UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended June 30, ~~2020~~2021



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

For the transition period from to

Commission File Number: 001-37429

EXPEDIA GROUP, INC.

(Exact name of registrant as specified in its charter)



Delaware						20-2705720
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1111 Expedia Group Way W.

Seattle,, WA98119

(Address of principal executive office) (Zip Code)

(206)481-7200

(Registrant’s telephone number, including area code)

__________________________________

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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value

EXPE

The Nasdaq Global Select Market

Expedia Group, Inc. 2.500% Senior Notes due 2022

EXPE22

New York Stock Exchange

The number of shares outstanding of each of the registrant’s classes of common stock as of July ~~17, 2020~~23, 2021 was:

Common stock, $0.0001 par value per share

~~135,703,255~~145,296,350

Class B common stock, $0.0001 par value per share

5,523,452

Table of Contents

Expedia Group, Inc.

Form 10-Q

For the Quarter Ended June 30, ~~2020~~2021

Contents



Part I		Financial Information
~~Part I~~		~~Financial Information~~

Item 1	Consolidated Financial Statements

		Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2021 and 2020 ~~and 2019~~ (unaudited)	2

		Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30 , 2021 and 2020 ~~and 2019~~ (unaudited)	3

		Consolidated Balance Sheets as of June 30 ~~2020~~, 2021 (unaudited) and December 31, ~~2019~~2020	4

		Consolidated Statements of Stockholders Equity for the Three and Six Months Ended June 30 , 2021 and 2020 ~~and 2019~~ (unaudited)	5

		Consolidated Statements of Cash Flows for the Six Months Ended ~~June~~Ju ne 30 , 2021 and 2020 ~~and 2019~~ (unaudited)	7

		Notes to Consolidated Financial Statements (unaudited)	8

Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2826

Item 3		Quantitative and Qualitative Disclosures about Market Risk	4743

Item 4		Controls and Procedures	4844

Part II		Other Information

Item 1		Legal Proceedings	4945

Item 1A		Risk Factors	5346

Item 2		Unregistered Sales of Equity Securities and Use of Proceeds	5346

Item 6		Exhibits	5447
Signature			5548

Table of Contents

Part I. Item 1. Consolidated Financial Statements

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)


	Three months ended June 30,						Six months ended June 30,							Three months ended June 30,				Six months ended June 30,
	2020			2019			2020			2019				2021		2020		2021		2020

Revenue	$	566		$	3,153		$	2,775		$	5,762		Revenue	$	2,111	$	566	$	3,357	$	2,775
Costs and expenses:													Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) ⁽¹⁾	389			500			1,018			990			Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)	374		381		685		1,010
Selling and marketing ⁽¹⁾	296			1,643			1,506			3,164			Selling and marketing (1)	1,199		291		1,863		1,496
Technology and content⁽¹⁾	255			304			563			601			Technology and content (1)	276		271		523		586
General and administrative ⁽¹⁾	152			205			339			389			General and administrative (1)	184		149		340		334
Depreciation and amortization	232			228			461			456			Depreciation and amortization	205		232		414		461
Impairment of goodwill	20			—			785			—			Impairment of goodwill	0		20		0		785
Impairment of intangible assets	10			—			131			—			Impairment of intangible assets	0		10		0		131
Legal reserves, occupancy tax and other	8			4			(13		)	14			Legal reserves, occupancy tax and other	(8)		8		(9)		(13)
Restructuring and related reorganization charges	53			4			128			14
Operating income (loss)	(849		)	265			(2,143		)	134
Restructuring and related reorganization changes													Restructuring and related reorganization changes	13		53		42		128
Operating loss													Operating loss	(132)		(849)		(501)		(2,143)
Other income (expense):													Other income (expense):
Interest income	3			17			13			28			Interest income	1		3		3		13
Interest expense	(95		)	(39		)	(145		)	(80		)	Interest expense	(83)		(95)		(181)		(145)
Loss on debt extinguishment													Loss on debt extinguishment	0		0		(280)		0
Other, net	(12		)	(8		)	(157		)	12			Other, net	(10)		(12)		(15)		(157)
Total other expense, net	(104		)	(30		)	(289		)	(40		)	Total other expense, net	(92)		(104)		(473)		(289)
Income (loss) before income taxes	(953		)	235			(2,432		)	94
Loss before income taxes													Loss before income taxes	(224)		(953)		(974)		(2,432)
Provision for income taxes	213			(48		)	295			(7		)	Provision for income taxes	47		213		216		295
Net income (loss)	(740		)	187			(2,137		)	87
Net (income) loss attributable to non-controlling interests	4			(4		)	100			(7		)
Net income (loss) attributable to Expedia Group, Inc.	(736		)	183			(2,037		)	80
Net loss													Net loss	(177)		(740)		(758)		(2,137)
Net loss attributable to non-controlling interests													Net loss attributable to non-controlling interests	5		4		8		100
Net loss attributable to Expedia Group, Inc.													Net loss attributable to Expedia Group, Inc.	(172)		(736)		(750)		(2,037)
Preferred stock dividend	(17		)	—			(17		)	—			Preferred stock dividend	(22)		(17)		(50)		(17)
Net income (loss) attributable to Expedia Group, Inc. common stockholders	$	(753	)	$	183		$	(2,054	)	$	80
Loss on redemption of preferred stock													Loss on redemption of preferred stock	(107)		0		(107)		0
Net loss attributable to Expedia Group, Inc. common stockholders													Net loss attributable to Expedia Group, Inc. common stockholders	$	(301)	$	(753)	$	(907)	$	(2,054)

Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders
Loss per share attributable to Expedia Group, Inc. available to common stockholders													Loss per share attributable to Expedia Group, Inc. available to common stockholders
Basic	$	(5.34	)	$	1.23		$	(14.57	)	$	0.54		Basic	$	(2.02)	$	(5.34)	$	(6.16)	$	(14.57)
Diluted	(5.34		)	1.21			(14.57		)	0.53			Diluted	(2.02)		(5.34)		(6.16)		(14.57)
Shares used in computing earnings (loss) per share (000's):													Shares used in computing earnings (loss) per share (000's):
Basic	141,072			149,049			140,947			148,468			Basic	149,093		141,072		147,148		140,947
Diluted	141,072			151,561			140,947			151,057			Diluted	149,093		141,072		147,148		140,947


(1) Includes stock-based compensation as follows:
Cost of revenue	$	6	$	3	$	11	$	6
Selling and marketing	32		13		49		25
Technology and content	32		18		59		38
General and administrative	50		20		84		40

(1) Includes stock-based compensation as follows:
Cost of revenue $ 3
$ 3
$ 6
$ 6
Selling and marketing 13
12
25
23
Technology and content 18
19
38
38
General and administrative 20
25
40
48

Table of Contents

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)


												Three months ended June 30,				Six months ended June 30,
	Three months ended June 30,					Six months ended June 30,						2021		2020		2021		2020
	2020			2019		2020			2019
Net income (loss)	$	(740	)	$	187	$	(2,137	)	$	87
Net loss											Net loss	$	(177)	$	(740)	$	(758)	$	(2,137)
Currency translation adjustments, net of tax⁽¹⁾	34			7		(56		)	2		Currency translation adjustments, net of tax(1)	19		34		(18)		(56)
Comprehensive income (loss)	(706		)	194		(2,193		)	89
Comprehensive loss											Comprehensive loss	(158)		(706)		(776)		(2,193)
Less: Comprehensive income (loss) attributable to non-controlling interests	2			10		(100		)	5		Less: Comprehensive income (loss) attributable to non-controlling interests	1		2		(18)		(100)
Less: Preferred stock dividend	17			—		17			—		Less: Preferred stock dividend	22		17		50		17
Comprehensive income (loss) attributable to Expedia Group, Inc. common stockholders	$	(725	)	$	184	$	(2,110	)	$	84
Less: Loss on redemption of preferred stock											Less: Loss on redemption of preferred stock	107		0		107		0
Comprehensive loss attributable to Expedia Group, Inc. common stockholders											Comprehensive loss attributable to Expedia Group, Inc. common stockholders	$	(288)	$	(725)	$	(915)	$	(2,110)

(1)Currency translation adjustments include tax benefit of $3 million and tax expense of $6 million associated with net investment hedges for the three and six months ended June 30, 2021 and tax benefit of $3 million and $1 million for the three and six months ended June 30, 2020.

See accompanying notes.

CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares, which are reflected in thousands, and par value)

See accompanying notes.

Table of Contents

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, except share and per share data)

(Unaudited)


Three months ended June 30, 2020	Common stock			Class B common stock			Additional paid-in capital		Treasury stock - Common and Class B			Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Non-redeemable non-controlling interest		Total
	Shares	Amount		Shares	Amount				Shares	Amount
Balance as of March 31, 2020	258,769,812	$	0	12,799,999	$	0	$	13,124	130,592,112	$	(10,083)	$	(470)	$	(301)	$	1,471	$	3,741
Net income (loss)												(736)				(4)		(740)
Other comprehensive income (loss), net of taxes														28		6		34
Payment of preferred dividends (declared at $14.02 per share)							(17)											(17)
Proceeds from exercise of equity instruments and employee stock purchase plans	315,120	—					10											10
Common stock warrants, net of issuance costs							110											110
Treasury stock activity related to vesting of equity instruments									57,631	(4)								(4)
Adjustment to the fair value of redeemable non-controlling interests							4											4
Other changes in ownership of non-controlling interests							9									(4)		5
Stock-based compensation expense							59											59
Other							1		20,630									1
Balance as of June 30, 2020	259,084,932	$	0	12,799,999	$	0	$	13,300	130,670,373	$	(10,087)	$	(1,206)	$	(273)	$	1,469	$	3,203

Three months ended June 30, 2019 Common stock
Class B
common stock

Additional
paid-in
capital
Treasury stock
Retained
earnings
(deficit)

Accumulated
other
comprehensive
income (loss)

Non-redeemable
non-controlling
interest
Total
Shares Amount Shares Amount Shares Amount
Balance as of March 31, 2019 233,294,034
$ —
12,799,999
$ —
$ 9,694
97,355,708
$ (5,767 ) $ 373
$ (217 ) $ 1,551
$ 5,634
Net income (loss) 183
4
187
Other comprehensive income (loss), net of taxes 1
6
7
Payment of dividends to common stockholders (declared at $0.32 per share) (48 ) (48 )
Proceeds from exercise of equity instruments and employee stock purchase plans 808,152
—
65
65
Withholding taxes for stock options (2 ) (2 )
Treasury stock activity related to vesting of equity instruments 28,504
(4 ) (4 )
Other changes in ownership of non-controlling interests —
4
4
Stock-based compensation expense 63
63
Other 1

1
Balance as of June 30, 2019 234,102,186
$ —
12,799,999
$ —
$ 9,821
97,384,212
$ (5,771 ) $ 508
$ (216 ) $ 1,565
$ 5,907


Six months ended June 30, 2020	Common stock			Class B common stock			Additional paid-in capital		Treasury stock - Common and Class B			Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Non-redeemable non-controlling interest		Total
	Shares	Amount		Shares	Amount				Shares	Amount
Balance as of December 31, 2019	256,691,777	$	0	12,799,999	$	0	$	12,978	126,892,525	$	(9,673)	$	879	$	(217)	$	1,569	$	5,536
Net income (loss)												(2,037)				(100)		(2,137)
Other comprehensive income (loss), net of taxes														(56)		—		(56)
Payment of preferred dividends (declared at $14.02 per share)							(17)											(17)
Payment of dividends to common stockholders (declared at $0.34 per share)												(48)						(48)
Proceeds from exercise of equity instruments and employee stock purchase plans	2,393,155	—					96											96
Common stock warrants, net of issuance costs							110											110
Treasury stock activity related to vesting of equity instruments									393,099	(44)								(44)
Common stock repurchases									3,364,119	(370)								(370)
Adjustment to the fair value of redeemable non-controlling interests							4											4
Other changes in ownership of non-controlling interests							10									—		10
Stock-based compensation expense							118											118
Other							1		20,630									1
Balance as of June 30, 2020	259,084,932	$	0	12,799,999	$	0	$	13,300	130,670,373	$	(10,087)	$	(1,206)	$	(273)	$	1,469	$	3,203

Six months ended June 30, 2019 Common stock
Class B
common stock

Additional
paid-in
capital
Treasury stock
Retained
earnings
(deficit)

Accumulated
other
comprehensive
income (loss)

Non-redeemable
non-controlling
interest
Total
Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2018 231,492,986
$ —
12,799,999
$ —
$ 9,549
97,158,586
$ (5,742 ) $ 517
$ (220 ) $ 1,547
$ 5,651
Net income (loss) 80
7
87
Other comprehensive income (loss), net of taxes 4
(2 ) 2
Payment of dividends to common stockholders (declared at $0.64 per share) (95 ) (95 )
Proceeds from exercise of equity instruments and employee stock purchase plans 2,609,200
—
156
156
Withholding taxes for stock options (2 ) (2 )
Treasury stock activity related to vesting of equity instruments 225,626
(29 ) (29 )
Other changes in ownership of non-controlling interests (3 ) 13
10
Impact of adoption of new accounting guidance 6
6
Stock-based compensation expense 119
119
Other 2
2
Balance as of June 30, 2019 234,102,186
$ —
12,799,999
$ —
$ 9,821
97,384,212
$ (5,771 ) $ 508
$ (216 ) $ 1,565
$ 5,907

Table of Contents

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, except share and per share data)

(Unaudited)


Three months ended June 30, 2021																										Three months ended June 30, 2021	Common stock			Class B common stock			Additional paid-in capital		Treasury stock - Common and Class B			Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Non-redeemable non-controlling interest		Total
																											Shares	Amount		Shares	Amount				Shares	Amount
Three months ended June 30, 2020	Common stock			Class B common stock			Additional paid-in capital			Treasury stock - Common and Class B				Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
	Shares	Amount		Shares	Amount					Shares	Amount
Balance as of March 31, 2020	258,769,812	$	—	12,799,999	$	—	$	13,124		130,592,112	$	(10,083	)	$	(470	)	$	(301	)	$	1,471		$	3,741
Balance as of March 31, 2021																										Balance as of March 31, 2021	265,207,012	$	0	12,799,999	$	0	$	13,919	131,141,343	$	(10,152)	$	(2,359)	$	(199)	$	1,479	$	2,688
Net income (loss)														(736		)				(4		)	(740		)	Net income (loss)												(172)				(5)		(177)
Other comprehensive income (loss), net of taxes																	28			6			34			Other comprehensive income (loss), net of taxes														13		6		19
Payment of preferred dividends (declared at $14.02 per share)							(17		)														(17		)
Payment of preferred dividends (declared at $47.11 per share)																										Payment of preferred dividends (declared at $47.11 per share)							(50)											(50)
Proceeds from exercise of equity instruments and employee stock purchase plans	315,120	—					10																10			Proceeds from exercise of equity instruments and employee stock purchase plans	1,561,799	—					110											110
Common stock warrants, net of issuance costs							110																110
Exercise of common stock warrants																										Exercise of common stock warrants	2,470,221	—					—											—
Loss on redemption of preferred stock																										Loss on redemption of preferred stock							(107)											(107)
Treasury stock activity related to vesting of equity instruments										57,631	(4		)										(4		)	Treasury stock activity related to vesting of equity instruments									177,075	(30)								(30)
Adjustment to the fair value of redeemable non-controlling interests							4																4			Adjustment to the fair value of redeemable non-controlling interests							(11)											(11)
Other changes in ownership of non-controlling interests							9													(4		)	5			Other changes in ownership of non-controlling interests							0									6		6
Stock-based compensation expense							59																59			Stock-based compensation expense							134											134
Other							1			20,630	—												1
Balance as of June 30, 2020	259,084,932	$	—	12,799,999	$	—	$	13,300		130,670,373	$	(10,087	)	$	(1,206	)	$	(273	)	$	1,469		$	3,203
Balance as of June 30, 2021																										Balance as of June 30, 2021	269,239,032	$	0	12,799,999	$	0	$	13,995	131,318,418	$	(10,182)	$	(2,531)	$	(186)	$	1,486	$	2,582

Six months ended June 30, 2020 Common stock
Class B
common stock

Additional
paid-in
capital
Treasury stock - Common and Class B
Retained
earnings
(deficit)

Accumulated
other
comprehensive
income (loss)

Non-redeemable
non-controlling
interest
Total
Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2019 256,691,777
$ —
12,799,999
$ —
$ 12,978
126,892,525
$ (9,673 ) $ 879
$ (217 ) $ 1,569
$ 5,536
Net income (loss) (2,037 ) (100 ) (2,137 )
Other comprehensive income (loss), net of taxes (56 ) —
(56 )
Payment of dividends to common stockholders (declared at $0.34 per share) (48 ) (48 )
Payment of preferred dividends (declared at $14.02 per share) (17 ) (17 )
Proceeds from exercise of equity instruments and employee stock purchase plans 2,393,155
—
96
96
Common stock warrants, net of issuance costs 110
110
Treasury stock activity related to vesting of equity instruments 393,099
$ (44 ) (44 )
Common stock repurchases 3,364,119
(370 ) (370 )
Adjustment to the fair value of redeemable non-controlling interests 4
4
Other changes in ownership of non-controlling interests 10
—
10
Stock-based compensation expense 118
118
Other 1
20,630
—
1
Balance as of June 30, 2020 259,084,932
$ —
12,799,999
$ —
$ 13,300
130,670,373
$ (10,087 ) $ (1,206 ) $ (273 ) $ 1,469
$ 3,203


Six months ended June 30, 2021	Common stock			Class B common stock			Additional paid-in capital		Treasury stock - Common and Class B			Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Non-redeemable non-controlling interest		Total
	Shares	Amount		Shares	Amount				Shares	Amount
Balance as of December 31, 2020	261,563,912	0		12,799,999	0		13,566		130,766,537	(10,097)		(1,781)		(178)		1,494		$	3,004
Net income (loss)												(750)				(8)		(758)
Other comprehensive income (loss), net of taxes														(8)		(10)		(18)
Payment of preferred dividends (declared at $47.11 per share)							(50)											(50)
Proceeds from exercise of equity instruments and employee stock purchase plans	5,204,899	—					379											379
Exercise of common stock warrants	2,470,221	—					—											—
Loss on redemption of preferred stock							(107)											(107)
Withholding taxes for stock options							(7)											(7)
Treasury stock activity related to vesting of equity instruments									551,881	(85)								(85)
Adjustment to the fair value of redeemable non-controlling interests							(11)											(11)
Other changes in ownership of non-controlling interests							0									10		10
Stock-based compensation expense							225											225
Balance as of June 30, 2021	269,239,032	$	0	12,799,999	$	0	$	13,995	131,318,418	$	(10,182)	$	(2,531)	$	(186)	$	1,486	$	2,582

See accompanying notes.

Table of Contents

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six months ended June 30,							Six months ended June 30,
	2020			2019				2021		2020
Operating activities:							Operating activities:
Net income (loss)	$	(2,137	)	$	87
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net loss							Net loss	$	(758)	$	(2,137)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:							Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment, including internal-use software and website development	376			352			Depreciation of property and equipment, including internal-use software and website development	361		376
Amortization of intangible assets	85			104			Amortization of intangible assets	53		85
Impairment of goodwill and intangible assets	916			—			Impairment of goodwill and intangible assets	0		916
Amortization of stock-based compensation	109			115			Amortization of stock-based compensation	203		109
Deferred income taxes	(279		)	(15		)	Deferred income taxes	(241)		(279)
Foreign exchange (gain) loss on cash, restricted cash and short-term investments, net	65			(13		)
Realized gain on foreign currency forwards	(79		)	(16		)
Foreign exchange loss on cash, restricted cash and short-term investments, net							Foreign exchange loss on cash, restricted cash and short-term investments, net	20		65
Realized (gain) loss on foreign currency forwards							Realized (gain) loss on foreign currency forwards	12		(79)
(Gain) loss on minority equity investments, net	195			(12		)	(Gain) loss on minority equity investments, net	(4)		195
Loss on debt extinguishment							Loss on debt extinguishment	280		0
Provision for credit losses and other, net	119			(13		)	Provision for credit losses and other, net	6		119
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable	1,479			(742		)	Accounts receivable	(729)		1,479
Prepaid expenses and other assets	(585		)	(7		)	Prepaid expenses and other assets	(614)		(585)
Accounts payable, merchant	(1,389		)	271			Accounts payable, merchant	556		(1,389)
Accounts payable, other, accrued expenses and other liabilities	(244		)	436			Accounts payable, other, accrued expenses and other liabilities	353		(244)
Tax payable/receivable, net	(82		)	(143		)	Tax payable/receivable, net	2		(82)
Deferred merchant bookings	(1,058		)	2,726			Deferred merchant bookings	5,184		(1,058)
Deferred revenue	(121		)	157			Deferred revenue	0		(121)
Net cash provided by (used in) operating activities	(2,630		)	3,287			Net cash provided by (used in) operating activities	4,684		(2,630)
Investing activities:							Investing activities:
Capital expenditures, including internal-use software and website development	(493		)	(573		)	Capital expenditures, including internal-use software and website development	(351)		(493)
Purchases of investments	(685		)	(636		)	Purchases of investments	(1)		(685)
Sales and maturities of investments	761			27			Sales and maturities of investments	12		761
Other, net	76			16			Other, net	(73)		76
Net cash provided by (used in) investing activities	(341		)	(1,166		)
Net cash used in investing activities							Net cash used in investing activities	(413)		(341)
Financing activities:							Financing activities:
Revolving credit facility borrowings	1,900			—			Revolving credit facility borrowings	0		1,900
Proceeds from issuance of long-term debt, net of issuance costs	2,714			—			Proceeds from issuance of long-term debt, net of issuance costs	1,964		2,714
Payment of long-term debt							Payment of long-term debt	(1,706)		0
Debt extinguishment costs							Debt extinguishment costs	(258)		0
Net proceeds from issuance of preferred stock and warrants	1,132			—			Net proceeds from issuance of preferred stock and warrants	0		1,132
Redemption of preferred stock							Redemption of preferred stock	(618)		0
Purchases of treasury stock	(414		)	(29		)	Purchases of treasury stock	(85)		(414)
Payment of dividends to common stockholders	(48		)	(95		)	Payment of dividends to common stockholders	0		(48)
Payment of preferred stock dividends	(17		)	—			Payment of preferred stock dividends	(50)		(17)
Proceeds from exercise of equity awards and employee stock purchase plan	96			156			Proceeds from exercise of equity awards and employee stock purchase plan	379		96
Other, net	(30		)	2			Other, net	(4)		(30)
Net cash provided by financing activities	5,333			34
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	(378)		5,333
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents	(93		)	20			Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents	(26)		(93)
Net increase in cash, cash equivalents and restricted cash and cash equivalents	2,269			2,175			Net increase in cash, cash equivalents and restricted cash and cash equivalents	3,867		2,269
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period	4,097			2,705			Cash, cash equivalents and restricted cash and cash equivalents at beginning of period	4,138		4,097
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	6,366		$	4,880		Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	8,005	$	6,366
Supplemental cash flow information							Supplemental cash flow information
Cash paid for interest	$	118		$	87		Cash paid for interest	$	192	$	118
Income tax payments, net	63			157			Income tax payments, net	16		63

See accompanying notes.

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Notes to Consolidated Financial Statements

June 30, ~~2020~~2021

(Unaudited)

Note 1 – Basis of Presentation

Description of Business

Expedia Group, Inc. and its subsidiaries provide travel products and services to leisure and corporate travelers in the United States and abroad as well as various media and advertising offerings to travel and non-travel advertisers. These travel products and services are offered through a diversified portfolio of brands including: Brand ~~Expedia~~®Expedia®, ~~Hotels.com~~®Hotels.com®, ~~Expedia~~®Expedia® Partner Solutions, ~~Vrbo~~®Vrbo®, ~~Egencia~~®Egencia®, ~~trivago~~®trivago®, ~~HomeAway~~®Orbitz®, ~~Orbitz~~®Travelocity®, ~~Travelocity~~®Hotwire®, ~~Hotwire~~®Wotif®, ~~Wotif~~®ebookers®, ~~ebookers~~®CheapTickets®, ~~CheapTickets~~®, Expedia Group™ Media Solutions, CarRentals.com™, Expedia ~~Local Expert~~Cruises®TM, ~~CarRentals.com~~^TMTraveldoo®, ~~Expedia~~® ~~CruiseShipCenters~~®~~, Classic Vacations~~®~~, Traveldoo~~®, ~~VacationRentals.com~~ and ~~SilverRail~~^TM.VacationRentals.com. In addition, many of these brands have related international points of sale. We refer to Expedia Group, Inc. and its subsidiaries collectively as “Expedia Group,” the “Company,” “us,” “we” and “our” in these consolidated financial statements.

COVID-19

During 2020, the ~~quarter ended June 30, 2020,~~COVID-19 pandemic severely restricted the level of economic activity around the world, and, is continuing to have an unprecedented effect on the global travel ~~booking volumes remain significantly below prior year~~industry. The various government measures implemented to contain the COVID-19 pandemic, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forgo their time outside of their homes, initially led to unprecedented levels of cancellations and ~~cancellation levels remain elevated compared~~continues to ~~pre-COVID levels. We~~ have ~~seen varying degrees~~a negative impact on the number of ~~containment~~new travel bookings. While many countries have continued vaccinating their residents against COVID-19, the large scale and challenging logistics of distributing the vaccines, as well as uncertainty over the efficacy of the vaccines against new variants of the virus, may contribute to delays in certain countries and some signs of travel recovery; however, the degree of containment and the recovery in travel, has varied country to country and there have been instances where cases of COVID-19 have started to increase again after a period of decline. Additionally, many travel restrictions and quarantine orders remain in place. economic recovery. Overall, the full duration and total impact of COVID-19 remains uncertain and it is difficult to predict how the recovery will unfold for the travel industry and, in particular, our ~~business.~~

~~Due to the high degree of cancellations and customer refunds and lower new bookings in the merchant~~ business, model, the Company experienced unfavorable working capital trends and material negative cash flow in the second quarter of 2020, although the level of negative cash flow moderated as booking trends improved and cancellations stabilized during the quarter. We expect cash flow to remain negative until the decline in new merchant bookings improves further with cancellations either remaining stable or moderating further. For a discussion on incremental credit losses and allowance impacts related to our accounts receivable and prepaid merchant bookings, see ~~Note 2 – Summary of Significant Accounting Policies. For a discussion of goodwill and intangible asset impairments recognized in conjunction with this pandemic, see~~ ~~Note 3 – Fair Value Measurements. For a discussion of recent actions to strengthen our liquidity position in the current environment, see~~ ~~Note 4 – Debt~~, ~~Note 5 – Capital Stock~~ ~~- Preferred Stock and Warrants, as well as~~ ~~Note 11 – Subsequent Events~~.going forward.

Basis of Presentation

These accompanying financial statements present our results of operations, financial position and cash flows on a consolidated basis. The unaudited consolidated financial statements include Expedia Group, Inc., our wholly-owned subsidiaries, and entities we control, or in which we have a variable interest and are the primary beneficiary of expected cash profits or losses. We have eliminated significant intercompany transactions and accounts.

We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. We have included all adjustments necessary for a fair presentation of the results of the interim period. These adjustments consist of normal recurring items. Our interim unaudited consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, previously filed with the Securities and Exchange Commission (“SEC”). trivago is a separately listed company on the Nasdaq Global Select Market and, therefore is subject to its own reporting and filing requirements, which could result in possible differences that are not expected to be material to Expedia Group.

Accounting Estimates

We use estimates and assumptions in the preparation of our interim unaudited consolidated financial statements in accordance with GAAP. Our estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our interim unaudited consolidated financial statements. These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results could differ significantly from these estimates. The significant estimates underlying our interim unaudited consolidated financial statements

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~~Notes to Consolidated Financial Statements – (Continued)~~

include revenue recognition; recoverability of current and long-lived assets, intangible assets and goodwill; income and transactional taxes, such as potential settlements related to occupancy and excise taxes; loss contingencies; deferred loyalty rewards; acquisition purchase price allocations; stock-based compensation; accounting for derivative instruments and provisions for credit losses, customer refunds and chargebacks.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business disruptions and adversely impact our results of operations. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

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Notes to Consolidated Financial Statements – (Continued)

Reclassifications

We have reclassified prior period financial statements to conform to the current period presentation. During the first quarter of ~~2020,~~2021, we centralized the management of our licensing and maintenance costs and reclassified ~~depreciation~~certain expenses to technology and content expense from within our other operating expense line items on our consolidated statements of ~~operations to be included with intangible asset amortization expense.~~operations. The following table presents a summary of the amounts as reported and as reclassified in our consolidated statements of operations for the three and six months ended June 30, ~~2019:~~2020:

Three months ended June 30, 2019 Six months ended June 30, 2019
As reported As reclassified As reported As reclassified
(In millions)
Cost of revenue $ 522
$ 500
$ 1,035
$ 990
Selling and marketing 1,657
1,643
3,192
3,164
Technology and content 435
304
864
601
General and administrative 214
205
405
389
Depreciation and amortization 52
228
104
456


	Three months ended June 30, 2020				Six months ended June 30, 2020
	As reported		As reclassified		As reported		As reclassified
	(In millions)
Cost of revenue	$	389	$	381	$	1,018	1,010
Selling and marketing	296		291		1,506		1,496
Technology and content	255		271		563		586
General and administrative	152		149		339		334

Seasonality

We generally experience seasonal fluctuations in the demand for our travel services. For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and winter holiday travel. The number of bookings typically decreases in the fourth quarter. Because revenue for most of our travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked, revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our alternative accommodations business. Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the year, with the relevant stays occurring during the peak summer travel months. The seasonal revenue impact is exacerbated with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we typically realize in closer alignment to booking volumes, and the more stable nature of our fixed costs. Furthermore, operating profits for our primary advertising business, trivago, have typically been experienced in the second half of the year, particularly the fourth quarter, as selling and marketing costs offset revenue in the first half of the year as we typically increase marketing during the busy booking period for spring, summer and winter holiday travel. As a result on a consolidated basis, revenue and income are typically the lowest in the first quarter and highest in the third quarter. The growth of our international operations, advertising business or a change in our product mix, including the growth of Vrbo, may influence the typical trend of the seasonality in the future.

~~Due to~~Impacts from COVID-19 ~~which impacted travel bookings in the first half of 2020 and led to significant cancellations for future travel, we do not expect~~disrupted our typical seasonal pattern for bookings, revenue, profit and ~~profit~~cash flows during 2020. ~~In addition, with the lower new bookings~~Significantly higher cancellations and ~~elevated cancellations~~reduced booking volumes, particularly in the ~~merchant business model, our typical, seasonal working capital source~~first half of ~~cash has been significantly disrupted resulting~~2020, resulted in ~~the Company experiencing unfavorable working capital trends~~material operating losses and ~~material~~ negative cash flow. Although travel volumes remain materially lower than historic levels, booking and travel trends normalized during the second half of 2020, and during the second quarter of 2021 have increased sequentially and from the end of second quarter of 2020 levels. This resulted in working capital benefits and positive cash flow more akin to typical historical trends. It isremains difficult to forecast the seasonality for the upcoming quarters, given the uncertainty related to the duration of the impact from COVID-19 and the shape and timing of any sustained recovery.

Note 2 – Summary of Significant Accounting Policies

Recently Adopted Accounting Policies

~~Measurement of Credit Losses on Financial Instruments.~~ As of January 1, 2020, we adopted the Accounting Standards Updates (“ASU”) guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable, and available-for-sale debt securities, using the modified retrospective method. The new guidance replaced

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~~Notes to Consolidated Financial Statements – (Continued)~~

the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, this new guidance did not have a material impact on our consolidated financial statements and no cumulative-effect adjustment to retained earnings was made.

~~Cloud Computing Arrangements.~~ As of January 1, 2020, we adopted the new ASU guidance on the accounting for implementation costs incurred for a cloud computing arrangement that is a service contract using the prospective method. The update conformed the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the accounting guidance that provides for capitalization of costs incurred to develop or obtain internal-use-software. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

~~Fair Value Measurements.~~ As of January 1, 2020, we adopted the new ASU guidance related to the disclosure requirements on fair value measurements, which removed, modified or added certain disclosures using the prospective method. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

~~Guarantor Financial Information.~~ In March 2020, the SEC amended Rule 3-10 of Regulation S-X regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. We adopted these amendments for the quarter ended March 31, 2020. Accordingly, combined summarized financial information has been presented only for the issuer and guarantors of our senior notes for the most recent fiscal year and the year-to-date interim period, and the location of the required disclosures has been removed from the Notes to the Consolidated Financial Statements and moved to Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~Recent Accounting Policies Not Yet Adopted~~

Simplifying the Accounting for Income Taxes. ~~In December 2019,~~As of January 1, 2021, we adopted the ~~Financial~~ Accounting Standards ~~Board issued new~~Updates (“ASU”) guidance to simplify the accounting for income taxes. This new standard ~~eliminates~~eliminated certain exceptions in current guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also ~~clarifies~~clarified and ~~simplifies~~simplified other aspects of the accounting for income taxes. ~~For public business entities, this guidance is effective for interim or annual periods beginning after December 15, 2020, with early~~The adoption ~~permitted in any interim period within that year. We are currently evaluating the impact~~ of this new guidance did not have a material impact on our consolidated financial ~~statements and the timing of adoption~~statements.

Investments - equity securities; Investments - Equity Method and Joint Ventures; Derivatives and Hedging. InAs of January ~~2020,~~1, 2021, we adopted the ~~FASB issued an accounting standards update~~new ASU guidance which ~~clarifies~~clarified the interaction between the accounting for investments in equity securities, equity method investments and certain derivative instruments. The new standard is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The standards update is effective for interim or annual periods beginning after December 15, 2020, with early adoption ~~permitted. We are currently evaluating the impact~~ of this new guidance did not have a material impact on our consolidated financial ~~statements~~statements.

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. As of January 1, 2021, we adopted the ~~timing~~new ASU guidance which simplified the accounting for certain financial instruments with characteristics of ~~adoption.~~liabilities and

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Notes to Consolidated Financial Statements – (Continued)

equity, including convertible instruments and contracts on an entity’s own equity. Specifically, the standard simplified accounting for convertible instruments by removing major separation models required under current GAAP, removing certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which permitted more equity contracts to qualify for it, and simplified the diluted earnings per share calculation in certain areas. The adoption of this new guidance did not have a material impact on our consolidated financial statements. The convertible senior notes issued in February 2021 are accounted for in accordance with this new guidance. See Note 4 – Debt for additional information.

Significant Accounting Policies

Below are the significant ~~accounting policies updated during 2020 as a result of the recently adopted accounting policies noted above as well as certain other~~ accounting policies with interim disclosure requirements. For a comprehensive description of our accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Revenue

Prepaid Merchant Bookings. We classify payments made to suppliers in advance of ~~our~~Vrbo performance obligations as prepaid merchant bookings included within prepaid and other current assets. Prepaid merchant bookings was ~~$579~~$955 million as of June 30, ~~2020,which is net of a $11~~2021 and $389 million ~~reserve for future collectibility risk in consideration of the impact of the COVID-19 pandemic on the economy, and~~ ~~$226 million~~ as of December 31, ~~2019.~~2020.

Deferred Merchant Bookings. We classify cash payments received in advance of our performance obligations as deferred merchant bookings. At December 31, ~~2019, $4.898~~2020, $2.3 billion of ~~cash~~ advance cash payments was reported within deferred merchant bookings, ~~$3.173~~$1.4 billion of which was recognized resulting in ~~$506~~$216 million of revenue during the six months ended June 30, ~~2020.~~2021. At June 30, ~~2020,~~2021, the related balance was ~~$3.842~~$7.5 billion.

At December 31, ~~2019, $781~~2020, $769 million of deferred loyalty rewards was reported within deferred merchant bookings, ~~$209~~$213 million of which was recognized within revenue during the six months ended June 30, ~~2020.~~2021. At June 30, ~~2020,~~2021, the related balance was ~~$790~~$757 million.

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~~Notes to Consolidated Financial Statements – (Continued)~~

Deferred Revenue. At December 31, ~~2019, $321~~2020, $172 million was recorded as deferred revenue, ~~$159~~$90 million of which was recognized as revenue during the six months ended June 30, ~~2020.~~2021. At June 30, ~~2020,~~2021, the related balance was ~~$197~~$172 million.

Practical Expedients and Exemptions. We have used the portfolio approach to account for our loyalty points as the rewards programs share similar characteristics within each program in relation to the value provided to the traveler and their breakage patterns. Using this portfolio approach is not expected to differ materially from applying the guidance to individual contracts. However, we will continue to assess and refine, if necessary, how a portfolio within each rewards program is defined.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Cash, Restricted Cash and Cash Equivalents

Our cash and cash equivalents include cash and liquid financial instruments, including money market funds and term deposit investments, with maturities of three months or less when purchased. Restricted cash includes cash and cash equivalents that is restricted through legal contracts, regulations or our intention to use the cash for a specific purpose. Our restricted cash primarily relates to certain traveler deposits and to a lesser extent collateral for office leases. The following table reconciles cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total amount presented in our consolidated statements of cash flows:

June 30,
2020 December 31,
2019
(in millions)
Cash and cash equivalents $ 5,053
$ 3,315
Restricted cash and cash equivalents 1,311
779
Restricted cash included within long-term investments and other assets 2
3
Total cash, cash equivalents and restricted cash and cash equivalents in the consolidated statement of cash flow $ 6,366
$ 4,097


	June 30, 2021		December 31, 2020
	(in millions)
Cash and cash equivalents	$	5,464	$	3,363
Restricted cash and cash equivalents	2,541		772
Restricted cash included within long-term investments and other assets	0		3
Total cash, cash equivalents and restricted cash and cash equivalents in the consolidated statement of cash flow	$	8,005	$	4,138

Accounts Receivable and Allowances

Accounts receivable are generally due within thirty days and are recorded net of an allowance for expected uncollectible amounts. We consider accounts outstanding longer than the contractual payment terms as past due. The risk characteristics we generally review when analyzing our accounts receivable pools primarily include the type of receivable (for example, credit card vs hotel collect), collection terms and historical or expected credit loss patterns. For each pool, we make estimates of

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Notes to Consolidated Financial Statements – (Continued)

expected credit losses for our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history continually updated for new collections data, the credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions and other factors that may affect our ability to collect from customers. The provision for estimated credit losses is recorded as cost of revenue in our consolidated statements of operations. During the six months ended June 30, ~~2020,~~2021, we recorded approximately ~~$82~~$2 million of ~~incremental allowance for~~recovery on previously expected uncollectible amounts ~~including estimated future losses in consideration of the impact of COVID-19 pandemic on the economy and the Company, partially offset by $8~~as well as $13 million of ~~other adjustments.~~write-offs during the six months ended June 30, 2021. Actual future bad debt could differ materially from this estimate resulting from changes in our assumptions of the duration and severity of the impact of the COVID-19 pandemic.

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~~Notes to Consolidated Financial Statements – (Continued)~~

Note 3 – Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, ~~2020~~2021 are classified using the fair value hierarchy in the table below:


	Total		Level 1		Level 2			Total		Level 1		Level 2
	(In millions)							(In millions)
Assets							Assets
Cash equivalents:							Cash equivalents:
Money market funds	$	458	$	458	$	—	Money market funds	$	257	$	257	$	0
Mutual funds							Mutual funds	24		24		0
Term deposits	107		—		107		Term deposits	48		0		48
Derivatives:
Foreign currency forward contracts	12		—		12
Investments:							Investments:
Term deposits	422		—		422		Term deposits	11		0		11
Marketable equity securities	69		69		—		Marketable equity securities	127		127		0
Total assets	$	1,068	$	527	$	541	Total assets	$	467	$	408	$	59

Liabilities							Liabilities
Derivatives:							Derivatives:
Foreign currency forward contracts							Foreign currency forward contracts	$	26	$	0	$	26

Financial assets measured at fair value on a recurring basis as of December 31, ~~2019~~2020 are classified using the fair value hierarchy in the table below:

Total Level 1 Level 2
(In millions)
Assets
Cash equivalents:
Money market funds $ 36
$ 36
$ —
Term deposits 865
—
865
U.S. treasury securities 10
10
—
Investments:
Term deposits 526
—
526
Marketable equity securities 129
129
—
Total assets $ 1,566
$ 175
$ 1,391

Liabilities
Derivatives:
Foreign currency forward contracts $ 8
$ —
$ 8


	Total		Level 1		Level 2
	(In millions)
Assets
Cash equivalents:
Money market funds	$	147	$	147	$	0
Term deposits	49		0		49
U.S. treasury securities	150		150		0


Investments:
Term deposits	24		0		24
Marketable equity securities	123		123		0
Total assets	$	493	$	420	$	73

Liabilities
Derivatives:
Foreign currency forward contracts	$	14	$	0	$	14

We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash equivalents and investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a Level 2 input.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our cash and cash equivalents consisted primarily of U.S. treasury securities, term deposits and mutual funds with maturities of three months or less and bank account balances.

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Notes to Consolidated Financial Statements – (Continued)

We hold term deposit investments with financial institutions. Term deposits with original maturities of less than three months are classified as cash equivalents and those with remaining maturities of less than one year are classified within short-term investments.

Our marketable equity securities consist of our investment in Despegar, a publicly traded company, which is included in long-term investments and other assets in our consolidated balance sheets. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, we recognized a gain ~~(loss)~~ of approximately ~~$(60)~~$4 million and ~~$14~~a loss of approximately $60 million within other, net in our consolidated statements of operations related to the fair value changes of this equity investment.

Derivative instruments are carried at fair value on our consolidated balance sheets. We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating liabilities. Our goal in managing our foreign exchange

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~~Notes to Consolidated Financial Statements – (Continued)~~

risk is to reduce, to the extent practicable, our potential exposure to the changes that exchange rates might have on our earnings, cash flows and financial position. Our foreign currency forward contracts are typically short-term and, as they do not qualify for hedge accounting treatment, we classify the changes in their fair value in other, net. As of June 30, ~~2020,~~2021, we were party to outstanding forward contracts hedging our liability and revenue exposures with a total net notional value of ~~$2.4~~$2.2 billion. We had a net forward ~~asset~~liability of ~~$12~~$26 million ($37 million gross forward ~~asset)~~liability) as of June 30, ~~2020 recorded in prepaid expenses~~2021 and ~~other current assets and a net forward liability of $8~~$14 million ($3023 million gross forward liability) as of December 31, ~~2019~~2020 recorded in accrued expenses and other current liabilities. We recorded $(43) million and $(6) million in net gains (losses) from foreign currency forward contracts during ~~both of~~ the three months ended June 30, ~~2020~~2021 and ~~2019~~2020 as well as ~~$100~~$(24) million and ~~$(12)~~$100 million in net gains (losses) from foreign currency forward contracts during the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Assets Measured at Fair Value on a Non-recurring Basis

Our non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity method investments, are adjusted to fair value when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements are based predominately on Level 3 inputs. We measure our minority investments that do not have readily determinable fair values at cost less impairment, adjusted by observable price changes with changes recorded within other, net on our consolidated statements of operations.

Goodwill. During 2020, due to the ~~first quarter~~severe and persistent negative effect COVID-19 had on global economies, the travel industry and our business, as well as the uncertainty and high variability in anticipated versus actual rates of recovery, in addition to our annual assessment on October 1, 2020, we deemed it necessary to perform various interim assessments of goodwill. As a result of assessments during the six months ended June 30, 2020, we recognized goodwill impairment charges of ~~$765~~$785 million, of which ~~$539~~$559 million related to our Retail segment,, primarily our Vrbo reporting unit, and $226 million related to our trivago segment. These impairment charges resulted from the significant negative impact related to COVID-19, which has had a severe effect on the entire global travel industry. As a result, we concluded that sufficient indicators existed to require us to perform an interim quantitative

Our assessment ~~of goodwill as of March 31, 2020 in which we~~ compared the fair value of the reporting units to their carrying value. The fair value estimates for all reporting units, except trivago, were based on a blended analysis of the present value of future discounted cash flows and market value approach, Level 3 inputs. The significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows and the long-term rate of growth. Our assumptions were based on the actual historical performance of the reporting unit and took into account ~~the recent severe and continued weakening of~~ operating ~~results as well as~~result trends, the anticipated ~~rate~~duration of COVID-19 impacts and rates of recovery, and implied risk premiums based on market prices of our equity and debt as of the assessment dates. Our significant estimates in the market approach model included identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The fair value estimate for the trivago reporting unit was based on trivago’s stock price, a Level 1 input, adjusted for an estimated control premium. The excess of the reporting unit's carrying value over our estimate of the fair value was recorded as ~~the goodwill impairment charge in the first quarter of 2020. In addition, during the second quarter of 2020, we recognized~~ goodwill impairment charges ~~of $20 million related to a recent decision to streamline operations for a smaller brand within our Retail segment.~~during 2020. As of ~~June 30,~~December 31, 2020, the applicable reporting units within our Retail segment had ~~$2.2~~$2.3 billion goodwill remaining after the impairments incurred in 2020 and our trivago segment had ~~$315~~$337 million goodwill remaining.

Intangible ~~Assets~~Assets. . During the ~~first quarter of~~six months ended June 30, 2020, ~~also as a result of the significant negative impact related to COVID-19, which has had a severe effect on the entire global travel industry,~~ we recognized intangible asset impairment charges of ~~$121 million. The impairment charges were~~$131 million within our Retail segment primarily related to indefinite-lived trade names ~~within our Retail segment and~~that resulted from changes in estimated future revenues of the related ~~brands.~~brands and, to a lesser extent, supplier relationship assets that were entirely written off in connection with a decision to streamline a smaller brand. The indefinite-lived assets, classified as Level 3 measurements, were ~~written down to $237 million based on valuation~~valued using the relief-from-royalty method, which includes unobservable inputs, including royalty rates and projected revenues. In addition, during the second quarter of 2020, we recognized intangible impairment charges of $10 million primarily related to supplier relationship assets that were entirely written off in connection with our recent decision to streamline a smaller brand within our Retail segment.

The full duration and total impact of COVID-19 remains uncertain and it is difficult to predict how the recovery will continue to unfold (in general and versus our expectations) for global economies, the travel industry or our business. Additionally, as the stock of our trivago segment is publicly traded, it is difficult to predict market dynamics and the extent or

Table of Contents

Notes to Consolidated Financial Statements – (Continued)

duration of any stock price declines. As a result, we may continue to record impairment charges in the future due to the potential long-term economic impact and near-term financial impacts of the COVID-19 pandemic.

Minority Investments without Readily Determinable Fair Values. As of both June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying values of our minority investments without readily determinable fair values totaled ~~$331 million~~$330 million. During the three and ~~$467 million.~~six months ended June 30, 2021, we had 0 material gains or losses recognized related to these minority investments. During the three and six months ended June 30, 2020, we recorded $21 million and $134 million of impairment losses related to a minority investment, which had recent observable and orderly transactions for similar investments, using an option pricing model that utilizes judgmental inputs such as discounts for lack of marketability and estimated exit event timing. As of June 30, ~~2020,~~2021, total cumulative adjustments made to the initial cost ~~bases~~basis of these investments included ~~$103~~$2 million in unrealized upward adjustments and $105 million in unrealized downward adjustments (including impairments).

The following table sets forth our outstanding debt:

(1)Net of applicable discounts and debt issuance costs.

Extinguishment of Debt. During the ~~three and~~ six months ended June 30, ~~2019,~~2021, we ~~had no material gains or losses recognized~~used the net proceeds from the February and March 2021 private placements discussed below, to (i) finance a redemption of all of our outstanding 7.0% senior notes due 2025 (the “7.0% Notes”), (ii) finance a tender offer for a portion of our issued and outstanding 6.25% senior notes due 2025 (the “6.25% Notes”) and (iii) to pay fees and expenses related to ~~these minority investments.~~the foregoing. On March 3, 2021, we completed the redemption of all of our outstanding 7.0% Notes as well as settled the tender offer to purchase $956 million in aggregate principal of our 6.25% Notes, which resulted in the recognition of a loss on debt extinguishment of $280 million during the six months ended June 30, 2021. This loss primarily reflected the payment of early payment premiums and fees associated with the tender offer as well as the write-off of unamortized debt issuance costs. The cash payments related to the debt extinguishment were classified as cash outflows from financing activities on the consolidated statement of cash flows and were $258 million during the six months ended June 30, 2021, which reflected the $280 million loss on debt extinguishment adjusted for the non-cash write-off of debt issuance costs of approximately $23 million. In addition, we paid accrued and unpaid interest on the 7.0% and tendered portion of the 6.25% Notes up to the date of settlement.

February 2021 Convertible Senior Notes Private Placement. On February 19, 2021, we completed our private placement of $1 billion aggregate principal amount of unsecured 0% convertible senior notes due 2026 (the “Convertible Notes”). The net proceeds from the issuance of the Convertible Notes was approximately $983 million after deducting debt issuance costs.

The Convertible Notes are unsecured, unsubordinated obligations and rank equally in right of payment with each other and with all of our existing and future unsecured and unsubordinated obligations, including our existing senior notes. The Convertible Notes are fully and unconditionally guaranteed by the subsidiary guarantors, which include each domestic subsidiary that is a borrower under or guarantees the obligations under our existing senior secured credit agreement. So long as the guarantees are in effect, each subsidiary guarantor’s guarantee will be the unsecured, unsubordinated obligation of such subsidiary guarantor and will rank equally in right of payment with each other and with all of such subsidiary guarantor’s existing and future unsecured and unsubordinated obligations, including such subsidiary guarantor’s guarantees of our existing senior notes.

Table of Contents

Notes to Consolidated Financial Statements – (Continued)

~~Note 4 – Debt~~

The ~~following table sets forth our outstanding debt:~~

June 30,
2020 December 31,
2019
(In millions)
5.95% senior notes due 2020 $ 750
$ 749
2.5% (€650 million) senior notes due 2022 729
725
4.5% senior notes due 2024 497
497
6.25% senior notes due 2025 1,970
—
7.0% senior notes due 2025 739
—
5.0% senior notes due 2026 744
743
3.8% senior notes due 2028 992
992
3.25% senior notes due 2030 1,232
1,232
Long-term debt⁽¹⁾
7,653
4,938
Current maturities of long-term debt (750 ) (749 )
Long-term debt, excluding current maturities $ 6,903
$ 4,189

Revolving credit facility $ 1,900
$ —

~~_______________~~


~~(1)~~	~~Net of applicable discounts and debt issuance costs.~~

~~Outstanding Debt~~

~~Our $750 million in registered senior unsecured notes outstanding at June 30, 2020 are due in August 2020 and~~Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. The Convertible Notes will not bear interest at 5.95% (the “5.95% Notes”). The 5.95% Notes were issued at 99.893% of par resulting in a discount, which is being amortized over their life. Interest is payable semi-annually in February and August of each year. We may redeem the 5.95% Notes at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium, in whole or in part.

Our Euro 650 million in registered senior unsecured notes outstanding at June 30, 2020 are due in June 2022 and bear interest at 2.5% (the “2.5% Notes”). The 2.5% Notes were issued at 99.525% of par resulting in a discount, which is being amortized over their life. Interest is payable annually in arrears in June of each year. We may redeem the 2.5% Notes at our option, at whole or in part, at any time or from time to time. If we elect to redeem the 2.5% Notes prior to March 3, 2022, we may redeem them at a specified “make-whole” premium. If we elect to redeem the 2.5% Notes on or after March 3, 2022, we may redeem them at a redemption price of 100% of the principal plus accrued and unpaid interest. Subject to certain limited exceptions, all payments ofregular interest, and ~~principal for~~ the ~~2.5% Notes will be made in Euros.~~

~~The aggregate~~ principal value of the 2.5% Notes is designated as a hedge of our net investment in certain Euro functional currency subsidiaries. The notes are measured at Euro to U.S. Dollar exchange rates at each balance sheet date and transaction gains or losses due to changes in rates are recorded in accumulated other comprehensive income (loss) (“AOCI”). The Euro-denominated net assets of these subsidiaries are translated into U.S. Dollars at each balance sheet date, with effects of foreign currency changes also reported in AOCI. Since the notional amount of the ~~recorded Euro-denominated debt is less than the notional~~Convertible Notes will not accrete.

The Convertible Notes have an initial conversion rate of 3.9212 shares of common stock of Expedia Group with a par value $0.0001 per share (referred to as “our common stock” herein), per $1,000 principal amount of ~~our net investment, we do not expect to incur any ineffectiveness on this hedge.~~

~~Our $500 million in registered senior unsecured notes outstanding at June 30, 2020 are due in August 2024 and bear interest at 4.5% (the “4.5% Notes”). The 4.5%~~Convertible Notes, ~~were issued at 99.444% of par resulting in a discount,~~ which is ~~being amortized over their life. Interest~~equal to an initial conversion price of approximately $255.02 per share of our common stock. The conversion rate is ~~payable semi-annually in February and August of each year. We may redeem the 4.5% Notes at our option at any time in whole or~~subject to adjustment from time to time ~~in part. If we elect~~upon the occurrence of certain events, including, but not limited to, ~~redeem~~ the ~~4.5% Notes~~issuance of stock dividends and payment of cash dividends. At any time prior to ~~May~~the close of business on the business day immediately preceding November 15, ~~2024, we~~2025, holders may ~~redeem them~~convert their Convertible Notes at ~~a redemption~~their option only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of ~~100%~~our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price then in effect on each applicable trading day;

• during the five business day period immediately after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal ~~plus accrued interest, plus a “make-whole” premium. If we elect to redeem~~amount of Convertible Notes for each trading day of the ~~4.5% Notes on or after May 15, 2024, we may redeem them at a redemption~~measurement period was less than 98% of the product of the last reported sale price of ~~100% of~~our common stock and the ~~principal plus accrued interest.~~conversion rate on each such trading day;

~~In May 2020, we privately placed $2 billion of senior unsecured notes that are due in May 2025 that bear interest at 6.250% (the “6.25% Notes”). The 6.25% Notes were issued at a price of 100% of~~• if the ~~aggregate principal amount. Interest is payable semi-annually in arrears in May and November of each year, beginning November 1, 2020. We may redeem some~~Company calls any or all of the ~~6.25%~~Convertible Notes for redemption, at any time prior to ~~February 1, 2025 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some~~the close of business on the business day immediately prior to the redemption date, but only with respect to the Convertible Notes called for redemption (or deemed called for redemption); or ~~all~~

• upon the occurrence of specified corporate events.

Irrespective of the ~~6.25%~~foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Additionally, upon the occurrence of a corporate event that constitutes a “make-whole fundamental change” per the indenture, or if we call the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion rate in certain circumstances as described in the indenture. Upon conversion, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

We may not redeem the Convertible Notes prior to February ~~1, 2025~~20, 2024. On or after February 20, 2024 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of our common stock has been at ~~par plus accrued and unpaid interest, if any.~~

~~Table of Contents~~

~~Notes to Consolidated Financial Statements – (Continued)~~

~~In May 2020, we also privately placed $750 million of senior unsecured notes due May 2025 that bear interest at 7.000% (the “7.0% Notes”). The 7.0% Notes were issued at a price of 100%~~least 130% of the ~~aggregate principal amount. Interest is payable semi-annually~~conversion price then in ~~arrears in May~~effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and ~~November~~including, the trading day immediately preceding the date on which we provide notice of ~~each year, beginning November 1, 2020. We~~redemption, we may redeem ~~some~~for cash all or ~~all~~part of the ~~7.0%~~Convertible Notes ~~at any time prior to May 1, 2022~~ at a redemption price equal to 100% of the principal amount of the ~~7.0%~~Convertible Notes to be redeemed, plus ~~a “make-whole” premium, plus~~ accrued and unpaid special interest, if ~~any. We may redeem some or all of~~any, to, but excluding, the ~~7.0% Notes on or after May 1, 2022 at specified~~ redemption ~~prices set forth~~date, except as otherwise described in the ~~7.0% Indenture, plus accrued and unpaid interest, if any. In addition, at any time or from time to time prior to May 1, 2022, we may redeem up to 40% of the aggregate principal~~indenture.

The net carrying amount of the ~~7.0%~~Convertible Notes ~~with the net proceeds~~as of ~~certain equity offerings at the specified redemption price described in the 7.0% Indenture, plus accrued and unpaid interest, if any.~~

~~Our $750 million in registered senior unsecured notes outstanding at~~ June 30, ~~2020 are due in February 2026 and bear interest at 5.0% (the “5.0% Notes”). The 5.0% Notes were issued at 99.535% of par resulting in a discount,~~2021 was $984 million, which ~~is being amortized over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem~~reflects the 5.0% Notes at our option at any time in whole or from time to time in part. If we elect to redeem the 5.0% Notes prior to November 12, 2025, we may redeem them at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem the 5.0% Notes on or after November 12, 2025, we may redeem them at a redemption price of 100% of the principal plus accrued interest.

~~Our~~ $1 billion in ~~registered senior unsecured notes outstanding at~~principal less unamortized debt issuance costs of $16 million. Interest expense related to the amortization of the debt issuance costs for the Convertible Notes was $1 million during the six months ended June 30, ~~2020 are due in February 2028 and bear interest at 3.8% (the “3.8% Notes”).~~2021. The 3.8% Notes were issued at 99.747% of par resulting in a discount, which is being amortized over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem the 3.8% Notes at our option at any time in whole or from time to time in part. If we elect to redeem the 3.8% Notes prior to November 15, 2027, we may redeem them at a redemption price of 100%estimated fair value of the ~~principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem~~Convertible Notes was $1.1 billion as of June 30, 2021. The fair value was determined based on quoted market prices in less active markets and is categorized as Level 2 in the ~~3.8% Notes on or after November 15, 2027, we may redeem them at a redemption price of 100% of the principal plus accrued interest.~~fair value hierarchy.

~~In September 2019,~~March 2021 Senior Note Private Placement. On March 3, 2021, we privately placed ~~$1.25~~$1 billion of senior unsecured notes that are due in ~~February 2030 and~~March 2031 that bear interest at ~~3.25%~~2.95%. In ~~February 2020,~~May 2021, we completed an offer to exchange these notes for registered notes having substantially the same financial terms and covenants as the original notes (the unregistered and registered notes collectively, the ~~“3.25%~~“2.95% Notes”). The ~~3.25%~~2.95% Notes were issued at ~~99.225%~~a price of ~~par resulting in a discount, which is being amortized over their life.~~99.081% of the aggregate principal amount. Interest is payable semi-annually in arrears in ~~February~~March and ~~August~~September of each ~~year.~~year, beginning September 15, 2021, and the interest rate is subject to adjustment based on certain ratings events. We may redeem some or all of the ~~3.25%~~2.95% Notes ~~at our option~~ at any time ~~in whole or from time to time in part. If we elect to redeem the 3.25% Notes~~ prior to ~~November~~December 15, ~~2029, we~~2030 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem ~~them at a redemption price of 100%~~some or all of the ~~principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem the 3.25%~~2.95% Notes on or after ~~November~~December 15, ~~2029, we may redeem them~~2030 at ~~a redemption price of 100%~~par plus accrued and unpaid interest, if any. The net proceeds from the issuance of the ~~principal plus accrued interest.~~2.95% Notes was approximately $982 million after deducting the discount and debt issuance costs.

In addition to registering the 2.95% Notes in May 2021, we also completed an offer to exchange the $500 million of senior unsecured notes due December 2023 bearing interest at 3.6% and the $750 million of senior unsecured notes due August 2027 bearing interest at 4.625%, both privately placed in July 2020, ~~we privately placed an additional $1.25 billion in unsecured~~for registered notes having substantially the same financial terms and covenants as the original notes.

Table of Contents

Notes to Consolidated Financial Statements – (Continued)

Additional information about our outstanding senior ~~notes. See~~ ~~Note 11 – Subsequent Eventsfor additional information.~~

~~The 5.95%, 2.5%, 4.5%, 5.0%, 3.8%, 3.25%, 6.25% and 7.0% Notes~~notes (collectively the ~~“Notes”~~“Senior Notes”), see Note 8 – Debt of the Notes to Consolidated Financial Statements in our 2020 Form 10-K.

All of our outstanding Senior Notes are senior unsecured obligations issued by Expedia Group and guaranteed by certain domestic Expedia Group subsidiaries. The Senior Notes rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations of Expedia Group and the guarantor subsidiaries. In addition, the Senior Notes include covenants that limit our ability to (i) create certain liens, (ii) enter into sale/leaseback transactions and (iii) merge or consolidate with or into another entity or transfer substantially all of our assets. ~~Accrued interest related to the Notes was $98 million and $76 million as of June 30, 2020 and December 31, 2019.~~ The Senior Notes are redeemable in whole or in part, at the option of the holders thereof, upon the occurrence of certain change of control triggering events at a purchase price in cash equal to 101% of the principal plus accrued and unpaid interest.

~~Table~~ Accrued interest related to the Senior Notes was $89 million and $110 million as of ~~Contents~~

~~Notes to Consolidated Financial Statements – (Continued)~~

June 30, 2021 and December 31, 2020.

The ~~following table sets forth the approximate~~total estimated fair value of our ~~outstanding debt, which is~~Senior Notes was approximately $8.2 billion and $9.1 billion as of June 30, 2021 and December 31, 2020. The fair value was determined based on quoted market prices in less active markets ~~(Level~~and is categorized according as Level 2 ~~inputs):~~in the fair value hierarchy.

June 30,
2020 December 31,
2019
(In millions)
5.95% senior notes due 2020 $ 753
$ 767
2.5% (€650 million) senior notes due 2022 ⁽¹⁾
731
764
4.5% senior notes due 2024 518
536
6.25% senior notes due 2025 2,134
—
7.0% senior notes due 2025 790
—
5.0% senior notes due 2026 778
825
3.8% senior notes due 2028 960
1,021
3.25% senior notes due 2030 1,171
1,206

~~_______________~~


~~(1)~~	~~Approximately 649 million Euro as of June 30, 2020 and 682 million Euro as of December 31, 2019.~~

Credit ~~Facility~~Facilities

Revolving Credit Facility.As of ~~December 31, 2019,~~June 30, 2021, Expedia Group maintained a $2$1.145 billion ~~unsecured~~ revolving credit facility with a group of lenders ~~which was unconditionally guaranteed by certain domestic Expedia Group subsidiaries~~ that ~~were the same as under the Notes and expired in~~expires on May ~~2023. The facility contained covenants including maximum leverage and minimum interest coverage ratios. As of December~~ 31, ~~2019, we had 0 revolving credit facility borrowings outstanding. On March 18, 2020, we borrowed $1.9 billion under the revolving credit facility.~~

~~On May 4, 2020, the Company, certain of the Company’s subsidiaries party thereto and the lenders party thereto~~2023 (the ~~“Consenting Lenders”) executed a restatement agreement, which amends and restates our existing revolving credit facility (as amended and restated, the “Amended~~“Revolving Credit Facility”) to, among other things, suspend the maximum leverage ratio covenant until December 31, 2021, increase the maximum permissible leverage ratio (once such covenant is reinstated) until March 31, 2023 (at which time the maximum permissible leverage ratio will return to the level in effect immediately prior to effectiveness of the Amended Credit Facility), eliminate the covenant imposing a minimum interest coverage ratio and add a covenant regarding minimum liquidity, as well as to make certain other amendments to the affirmative and negative covenants therein. The Amended Credit Facility became effective on May 5, 2020 (the “Amended Credit Facility Effective Date”).

Obligations under the ~~Amended~~Revolving Credit Facility are secured by substantially all of the assets of the Company and its subsidiaries that guarantee the ~~Amended Credit Facility~~facility (subject to certain exceptions, including for our ~~new~~ headquarters located in Seattle, WA) up to the maximum amount permitted under the indentures governing the ~~Notes and the Company’s existing 5.95% Notes, 2.5% Notes, 4.5% Notes, 5.0% Notes, 3.8% Notes and 3.25%~~ Senior Notes ~~(collectively, the “Existing Notes”) as of the Amended Credit Facility Effective Date~~ without securing such ~~notes. Aggregate commitments under the Amended Credit Facility initially total $2 billion, and will mature on May 31, 2023.~~

Pursuant to the terms of the Amended Credit Facility, the Company agreed to use reasonable best efforts to enter into (and to cause certain of its subsidiaries, including certain of its subsidiaries that are not guarantors of the 6.25% and 7.0% Notes or the Existing Notes, to enter into), promptly after the Amended Credit Facility Effective Date, a new credit facility incurred by one or more of the Company’s subsidiaries that are not obligors with respect to the Amended Credit Facility, the 6.25% and 7.0% Notes or the Existing Notes and which will be guaranteed by the Company, its subsidiaries that guarantee the Amended Credit Facility, the 6.25% and 7.0% Notes and the Existing Notes and certain of the Company’s non-guarantor subsidiaries (the “Additional Credit Facility”), on specified terms in an aggregate principal amount up to approximately $855 million. Upon establishment of the Additional Credit Facility, the Company will prepay indebtedness, and reduce commitments, under the Amended Credit Facility, in an amount equal to the aggregate commitments in respect of the Additional Credit Facility.Senior Notes.

Loans under the ~~Amended~~Revolving Credit Facility ~~held by Consenting Lenders will~~ bear interest (A) in the case of eurocurrency loans, at rates ranging from (i) prior to December 31, 2021, ~~2.35% per annum for any day that the aggregate unused commitments and funded exposure under the Amended Credit Facility exceed $1.145 billion to~~ 2.25% per annum ~~otherwise~~ and (ii) on and after December 31, 2021, or prior to such date for each quarter that the leverage ratio, as of the end of the most recently ended fiscal quarter for which financial statements have been delivered, calculated on an annualized basis using consolidated EBITDA for the two most recently ended fiscal quarters included in such financial statements multiplied by two, is not greater than 5.00:1.00, ~~1.10% to 1.85% per annum for any day that the aggregate unused commitments and funded~~

~~Table of Contents~~

~~Notes to Consolidated Financial Statements – (Continued)~~

~~exposure under the Amended Credit Facility exceed $1.145 billion and, otherwise, ranging~~ from 1.00% to 1.75% ~~per annum, in each case,~~ depending on the Company’s credit ratings, and (B) in the case of base rate loans, at rates ~~ranging from~~ (i) prior to December 31, 2021, ~~1.35% per annum for any day that the aggregate unused commitments and funded exposure under the Amended Credit Facility exceed $1.145 billion to~~ 1.25% per annum ~~otherwise~~ and (ii) on and after December 31, 2021, or prior to such date if the leverage ratio condition referred to above is satisfied, ~~0.10% to 0.85% per annum for any day that the aggregate unused commitments and funded exposure under the Amended Credit Facility exceed $1.145 billion, and, otherwise, ranging~~ from 0.00% to 0.75% per annum ~~in each case,~~ depending on the Company’s credit ratings.

The Revolving Credit Facility contains covenants including a minimum liquidity requirement and, as of December 31, 2021, a maximum leverage ratio.

As of June 30, 2021 and December 31, 2020, ~~$1.9 billion was outstanding under the Amended~~we had 0 Revolving Credit Facility ~~and the interest rate on the outstanding balance was 2.55%.~~

borrowings outstanding. The amount of stand-by letters of credit (“LOC”) issued under the ~~prior credit facility as well as the Amended~~Revolving Credit Facility reduced the credit amount available. As of ~~both~~ June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, there was ~~$16~~$14 million and $13 million of outstanding stand-by LOCs issued under the ~~facilities.~~facility.

~~In addition, one of our international subsidiaries maintains a Euro 50 million uncommitted credit facility, which is guaranteed by Expedia Group, which may be terminated at any time by the lender.~~Foreign Credit Facility. As of June 30, ~~2020~~2021, the Company and Expedia Group International Holdings III, LLC (the “Borrower”) also maintained an $855 million credit facility with a group of lenders that expires on May 31, 2023 (the “Foreign Credit Facility”). Obligations under the Foreign Credit Facility are unsecured. Such obligations are guaranteed by the Company, its subsidiaries that guarantee obligations under the Revolving Credit Facility, as mentioned above, and certain of the Company’s additional subsidiaries.

Loans under the Foreign Credit Facility bear interest at a rate equal to an index rate plus a margin (A) in the case of eurocurrency loans, (i) prior to December 31, 2021, equal to 2.50% per annum and (ii) on and after December 31, 2021, or prior to such date for each quarter that the leverage ratio, as of the end of the most recently ended fiscal quarter for which financial statements have been delivered, calculated on an annualized basis using consolidated EBITDA for the two most recently ended fiscal quarters included in such financial statements multiplied by two, is not greater than 5.00:1.00, ranging from 1.25% to 2.00% per annum, depending on the Company’s credit ratings, and (B) in the case of base rate loans, (i) prior to December 31, 2021, equal to 1.50% per annum and (ii) on and after December 31, 2021, or prior to such date if the leverage ratio condition referred to above is satisfied, ranging from 0.25% to per 1.00% annum, depending on the Company’s credit ratings.

The covenants, events of default and other terms and conditions in the Foreign Credit Facility are substantially similar to those in the Revolving Credit Facility, but include additional limitations on the Borrower and certain other entities that are not obligors under the Revolving Credit Facility.

As of June 30, 2021 and December 31, ~~2019, there were~~2020, we had 0 Foreign Credit Facility borrowings outstanding.

Table of Contents

Notes to Consolidated Financial Statements – (Continued)

Note 5 – Capital Stock

Preferred Stock and Warrants

On May 5, 2020, we completed the sale of Series A Preferred Stock and Warrants (as defined below) ~~and warrants (the “Warrants”)~~ to purchase our common stock ~~(“Common Stock”)~~ to AP Fort Holdings, L.P., an affiliate of Apollo Global Management, Inc. (the “Apollo Purchaser”) and SLP Fort Aggregator II, L.P. and SLP V Fort Holdings II, L.P., affiliates of Silver Lake Group, L.L.C. (the “Silver Lake Purchasers”) pursuant to the Company’s previously announced Investment Agreements, dated as of April 23, 2020, with the Apollo Purchaser and the Silver Lake Purchasers (together, the “Investment Agreements”).

We issued and sold (1) to the Apollo Purchaser, pursuant to the Apollo Investment Agreement, 600,000 shares of the Company’s newly created Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and ~~warrants~~Warrants (the “Warrants”) to purchase 4.2 million shares of ~~the Company’s~~our common stock ~~par value $0.0001 per share (“Common Stock”),~~ for an aggregate purchase price of $588 million and (2) to the Silver Lake Purchaser, pursuant to the Silver Lake Investment Agreement, 600,000 shares of Series A Preferred Stock and Warrants to purchase 4.2 million shares of ~~Common Stock,~~common stock, for an aggregate purchase price of $588 million. ~~At closing, we paid certain fees in an aggregate amount of $12 million to affiliates of the Apollo Purchaser and the Silver Lake Purchaser.~~ On the terms and subject to the conditions set forth in the Investment Agreements, from and after the closing, (1) each of the Apollo Purchaser and the Silver Lake Purchaser designated one representative who was appointed to the Board of Directors of the Company (the “Board”) and (2) the Apollo Purchaser appointed one non-voting observer to the Board, in each case until such time as the applicable Purchaser and its Permitted Transferees (as defined in the Investment Agreements) no longer beneficially own (a) at least 50% of the shares of Series A Preferred Stock purchased by the applicable Purchaser under the Investment Agreement (unless the applicable Purchaser holds less than 50% of the shares of Series A Preferred Stock as a result of redemptions by the Company, in which case the reference to 50% shall be replaced with a reference to 20%) and (b) Warrants and/or Common Stock for which the Warrants were exercised that represent in the aggregate and on an as exercised basis, at least 50% of the shares underlying the Warrants purchased by the applicable Purchaser under the Investment Agreement.

The Investment Agreements (including the forms of Certificate of Designations, Warrants and Registration Rights Agreement) contain other customary covenants and agreements, including certain standstill provisions and customary preemptive rights.

Certificate of Designations for Series A Preferred Stock. Dividends on each share of Series A Preferred Stock accrue daily on the Preference Amount (as defined below) at the then-applicable Dividend Rate (as defined below) and are payable semi-annually in arrears. As used herein, “Dividend Rate” with respect to the Series A Preferred Stock means (a) from the closing until the day immediately preceding the fifth anniversary of the closing, 9.5% per annum, (b) beginning on each of the fifth, sixth and seventh anniversaries of the closing, the then-applicable Dividend Rate shall be increased by 100 basis points on each such yearly anniversary, and (c) beginning on each of the eighth and ninth anniversaries of the closing date, the then-applicable Dividend Rate shall be increased by 150 basis points on each such yearly anniversary. The Dividend Rate is also subject to certain adjustments if the Company incurs indebtedness causing its leverage to exceed certain thresholds. Dividends are payable (a) until the third anniversary of the closing, either in cash or through an accrual of unpaid dividends (“Dividend Accrual”), at the Company’s option, (b) from the third anniversary of the closing until the sixth anniversary of the closing, either in cash or in a combination of cash and Dividend Accrual (with no more than 50% of the total amount of such Dividend being paid through a Dividend Accrual), at the Company’s option and (c) thereafter, in cash.

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~~Notes to Consolidated Financial Statements – (Continued)~~

The Series A Preferred Stock rank senior to ~~the Common Stock~~our common stock and the Class B common stock, par value $0.0001 per share, of the Company (the “Class B Common Stock”) with respect to dividend rights, redemption rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

At any time on or before the first anniversary of the closing, we may redeem all or any portion of the Series A Preferred Stock in cash at a price equal to 105.0% of the sum of the original liquidation preference of $1,000 per share of Series A Preferred Stock plus any Dividend Accruals (the “Preference Amount”), plus accrued and unpaid distributions as of the redemption date. Any time after the first anniversary of the closing but on or prior to the second anniversary of the closing, we may redeem all or any portion of the Series A Preferred Stock in cash at a price equal to ~~103.0%~~103% of the ~~Preference Amount,~~sum of the original liquidation preference of $1,000 per share of Series A Preferred Stock plus any Dividend Accruals (the “Preference Amount”), plus accrued and unpaid distributions as of the redemption date. Any time after the second anniversary of the closing but on or prior to the third anniversary of the closing, we may redeem all or any portion of the Series A Preferred Stock in cash at a price equal to ~~102.0%~~102% of the Preference Amount, plus accrued and unpaid distributions as of the redemption date. Any time after the third anniversary of the closing but on or prior to the fourth anniversary of the closing, we may redeem all or any portion of the Series A Preferred Stock in cash at a price equal to ~~101.0%~~101% of the Preference Amount, plus accrued and unpaid distributions as of the redemption date. At any time after the fourth anniversary of the closing, we may redeem all or any portion of the Series A Preferred Stock in cash at a price equal to the Preference Amount plus accrued and unpaid distributions as of the redemption date.

In addition, upon the occurrence of a change of control, (i) we shall have the right, but not the obligation, to redeem any or all of the outstanding shares of Series A Preferred Stock at the then applicable redemption price, payable in cash and (ii) each holder will have the right, but not the obligation, to require the Company to redeem any or all of the outstanding shares of Series A Preferred Stock owned by such holder at the then applicable redemption price, payable in cash.

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Notes to Consolidated Financial Statements – (Continued)

The Series A Preferred Stock is not convertible into ~~Common Stock~~our common stock or Class B Common Stock.

Each holder of Series A Preferred Stock will have one vote per share on any matter on which holders of Series A Preferred are entitled to vote separately as a class (as described below), whether at a meeting or by written consent. The holders of shares of Series A Preferred Stock do not otherwise have any voting rights.

The vote or consent of the holders of at least two-thirds of the shares of Series A Preferred Stock outstanding at such time, voting together as a separate class, is required in order for the Company to (i) amend, alter or repeal any provision of its Amended and Restated Certificate of Incorporation (including the certificates of designations relating to the Series A Preferred Stock) in a manner that would have an adverse effect on the rights, preferences or privileges of the Series A Preferred Stock, as applicable, (ii) issue, any capital stock ranking senior or pari passu to the Series A Preferred Stock, other than certain issuances to a governmental entity in connection with a financing transaction or (iii) liquidate, dissolve or wind up the Company.

The Series A Preferred Stock is classified within temporary equity on our consolidated balance sheets due to provisions that could cause the equity to be redeemable at the option of the holder. However, such events that could cause the Series A Preferred Stock to become redeemable are not considered probable of occurring. As of ~~June 30,~~December 31, 2020, the carrying value of the Series A Preferred Stock was $1,022 million, net of $68 million in initial discount and issuance costs as well as $110 million allocated on a relative fair value basis to the concurrently issued Warrants recorded to additional paid-in capital (as described below). On May 20, 2021, we redeemed 50% of the outstanding Series A Preferred Stock at a price equal to 103% of the Preference Amount, plus accrued and unpaid distributions as to the redemption date using cash on-hand of $640 million, including an $18 million redemption premium and $22 million of accrued dividends. The loss on redemption of Preferred Stock was $107 million during the three and six months ended June 30, 2021, which included a charge to additional paid-in capital for the redemption premium as well as $89 million related to 50% of: the original issuance discount, issuance costs and the Warrants value.

As of June 30, 2021, the carrying value of the remaining Series A Preferred Stock was $511 million. The Series A Preferred Stock accumulated and we paid ~~$17~~$50 million (or ~~$14.02~~$47.11 per share of Series A Preferred Stock) ofin total dividends, including those mentioned above, during the ~~three and~~ six months ended June 30, ~~2020.~~2021.

Warrants to Purchase Company Common Stock. Pursuant to the Investment Agreements, we issued to each of (1) the Silver Lake Purchasers (in the aggregate) and (2) the Apollo Purchaser, Warrants to purchase 4.2 million shares of ~~Common Stock~~our common stock at an exercise price of $72.00 per share, subject to certain customary anti-dilution adjustments provided under the Warrants, including for stock splits, reclassifications, combinations and dividends or distributions made by the Company on ~~the Common Stock.~~our common stock. The Warrants are exercisable on a net share settlement ~~basis. The Warrants~~basis and expire ten years after the closing date.

~~Registration Rights Agreement.~~ In ~~connection with and concurrently with the effective time of the transactions contemplated by the Investment Agreements, the Company,~~May 2021, the Apollo Purchaser exercised all of the Warrants it held and received approximately 2.5 million shares of our common stock in respect thereof. As of June 30, 2021, the Silver Lake Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Apollo Purchaser and the Silver Lake Purchasers are entitled to certain registration rights. Under the terms of the Registration Rights Agreement, the Apollo Purchaser and the Silver Lake Purchasers are entitled to customary registration rights with respect to the shares of Common Stock for which the Warrants may be exercised and, from and after the fifth anniversary of the closing, the Series A Preferred Stock.Purchasers’ warrants remain outstanding.

Dividends on our Common Stock

The Executive Committee, acting on behalf of the Board of Directors, declared and paid the following ~~dividends~~common stock dividend during the ~~periods presented:~~six months ended June 30, 2020:

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~~Notes to Consolidated Financial Statements – (Continued)~~

Declaration Date
Dividend
Per Share
Record Date
Total Amount
(in millions)
Payment Date
Six Months Ended June 30, 2020

February 13, 2020
$ 0.34

March 10, 2020
$ 48

March 26, 2020
Six Months Ended June 30, 2019

February 6, 2019
0.32

March 7, 2019
47

March 27, 2019
May 1, 2019
0.32

May 23, 2019
48

June 13, 2019

Declaration Date

Dividend
Per Share

Record Date

Total Amount
(in millions)

Payment Date

February 13, 2020

0.34

March 10, 2020

March 26, 2020

During the second quarter of 2020, we suspended quarterly dividends on our common stock. WeAt this time, we do not currently expect to declare future dividends on our common ~~stock, at least until the current economic and operating environment improves.~~stock. Future declarations of dividends are subject to final determination by our Board of Directors.

Treasury Stock

As of June 30, ~~2020,~~2021, the Company’s treasury stock was comprised of approximately ~~123.4~~124.0 million common stock and 7.3 million Class B shares. As of December 31, ~~2019,~~2020, the Company’s treasury stock was comprised of approximately ~~119.6~~123.5 million shares of common stock and 7.3 million Class B shares.

Share Repurchases. In April 2018, the Executive Committee, acting on behalf of the Board of Directors, authorized a repurchase of up to 15 million outstanding shares of our common stock. In December 2019, the Board of Directors authorized a repurchase of up to 20 million outstanding shares of our common stock. We made 0 share repurchases during the six months ended June 30, 2021. During the six months ended June 30, 2020, we repurchased, through open market transactions, 3.4 million shares under these authorizations for the total cost of $370 million, excluding transaction costs, representing an average

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Notes to Consolidated Financial Statements – (Continued)

repurchase price of $109.88 per share. As of June 30, ~~2020,~~2021, there were approximately 23.3 million shares remaining under the 2018 and 2019 repurchase authorizations. There is no fixed termination date for the repurchases.

Accumulated Other Comprehensive Loss

The balance of accumulated other comprehensive loss as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was comprised of foreign currency translation adjustments. These translation adjustments include foreign currency transaction losses at June 30, ~~2020~~2021 of ~~$17~~$49 million ($2265 million before tax) and ~~$15~~$69 million ($1990 million before tax) at December 31, ~~2019~~2020 associated with our 2.5% Notes. The 2.5% Notes are Euro-denominated debt designated as hedges of certain of our Euro-denominated net assets. ~~See~~ ~~Note 4 – Debt~~ ~~for more information.~~

Note 6 – Earnings (Loss) Per Share

~~The following table presents our basic and diluted earnings (loss) per share:~~

Three months ended
June 30, Six months ended
June 30,
2020 2019 2020 2019
(In millions, except share and per share data)
Net income (loss) attributable to Expedia Group, Inc. $ (736 ) $ 183
$ (2,037 ) $ 80
Preferred stock dividend (17 ) —
(17 ) —
Net income (loss) attributable to Expedia Group, Inc. common stockholders $ (753 ) $ 183
$ (2,054 ) $ 80
Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders:
Basic $ (5.34 ) $ 1.23
$ (14.57 ) $ 0.54
Diluted (5.34 ) 1.21
(14.57 ) 0.53
Weighted average number of shares outstanding (000's):
Basic 141,072
149,049
140,947
148,468
Dilutive effect of:
Options to purchase common stock —
1,893
—
1,944
Other dilutive securities —
619
—
645
Diluted 141,072
151,561
140,947
151,057

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~~Notes to Consolidated Financial Statements – (Continued)~~

Basic earnings per share is calculated using our weighted-average outstanding common shares. The earnings per share amounts are the same for common stock and Class B common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.

Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards and common stock warrants as determined under the treasury stock method and of our Convertible Notes using the if-converted method.In periods when we recognize a net loss, we exclude the impact of outstanding stock awards, ~~and~~ common stock warrants and the potential share settlement impact related to our Convertible Notes from the diluted loss per share calculation as their inclusion would have an antidilutive effect. For ~~both of~~ the three and six months ended June 30, ~~2020,~~2021, approximately 2619 million of outstanding stock awards and common stock warrants and approximately 4 million shares related to the potential share settlement impact related to our Convertible Notes of have been excluded from the calculations of diluted earnings per share attributable to common stockholders because their effect would have been antidilutive. For ~~both of~~ the three and six months ended June 30, ~~2019,~~2020, approximately 526 million of outstanding stock awards ~~have been excluded from the calculations of diluted earnings per share attributable to~~and common ~~stockholders because their effect would have been antidilutive.~~stock warrants were excluded.

Note 7 – Restructuring and Related Reorganization Charges

In ~~February~~ 2020, we committed to restructuring actions intended to simplify our businesses and improve operational efficiencies, which have resulted in headcount reductions and ~~during the second quarter of 2020, the Company has continued to implement actions beyond our initial commitments.~~office consolidations. As a result, we recognized ~~$53~~$42 million and $128 million in restructuring and related reorganization charges during the ~~three and~~ six months ended June 30, 2021 and 2020. Based on current plans, which are subject to change, we expect total reorganization charges primarily in the remainder ~~of 2020 and into~~ 2021 of approximately ~~$60~~$15 million to $20 million. However, we continue to actively evaluate additional cost reduction efforts and should we make decisions in future periods to take further actions we will incur additional reorganization charges.

We also engaged in certain smaller scale restructure actions in 2019 to centralize and migrate certain operational functions and systems, for which we recognized $4 million and $14 million in restructuring and related reorganization charges during the three and six months ended June 30, 2019, which were primarily related to severance and benefits.

The following table summarizes the restructuring and related reorganization activity for the six months ended June 30, ~~2020:~~2021:

Employee Severance and Benefits Other Total
(In millions)
Accrued liability as of January 1, 2020 $ 11
$ 6
$ 17
Charges 122
6
128
Payments (65 ) (12 ) (77 )
Accrued liability as of June 30, 2020 $ 68
$ —
$ 68


	Employee Severance and Benefits		Other		Total
	(In millions)
Accrued liability as of January 1, 2021	$	103	$	0	$	103
Charges	19		23		42
Payments	(53)		(4)		(57)
Non-cash items	(3)		(14)		(17)
Accrued liability as of June 30, 2021	$	66	$	5	$	71

Note 8 – Income Taxes

We determine our provision for income taxes for interim periods using an estimate of our annual effective tax rate. We record any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete items.

For the three months ended June 30, ~~2020,~~2021, the effective tax rate was a ~~22.3%~~21.0% benefit on a pre-tax loss, compared to a ~~20.4% expense~~22.3% benefit on a pre-tax ~~income~~loss for the three months ended June 30, ~~2019.~~2020.

For the six months ended June 30, 2021, the effective tax rate was a 22.1% benefit on a pre-tax loss, compared to a 12.1% benefit on pre-tax loss for the six months ended June 30, 2020. The change in the effective tax rate was primarily due to ~~discrete tax benefits in the prior year period.~~

For the six months ended June 30, 2020, the effective tax rate was a 12.1% benefit on a pre-tax loss, compared to a 7.2% expense on a pre-tax income for the six months ended June 30, 2019. The change in the effective tax rate was primarily driven by the nondeductible ~~impairment charges~~impairments and a valuation allowance principally related to unrealized capital losses recorded in the ~~first quarter~~prior year period.

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Notes to Consolidated Financial Statements – (Continued)

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~~Notes to Consolidated Financial Statements – (Continued)~~

~~protested~~IRS. We filed a protest with the IRS ~~position.~~for our 2011 to 2013 tax years and Appeals returned the case to Exam for further review. We are also under examination by the IRS for our 2014 to 2016 tax years. Subsequent years remain open to examination by the IRS. We do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which, along with earlier issued IRS guidance, provides for deferral of certain taxes. The CARES Act, among other things, also contains numerous provisions which may benefit the Company. We continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 that may be issued.

Note 9 – Commitments and Contingencies

Legal Proceedings

In the ordinary course of business, we are a party to various lawsuits. Management does not expect these lawsuits to have a material impact on the liquidity, results of operations, or financial condition of Expedia Group. We also evaluate other potential contingent matters, including value-added tax, excise tax, sales tax, transient occupancy or accommodation tax and similar matters. We do not believe that the aggregate amount of liability that could be reasonably possible with respect to these matters would have a material adverse effect on our financial results; however, litigation is inherently uncertain and the actual losses incurred in the event that our legal proceedings were to result in unfavorable outcomes could have a material adverse effect on our business and financial performance.

Litigation Relating to Occupancy Taxes. NaN lawsuits have been filed by or against cities, counties and states involving hotel occupancy and other taxes. NaN lawsuits are currently active. These lawsuits are in various stages and we continue to defend against the claims made in them vigorously. With respect to the principal claims in these matters, we believe that the statutes or ordinances at issue do not apply to us or the services we provide and, therefore, that we do not owe the taxes that are claimed to be owed. We believe that the statutes or ordinances at issue generally impose occupancy and other taxes on entities that own, operate or control hotels (or similar businesses) or furnish or provide hotel rooms or similar accommodations. To date, NaN of these lawsuits have been dismissed. Some of these dismissals have been without prejudice and, generally, allow the governmental entity or entities to seek administrative remedies prior to pursuing further litigation. NaN dismissals were based on a finding that we and the other defendants were not subject to the local tax ordinance or that the local government lacked standing to pursue its claims. As a result of this litigation and other attempts by certain jurisdictions to levy such taxes, we have established a reserve for the potential settlement of issues related to hotel occupancy and other taxes, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of ~~$59~~$48 million and ~~$48~~$58 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Our settlement reserve is based on our best estimate of probable losses and the ultimate resolution of these contingencies may be greater or less than the liabilities recorded. An estimate for a reasonably possible loss or range of loss in excess of the amount reserved cannot be made. Changes to the settlement reserve are included within legal reserves, occupancy tax and other in the consolidated statements of operations.

Pay-to-Play. Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as “pay-to-play.” Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest.

We are in various stages of inquiry or audit with ~~domestic and foreign~~various tax authorities, some of which, including in the City of Los Angeles regarding hotel occupancy taxes, ~~and in the United Kingdom regarding the application of value added tax (“VAT”) to our European Union related transactions as discussed below,~~ may impose a pay-to-play requirement to challenge an adverse inquiry or audit result in court.

Matters Relating to International VAT.We are in various stages of inquiry or audit in multiple European Union jurisdictions ~~including in the United Kingdom,~~ regarding the application of VAT to our European Union related transactions. While we believe we comply with applicable VAT laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional taxes. In certain jurisdictions, including the United Kingdom, we may be required to “pay-to-play” any VAT assessment prior to contesting its validity. While we believe that we will be successful based on the merits of our positions with regard to ~~the United Kingdom and other VAT~~ audits in pay-to-play jurisdictions, it is nevertheless reasonably possible that we could be required to pay any assessed amounts in order to contest or litigate the applicability of any assessments and an estimate for a reasonably possible amount of any such payments cannot be made.

Competition and Consumer Matters. On August 23, 2018, the Australian Competition and Consumer Commission, or "ACCC", instituted proceedings in the Australian Federal Court against trivago. The ACCC alleged breaches of Australian Consumer Law, or "ACL," relating to trivago’s advertisements in Australia concerning the hotel prices available on trivago’s Australian site, trivago’s strike-through pricing practice and other aspects of the way offers for accommodation were displayed

2119

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Notes to Consolidated Financial Statements – (Continued)

on trivago's Australian website. The matter went to trial in September 2019 and, on January 20, 2020, the Australian Federal Court issued a judgment finding trivago had engaged in conduct in breach of the ACL. On March 4, 2020, trivago filed a notice of appeal of part of that judgment at the Australian Federal Court. ~~The appeal was heard on July 20-21,~~On November 4, 2020, ~~and~~ the ~~parties await a ruling. The court has yet to set a date for~~Australian Federal Court dismissed trivago's appeal. On May 27, 2021, the Australian Federal Court scheduled a separate trial regarding penalties and other ~~orders.~~orders for October 8, 2021, after having vacated the prior June 2021 trial date. We recorded the estimated probable loss associated with the proceedings in a previous period. An estimate for the reasonable possible loss or range of loss in excess of the amount reserved cannot be made.

Note 10 – Divestitures

On May 4, 2021, we announced that American Express Global Business Travel (“GBT”) made a binding offer to acquire Egencia, Expedia Group’s corporate travel arm included within our B2B segment. On August 4, 2021, Expedia Group accepted that offer. All relevant employee representative consultations have been completed and relevant regulatory approvals obtained, though the transaction remains subject to other customary closing conditions. As part of the transaction, Expedia Group would receive a minority ownership position in the combined business, and enter a 10-year lodging supply agreement with GBT. The transaction is currently anticipated to close during 2021. Upon closing, we may recognize a gain or loss on sale of the business. While the consideration for the transaction is not expected to materially change, the actual gain or loss on sale of the business to be recognized will depend on, among other things, final transaction proceeds, ending cash balances, and underlying costs as of the closing date, and changes in the estimated fair values of certain components of the considerations.

In addition, during the third quarter of 2020, in connection with our efforts to focus on our core businesses and streamline our activities, we committed to a plan to divest certain smaller businesses within our Retail segment. In April 2021, we completed the sale of Classic Vacations, which resulted in an immaterial gain within other, net in the consolidated statement of operations and net cash divested of approximately $56 million. In July 2021, we also completed the sale of another of our smaller businesses within our Retail segment.

As a result, the related assets and liabilities of the above disposal groups were considered held-for-sale and consisted of the following:

•Held-for-sale assets of $431 million as of June 30, 2021, which were primarily classified within cash of $46 million, accounts receivable of $108 million, property and equipment of $54 million, operating lease right-of-use asset of $20 million and goodwill of $163 million. Held-for-sale assets of $21 million as of December 31, 2020, which were primarily classified within cash of $5 million, accounts receivable of $2 million and prepaid expenses and other current assets of $12 million.

•Held-for-sale liabilities of $134 million as of June 30, 2021, which were primarily classified within merchant accounts payable of $16 million and accrued expenses and other current liabilities of $83 million. Held-for-sale liabilities of $53 million as of December 31, 2020, which were primarily classified within merchant accounts payable of $8 million, accrued expenses and other current liabilities of $5 million and deferred merchant bookings of $38 million.

Note 1011 – Segment Information

~~Beginning in the first quarter of 2020, we~~We have the following reportable segments: Retail, B2B, and trivago. The change from our previous reportable segments, Core OTA, trivago, Vrbo and Egencia, reflect Expedia Group’s efforts to simplify our organization into a platform operating model by aligning our retail brand operations, combining our business focused brands and centralizing our platform and supply organizations to support all of our businesses.Our Retail segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, CarRentals.com ~~CruiseShipCenters, Classic Vacations~~ and ~~SilverRail Technologies, Inc.~~Expedia Cruises. Our B2B segment is comprised of our Expedia Business Services organization including Expedia Partner Solutions, which ~~operates~~offers private label and co-branded ~~programs~~products to make travel services available to ~~leisure~~ travelers through third-party company branded websites, and Egencia, a full-service travel management company that provides travel services to businesses and their corporate customers. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites. ~~There were no changes to our reporting units for goodwill testing as a result of these current year segment changes.~~

We determined our operating segments based on how our chief operating decision makers manage our business, make operating decisions and evaluate operating performance. Our primary operating metric is Adjusted EBITDA. Adjusted EBITDA for our Retail and B2B segments includes allocations of certain expenses, primarily related to our global travel supply organization and the majority of costs from our product and technology platform, as well as facility costs and the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant lodging revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, certain information technology and legal to our reportable segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated and may change.

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Notes to Consolidated Financial Statements – (Continued)

Our segment disclosure includes intersegment revenues, which primarily consist of advertising and media services provided by our trivago segment to our Retail segment. These intersegment transactions are recorded by each segment at amounts that approximate fair value as if the transactions were between third parties, and therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within Corporate and Eliminations in the table below.

Corporate and Eliminations also includes unallocated corporate functions and expenses as well as Bodybuilding.com ~~subsequent to our acquisition in July 2019~~ through its sale in May 2020. In addition, we record amortization of intangible assets and any related impairment, as well as stock-based compensation expense, restructuring and related reorganization charges, legal reserves, occupancy tax and other, and other items excluded from segment operating performance in Corporate and Eliminations. Such amounts are detailed in our segment reconciliation below.

The following tables present our segment information for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. As a significant portion of our property and equipment is not allocated to our operating segments and depreciation is not included in our segment measure, we do not report the assets by segment as it would not be meaningful. We do not regularly provide such information to our chief operating decision makers.


	Three months ended June 30, 2021
	Retail		B2B		trivago		Corporate & Eliminations		Total
	(In millions)
Third-party revenue	$	1,715	$	305	$	91	$	0	$	2,111
Intersegment revenue	0		0		24		(24)		—
Revenue	$	1,715	$	305	$	115	$	(24)	$	2,111
Adjusted EBITDA	$	303	$	(8)	$	5	$	(99)	$	201
Depreciation	(133)		(26)		(2)		(18)		(179)
Amortization of intangible assets	0		0		0		(26)		(26)
Stock-based compensation	0		0		0		(120)		(120)
Legal reserves, occupancy tax and other	0		0		0		8		8
Restructuring and related reorganization charges	0		0		0		(13)		(13)
Realized (gain) loss on revenue hedges	(3)		0		0		0		(3)
Operating income (loss)	$	167	$	(34)	$	3	$	(268)	(132)
Other expense, net									(92)
Loss before income taxes									(224)
Provision for income taxes									47
Net loss									(177)
Net loss attributable to non-controlling interests									5
Net loss attributable to Expedia Group, Inc.									(172)
Preferred stock dividend									(22)
Loss on redemption of preferred stock									(107)
Net loss attributable to Expedia Group, Inc. common stockholders									$	(301)

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Notes to Consolidated Financial Statements – (Continued)

Three months ended June 30, 2020
Retail B2B trivago Corporate &
Eliminations Total
(In millions)
Third-party revenue $ 463
$ 68
$ 15
$ 20
$ 566
Intersegment revenue —
—
3
(3 ) —
Revenue $ 463
$ 68
$ 18
$ 17
$ 566
Adjusted EBITDA $ (203 ) $ (128 ) $ (16 ) $ (89 ) $ (436 )
Depreciation (136 ) (34 ) (3 ) (18 ) (191 )
Amortization of intangible assets —
—
—
(41 ) (41 )
Impairment of goodwill —
—
—
(20 ) (20 )
Impairment of intangible assets —
—
—
(10 ) (10 )
Stock-based compensation —
—
—
(54 ) (54 )
Legal reserves, occupancy tax and other —
—
—
(8 ) (8 )
Restructuring and related reorganization charges —
—
—
(53 ) (53 )
Realized (gain) loss on revenue hedges (36 ) —
—
—
(36 )
Operating loss $ (375 ) $ (162 ) $ (19 ) $ (293 ) (849 )
Other expense, net (104 )
Loss before income taxes (953 )
Provision for income taxes 213
Net loss (740 )
Net loss attributable to non-controlling interests 4
Net loss attributable to Expedia Group, Inc. (736 )
Preferred stock dividend (17 )
Net loss attributable to Expedia Group, Inc. common stockholders $ (753 )

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Notes to Consolidated Financial Statements – (Continued)

Three months ended June 30, 2019
Retail B2B trivago Corporate &
Eliminations Total
(In millions)
Third-party revenue $ 2,333
$ 657
$ 163
$ —
$ 3,153
Intersegment revenue —
—
88
(88 ) —
Revenue $ 2,333
$ 657
$ 251
$ (88 ) $ 3,153
Adjusted EBITDA $ 548
$ 130
$ 20
$ (130 ) $ 568
Depreciation (127 ) (27 ) (3 ) (19 ) (176 )
Amortization of intangible assets —
—
—
(52 ) (52 )
Stock-based compensation —
—
—
(59 ) (59 )
Legal reserves, occupancy tax and other —
—
—
(4 ) (4 )
Restructuring and related reorganization charges —
—
—
(4 ) (4 )
Realized (gain) loss on revenue hedges (4 ) (4 ) —
—
(8 )
Operating income (loss) $ 417
$ 99
$ 17
$ (268 ) 265
Other expense, net (30 )
Income before income taxes 235
Provision for income taxes (48 )
Net income 187
Net income attributable to non-controlling interests (4 )
Net income attributable to Expedia Group, Inc. $ 183

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Notes to Consolidated Financial Statements – (Continued)

Six months ended June 30, 2020
Retail B2B trivago Corporate &
Eliminations Total
(In millions)
Third-party revenue $ 2,045
$ 553
$ 118
$ 59
$ 2,775
Intersegment revenue —
—
54
(54 ) —
Revenue $ 2,045
$ 553
$ 172
$ 5
$ 2,775
Adjusted EBITDA $ (181 ) $ (102 ) $ (17 ) $ (212 ) $ (512 )
Depreciation (264 ) (66 ) (6 ) (40 ) (376 )
Amortization of intangible assets —
—
—
(85 ) (85 )
Impairment of goodwill —
—
—
(785 ) (785 )
Impairment of intangible assets —
—
—
(131 ) (131 )
Stock-based compensation —
—
—
(109 ) (109 )
Legal reserves, occupancy tax and other —
—
—
13
13
Restructuring and related reorganization charges —
—
—
(128 ) (128 )
Realized (gain) loss on revenue hedges (27 ) (3 ) —
—
(30 )
Operating loss $ (472 ) $ (171 ) $ (23 ) $ (1,477 ) (2,143 )
Other expense, net (289 )
Loss before income taxes (2,432 )
Provision for income taxes 295
Net loss (2,137 )
Net loss attributable to non-controlling interests 100
Net loss attributable to Expedia Group, Inc. (2,037 )
Preferred stock dividend (17 )
Net loss attributable to Expedia Group, Inc. common stockholders $ (2,054 )

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~~Notes to Consolidated Financial Statements – (Continued)~~

Six months ended June 30, 2019
Retail B2B trivago Corporate &
Eliminations Total
(In millions)
Third-party revenue $ 4,234
$ 1,213
$ 315
$ —
$ 5,762
Intersegment revenue —
—
173
(173 ) —
Revenue $ 4,234
$ 1,213
$ 488
$ (173 ) $ 5,762
Adjusted EBITDA $ 743
$ 202
$ 44
$ (245 ) $ 744
Depreciation (255 ) (54 ) (6 ) (37 ) (352 )
Amortization of intangible assets —
—
—
(104 ) (104 )
Stock-based compensation —
—
—
(115 ) (115 )
Legal reserves, occupancy tax and other —
—
—
(14 ) (14 )
Restructuring and related reorganization charges —
—
—
(14 ) (14 )
Realized (gain) loss on revenue hedges (6 ) (5 ) —
—
(11 )
Operating income (loss) $ 482
$ 143
$ 38
$ (529 ) 134
Other expense, net (40 )
Income before income taxes 94
Provision for income taxes (7 )
Net income 87
Net income attributable to non-controlling interests (7 )
Net income attributable to Expedia Group, Inc. $ 80


	Six months ended June 30, 2020
	Retail		B2B		trivago		Corporate & Eliminations		Total
	(In millions)
Third-party revenue	2,045		553		118		59		$	2,775
Intersegment revenue	0		0		54		(54)		—
Revenue	$	2,045	$	553	$	172	$	5	$	2,775
Adjusted EBITDA	(181)		(102)		(17)		(212)		$	(512)
Depreciation	(264)		(66)		(6)		(40)		(376)
Amortization of intangible assets	0		0		0		(85)		(85)
Impairment of goodwill	0		0		0		(785)		(785)
Impairment of intangible assets	0		0		0		(131)		(131)
Stock-based compensation	0		0		0		(109)		(109)
Legal reserves, occupancy tax and other	0		0		0		13		13
Restructuring and related reorganization charges	0		0		0		(128)		(128)
Realized (gain) loss on revenue hedges	(27)		(3)		0		0		(30)
Operating loss	$	(472)	$	(171)	$	(23)	$	(1,477)	(2,143)
Other expense, net									(289)
Loss before income taxes									(2,432)
Provision for income taxes									295
Net loss									(2,137)
Net loss attributable to non-controlling interests									100
Net loss attributable to Expedia Group, Inc.									(2,037)
Preferred stock dividend									(17)
Net loss attributable to Expedia Group, Inc. common stockholders									$	(2,054)

Revenue by Business Model and Service Type

The following table presents revenue by business model and service type:


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(in millions)
Business Model:
Merchant	$	1,338	$	368	$	2,134	$	1,708
Agency	573		105		896		667
Advertising, media and other	200		93		327		400
Total revenue	$	2,111	$	566	$	3,357	$	2,775
Service Type:
Lodging	$	1,533	$	487	$	2,436	$	2,029
Air	78		(70)		128		39
Advertising and media	161		25		249		228
Other(1)	339		124		544		479
Total revenue	$	2,111	$	566	$	3,357	$	2,775

(1)Other includes car rental, insurance, destination services, cruise and fee revenue related to our corporate travel business, among other revenue streams, none of which are individually material. Other also includes product revenue of $20 million and $59 million during the three and six months ended June 30, 2020 related to Bodybuilding.com, which was sold in May 2020.

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Notes to Consolidated Financial Statements – (Continued)

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
(in millions)
Business Model:
Merchant $ 368
$ 1,758
$ 1,708
$ 3,193
Agency 105
1,047
667
1,889
Advertising, media and other 93
348
400
680
Total revenue $ 566
$ 3,153
$ 2,775
$ 5,762
Service Type:
Lodging $ 487
$ 2,204
$ 2,029
$ 3,893
Air (70 ) 228
39
476
Advertising and media 25
284
228
549
Other⁽¹⁾
124
437
479
844
Total revenue $ 566
$ 3,153
$ 2,775
$ 5,762

Our Retail and B2B segments generate revenue from the merchant, agency and advertising, media and other business models as well as all service types. trivago segment revenue is generated through advertising and media.

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~~Notes to Consolidated Financial Statements – (Continued)~~

~~Note 11 – Subsequent Events~~

~~Issuance of Senior Notes~~

On July 14, 2020, we privately placed $500 million of unsecured 3.600% senior notes due December 2023 (the “3.6% Notes”) and $750 million of unsecured 4.625% senior notes due August 2027 (the “4.625% Notes” and, together with the 3.6% Notes, the “3.6% and 4.625% Notes”). The 3.6% Notes were issued at a price of 99.922% of the aggregate principal amount. Interest is payable on the 3.6% Notes semi-annually in arrears in June and December of each year, beginning December 15, 2020. The 4.625% Notes were issued at a price of 99.997% of the aggregate principal amount. Interest is payable on the 4.625% Notes semi-annually in arrears in February and August of each year, beginning February 1, 2021. The 3.6% and 4.625% Notes are guaranteed by certain subsidiaries of Expedia Group. We expect to use the net proceeds to redeem outstanding shares of its 9.5% Series A Preferred Stock after May 5, 2021, when the redemption premium is scheduled to decrease. Depending on business, liquidity and other trends or conditions, however, we may elect to use all or part of the proceeds for other general corporate purposes, which may include repaying, prepaying, redeeming or repurchasing other indebtedness in lieu of or pending such redemption.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, Part I, Item 1A, “Risk Factors,” in Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on April 23, 2020, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 21, 2020, as well as those discussed ~~in the Risk Factor section and~~ elsewhere in this report. COVID-19, and the volatile regional and global economic conditions stemming from it, and additional or unforeseen effects from the COVID-19 pandemic, could also give rise to or aggravate these risk factors, which in turn could materially adversely affect our business, financial condition, liquidity, results of operations (including revenues and profitability) and/or stock price. Further, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks to our operations. 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,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “likely,” “may,” “plans,” “potential,” “predicts,” “projected,” “seeks,” “should” and “will,” or the negative of these terms or other similar expressions, 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 information included in this management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and 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, ~~2019.~~2020.

Overview

Expedia ~~Group~~Group's mission is ~~one of the world's largest~~to power global travel ~~companies.~~for everyone, everywhere. We believe travel is a force for good. Travel is an essential human experience that strengthens connections, broadens horizons and bridges divides. We help reduce the barriers to travel, making it easier, more enjoyable, more attainable and more ~~accessible, bringing~~accessible. We bring the world within reach for customers and partners around the globe. We leverage our supply portfolio, platform and technology capabilities across an extensive portfolio of ~~businesses~~consumer brands, and ~~brands~~provide solutions to our business partners, to orchestrate the movement of people and the delivery of travel experiences on both a local and global basis. We make available, on a stand-alone and package basis, travel services provided by numerous lodging properties, airlines, car rental companies, activities and experiences providers, cruise lines, alternative accommodations property owners and managers, and other travel product and service companies. We also offer travel and non-travel advertisers access to a potential source of incremental traffic and transactions through our various media and advertising offerings on our websites. For additional information about our portfolio of brands, see ~~“Portfolio of Brands”~~the disclosure set forth in Part I, Item 1, ~~“Business”,~~Business, under the caption “Management Overview” in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

All percentages within this section are calculated on actual, unrounded numbers.

Trends

The ~~widespread outbreak of the~~ COVID-19 pandemic, and measures to contain the virus, including government travel restrictions and quarantine orders, have had a significant negative impact on the travel industry. COVID-19 has ~~forced~~negatively impacted consumer sentiment and consumer’s ability to travel, and many of our supply partners, particularly airlines and hotels, continue to operate at ~~significantly~~ reduced service levels, and has negatively impacted consumer sentiment and consumers ability to travel. Our financial and operating results for the first half of 2020 were significantly impacted due to the decrease in travel demand related to COVID-19.

levels.

As the spread of the virus has been contained to varying degrees in certain countries, ~~over the past few months, some~~ travel restrictions have been lifted and consumers have become more comfortable traveling, particularly to domestic locations. This ~~has~~ led to a moderation of the declines in travel bookings and in cancellation rates ~~compared to the~~since March and April ~~2020 time period, however,~~2020. However, travel ~~booking volume remains significantly~~bookings remain below ~~prior year levels~~ and cancellation ~~levels~~rates still remain elevated compared to pre-COVID levels.

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The degree of containment of the virus, and the recovery in travel, has varied country by country. During the recovery period, there have been instances where cases of COVID-19 have started to increase again after a period of decline, which in some cases impacted the recovery of ~~travel. In addition,~~ travel in certain countries. While many countries have continued vaccinating their residents against COVID-19, the ~~degree~~large scale and challenging logistics of ~~containment~~distributing the vaccines, vaccine hesitancy, as well as uncertainty over the impact of the delta or other new variants of the virus, including the efficacy of the vaccine against such variants, may contribute to delays in economic recovery. COVID-19 has also had broader economic impacts, including an increase in unemployment levels and reduction in economic activity, which if COVID-19 starts to increase again, could lead to a reduction in consumer or business spending on travel activities, which may negatively impact the timing and level of a recovery in travel demand. Broader, sustained negative economic impacts could also put strain on our suppliers, business and service partners which increases the risk of credit losses and service level or other disruptions.

Our financial and operating results for 2020 were significantly impacted due to the decrease in travel demand related to COVID-19. While we saw sequential improvement in trends during the second quarter of 2021, the impact to the overall travel market, and our business, has ~~varied country to country. We expect that to remain the case in the near-term. Overall, the~~continued. The full duration and total impact of COVID-19 remains uncertain and it is difficult to predict how the recovery will unfold for the travel industry and, in particular, our business.

COVID-19 has also had broader economic impacts, including a significant increase in unemployment levels and reduction in economic activity, which could lead to a recession, and further reduction in consumer or business spending on travel activities, which may negatively impact the timing and level of a recovery in travel demand. Additionally, further health-related events, political instability, geopolitical conflicts, acts of terrorism, significant fluctuations in currency values, sovereign debt issues, and natural disasters, are examples of other events that could have a negative impact on the travel industry in the future.

Prior to the onset of COVID-19, we began to execute a cost savings initiative aimed at simplifying the organization and increasing efficiency. Following the onset of COVID-19, we accelerated execution on several of these cost savings initiatives and took additional actions to reduce costs to help mitigate the impact to demand from COVID-19 and reduce our monthly cash usage. While some cost actions during COVID-19 are temporary and intended to minimize cash usage during this disruption, we expect to continue to benefit from the majority of the savings when business conditions return to more normalized levels. Overall, we ~~now~~continue to expect ~~to exceed $500 million in~~ annualized run-rate fixed cost savings of $700 to $750 million compared to the fourth quarter of 2019 exit rate, and we continue to evaluate additional opportunities to increase efficiency and improve operational effectiveness across the Company. In addition to the actions to reduce fixed costs, we are executing initiatives to reduce certain variable costs and improve our marketing efficiency.

As a result of ~~the~~these cost savings ~~effort launched prior to COVID-19 and additional cost reductions during COVID-19 that we expect to remain in place,~~initiatives, we expect Adjusted EBITDA margins to increase compared to historical levels when revenue returns to more normalized levels.

~~Lodging~~

Lodging includes hotel accommodations and alternative accommodations. As a percentage of our total worldwide revenue in the first six months of 2020, lodging accounted for 73%. As a result of the COVID-19 outbreak and impact on travel demand, room nights declined 81% in the second quarter of 2020, and 51% in the first six months of 2020. Many hotel partners were forced to shut a number of properties due to the virus, and some remain closed. The timing of hotel operations returning to normal levels, and recovery in consumer sentiment on staying at hotels will be a factor in our level of room night growth, and as noted above, we expect that to vary by country. Average Daily Rates (“ADRs”) for rooms booked on Expedia Group websites increased 1% in the second quarter and was flat in the first half of 2020. During the second quarter of 2020, ADRs for our Vrbo business increased year-over-year at a higher rate than in prior quarters and Vrbo accounted for a higher percentage of room nights due to the faster recovery in alternative accommodations during this period. This was offset by declines in hotel ADRs.

The uncertain environment related to COVID-19, and the potential for a higher degree of discounting activity due to the lower travel demand, could result in continued hotel ADR declines for a period of time. Similarly, fluctuations in supply and demand for alternative accommodations, could impact ADRs for Vrbo. In addition, travel restrictions and shift in consumer behavior during COVID-19 that impact the mix of our lodging bookings across geographies and types of accommodations could impact total ADRs. Given these dynamics, it is difficult to predict ADR trends in the near-term.

~~Hotel.~~ We generate the majority of our revenue through the facilitation of hotel reservations (stand-alone and package bookings). After rolling out Expedia Traveler Preference (“ETP”) globally over a period of several years, during which time we reduced negotiated economics in certain instances to compensate for hotel supply partners absorbing expenses such as credit card fees and customer service costs, our relationships and overall economics with hotel supply partners have been broadly stable in recent years. As we continue to expand the breadth and depth of our global hotel offering, in some cases we have reduced our economics in various geographies based on local market conditions. These impacts are due to specific initiatives intended to drive greater global size and scale through faster overall room night growth. Additionally, increased promotional activities such as growing loyalty programs contribute to declines in revenue per room night and profitability.

United States are at historically low levels and ADRs could decline for a period of time. In addition, other factors could pressure ADR trends, including the continued growth in hotel supply in recent years and the increase in alternative accommodation inventory. Further, while the global lodging industry remains very fragmented, there has been consolidation in the hotel space among chains as well as ownership groups. In the meantime, certain hotel chains have been focusing on driving direct bookings on their own websites and mobile applications by advertising lower rates than those available on third-party websites as well as incentives such as loyalty points, increased or exclusive product availability and complimentary Wi-Fi.

We have continued to add supply to our global lodging marketplace with over 1.7 million properties on our global websites as of June 30, 2020, including over 805,000 integrated Vrbo alternative accommodations listings.

~~Alternative Accommodations.~~ With our acquisition of Vrbo (previously HomeAway) and all of its brands in December 2015, we expanded into the fast growing alternative accommodations market. Vrbo is a leader in this market and represents an attractive growth opportunity for Expedia Group. Vrbo has transitioned from a listings-based classified advertising model to an online transactional model that optimizes for both travelers and homeowner and property manager partners, with a goal of increasing monetization and driving growth through investments in marketing as well as in product and technology. Vrbo offers hosts subscription-based listing or pay-per-booking service models. It also generates revenue from a traveler service fee for bookings. As of June 30, 2020, there are over 2.1 million online bookable listings available on Vrbo. In addition, we have actively moved to integrate Vrbo listings into our global Retail services, as well as directly add alternative accommodation listings to our offerings, to position our key global brands to offer a full range of lodging options for consumers.

~~Air~~

The airline industry has been dramatically impacted by COVID-19. As a result of the significantly reduced air travel demand due to government travel restrictions and the impact on consumer sentiment related to COVID-19, airlines have been operating with less capacity and passenger traffic has declined significantly. As some travel restrictions were lifted during the second quarter of 2020, air passenger traffic declines moderated, but to a lesser degree than lodging bookings. The recovery in air travel remains difficult to predict, and may not correlate with the recovery in lodging demand. According to the Transportation Security Administration (“TSA”), air traveler 7-day average throughput declined approximately 95% in April 2020 compared to prior year levels and have since moderated to down approximately 73% as of mid-July 2020. In addition, the International Air Transport Association (“IATA”) currently expects airline passenger traffic to decline 55% in 2020 compared to 2019 levels. For 2021, IATA estimates traffic to increase 62% compared to 2020, representing a decline of nearly 30% compared to 2019 levels.

In addition, there is significant correlation between airline revenue and fuel prices, and fluctuations in fuel prices generally take time to be reflected in air revenue. Given current volatility, it is uncertain how fuel prices could impact airfares. We could encounter pressure on air remuneration as air carriers combine, certain supply agreements renew, and as we continue to add airlines to ensure local coverage in new markets.

Air ticket volumes increased 5% in 2018 and 7% in 2019. In the first half of 2020, air ticket volumes declined 55%. As a percentage of our total worldwide revenue in the first half of 2020, air accounted for 1%.

~~Advertising & Media~~

Our advertising and media business is principally driven by revenue generated by trivago, a leading hotel metasearch website, and Expedia Group Media Solutions, which is responsible for generating advertising revenue on our global online travel brands. In the first half of 2020, we generated $228 million of advertising and media revenue, a 58% decline from the same period in 2019, representing 8% of our total worldwide revenue. Given the decline in travel demand related to COVID-19, online travel agencies have dramatically reduced marketing spend, including on trivago, and given the uncertain duration and impact of COVID-19 it is difficult to predict when spend will recover. In response, trivago has significantly reduced its marketing spend and taken additional actions to lower operating expenses. We expect trivago to continue to experience significant pressure on revenue and profit until online travel agencies and other hotel suppliers begin to see consumer demand that warrants an increase in marketing spend.

Online Travel

Increased usage and familiarity with the internet are driving rapid growth in online penetration of travel expenditures. According to Phocuswright, an independent travel, tourism and hospitality research firm, in 2019, approximately ~~45%~~49% of U.S., European and ~~European~~Latin American leisure and unmanaged corporate travel expenditures occurred online. ~~This~~As of January 2021, this figure was estimated to reach approximately ~~50%~~53% in ~~2020, prior to the outbreak of COVID-19.~~2022. Online penetration rates in the emerging markets, such as Asia Pacific and Latin American regions, ~~are lagging~~have historically lagged behind that of the United States and Europe. These penetration rates increased over the past few years, and are expected to continue growing, which presents an attractive growth opportunity for our business, while also attracting many competitors to online travel. This competition intensified in recent years, and the industry is expected to remain highly competitive for the foreseeable future. In addition to the growth of online travel agencies, we see

increased interest in the online travel industry from search engine companies such as Google, evidenced by continued product enhancements, including new trip planning features for users and the integration of its various travel products into the Google Travel offering, as well as further prioritizing its own products in search results. Competitive entrants such as “metasearch” companies, including Kayak.com (owned by Booking Holdings), trivago (in which Expedia Group owns a majority interest) as well as TripAdvisor, introduced differentiated features, pricing and content compared with the legacy online travel agency companies, as well as various forms of direct or assisted booking tools. Further, airlines and lodging companies are aggressively pursuing direct online distribution of their products and services. In addition, the increasing popularity of the “sharing economy,” accelerated by online penetration, has had a direct impact on the travel and lodging industry. Businesses such as Airbnb, Vrbo (previously HomeAway, which Expedia Group acquired in December 2015) and Booking.com (owned by Booking Holdings) have emerged as the leaders, bringing incremental alternative accommodation and vacation rental inventory to the market. Many other competitors, including vacation rental metasearch players, continue to emerge in this space, which is expected to continue to grow as a percentage of the global accommodation market. Finally, traditional consumer ecommerce and group buying websites expanded their local offerings into the travel market by adding hotel offers to their websites.

The online travel industry also saw the development of alternative business models and variations in the timing of payment by travelers and to suppliers, which in some cases place pressure on historical business models. In particular, the agency hotel model saw rapid adoption in Europe. Expedia Group facilitates both merchant (Expedia Collect) and agency ~~(Hotel~~

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(Hotel Collect) hotel offerings with our hotel supply partners through both agency-only contracts as well as our hybrid ~~ETP~~Expedia Traveler Preference (“ETP”) program, which offers travelers the choice of whether to pay Expedia Group at the time of booking or pay the hotel at the time of stay.

~~We have recently~~In 2020, we shifted to managing our marketing investments holistically across the brand portfolio in our Retail segment to optimize results for the Company, and making decisions on a market by market and customer segment basis that we think are appropriate based on the relative growth opportunity, the expected returns and the competitive environment. Over time, intense competition historically led to aggressive marketing efforts by the travel suppliers and intermediaries, and a meaningful unfavorable impact on our overall marketing efficiencies and operating margins. During 2020, we ~~have~~ increased our focus on opportunities to differentiate brands across customer and geographic segments, increase marketing efficiency, drive a higher proportion of transactions through direct channels and ultimately improve the balance of transaction growth and profitability.

~~Growth Strategy~~Lodging

~~Global Expansion.~~ ~~Our Brand~~Lodging includes hotel accommodations and alternative accommodations. As a percentage of our total worldwide revenue in the second quarter of 2021, lodging accounted for 73%. As a result of the improvement in travel demand, stayed room nights grew 196% in the second quarter of 2021 and 6% in the first half of 2021, as compared to a decline of 55% in 2020 and growth of 11% in 2019. The timing of a further recovery in consumer sentiment on travel and on staying at hotels will be a factor in our level of room night growth, and as noted above, we expect that to vary by country. Average Daily Rates (“ADRs”) for rooms booked on Expedia ~~Hotels.com,~~Group websites decreased 1% in 2019, increased 3% in 2020 and increased 18% in the first half of 2021. During 2020 and the first half of 2021, the year-over-year increase in ADRs for our Vrbo ~~portfolio, Expedia Partner Solutions~~business remained elevated compared to years prior to the COVID-19 outbreak. Vrbo carries a higher ADR than hotels and ~~Egencia brands operate both domestically~~has accounted for a higher percentage of room nights due to the faster recovery in alternative accommodations during this period.

The uncertain environment related to COVID-19, and ~~through international points~~the potential for a higher degree of ~~sale, including~~discounting activity due to the lower travel demand, could result in ~~Europe, Asia Pacific, Canada~~variations in hotel ADR declines for a period of time. Similarly, fluctuations in supply and ~~Latin America.~~demand for alternative accommodations, could impact ADRs for Vrbo. In addition, ~~ebookers offers multi-product~~travel restrictions and shift in consumer behavior during COVID-19 that impact the mix of our lodging bookings across geographies and types of accommodations could impact total ADRs. Given these dynamics, it is difficult to predict ADR trends in the near-term.

As of June 30, 2021, our global lodging marketplace had approximately 3 million lodging properties available, including over 2 million online bookable alternative accommodations listings and approximately 885,000 hotels.

Hotel. We generate the majority of our revenue through the facilitation of hotel reservations (stand-alone and package bookings). After rolling out ETP globally over a period of several years, during which time we reduced negotiated economics in certain instances to compensate for hotel supply partners absorbing expenses such as credit card fees and customer service costs, our relationships and overall economics with hotel supply partners have been broadly stable in recent years. As we continue to expand the breadth and depth of our global hotel offering, in some cases we have reduced our economics in various geographies based on local market conditions. These impacts are due to specific initiatives intended to drive greater global size and scale through faster overall room night growth. Additionally, increased promotional activities such as growing loyalty programs contribute to declines in revenue per room night and profitability.

Since our hotel supplier agreements are generally negotiated on a percentage basis, any increase or decrease in ADRs has an impact on the revenue we earn per room night. Over the course of the last several years, occupancies and ADRs in the lodging industry generally increased on a currency-neutral basis in a gradually improving overall travel ~~reservations~~environment. However, due to COVID-19, current occupancy rates for hotels in ~~Europe~~the United States are at reduced levels. In addition, other factors could pressure ADR trends, including the continued growth in hotel supply in recent years and the ~~Wotif portfolio~~increase in alternative accommodation inventory. Further, while the global lodging industry remains very fragmented, there has been consolidation in the hotel space among chains as well as ownership groups. In the meantime, certain hotel chains have been focusing on driving direct bookings on their own websites and mobile applications by advertising lower rates than those available on third-party websites as well as incentives such as loyalty points, increased or exclusive product availability and complimentary Wi-Fi.

Alternative Accommodations.With our acquisition of Vrbo (previously HomeAway) and all of its brands ~~are focused principally on~~in December 2015, we expanded into the ~~Australia~~fast growing alternative accommodations market. Vrbo is a leader in this market and ~~New Zealand markets. We own~~represents an attractive growth opportunity for Expedia Group. Vrbo has transitioned from a ~~majority share~~listings-based classified advertising model to an online transactional model that optimizes for both travelers and homeowner and property manager partners, with a goal of ~~trivago,~~increasing monetization and driving growth through investments in marketing as well as in product and technology. Vrbo offers hosts subscription-based listing or pay-per-booking service models. It also generates revenue from a ~~leading metasearch company. In December 2016, trivago successfully completed its initial public offering and trades on the Nasdaq Global Select Market under the symbol “TRVG.”~~traveler service fee for bookings. In addition, we have ~~commercial agreements in place with Trip.com and eLong in China, Traveloka in Southeast Asia,~~actively moved to integrate Vrbo listings into our global Retail services, as well as ~~Despegar~~directly add alternative accommodation listings to our offerings, to position our key global brands to offer a full range of lodging options for consumers.

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Air

The airline industry has been dramatically impacted by COVID-19. As a result of the significantly reduced air travel demand due to government travel restrictions and the impact on consumer sentiment related to COVID-19, airlines have been operating with less capacity and passenger traffic has declined significantly. During the third and fourth quarter of 2020, air passenger traffic declines further moderated and remained stable, but continue to lag the recovery in ~~Latin America, among many others. In conjunction~~lodging bookings. The recovery in air travel remains difficult to predict, and may not correlate with the ~~commercial arrangements with Traveloka~~recovery in lodging demand. According to the Transportation Security Administration (“TSA”), air traveler 7-day average throughput declined 95% in April 2020 compared to prior year levels. The declines moderated to 60 to 65% in mid-October 2020 and, ~~Despegar,~~as of mid-July 2021, further moderated to down 20 to 25% compared to 2019 levels.

In addition, there is significant correlation between airline revenue and fuel prices, and fluctuations in fuel prices generally take time to be reflected in air revenue. Given current volatility, it is uncertain how fuel prices could impact airfares. We could encounter pressure on air remuneration as air carriers combine, certain supply agreements renew, and as we ~~have also made strategic investments~~continue to add airlines to ensure local coverage in ~~both companies. In~~new markets.

Air ticket volumes increased 299% during the second quarter of 2021 and 6% in first half of 2021 compared to a decline of 63% in 2020 ~~approximately 36%~~and an increase of 7% in 2019. As a percentage of our total worldwide revenue ~~was through international points~~in the second quarter of ~~sale.~~ 2021, air accounted for 4%.

Advertising & Media

Our ~~strategy~~advertising and media business is ~~focused~~principally driven by revenue generated by trivago, a leading hotel metasearch website, and Expedia Group Media Solutions, which is responsible for generating advertising revenue on ~~continuing~~our global online travel brands. In the second quarter of 2021, we generated $161 million of advertising and media revenue, a 539% increase from the same period in 2020, representing 8% of our total worldwide revenue. Given the decline in travel demand related to COVID-19, online travel agencies dramatically reduced marketing spend, including on trivago, and given the uncertain duration and impact of COVID-19 it is difficult to predict when spend will recover to normalized levels. In response, in 2020, trivago significantly reduced its marketing spend and took additional actions to lower operating expenses. We expect trivago to continue to experience pressure on revenue and profit until online travel agencies and other hotel suppliers begin to see consumer demand that warrants an increase in their advertising spend with trivago.

Business Strategy

As we endeavor to power global travel for everyone, everywhere our focus is to: leverage our brand and supply strength, and our platform, to provide greater services and value to our travelers, suppliers and business partners, and generate sustained, profitable growth.

Leverage Brand and Supply Strength. We believe the strength of our brand portfolio and enhancements to product and service offerings, which when combined with our global scale and broad based supply, drive increasing value to customers and customer demand. With our significant global audience of travelers, and our deep and broad selection of travel products, there is a rich interplay between supply and demand in our global marketplace that helps us provide value to both travelers planning trips and supply partners wanting to grow ~~our international market share,~~their business through a better understanding of travel retailing and ~~over the longer term we aim~~consumer demand in addition to ~~increase our mix of international revenue as we execute to strengthen our brands~~reaching consumers in markets beyond their reach. Our multi-brand strategy and ~~products in key international markets.~~

~~In expanding our global reach, we leverage significant investments in technology, operations, brand building, supplier relationships~~deep product and other initiatives that we have made since the launch of Expedia.com in 1996. More recently, we have invested in migrating parts of our technology platform to the cloud, as well as focused on expanding our lodging supply particularly in key international markets. Our scale of operations enhances the value of technology innovations we introduce on behalf of our travelers and suppliers. We believe that our size and scale afford the company the ability to negotiate competitive rates with our supply partners, provide breadth of choice and travel deals to our traveling customers through an expanding supply portfolio and create opportunities for new value added offers for our customers such as our loyalty programs. The size of Expedia Group’s worldwide traveler base makes our websites an increasingly appealing channel for travel suppliers to reach customers. In addition, the sheer size of our user base and search query volumefootprint allows us to ~~test~~tailor offerings to target different types of consumers and travel needs, employ geographic segmentation in markets around the world, and leverage brand differentiation, among other benefits. Additionally, we know that consumers typically visit multiple travel websites prior to booking travel, and having a multi-brand strategy increases the likelihood that those consumers will visit one or more of our websites. We also market to consumers through a variety of channels, including internet search, metasearch and social media websites, and having multiple brands appear in search results also increases the likelihood of attracting new ~~technologies very quickly~~visitors.

Leverage Our Platform.During 2020, Expedia Group shifted to ~~determine which innovations~~a platform operating model with more centralized technology, product, data engineering and data science teams building services and capabilities that are ~~most likely~~leveraged across our business units to ~~improve the travel research~~serve our end customers and ~~booking process, and then roll those features out~~provide value-add services to our ~~worldwide audience to drive improvements in conversion.~~

~~Product Innovation.~~ ~~Each of our leading brands was a pioneer in online~~ travel and has been responsible for driving key innovations in the space for more than two decades. We have made key investments in technology, including significant development of our technical platforms, that make it possible forsuppliers. This model enables us to deliver ~~innovations at a faster pace. Improvements in~~more scalable services and operate more efficiently. All of our ~~global platforms for Hotels.com, Brand Expedia~~transaction-based businesses share and ~~Vrbo~~benefit from our platform infrastructure, including customer servicing and support, data centers, search capabilities and transaction processing functions, including payment processing and fraud operations.

As we continue to evolve our platform infrastructure, our focus is on developing technical capabilities that support various travel products while using common applications and frameworks. We believe this strategy will enable us ~~to significantly increase the innovation cycle, thereby improving conversion~~to: build in parallel because of simpler, standard architecture; ship products faster; create more innovative solutions; and ~~driving faster growth rates for those brands. Since 2014,~~achieve greater

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scale. Over time, as we ~~have acquired Travelocity, Wotif Group~~enable domains around application development frameworks, we believe we can unlock additional platform service opportunities beyond our internal brands and ~~Orbitz Worldwide, including Orbitz, CheapTickets and ebookers, and migrated their brands to the Brand~~

Expedia technology platform. In addition, Orbitz for Business customers were migrated to the Egencia technology platform in 2016. We intend to continue leveraging these technology investments when launching additional points of sale in new countries, introducing new website features, adding supplier products and services including newother business ~~model offerings, as well as proprietary and user-generated content for travelers.~~

~~Channel Expansion.~~travel partners. Technological innovations and developments continue to create new opportunities for travel bookings. In the past few years, each of our brands made significant progress innovating on its mobile websites and mobile applications, contributing to solid download trends, and many of our brands now see more traffic via mobile devices than via traditional PCs and an increasing percentage of transactions are coming through mobile. Mobile bookings continue to present an opportunity for incremental growth as they are often completed with a much shorter booking window than we historically experienced via more traditional online booking methods. Additionally, our brands are implementing new technologies like voice-based search, chatbots and messaging apps as mobile-based options for travelers. In addition, we are seeing significant cross-device usage among our customers, who connect to our websites and apps across multiple devices and platforms throughout their travel planning process. We also believe mobile represents an efficient marketing channel given the opportunity for direct traffic acquisition, increase in share of wallet and in repeat customers, particularly through mobile applications. During 2019, more than 40% of transactions across Expedia Group’s Retail brands were booked on a mobile device.

Seasonality

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they require that we use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance with generally accepted accounting principles in the United States (“GAAP”). Preparation of the consolidated financial statements and accompanying notes requires that we 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. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.

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

•It requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the time we were making the estimate; and

•Changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations.

~~Recoverability of Goodwill and Indefinite and Definite-Lived Intangible Assets~~

~~Goodwill~~. We assess goodwill for impairment annually as of October 1, or more frequently, if events and circumstances indicate impairment may have occurred. During the first quarter of 2020, as a result of the significant turmoil related to COVID-19, we concluded that sufficient indicators existed to require us to perform an interim impairment assessment. In addition, during the second quarter of 2020, due to a recent decision to streamline operations for a smaller brand within our Retail segment, we performed another targeted interim impairment assessment. In the evaluation of goodwill for impairment, we typically perform a quantitative assessment and compare the fair value of the reporting unit to the carrying value and, if applicable, record an impairment charge based on the excess of the reporting unit's carrying amount over its fair value. Periodically, we may choose to perform a qualitative assessment, prior to performing the quantitative analysis, to determine whether the fair value of the goodwill is more likely than not impaired.

We generally base our measurement of fair value of reporting units, except for trivago, which is a separately listed company on the Nasdaq Global Select Market, on a blended analysis of the present value of future discounted cash flows and market valuation approach. The discounted cash flows model indicates the fair value of the reporting units based on the present value of the cash flows that we expect the reporting units to generate in the future. Our significant estimates in the discounted cash flows model include: our weighted average cost of capital; long-term rate of growth and profitability of our business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the Company to comparable publicly traded firms in similar lines of business. Our significant estimates in the market approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting units. The fair value estimate for our trivago reporting unit is based on trivago’s stock price, a Level 1 input, adjusted for an estimated control premium.

We believe the weighted use of discounted cash flows and market approach is generally the best method for determining the fair value of our reporting units because these are the most common valuation methodologies used within the travel and internet industries; and the blended use of both models compensates for the inherent risks associated with either model if used on a stand-alone basis.

In addition to measuring the fair value of our reporting units as described above, we consider the combined carrying and fair values of our reporting units in relation to the Company’s total fair value of equity plus debt as of the assessment date. Our equity value assumes our fully diluted market capitalization, using either the stock price on the valuation date or the average stock price over a range of dates around the valuation date, plus an estimated acquisition premium which is based on observable transactions of comparable companies. The debt value is based on the highest value expected to be paid to repurchase the debt, which can be fair value, principal or principal plus a premium depending on the terms of each debt instrument.

~~Indefinite-Lived Intangible Assets~~. We base our measurement of fair value of indefinite-lived intangible assets, which primarily consist of trade name and trademarks, using the relief-from-royalty method. This method assumes that the trade name and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.

~~Definite-Lived Intangible Assets.~~ We review the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, we would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, we will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset groups carrying amount and its estimated fair value.

The use of different estimates or assumptions in determining the fair value of our goodwill, indefinite-lived and definite-lived intangible assets may result in different values for these assets, which could result in an impairment or, in the period in

~~which an impairment is recognized, could result in a materially different impairment charge.~~

~~For additional information on our goodwill and intangible asset impairments recorded as a result of our interim impairment testing during the first six months of 2020, see~~ ~~Note 3 – Fair Value Measurementsin the notes to the consolidated financial statements.~~

For additional information about our other critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 as well as updates in the current fiscal year provided in Note 2 – Summary of Significant Accounting Policies in the notes to the consolidated financial statements.

Occupancy and Other Taxes

Legal Proceedings. We are currently involved in ~~eight~~ten lawsuits brought by or against states, cities and counties over issues involving the payment of hotel occupancy and other taxes. We continue to defend these lawsuits vigorously. With respect to the principal claims in these matters, we believe that the statutes and/or ordinances at issue do not apply to us or the services we

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provide, namely the facilitation of travel planning and reservations, and, therefore, that we do not owe the taxes that are claimed to be owed. We believe that the statutes and ordinances at issue generally impose occupancy and other taxes on entities that own, operate or control hotels (or similar businesses) or furnish or provide hotel rooms or similar ~~accommodations.~~accommodations

~~Recent developments include:~~


•	~~City of San Antonio, Texas Litigation.~~ On July 6, 2020, the United States Fifth Circuit Court of Appeals denied plaintiffs’ petition for rehearing en banc of the decision affirming the district court’s award of over $2 million in appeal bond costs against the city.


•	~~Palm Beach, Florida Litigation.~~ The Florida Fourth District Court of Appeals denied the plaintiff’s motions for rehearing, rehearing en banc and certification to the Florida Supreme Court as to the non-HomeAway defendants on June 3, 2020. On July 1, 2020, the plaintiff filed a notice to invoke discretionary jurisdiction of the Florida Supreme Court.

For additional information on these and other legal proceedings, see Part II, Item 1, Legal Proceedings.

We have established a reserve for the potential settlement of issues related to hotel occupancy and other tax litigation, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of ~~$59~~$48 million as of June 30, ~~2020,~~2021, and ~~$48~~$58 million as of December 31, ~~2019.~~2020.

Certain jurisdictions, including without limitation the states of New York, New Jersey, North Carolina, Minnesota, Oregon, Rhode Island, Maryland, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas, Indiana, Maine, Nebraska, Vermont, the city of New York, and the District of Columbia, have enacted legislation seeking to tax online travel company services as part of sales or other taxes for hotel and/or other accommodations and/or car rental. In addition, in certain jurisdictions, we have entered into voluntary collection agreements pursuant to which we have agreed to voluntarily collect and remit taxes to state and/or local taxing jurisdictions. We are currently remitting taxes to a number of jurisdictions, including without limitation the states of New York, New Jersey, South Carolina, North Carolina, Minnesota, Georgia, Wyoming, West Virginia, Oregon, Rhode Island, Montana, Maryland, Kentucky, Maine, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas, Indiana, Nebraska, Vermont, the city of New York and the District of Columbia, as well as certain other jurisdictions.

Pay-to-Play

Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as “pay-to-play.” Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest. However, any significant pay-to-play payment or litigation loss could negatively impact our liquidity.

Other Jurisdictions.We are also in various stages of inquiry or audit with ~~domestic and foreign~~various tax authorities, some of which, including the City of Los Angeles regarding hotel occupancy taxes, ~~and the United Kingdom regarding the application of value added tax (“VAT”) to our European Union related transactions,~~ may impose a pay-to-play requirement to challenge an adverse inquiry or audit result in court.

Segments

~~Beginning in the first quarter of 2020, we~~We have the following reportable segments: Retail, B2B, and trivago. Our Retail segment provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, CarRentals.com ~~CruiseShipCenters, Classic Vacations~~ and ~~SilverRail Technologies, Inc.~~Expedia Cruises. Our B2B segment is comprised of our Expedia Business Services organization including Expedia Partner Solutions, which ~~operates~~offers private label and co-branded ~~programs~~products to make travel services available to ~~leisure~~ travelers through third-party company branded websites, and Egencia, a full-service travel management company that provides travel services to businesses and their corporate customers. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites.

Operating Metrics

Our operating results are affected by certain metrics, such as gross bookings and revenue margin, which we believe are necessary for understanding and evaluating us. Gross bookings generally represent the total retail value of transactions booked for agency and merchant transactions, recorded at the time of booking reflecting the total price due for travel by travelers, including taxes, fees and other charges, and are reduced for cancellations and refunds. As travelers have increased their use of the internet to book travel arrangements, we have generally seen our gross bookings increase, reflecting the growth in the online travel industry, our organic market share gains and our business acquisitions. Revenue margin is defined as revenue as a percentage of gross bookings.

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Gross Bookings and Revenue Margin


	Three months ended June 30,								Six months ended June 30,									Three months ended June 30,								Six months ended June 30,
	2020			2019			% Change		2020			2019			% Change			2021			2020			% Change		2021			2020			% Change
	($ in millions)								($ in millions)									($ in millions)								($ in millions)
Gross bookings	$	2,713		$	28,292		(90	)%	$	20,598		$	57,701		(64	)%	Gross bookings	$	20,815		$	2,713		667	%	$	36,237		$	20,598		76	%
Revenue margin ⁽¹⁾	20.9		%	11.1		%			13.5		%	10.0		%			Revenue margin (1)	10.1		%	20.9		%			9.3		%	13.5		%

(1)trivago, which is comprised of a hotel metasearch business that differs from our transaction-based websites, does not have associated gross bookings or revenue margin. However, third-party revenue from trivago is included in revenue used to calculate total revenue margin.

During the three and six months ended June 30, ~~2020,~~2021, gross bookings ~~decreased 90%~~increased 667% and ~~64%~~76%, ~~respectively,~~ compared to the same periods in ~~2019, resulting~~2020. Booking trends for our lodging, air and other travel products all improved sequentially from the ~~impacts~~first quarter of ~~the COVID-19 pandemic.~~

In January 2020, gross bookings growth was positive, as COVID-19 modestly impacted results, with the virus largely limited to the Asia Pacific region. In February 2020, gross bookings declined year-over-year as the virus spread, particularly into Europe by later in the month. During March 2020, with COVID-19 becoming a global pandemic, including significantly impacting North America, our largest region, cancellations exceeded new bookings, and total gross bookings were negative for the month.

In April 2020, as COVID-19 spread globally, cancellations exceeded new bookings, and, as a result, total gross bookings were negative for the month. Subsequently, as the virus was contained to varying degrees in certain countries and certain travel restrictions were lifted, the decline in new bookings slowed and cancellation rates moderated. Gross bookings turned positive in May 2020 and the year-over-year decline moderated further in June 2020, led by growth at Vrbo, Expedia Group's alternative accommodation business.2021.

Revenue margin for the three and six months ended June 30, 2020 was higher than in the ~~prior period~~current periods due in part to ~~the~~ significant lodging cancellations in the prior year periods, which reduced gross bookings, creating an unusual mix of bookings and ~~revenue in the quarter. Current period revenue margins are not indicative of our future expectations.~~revenue.

Results of Operations


	Three months ended June 30,						Six months ended June 30,
	2021		2020		% Change		2021		2020		% Change
	($ in millions)						($ in millions)
Revenue by Segment
Retail	$	1,715	$	463	270	%	$	2,740	$	2,045	34	%
B2B	305		68		348	%	489		553		(11)	%
trivago (Third-party revenue)	91		15		509	%	128		118		8	%
Corporate (Bodybuilding.com)	—		20		N/A		—		59		N/A
Total revenue	$	2,111	$	566	273	%	$	3,357	$	2,775	21	%

Three months ended June 30, Six months ended June 30,
2020 2019 % Change 2020 2019 % Change
($ in millions) ($ in millions)
Revenue by Segment
Retail $ 463
$ 2,333
(80 )% $ 2,045
$ 4,234
(52 )%
B2B 68
657
(90 )% 553
1,213
(54 )%
trivago (Third-party revenue) 15
163
(91 )% 118
315
(63 )%
Corporate (Bodybuilding.com) 20
—
N/A
59
—
N/A
Total revenue $ 566
$ 3,153
(82 )% $ 2,775
$ 5,762
(52 )%

Revenue ~~decreased 82%~~increased 273% and ~~52%~~21% for the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019. Revenue grew for both January~~2020. Our Retail, B2B and ~~February 2020 before significantly declining year-over-year in March 2020. In the second quarter of 2020,~~trivago segments revenue ~~declined significantly year-over-year in both April and May 2020, and the decline moderated in June 2020 due to the improved trends~~all increased in the ~~lodging business.~~quarter. The growth in revenue largely reflected continued improvement in leisure travel trends during the quarter.


	Three months ended June 30,						Six months ended June 30,
	2021		2020		% Change		2021		2020		% Change
	($ in millions)						($ in millions)
Revenue by Service Type
Lodging	$	1,533	$	487	215	%	$	2,436	$	2,029	20	%
Air	78		(70)		N/A		128		39		221	%
Advertising and media(1)	161		25		539	%	249		228		9	%
Other	339		124		174	%	544		479		14	%
Total revenue	$	2,111	$	566	273	%	$	3,357	$	2,775	21	%

____________________________

(1)

Three months ended June 30, Six months ended June 30,
2020 2019 % Change 2020 2019 % Change
($ in millions) ($ in millions)
Revenue by Service Type
Lodging $ 487
$ 2,204
(78 )% $ 2,029
$ 3,893
(48 )%
Air (70 ) 228
N/A
39
476
(92 )%
Advertising and media⁽¹⁾
25
284
(91 )% 228
549
(58 )%
Other 124
437
(72 )% 479
844
(43 )%
Total revenue $ 566
$ 3,153
(82 )% $ 2,775
$ 5,762
(52 )%

~~____________________________~~Includes third-party revenue from trivago as well as our transaction-based websites.

Lodging revenue ~~decreased 78%~~increased 215% and ~~48%~~20% for the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, on ~~an 81%~~a 196% and ~~51% decrease~~6% increase in room nights stayed ~~in the respective periods, partially offset by~~and a ~~15%~~7% and 6%13% increase in revenue per room night. For the three months ended June 30, 2021, revenue per room night benefited from higher ADRs driven by an increase in regional rates and a higher mix of U.S. hotels. Revenue per room night also benefited in the ~~respective periods.~~six months ended June 30, 2021 from an

increase in the percentage of stayed room nights contributed by alternative accommodations, which generate a higher revenue per room night than the other lodging products.

Air revenue, which is recognized when booked net of an estimate of cancellations, was negative in the second quarter of 2020 due to several revenue offsets that ~~exceed~~exceeded new booked revenue in the prior year quarter. The negative impacts to revenue included significantly elevated cancellations, which were higher than estimated cancellations of previous period bookings, higher than previously anticipated cash refunds to customers for certain cancellations, as well as a reduction to previously estimated and recognized volume-based revenues due to lower ticket volumes. Air tickets sold declined 85%, in the second quarter of 2020, reflecting the adverse impact of COVID-19 on demand for air travel. Air revenue ~~declined 92% for the six months ended June 30, 2020, compared to the same period in 2019, reflecting the adverse impact of COVID-19 on air travel.~~

~~Advertising and media revenue decreased 91% and 58%~~increased for the three and six months ended June 30, ~~2020,~~2021 driven by an increase in air tickets sold of 299% and 6% as air travel demand improved.

Advertising and media revenue increased 539% and 9% for the three and six months ended June 30, 2021, compared to the same periods in ~~2019,~~2020, due to ~~declines~~increases at both trivago and Expedia Group Media Solutions. All other revenue, which includes car rental, insurance, destination services, fee revenue related to our corporate travel business and Bodybuilding.com ~~(during the period of our ownership of July 2019 to~~(through its sale in May 2020), ~~decreased 72%~~increased 174% and ~~43%~~14% for the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019. The decline~~2020 from growth in ~~all other revenue was more modest than the decrease in total revenue mainly due to the inorganic benefit related to Bodybuilding.com.~~

car as well as travel insurance products.

In addition to the above segment and product revenue discussion, our revenue by business model is as follows:

Merchant revenue ~~decreased~~increased for the three months ended June 30, 2021, compared to the same period in 2020, primarily due to an increase in merchant hotel revenue driven by an increase in room nights stayed as well as an increase in Vrbo merchant alternative accommodations revenue. Merchant revenue increased for the six months ended June 30, 2021, compared to the same period in 2020, primarily due to an increase in Vrbo merchant alternative accommodations revenue, partially offset by a decline in merchant hotel revenue.

Agency revenue increased for the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, primarily due to ~~the decrease in merchant hotel revenue driven by a decrease in room nights stayed, partially offset by~~ an increase in ~~Vrbo merchant alternative accommodations~~agency hotel, air and car revenue.

~~Agency revenue decreased~~Advertising, media and other increased for the three ~~and six~~ months ended June 30, ~~2020,~~2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to ~~the decline~~an increase in ~~agency hotel and air as well as Vrbo agency alternative accommodations~~advertising revenue.

Advertising, media and other decreased for the ~~three and~~ six months ended June 30, ~~2020,~~2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily due to declines ~~in advertising revenue,~~related to our prior year sale of Bodybuilding.com, partially offset by an increase in advertising revenue.

In the ~~inorganic impact~~below discussion, we reclassified certain prior period information to conform to the current period presentation primarily related to the classification of ~~Bodybuilding.com.~~licensing and maintenance costs within our operating expenses. For additional information, see Note 1 – Basis of Presentation in the notes to the consolidated financial statements.

Cost of revenue primarily consists of direct costs to support our customer operations, including our customer support and telesales as well as fees to air ticket fulfillment vendors; credit card processing, including merchant fees, fraud and chargebacks; and other costs, primarily including data center and cloud costs to support our websites, supplier operations, destination supply, certain transactional level taxes, costs related to Bodybuilding.com during our period of ownership as well as related personnel and overhead costs, including stock-based compensation.

Cost of revenue decreased ~~$111~~$7 million during the three months ended June 30, ~~2020,~~2021, compared to the same period in ~~2019,~~2020, primarily due to a ~~decline~~decrease in decreased customer service and personnel costs, lower bad debt expense as well as the absence of expenses related to Bodybuilding.com, which was disposed of in the second quarter of 2020. These decreases were partially offset by increase in merchant fees resulting from ~~lower~~recovering transaction volumes ~~as well as a decrease in personnel costs, partially offset by the an inorganic impact related to Bodybuilding.com~~ and ~~an increase in bad debt reserves related to future collection risk from the impact of COVID-19.~~higher cloud expense.

Cost of revenue ~~increased $28~~decreased $325 million during the six months ended June 30, ~~2020,~~2021, compared to the same period in ~~2019,~~2020, primarily due to ~~an increase~~a decrease in bad debt expense, ~~an inorganic impact~~which was significantly elevated in the first six months of 2020 due to the initial impacts of COVID-19, decreased customer service and personnel costs, and the absence of expenses related to ~~the Bodybuilding.com acquisition and higher cloud expenses, partially offset by a decrease in merchant fees resulting from lower volumes and a decrease in personnel costs.~~

Selling and Marketing

Selling and marketing expense primarily relates to direct costs, including traffic generation costs from search engines and internet portals, television, radio and print spending, private label and affiliate program commissions, public relations and other costs. The remainder of the expense relates to indirect costs, including personnel and related overhead in our various brands and global supply organization, as well as stock-based compensation costs.

Selling and marketing expenses ~~decreased $1.3 billion~~increased $908 million and ~~$1.7 billion~~$367 million during the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, primarily due to ~~a decrease~~an increase in direct costs driven by a significant ~~reduction~~increase in marketing spend ~~in March 2020 and continuing into~~during the second quarter of ~~2020 related~~2021 in response to the ~~impact on~~anticipation of a further recovery in travel ~~demand from COVID-19, as well as~~demand. The change in indirect costs reflect lower personnel ~~costs.~~costs in connection with previously announced cost savings initiatives, partially offset by higher stock-based compensation expense.

Technology and Content

Technology and content expense includes product development and content expense, as well as information technology costs to support our infrastructure, back-office applications and overall monitoring and security of our networks, and is principally comprised of personnel and overhead, including stock-based compensation, as well as other costs including cloud expense and licensing and maintenance expense.

Technology and content expense ~~decreased $49 million and $38~~increased $5 million during the three months ended June 30, 2021, compared to the same period in 2020, primarily reflecting higher stock-based compensation expense, partially offset by lower other personnel and related costs in connection with previously announced cost savings initiatives.

Technology and content expense decreased $63 million during the six months ended June 30, ~~2020,~~2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily reflecting lower personnel ~~costs. The decrease~~and related costs as well as license and maintenance expense in ~~the year-to-date period was~~connection with previously announced cost savings initiatives, partially offset by higher ~~software license costs.~~stock-based compensation.

General and Administrative

General and administrative expense consists primarily of personnel-related costs, including our executive leadership, finance, legal and human resource functions and related stock-based compensation as well as fees for external professional ~~services including legal, tax and accounting.~~services.

General and administrative expense ~~decreased $53~~increased $35 million and ~~$50~~$6 million during the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, mainly ~~driven~~due to an increase in stock-based compensation. For the six months ended June 30, 2021, this increase was mostly offset by ~~lower~~a decrease in personnel costs ~~professional fees and lower stock-based compensation.~~in connection with previously announced savings initiatives.

Depreciation and Amortization

Depreciation ~~increased $15~~decreased $12 million and ~~$24~~$15 million during the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019, due to depreciation related to our new headquarters and higher internal-use software and website development depreciation, partially offset by lower data center depreciation.~~2020. Amortization of intangible assets decreased ~~$11~~$15 million and ~~$19~~$32 million during the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019~~2020 primarily due to the completion of amortization related to certain intangible ~~assets.~~assets as well as the impact of definite-lived intangible impairments in the prior year.

Impairment of Goodwill and Intangible Assets

During three months ended March 31 2020, as a result of the significant negative impact related to the COVID-19, which has had a severe effect on the entire global travel industry, we concluded that sufficient indicators existed to require us to perform an interim quantitative assessment of goodwill and long-lived assets. As a result, we recognized goodwill impairment charges of $765 million and intangible asset impairment charges of $121 million. In addition, during the three months ended June 30, 2020, we recognized goodwill impairment charges of $20 million and intangible asset impairment charges of $10 million ~~related~~due to a ~~recent~~ decision to streamline operations for a smaller brand within our Retail segment. During the six months ended June 30, 2020, primarily as a result of the significant negative impact related to COVID-19, which had a severe effect on the entire global travel industry, we recognized goodwill impairment charges of $785 million as well as intangible asset impairment charges of $131 million. See Note 3 – Fair Value Measurements in the notes to the consolidated financial statements for further information.

Legal Reserves, Occupancy Tax and Other

Legal reserves, occupancy tax and other consists of changes in our reserves for court decisions and the potential and final settlement of issues related to hotel occupancy and other taxes, expenses recognized related to monies paid in advance of occupancy and other tax proceedings (“pay-to-play”) as well as certain other legal reserves.

During the three and six months ended June 30, 2021, there were net reductions to our reserve related to hotel occupancy and other taxes. During the six months ended June 30, 2020, we recorded a $25 million gain in relation to a legal settlement, which was partially offset by changes in our reserve related to hotel occupancy and other taxes. During the three and six months ended June 30, 2019, we received a $10 million refund of prepaid pay-to-play amounts from the State of Hawaii in connection with the general excise tax litigation resulting in a corresponding benefit during the period, which nets down increases in reserves for other matters.

Restructuring and Related Reorganization Charges

In ~~late February~~ 2020, we committed to restructuring actions intended to simplify our businesses and improve operational efficiencies, which have resulted in headcount reductions and ~~during the second quarter of 2020, the Company has continued to implement actions beyond our initial commitments.~~office consolidations. As a result, we recognized ~~$53~~$13 million and ~~$128~~$53 million in restructuring and related reorganization charges during the three months ended June 30, 2021 and 2020 and, during the six months ended June 30, ~~2020.~~2021 and 2020, we recognized $42 million and $128 million. Based on current plans, which are subject to change, we expect total reorganization charges primarily in the remainder of ~~2020 and into~~ 2021 of approximately ~~$60~~$15 million to $20 million. However, we continue to actively evaluate additional cost reduction efforts and should we make decisions in future periods to take further actions we will incur additional reorganization charges.

~~Operating Income (Loss)~~

During the three and six months ended June 30, ~~2020,~~2021, we had operating losses of $132 million and $501 million, compared to operating losses of $849 million and $2.1 billion ~~compared to operating income of $265 million and $134 million~~ for the same periods in ~~2019,~~2020. The lower operating losses for the quarter were primarily due to ~~declining~~growth in revenue in excess of operating costs. The lower operating losses for the ~~current year periods resulting from the COVID-19 pandemic~~year-to-date period was due to revenue growth as well as the prior year goodwill and intangible impairment charges mentioned above.

Adjusted EBITDA by Segment

Unallocated overhead costs (Corporate) ⁽¹⁾

Unallocated overhead costs (Corporate) (1)

Total Adjusted EBITDA ⁽²⁾

Total Adjusted EBITDA (2)

____________________________

(1) Includes immaterial operating results of Bodybuilding.com through its sale in May 2020.

(2) Adjusted EBITDA is a non-GAAP measure. See “Definition and Reconciliation of Adjusted EBITDA” below for more information.

Adjusted EBITDA is our primary segment operating metric. See Note 1011 – Segment Information in the notes to the consolidated financial statements for additional information on intersegment transactions, unallocated overhead costs and for a reconciliation of Adjusted EBITDA by segment to net income (loss) attributable to Expedia Group, Inc. for the periods presented above.

Our Retail, B2B and trivago ~~segment~~segments all experienced improvements from the Adjusted EBITDA ~~all declined~~losses in the prior year periods as a result of the recovering travel environment in the current year as well as impacts of the costs saving initiatives implemented in 2020.

Unallocated overhead costs increased $10 million during the three months ended June 30, 2021, compared to the same period in 2020, primarily due to an increase in general and administrative expenses. Unallocated overhead costs decreased $25 million during the six months ended June 30, ~~2020,~~2021, compared to the same ~~periods~~period in ~~2019, resulting from impacts of the COVID-19 pandemic as revenue decreased for the current year period, partially offset by a decline in direct sales and marketing expense.~~

~~Unallocated overhead costs decreased $41 million and $33 million during the three and six months ended June 30,~~ 2020, ~~compared to the same periods in 2019,~~ primarily due to lower general and administrative as well as technology and content expenses.

Interest Income and Expense

Interest income decreased for the three and six months ended June 30, ~~2020,~~2021, compared to the same periods in ~~2019,~~2020, as a result of lower rates of return. Interest expense ~~increased~~decreased for the three ~~and six~~ months ended June 30, ~~2020,~~2021, compared to the same ~~periods~~period in ~~2019,~~2020, primarily as a result of ~~additional~~ interest ~~on the $1.25 billion senior unsecured notes issued in September 2019, the $2.75 billion senior unsecured notes issued in May 2020 as well~~related to our ~~$1.9 billion~~prior year draw on our revolving credit facility, which we fully repaid in ~~March~~December 2020. Interest expense increased for the six months ended June 30, 2021, compared to the same period in 2020, primarily as a result of higher average debt balances due to additional debt issued since May 2020.

As a result of the debt refinancing transactions during the six months ended June 30, 2021, we recognized a loss on debt extinguishment of $280 million, which included the payment of early payment premiums and fees as well as the write-off of unamortized debt issuance costs. See Note 4 – Debtin the notes to the consolidated financial statements for further information.

Other, net is comprised of the following:

During the six months ended June 30, 2020, losses on minority equity investments, net included $134 million of impairment losses related to a minority investment as well as $60 million of mark-to-market losses related to our publicly traded marketable equity investment, Despegar. See Note 3 – Fair Value Measurements in the notes to the consolidated financial statements for further information.

Provision for Income Taxes

We determine our provision for income taxes for interim periods using an estimate of our annual effective tax rate. We record any changes affecting the estimated annual tax rate in the interim period in which the change occurs, including discrete ~~tax~~ items.

For the six months ended June 30, 2020, the effective tax rate was a 12.1% benefit on pre-tax loss, compared to 7.2% expense on pre-tax income for the six months ended June 30, 2019. The decrease in the effective tax rate was primarily driven by the nondeductible ~~impairment charges~~impairments and a valuation allowance principally related to unrealized capital losses recorded in the ~~first quarter~~prior year period.

We are subject to taxation in the United States and foreign jurisdictions. Our income tax filings are regularly examined by federal, state and foreign tax authorities. We filed a protest with the Internal Revenue Service (“IRS”) for our 2011 to 2013 tax years and our case has been forwarded to appeals. We are under examination by the IRS for our 2014 to 2016 tax years. During the fourth quarter of 2019, the ~~IRS~~Internal Revenue Service (“IRS”) issued final adjustments related to transfer pricing with our foreign subsidiaries for our 2011 to 2013 tax years. The proposed adjustments would increase our U.S. taxable income by $696 million, which would result in federal tax of approximately $244 million, subject to interest. We do not agree with the ~~proposed adjustments and formally protested~~position of the IRS. We filed a protest with the IRS ~~position.~~for our 2011 to 2013 tax years and Appeals returned our case to Exam for further review. We are also under examination by the IRS for our 2014 to 2016 tax years. Subsequent years remain open to examination by the IRS. We do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years.

Definition and Reconciliation of Adjusted EBITDA

We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA is among the primary metrics by which management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the same set of tools that management uses to analyze our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA has certain

limitations in that it does not take into account the impact of certain expenses to our consolidated statements of operations. We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing the most directly comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. Adjusted EBITDA also excludes certain items related to transactional tax matters, which may ultimately be settled in cash, and we urge investors to review the detailed disclosure regarding these matters included above, in the Legal Proceedings section, as well as the notes to the financial statements. The non-GAAP financial measure used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

Adjusted EBITDA is defined as net income (loss) attributable to Expedia Group adjusted for (1) net income (loss) attributable to non-controlling interests; (2) provision for income taxes; (3) total other expenses, net; (4) stock-based compensation expense, including compensation expense related to certain subsidiary equity plans; (5) acquisition-related impacts, including (i) amortization of intangible assets and goodwill and intangible asset impairment, (ii) gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, and (iii) upfront consideration paid to settle employee compensation plans of the acquiree, if any; (6) certain other items, including restructuring; (7) items included in legal reserves, occupancy tax and other; (8) that portion of gains (losses) on revenue hedging activities that are included in other, net that relate to revenue recognized in the period; and (9) depreciation.

The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing of these items is unpredictable, not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future on-going performance as this measure allows a more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. In addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business and allows investors to gain an understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made and debt is serviced.

The reconciliation of net income (loss) attributable to Expedia Group, Inc. to Adjusted EBITDA is as follows:


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
	(In millions)
Net loss attributable to Expedia Group, Inc.	$	(172)	$	(736)	$	(750)	$	(2,037)
Net loss attributable to non-controlling interests	(5)		(4)		(8)		(100)
Provision for income taxes	(47)		(213)		(216)		(295)
Total other expense, net	92		104		473		289
Operating loss	(132)		(849)		(501)		(2,143)
Gain (loss) on revenue hedges related to revenue recognized	3		36		(6)		30
Restructuring and related reorganization charges	13		53		42		128
Legal reserves, occupancy tax and other	(8)		8		(9)		(13)
Stock-based compensation	120		54		203		109
Depreciation and amortization	205		232		414		461
Impairment of goodwill	—		20		—		785
Impairment of intangible assets	—		10		—		131
Adjusted EBITDA	$	201	$	(436)	$	143	$	(512)

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
(In millions)
Net income (loss) attributable to Expedia Group, Inc. $ (736 ) $ 183
$ (2,037 ) $ 80
Net income (loss) attributable to non-controlling interests (4 ) 4
(100 ) 7
Provision for income taxes (213 ) 48
(295 ) 7
Total other expense, net 104
30
289
40
Operating income (loss) (849 ) 265
(2,143 ) 134
Gain (loss) on revenue hedges related to revenue recognized 36
8
30
11
Restructuring and related reorganization charges 53
4
128
14
Legal reserves, occupancy tax and other 8
4
(13 ) 14
Stock-based compensation 54
59
109
115
Depreciation and amortization 232
228
461
456
Impairment of goodwill 20
—
785
—
Impairment of intangible assets 10
—
131
—
Adjusted EBITDA $ (436 ) $ 568
$ (512 ) $ 744

Financial Position, Liquidity and Capital Resources

Our principal sources of liquidity are typically cash flows generated from operations, cash available under our ~~revolving~~ credit ~~facility~~facilities as well as our cash and cash equivalents and short-term investment balances, which were $5.5 billion and ~~$3.8~~$3.4 billion at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. As of June 30, ~~2020,~~2021, the total cash and cash equivalents and short-term investments held outside the United States was ~~$861~~$925 million ($~~602~~683 million in wholly-owned foreign subsidiaries and ~~$259~~$242 million in majority-owned subsidiaries). Our credit facilities were essentially untapped at June 30, 2021 and December 31, 2020.

Managing our balance sheet prudently and maintaining appropriate liquidity are high priorities during the current COVID-19 pandemic. In 2020, in order to best position the Company to navigate our temporary working capital changes and depressed

revenue, we ~~have taken~~took a number of actions to bolster our liquidity and preserve financial ~~flexibility, including:~~flexibility. During the six months ended June 30, 2021, we continued these actions, including suspension of our share repurchases and quarterly common stock dividends as well as completed the following:

~~Suspension of Share Repurchases.~~

•0% Convertible Notes Issuance. ~~We have not repurchased any shares since our earnings call on February 13, 2020, and have suspended future share repurchases.~~

~~Suspension of Quarterly Dividends.~~ ~~We do not expect to declare quarterly dividends on our common stock, at least until the current economic and operating environment improves.~~

~~Credit Facility Draw.~~ On March 18, 2020, we increased our cash on hand by borrowing $1.9 billion under our $2 billion revolving credit facility. The revolving credit facility bore interest at 2.55% as of June 30, 2020. The proceeds from the draw are available to be used for general corporate purposes, including working capital. This existing revolving credit facility was subsequently amended in May 2020 as discussed below.

~~Private Equity Investment.~~ On April 23, 2020, we entered into an investment agreement with AP Fort Holdings, L.P., an affiliate of Apollo Global Management, Inc., and an investment agreement with SLP Fort Aggregator II, L.P. and SLP V Fort Holdings II, L.P., affiliates of Silver Lake Group, L.L.C., to raise approximately $1.2 billion in gross proceeds in a private placement of shares of a newly created series of preferred stock and warrants to purchase our common stock. The transaction was completed on May 5, 2020.

~~Senior Notes Issuance.~~ On May 5, 2020, we privately placed $2 billion of unsecured 6.250% senior notes that are due in May 2025 (the “6.25% Notes”) and $750 million of unsecured 7.000% senior notes due May 2025 (the “7.0% Notes”, and, together with the 6.25% Notes, the “6.25% and 7.0% Notes”). The 7.0% notes have certain redemption provisions starting with the second anniversary of the issuance.The 6.25% and 7.0 % Notes were issued at a price of 100% of the aggregate principal amount. Interest is payable semi-annually in arrears in May and November of each year, beginning November 1, 2020. We expect to use the net proceeds of this offering for general corporate purposes, which may include, but are not limited to, the repayment or redemption of our 5.95% senior notes due 2020.

On ~~July 14, 2020,~~February 19, 2021, we completed our private placement of $1 billion aggregate principal amount of unsecured 0% convertible senior notes due 2026 (the “Convertible Notes”). The net proceeds from the issuance of the Convertible Notes was approximately $983 million after deducting debt issuance costs. The Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. The Convertible Notes will not bear regular interest. The Convertible Notes have an initial conversion rate of 3.9212 shares of common stock of Expedia Group with a par value $0.0001 per share, per $1,000 principal amount of Convertible Notes, which is equal to an initial conversion price of approximately $255.02 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends.

•2.95% Senior Notes Issuance. On March 3, 2021, we privately placed ~~$500 million~~$1 billion of senior unsecured ~~3.600% senior~~ notes that are due ~~December 2023~~in March 2031 that bear interest at 2.95% (the ~~“3.6% Notes”) and $750 million of unsecured 4.625% senior notes due August 2027 (the “4.625% Notes” and, together with the 3.6% Notes, the “3.6% and 4.625%~~“2.95% Notes”). The ~~3.6%~~2.95% Notes were issued at a price of ~~99.922%~~99.081% of the aggregate principal amount. Interest is payable ~~on the 3.6% Notes~~ semi-annually in arrears in ~~June~~March and ~~December~~September of each year, beginning ~~December~~September 15, ~~2020.~~2021, and the interest rate is subject to adjustment based on certain ratings events. The ~~4.625% Notes were issued at a price of 99.997%~~net proceeds from the issuance of the ~~aggregate principal amount. Interest is payable on~~2.95% Notes was approximately $982 million after deducting the ~~4.625% Notes semi-annually in arrears in February~~discount and ~~August~~debt issuance costs.

•Extinguishment of ~~each year, beginning February 1, 2021. We expect to use~~High Cost Debt. On March 3, 2021, we used the net proceeds from the Convertible Notes and 2.95% Notes and completed the redemption of all of our outstanding 7.0% Notes as well as settled the tender offer to ~~redeem~~purchase $956 million in aggregate principal of our 6.25% Notes, which resulted in the recognition of a loss on debt extinguishment of $280 million during the six months ended June 30, 2021 comprised of early payment premiums and

fees associated with the tender offer as well as the write-off of unamortized debt issuance costs.

•Partial Repayment of Preferred Stock. On May 20, 2021, we completed the prepayment of 50% of the outstanding ~~shares of its 9.5%~~ Series A Preferred Stock ~~after May 5, 2021, when~~at a price equal to 103% of the Preference Amount, plus accrued and unpaid distributions as to the redemption premium is scheduled to decrease. Depending on business, liquidity and other trends or conditions, however, we may elect to use all or part of the proceeds for other general corporate purposes, which may include repaying, prepaying, redeeming or repurchasing other indebtedness in lieu of or pending such redemption.

~~Credit Facility Amendment~~. In connection with the issuance of the Notes and private placement transaction, on May 4, 2020, we executed a restatement agreement, which amends and restates our existing revolving credit facility (as amended and restated, the “Amended Credit Facility”) to, among other things, provide additional flexibility under pliable covenant provisions.date using cash on-hand.

Our credit ratings are periodically reviewed by rating agencies. As of June 30, ~~2020,~~2021, Moody’s rating was Baa3 with an outlook of “negative,” S&P’s rating was BBB- with an outlook of “negative” and Fitch’s rating was BBB- with an outlook of “negative.” ~~The April 2020 rating~~In July 2021, Moody's changed its outlook from “negative” to “stable” “reflecting Moody's expectation for continued recovery in travel demand, particularly in the U.S. where the company is a leading online travel agency, ~~downgrades were in connection~~combined with ~~the severe disruption~~Expedia's commitment to ~~global travel caused by the COVID-19 pandemic.~~reduce debt balances with excess cash and restore credit metrics to pre-pandemic levels.” Changes in our operating results, cash flows, financial position, capital structure, financial policy or capital allocations to share repurchase, dividends, investments and acquisitions could impact the ratings assigned by the various rating agencies. Should our credit ratings be adjusted downward, we may incur higher costs to borrow and/or limited access to capital markets and interest rates on the 6.25% ~~and 7.0%~~ Notes issued in May 2020, ~~as well as on~~ the 3.6% and 4.625% Notes issued in July 2020 as well as the 2.95% Notes issued in March 2021 will increase, which could have a material impact on our financial condition and results of operations.

As of June 30, ~~2020,~~2021, we were in compliance with the covenants and conditions in our revolving credit ~~facility~~facilities and outstanding debt ~~which was comprised of $750 million~~as detailed in ~~registered senior unsecured~~Note 4 – Debt in the notes due in August 2020 that bear interest at 5.95%, $500 million in registered senior unsecured notes due in August 2024 that bear interest at 4.5%, Euro 650 million of registered senior unsecured notes due in June 2022 that bear interest at 2.5%, $750 million of registered senior unsecured notes due in February 2026 that bear interest at 5.0%, $1 billion of registered senior unsecured notes due in February 2028 that bear interest at 3.8%, $1.25 billion in registered senior unsecured notes due in February 2030 that bear interest at 3.25%, $2 billion of registered senior unsecured notes due in May 2025 that bear interest at 6.25% and $750 million of registered senior unsecured notes due in May 2025 that bear interest at 7.0%.to the consolidated financial statements.

Under the merchant model, we receive cash from travelers at the time of booking and we record these amounts on our consolidated balance sheets as deferred merchant bookings. We pay our airline suppliers related to these merchant model

bookings generally within a few weeks after completing the transaction. For most other merchant bookings, which is primarily our merchant lodging business, we generally pay after the travelers’ use and, in some cases, subsequent billing from the hotel suppliers. Therefore, generally we receive cash from the traveler prior to paying our supplier, and this operating cycle represents a working capital source of cash to us. Typically, the seasonal fluctuations in our merchant hotel bookings have affected the timing of our annual cash flows. Generally, during the first half of the year, hotel bookings have traditionally exceeded stays, resulting in much higher cash flow related to working capital. During the second half of the year, this pattern typically reverses and cash flows are typically negative. ~~With the~~During 2020, impacts of ~~the~~ COVID-19 ~~pandemic, including the high degree of~~disrupted our typical working capital trends. Significantly higher cancellations and customer refunds and the lower new bookings in the merchant business model, these seasonal influences and the working capital source of cash to us has been significantly disrupted resulting in the Company experiencing unfavorable working capital trends and material negative cash flowreduced booking volumes, particularly in the first half of ~~2020. The full duration~~2020, resulted in material operating losses and ~~total impact~~negative cash flow. Although travel volumes remain materially lower than historic levels, booking and travel trends normalized during the second half of ~~COVID-19,~~2020, and ~~how~~during second quarter 2021 have increased sequentially and from the ~~recovery will unfold,~~end of second quarter2020 levels,resulting in working capital benefits and positive cash flow in the current period more akin to typical historical trends. However, it remains difficult to ~~predict. We expect cash flow~~forecast the working capital trends for the upcoming quarters, given the uncertainty related to ~~remain negative until~~ the ~~decline in new merchant bookings improves further with cancellations either remaining stable or moderating further.~~duration of the impact from COVID-19 and the shape and timing of any sustained recovery.

Prior to COVID-19, we embarked on an ambitious cost reduction initiative to simplify the organization and increase efficiency. In response to COVID-19, ~~Expedia Group has taken~~we took several additional actions to further reduce costs to help mitigate the financial impact from COVID-19 and continue to improve our long-term cost structure. ~~In addition, certain capital expenditures have been deferred, including~~We temporarily ~~halting construction on several real estate projects, and we continue to evaluate opportunities to defer other capital expenditures that are not critical to our operations. After temporarily halting~~halted construction on our new headquarters during the initial quarantine order ~~we have~~in March 2020 but restarted ~~construction.~~construction later in the year. We ~~expect to spend~~spent approximately ~~$900~~$850 million ~~in total for the project. Of the total, approximately $680 million was spent~~on construction between 2016 and ~~2019,~~2020 and approximately ~~$115~~$23 million was spent during the ~~first half~~six months ended June 30, 2021. As of ~~2020. Due to~~ the ~~delays related to COVID-19, we now expect~~end of the second quarter of 2021, the project ~~to be~~was substantially complete inand was within the ~~first half~~expected total project spend of ~~2021.~~approximately $900 million.

Our cash flows are as follows:

For the six months ended June 30, ~~2020,~~2021, net cash ~~used in~~provided by operating activities was ~~$2.6~~$4.7 billion compared to cash ~~provided by~~used in operations of ~~$3.3~~$2.6 billion for the six months ended June 30, ~~2019 with~~2020. In the ~~change due to~~prior year period, impacts from the COVID-19 pandemic resulted in a significant use of cash ~~for~~to fund working capital changes ~~in the current year~~and operating losses compared to a ~~prior~~current year

cash benefit from working ~~capital driven by the COVID-19 pandemic as well as a decline operating income after adjusting for impacts of depreciation, amortization and impairments.~~capital. The largest driver of the swing in working capital relates to a significant use of cash in the prior year for deferred merchant bookings as refunds for cancelled bookings exceeded new bookings compared to ana meaningful increase ~~from~~in booking volumes and deferred merchant bookings in the ~~prior~~current year period.

For the six months ended June 30, ~~2020~~2021, cash used byin investing activities was ~~$341~~$413 million compared to cash used in investing activities of ~~$1,166~~$341 million for the six months ended June 30, ~~2019.~~2020. The ~~change~~increase was largely due to ~~net sales and maturities~~the settlement of ~~investments of $76 million during~~currency forward contract losses in the current year period compared to ~~net purchases of investments of $609 million~~gains in the prior ~~year.~~year period as well as lower net sales of maturities of investments, partially offset by lower capital expenditures, including those related to our new headquarters as our construction winds down.

For the six months ended June 30, 2021, cash used in financing activities primarily included payments of approximately $2 billion related to the extinguishment of debt and $618 million for the 50% redemption of preferred stock both discussed above as well as $85 million of cash paid for treasury stock activity related to the vesting of equity instruments and $50 million in preferred stock dividends. These uses of cash were largely offset by approximately $2 billion of net proceeds from the issuance of Convertible Notes and 2.95% Notes issued in February and March 2020, respectively, as well as $379 million of proceeds from the exercise of options and employee stock purchase plans. For the six months ended June 30, 2020, cash provided by financing activities primarily included $2.7 billion of net proceeds from the issuance of the 6.25% and 7.0% Notes issued in May 2020, $1.9 billion of proceeds from our revolving credit facility draw in March 2020, $1.1 billion of net proceeds from ~~our~~a private equity investment as well as $96 million of proceeds from the exercise of options and employee stock purchase plans. These sources ~~of cash~~ were partially offset by cash paid to acquire shares of $414 million ~~including the repurchased shares in the first quarter of 2020 and treasury stock activity related to the vesting of equity instruments,~~ and cash dividend payments of $65 million. ~~For~~

During the six months ended June 30, ~~2019, cash provided by financing activities primarily included $156 million of proceeds from the exercise of options~~2021, we accumulated and ~~employee stock purchase plans, partially offset by cash dividend payments of $95 million and treasury stock activity related to the vesting of equity instruments of $29 million.~~

~~During the first six months of 2020 and 2019, the Executive Committee, acting on behalf of the Board of Directors, declared and we~~ paid ~~the following common stock dividends:~~

Declaration Date
Dividend
Per Share
Record Date
Total Amount
(in millions)
Payment Date
Six Months Ended June 30, 2020
February 13, 2020 $ 0.34
March 10, 2020 $ 48
March 26, 2020
Six Months Ended June 30, 2019
February 6, 2019 0.32
March 7, 2019 47
March 27, 2019
May 1, 2019 0.32
May 23, 2019 48
June 13, 2019

~~During the second quarter of 2020, we paid $17~~$50 million (or ~~$14.02~~$47.11 per share of Series A Preferred Stock) of dividends on ~~the~~our Series A Preferred Stock. ~~The Company does~~At this time, we do not expect to make future quarterly dividend payments on our common ~~stock, at least until the current economic and operating environment improves.~~stock. Future declarations of dividends are subject to final determination by our Board of Directors.

Foreign exchange rate changes resulted in a decrease of our cash and restricted cash balances denominated in foreign currency during the six months ended June 30, 2021 and 2020 of $26 million and $93 million reflecting a net depreciation in foreign currencies relative to the U.S. dollar during the period. Foreign exchange rate changes resulted in an increase of our cash and restricted cash balances denominated in foreign currency during the six months ended June 30, 2019 of $20 million reflecting a net appreciation in foreign currencies during the period and higher foreign-denominated cash balances.periods.

In our opinion, our liquidity position provides sufficient capital resources to meet our foreseeable cash needs. There can be no assurance, however, that the cost or availability of future borrowings, including refinancings, if any, will be available on terms acceptable to us.

Summarized Financial Information for Guarantors and the Issuer of Guaranteed Securities

Summarized financial information of Expedia Group, Inc. (the “Parent”) and our subsidiaries that are guarantors of our debt facility and instruments (the “Guarantor Subsidiaries”) is shown below on a combined basis as the “Obligor Group.” The debt facility and instruments are guaranteed by certain of our wholly-owned domestic subsidiaries and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. The guarantees are full, unconditional, joint and several with the exception of certain customary automatic subsidiary release provisions. In this summarized financial information of the Obligor Group, all intercompany balances and transactions between the Parent and Guarantor Subsidiaries have been eliminated and all information excludes subsidiaries that are not issuers or guarantors of our debt facility and instruments, including earnings from and investments in these entities.

June 30, 2020 December 31, 2019
(In millions)
Combined Balance Sheets Information:
     Current Assets⁽¹⁾
$ 7,891
$ 6,185
     Non-Current Assets 9,904
10,320
     Current Liabilities 6,649
9,486
     Non-Current Liabilities 9,346
4,710
     Series A Preferred Stock 1,022
—

Six Months Ended
June 30, 2020 Year Ended December 31, 2019
Combined Statements of Operations Information:
     Revenue $ 2,266
$ 9,463
     Operating income (loss) ⁽²⁾
(1,565 ) 420
     Net income (loss) (1,527 ) 195
     Net income (loss) attributable to Obligors (1,544 ) 198

~~Current assets include intercompany receivables with non-guarantors of $894 million as of June 30, 2020 and~~ ~~$1.0 billion~~ ~~as of~~ ~~December 31, 2019~~.

~~Operating income (loss) includes intercompany expenses with non-guarantors of $394 million for the six months ended June 30, 2020 and~~ ~~$1.2 billion~~ ~~for the year ended December 31, 2019.~~


	June 30, 2021		December 31, 2020
	(In millions)
Combined Balance Sheets Information:
Current Assets (1)	$	9,513	$	5,076
Non-Current Assets	10,476		10,245
Current Liabilities	10,030		4,595
Non-Current Liabilities	9,047		8,804
Series A Preferred Stock	511		1,022

	Six Months Ended June 30, 2021		Year Ended December 31, 2020
Combined Statements of Operations Information:
Revenue	$	2,877	$	4,229
Operating loss (2)	(405)		(1,884)
Net loss	(622)		(1,890)
Net loss attributable to Obligors	(779)		(1,965)

(1)Current assets include intercompany receivables with non-guarantors of $1.3 billion as of June 30, 2021 and $1.2 billion as of December 31, 2020.

(2)Operating loss includes intercompany expenses with non-guarantors of $343 million for the six months ended June 30, 2021 and $600 million for the year ended December 31, 2020.

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, ~~2019.~~2020. Other than our contractual obligations and commercial commitments, we did not have any off-balance sheet arrangements as of June 30, ~~2020~~2021 or December 31, ~~2019.~~2020.

Market Risk Management

~~Other than the interest rate risk changes discussed below, there~~There have been no material changes in our market risk during the three and six months ended June 30, ~~2020.~~2021. For additional information, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

~~Interest Rate Risk~~

~~In May 2020, we privately placed $2 billion~~

Table of senior unsecured notes due May 2025 that bear interest at 6.25% and $750 million of senior unsecured notes due May 2025 that bear interest at 7.0%. These senior unsecured notes issued in May are subject to interest rate adjustments should our credit ratings be adjusted downwards, which would result in increased interest expense in the future.

In March 2020, we borrowed $1.9 billion under our $2 billion revolving credit facility in existence at that time, which bore interest based on market rates plus a spread determined by our credit ratings. In May 2020, we executed a restatement agreement, which amended and restated the previous revolving credit facility (the “Amended Credit Facility”), which also bears interest based on market rates plus a spread determined bythe amount of the draw, the time frame of the draw, certain financial ratios and our credit ratings. As of June 30, 2020, $1.9 billion remained outstanding under the Amended Credit Facility and the interest rate on the outstanding balance was 2.5%. Because our interest rate is tied to a market rate, we will be susceptible to fluctuations in interest rates if, consistent with our practice to date, we do not hedge the interest rate exposure arising from any borrowings under our revolving credit facility.Contents

Part I. Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our Chairman and Senior Executive, Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chairman and Senior Executive, Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting.

There were no changes to our internal control over financial reporting that occurred during the quarter ended June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

Part II. Item 1. Legal Proceedings

In the ordinary course of business, Expedia Group and its subsidiaries are parties to legal proceedings and claims involving property, tax, personal injury, contract, alleged infringement of third-party intellectual property rights and other claims. A discussion of certain legal proceedings can be found in the section titled “Legal Proceedings,” of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020.~~2021. The following are developments regarding, as applicable, such legal proceedings and/or new legal proceedings:

Litigation Relating to Occupancy and Other Taxes

City of San Antonio, Texas Litigation. On ~~June 9, 2020, plaintiffs filed a petition for rehearing en banc with~~May 27, 2021, the ~~Fifth Circuit seeking review of~~court affirmed the Fifth Circuit’s ~~decision affirming~~cost award; plaintiffs paid the ~~district court’s award to the defendant online travel~~Expedia Group companies ~~of over $2~~approximately $1.3 million in ~~appeal bond costs against~~June 2021, thereby ending the ~~city. On July 6, 2020, the Fifth Circuit denied the petition. On July 13, 2020, the city~~matter.

Pine Bluff, Arkansas Litigation.In April 2021, defendants filed a motion to ~~stay issuance of~~dismiss/motion to strike the ~~court’s mandate,~~intervenor’s amended complaint, which ~~the Fifth Circuit denied on July 24, 2020. The city has indicated that it intends to file a petition for writ of certiorari to the United States Supreme Court.~~remains pending.

State of Mississippi Litigation. On ~~June 17, 2020,~~July 12, 2021, the trial court ~~heard argument on~~issued a “final judgment.” That order referenced the court’s previous rulings finding the defendant online travel companies liable for state and local sales taxes and interest, and held that the defendants are liable for penalties as well. On July 26, 2021, the defendants filed a notice of appeal from the final judgment and all other adverse findings and rulings made by the trial court.

State of Louisiana/City of New Orleans Litigation.The court denied the parties’ ~~cross~~ motions for summary judgment on ~~damages issues; the parties await a ruling.~~May 20, 2021.

~~Jefferson Parrish, Louisiana Litigation.~~ On ~~May 27, 2020, defendants~~June 25, 2021, the defendant online travel companies collectively filed ~~a motion for summary judgment.as to liability issues; on June 24, 2020, plaintiff filed a cross motion for summary judgment as to liability issues. Both motions remain pending.~~

~~Palm Beach, Florida Litigation.~~ ~~The Florida Fourth District~~three writ applications with the Louisiana Court of Appeals denied the plaintiff’s motions for rehearing, rehearing en banc and certification to the Florida Supreme Court as to the non-HomeAway defendants on June 3, 2020. On July 1, 2020, the plaintiff filed a notice to invoke discretionary jurisdictionseeking relief from three of the ~~Florida Supreme Court.~~

~~Non-Tax Litigation and Other Legal Proceedings~~

~~Putative Class Action Litigation~~

~~Cases against HomeAway.com, Inc.~~ ~~On June 2, 2020,~~trial court’s rulings regarding the ~~district court~~plaintiffs’ Louisiana Unfair Trade Practices Act claims; those writ applications were denied plaintiffs’ motion for reconsideration of the court’s denial of plaintiffs’ motion for class certification. On June 3, 2020, the United States Fifth Circuit Court of Appeals denied plaintiffs’ petition for permissionon July 27, 2021. Trial is currently scheduled to ~~appeal under Fed. R. Civ. P. 23(f). Plaintiffs’ individual claims have been set for trial in July~~begin on August 16, 2021.

~~Other Legal Proceedings~~

~~New York City Litigation.~~ ~~On July 7, 2020, the city amended the ordinance governing hosting platforms in an effort to resolve the litigation.~~

~~Helms-Burton~~Clark County, Nevada Litigation. On May ~~26, 2020, the court granted Expedia’s motion to dismiss with prejudice in the~~ ~~Del Valle~~ ~~case. The plaintiffs have appealed that ruling to the U.S. Court of Appeals for the Eleventh Circuit and that appeal remains pending. Motions to dismiss have been~~14, 2021, Clark County, Nevada filed ~~in the~~ ~~Echevarria, Echevarria et al.~~ ~~and~~ ~~Glen~~ ~~actions and remain pending. A motion to dismiss was pending in the~~ ~~Trinidad~~ ~~case, but the plaintiffs filed an amended complaint mooting that motion. A motion to dismiss was re-filed in that caseon July 6, 2020 and remains pending.~~

~~Competition and Consumer Matters~~

Over the last several years, the online travel industry has become the subject of investigations by various national competition authorities (“NCAs”), particularly in Europe. Expedia Group companies are or have been involved in investigations predominately related to whether certain parity clauses in contracts between Expedia Group entities and accommodation providers, sometimes also referred to as “most favored nation” or “MFN” provisions, are anti-competitive.

In Europe, investigations or inquiries into contractual parity provisions between hotels and online travel companies, including Expedia Group companies, were initiated in 2012, 2013 and 2014 by NCAs in Austria, Belgium, Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Poland, Sweden and Switzerland. While the ultimate outcome of some of these investigations or inquiries remains uncertain, and the Expedia Group companies’ circumstances are distinguishable from other online travel companies subject to similar investigations and inquiries, we note in this context that on April 21, 2015, the French, Italian and Swedish NCAs, working in close cooperation with the European Commission, announced that they had accepted formal commitments offered by Booking.com to resolve and close the investigations against Booking.com in France, Italy and Sweden by Booking.com removing and/or modifying certain rate, conditions and availability parity provisions in its contracts with accommodation providers in France, Italy and Sweden as of July 1, 2015, among other

~~commitments. Booking.com voluntarily extended the geographic scope of these commitments to accommodation providers throughout Europe as of the same date.~~

With effect from August 1, 2015, Expedia Group companies waived certain rate, conditions and availability parity clauses in agreements with European hotel partners for a period of five years. While the Expedia Group companies maintain that their parity clauses have always been lawful and in compliance with competition law, these waivers were nevertheless implemented as a positive step towards facilitating the closure of the open investigations into such clauses on a harmonized pan-European basis. Following the implementation of the Expedia Group companies' waivers, nearly all NCAs in Europe have announced either the closure of their investigation or inquiries involving Expedia Group companies or a decision not to open an investigation or inquiry involving Expedia Group companies. Below are descriptions of additional rate parity-related matters of note in Europe.

The German Federal Cartel Office (“FCO”) has required another online travel company, Hotel Reservation Service (“HRS”), to remove certain clauses from its contracts with hotels. HRS’ appeal of this decision was rejected by the Higher Regional Court Düsseldorf on January 9, 2015. On December 23, 2015, the FCO announced that it had also required Booking.com by way of an infringement decision to remove certain clauses from its contracts with German hotels. Booking.com has appealed the decision and the appeal was heard by the Higher Regional Court Düsseldorf on February 8, 2017. On June 4, 2019, the Higher Regional Court Düsseldorf issued its judgment in this matter and ruled that certain parity clauses are in compliance with applicable German and European competition rules and the FCO’s prohibition order against Booking.com was annulled. The decision is not yet final as the FCO has applied to the German Federal Supreme Court to admit an appeal from the decision. The FCO’s case against the Expedia Group companies’ contractual parity provisions with accommodation providers in Germany remains open but is still at a preliminary stage with no formal allegations of wrongdoing having been communicated to the Expedia Group companies to date.

The Italian competition authority's case closure decision against Booking.com and Expedia Group companies has subsequently been appealed by two Italian hotel trade associations, i.e. Federalberghi and AICA. The Federalberghi appeal remains at an early stage and no hearing date has been fixed; the AICA appeal was cancelled for lack of interest of the AICA on December 12, 2019.

On November 6, 2015, the Swiss competition authority announced that it had issued a final decision finding certain parity terms existing in previous versions of agreements between Swiss hotels and each of certain Expedia Group companies, Booking.com and HRS to be prohibited under Swiss law. The decision explicitly notes that the Expedia Group companies' current contract terms with Swiss hotels are not subject to this prohibition. The Swiss competition authority imposed no fines or other sanctions against the Expedia Group companies and did not find an abuse of a dominant market position by the Expedia Group companies.

On December 10, 2019, the French Competition Authority dismissed all antitrust complaints filed by hotel unions and Accor against Expedia Group companies regarding MFNs and other alleged business practices.

The Directorate General for Competition, Consumer Affairs and Repression of Fraud (the “DGCCRF”), a directorate of the French Ministry of Economy and Finance with authority over unfair trading practices, brought a lawsuit in ~~France against Expedia Group companies objecting to certain parity clauses in contracts between Expedia Group companies and French hotels. In May 2015, the French~~state court ruled that certain of the parity provisions in certain contracts that were the subject of the lawsuit were not in compliance with French commercial law but imposed no fine and no injunction. The DGCCRF appealed the decision and, on June 21, 2017, the Paris Court of Appeal published a judgment overturning the decision. The court annulled parity clauses contained in the agreements at issue, ordered the Expedia Group companies to amend their contracts, and imposed a fine. The Expedia Group companies appealed the decision and, on July 8, 2020, the French ~~Cour de cassation~~ ~~overturned the Court of Appeal’s decision.~~

Hotelverband Deutschland (“IHA”) e.V. (a German hotel association) brought proceedings before the Cologne regional court against Expedia, Inc., Expedia.com GmbH and Expedia Lodging Partner Services Sàrl. IHA applied for a ‘cease and desist’ order against these companies in relation to the enforcement of certain rate and availability parity clauses contained in contracts with hotels in Germany. On or around February 16, 2017, the court dismissed IHA’s action and declared the claimant liable for the Expedia Group defendants’ statutory costs. IHA appealed the decision and, on December 4, 2017, the Court of Appeals rejected IHA’s appeal. The Court of Appeals expressly confirmed that Expedia Group’s MFNs are in compliance both with European and German competition law. While IHA had indicated an intention to appeal the decision to the Federal Supreme Court, it has not lodged an appeal within the applicable deadline, with the consequence that the Court of Appeals judgment has now become final.

A working group of 10 European NCAs (Belgium, Czech Republic, Denmark, France, Hungary, Ireland, Italy, Netherlands, Sweden and the United Kingdom) and the European Commission has been established by the European Competition Network (“ECN”) at the end of 2015 to monitor the functioning of the online hotel booking sector, following

amendments made by a number of online travel companies (including Booking.com and Expedia Group companies) in relation to certain parity provisions in their contracts with hotels. The working group issued questionnaires to online travel agencies including Expedia Group companies, metasearch sites and hotels in 2016. The underlying results of the ECN monitoring exercise were published on April 6, 2017.

Legislative bodies in France (July 2015), Austria (December 2016), Italy (August 2017) and Belgium (August 2018) have also adopted new domestic anti-parity clause legislation. Expedia Group believes each of these pieces of legislation violates both EU and national legal principles and therefore, Expedia Group companies have challenged these laws at the European Commission. A motion requesting the Swiss government to take action on narrow price parity has been adopted in the Swiss parliament. The Swiss government is now required to draft legislation implementing the motion. The Company is unable to predict whether and with what content legislation will ultimately be adopted and, if so, when this might be the case. It is not yet clear how any adopted domestic anti-parity clause legislations and/or any possible future legislation in this area may affect Expedia Group's business.

Outside of Europe, a number of NCAs have also opened investigations or inquired about contractual parity provisions in contracts between hotels and online travel companies in their respective territories, including Expedia Group companies. A Brazilian hotel sector association -- Forum de Operadores Hoteleiros do Brasil -- filed a complaint with the Brazilian Administrative Council for Economic Defence (“CADE”) against a number of online travel companies, including ~~Booking.com, Decolar.com and~~a number of Expedia Group companies ~~on July 27, 2016~~such as Expedia, Hotels.com, Orbitz, Travelscape, and Hotwire. Clark County, Nevada v. Orbitz Worldwide, LLC, et al., Case No. A-21-834681-C (Clark County District Court). The complaint alleges the defendants failed to comply with ~~respect~~state and local transient occupancy tax statutes. The complaint further alleges claims for conversion, breach of fiduciary duty, unjust enrichment, fraud and violation of the Nevada Deceptive Trade Practices Act. Plaintiffs purport to ~~parity provisions in contracts between hotels~~seek compensatory and ~~online travel companies. On September 13, 2016, the~~punitive damages, declaratory relief and imposition of a constructive trust.

Stockholder Litigation

In re Expedia Group, ~~companies submitted~~Inc. Stockholders Litigation. On July 28, 2021, the Special Litigation Committee filed a ~~response~~letter informing the court that the parties to the ~~complaint~~litigation have reached an agreement in principle to ~~CADE. On March 27, 2018,~~resolve the ~~Expedia Group companies resolved CADE’s concerns based~~action and requesting a stay of further proceedings while that agreement is formalized. The July 28, 2021 letter was publicly filed on a settlement implementing waivers substantially similar to those provided to accommodation providers in Europe. In late 2016, Expedia Group companies resolved the concerns of the Australia and New Zealand NCAs based on implementation of the waivers substantially similar to those provided to accommodation providers in Europe (on September 1, 2016 in Australia and on October 28, 2016 in New Zealand). On and with effect from March 22, 2019, Expedia Group voluntarily and unilaterally waived certain additional rate parity provisions in agreements with Australian hotel partners. The ACCC confirmed it has ceased its investigation into Expedia Group companies’ conduct in relation to such rate parity provisions in around November 2019. Expedia Group companies are in ongoing discussions with a limited number of NCAs in other countries in relation to their contracts with hotels. In April 2019, the Japan Fair Trade Commission (“JFTC”) launched an investigation into certain practices of a number of online travel companies, including Expedia Group companies. Expedia Group is cooperating with the JFTC in this investigation. The Hong Kong Competition Commission ("HKCC") is conducting an investigation into certain terms and conditions in contracts entered into between online travel companies (including Expedia Group companies) and hotels. Expedia Group has agreed to a set of voluntary commitments with the HKCC to waive certain rate, conditions and availability parity clauses in certain agreements with Hong Kong hotel partners. The commitments have been published on the HKCC’s public register. In February 2020, the Korean Fair Trade Commission (“KFTC”) issued a request for information relating to hotel contracts entered into by Expedia Group companies. Expedia Group is cooperating with the KFTC. Expedia Group is currently unable to predict the impact the implementation of the waivers both in Europe and elsewhere will have on Expedia Group's business, on investigations or inquiries by NCAs in other countries, or on industry practice more generally. August 4, 2021.

~~In addition, regulatory authorities in Europe (including the UK~~ Competition and Markets Authority, or “CMA”), Australia, and elsewhere have initiated legal proceedings and/or undertaken market studies, inquiries or investigations relating to online marketplaces and how information is presented to consumers using those marketplaces, including practices such as search results rankings and algorithms, discount claims, disclosure of charges, and availability and similar messaging.Consumer Matters

On ~~June 28, 2018, the CMA announced that it will be requiring hotel booking websites to take action to address concerns identified~~May 27, 2021, in the course of its ongoing investigation. After consulting with the CMA, on January 31, 2019, we agreed to offer certain voluntary undertakings with respect to the presentation of information on certain of our UK consumer-facing websites in order to address the CMA’s concerns. On February 4, 2019, the CMA confirmed that, as a result of the undertakings offered, it has closed its investigation without any admission or finding of liability. The undertakings become effective on September 1, 2019. On October 21, 2019, the Italian Competition Authority announced that it had accepted Expedia’s voluntary undertakings with respect to the presentation of information on its Italian website and closed the proceedings against ~~Expedia without any admission or finding of liability. The undertakings became effective on September 1, 2019.~~

~~On August 23, 2018, the Australian Competition and Consumer Commission, or "ACCC", instituted proceedings in~~trivago, the Australian Federal Court against trivago. The ACCC alleged breaches of Australian Consumer Law, or "ACL," relating to trivago’s advertisements in Australia concerning the hotel prices available on trivago’s Australian site, trivago’s strike-through pricing practice and other aspects of the way offers for accommodation were displayed on trivago's Australian website. The matter went to trial in September 2019 and, on January 20, 2020, the Australian Federal Court issued a judgment finding trivago had engaged in conduct in breach of the ACL. On March 4, 2020, trivago filed a notice of appeal of part of that judgment at the Australian Federal Court. The appeal was heard on July 20-21, 2020 and the parties await a ruling. The court has yet to set a

~~date for~~scheduled a separate trial regarding penalties and other ~~orders. We recorded~~orders for October 18, 2021, after having vacated the ~~estimated probable loss associated with the proceedings as~~prior June 2021 trial date.

Table of ~~December 31, 2019. An estimate for the reasonable possible loss or range of loss in excess of the amount reserved cannot be made.~~Contents

We are cooperating with regulators in the investigations described above where applicable, but we are unable to predict what, if any, effect such actions will have on our business, industry practices or online commerce more generally. Other than described above, we have not accrued a reserve in connection with the market studies, investigations, inquiries or legal proceedings described above either because the likelihood of an unfavorable outcome is not probable, or the amount of any loss is not estimable.

Part II. Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2019,in our Current Report on Form 8-K, filed with the SEC on April 23, 2020,and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 21,~~ 2020, which could materially affect our business, financial condition or future results. These are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Table of Contents

Part II. Item 6. Exhibits

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

Exhibit
No.

Exhibit Description

Filed
Herewith

Incorporated by Reference

Form

SEC File No.

Exhibit

Filing Date

10.1

Fifth Amendment, dated as of May 4, 2021, to the Amended and Restated Credit Agreement among Expedia Group, Inc., the borrowing subsidiaries party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent and London agent

10.2

Third Amendment, dated as of May 4, 2021, to the Credit Agreement among Expedia Group, Inc., Expedia Group International Holdings III, LLC, the lenders from time to time party thereto and JP Morgan Chase Bank, N.A. as Administrative Agent and London Agent

List of Guarantor Subsidiaries of Expedia Group, Inc.

31.1

Certification of the Chairman and Senior Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3

Certification of the Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of the Chairman and Senior Executive pursuant Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002

32.3

Certification of the Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.

Exhibit
No.
Exhibit Description
Filed
Herewith
Incorporated by Reference
Form SEC File No. Exhibit Filing Date

4.1
Indenture, dated as of July 14, 2020, among Expedia Group, Inc., the guarantors party thereto and U.S. Bank National Association relating to the 2023 Notes
8-K 001-37429 4.1 7/15/2020

4.2
Indenture, dated as of July 14, 2020, among Expedia Group, Inc., the guarantors party thereto and U.S. Bank National Association relating to the 2027 Notes.
8-K 001-37429 4.2 7/15/2020

4.3
Registration Rights Agreement, dated as of July 14, 2020, by and among Expedia Group, Inc., the guarantors party thereto and J.P. Morgan Securities LLC relating to the 2023 Notes.
8-K 001-37429 4.3 7/15/2020

4.4
Registration Rights Agreement, dated as of July 14, 2020, by and among Expedia Group, Inc., the guarantors party thereto and J.P. Morgan Securities LLC relating to the 2027 Notes.
8-K 001-37429 4.4 7/15/2020

10.1
Fifth Amended and Restated Expedia Group, Inc. 2005 Stock and Annual Incentive Plan
DEF 14A 001-37429 App.A 5/7/2020

22
List of Guarantor Subsidiaries of Expedia Group, Inc.
X

31.1
Certification of the Chairman and Senior Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

31.2
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

31.3
Certification of the Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002
X

32.1
Certification of the Chairman and Senior Executive pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X

32.2
Certification of the Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X

32.3
Certification of the Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002
X

101
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
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Table of Contents

Signature

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.


August 5, 2021			Expedia Group, Inc.

~~July 30, 2020~~			~~Expedia Group, Inc.~~
By:
	~~By:~~	/s/ Eric Hart
				Eric Hart
			��	Chief Financial Officer

5548


	June 30, 2020			December 31, 2019				June 30, 2021		December 31, 2020
	(Unaudited)							(Unaudited)
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	5,053		$	3,315		Cash and cash equivalents	$	5,464	$	3,363
Restricted cash and cash equivalents	1,311			779			Restricted cash and cash equivalents	2,541		772
Short-term investments	422			526			Short-term investments	11		24
Accounts receivable, net of allowance of $115 and $41	1,002			2,524
Accounts receivable, net of allowance of $86 and $101							Accounts receivable, net of allowance of $86 and $101	1,440		701
Income taxes receivable	107			70			Income taxes receivable	399		120
Prepaid expenses and other current assets	1,049			521			Prepaid expenses and other current assets	1,258		654
Total current assets	8,944			7,735			Total current assets	11,113		5,634
Property and equipment, net	2,305			2,198			Property and equipment, net	2,261		2,257
Operating lease right-of-use assets	626			611			Operating lease right-of-use assets	467		574
Long-term investments and other assets	618			796			Long-term investments and other assets	663		671
Deferred income taxes	482			145			Deferred income taxes	850		659
Intangible assets, net	1,600			1,804			Intangible assets, net	1,457		1,515
Goodwill	7,330			8,127			Goodwill	7,370		7,380
TOTAL ASSETS	$	21,905		$	21,416		TOTAL ASSETS	$	24,181	$	18,690
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable, merchant	$	531		$	1,921		Accounts payable, merchant	$	1,157	$	602
Accounts payable, other	518			906			Accounts payable, other	778		496
Deferred merchant bookings	4,632			5,679			Deferred merchant bookings	8,240		3,107
Deferred revenue	197			321			Deferred revenue	172		172
Income taxes payable	78			88			Income taxes payable	328		50
Accrued expenses and other current liabilities	1,166			1,050			Accrued expenses and other current liabilities	1,038		979
Current maturities of long-term debt	750			749
Total current liabilities	7,872			10,714			Total current liabilities	11,713		5,406
Long-term debt, excluding current maturities	6,903			4,189
Revolving credit facility	1,900			—
Long-term debt							Long-term debt	8,480		8,216
Deferred income taxes	74			56			Deferred income taxes	22		67
Operating lease liabilities	543			532			Operating lease liabilities	408		513
Other long-term liabilities	388			389			Other long-term liabilities	465		462
Commitments and contingencies							Commitments and contingencies	0		0
Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 1,200 and 0	1,022			—
Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 600 and 1,200							Series A Preferred Stock: $.001 par value, Authorized shares: 100,000; Shares issued and outstanding: 600 and 1,200	511		1,022
Stockholders’ equity:							Stockholders’ equity:
Common stock: $.0001 par value; Authorized shares: 1,600,000	—			—			Common stock: $.0001 par value; Authorized shares: 1,600,000	0		0
Shares issued: 259,085 and 256,692; Shares outstanding: 135,691 and 137,076
Shares issued: 269,239 and 261,564; Shares outstanding: 145,197 and 138,074							Shares issued: 269,239 and 261,564; Shares outstanding: 145,197 and 138,074
Class B common stock: $.0001 par value; Authorized shares: 400,000	—			—			Class B common stock: $.0001 par value; Authorized shares: 400,000	0		0
Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523							Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523
Additional paid-in capital	13,300			12,978			Additional paid-in capital	13,995		13,566
Treasury stock - Common stock and Class B, at cost; Shares 130,670 and 126,893	(10,087		)	(9,673		)
Treasury stock - Common stock and Class B, at cost; Shares 131,318 and 130,767							Treasury stock - Common stock and Class B, at cost; Shares 131,318 and 130,767	(10,182)		(10,097)
Retained earnings (deficit)	(1,206		)	879			Retained earnings (deficit)	(2,531)		(1,781)
Accumulated other comprehensive income (loss)	(273		)	(217		)	Accumulated other comprehensive income (loss)	(186)		(178)
Total Expedia Group, Inc. stockholders’ equity	1,734			3,967			Total Expedia Group, Inc. stockholders’ equity	1,096		1,510
Non-redeemable non-controlling interests	1,469			1,569			Non-redeemable non-controlling interests	1,486		1,494
Total stockholders’ equity	3,203			5,536			Total stockholders’ equity	2,582		3,004
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	21,905		$	21,416		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	24,181	$	18,690


~~(1)~~	Currency translation adjustments include tax benefit of $3 million and $1 million associated with net investment hedges for the three and six months ended June 30, 2020 and tax benefit of $2 million and tax expense of $1 million for the three and six months ended June 30, 2019.



Three months ended June 30, 2019	Common stock			Class B common stock			Additional paid-in capital			Treasury stock				Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest		Total
	Shares	Amount		Shares	Amount		Additional paid-in capital			Shares	Amount			Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest		Total
Balance as of March 31, 2019	233,294,034	$	—	12,799,999	$	—	$	9,694		97,355,708	$	(5,767	)	$	373		$	(217	)	$	1,551	$	5,634
Net income (loss)														183						4		187
Other comprehensive income (loss), net of taxes																	1			6		7
Payment of dividends to common stockholders (declared at $0.32 per share)														(48		)						(48		)
Proceeds from exercise of equity instruments and employee stock purchase plans	808,152	—					65															65
Withholding taxes for stock options							(2		)													(2		)
Treasury stock activity related to vesting of equity instruments										28,504	(4		)									(4		)
Other changes in ownership of non-controlling interests							—													4		4
Stock-based compensation expense							63															63
Other							1															1
Balance as of June 30, 2019	234,102,186	$	—	12,799,999	$	—	$	9,821		97,384,212	$	(5,771	)	$	508		$	(216	)	$	1,565	$	5,907



Six months ended June 30, 2019	Common stock			Class B common stock			Additional paid-in capital			Treasury stock				Retained earnings (deficit)			Accumulated other comprehensive income (loss)			Non-redeemable non-controlling interest			Total
	Shares	Amount		Shares	Amount					Shares	Amount
Balance as of December 31, 2018	231,492,986	$	—	12,799,999	$	—	$	9,549		97,158,586	$	(5,742	)	$	517		$	(220	)	$	1,547		$	5,651
Net income (loss)														80						7			87
Other comprehensive income (loss), net of taxes																	4			(2		)	2
Payment of dividends to common stockholders (declared at $0.64 per share)														(95		)							(95		)
Proceeds from exercise of equity instruments and employee stock purchase plans	2,609,200	—					156																156
Withholding taxes for stock options							(2		)														(2		)
Treasury stock activity related to vesting of equity instruments										225,626	(29		)										(29		)
Other changes in ownership of non-controlling interests							(3		)											13			10
Impact of adoption of new accounting guidance														6									6
Stock-based compensation expense							119																119
Other							2																2
Balance as of June 30, 2019	234,102,186	$	—	12,799,999	$	—	$	9,821		97,384,212	$	(5,771	)	$	508		$	(216	)	$	1,565		$	5,907


~~(1)~~	Other includes car rental, insurance, destination services, cruise and fee revenue related to our corporate travel business, among other revenue streams, none of which are individually material. Other also includes product revenue of $20 million and $59 million during the three and six months ended June 30, 2020 related to Bodybuilding.com, which was sold in May 2020.


~~(1)~~	trivago, which is comprised of a hotel metasearch business that differs from our transaction-based websites, does not have associated gross bookings or revenue margin. However, third-party revenue from trivago is included in revenue used to calculate total revenue margin.


~~(1)~~	~~Includes third-party revenue from trivago as well as our transaction-based websites.~~


~~(1)~~	~~Includes immaterial operating results of Bodybuilding.com subsequent to our acquisition on July 26, 2019.~~


~~(2)~~	~~Adjusted EBITDA is a non-GAAP measure. See “Definition and Reconciliation of Adjusted EBITDA” below for more information.~~


•	~~Suspension of Share Repurchases.~~ •0% Convertible Notes Issuance. ~~We have not repurchased any shares since our earnings call on February 13, 2020, and have suspended future share repurchases.~~



	June 30, 2020			December 31, 2019
	(In millions)
Combined Balance Sheets Information:
Current Assets⁽¹⁾	$	7,891		$	6,185
Non-Current Assets	9,904			10,320
Current Liabilities	6,649			9,486
Non-Current Liabilities	9,346			4,710
Series A Preferred Stock	1,022			—

	Six Months Ended June 30, 2020			Year Ended December 31, 2019
Combined Statements of Operations Information:
Revenue	$	2,266		$	9,463
Operating income (loss) ⁽²⁾	(1,565		)	420
Net income (loss)	(1,527		)	195
Net income (loss) attributable to Obligors	(1,544		)	198