Tripadvisor : Reports First Quarter 2024 Financial Results

Tripadvisor Reports First Quarter 2024 Financial Results

NEEDHAM, MA, May 8, 2024 - Tripadvisor, Inc. (Nasdaq: TRIP) ("Tripadvisor" or the "Company") today announced financial results for the first quarter ended March 31, 2024.

• Revenue of $395 million, reflecting year-over-year growth of 6%.
• Net loss of $59 million, or $0.43 loss per share, which includes the net impact of $42 million in incremental income tax expense, a result of a previously communicated IRS audit settlement. Refer to "Income Taxes" section below for additional information.
• Non-GAAPnet income of $17 million, or $0.12 per share. Adjusted EBITDA of $47 million, or 12% of revenue.

"We are pleased with our first quarter results, which provide a solid start to the fiscal year, and were driven by the continued diversification of our portfolio into higher growth experiences offerings," said Chief Executive Officer Matt Goldberg. "We believe that our unique position in travel and experiences, coupled with positive signals we are seeing as a result of our segment strategies, will drive continued momentum across Tripadvisor Group."

"Our disciplined approach to balancing growth and investment was reflected in our first quarter results. We delivered revenue growth of six percent, or $395 million, and adjusted EBITDA of $47 million, or 12 percent of revenue," said Chief Financial Officer, Mike Noonan. "We remain pleased with our operational execution, which is driving solid financial outcomes, and remain focused on segment priorities in support of long-term growth and profitability."

First Quarter 2024 Summary

1. Brand Tripadvisor segment revenue figures shown in this table are gross of intersegment (intercompany) revenue, which is eliminated on a consolidated basis.
2. "Total Adjusted EBITDA," "Non-GAAP Net Income (Loss)," "Non-GAAP Diluted Earnings (Loss) per Share," and "Free Cash Flow" are non- GAAP measures as defined by the U.S. Securities and Exchange Commission (the "SEC"). Please refer to "Non-GAAPFinancial Measures" below for definitions and explanations of these non-GAAP financial measures, as well as tabular reconciliations to the most directly comparable GAAP financial measures.

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Cost performance - Total costs and expenses were $410 million for the first quarter, an increase of 6% year-over-year, driven primarily by the following:

• Cost of revenue was $35 million for the first quarter, or 9% of consolidated revenue, an increase of 21% year- over-year, compared to $29 million in the same period a year ago, or 8% of consolidated revenue.
• Selling and marketing costs were $221 million for the first quarter, or 56% of consolidated revenue, an increase of 1% year-over-year, compared to $219 million in the same period a year ago, or 59% of consolidated revenue.
• Technology and content costs were $76 million for the first quarter, or 19% of consolidated revenue, an increase of 12% year-over-year, compared to $68 million in the same period a year ago, or 18% of consolidated revenue.
• General and administrative costs were $56 million for the first quarter, or 14% of consolidated revenue, an increase of 17% year-over-year, compared to $48 million in the same period a year ago, or 13% of consolidated revenue.

Cash & Liquidity - As of March 31, 2024, the Company had approximately $1.2 billion of cash and cash equivalents, an increase of $104 million from December 31, 2023. This increase was driven primarily by an increase in operating cash flows.

Segment Highlights

Brand Tripadvisor

• Revenue was $240 million, reflecting year-over-year decline of 2%.
• • Branded hotels revenue was $159 million, reflecting year-over-year decline of 5%.
  • Media and advertising revenue was $33 million, reflecting year-over-year growth of 10%.
  • Experiences and dining revenue was $36 million, reflecting year-over-year growth of 9%.
  • Other revenue was $12 million reflecting year-over-year decline of 8%.
• Adjusted EBITDA was $78 million, or 33% of revenue, compared to adjusted EBITDA in the same period a year ago of $72 million, or 30% of revenue. The improvement in adjusted EBITDA margin was largely driven by lower selling and marketing and lower people costs as a percent of revenue, which more than offset higher cost of revenue and higher technology and content costs as a percent of revenue.

Viator

• Revenue was $141 million, reflecting year-over-year growth of 23%.
• Gross bookings value ("GBV") was approximately $1 billion, reflecting year-over-year growth of approximately 15%. GBV is reported at the time of booking and is gross of cancellations, whereas revenue is recorded at the time of the experience and is net of cancellations.
• Adjusted EBITDA loss was $27 million, or -19% of revenue, compared to adjusted EBITDA loss in the same period a year ago of $30 million, or -26% of revenue. Year-over-year improvement in adjusted EBITDA margin for the first quarter was primarily driven by an increase in revenue during the first quarter due to the timing of the Easter holiday, and lower cost of revenue, selling and marketing costs, and people costs as a percent of revenue.

TheFork

• Revenue was $41 million, reflecting year-over-year growth of 17%.
• Total number of bookings grew year-over-year by approximately 10%.
• Adjusted EBITDA loss was $4 million, or -10% of revenue, compared to adjusted EBITDA loss in the same period a year ago of $9 million, or -26% of revenue. The year-over-year improvement in adjusted EBITDA margin for the first quarter was driven primarily by lower people costs and lower selling and marketing, as a percent of revenue.

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Update on the Special Committee of the Board of Directors

In February 2024, Tripadvisor disclosed that its Board of Directors had formed a Special Committee to evaluate proposals resulting from Liberty Tripadvisor Holdings' stated intention to engage in discussions with respect to a potential transaction, or other alternatives. The Special Committee has determined that at this time, there is no transaction with a third party that is in the best interests of the Company and its stockholders. The Special Committee will continue to evaluate proposed alternatives as appropriate. There can be no assurance that any transaction will result, and the Company does not expect to provide further updates unless it has something definitive to share.

Income Taxes

As disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the Company had received Notices of Proposed Adjustments from the IRS for the 2014, 2015, and 2016 tax years relating to certain transfer pricing arrangements with its foreign subsidiaries and requested competent authority assistance under the Mutual Agreement Procedure ("MAP") for those years. In January 2024, the Company received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which the Company accepted in February 2024. In the first quarter of 2024, the Company recorded additional income tax expense as a discrete item, inclusive of interest, of $46 million related to this settlement. The Company reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent tax years during the first quarter of 2024, which resulted in an income tax benefit, inclusive of estimated interest, of $4 million. The net impact of these adjustments resulted in income tax expense of $42 million for the first quarter of 2024. In addition, accepting this MAP settlement will result in an estimated net operating cash outflow of $110 million to $120 million, inclusive of related interest expense, which is expected to be substantially settled by the Company during the second quarter of 2024.

Conference Call

Tripadvisor will host a conference call today, May 8, 2024, at 8:30 a.m., Eastern Time, to discuss the Company's first quarter 2024 financial results, which may include forward looking information about Tripadvisor's business. Investors and other interested parties may also go to the Investor Relations section of Tripadvisor's website at http://ir.tripadvisor.com for a live webcast of the conference call. A replay of the conference call will be available on Tripadvisor's website for three months.

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SELECTED FINANCIAL INFORMATION

Tripadvisor, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in millions, except per share amounts)

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Tripadvisor, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in millions, except number of shares and per share amounts)

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Tripadvisor, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)

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Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we also report certain non- GAAP financial measures. A "non-GAAP financial measure" refers to a numerical measure of a company's historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company's financial statements. These non-GAAP financial measures are not prepared under a comprehensive set of accounting rules and, therefore, should only be reviewed alongside results reported under GAAP.

We may use the following non-GAAP measures: consolidated adjusted EBITDA (including forecasted consolidated adjusted EBITDA), consolidated adjusted EBITDA margin, non-GAAP net income (loss), non-GAAP net income (loss) per diluted earnings (loss) per share, free cash flow, non-GAAP revenue growth before foreign exchange effect (or "constant currency basis" revenue growth), as well as other measures.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of Tripadvisor's liquidity, except for free cash flow. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures do not take into account the impact of certain expenses to our consolidated statements of operations. In addition, these measures may be different from non-GAAP financial measures used by other companies, even where similarly titled, limiting their usefulness for comparison purposes and therefore should not be used to compare Tripadvisor's performance to that of other companies. We endeavor to compensate for the limitation of the non-GAAP financial measures presented by providing tabular reconciliations to the most directly comparable GAAP financial measure, definitions, limitations, and other related information about these non-GAAP financial measures. We do not reconcile consolidated adjusted EBITDA guidance to projected consolidated GAAP net income (loss) because GAAP net income (loss) or the reconciling items between consolidated adjusted EBITDA and GAAP net income (loss) are unavailable on a forward-looking basis, as a result of the uncertainty regarding, and the potential variability of, certain of these items. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

We believe these non-GAAP financial measures provide investors and analysts with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and/or allow for greater transparency with respect to key measures used by management to operate and analyze our business over different periods of time.

We define our non-GAAP financial measures as below:

Tripadvisor defines "Adjusted EBITDA" as net income (loss) plus: (1) (provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived assets and intangible asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income. These items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount is unpredictable, not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. The Company believes that excluding these amounts better enables management and investors to compare financial results between periods as these costs may vary independent of business performance.

Tripadvisor defines "Adjusted EBITDA margin" as Adjusted EBITDA divided by revenue.

Adjusted EBITDA and Adjusted EBITDA margin are key operating performance measures used by our management and board of directors to understand and evaluate the financial performance of our business as a whole and our individual business segments, and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and

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better enables management and investors to compare financial results between periods as these costs may vary independent of core business performance. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors and allows for a useful comparison of our performance with our historical results from prior periods.

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

Some of these limitations are:

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
• Adjusted EBITDA does not reflect the interest expense or cash requirements necessary to service interest or principal payments on our debt;
• Adjusted EBITDA does not consider the potentially dilutive impact of stock-based compensation or other stock-settled obligations;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• Adjusted EBITDA does not reflect certain income and expenses not directly tied to the ongoing core operations of our business, including, but not limited to, legal reserves and settlements, restructuring and other related reorganization costs;
• Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
• Adjusted EBITDA is unaudited and does not conform to SEC Regulation S-X, and as a result such information may be presented differently in our future filings with the SEC; and
• other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Tripadvisor defines "non-GAAP net income (loss)" as GAAP net income (loss) excluding: (1) stock-based compensation expense and other stock-settled obligations; (2) amortization of intangible assets; (3) goodwill, intangible asset, and other long-lived asset impairments; (4) legal reserves and settlements; (5) restructuring and other related reorganization costs; and (6) certain gains, losses, and non-recurring income or expenses that we do not believe are indicative of our ongoing operating results. The non-GAAP adjustments described previously are reported on a pre-tax basis. The income tax effect on these non-GAAP adjustments is calculated based on the individual impact that these items had on our GAAP consolidated income tax expense (benefit) for the periods presented, in addition to non-recurring or infrequent discrete tax items (including significant adjustments related to (i) tax audit reserves/settlements; (ii) non-recurring or infrequent income tax reserves or adjustments; and (iii) the impact of one-time changes resulting from tax legislation or legislation that impacts tax, such as the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") or the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act")). We believe non-GAAP net income (loss) is an operating performance measure that provides investors and analysts with useful supplemental information about the financial performance of our business, as it incorporates our unaudited condensed consolidated statement of operations, taking into account depreciation, which management believes is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest expense, interest income, income taxes, and foreign exchange gains and losses, but excluding the impact of certain expenses, infrequently occurring items and items not directly tied to the ongoing core operations of our businesses. Non-GAAP net income (loss) also enables comparison of financial results between periods where certain items may vary independent of business performance.

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Tripadvisor defines "non-GAAP net income (loss) per diluted share," or "non-GAAP diluted EPS," as non-GAAP net income (loss) divided by GAAP diluted shares. We believe non-GAAP diluted EPS is useful to investors because it represents, on a per share basis, our unaudited condensed consolidated statement of operations, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest expense, interest income, income taxes and foreign exchange gains or losses, but excluding the effects of certain expenses not directly tied to the ongoing core operations of our businesses. Tripadvisor calculates non-GAAP diluted EPS using weighted average diluted shares prepared under GAAP.

Non-GAAP net income (loss) and non-GAAP diluted EPS have some of the same limitations as Adjusted EBITDA. In addition, non-GAAP net income (loss) does not include all items that affect our GAAP net income (loss) and GAAP diluted EPS for the period. Therefore, we think it is important to evaluate these measures along with our unaudited condensed consolidated statements of operations, which are prepared under GAAP.

Tripadvisor defines "free cash flow" as cash provided by (used in) operations less capital expenditures, which are purchases of property and equipment, including the capitalization of website development costs. We believe this financial measure can provide useful supplemental information to help investors better understand underlying cashflow trends in our business, as it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash movements that are not directly tied to the ongoing core operations of our businesses, such as financing activities, foreign currency exchange rate impact on cash, or certain other investing activities. Free cash flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate free cash flow along with the unaudited condensed consolidated statements of cash flows, which are prepared under GAAP.

Tripadvisor calculates the estimated effects of foreign currency exchange rates on revenue to determine constant currency revenue growth, by translating actual revenue for the current three months and year ended using the comparable prior period foreign currency exchange rates. We believe this is a useful estimate that facilitates management's internal comparison to our historical performance because the effects of foreign currency exchange rate volatility are not indicative of our ongoing core operating results.

Pursuant to the requirements of Regulation G, we present reconciliations of these non-GAAP financial measures, described above, to the most directly comparable GAAP measures in the tables below.

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