☒ 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						Six months ended
	Three months ended March 31,						June 30,						June 30,
	2023			2022			2023			2022			2023			2022
Revenue (Note 3)	$	371		$	262		$	494		$	417		$	865		$	679

Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization as shown separately below)		29			22
Cost of revenue (1) (exclusive of depreciation and amortization as shown separately below)								41			31			70			53
Selling and marketing (1)		219			141			270			217			488			357
Technology and content (1)		68			54			71			53			139			107
General and administrative (1)		48			40			47			28			96			68
Depreciation and amortization		21			25			21			25			42			50
Total costs and expenses		385			282			450			354			835			635
Operating income (loss)		(14	)		(20	)		44			63			30			44
Other income (expense):
Interest expense		(11	)		(12	)		(11	)		(11	)		(22	)		(23	)
Interest income		11			1			12			2			22			2
Other income (expense), net		(1	)		(2	)		(1	)		(1	)		(1	)		(2	)
Total other income (expense), net		(1	)		(13	)		—			(10	)		(1	)		(23	)
Income (loss) before income taxes		(15	)		(33	)		44			53			29			21
(Provision) benefit for income taxes (Note 8)		(58	)		(1	)		(20	)		(22	)		(78	)		(24	)
Net income (loss)	$	(73	)	$	(34	)	$	24		$	31		$	(49	)	$	(3	)

Earnings (loss) per share attributable to common stockholders (Note 12):
Basic	$	(0.52	)	$	(0.24	)	$	0.17		$	0.22		$	(0.35	)	$	(0.02	)
Diluted	$	(0.52	)	$	(0.24	)	$	0.17		$	0.21		$	(0.35	)	$	(0.02	)
Weighted average common shares outstanding (Note 12):
Basic		141			139			140			140			141			139
Diluted		141			139			145			145			141			139

(1) Includes stock-based compensation expense as follows (Note 10):
Cost of revenue							$	—		$	—		$	1		$	1
Selling and marketing	$	4		$	3		$	4		$	3		$	8		$	6
Technology and content	$	10		$	9		$	10		$	9		$	20		$	18
General and administrative	$	9		$	10		$	11		$	9		$	19		$	18

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


							June 30,			December 31,
	March 31, 2023			December 31, 2022			2023			2022
ASSETS
Current assets:
Cash and cash equivalents (Note 4)	$	1,132		$	1,021		$	1,141		$	1,021
Accounts receivable and contract assets, net of allowance for credit losses of $24 and $28, respectively (Note 3)		210			205
Accounts receivable and contract assets, net (allowance for credit losses of $21 and $28, respectively) (Note 4)								240			205
Income taxes receivable (Note 8)		48			—			51			—
Prepaid expenses and other current assets		49			44			46			44
Total current assets		1,439			1,270			1,478			1,270
Property and equipment, net of accumulated depreciation of $529 and $512, respectively		194			194
Property and equipment, net of accumulated depreciation of $538 and $512, respectively								194			194
Operating lease right-of-use assets		24			27			22			27
Intangible assets, net of accumulated amortization of $200 and $198, respectively		49			51
Intangible assets, net of accumulated amortization of $202 and $198, respectively								47			51
Goodwill		825			822			824			822
Non-marketable investments (Note 4)		33			34			33			34
Deferred income taxes, net		70			78			87			78
Other long-term assets, net of allowance for credit losses of $10 and $10, respectively (Note 4, Note 8)		50			93			49			93
TOTAL ASSETS	$	2,684		$	2,569		$	2,734		$	2,569

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	34		$	39		$	47		$	39
Deferred merchant payables		311			203			435			203
Deferred revenue (Note 3)		81			44			87			44
Income taxes payable (Note 8)		126			16			26			16
Accrued expenses and other current liabilities (Note 5)		211			231			259			231
Total current liabilities		763			533			854			533
Long-term debt (Note 6)		837			836			838			836
Finance lease obligation, net of current portion		56			58			55			58
Operating lease liabilities, net of current portion		13			15			10			15
Deferred income taxes, net		1			1			1			1
Other long-term liabilities (Note 7)		206			265			195			265
Total Liabilities		1,876			1,708			1,953			1,708

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
Shares issued and outstanding: 0 and 0, respectively
Common stock, $0.001 par value		—			—			—			—
Authorized shares: 1,600,000,000
Shares issued: 148,090,833 and 146,891,538, respectively
Shares outstanding: 129,246,219 and 128,046,924, respectively
Shares issued: 148,642,645 and 146,891,538, respectively
Shares outstanding: 125,073,302 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		1,420			1,404			1,445			1,404
Retained earnings		188			261			212			261
Accumulated other comprehensive income (loss)		(78	)		(82	)		(79	)		(82	)
Treasury stock-common stock, at cost, 18,844,614 and 18,844,614 shares, respectively		(722	)		(722	)
Treasury stock-common stock, at cost, 23,569,343 and 18,844,614 shares, respectively								(797	)		(722	)
Total Stockholders’ Equity		808			861			781			861
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,684		$	2,569		$	2,734		$	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																										Three months ended June 30, 2023
															Accumulated																									Accumulated
					Class B				Additional						other																				Additional					other
	Common stock				common stock				paid-in			Retained			comprehensive			Treasury Stock													Class B				paid-in			Retained		comprehensive
	Shares		Amount		Shares		Amount		capital			earnings			income (loss)			Shares			Amount			Total			Common stock				common stock				capital			earnings		income (loss)			Treasury Stock
Balance as of December 31, 2022		146,891,538	$	—		12,799,999	$	—	$	1,404		$	261		$	(82	)		(18,844,614	)	$	(722	)	$	861
																											Shares		Amount		Shares		Amount										Shares			Amount			Total
Balance as of March 31, 2023																												148,090,833	$	—		12,799,999	$	—	$	1,420		$	188	$	(78	)		(18,844,614	)	$	(722	)	$	808
Net income (loss)													(73	)											(73	)													24											24
Other comprehensive income (loss), net of tax																4									4																(1	)								(1	)
Issuance of common stock related to exercises of options and vesting of RSUs		1,199,295		—						—															—			551,812		—						—														—
Repurchase of common stock (Note 11)																																												(4,724,729	)		(75	)		(75	)
Withholding taxes on net share settlements of equity awards										(9	)														(9	)										(3	)													(3	)
Stock-based compensation										25															25											28														28
Balance as of March 31, 2023		148,090,833	$	—		12,799,999	$	—	$	1,420		$	188		$	(78	)		(18,844,614	)	$	(722	)	$	808

	Three months ended March 31, 2022
															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, 2021		144,656,649	$	—		12,799,999	$	—	$	1,326		$	241		$	(56	)		(18,844,614	)	$	(722	)	$	789
Net income (loss)													(34	)											(34	)
Other comprehensive income (loss), net of tax																(4	)								(4	)
Issuance of common stock related to exercises of options and vesting of RSUs		980,051		—						—															—
Withholding taxes on net share settlements of equity awards										(8	)														(8	)
Stock-based compensation										24															24
Balance as of March 31, 2022		145,636,700	$	—		12,799,999	$	—	$	1,342		$	207		$	(60	)		(18,844,614	)	$	(722	)	$	767
Balance as of June 30, 2023																												148,642,645	$	—		12,799,999	$	—	$	1,445		$	212	$	(79	)		(23,569,343	)	$	(797	)	$	781

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.

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~~There have been no material changes 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 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.~~revenue recognition policies, performance obligations, description of and timing of services, or customer payment terms since December 31, 2022, as described under “Note 2: Significant Accounting Policies” and “Note 3: Revenue Recognition”, in the notes to consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022. There was no significant revenue recognized in the three and six months ended ~~March 31,~~June 30, 2023 and 2022, 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~~Disaggregation of ~~our revenue recognition policies and a description of our principal activities, organized by reportable segment, from which we generate our revenue, are presented below.~~

~~Tripadvisor Core Segment~~

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

In addition, we offer business-to-business, or “B2B”, solutions to hotels, including subscription-based advertising to hotels, owners of B&Bs, and other specialty lodging properties. Our performance obligation is generally to enable subscribers to advertise their businesses on our platform, as well as to manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription-based advertising services are predominantly sold for a flat fee for a contracted period of time of one year or less and revenue is recognized on a straight-line basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription-based advertising services are generally billed at the inception of the service. When prepayments are received, we recognize deferred revenue initially on our consolidated balance sheet for the amount of prepayment in excess of revenue recognized, until the performance obligation is satisfied. To a lesser extent, we offer travel partners the opportunity to advertise and promote their 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 the travel partner’s 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.~~ ~~We offer travel partners the ability to promote their brands through display-based~~advertising, or sometimes referred to as “media advertising”, placements across our platform. Our display-based advertising clients are predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations. We also sell display-based advertising to OTAs and other travel related businesses, as well as to advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions, or "CPM", basis. The performance obligation in our display-based advertising arrangements is to display a number of advertising impressions on our platform and we recognize revenue for impressions as they are delivered. Services are generally billed monthly. We have applied the practical expedient to measure progress toward completion, as we have the right to invoice the customer in an amount that directly corresponds with the value to the customer of our performance to date, which is measured based on impressions delivered.

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

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

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

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

~~Viator Segment~~

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

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

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

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

~~TheFork Segment~~

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

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 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:


	Three months ended March 31,						Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022			2023			2022
Major products/revenue sources (1):	(in millions)						(in millions)
Tripadvisor Core
Tripadvisor-branded hotels	$	168		$	135		$	174		$	188		$	343		$	322
Tripadvisor-branded display and platform		30			26			42			37			72			63
Tripadvisor experiences and dining (2)		33			20			50			35			83			56
Other		13			10			13			14			25			24
Total Tripadvisor Core		244			191			279			274			523			465

Viator		115			56			216			136			331			192
TheFork		35			26			38			32			73			58
Intersegment eliminations (2)		(23	)		(11	)		(39	)		(25	)		(62	)		(36	)
Total Revenue	$	371		$	262		$	494		$	417		$	865		$	679

(1)

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

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.Deferred Revenue

Contract liabilities generally include payments received in advance of performance under the contract and are realized as revenue as the performance obligation to the customer is satisfied, which we present as deferred revenue on our consolidated balance ~~sheet.~~sheet, including amounts that are refundable. 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 ~~sheets,~~sheet, of which $288 million and $1836 million ~~respectively,~~ was recognized inas revenue during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2023, refunds due to cancellations by travelers were $1 million and $3 million, respectively. As of January 1, 2022, we had $36 million recorded as deferred revenue on our unaudited condensed consolidated balance sheet, of which $8 million and $26 million was recognized as revenue during the three and six months ended June 30, 2022, respectively. During the three months ended June 30, 2022, refunds due to cancellations by travelers were not material, while $2 million was refunded due to cancellations by travelers during ~~each of~~ the ~~three~~six months ended ~~March 31, 2023 and~~June 30, 2022. The difference between the opening and closing balances of our deferred revenue primarily results from the timing differences between when we receive customer payments and the time in which we satisfy our performance obligations. There were no significant changes in contract assets or deferred revenue during each of the three months ended March 31, 2023 and 2022, related to business combinations, impairments, cumulative catch-ups or other material adjustments.

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 ~~March 31,~~June 30, 2023 and December 31, 2022, we had approximately $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. We had no outstanding investments classified as either short-term or long-term marketable securities as of ~~March 31,~~June 30, 2023 orand December 31, 2022, and there were no purchases or sales of any marketable securities during and for the three and six months ended ~~March 31,~~June 30, 2023 and 2022.

The following table shows our cash and cash equivalents 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 ~~March 31,~~June 30, 2023 and December 31, ~~2022:~~2022:

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

200

200

200

200

200

200

Total

$
1,132

$
1,132

$
1,132

$
1,021

$
1,021

$
1,021

1311


	June 30, 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	$	638	$	638	$	638	$	821	$	821	$	821
Level 1:
Money market funds		503		503		503		—		—		—
Level 2:
Term deposits		—		—		—		200		200		200
Total	$	1,141	$	1,141	$	1,141	$	1,021	$	1,021	$	1,021

(1)

Unrealized gains and losses related to our cash equivalents were not material.

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 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 six months ended ~~March 31,~~June 30, 2023 and 2022, our forward contracts have not been designated as hedges and generally had maturities of less than 90 days. Our outstanding or unsettled forward contracts are carried at fair value on our unaudited condensed consolidated balance sheet as of both ~~March 31,~~June 30, 2023 ~~and~~or December 31, 2022. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. We recognize any gain or loss resulting from the change in fair value of our foreign currency forward contracts in other income (expense), net on our unaudited condensed consolidated statement of operations, which was not material during the three and six months ended June 30, 2023, while we recorded a net gain of $2 million for both the three and six months ended ~~March 31, 2023 and~~June 30, 2022.

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

March 31, 2023

December 31, 2022

(in millions)

Foreign currency exchange-forward contracts (1)(2)
$
21

$
18

(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 ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, was not material. The notional amount of a forward contract is the contracted amount of foreign currency to be exchanged and is not recorded on the 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 ~~March 31,~~June 30, 2023 ~~and~~or December 31, 2022.

Other Financial Assets and Liabilities

As of ~~March 31,~~June 30, 2023 and December 31, 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 described below, as well as certain other financial assets, ~~were~~are measured at amortized cost and are carried at cost less an allowance for expected credit losses on our unaudited condensed consolidated balance sheets to present the net amount expected to be collected.

Accounts Receivable and Contract Assets, net

The following table provides information about the opening and closing balances of accounts receivable and contract assets, net of allowance for credit losses, from contracts with customers:


	June 30, 2023		December 31, 2022
	(in millions)
Accounts receivable	$	211	$	173
Contract assets		29		32
Total	$	240	$	205

Accounts receivable are recognized when the right to consideration becomes unconditional, and are recorded net of an allowance for expected credit losses. We record accounts receivable at the invoiced amount. Our customer invoices are generally due from customers 30 days from the time of invoicing. During the six months ended June 30, 2023, we recorded $1 million of incremental allowance for expected uncollectible accounts, offset by $8 million of write-offs for accounts deemed to be uncollectible. The Company's exposure to credit losses may increase if our customers are adversely affected by changes in macroeconomic pressures or uncertainty associated with local or global economic recessions, or other customer-specific factors. 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.

Fair Value of Long-Term Debt

The following table shows the aggregate principal and fair value amount of the outstanding 2025 Senior Notes and 2026 Senior Notes as of the 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 6: Debt” for additional information on the 2025 Senior Notes and 2026 Senior ~~Notes.~~Notes.


	March 31, 2023		December 31, 2022		June 30, 2023		December 31, 2022
	(in millions)				(in millions)
2025 Senior Notes
Aggregate principal amount	$	500	$	500	$	500	$	500
Carrying value amount (1)		496		495		496		495
Fair value amount (2)		503		498		502		498

2026 Senior Notes
Aggregate principal amount	$	345	$	345	$	345	$	345
Carrying value amount (3)		341		341		342		341
Fair value amount (2)		283		281		291		281

(1)

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

(2)

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

(3)

Net of $3 million and $4 million inof unamortized debt issuance costs as of ~~both March 31,~~June 30, 2023 and December 31, ~~2022.~~2022, respectively.

The Company did notnot have any assets or liabilities measured at fair value on a recurring basis using Level 3 unobservable inputs as of ~~March 31,~~June 30, 2023 and December 31, 2022.

Risks and Concentrations

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, 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 35% 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, 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 several major global financial institutions, as well as money market funds, primarily denominated in U.S. dollars, and to a lesser extent Euros, British pounds, and Australian dollars. We may invest in highly-rated corporate debt securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. Our credit risk related to corporate debt securities is also mitigated by the relatively short maturity period required by our investment policy. Forward contracts and capped calls are transacted with major international financial institutions with high credit standings. Forward contracts, which, to date, have typically had

maturities of less than 90 days, also 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 $31 million and $32 million as of ~~March 31,~~June 30, 2023 and December 31, 2022, respectively, and is included in non-marketable investments on our unaudited condensed consolidated balance sheets. During both the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, we recognized $1 million, representing our share of the investee’s net loss in other income (expenses), net within the unaudited condensed consolidated ~~statement~~statements of ~~operations, while this amount was not material during the three months ended March 31, 2022.~~operations. The Company evaluates this investment for impairment when factors indicate that a decline in the value of its investment has occurred and the carrying amount of its investment may not be recoverable. An impairment loss, based on the excess of the carrying value over the estimated fair value of the investment based on Level 3 inputs, is recognized in earnings when an impairment is deemed to be other than temporary. During ~~both~~ the three and six months ended ~~March 31,~~June 30, 2023 and 2022, 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 six months ended ~~March 31,~~June 30, 2023 and 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 June 2025 and the remaining 50% due in June 2030. As of both ~~March 31,~~June 30, 2023 and December 31, 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.

Other non-financial assets, such as property and equipment, goodwill, intangible assets, and operating lease right-of-use assets are adjusted to fair value when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements, if necessary, are based predominately on Level 3 inputs.

NOTE 5: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following as of the dates ~~presented:~~presented:


	March 31, 2023		December 31, 2022		June 30, 2023		December 31, 2022
	(in millions)				(in millions)
Accrued employee salary, bonus, and related benefits	$	47	$	65	$	52	$	65
Accrued marketing costs		69		68		106		68
Interest payable (1)		8		17		16		17
Finance lease liabilities - current portion		6		6
Operating lease liabilities - current portion		13		14
Finance lease liability - current portion						6		6
Operating leases liability - current portion						13		14
Other		68		61		66		61
Total	$	211	$	231	$	259	$	231

(1)

Amount relates primarily to unpaid interest accrued on the 2025 Senior Notes. Refer to “Note 6: Debt” for further information.

NOTE 6: DEBT

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


March 31, 2023		Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
June 30, 2023										Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
(in millions)	(in millions)								(in millions)
Long-Term Debt:
2025 Senior Notes		$	500	$	(4	)	$	496		$	500	$	(4	)	$	496
2026 Senior Notes			345		(4	)		341			345		(3	)		342
Total Long-Term Debt		$	845	$	(8	)	$	837		$	845	$	(7	)	$	838

December 31, 2022		Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value			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	$	(5	)	$	495
2026 Senior Notes			345		(4	)		341			345		(4	)		341
Total Long-Term Debt		$	845	$	(9	)	$	836		$	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~~. On May 8, 2023, the Company declared a "Covenant Changeover Date" (as defined in its existing credit agreement), thereby declaring the Company out of the financial covenant holiday and no longer subject to certain of the restrictive covenants contained in the agreement. Following that, on June 29, 2023, we amended and restated the Credit Agreement (the "Restated Credit Agreement") to, among other things, (i) extend the maturity date of the Credit Facility from May 12, 2024 to June 29, 2028. (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt", the aggregate outstanding principal amount of such specified debt is $200 million or more then the maturity date will be such business day); (ii) maintain the aggregate amount of revolving commitments available at $500 million; (iii) increases the total net leverage ratio from 3.5 to 1.0 to 4.5 to 1.0; and (iv) replace the LIBOR interest rate benchmark with a secured overnight financing rate ("SOFR") interest rate benchmark.

The Company may borrow from the Credit Facility in U.S dollars, Euros and Sterling. Borrowings under the Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the Term Benchmark Borrowing rate, or the EURIBO rate for the interest period in effect for such borrowings in Euro; plus an applicable margin ranging from 1.75% to 2.50% (“Term Benchmark/RFP Spread”), based on the Company’s total net leverage ratio; (ii) the RFP Borrowing rate, or the Daily Simple Sterling Overnight Interbank Average rate for the interest period in effect for such borrowings in Sterling; plus the Term Benchmark/RFP Spread, based on the Company’s total net leverage ratio; or (iii) the Alternate Base Rate (“ABR”) 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 Term Benchmark Borrowing rate, or Adjusted Term SOFR for an interest period of one month as published two US Government Securities Business Days prior to such day (or if such day is not a US Government Securities Business Day, the immediately preceding US Government Securities Business Day) plus 1.00% per annum; in addition to an applicable margin ranging from 0.75% to 1.50%, based on the Company’s total net leverage ratio. In addition, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.25% to 0.40%, on the daily unused portion of the Credit Facility for each fiscal quarter and in connection with the issuance of letters of credit. As of ~~March 31,~~June 30, 2023, our unused revolver capacity was subject to a commitment fee of 0.25%, given the Company’s total net leverage ratio. In addition, the Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for swing line borrowings on same-day notice.

As of June 30, 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~~six months ended ~~March 31,~~June 30, 2023 and 2022, ~~we recorded~~ total interest expense and commitment fees on ~~the~~our Credit Facility was not material. In connection with the Restated Credit Agreement, we incurred lender fees and other debt financing costs of approximately $13 ~~million~~million. These costs were capitalized as deferred financing costs in other long-term assets on our unaudited consolidated balance sheet as of June 30, 2023, while deferred financing costs incurred in previous amendments, which were immediately recognized to interest expense on our unaudited condensed consolidated statements of ~~operations.~~

~~The~~operations for the three and six months ended June 30, 2023, were not material. As of June 30, 2023, the Company ~~may borrow from~~had $4 million remaining in deferred financing costs in connection with 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.

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

~~The Company remained in~~amortized over the ~~Leverage Covenant Holiday as of 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 (“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 LIBOR (or 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 March 31, 2023, on the daily unused portion~~remaining term of the Credit Facility, ~~for each fiscal quarter during~~using the ~~Leverage Covenant Holiday~~effective interest rate method, and ~~in connection with the issuance~~recorded to interest expense on our unaudited condensed consolidated statement of ~~letters of credit~~operations.

There is no specific repayment date prior to the maturity date for any borrowings under the Credit Agreement. We may voluntarily repay any outstanding borrowing under the Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to ~~Eurocurrency~~Term Benchmark and RFP interest rate-based loans. Additionally, the Company believes that the likelihood of the lender exercising any subjective acceleration rights, which would permit the lenders to accelerate repayment of any outstanding borrowings, is remote. As such, we intend to classify any future borrowings under this facility as long-term debt. The Credit Agreement contains a number of covenants that, among other things, restrict our ability to incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change our fiscal year. ~~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~~requires us to maintain a maximum total net leverage ratio and contains certain customary affirmative and negative covenants and events of default, including a change of control. 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 ~~March 31,~~June 30, 2023 and December 31, 2022, ~~we were~~the Company was in compliance with ~~our~~its existing covenants.

2025 Senior Notes

On ~~July 9,~~In 2020,, the Company ~~completed the sale of~~issued $500 million of outstanding aggregate principal amount of 7.0% Senior Notes due 2025 (the “2025 Senior Notes”)~~, pursuant to a purchase agreement,~~. The 2025 Senior Notes are governed by an indenture dated July 7,9, 2020, among the Company, the guarantors party thereto and the initial purchasers party thereto in a private offering to qualified institutional buyers. The 2025 Senior Notes were issued pursuant to an indenture, dated July 9, 2020 (the “2025 Indenture”), among the Company, the guarantors and the trustee. The 2025 Indenture provides, among other things, that interest is payable on the 2025 Senior Notes semiannually on January 15 and July 15 of each year, and continues until their maturity date of July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the Company, although unconditionally guaranteed on a joint and ~~are guaranteed~~several basis, 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 ~~March 31,~~both June 30, 2023 and December 31, 2022, unpaid interest on the 2025 Senior Notes ~~of $~~7 ~~million and~~totaled approximately $16 million, ~~respectively,~~and was included in accrued expenses and other current liabilities on our unaudited condensed consolidated balance ~~sheet,~~sheets. During both the three and six months ended June 30, 2023 and 2022, we recorded interest expense of $9 million ~~was recorded as interest expense~~and $18 million, respectively, on our unaudited condensed consolidated statements of ~~operations for both the three months ended March 31, 2023 and 2022.~~operations.

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

2026 Senior Notes

~~On March 25,~~In 2021, ~~we entered into a purchase agreement for~~ the ~~sale of~~Company issued $~~300~~345 million in outstanding 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 also 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 unconditionally guaranteed on a joint and several basis, by certain of the Company’s domestic subsidiaries, with interest payable semiannually in arrears on April 1 and October 1 of each year. During both the three and six months ended ~~March 31,~~June 30, 2023 and 2022, our effective interest rate, including debt issuance costs, was approximately ~~0.45~~0.50% and ~~0.52%, respectively, and total~~ interest expense incurred ~~from the 2026 Senior Notes~~ was not material in any period. As of ~~March 31,~~June 30, 2023 and December 31, 2022, unpaid interest on 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 30~~th 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 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.

Refer to “Note 9: Debt” in the notes to consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022, for additional information pertaining to redemption, conversion, and repurchase features or terms regarding the 2025 Senior Notes and 2026 Senior Notes.

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 both ~~March 31,~~June 30, 2023 and December 31, 2022. The Capped Calls are not accounted for as derivatives and their fair value is not remeasured each reporting period.

NOTE 7: OTHER LONG-TERM LIABILITIES

Other long-term liabilities consisted of the following as of the dates presented:

March 31, 2023

December 31, 2022

(in millions)

Unrecognized tax benefits (1)

$
148

$
204

Deferred gain on equity method investment (2)

28

28

Long-term income taxes payable (3)

27

27

Other

3

6

Total

$
206

$
265


	June 30, 2023		December 31, 2022
	(in millions)
Unrecognized tax benefits (1)	$	151	$	204
Deferred gain on equity method investment (2)		27		28
Long-term income taxes payable (3)		15		27
Other		2		6
Total	$	195	$	265

(1)

Refer to “Note 8: Income Taxes” for information regarding our unrecognized tax benefits. Amounts include accrued interest related to this liability.

(2)

Amount relates to long-term portion of a deferred income liability recorded as a result of an equity method ~~investment made in the fourth quarter of 2019.~~investment. Refer to “Note 4: Financial Instruments and Fair Value Measurements” for additional information.

(3)

Amount relates to the long-term portion of transition tax payable related to the 2017 Tax Act.

NOTE 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.

Our income tax provision was $5820 million and $178 million for the three and six months ended ~~March 31,~~June 30, 2023, respectively, and our income tax provision was $22 million and $24 million for the three and six months ended June 30, 2022, respectively. The change in our income tax provision during the ~~three~~six months ended ~~March 31,~~June 30, 2023, when compared to the same period in 2022, was primarily the result of an Internal Revenue Service ("IRS") audit settlement and ~~the~~related 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 and six months ended ~~March 31,~~June 30, 2023 differs from the U.S. federal statutory rate of 21%, primarily due to the reasons noted above.

A reconciliation of the provision (benefit) for income taxes to the amounts computed by applying the statutory federal income tax rate to income (loss) before income taxes is as follows for the periods presented:


	Three months ended March 31,						Six months ended June 30,
	2023			2022			2023			2022
	(in millions)						(in millions)
Income tax expense (benefit) at the federal statutory rate	$	(3	)	$	(7	)	$	6		$	5
State income taxes, net of effect of federal tax benefit		—			(1	)		3			2
Unrecognized tax benefits and related interest		1			2			4			7
Stock-based compensation		2			4			6			9
Research tax credit		—			1			(1	)		(2	)
Change in valuation allowance		2			3			5			4
IRS audit settlement		31			—			31			—
Transfer pricing reserves adjustment		24			—			24			—
Other, net		1			(1	)		—			(1	)
Provision (benefit) for income taxes	$	58		$	1		$	78		$	24

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 ~~March 31,~~June 30, 2023, we had an accrued interest liability of $4043 million ~~which was included in unrecognized tax benefits in other long-term liabilities on our unaudited condensed consolidated balance sheet,~~ and no penalties ~~were~~have been accrued.

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

As disclosed in previous filings, including in our Annual Report on Form 10-K for the year ended December 31, 2022, we ~~had~~ received Notices of Proposed Adjustments ("NOPA") from the IRS with respect to income tax returns filed by Expedia when Tripadvisor was part of Expedia Group’s consolidated income tax return for the 2009, 2010, and 2011 tax ~~years relating~~years. The assessment is related to certain transfer pricing arrangements with ~~our~~ foreign ~~subsidiaries. In response,~~subsidiaries, which we had requested competent authority assistance under the Mutual Agreement Procedure (“MAP”) for the 2009 through 2011 tax years. In January 2023, we received a final notice from the IRS regarding a MAP settlement for the 2009 through 2011 tax years, which the Company accepted in February 2023. In the first quarter of 2023, we recorded additional income tax expense as a discrete item, inclusive of interest, of $31 million specifically related to this settlement. WeDuring the first quarter of 2023, we reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent tax years, ~~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~~which was recognized during the three months ended March 31, 2023. During the three months ended June 30, 2023, we made a U.S. federal tax payment of $113 million, inclusive of interest, to Expedia related to this IRS audit settlement, pursuant to the Tax Sharing Agreement with Expedia. This amount was previously accrued in income taxes payable on our unaudited condensed consolidated balance sheet. We anticipate a competent authority refund and federal tax benefits, net of state tax payments due, associated with this IRS audit settlement will be substantially settled in the next twelve months, resulting in an estimated net cash inflow of $45 million to $55 million, inclusive of related interest expense, and is reflected in income taxes receivable on our unaudited condensed consolidated balance sheet as of June 30, 2023.

~~In addition, and separately,~~Separately, during August 2020, we received a NOPA from the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments pertain to certain transfer pricing arrangements with our foreign subsidiaries and would result in additional income tax expense above our existing tax reserves as of June 30, 2023, in an estimated range of $55 million to $65 million at the close of the audit if the IRS prevails. 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. 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 years discussed above, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we may be subject to significant additional tax liabilities. We have previously requested competent authority assistance under MAP for the tax years of 2014 through ~~2016 tax years. As discussed above, we~~2016. We reviewed our transfer pricing reserves as of ~~March 31,~~June 30, 2023 and, 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,~~June 30, 2023.

2018

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 the tax years 2009 through 2011, and its impact on other ongoing IRS audits, as described above, during the first quarter of 2023, we reduced this unrecognized tax benefits liability by $59 million, ~~during the three months ended March 31, 2023, while increasing our current~~reclassifying this balance to income taxes ~~payable by $109~~ ~~million, representing a short-term payment obligation to the IRS, and increasing~~payable. We also increased 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~~jurisdiction, while reducing our long-term income taxes receivable by $45 million, representing our previous estimate of competent authority relief, 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.~~2022.

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

NOTE 9: COMMITMENTS AND CONTINGENCIES

As of ~~March 31,~~June 30, 2023, there have been no material changes to our commitments and contingencies since December 31, 2022. Refer to “Note 12: Commitments and Contingencies,” in the notes to our consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Legal Proceedings

In the ordinary course of business, we are party to legal, regulatory and administrative matters, including threats thereof, arising out of, or in connection with our operations. These matters may involve claims involving 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. All legal fees incurred by the Company related to any regulatory and legal matters are expensed in the period incurred.

Income and Non-Income Taxes

We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and non-income tax matters. We have reserved for potential adjustments that may result from examinations by, or any negotiated agreements with, these tax authorities. Although we believe our tax estimates are reasonable, the final determination of audits could be materially different from our historical tax provisions and accruals. The results of an audit could have a material effect on our financial position, results of operations, or cash flows in the period for which that determination is made. Refer to “Note 8: Income Taxes” for further information on potential contingencies surrounding income taxes.

NOTE 10: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS

On June 6, 2023, our stockholders approved the TripAdvisor, Inc. 2023 Stock and Annual Incentive Plan (the “2023 Plan”) primarily for the purpose of providing sufficient reserves of shares of our common stock to ensure our ability to continue to provide new hires, employees, and other participants with equity incentives. The 2023 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. As of June 30, 2023, the total number of shares reserved for future stock-based awards under the 2023 Plan was approximately 18 million shares, calculated as follows: 12 million shares plus the number of shares available for issuance (and not subject to outstanding awards) under the TripAdvisor, Inc. 2018 Stock and Annual Incentive Plan (the “2018 Plan”). All shares of common stock issued to date in respect of the exercise of options, restricted stock units (“RSUs”), or other equity awards have been issued from authorized, but unissued common stock.

Stock-Based Compensation Expense

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

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


	Three months ended						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
	(in millions)						(in millions)
Total stock-based compensation expense	$	25		$	21		$	48		$	43
Income tax benefit from stock-based compensation		(5	)		(5	)		(10	)		(9	)
Total stock-based compensation expense, net of tax	$	20		$	16		$	38		$	34

We capitalized $23 million and $5 million of stock-based compensation expense as website development costs during ~~both~~ the three and six months ended ~~March 31,~~June 30, 2023, respectively, and ~~2022.~~$2 million and $5 million during the three and six months ended June 30, 2022, respectively.

Stock-Based Award Activity and Valuation

2023 Stock Option Activity

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


				Weighted		Weighted							Weighted		Weighted
				Average		Average							Average		Average
				Exercise		Remaining		Aggregate					Exercise		Remaining		Aggregate
	Options			Price Per		Contractual		Intrinsic		Options			Price Per		Contractual		Intrinsic
	Outstanding			Share		Life		Value		Outstanding			Share		Life		Value
	(in thousands)					(in years)		(in millions)		(in thousands)					(in years)		(in millions)
Options outstanding at December 31, 2022		5,462		$	43.48						5,462		$	43.48
Granted		100			22.49						138			20.85
Cancelled or expired		(125	)		42.92						(466	)		41.95
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
Options outstanding at June 30, 2023											5,134		$	43.01		4.5	$	—
Exercisable as of June 30, 2023											3,816		$	49.19		3.0	$	—
Vested and expected to vest after June 30, 2023 (1)											4,988		$	43.47		4.4	$	—

(1)

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

The weighted-average grant date fair value of stock options issued during the six months ended June 30, 2023 and 2022, using a Black-Scholes Merton option-pricing model, was $10.46 and $12.13, respectively. The total fair value of stock options vested was $4 million and $7 million for the six months ended June 30, 2023 and 2022, respectively. 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 ~~March 31,~~June 30, 2023 was $~~19.86~~16.49. ~~The total intrinsic value of stock options exercised was~~ no~~t material for both the three months ended March 31, 2023 and 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:~~

Three months ended

March 31,

2023

2022

Risk free interest rate

3.56
%

1.53
%
Expected term (in years)

5.14

5.15

Expected volatility

52.28
%

50.32
%
Expected dividend yield

— %

— %

Weighted-average grant date fair value

$
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 $2 ~~million and $~~6 ~~million for the three months ended March 31, 2023 and 2022, respectively.~~

2023 RSU Activity

A summary of our ~~RSUs~~RSU activity, consisting of service-based vesting terms, is presented ~~below:~~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, 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


				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		6,488			21.75
Vested and released (1)		(2,337	)		30.55
Cancelled		(621	)		27.28
Unvested RSUs outstanding as of June 30, 2023 (2)		12,102		$	24.48	$	200

(1)

Inclusive of approximately ~~358,000~~540,000 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~~2023 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited condensed consolidated statements of cash flows.

(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. The total fair value of RSUs vested was $71 million and $63 million for the six months ended June 30, 2023 and 2022, respectively.

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


	PSUs (1)						MSUs (2)						PSUs (1)			MSUs (2)
			Weighted						Weighted					Weighted			Weighted
			Average						Average					Average			Average
			Grant-		Aggregate				Grant-		Aggregate			Grant-	Aggregate		Grant-	Aggregate
			Date Fair		Intrinsic				Date Fair		Intrinsic			Date Fair	Intrinsic		Date Fair	Intrinsic
	Outstanding		Value Per Share		Value		Outstanding		Value Per Share		Value		Outstanding	Value Per Share	Value	Outstanding	Value Per Share	Value
	(in thousands)				(in millions)		(in thousands)				(in millions)		(in thousands)		(in millions)	(in thousands)		(in millions)
Unvested and outstanding as of December 31, 2022		—	$	—				592	$	10.00			—	$—		592	$10.00
Granted		546		18.45				34		14.80			546	18.45		34	14.80
Unvested and outstanding as of March 31, 2023		546	$	18.45	$	11		626	$	10.26	$	12
Cancelled													(2)	18.45		(54)	9.26
Unvested and outstanding as of June 30, 2023													544	$18.45	$9	572	$10.35	$9

(1)

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

Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications, if any.

(2)

MSUs shall vest three years from ~~their~~ grant date, generally with 25% vesting if ~~our~~the weighted-average stock price over a 30 day trading period during the vesting period is equal to or greater than $35.00 but less than $45.00, 50% vesting if ~~our stock price is~~ equal to or greater than $45.00 but less than ~~$55.00~~$55.00; and 100% vesting if ~~our stock price is~~ equal to or greater than $55.00,, subject to continuous employment with, or performance of services for, the ~~Company.~~Company. A Monte-Carlo simulation model, which simulated the present value of the potential outcomes of future stock prices was used to calculate the grant-date fair value of our MSU awards. The estimated grant-date fair value of these awards is amortized on a straight-line basis over the requisite service ~~period.~~period and is not adjusted based on the actual number of awards that ultimately vest.

~~Total current income~~Income tax benefits associated with the exercise or settlement of all Tripadvisor stock-based awards held by our employees was $3 million and $26 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, and $1 million and $3 million during the three and six months ended June 30, 2022, respectively.

23As of June 30, 2023, total unrecognized compensation cost related to stock-based awards, substantially RSUs, was $

288 million, which the Company expects to recognize over a weighted-average period of

~~Unrecognized Stock-Based Compensation~~3.0 years.

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

NOTE 13: SEGMENT INFORMATION

We have three 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 meta revenue, primarily click-based advertising revenue, and also 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;~~revenue (also referred to as "media advertising"); (3) Tripadvisor experiences and dining revenue – consisting of intercompany (intersegment) revenue related to affiliate marketing commissions earned primarily from experience bookings, and to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, ~~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 2: Significant Accounting Policies” and “Note 3: Revenue Recognition.”, in the notes to consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

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

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

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

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

Our segment disclosure includes intersegment revenues, which consist of affiliate marketing fees for services provided by our 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 the “Corporate & Eliminations” ~~columns~~column in the tables below.


	Three months ended March 31, 2023														Three months ended June 30, 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	$	221	$	115		$	35		$	—		$	371		$	240	$	216		$	38		$	—		$	494
Intersegment revenue		23		—			—			(23	)		—			39		—			—			(39	)		—
Total Revenue	$	244	$	115		$	35		$	(23	)	$	371		$	279	$	216		$	38		$	(39	)	$	494
Adjusted EBITDA		72		(30	)		(9	)		—			33			96		(2	)		(4	)		—			90
Depreciation and amortization										(21	)		(21	)										(21	)		(21	)
Stock-based compensation										(23	)		(23	)										(25	)		(25	)
Non-recurring income (expense) (4)										(3	)		(3	)
Operating income (loss)													(14	)													44
Other income (expense), net													(1	)													—
Income (loss) before income taxes													(15	)													44
(Provision) benefit for income taxes													(58	)													(20	)
Net income (loss)													(73	)													24

Three months ended March 31, 2022

Tripadvisor Core (1)

Viator (2)

TheFork (3)

Corporate &
Eliminations

Total

(in millions)

External revenue

$
180

$
56

$
26

$
—

$
262

Intersegment revenue

11

—

—

(11
)

—

Total Revenue

$
191

$
56

$
26

$
(11
)

$
262

Adjusted EBITDA

55

(20
)

(8
)

—

27

Depreciation and amortization

(25
)

(25
)
Stock-based compensation

(22
)

(22
)
Operating income (loss)

(20
)
Other income (expense), net

(13
)
Income (loss) before income taxes

(33
)
(Provision) benefit for income taxes

(1
)
Net income (loss)

(34
)


	Three months ended June 30, 2022
	Tripadvisor Core (1)		Viator (2)		TheFork (3)			Corporate & Eliminations			Total
	(in millions)
External revenue	$	249	$	136	$	32		$	—		$	417
Intersegment revenue		25		—		—			(25	)		—
Total Revenue	$	274	$	136	$	32		$	(25	)	$	417
Adjusted EBITDA		116		—		(7	)		—			109
Depreciation and amortization									(25	)		(25	)
Stock-based compensation									(21	)		(21	)
Operating income (loss)												63
Other income (expense), net												(10	)
Income (loss) before income taxes												53
(Provision) benefit for income taxes												(22	)
Net income (loss)												31


	Six months ended June 30, 2023
	Tripadvisor Core (1)		Viator (2)			TheFork (3)			Corporate & Eliminations			Total
	(in millions)
External revenue	$	461	$	331		$	73		$	—		$	865
Intersegment revenue		62		—			—			(62	)		—
Total Revenue	$	523	$	331		$	73		$	(62	)	$	865
Adjusted EBITDA		168		(31	)		(14	)		—			123
Depreciation and amortization										(42	)		(42	)
Stock-based compensation										(48	)		(48	)
Non-recurring income (expense) (4)										(3	)		(3	)
Operating income (loss)													30
Other income (expense), net													(1	)
Income (loss) before income taxes													29
(Provision) benefit for income taxes													(78	)
Net income (loss)													(49	)


	Six months ended June 30, 2022
	Tripadvisor Core (1)		Viator (2)			TheFork (3)			Corporate & Eliminations			Total
	(in millions)
External revenue	$	429	$	192		$	58		$	—		$	679
Intersegment revenue		36		—			—			(36	)		—
Total Revenue	$	465	$	192		$	58		$	(36	)	$	679
Adjusted EBITDA		172		(20	)		(15	)		—			137
Depreciation and amortization										(50	)		(50	)
Stock-based compensation										(43	)		(43	)
Operating income (loss)													44
Other income (expense), net													(23	)
Income (loss) before income taxes													21
(Provision) benefit for income taxes													(24	)
Net income (loss)													(3	)

(1)

Corporate general and administrative personnel costs of $2 million and $3 million for the three and six months ended June 30, 2023, respectively, and $2 million for both the three and six months ended ~~March 31, 2023 and~~June 30, 2022, were allocated to the Viator and TheFork segments.

(2)

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

(3)

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

(4)

The Company expensed $3 million of previously capitalized transaction costs during the ~~three months ended March 31,~~first quarter of 2023 to general and administrative expenses on our unaudited condensed consolidated statement of operations. The Company considers such costs to be non-recurring in nature.

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, 2022.

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, 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 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 audiences, with hundreds of 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 doing so, Viator elevates tens of thousands of businesses,

large and small. Viator delivers on its purpose by enabling travelers to discover and book iconic, unique and memorable experiences from 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 in a unique position in the travel and 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~~offerings that include accommodations, experiences, dining, and media. This value proposition is delivered through a collection of durable assets that we believe is difficult to replicate: a trusted brand, authentic UGC, a large community of contributors, and one of the largest global travel audiences. Our strategy in this segment is to leverage these core assets as well as our technology capabilities to provide travelers with a compelling user experience that helps travelers make the best decisions in each phase of their travel journey, including pre-trip planning, in-destination, and post-trip sharing. We intend to drive new traveler acquisition and repeat audience engagement on our platform by offering meaningful travel guidance solutions and services that reduce friction in the traveler journey and create a deeper, more persistent relationship with travelers. We evaluate investment opportunities across data, product, marketing, and technology that we believe will improve and diversify the monetization of our audience through deeper engagement, which, in turn, we expect will drive more value to our partners. As an example, during June 2023, we introduced a beta version of our core trip planning tool, including a new AI-powered travel itinerary generator. This new feature creates personalized travel itineraries utilizing generative AI technology.

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.

In our Viator and TheFork segments, we provide two-sided marketplaces that connect travelers and diners to operators of bookable experiences and restaurants, respectively. Within our Viator segment, we are investing in growth, future scale, and market share gains to accelerate our market leadership position, while improving booking unit economics that provide visibility to sustainable future profitability. This means driving awareness and higher quality audience engagement, which we believe will drive greater repeat behavior, more direct traffic, and translate into improved unit economics over time. Our investments on both sides of our marketplace, as well as in our core offerings, are intended to deliver a differentiated value proposition that will drive sustainable market leadership as our partners, operators, and travelers find themselves in an increasingly competitive marketplace environment. Similarly, in TheFork segment, we are also investing in growth, future scale, and market share gains. Our investments are focused on continuing to grow both our restaurant base and our diner base by offering innovative tools and features on our platform, and through continued awareness of our brand.

We expect to drive growth across the Tripadvisor group through organic investment in data, products, marketing and technology to further enhance the value we deliver to travelers and partners across our brands, platforms, and segments. In addition, we may accelerate growth inorganically by opportunistically pursuing strategic acquisitions.

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, highly dynamic and competitive. We describe below current trends affecting our overall business and reportable segments, including uncertainties that may impact our ability to execute on our objectives and strategies. Health-related events, such as a pandemic, 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 industry, and as a result, our financial results in the future.

Our consolidated revenue for the three months ended March 31, 2023 was $371 million, an increase of 42%, when compared to the same period in 2022. In the first quarter of 2023, we 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 first quarter of 2022, we experienced a significant negative impact from the Omicron variant across ~~our business,~~all segments which ~~also contributed~~helped contribute to the year-over-year revenue growth rate during the first ~~quarter~~half of 2023. Asia-Pacific, which represents a small portion of our overall business, has been slower to recover due to longer and sustained travel restrictions as a result of the COVID-19 pandemic. However, in the first quarter of 2023, travel restrictions across Asia began to ease relative to 2022 and continued in the second quarter of 2023, 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 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 slower to recover. Prior to Google introducing changes to its SERP (search engine results page), we generated a significant amount of direct traffic from search engines, such as Google, through strong SEO ~~performance.~~performance across all segments. We believe our SEO traffic acquisition performance has been negatively impacted in the past, and may be impacted in the future by search engines (primarily Google) increasing the prominence of their own products in search ~~results.~~results across our business, most notably within our hotel meta offering within our Tripadvisor Core segment.

In response to strong consumer demand for our experiences offerings across our Viator and Tripadvisor Core segments, we continued to increase investment in performance marketing and brand spend during the first half of 2023 to grow market share in this large underpenetrated market. Over the long-term, we are focused on driving a greater percentage of our traffic from direct sources and channels which are more profitable than performance marketing channels.

The global experiences market is large, growing, and highly fragmented, with the vast majority of bookings still occurring through traditional offline sources. We are observing a secular shift, however, as this market continues to grow and accelerate the pace of online adoption. Likewise, the global restaurants category is also benefiting from increased online adoption by both consumers and partners, particularly in Europe. Given the competitive positioning of our businesses relative to the attractive growth prospects in these categories, we expect to continue to invest in these categories across the Tripadvisor group, and in particular, within the Viator and TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.

On July 31, 2023, the Company approved global cost reduction measures to provide additional flexibility in prioritizing our strategic investment. At this time, we expect an estimated $35 million in annualized cost savings across several areas of the Company, related to targeted global workforce reduction measures, largely in the Tripadvisor Core segment, including corporate general and administrative. Cost reduction measures may also include, but not be limited to, discretionary spend and real estate. We expect these cost reduction measures to be largely completed by the Company over the remainder of 2023.

As of ~~March 31,~~June 30, 2023, the Company had approximately ~~3,115~~3,112 employees. Approximately ~~56%~~57%, 34%, and ~~10%~~9% of the Company’s current employees are based in Europe, the U.S., and the rest of world, respectively. Additionally, we use independent contractors to supplement our workforce. We believe we have good relationships with our employees and contractors, including relationships with employees represented by international works councils or other similar organizations.

Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel partner advertising investments, and therefore our revenue and operating profits, have also historically followed a seasonal pattern. Our financial performance tends to be seasonally highest in the second and third quarters of a given year, which includes the seasonal peak in consumer demand, including traveler accommodation stays, and travel experiences taken, compared to the first and fourth quarters, which represent seasonal low points. In addition, during the first half of the year, experience bookings typically exceed the amount of completed experiences, resulting in higher cash flow related to working capital, while during the second half of the year, particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative. Other factors may also impact

typical seasonal fluctuations, which factors include further significant shifts in our business mix, adverse economic conditions, or health-related ~~events.~~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, 2022.

There have been no material changes to our significant accounting policies since December 31, 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, 2022.


	Three months ended March 31,						% Change			Three months ended June 30,						% Change			Six months ended June 30,						% Change
	2023			2022			2023 vs. 2022			2023			2022			2023 vs. 2022			2023			2022			2023 vs. 2022
Revenue	$	371		$	262			42	%	$	494		$	417			18	%	$	865		$	679			27	%

Costs and expenses:
Cost of revenue		29			22			32	%		41			31			32	%		70			53			32	%
Selling and marketing		219			141			55	%		270			217			24	%		488			357			37	%
Technology and content		68			54			26	%		71			53			34	%		139			107			30	%
General and administrative		48			40			20	%		47			28			68	%		96			68			41	%
Depreciation and amortization		21			25			(16	)%		21			25			(16	)%		42			50			(16	)%
Total costs and expenses:		385			282			37	%		450			354			27	%		835			635			31	%
Operating income (loss)		(14	)		(20	)		(30	)%		44			63			(30	)%		30			44			(32	)%
Other income (expense)
Other income (expense):
Interest expense		(11	)		(12	)		(8	)%		(11	)		(11	)		0	%		(22	)		(23	)		(4	)%
Interest income		11			1			1000	%		12			2			500	%		22			2			1000	%
Other income (expense), net		(1	)		(2	)		(50	)%		(1	)		(1	)		0	%		(1	)		(2	)		(50	)%
Total other income (expense), net		(1	)		(13	)		(92	)%		—			(10	)	n.m.				(1	)		(23	)		(96	)%
Income (loss) before income taxes		(15	)		(33	)		(55	)%		44			53			(17	%)		29			21			38	%
(Provision) benefit for income taxes		(58	)		(1	)		5700	%		(20	)		(22	)		(9	%)		(78	)		(24	)		225	%
Net income (loss)	$	(73	)	$	(34	)		115	%	$	24		$	31			(23	%)	$	(49	)	$	(3	)		1533	%

Other Financial Data:
Adjusted EBITDA (1)	$	33		$	27			22	%	$	90		$	109			(17	)%	$	123		$	137			(10	)%

(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.

Tripadvisor Core segment revenue increased by ~~$53~~$5 million ~~or 28%,~~ during the three months ended ~~March 31,~~June 30, 2023, when compared to the same period in 2022, primarily due to ~~increased hotel meta~~an increase in Tripadvisor experiences revenue, and, to a lesser extent, an increase in Tripadvisor-branded display and platform and hotel B2B revenue, largely offset by a decrease in our European hotel meta revenue.

Tripadvisor Core segment revenue increased by $58 million during the six months ended June 30, 2023, when compared to the same period in 2022, primarily due to an increase in Tripadvisor experiences and ~~dining~~hotel B2B revenue, and, to a lesser extent, an increase in Tripadvisor-branded display and platform revenue, all of which was primarily driven by ~~increased~~strong consumer ~~travel~~ demand, in addition to the negative impact on this segment’s revenue from the Omicron variant in the first quarter of ~~2022.~~2022, partially offset by a decrease in our European hotel meta revenue during the second quarter of 2023.

Adjusted EBITDA in our Tripadvisor Core segment ~~increased $17~~decreased by $20 million ~~or 31%,~~and $4 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, while adjusted EBITDA margin decreased by 8 percentage points and 5 percentage points during the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022. This was primarily due to an increase in ~~revenue as noted above, partially offset by~~personnel and overhead costs to support business growth, particularly during the second half of 2022 related to the travel demand recovery, an increase in direct selling and marketing expenses related to search engine marketing, or SEM, and other online paid traffic acquisition costs, as well as a decrease in ~~response to increased consumer travel demand, and to a lesser extent, increased personnel and overhead costs to support business growth related to~~our European hotel meta revenue during the ~~travel demand recovery during 2022.~~second quarter of 2023, partially offset by an increase in other Tripadvisor Core segment revenue streams, as noted above.

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

For the three and six months ended ~~March 31,~~June 30, 2023, 62% and 66%, respectively, and for both the three and six months ended June 30, 2022, 69% ~~and 71%, respectively,~~ of our total Tripadvisor Core segment revenue was derived from Tripadvisor-branded hotels revenue.

Tripadvisor-branded hotels revenue ~~increased $33~~decreased by $14 million during the three

months ended ~~March 31,~~June 30, 2023 when compared to the same period in ~~2022.~~2022, primarily driven by a decrease in our European hotel meta revenue related to lower seasonal demand and increased competitive environment in paid channels, leading to a decrease in paid volume clicks. This ~~increase~~decrease was partially offset by improved hotel B2B revenue when compared to the second quarter of 2022.

Tripadvisor-branded hotels revenue increased by $21 million during the six months ended June 30, 2023 when compared to the same period in 2022, primarily driven by improved hotel ~~meta~~B2B revenue, ~~across all geographic markets,~~ as well as to a lesser extent, improved hotel ~~B2B~~meta revenue in the U.S. and rest of world geographic markets, primarily driven by ~~increased~~strong consumer travel demand compared to the first ~~quarter~~half of 2022, which was negatively impacted by the Omicron ~~variant. As consumer travel demand increased,~~variant during the first quarter of 2022. In addition, the Company saw continued ~~improvement~~strength in hotel meta monetization in the U.S., as CPC rates ~~increased~~remained robust when compared to the same quarter of 2022, ~~which enabled increased efficient marketing investment on performance channels.~~as consumer demand remained strong. These improvements were partially offset by a decrease in our European hotel meta revenue during the second quarter of 2023, as described above.

For the three and six months ended ~~March 31,~~June 30, 2023, ~~and 2022, 12%~~15% and 14%, respectively, and for both the three and six months ended June 30, 2022, 14% of 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.

Tripadvisor-branded display and platform revenue increased by $4$5 million and $9 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, primarily driven by an increase in marketing spend from ~~our~~ advertisers, in correlation with ~~increased~~strong consumer travel demand.

For the three and six months ended ~~March 31,~~June 30, 2023, 18% and 16%, respectively, and for the three and six months ended June 30, 2022, ~~14%~~13% and ~~10%~~12%, 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~~experiences 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 restaurants service offerings.

Tripadvisor experiences and dining revenue increased by ~~$13~~$15 million and $27 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, primarily driven by ~~marketing investment on performance channels to capture increased~~strong consumer demand for experiences, conversion rate improvements and enhancements to our online user experience.

For ~~each of~~both the three and six months ended ~~March 31,~~June 30, 2023 and 2022, 5% 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 ~~cruise,~~cruises, flights, and ~~rental~~ cars offerings on Tripadvisor websites and mobile apps. Other revenue increased by $3 million during the three months ended March 31, 2023 when compared to the same period in 2022, primarily due to strong performance in our cruise category as the cruise industry continues to recover.app.

Viator segment revenue increased by ~~$59~~$80 million ~~or 105%,~~and $139 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, primarily driven by ~~increased~~strong consumer demand for experiences across all geographies. Viator is also benefitting from a larger macro trend, or secular shift, as the large global market in which it operates continues to grow and migrate online from traditional offline sources. In addition, we estimate this segment's revenue growth rate was negatively impacted by foreign currency fluctuations of approximately 10% during the three months ended March 31, 2023 when compared to the same period in 2022.

Adjusted EBITDA loss in our Viator segment increased by ~~$10~~$2 million and $11 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022. ~~This increase was~~These increases were primarily due to an increase in selling and marketing expenses related to SEM, other online paid traffic acquisition costs, and other marketing costs, including brand spend, in response to ~~increased~~strong consumer demand for experiences and increased investment to grow market share and drive brand awareness, 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. In addition, increases in personnel and overhead costs, ~~increased~~particularly during the second half of 2022, to support business growth related to strong consumer demand and travel demand recovery ~~during 2022.~~contributed to adjusted EBITDA losses in this segment. This was all largely offset by an increase in revenue as noted above.

TheFork segment revenue increased by $9$6 million ~~or 35%,~~and $15 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022. This improvement was driven by increased consumer ~~travel~~ demand for dining, including increased bookings, during 2023 compared to the first half of 2022, as well as a decrease in the negative impact of the Omicron variant which occurred during the first quarter of 2022, which was negatively impacted by the Omicron variant. In addition, we estimate this segment's revenue growth rate was negatively impacted by foreign currency fluctuations of approximately 6% during the three months ended March 31, 2023 when compared to the same period in 2022.

Adjusted EBITDA loss in TheFork segment ~~increased~~decreased by $3 million and $1 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, while adjusted EBITDA margin improved by 11 percentage points and 7 percentage points during the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022, primarily due to an increase in revenue as noted above, a decrease in selling and marketing expenses related to SEM, other online paid traffic acquisition costs, and television advertising costs ~~in response to consumer travel and local demand recovery as COVID-19~~during the second quarter of 2023, which were largely offset by non-income tax related government ~~restrictions on restaurants were~~

~~lifted~~assistance benefits related to COVID-19 relief received during the second quarter of 2022 of $11 million recorded as a benefit to general and administrative expenses, which did not reoccur in 2023, and, to a lesser extent, an increase in personnel and overhead costs to support business growth related to the travel demand recovery that began during 2022. ~~This was largely offset by an increase in revenue as noted above.~~

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 $7by $10 million and $17 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in ~~2022, the majority~~2022. The increase in cost of ~~which~~revenue was primarily due to increased direct costs from credit

card payment processing fees and other revenue-related transaction costs in our Viator segment in direct correlation with the increase in revenue, as Viator serves as the merchant of record for the significant majority of its experience booking transactions.

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 ~~$70~~by $41 million and $112 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, while direct selling and marketing costs as a percentage of consolidated revenue was ~~44%~~43% during both the three and six months ended ~~March 31,~~June 30, 2023, an increase from ~~36%~~41% and 39%, respectively, when compared to the same ~~period~~periods in 2022, primarily due to increased marketing investments related to strong consumer demand and growth opportunities in our experiences category.

The increase in direct selling and marketing costs during the three and six months ended June 30, 2023, when compared to the same periods in 2022, was primarily due to an increase of ~~approximately $63~~$47 million and $110 million, respectively, in paid online traffic acquisition costs, including SEM and other paid online traffic acquisition spend, and also other marketing costs, including brand spend, the substantial majority of which was incurred within our Viator segment and, to a lesser extent, our Tripadvisor Core ~~segments,~~segment, in order to capture ~~increased~~ consumer ~~travel~~ demand, ~~and~~including increased investment in the marketing of our experiences offerings within these segments ~~as well as, and to~~for growth opportunities, partially offset by a ~~lesser extent, increased~~decrease in television advertising costs of $6 million in TheFork segment ~~in order to increase brand awareness.~~during the three months ended June 30, 2023.

Personnel and overhead costs increased $8by $12 million and $19 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, primarily due to an increase in headcount and contingent staff to support business growth related to the travel demand recovery that began 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, computer supplies, telecom, content translation and localization, and consulting.

Personnel and ~~content~~overhead costs increased ~~$14~~by $15 million and $27 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, primarily due to increased personnel and overhead costs resulting from additional headcount and contingent staff to support business growth related to the travel demand recovery that began during 2022.

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.

Personnel and ~~administrative~~overhead costs increased by $5 million and $8 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 2022, ~~the majority due to a $5 million increase in professional service fees and other costs,~~ primarily due to a non-recurring cost of $3 million related to previously capitalized transaction costs and increased digital service tax costs. In addition, an increase in personnel and overhead costs of $3 million was driven by additional headcount to help support business growth related to the travel demand recovery that began during 2022.

Professional service fees and other costs increased by $14 million and $20 million during the three and six months ended June 30, 2023, respectively, when compared to the same periods in 2022, primarily due to non-income tax related government assistance benefits related to COVID-19 relief of $11 million received by the Company during the second quarter of 2022, which did not reoccur in 2023, as well as, and to a lesser extent, a non-recurring cost of $3 million related to previously capitalized transaction costs during the first quarter of 2023, and incremental digital service tax costs of $3 million and $4 million for the three and six months periods, respectively.

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 by $4 million and $8 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 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, the 2025 Senior Notes, the 2026 Senior Notes, as well as interest on finance leases.

The significant majority of interest expense ~~reported~~incurred during the three and six months ended ~~March 31,~~June 30, 2023 and 2022, was related to the 2025 Senior Notes. Refer to “Note 6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on 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 by $10 million and $20 million during the three and six months ended ~~March 31,~~June 30, 2023, respectively, when compared to the same ~~period~~periods in 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~~an increase in the interest earned on money market funds during ~~the quarter.~~2023.

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 ~~decreased $1 million during the three months ended March 31, 2023 when compared to the same period in 2022,~~ primarily ~~due to~~consists of net foreign exchange gains and losses ~~related to~~as a result of foreign currency ~~fluctuations.~~movements.

Our ~~first quarter of 2023~~ effective tax rate ~~differs~~differed from the U.S. federal statutory rate of 21%, during the three months ended June 30, 2023, primarily due to state taxes, stock compensation expense shortfalls, and unbenefited foreign losses. Our effective tax rate differed from the U.S. federal statutory rate of 21% during the six months ended June 30, 2023, primarily as a result of a discrete item recorded during the first quarter of 2023, as described below.

We recorded an income tax provision of ~~$58~~$20 million and $78 million for the three and six months ended ~~March 31, 2023.~~June 30, 2023, respectively. The change in our income tax provision and our effective tax rate during the ~~three~~six months ended ~~March 31,~~June 30, 2023, when compared to the same period in 2022, was primarily the result of an IRS audit settlement and ~~the~~a related adjustment to our existing transfer pricing income tax reserves for subsequent tax years, totaling $55 million, ~~recorded~~which was recognized during the three months ended March 31, 2023. Refer to “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information.

Net ~~loss increased~~income decreased by ~~$39~~$7 million during the three months ended ~~March 31,~~June 30, 2023 when compared to the same period in 2022. The decrease in net income was largely driven by increased direct selling and marketing costs incurred in response to strong consumer travel demand and investment to grow market share in our experiences offerings, increased personnel and overhead costs to help support business growth and consumer demand, as well as to a lesser extent, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue during the three months ended June 30, 2023, and non-income tax related government assistance benefits related to COVID-19 relief of $11 million received during the

second quarter of 2022 and did not reoccur in 2023, all of which are described in more detail above under “Consolidated Expenses.” These changes were largely offset by an increase in revenue, as described in more detail above under “Revenue and Segment Information.”

Net loss increased by $46 million during the six months ended June 30, 2023 when compared to the same period in 2022. The increase in net loss was largely driven by increased direct selling and marketing costs in response to ~~increasing~~strong consumer travel demand and investment to grow market share in our experiences offerings, as well as an incremental income tax expense of $55 million recognized during the first quarter of 2023 as a result of an IRS audit settlement and ~~the~~related adjustment to our existing transfer pricing income tax reserves for subsequent tax years and, to a lesser extent, ~~an increase in~~increased personnel and overhead costs to help support business growth and consumer demand, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue during the ~~three~~six months ended ~~March 31,~~June 30, 2023, and non-income tax related government assistance benefits related to COVID-19 relief of $11 million received during the second quarter of 2022, which did not reoccur in 2023, all of which is described in more detail above under “Consolidated Expenses,” largely offset by an increase in revenue, as described in more detail above under “Revenue and Segment Information.”

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

Adjusted EBITDA is also our segment profit measure and a key measure used by our management and Board of Directors to understand and evaluate the financial performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and better enables management and investors to compare financial results between periods as these costs may vary independent of ongoing core business performance. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. We define Adjusted EBITDA as net income (loss) plus: (1) (provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived asset, and 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 ~~56%~~approximately 57% of our voting power as of ~~March 31,~~June 30, 2023, refer to “Note 1: Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report. We had no related party transactions with LTRIP during both of the three and six months ended ~~March 31,~~June 30, 2023 and 2022.

Refer to “Note 10: Stock Based Awards and Other Equity Instruments” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on current year equity award activity, including the issuance of nearly ~~6.0~~6.5 million service-based RSUs with a weighted average grant-date fair value of ~~$22.13~~$21.75 during the ~~three~~six months ended ~~March 31,~~June 30, 2023.

Our principal source of liquidity is cash flow generated from operations and ~~our~~ existing cash and cash ~~equivalents balance. Our liquidity~~equivalents. Liquidity needs can also be met through drawdowns under the Credit Facility. As of ~~March 31,~~June 30, 2023 and December 31, 2022, we had approximately $1.1 billion and $1.0 billion, respectively, of cash and cash equivalents, and $496 million of available borrowing capacity under the Credit Facility. As of ~~March 31,~~June 30, 2023, ~~approximately $210~~$221 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which nearly 45% was ~~located~~held in the U.K. As of ~~March 31,~~June 30, 2023, the significant majority of our cash was denominated in U.S. dollars.

As of ~~March 31,~~June 30, 2023, we had ~~$471~~$478 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 2023, we are party ~~to the Credit Agreement,~~a credit agreement, which, among other things, provides for a $500 million revolving credit facility with a maturity date of ~~May 12, 2024.~~June 29, 2028. The Company may borrow from the Credit Facility in ~~U.S.~~U.S dollars, Euros 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 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 will be reinstated.

~~The Company remained in the Leverage Covenant Holiday as of March 31, 2023. Based on the Company’s existing leverage ratio, any outstanding or future borrowings~~Sterling. Borrowings under the Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the ~~Eurocurrency~~Term Benchmark Borrowing rate, or the ~~adjusted LIBO~~EURIBO rate for the interest period in effect for such ~~borrowing;~~borrowings in Euro; plus an applicable margin ranging from ~~1.25%~~1.75% to ~~2.00% with a London Inter-Bank Offered Rate~~2.50% (“~~LIBOR rate”~~Term Benchmark/RFP Spread”) ~~floor of 1.00% per annum;~~, based on the Company’s total net leverage ratio; (ii) the RFP Borrowing rate, or ~~(ii)~~the Daily Simple Sterling Overnight Interbank Average rate for the interest period in effect for such borrowings in Sterling; plus the Term Benchmark/RFP Spread, based on the Company’s total net leverage ratio; or (iii) the Alternate Base Rate (“ABR”) 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,~~annum; and (c) the Term Benchmark Borrowing rate, or Adjusted ~~LIBOR (or LIBOR multiplied by the Statutory Reserve Rate)~~Term SOFR for an interest period of one month as published two US Government Securities Business Days prior to such day (or if such day is not a US Government Securities Business Day, the immediately preceding US Government Securities Business Day) plus 1.00%; per annum; in addition to an applicable margin ranging from ~~0.25%~~0.75% to ~~1.00%. In addition,~~1.50%, based on the Company’s ~~existing~~total net leverage ~~ratio,~~ratio. In addition, we are required to pay a quarterly commitment fee, at an applicable rate ranging from ~~0.15%~~0.25% to ~~0.30% as of March 31, 2023,~~0.40%, 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. As of June 30, 2023, our unused revolver capacity was subject to a commitment fee of 0.25%, given the Company’s total net leverage ratio. The Credit Facility ~~includes restrictions on the Company’s ability~~requires us to ~~make~~maintain a maximum total net leverage ratio and contains certain ~~payments~~customary affirmative and ~~distributions,~~negative covenants and events of default, including ~~share repurchases and dividends.~~for a change of control.

As of ~~March 31,~~June 30, 2023 and December 31, 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 total net 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 ~~March 31,~~June 30, 2023, the Company had an aggregate outstanding principal amount of $845 million in long-term debt, as a result of the ~~issuance of 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 in 2025 Senior Notes. The 2025 Senior Notes provide, among other things, that interest, at an interest rate of 7.0% per annum, is payable on January 15 and July 15 of each year, until their maturity on July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the Company, although unconditionally guaranteed on a joint and ~~are guaranteed~~several basis, by certain of the Company’s domestic subsidiaries. In March 2021, the Company completed the sale of $345 million of the 2026 Senior Notes. The 2026 Senior Notes provide, among other things, that interest, at an interest rate of 0.25% per annum, is payable on April 1 and October 1 of each year, until their maturity on April 1, 2026. The 2026 Senior Notes are senior unsecured obligations of the Company, although unconditionally guaranteed on a joint and ~~are guaranteed~~several basis, by certain of the Company’s domestic subsidiaries.

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

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

AsOn November 1, 2019, our Board of ~~March 31, 2023, we had $75~~Directors authorized the repurchase of an additional $100 million ~~remaining available to repurchase~~in shares of our common stock under our existing share repurchase program, ~~authorized by our Board of Directors.~~which increased the amount available to the Company under this share repurchase program to $250 million. During the three months ended ~~March 31,~~June 30, 2023, ~~and 2022, the Company did not repurchase any~~we repurchased 4,724,729 shares of our outstanding common stock ~~under~~at an average price of $15.85 per share, exclusive of fees and commissions, or $75 million in the aggregate, which completed this 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. ~~From~~As a result of our experience bookings, we receive cash from travelers at the time of booking or prior to the occurrence of an experience, and we record these amounts, net of commissions, on our unaudited condensed consolidated balance sheet as deferred merchant payables. We pay the experience operator, or the experience supplier, after the travelers’ use. Therefore, we generally receive cash from the traveler prior to paying the experience operator and this operating cycle represents a source or use of cash to us. During the first half of the year, experiences bookings typically exceed the amount of completed experiences, resulting in higher cash flow related to working capital, while during the second half of the year, particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative. Other factors, such as a resurgence of COVID-19, may also impact typical seasonal fluctuations, which 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. 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 growing~~may continue to increase though it is still not used in ~~the minority~~a majority of bookings to date, ~~may continue to increase,~~ and affect the timing of our future cash flows and working capital.

As discussed in “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report, we received a final notice regarding a MAP settlement for the 2009 through 2011 tax years in January 2023, which the Company subsequently accepted in February 2023. ~~Accepting~~During the three months ended June 30, 2023, we made a U.S. federal tax payment of $113 million, inclusive of interest, to Expedia related to this ~~MAP~~IRS audit settlement, pursuant to the Tax Sharing Agreement with Expedia. This amount was previously accrued in income taxes payable on our unaudited condensed consolidated balance sheet. We anticipate a competent authority refund and federal tax benefits, net of state tax payments, associated with this IRS audit settlement will be substantially settled in the next twelve months, and will result in an estimated net operating cash inflow of $45 million to $55 million, inclusive of related interest expense.

~~outflow of $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,~~Additionally, 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 the 2012 through 2016 tax years in January 2021. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to ~~our consolidated~~ income tax expense in an estimated range of $25 million to $35 million, exclusive of interest expense, at the close of the audit if HMRC prevails. Although the ultimate timing for resolution of these matters is uncertain, any future payments required would negatively impact our operating cash flows.

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

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~our primary source of cash was from operations, while~~ our primary use of cash was in operations, and from financing activities (including repurchases of our outstanding common stock at an aggregate cost of $75 million under our existing share repurchase program and payment of withholding taxes on net share settlements of our equity awards of $12 million) and investing activities (including capital expenditures of $31 million incurred during the six months ended June 30, 2023). This use of cash was funded with cash and cash equivalents and operating cash flows during the period.

During the six months ended June 30, 2022, our primary use of cash was in operations, and from financing activities (including payment of withholding taxes on net share settlements of our equity awards of $9 million), and investing activities (including capital expenditures of ~~$16~~$27 million). This use of cash was funded with cash and cash equivalents, and operating cash flows ~~from operations.~~

During the three months ended March 31, 2022, our primary source of cash was from operations, while our primary use of cash was financing activities (including payment of withholding taxes on net share settlements of our equity awards of $8 million), and investing activities (including capital expenditures incurred during the ~~three months ended March 31, 2022 of $14 million). This use of cash was funded with cash and cash equivalents, and cash flows from operations.~~period.

Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023, ~~increased $49~~decreased by $140 million when compared to the same period in 2022, primarily due to ~~an increase~~a decrease in working capital of ~~$88~~$66 million and an increase in net losses of $46 million, as well as, and to a lesser extent, a decrease in non-cash items of $28 million, primarily due to a decrease in deferred income tax expense. The decrease in working capital was largely driven by ~~increased income~~a U.S. federal tax ~~expense as a result~~payment of ~~a discrete tax item pertaining~~$113 million during the second quarter of 2023, inclusive of interest, related to anthe IRS audit settlement, ~~and related increase in transfer pricing income tax reserves, as~~ discussed above, a $64 million U.S. federal tax refund related to the CARES Act received in 2022, which did not reoccur in 2023, and increased cash outflows from accounts payable due to timing of vendor payments. These changes were partially offset by an increase in deferred revenue and deferred merchant payables resulting from cash received in advance for experiences bookings, net of cancellations, reflecting experiences bookings growth, ~~and seasonality,~~ and the timing of when cash is received from travelers and then remitted to experience operators, in addition to the timing of and improvement in collection from customers, resulting in increased ~~cashflows~~operating cash flows from accounts ~~receivable. These increases were partially offset by~~receivable during the period, and an increase of $55 million in ~~net loss~~our income tax provision as a result of ~~$39 million as well as increased cash outflows from accounts payable due~~an IRS audit settlement and a related adjustment to ~~timing of vendor payments.~~our existing transfer pricing income tax reserves for subsequent tax years, discussed above.

Net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023 increased by $2$5 million when compared to the same period in 2022, due to an increase in capital expenditures inacross the business.

Net cash used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2023 ~~was materially consistent~~increased by $80 million when compared to the same period in ~~2022.~~2022, primarily due to the repurchase of shares of our common stock under the existing share repurchase program of $75 million and $3 million of financing costs incurred related to our Credit Facility, both occurring during the three months ended June 30, 2023.

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, 2022. As of ~~March 31,~~June 30, 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 Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022 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~~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 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.~~2014. As of ~~March 31, 2022,~~June 30, 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 HMRC audit.

As disclosed in previous filings, including in our Annual Report on Form 10-K for the year ended December 31, 2022, we ~~had~~ received a NOPA from the IRS by virtue of income tax returns filed with Expedia 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. In January 2023, we received a final notice from the IRS regarding a MAP settlement for the 2009 through 2011 tax years, which the Company accepted in February 2023. In the first quarter of 2023, we recorded additional income tax expense as a discrete item, inclusive of interest, of $31 million specifically related to this settlement. 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~~which was recognized during the three months ended March 31, 2023.

In addition, and separately, during August 2020, we received a ~~Notice of Proposed Adjustment~~NOPA from the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments pertain to certain transfer pricing arrangements with our foreign subsidiaries and would result in additional income tax expense above our existing tax reserves in an estimated range of $55 million to $65 million at the close of the audit if the IRS prevails. 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. 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 years discussed above, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we may be subject

to significant additional tax liabilities. We have previously requested competent authority assistance under MAP for the tax years of 2014 through ~~2016 tax years. As discussed above, we~~2016. We have reviewed our transfer pricing reserves as of ~~March 31,~~June 30, 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,~~June 30, 2023.

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

Over the last several years, 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. ~~Further,~~In July 2023, more than 138 countries and jurisdictions agreed to refrain from imposing newly enacted digital service tax initiatives or relevant similar measures on any company before December 31, 2024, or the entry into force of the multilateral convention developed by the OECD/G20 Inclusive Framework if earlier, provided the multilateral convention has made sufficient progress by the end of 2023. Furthermore, certain U.S. states, such as Maryland, have deployed comparable digital services tax initiatives, and we continue to monitor these developments to determine the financial impact to the Company. During the three and six months ended ~~March 31,~~June 30, 2023, we recorded $5 million and $7 million, respectively, of digital service tax, while during the three and six months ended June 30, 2022, we recorded $2 million and $1$3 million, respectively, of digital service tax to general and administrative expense on our unaudited condensed consolidated statement of operations.

Due to the one-time transition tax on the deemed repatriation of undistributed foreign subsidiary earnings and profits in 2017, as a result of the 2017 Tax Act, the majority of previously unremitted earnings have been subjected to U.S. federal income tax. To the extent future distributions from these subsidiaries will be taxable, a deferred income tax liability has been accrued on our unaudited condensed consolidated balance sheet, which was not material as of ~~March 31,~~June 30, 2023. As of ~~March 31,~~June 30, 2023, ~~$471~~$478 million of our cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested.

Refer to “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information 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 ~~three~~six months ended ~~March 31,~~June 30, 2023 since December 31, 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, 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. The risk of loss can be assessed from the perspective of adverse changes in our future earnings, cash flows, fair values of our assets, and financial condition. Our exposure to market risk, at any point in time, may include risks related to any borrowings under the Credit Facility, or outstanding debt related to the 2025 Senior Notes and 2026 Senior Notes, derivative instruments, capped calls, cash and cash equivalents, short-term and long-term marketable securities, if any, accounts receivable, intercompany receivables/payables, accounts payable, deferred merchant payables and other balances and transactions denominated in foreign currencies. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage and attempt to mitigate our exposure to such risks.

We expect that we will continue to increase our operations internationally. Our exposure to potentially volatile movements in foreign currency exchange rates will increase as we increase our operations in 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. 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 ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

During the quarter ended ~~March 31,~~June 30, 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 March 31, 2023, we did not repurchase any shares~~A summary of information regarding our common stock ~~under our existing share repurchase program. As~~repurchases during the second quarter of ~~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 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 6: ~~Debt~~”is set forth in the ~~notes to the unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information about the Credit Agreement~~table below:

~~Not Applicable.~~During the second quarter of 2023, none of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

~~+ 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 ~~April 27,~~July 28, 2023
Common Stock, $0.001 par value per share		~~129,310,431~~125,187,927 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 Six Months Ended ~~March 31,~~June 30, 2023 and 2022		3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended ~~March 31,~~June 30, 2023 and 2022		4
Unaudited Condensed Consolidated Balance Sheets at ~~March 31,~~June 30, 2023 and December 31, 2022		5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended ~~March 31,~~June 30, 2023 and 2022		6
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2023 and 2022		78
Notes to Unaudited Condensed Consolidated Financial Statements		89
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2725
Item 3. Quantitative and Qualitative Disclosures about Market Risk		4140
Item 4. Controls and Procedures		4241
Part II—Other Information
Item 1. Legal Proceedings		4241
Item 1A. Risk Factors		4241
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3. Defaults Upon Senior Securities		4342
Item 4. Mine Safety Disclosures		4342
Item 5. Other Information		4342
Item 6. Exhibits		4443
Signatures		4544


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


	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


	Stock
	Options		RSUs
	(in millions, except in years information)
Unrecognized stock-based compensation expense	$	12	$	306
Weighted average period remaining (in years)		2.9		3.2


Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to April 30		—		—		—	$	75,042,077
May 1 to May 31		4,724,729	$	15.85		4,724,729	$	—
June 1 to June 30		—		—		—	$	—
Total		4,724,729				4,724,729


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

By		/s/ Geoffrey Gouvalaris
		Geoffrey Gouvalaris
		Chief Accounting Officer

June 30, 2023

December 31, 2022

(in millions)

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