improved, albeit unevenly, during 2021 from 2020, resulting in increased revenues, and working capital and operating cash flow more akin to typical historical seasonality trends, which continued to improve during the first three quarters of 2022.

We continue to be subject to risks and uncertainties related to the COVID-19 pandemic. Continued widespread vaccine distributions, efficacy against existing variants (e.g., Delta, Omicron, and BA.5) and future variants, if any, of COVID-19, whether there will be resurgences of the virus and subsequent government restrictions, the extent and effectiveness of containment actions taken, and whether consumers' demand for travel and hospitality services continue to be or become negatively impacted remain uncertain. Although uncertainty remains, we saw continuous, albeit uneven, improvement in the travel market throughout 2021, and during the first three quarters of 2022, including our operating cash flows, given what we believe to be continued pent-up and increasing consumer demand for travel industry related services. Other factors may also impact typical seasonal fluctuations, which include further significant shifts in our business mix or adverse economic conditions ~~unrelated to COVID-19~~ that could result in future seasonal patterns that are different from historical trends. In addition, new or different payment options offered to our customers could impact the timing of cash flows. For example, our “Reserve Now, Pay Later” payment option, which allows our travelers the option to reserve certain experiences and defer payment until a date no later than two days before the experience date, which although ~~not~~growing is still used in ~~a majority~~the minority of bookings to date, may continue to increase, and affect the timing of our future cash flows and working capital.

As discussed in “Note 9:8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report, ~~on Form 10-Q,~~ we ~~have~~ received ~~Notices~~a final notice regarding a MAP settlement for the 2009 through 2011 tax years in January 2023, which the Company subsequently accepted in February 2023. Accepting this MAP settlement will result in an estimated net cash

outflow of ~~Proposed Adjustments~~$60 million to $70 million, inclusive of related interest expense, which is expected to be substantially paid by the Company in the next twelve months.

Furthermore, as discussed in “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1, during August 2020 we separately received a NOPA issued by the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in additional income tax expense above our existing tax reserves in an estimated range of $55 million to $65 million, exclusive of interest expense, at the close of the audit if the IRS prevails. In addition, we received an issue closure notice from HMRC relating to adjustments for 2012 through 2016 tax years 2009 through 2016, as of September 30, 2022. The statute of limitation of assessment for all years subject to the Notices of Proposed Adjustment remain open, with the exception of the 2012 and 2013 tax years.in January 2021. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our worldwide income tax expense, for the open tax years, in an estimated range of $90 million to $100 million, exclusive of interest expense, at the close of the audit if the IRS prevails. In addition, we received from HMRC in the U.K. an issue closure notice relating to adjustments for 2012 through 2016 tax years, as of September 30, 2022. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our worldwideconsolidated income tax expense in an estimated range of $25 million to $35 million, exclusive of interest expense, ~~and potential U.S. transition tax adjustments,~~ at the close of the audit if HMRC prevails. ~~We disagree with the proposed adjustments and we intend to defend our positions through applicable administrative and, if necessary, judicial remedies.~~

Although the ultimate timing for resolution of these matters is uncertain, any future payments would negatively impact our operating cash flows.

The CARES Act, enacted in March 2020, made tax law changes to provide financial relief to companies as a result of the impact to businesses related to COVID-19. Key income tax provisions of the CARES Act include changes in NOL carryback and carryforward rules, increase of the net interest expense deduction limit, and immediate write-off of qualified improvement property. The CARES Act allowed the Company to carryback our U.S. federal NOLs incurred in 2020, generating an expected U.S. federal tax benefit of $76 million, of which $64 million was refunded during the three months ended June 30, 2022. The remaining refund of $12 million is included in current income taxes payable within accrued expenses and other current liabilities on our unaudited condensed consolidated balance sheet as of September 30, 2022 and is expected to be received in the next twelve months. In addition, $25 million of this refund received was recorded to long-term taxes payable within other long-term liabilities on our unaudited condensed consolidated balance sheet as of September 30, 2022, which reflects future transition tax payments expected to be made by the Company related to the 2017 Tax Act.

We believe that our available cash and cash equivalents will be sufficient to fund our foreseeable working capital requirements, capital expenditures, existing business growth initiatives, debt and interest obligations, lease commitments, and other financial commitments through at least the next twelve months. Our future capital requirements may also include capital needs for acquisitions and/or other expenditures in support of our business strategy, which may potentially reduce our cash balance and/or require us to borrow under the Credit Facility or to seek other financing alternatives.

Our cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ as reflected in our unaudited condensed consolidated statements of cash flows, are summarized in the following table:

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, our primary source of cash was from operations, while our primary use of cash was from ~~operations,~~ financing activities (including payment of withholding taxes on net share settlements of our equity awards of ~~$18~~$9 million), and investing activities (including capital expenditures of ~~$41~~$16 million). This use of cash was funded with cash and cash equivalents and ~~operating~~ cash ~~flows.~~flows from operations.

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, our primary source of cash was from operations, while our primary use of cash was ~~from operations,~~ financing activities (including payment of withholding taxes on net share settlements of our equity awards of ~~$39 million and purchase of Capped Calls of $35~~$8 million), and investing activities (including capital expenditures incurred during the three months ended March 31, 2022 of ~~$40~~$14 million). This use of cash was funded ~~primarily~~ with cash ~~on hand, operating~~and cash ~~flow~~equivalents, and ~~financing activities, which included $340 million of proceeds~~cash flows from ~~the issuance of our 2026 Senior Notes, net of financing costs.~~operations.

Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023 increased ~~by $397~~$49 million when compared to the same period in ~~2021,~~2022, primarily due to ~~a decrease in net losses of $141 million and~~ an increase in working capital of ~~$260 million. The~~$88 million, largely driven by increased income tax expense as a result of a discrete tax item pertaining to an IRS audit settlement, and related increase in ~~working capital was driven primarily by~~transfer pricing income tax reserves, as discussed above, an increase ~~of $53 million~~ in deferred revenue and deferred merchant payables ~~and $6 million in deferred revenue reflecting the~~resulting from cash received ~~from travelers principally due to an increase~~ in advance for experiences bookings, net of cancellations, ~~which exceeded our payments~~reflecting experiences bookings growth and seasonality, and the timing of when cash is received from travelers and then remitted to traveler suppliers, a $64 million U.S. federal tax refund related to the CARES Act, and an increase in accounts receivable across the business, largely reflective of the increasing consumer demand for travel activities during the first three quarters of 2022,experience operators, in addition to the timing of ~~vendor payments~~ and improvement in collection ~~of receivables.~~from customers, resulting in increased cashflows from accounts receivable. These increases were partially offset by ~~a decrease~~an increase in ~~non-cash items~~net loss of $4$39 million ~~which was primarily~~as well as increased cash outflows from accounts payable due to ~~a decrease in deferred income tax benefits, largely offset by a decrease in stock-based compensation expense.~~timing of vendor payments.

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2022 decreased~~March 31, 2023 increased by $4$2 million when compared to the same period in ~~2021, primarily~~2022, due to ~~other investing activities, net, resulting from~~an increase in capital expenditures in the ~~change in fair value of our settled foreign currency forward contracts.~~business.

Net cash ~~provided by~~used in financing activities for the ~~nine~~three months ended ~~September 30, 2022 decreased by $292 million~~March 31, 2023 was materially consistent when compared to the same period in 2021, primarily due to proceeds received from the issuance of our 2026 Senior Notes of $340 million, net of financing costs, partially offset by payments of $35 million for the Capped Calls in connection with our 2026 Senior Notes during the first quarter of 2021, both of which did not reoccur during 2022, as well as, and to a lesser extent, cash received for stock

option exercises of $8 million during the nine months ended September 30, 2021, partially offset by a decrease in payment of withholding taxes on net share settlements of equity awards of $21 million during the nine months ended September 30, 2022.

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

There have been no material changes outside the normal course of business to our contractual obligations and commercial commitments since December 31, ~~2021.~~2022. As of ~~September 30, 2022,~~March 31, 2023, other than our contractual obligations and commercial commitments, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.

Refer to “Liquidity and Capital Resources” in Part II, Item 7. ~~Management’s~~—Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for a discussion of our contractual obligations and commercial commitments.

In the ordinary course of business, we are party to legal, regulatory and administrative matters, including threats thereof, arising out of or in connection with our operations. These matters may involve claims involving patent and other intellectual property rights (including privacy, alleged infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition, consumer matters and data privacy), defamation and reputational claims. Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been incurred; and (ii) the amount of the loss can be reasonably estimated and is material, we record the estimated loss in our consolidated statements of operations. We provide disclosures in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. We base accruals on the best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of any of these matters will have a material adverse effect on our business. However, the final outcome of these matters could vary significantly from our estimates. Finally, there may be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which could have a material adverse effect on us.

We are also under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and non-income tax matters. We have reserved for potential adjustments to our provision for income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities. Although we believe our tax estimates are reasonable, the final determination of audits could be materially different from our historical income tax provisions and accruals. The results of an audit could have a material effect on our financial position, results of operations, or cash flows in the period for which that determination is made.

By virtue of consolidated income tax returns previously filed with Expedia, we are currently under an IRS audit for the 2009, 2010 and short-period 2011 tax years. We are separately under examination by the IRS for the ~~short-period 2011,~~ 2014 through 2016 and 2018 tax years, and have various ongoing audits for foreign and state income tax returns. These audits include questioning of the timing and the amount of income and deductions and the allocation of income among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax authorities for years prior to 2009. As of ~~September 30,~~March 31, 2022, no material assessments have resulted, except as noted below regarding our 2009, 2010, and 2011 IRS audit with Expedia, our 2014 through 2016 standalone IRS audit, and our 2012 through 2016 HMRC audit.

~~In January 2017 and April 2019, as part of~~As disclosed in previous filings, including in our Annual Report on Form 10-K for the ~~IRS audit of Expedia,~~year ended December 31, 2022, we had received ~~Notices of Proposed Adjustment~~a NOPA from the IRS for the 2009, 2010, and 2011 tax years relating to certain transfer pricing arrangements with our foreign subsidiaries. In response, we had requested competent authority assistance under the MAP for the 2009 through 2011 tax years. ~~Subsequently, in September 2019, as part of Tripadvisor’s standalone audit,~~In January 2023, we received ~~Notices of Proposed Adjustment~~a final notice from the IRS regarding a MAP settlement for the ~~2012 and 2013~~2009 through 2011 tax years, which the Company accepted in February 2023. In the first quarter of 2023, we recorded additional income tax expense as a discrete item, inclusive of interest, of $31 million specifically related to this settlement. We reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent tax years during the first quarter of 2023, which resulted in incremental income tax expense, inclusive of estimated interest, of $24 million. The total impact of these adjustments resulted in an incremental income tax expense of $55 million for the three months ended March 31, 2023.

In addition, and inseparately, during August 2020, we received ~~Notices~~a Notice of Proposed ~~Adjustments~~Adjustment from the IRS for the 2014, 2015, and 2016 tax years. ~~The statute of limitation of assessment for all years subject to the Notices of Proposed Adjustment remain open, with the exception of the 2012 and 2013 tax years.~~ These proposed adjustments ~~are related~~pertain to certain transfer pricing arrangements with our foreign subsidiaries and would result in ~~an increase to our worldwide~~additional income tax expense ~~for the open~~above our existing tax ~~years,~~reserves in an estimated range of ~~$90~~$55 million to ~~$100~~$65 million at the close of the audit if the IRS prevails. ~~The~~This estimated range takes into consideration competent authority relief, existing income tax reserves, and transition tax regulations and is exclusive of deferred tax consequences and interest expense, which would also be significant. We disagree with the proposed adjustments, and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. ~~Our policy is to review and update tax reserves as facts and circumstances change.~~ Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable. In addition to the risk of additional tax for the ~~open~~ years ~~outlined~~discussed above, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we ~~would~~may be subject to significant additional tax liabilities. We have previously requested competent authority assistance under MAP for ~~tax~~the years ~~2009~~of 2014 through 2016 ~~for which the statutes remain open for all but the 2012 and 2013~~ tax years. ~~We expect~~As discussed above, we have reviewed our transfer pricing reserves as of March 31, 2023, based on the ~~competent authorities~~facts and circumstances that existed as of the reporting date, and consider them to be the Company’s best estimate as of March 31, 2023.

present a resolution for the 2009 through 2011 tax years in the near future. Upon receipt, we will assess the resolution provided by the competent authorities as well as its impact on our existing income tax reserves for all subsequent years which remain open.

In January 2021, we received an issue closure notice from HMRC relating to adjustments for the 2012 through 2016 tax ~~years from HMRC.~~years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our ~~worldwide~~consolidated income tax expense in an estimated range of $25 million to $35 million, exclusive of interest expense, ~~and potential U.S. transition tax adjustments,~~ at the close of the audit if HMRC prevails. We disagree with the proposed adjustments and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position ~~we have~~the Company has taken with regard to transfer pricing with our foreign subsidiaries is sustainable.

Over the last several years, ~~The~~the Organization for Economic Cooperation and Development (“OECD”) has been working on a Base Erosion and Profit Shifting Project to address the tax challenges arising from digitalization. The OECD/G20 Inclusive Framework has issued various guidelines, policy notes, and proposals that if adopted could result in an overhaul of the international taxation system under which our current tax obligations are determined. In October 2021, more than 130 countries tentatively signed on to a framework, which calls for a minimum tax rate on corporations of 15% and a reallocation of profits from the largest and most profitable businesses to countries where they make sales. The proposed framework, once enacted, envisages new international tax rules and the removal of all digital services taxes. As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax obligations is uncertain. As the OECD/G20 continues to drive toward a consensus framework, several countries which have previously enacted unilateral digital services tax initiatives, such as France, Italy, Spain, and the U.K., will continue to impose these revenue-based taxes until implementation of the consensus framework. ~~During~~Further, certain U.S. states, such as Maryland, have deployed comparable digital services tax initiatives, and we continue to monitor these developments to determine the ~~three and nine months ended September 30, 2022, we recorded $4 million and $7 million of digital service tax, respectively.~~financial impact to the Company. During the three months ended ~~September 30, 2021,~~March 31, 2023 and 2022, we recorded $2 million and $1 million, respectively, of digital service tax ~~recorded~~ to general and administrative expense on our unaudited condensed consolidated statement of ~~operations was not material, while this amount was $1 million during the nine months ended September 30, 2021.~~operations.

Due to the one-time transition tax on the deemed repatriation of undistributed foreign subsidiary earnings and profits in 2017, as a result of the 2017 Tax Act, the majority of previously unremitted earnings have been subjected to U.S. federal income tax. To the extent future distributions from these subsidiaries will be taxable, a deferred income tax liability has been accrued on our unaudited condensed consolidated balance sheet, which was not material as of ~~September 30, 2022.~~March 31, 2023. As of ~~September 30, 2022, $479~~March 31, 2023, $471 million of our cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested.

Refer to “Note 9:8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report ~~on Form 10-Q~~ for further information on potential tax contingencies, including current audits by the IRS and various other domestic and foreign tax authorities, and other income tax and non-income tax matters.

There has been no material change in our market risk profile during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 since December 31, 2021. For a discussion of current market conditions and impacts on the Company’s financials resulting from the COVID-19 pandemic, refer to “Note 1: Business Description and Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q, and for further information, Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations,” and to Part II, Item 1A, "Risk Factors”.2022. For additional information about our market risk profile, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A. in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. We are exposed to market risks primarily due to our international operations, our ongoing investment and financial activities, as well as changes in economic conditions in all significant markets in which we ~~operate which has been heightened during the COVID-19 pandemic.~~operate. The risk of loss can be assessed from the perspective of adverse changes in our future earnings, cash flows, fair values of our assets, and financial condition. Our exposure to market risk, at any point in time, may include ~~risk, including~~risks related to any borrowings under the Credit Facility, or outstanding debt related to the 2025 Senior Notes and 2026 Senior Notes, derivative instruments, capped calls, cash and cash equivalents, short-term and long-term marketable securities, if any, accounts receivable, intercompany receivables/payables, accounts payable, deferred merchant payables and other balances and transactions denominated in foreign currencies. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage and attempt to mitigate our exposure to such risks.

We expect that we will continue to increase our operations ~~internationally as, or when, COVID-19 restrictions are fully lifted globally and international markets continue to reopen.~~internationally. Our exposure to potentially volatile movements in foreign currency exchange

rates will increase as we increase our operations in these international markets. The economic impact to us of foreign currency exchange rate movements is linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. We continue to monitor the current economic environment, including the impact of a potential U.S. recession, increasing interest rates, and increased inflation globally, which has been heightened by the conflict between Russia and Ukraine. These changes, if material, could cause us to adjust our foreign currency risk strategies. For example, Brexit (pursuant to which the United Kingdom ceased to be a member of the European Union) has caused volatility in currency exchange rates, including between the U.S. dollar and the British pound. Although, the U.K. and E.U. finalized the terms of the departure on December 24, 2020, certain decisions still need to be made on financial services, among others, and disputes may lead to tariffs being imposed on some goods in the future. Continued uncertainty regarding our international operations and U.K. and E.U. relations may result in future currency exchange rate volatility which may impact our business and results of operations. In addition, the geopolitical tensions resulting from Russia’s invasion of Ukraine, including increased cyberattacks, military conflicts and sanctions, may result in additional financial volatility that may adversely affect our results of operations.

As of ~~September 30, 2022,~~March 31, 2023, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of ~~September 30, 2022,~~March 31, 2023, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s, or the SEC’s, rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes to our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In the ordinary course of business, we are party to legal, regulatory and administrative matters, including threats thereof, arising out of, or in connection with our operations. These matters may involve claims involving intellectual property rights (including privacy, alleged infringement of third-party intellectual property rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition and consumer protection matters), defamation and reputational claims, personal injury claims, labor and employment matters and commercial disputes. Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. We record the estimated loss in our consolidated statements of operations when (i) it is probable that an asset has been impaired or a liability has been incurred; and (ii) the amount of the loss can be reasonably estimated and is material. We provide disclosures in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. We base accruals on the best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of any of these matters will have a material adverse effect on our business. However, the final outcome of these matters could vary significantly from our estimates. Finally, there may be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which could have a material adverse effect on us.

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for a description of the risks and uncertainties which could materially and adversely affect our business, financial condition, cash flows and results of operations, and the trading price of our common stock. The risks and uncertainties described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business, results of operations or financial condition.

During the quarter ended ~~September 30, 2022,~~March 31, 2023, there have been no material changes in our risk factors from those disclosed in Part 1, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

During the quarter ended ~~September 30, 2022,~~March 31, 2023, we did not issue or sell any shares of our common stock, Class B common stock or other equity securities pursuant to unregistered transactions in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended.

During the quarter ended ~~September 30, 2022,~~March 31, 2023, we did not repurchase any shares of our common stock under our existing share repurchase program. As of ~~September 30, 2022,~~March 31, 2023, we had $75 million remaining available to repurchase shares of our common stock under our previously authorized share repurchase program.

While the Board of Directors has not suspended or terminated the share repurchase program, the terms of the Credit Agreement limit the Company from engaging in share repurchases and the terms of ~~our~~the 2025 Indenture related to the 2025 Senior Notes impose certain limitations and restrictions on share repurchases. In addition, the Inflation Reduction Act of 2022 imposes a 1% excise tax on certain corporate stock buybacks. Refer to “Note 7:6: Debt” in the notes to the unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report ~~on Form 10-Q~~ for further information about the Credit Agreement and the 2025 Indenture.

The exhibits listed below are filed as part of this Quarterly ~~Report on Form 10-Q.~~Report.

+ Indicates a management contract or a compensatory plan, contract or arrangement.

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 hereunto duly authorized.


Class		Outstanding Shares at ~~November 1, 2022~~April 27, 2023
Common Stock, $0.001 par value per share		~~127,786,062~~129,310,431 shares
Class B common stock, $0.001 par value per share		12,799,999 shares


		Page
Part I—Financial Information
Item 1. Unaudited Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		4
Unaudited Condensed Consolidated Balance Sheets at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022		5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		6
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		87
Notes to Unaudited Condensed Consolidated Financial Statements		98
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3127
Item 3. Quantitative and Qualitative Disclosures about Market Risk		4941
Item 4. Controls and Procedures		5042
Part II—Other Information
Item 1. Legal Proceedings		5042
Item 1A. Risk Factors		5042
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		5142
Item 3. Defaults Upon Senior Securities		5143
Item 4. Mine Safety Disclosures		5143
Item 5. Other Information		5143
Item 6. Exhibits		5244
Signatures		5345


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	TRIP	Nasdaq


	Three months ended September 30, 2021
														Accumulated
									Additional					other
					Class B				paid-in			Retained		comprehensive
	Common stock				common stock				capital			earnings		income (loss)			Treasury Stock
	Shares		Amount		Shares		Amount										Shares			Amount			Total
Balance as of June 30, 2021		143,418,007	$	—		12,799,999	$	—	$	1,275		$	269	$	(43	)		(18,844,614	)	$	(722	)	$	779
Net income (loss)													1											1
Other comprehensive income (loss), net of tax															(8	)								(8	)
Issuance of common stock related to exercises of options and vesting of RSUs		759,642		—						—														—
Withholding taxes on net share settlements of equity awards										(10	)													(10	)
Stock-based compensation										32														32
Balance as of September 30, 2021		144,177,649	$	—		12,799,999	$	—	$	1,297		$	270	$	(51	)		(18,844,614	)	$	(722	)	$	794


	Hotels, Media & Platform			Experiences & Dining			Other (2)			Tripadvisor Core			Viator			TheFork			Total
	(in millions)
Balance as of December 31, 2021	$	407		$	344		$	92		$	—		$	—		$	—		$	843
Foreign currency translation adjustments		—			(18	)		(5	)		(3	)		(3	)		(11	)		(40	)
Allocation to new segments (1)		(407	)		(326	)		(87	)		599			120			101			—
Balance as of September 30, 2022	$	—		$	—		$	—		$	596		$	117		$	90		$	803


	Stock
	Options		RSUs/MSUs
Unrecognized compensation expense (in millions)	$	14	$	208
Weighted average period remaining (in years)		2.8		2.9


Tripadvisor, Inc.
By		/s/ Michael Noonan
		Michael Noonan
		Chief Financial Officer

By		/s/ Geoffrey Gouvalaris
		Geoffrey Gouvalaris
		Chief Accounting Officer

March 31, 2023

December 31, 2022

(in millions)

Foreign currency exchange-forward contracts (1)(2)