TripAdvisor(TRIP) - 2020 Q4 - Annual Report

PART I This section outlines Tripadvisor's business, risk factors, legal matters, properties, and mine safety disclosures Item 1. Business Tripadvisor operates a global travel guidance platform, connecting travelers with partners for accommodations, activities, and restaurants, with business significantly impacted by COVID-19 - Tripadvisor operates a global travel guidance platform, offering content, price comparison tools, and online reservation services for hotels, accommodations, restaurants, experiences, airlines, and cruises[9] - As of December 31, 2020, Tripadvisor featured 884 million reviews and opinions on 7.9 million hotels, accommodations, restaurants, experiences, airlines, and cruises, with localized websites in 48 markets and 28 languages[9] - The company's business is managed through two reportable segments: (1) Hotels, Media & Platform and (2) Experiences & Dining, with other offerings including Rentals, Flights & Car, and Cruise[15][17][20] - The COVID-19 pandemic significantly and negatively impacted the travel industry and Tripadvisor's business, results of operations, liquidity, and financial condition during 2020, though global travel is expected to return to pre-pandemic levels eventually[10] - Tripadvisor's long-term growth strategy focuses on increasing customer engagement, driving consumer loyalty, investing in technology (e.g., machine learning), deepening travel partner engagement, leveraging platform attributes for new offerings, driving operational efficiencies, and opportunistically pursuing strategic acquisitions[24] - The company beta-launched a direct-to-consumer annual subscription-based offering in December 2020 as part of its product innovation strategy[25] - Tripadvisor competes globally with various online and offline travel providers, including OTAs (Expedia, Booking), hotel metasearch providers (trivago, Kayak), large online search/social media platforms (Google, Facebook), and traditional agencies[29] - Expedia Group, Inc. and Booking Holdings, Inc. were the two most significant travel partners, accounting for approximately 25% of consolidated revenue in 2020, down from 33% in 2019 and 37% in 2018[30] Employee Headcount (2019 vs. 2020) | Metric | 2019 | 2020 | | :----- | :--- | :--- | | Total Employees | ~4,187 | 2,596 | | Change | | -38% | Item 1A. Risk Factors The company faces significant risks from the COVID-19 pandemic, reliance on search engines and partners, intense competition, technological innovation, and evolving global regulations - The COVID-19 pandemic has materially and adversely affected Tripadvisor's business, financial performance, and liquidity due to declines in travel demand, governmental restrictions, and economic disruption[60][62] - Reliance on internet search engines (like Google) and application marketplaces (Apple's App Store, Google Play) to drive traffic is a significant risk, as changes in algorithms or competing products could negatively impact user acquisition[62] - A substantial portion of revenue is derived from advertising, making the business vulnerable to reductions in advertiser spending or the loss of significant travel partners (Expedia and Booking accounted for 25% of 2020 revenue)[64][30] - Operating in an intensely competitive global environment, with numerous online and offline providers, poses a risk to market share and financial performance, especially given competitors' greater resources and ability to leverage other business aspects[68] - The company is subject to a complex and evolving landscape of global laws and regulations, including those related to data privacy (GDPR, CCPA), consumer protection, and taxation, with non-compliance potentially leading to significant liabilities and reputational harm[38][42][75] - System security issues, data protection breaches, cyberattacks, and system outages could disrupt operations, damage reputation, and lead to financial losses and legal liabilities[78][79] - Liberty Tripadvisor Holdings, Inc. (LTRIP) is a controlling stockholder, beneficially owning 58.5% of voting power, which may influence corporate decisions and discourage changes of control[46][89] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments were reported[93] Item 2. Properties Tripadvisor leases approximately 280,000 square feet for its Needham, Massachusetts headquarters and 485,000 square feet across 35 global locations - Tripadvisor does not own any real estate as of December 31, 2020[93] - The company leases approximately 280,000 square feet for its corporate headquarters in Needham, Massachusetts, with a lease term extending to December 2030 and options for two five-year extensions[93] - An additional 485,000 square feet of office space is leased across approximately 35 other global locations (North America, Europe, Asia Pacific, South America) for various operational teams[93] Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 13: Commitments and Contingencies - Legal proceedings information is detailed in Note 13: Commitments and Contingencies of the consolidated financial statements[94] Item 4. Mine Safety Disclosures This item is not applicable to Tripadvisor - Mine Safety Disclosures are not applicable[94] PART II This section covers market information, selected financial data, management's discussion and analysis, market risk, and financial statements Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Tripadvisor's common stock trades on NASDAQ, with Class B stock held by LTRIP; the company made share repurchases in 2020 but faces dividend and repurchase limits - Tripadvisor's common stock is traded on NASDAQ under the ticker symbol 'TRIP'[96] - As of February 12, 2021, there were 122,029,254 outstanding shares of common stock held by 2,027 stockholders and 12,799,999 outstanding shares of Class B common stock held by one stockholder (LTRIP)[103] - The company did not declare or pay any dividends during the years ended December 31, 2020 or 2018, though a special cash dividend of $3.50 per share was paid in 2019[104] - Future dividend payments are at the discretion of the Board of Directors and are subject to results of operations, financial condition, and contractual restrictions, including those from the Credit Agreement and Indenture[104] - During 2020, the company repurchased 4,707,450 shares of common stock at an aggregate cost of $115 million, with $75 million remaining available under the program, however, current credit agreements limit further share repurchases[107][209] Item 6. Selected Financial Data This item is no longer required as the company has elected to early adopt changes to Item 301 of Regulation S-K - The company has elected to early adopt changes to Item 301 of Regulation S-K, making this item no longer required[108] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Tripadvisor's financial performance and condition, heavily impacted by COVID-19, detailing revenue declines, cost reductions, and liquidity adjustments - Tripadvisor's consolidated revenue for the year ended December 31, 2020, was approximately 40% of the prior year's comparable period, with the second half of 2020 averaging 35% of prior year revenue[118] - Monthly unique users on Tripadvisor websites averaged approximately 67% of prior year levels in the second half of 2020, improving from 33-45% in April-May 2020, but declining to 60% in Q4 2020 due to new restrictions[118] - The company borrowed $700 million under its 2015 Credit Facility in Q1 2020 (repaid in Q3 2020) and issued $500 million in Senior Notes in July 2020 to strengthen liquidity[124][126] - Cost reduction measures in 2020 included workforce reductions (eliminating over 900 employees and furloughing ~850, later ~400), reduced discretionary spending, and cuts in brand advertising, resulting in $41 million in restructuring costs[127][129][130] - The CARES Act and other governmental relief programs provided $23 million in income tax benefits and $12 million in government grants/assistance in 2020[131] Consolidated Results of Operations (2018-2020) | Metric (in millions) | 2020 | 2019 | 2018 | % Change 2020 vs. 2019 | % Change 2019 vs. 2018 | | :------------------- | :--- | :--- | :--- | :--------------------- | :--------------------- | | Revenue | $604 | $1,560 | $1,615 | (61)% | (3)% | | Operating Income (Loss) | $(329) | $187 | $183 | n.m. | 2% | | Net Income (Loss) | $(289) | $126 | $113 | n.m. | 12% | | Adjusted EBITDA | $(51) | $438 | $422 | n.m. | 4% | Revenue and Adjusted EBITDA by Segment (2018-2020) | Segment (in millions) | 2020 Revenue | 2019 Revenue | 2018 Revenue | 2020 Adj. EBITDA | 2019 Adj. EBITDA | 2018 Adj. EBITDA | | :-------------------- | :----------- | :----------- | :----------- | :--------------- | :--------------- | :--------------- | | Hotels, Media & Platform | $361 | $939 | $1,001 | $13 | $378 | $329 | | Experiences & Dining | $186 | $456 | $372 | $(79) | $5 | $48 | | Other | $57 | $165 | $242 | $15 | $55 | $45 | | Total | $604 | $1,560 | $1,615 | $(51) | $438 | $422 | - Hotels, Media & Platform revenue decreased by $578 million (62%) in 2020 due to COVID-19, partially offset by reduced advertising and personnel costs, with Adjusted EBITDA decreasing by $365 million (97%)[153][150] - Experiences & Dining revenue decreased by $270 million (59%) in 2020 due to COVID-19, with Adjusted EBITDA decreasing by $84 million, and the segment saw some recovery in Q3 2020, but new restrictions in Q4 negatively impacted trends[157][160][141] - Other revenue decreased by $108 million (65%) in 2020, and Adjusted EBITDA decreased by $40 million (73%), primarily due to COVID-19 and the sale of the SmarterTravel business[161][162] Consolidated Expenses (2018-2020) | Expense Category (in millions) | 2020 | 2019 | 2018 | % Change 2020 vs. 2019 | | :----------------------------- | :--- | :--- | :--- | :--------------------- | | Cost of Revenue | $55 | $94 | $86 | (41)% | | Selling and Marketing | $316 | $672 | $778 | (53)% | | Technology and Content | $220 | $293 | $275 | (25)% | | General and Administrative | $173 | $187 | $177 | (7)% | | Depreciation and Amortization | $125 | $126 | $116 | (1)% | | Impairment of Goodwill | $3 | $0 | $0 | n.m. | | Restructuring Costs | $41 | $1 | $0 | n.m. | - Net cash used in operating activities increased by $618 million in 2020, primarily due to a $415 million decrease in net income and a $209 million increase in working capital use driven by booking cancellations and payments to travel suppliers related to COVID-19[218] - The company expects a $48 million tax refund in 2021 due to U.S. federal NOL carrybacks under the CARES Act[215] - The company is under IRS audit for tax years 2009-2016 and HMRC audit for 2012-2016, with proposed adjustments related to transfer pricing that could result in significant additional tax liabilities ($95-105 million for IRS, $45-55 million for HMRC)[212][214][231][232] Overview Tripadvisor is a leading online travel company helping users plan, book, and experience trips through its global platform and two reportable segments - Tripadvisor's mission is to help people plan, book, and experience the perfect trip through its global travel guidance platform[111] - The platform connects prospective travelers with travel partners via rich content, price comparison tools, and online reservation services for destinations, accommodations, activities, and restaurants[111] - As of December 31, 2020, Tripadvisor featured 884 million reviews and opinions on 7.9 million hotels, restaurants, experiences, airlines, and cruises across 48 markets and 28 languages[111] - The company's reportable segments are Hotels, Media & Platform and Experiences & Dining, with other offerings combined into 'Other'[112] Business Trends The online travel industry is dynamic and competitive, with Tripadvisor's strategy focused on consumer and partner value to increase monetization - The online travel industry is characterized by its large, dynamic, and highly competitive nature[114] - Tripadvisor's strategy is to enhance value for consumers and travel partners to drive increased monetization on its platform[114] - Growth objectives and resource allocation strategies differ in duration and magnitude across the company's segments[114] COVID-19 The COVID-19 pandemic severely impacted Tripadvisor's business in 2020, causing significant declines in demand, revenue, and liquidity, prompting cost reductions - The COVID-19 pandemic caused a significant negative impact on the travel, hospitality, restaurant, and leisure industry, materially affecting Tripadvisor's business, results of operations, liquidity, and financial condition in 2020[115] - Consolidated revenue for 2020 was approximately 40% of the prior year, with April and May revenues at about 10% of prior year levels, improving to 35% in the second half of 2020[118] - Monthly unique users on Tripadvisor websites averaged approximately 67% of prior year levels in the second half of 2020, recovering from 33-45% in April-May, but declined to 60% in Q4 2020 due to new restrictions[118] - The company experienced significant and unanticipated cancellations of future travel, accommodations, and tour bookings, leading to unfavorable working capital trends and negative operating cash flow in 2020[119][22] - Uncertainty remains regarding the duration and severity of the pandemic, vaccine distribution, and long-term changes in consumer travel behavior, making forecasting for 2021 difficult[120][121][22] Liquidity Tripadvisor bolstered liquidity in response to COVID-19 by borrowing, repaying, and amending its credit facility, and issuing $500 million in Senior Notes - In Q1 2020, Tripadvisor borrowed $700 million under its 2015 Credit Facility as a precautionary measure, which was fully repaid in Q3 2020[124][204] - The 2015 Credit Facility was amended in May and December 2020 to suspend the leverage ratio covenant, add a minimum liquidity covenant, secure obligations, downsize capacity to $500 million, and extend the maturity date to May 12, 2024[125][203] - In July 2020, the company completed a private offering of $500 million aggregate principal amount of Senior Notes with a 7.000% interest rate, maturing July 15, 2025, with net proceeds of $490 million used to repay a portion of the 2015 Credit Facility borrowings[126][205] Cost Reduction Measures Tripadvisor implemented significant cost reductions in 2020, including workforce reductions, discretionary spending cuts, and office lease optimization, incurring $41 million in restructuring costs - Cost reduction initiatives in 2020 included eliminating over 900 employees and furloughing approximately 850 employees (primarily in European operations at The Fork), with about 400 re-furloughed in Q4 2020 due to renewed restrictions[127][129] - Other measures included eliminating most discretionary spending, business travel, non-critical vendor relationships, and brand advertising, as well as targeted reductions in the office lease portfolio[127][129] - Total pre-tax restructuring and other related reorganization costs incurred during 2020 amounted to approximately $41 million[130] CARES Act and Other Governmental Relief Tripadvisor benefited from the U.S. CARES Act and international governmental relief programs in 2020, recognizing $23 million in tax benefits and $12 million in grants - The U.S. CARES Act provided an income tax benefit of $23 million to Tripadvisor during 2020[131] - The company recognized $12 million in government grants and other assistance benefits from various governments (including the UK's job retention scheme) in 2020, recorded as a reduction of personnel and overhead costs[131] Hotels, Media & Platform Segment This segment aims to preserve profit and increase customer engagement, but was severely impacted by COVID-19 and faces headwinds from search engines - The Hotels, Media & Platform segment's strategic objective is to preserve profit and drive increased customer engagement and monetization on the Tripadvisor platform[132] - The segment was adversely and materially impacted by the COVID-19 pandemic, with modest performance improvements in Q3 2020 negatively affected by new restrictions in Q4, particularly in Europe[137] - Revenue headwinds were experienced in the SEO marketing channel, attributed to search engines (primarily Google) increasing the prominence of their own hotel products[137] - Initiatives include continuous product innovation, driving membership growth, increasing personalization, and enhancing the mobile app experience to improve user engagement and monetization[139] - New direct-to-consumer initiatives, including a beta-launch of an annual subscription-based offering with hotel and experience discounts and a travel concierge service, were introduced in December 2020[139] Experiences & Dining Segment This segment contributes to user experience and long-term growth, but was materially impacted by COVID-19, despite some recovery and strategic acquisitions - The Experiences & Dining segment's financial results were adversely and materially impacted by the COVID-19 pandemic in 2020[141] - TheFork business unit, primarily in Europe, largely regained prior year revenue levels by September 2020, but new government restrictions in Q4 negatively impacted this trend[141] - New initiatives during the pandemic included offering virtual tours and a beta-launch of an annual subscription-based membership with discounts on experience bookings[142] - The acquisition of U.K.-based Bookatable in December 2019 strengthened TheFork's online restaurant reservation platform, expanding its reach into new European countries and increasing total bookable restaurants to approximately 76,000 by December 31, 2020[144] Other The 'Other' category, including Rentals, Flights & Car, and Cruise, experienced profit and revenue declines due to COVID-19 and a business sale - The 'Other' segment, which includes Rentals, Flights & Car, and Cruise offerings, is not considered a reportable segment[145] - Profits and revenues in this segment declined in 2020 primarily due to the COVID-19 pandemic and, to a lesser extent, the sale of the SmarterTravel business[145] Consolidated Results of Operations Tripadvisor's 2020 consolidated results show significant revenue decline and a net loss, primarily due to COVID-19, impacting all segments and Adjusted EBITDA Selected Financial Data (in millions, except per share amounts) | Metric | 2020 | 2019 | 2018 | % Change 2020 vs. 2019 | % Change 2019 vs. 2018 | | :----------------------------------- | :--- | :--- | :--- | :--------------------- | :--------------------- | | Revenue | $604 | $1,560 | $1,615 | (61)% | (3)% | | Cost of revenue | $55 | $94 | $86 | (41)% | 9% | | Selling and marketing | $316 | $672 | $778 | (53)% | (14)% | | Technology and content | $220 | $293 | $275 | (25)% | 7% | | General and administrative | $173 | $187 | $177 | (7)% | 6% | | Depreciation and amortization | $125 | $126 | $116 | (1)% | 9% | | Impairment of goodwill | $3 | — | — | n.m. | n.m. | | Restructuring and other related costs | $41 | $1 | — | n.m. | n.m. | | Total costs and expenses | $933 | $1,373 | $1,432 | (32)% | (4)% | | Operating income (loss) | $(329) | $187 | $183 | n.m. | 2% | | Interest expense | $(35) | $(7) | $(12) | 400% | (42)% | | Interest income | $3 | $17 | $7 | (82)% | 143% | | Other income (expense), net | $(8) | $(3) | $(5) | 167% | (40)% | | Total other income (expense), net | $(40) | $7 | $(10) | n.m. | n.m. | | Income (loss) before income taxes | $(369) | $194 | $173 | n.m. | 12% | | (Provision) benefit for income taxes | $80 | $(68) | $(60) | n.m. | 13% | | Net income (loss) | $(289) | $126 | $113 | n.m. | 12% | | Adjusted EBITDA | $(51) | $438 | $422 | n.m. | 4% | Revenue and Segment Information Total revenue decreased by 61% to $604 million in 2020 due to COVID-19, with all segments experiencing substantial declines and negative Adjusted EBITDA Revenue by Segment (in millions) | Segment | 2020 | 2019 | 2018 | % Change 2020 vs. 2019 | % Change 2019 vs. 2018 | | :-------------------- | :--- | :--- | :--- | :--------------------- | :--------------------- | | Hotels, Media & Platform | $361 | $939 | $1,001 | (62)% | (6)% | | Experiences & Dining | $186 | $456 | $372 | (59)% | 23% | | Other | $57 | $165 | $242 | (65)% | (32)% | | Total revenue | $604 | $1,560 | $1,615 | (61)% | (3)% | Adjusted EBITDA by Segment (in millions) | Segment | 2020 | 2019 | 2018 | % Change 2020 vs. 2019 | % Change 2019 vs. 2018 | | :-------------------- | :--- | :--- | :--- | :--------------------- | :--------------------- | | Hotels, Media & Platform | $13 | $378 | $329 | (97)% | 15% | | Experiences & Dining | $(79) | $5 | $48 | n.m. | (90)% | | Other | $15 | $55 | $45 | (73)% | 22% | | Total Adjusted EBITDA | $(51) | $438 | $422 | n.m. | 4% | Adjusted EBITDA Margin by Segment | Segment | 2020 | 2019 | 2018 | | :-------------------- | :--- | :--- | :--- | | Hotels, Media & Platform | 4% | 40% | 33% | | Experiences & Dining | (42)% | 1% | 13% | | Other | 26% | 33% | 19% | Hotels, Media & Platform Segment The Hotels, Media & Platform segment's revenue decreased by $578 million (62%) and Adjusted EBITDA by $365 million (97%) in 2020 due to COVID-19 - Hotels, Media & Platform segment revenue decreased by $578 million (62%) in 2020 compared to 2019, primarily due to COVID-19 impacts[153] - Adjusted EBITDA for the segment decreased by $365 million (97%) in 2020, driven by lower revenue, partially offset by reductions in advertising, SEM, and personnel costs[153] Hotels, Media & Platform Revenue Sources (in millions) | Revenue Source | 2020 | 2019 | 2018 | % Change 2020 vs 2019 | % Change 2019 vs 2018 | | :--------------------------------- | :--- | :--- | :--- | :-------------------- | :-------------------- | | Tripadvisor-branded hotels | $292 | $779 | $848 | (63)% | (8)% | | Tripadvisor-branded display and platform | $69 | $160 | $153 | (57)% | 5% | | Total Hotels, Media & Platform revenue | $361 | $939 | $1,001 | (62)% | (6)% | - Tripadvisor-branded hotels revenue, comprising 81% of segment revenue in 2020, decreased by $487 million (63%) due to reduced consumer demand and travel restrictions from COVID-19[155] - Tripadvisor-branded display and platform revenue decreased by $91 million (57%) in 2020, mainly due to decreased marketing spend from advertisers impacted by COVID-19[156] Experiences & Dining Segment The Experiences & Dining segment's revenue decreased by $270 million (59%) and Adjusted EBITDA by $84 million in 2020 due to COVID-19 - Experiences & Dining segment revenue decreased by $270 million (59%) in 2020, primarily due to a significant reduction in consumer demand and widespread travel restrictions caused by COVID-19[157] - Adjusted EBITDA for the segment decreased by $84 million in 2020, driven by lower revenue, partially offset by reduced selling and marketing expenses and personnel costs[160] - Incremental revenue of approximately $31 million from the December 2019 acquisitions of Bookatable and SinglePlatform partially offset the negative impact of COVID-19 on segment revenue[159] Other The 'Other' segment's revenue decreased by $108 million (65%) and Adjusted EBITDA by $40 million (73%) in 2020 due to COVID-19 and a business sale - Other revenue decreased by $108 million (65%) in 2020, primarily due to decreased consumer demand from COVID-19 and the sale of the SmarterTravel business[161] - Adjusted EBITDA in the 'Other' segment decreased by $40 million (73%) in 2020, driven by lower revenue, partially offset by reduced selling and marketing expenses and personnel costs[162] Consolidated Expenses Consolidated expenses decreased across most categories in 2020 due to COVID-19 cost reductions, though interest expense increased and goodwill impairment was recorded Cost of Revenue (in millions) | Category | 2020 | 2019 | 2018 | % Change 2020 vs 2019 | | :-------------------- | :--- | :--- | :--- | :-------------------- | | Direct costs | $34 | $71 | $67 | (52)% | | Personnel and overhead | $21 | $23 | $19 | (9)% | | Total cost of revenue | $55 | $94 | $86 | (41)% | - Cost of revenue decreased by $39 million (41%) in 2020, primarily due to decreased direct costs (credit card payments, transaction costs) in the Experiences & Dining segment, correlating with reduced revenue from COVID-19[164] Selling and Marketing Expenses (in millions) | Category | 2020 | 2019 | 2018 | % Change 2020 vs 2019 | | :-------------------- | :--- | :--- | :--- | :-------------------- | | Direct costs | $128 | $433 | $553 | (70)% | | Personnel and overhead | $188 | $239 | $225 | (21)% | | Total selling and marketing | $316 | $672 | $778 | (53)% | - Direct selling and marketing costs decreased by $305 million (70%) in 2020, mainly due to reduced SEM, online traffic acquisition, and television advertising costs in response to COVID-19[167] - Selling and marketing personnel and overhead costs decreased by $51 million (21%) in 2020 due to headcount reductions and $6 million in government grants[168] Technology and Content Expenses (in millions) | Category | 2020 | 2019 | 2018 | % Change 2020 vs 2019 | | :-------------------- | :--- | :--- | :--- | :-------------------- | | Personnel and overhead | $194 | $260 | $246 | (25)% | | Other | $26 | $33 | $29 | (21)% | | Total technology and content | $220 | $293 | $275 | (25)% | - Technology and content costs decreased by $73 million (25%) in 2020, primarily due to reduced personnel and overhead costs from headcount reductions and $4 million in government grants[170] General and Administrative Expenses (in millions) | Category | 2020 | 2019 | 2018 | % Change 2020 vs 2019 | | :-------------------- | :--- | :--- | :--- | :-------------------- | | Personnel and overhead | $119 | $135 | $129 | (12)% | | Professional service fees and other | $54 | $52 | $48 | 4% | | Total general and administrative | $173 | $187 | $177 | (7)% | - General and administrative costs decreased by $14 million (7%) in 2020, mainly due to headcount reductions and $2 million in government grants, partially offset by increased bad debt expense[173] Depreciation and Amortization (in millions) | Category | 2020 | 2019 | 2018 | | :-------------------------- | :--- | :--- | :--- | | Depreciation | $99 | $93 | $82 | | Amortization of intangible assets | $26 | $33 | $34 | | Total depreciation and amortization | $125 | $126 | $116 | - Depreciation and amortization decreased by $1 million (1%) in 2020, due to the completion of amortization for certain intangible assets, partially offset by increased depreciation from capitalized software and website development[175] - A goodwill impairment charge of $3 million was recorded in Q3 2020 related to the Tripadvisor China reporting unit due to strategic operating decisions[178] - Restructuring and other related reorganization costs totaled $41 million in 2020, primarily for employee severance and benefits due to COVID-19 related workforce reductions[180] Interest Expense Interest expense significantly increased by $28 million to $35 million in 2020 due to new Senior Notes and higher credit facility borrowings Interest Expense (in millions) | Metric | 2020 | 2019 | 2018 | | :------------- | :--- | :--- | :--- | | Interest expense | $(35) | $(7) | $(12) | - Interest expense increased by $28 million in 2020, driven by the issuance of Senior Notes in July 2020 and higher average outstanding borrowings from the 2015 Credit Facility[182] Interest Income Interest income decreased by $14 million to $3 million in 2020 due to lower average interest rates and reduced invested funds Interest Income (in millions) | Metric | 2020 | 2019 | 2018 | | :------------ | :--- | :--- | :--- | | Interest income | $3 | $17 | $7 | - Interest income decreased by $14 million in 2020, primarily due to lower average interest rates on investments and reduced average invested funds[184] Other Income (Expense), Net Other expense, net, increased by $5 million to $8 million in 2020, driven by a business sale loss and equity investment losses, partially offset by currency gains Other Income (Expense), Net (in millions) | Metric | 2020 | 2019 | 2018 | | :------------------------ | :--- | :--- | :--- | | Other income (expense), net | $(8) | $(3) | $(5) | - Other expense, net, increased by $5 million in 2020, driven by a $6 million loss on business sale, a $3 million allowance for credit losses on a long-term note receivable, and $3 million in net losses from an equity method investment[187] - These increases were partially offset by net foreign currency transaction gains due to exchange rate fluctuations[187] (Provision) Benefit for Income Taxes Tripadvisor recorded an $80 million income tax benefit in 2020, a shift from prior year expense, due to pretax losses and CARES Act benefits (Provision) Benefit for Income Taxes (in millions) | Metric | 2020 | 2019 | 2018 | | :----------------------------------- | :--- | :--- | :--- | | (Provision) benefit for income taxes | $80 | $(68) | $(60) | | Effective tax rate | 21.7% | 35.1% | 34.7% | - The company recognized an $80 million income tax benefit in 2020, a decrease of $148 million compared to the $68 million expense in 2019[188] - This benefit was primarily driven by significant pretax losses in 2020 and a $23 million income tax benefit from U.S. loss carryforwards eligible for carryback under the CARES Act[188] - Offsetting factors included foreign valuation allowances and increased recognition of stock-based compensation shortfalls due to the decline in the company's common stock price[188] Net income (loss) Tripadvisor reported a net loss of $289 million in 2020, a $415 million decline from 2019, primarily due to COVID-19 revenue impacts Net Income (Loss) (in millions) | Metric | 2020 | 2019 | 2018 | | :-------------------- | :--- | :--- | :--- | | Net income (loss) | $(289) | $126 | $113 | | Net income (loss) margin | (47.8)% | 8.1% | 7.0% | - Net income decreased by $415 million in 2020, resulting in a net loss of $289 million, primarily due to the negative impact of COVID-19 on revenue[189] - This decline was partially offset by a decrease in total costs and expenses, driven by cost reduction measures implemented in response to the pandemic[189] Adjusted EBITDA Adjusted EBITDA shifted to a $51 million loss in 2020 from a $438 million profit in 2019, reflecting severe COVID-19 impact on operating performance - Adjusted EBITDA is a non-GAAP financial measure used by management and the board to evaluate financial performance, understand the business, and base budgets and forecasts[192] - Adjusted EBITDA is defined as net income (loss) plus (1) income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation; (5) goodwill, intangible asset, and long-lived asset impairments; (6) legal reserves and settlements; (7) restructuring costs; and (8) other non-recurring expenses and income[192] Reconciliation of Adjusted EBITDA to Net Income (in millions) | Metric | 2020 | 2019 | 2018 | | :---------------------------------------------------- | :--- | :--- | :--- | | Net income (loss) | $(289) | $126 | $113 | | Add: (Benefit) provision for income taxes | $(80) | $68 | $60 | | Add: Other expense (income), net | $40 | $(7) | $10 | | Add: Restructuring and other related reorganization costs | $41 | $1 | — | | Add: Impairment of goodwill | $3 | — | — | | Add: Legal reserves and settlements | — | — | $5 | | Add: Stock-based compensation | $109 | $124 | $118 | | Add: Depreciation and amortization | $125 | $126 | $116 | | Adjusted EBITDA | $(51) | $438 | $422 | Liquidity and Capital Resources COVID-19 led to negative operating cash flow in 2020, prompting credit facility amendments, Senior Notes issuance, and CARES Act benefits, with ongoing tax audit risks - As of December 31, 2020, Tripadvisor had $418 million in cash and cash equivalents and $497 million in available borrowing capacity under its 2015 Credit Facility[198] - The 2015 Credit Facility was amended in 2020 to suspend the leverage ratio covenant, add a minimum liquidity covenant, downsize capacity to $500 million, and extend maturity to May 12, 2024, also limiting share repurchases and dividends during the 'Leverage Covenant Holiday'[203] - In July 2020, the company issued $500 million in 7.000% Senior Notes due 2025, using the $490 million net proceeds to repay a portion of the 2015 Credit Facility borrowings[205] - Net cash used in operating activities increased by $618 million in 2020, primarily due to decreased net income and a $209 million increase in working capital use from booking cancellations and payments to suppliers related to COVID-19[218] - The CARES Act allowed for U.S. federal NOL carrybacks, generating an expected $48 million tax refund in 2021[215] - The company is under IRS audit (2009-2016) and HMRC audit (2012-2016) regarding transfer pricing, with proposed adjustments potentially increasing worldwide income tax expense by $95-105 million (IRS) and $45-55 million (HMRC), exclusive of interest[212][214][231][232] Cash Flows (in millions) | Activity | 2020 | 2019 | 2018 | | :-------------------------- | :--- | :--- | :--- | | Operating activities | $(194) | $424 | $405 | | Investing activities | $(56) | $(176) | $(49) | | Financing activities | $341 | $(580) | $(358) | Material Contractual Obligations and Commercial Commitments (as of Dec 31, 2020, in millions) | Obligation | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | | :--------------------------------------- | :---- | :--------------- | :----------- | :----------- | :---------------- | | Senior Notes | $500 | — | — | $500 | — | | Expected interest payments on Senior Notes | $161 | $35 | $71 | $55 | — | | Finance lease obligations | $96 | $10 | $20 | $20 | $46 | | Operating lease obligations | $72 | $25 | $34 | $11 | $2 | | Expected commitment fee payments on 2015 Credit Facility | $9 | $3 | $5 | $1 | — | | Long-term income taxes payable | $3 | — | — | $3 | — | | Purchase obligations | $19 | $8 | $9 | $1 | $1 | | Total | $860 | $81 | $139 | $591 | $49 | Certain Relationships and Related Party Transactions Information on certain relationships and related party transactions is referenced to Note 19: Related Party Transactions in the consolidated financial statements - Related party transactions are detailed in Note 19: Related Party Transactions of the consolidated financial statements[236] Critical Accounting Policies and Estimates Financial statements rely on critical accounting policies and estimates for goodwill, intangibles, and income taxes, with COVID-19 amplifying judgment and uncertainty - Critical accounting policies and estimates require significant management judgment and assumptions, which, if changed, could materially impact financial condition or results of operations[237][238] - Key critical estimates include the recognition and recoverability of goodwill, definite-lived intangibles, and other long-lived assets, as well as accounting for income taxes[240][252] - The COVID-19 pandemic has increased the judgment required for these estimates, leading to higher variability and volatility, with potential for material changes in future periods[318] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Tripadvisor is exposed to interest rate and foreign currency risks, managed through natural hedges and forward contracts, with COVID-19 amplifying foreign currency volatility - Tripadvisor's primary market risk exposures are to changes in interest rates and foreign currency exchange rates, stemming from international operations and financial activities[257][259][263] - Interest rate exposure relates to cash, cash equivalents, investment portfolio, Senior Notes, and 2015 Credit Facility borrowings, with the Senior Notes having a fixed rate of 7.0%, making the company sensitive to fair value changes if market rates decline[259][261] - A hypothetical 100 basis point increase or decrease in interest rates would decrease or increase the fair value of the Senior Notes by an estimated $8 million as of December 31, 2020[261] - Foreign currency exchange rate exposure arises from international subsidiaries (e.g., Europe, UK, Singapore, Australia) whose financial results are translated into U.S. dollars, with a hypothetical 10% strengthening of the U.S. dollar resulting in an estimated unrealized loss of $38 million on net assets[263][264] - The company uses short-term foreign currency forward exchange contracts (not designated as hedges) to manage foreign currency risk, primarily for Euro vs. U.S. Dollar, with a net notional value of $3 million as of December 31, 2020[266][269] - Brexit has caused significant volatility in currency exchange rates, particularly between the U.S. dollar and the British pound, which may continue to impact business and results of operations[270] Item 8. Financial Statements and Supplementary Data This section presents Tripadvisor's audited consolidated financial statements for 2020, 2019, and 2018, including the independent auditor's report and extensive notes - The consolidated financial statements for the years ended December 31, 2020, 2019, and 2018 are presented, including statements of operations, comprehensive income (loss), balance sheets, changes in stockholders' equity, and cash flows[272] - KPMG LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[275][276] - A critical audit matter identified was the sufficiency of audit evidence over revenue, requiring subjective auditor judgment due to multiple revenue streams and IT systems[282] Consolidated Statements of Operations (in millions, except per share amounts) | Metric | 2020 | 2019 | 2018 | | :----------------------------------- | :--- | :--- | :--- | | Revenue | $604 | $1,560 | $1,615 | | Total costs and expenses | $933 | $1,373 | $1,432 | | Operating income (loss) | $(329) | $187 | $183 | | Income (loss) before income taxes | $(369) | $194 | $173 | | (Provision) benefit for income taxes | $80 | $(68) | $(60) | | Net income (loss) | $(289) | $126 | $113 | | Basic EPS | $(2.14) | $0.91 | $0.82 | | Diluted EPS | $(2.14) | $0.89 | $0.81 | Consolidated Balance Sheets (in millions) | Asset/Liability | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $418 | $319 | | Accounts receivable and contract assets, net | $83 | $183 | | Total current assets | $573 | $533 | | Property and equipment, net | $240 | $270 | | Operating lease right-of-use assets | $54 | $74 | | Intangible assets, net | $86 | $110 | | Goodwill | $862 | $840 | | Total Assets | $1,969 | $1,984 | | Accounts payable | $18 | $11 | | Deferred merchant payables | $36 | $159 | | Deferred revenue | $28 | $62 | | Total current liabilities | $242 | $435 | | Long-term debt | $491 | — | | Total Liabilities | $1,083 | $823 | | Total Stockholders' Equity | $886 | $1,161 | | Total Liabilities and Stockholders' Equity | $1,969 | $1,984 | Consolidated Statements of Cash Flows (in millions) | Activity | 2020 | 2019 | 2018 | | :---------------------------------------- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(194) | $424 | $405 | | Net cash provided by (used in) investing activities | $(56) | $(176) | $(49) | | Net cash provided by (used in) financing activities | $341 | $(580) | $(358) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $99 | $(336) | $(18) | | Cash, cash equivalents and restricted cash at end of period | $418 | $319 | $655 | NOTE 1: ORGANIZATION AND BUSINESS DESCRIPTION Tripadvisor, an online travel company controlled by LTRIP, was severely impacted by COVID-19 in 2020, leading to financial strengthening measures and disrupted seasonality - Tripadvisor, Inc. was co-founded in February 2000 and spun off from Expedia in December 2011, becoming an independent public company[44][299] - Liberty Tripadvisor Holdings, Inc. (LTRIP) beneficially owned approximately 14.9% of common stock and 100% of Class B common stock as of December 31, 2020, representing 58.5% of voting power[46][301] - The company operates a global travel guidance platform under the flagship Tripadvisor brand and a portfolio of other online travel brands, featuring 884 million reviews on 7.9 million listings across 48 markets[302][303] - The COVID-19 pandemic caused material and adverse declines in consumer demand, impacting results of operations, liquidity, and financial condition in 2020, leading to increased provision for expected credit losses and higher cash outlays for cancellations[304][306] - In response to COVID-19, Tripadvisor strengthened its financial position through restructuring, reducing operating expenses and headcount, borrowing and repaying $700 million from its credit facility, amending the credit facility, and issuing $500 million in Senior Notes[309] - The company recognized $23 million in income tax benefits from the CARES Act and $12 million in government grants and assistance in 2020[310][313] - Typical seasonal patterns for revenue and profit were disrupted in 2020 due to COVID-19, with cash outflows to travel suppliers significantly exceeding cash received from travelers, leading to negative operating cash flow in the first half of the year[22][314] NOTE 2: SIGNIFICANT ACCOUNTING POLICIES This note outlines Tripadvisor's accounting policies, including revenue recognition, expense classifications, stock-based compensation, and asset valuations, with COVID-19 impacting estimates - The consolidated financial statements are prepared in accordance with U.S. GAAP, consolidating wholly-owned subsidiaries and variable interest entities where Tripadvisor is the primary beneficiary[315] - Critical accounting estimates, requiring significant judgment, include the recognition and recoverability of goodwill, definite-lived intangibles, other long-lived assets, and accounting for income taxes[316] - The COVID-19 pandemic has increased uncertainty in macroeconomic conditions, leading to higher variability and volatility in accounting estimates[318] - Advertising costs, including online (SEM, traffic acquisition) and offline (television) expenses, are recorded as selling and marketing expense in the period the advertisement takes place[322] - Stock-based compensation for stock options, RSUs, performance-based awards, and market-based awards is amortized over the vesting term, typically four years[326][328][329][330] - The company adopted ASC 326 (Credit Losses) on January 1, 2020, transitioning to an 'expected credit loss' methodology for financial assets, resulting in a $3 million cumulative-effect adjustment to retained earnings[373] Allowance for Credit Losses (in millions) | Metric | 2020 | 2019 | 2018 | | :-------------------------------------------- | :--- | :--- | :--- | | Balance, beginning of period | $25 | $21 | $16 | | Provision charged to expense | $17 | $11 | $11 | | Write-offs, net of recoveries and other adjustments | $(9) | $(7) | $(6) | | Balance, end of period | $33 | $25 | $21 | - Goodwill is assessed for impairment annually or more frequently if circumstances indicate, using qualitative or quantitative assessments (income and market approaches), with a $3 million goodwill impairment recognized in 2020 for Tripadvisor China[353][458] - The company's two most significant travel partners, Expedia and Booking, accounted for a combined 25% of consolidated revenue in 2020, down from 33% in 2019 and 37% in 2018, with revenue concentrated in the Hotels, Media & Platform segment[367] NOTE 3: ACQUISITIONS AND OTHER INVESTMENTS Tripadvisor made no material acquisitions in 2020, but completed three acquisitions in 2019 for $109 million to strengthen its Dining offering - No material acquisitions were made during the year ended December 31, 2020[380] - In 2019, Tripadvisor completed three acquisitions (SinglePlatform, Bookatable, Restorando) for a total purchase price of $109 million, primarily to enhance its Dining offering[381] 2019 Acquisitions Purchase Price Allocation (in millions) | Category | Total | | :----------------------------- | :---- | | Goodwill | $88 | | Intangible assets | $26 | | Net tangible assets (liabilities) | $(5) | | Total purchase price consideration | $109 | - Identifiable definite-lived intangible assets acquired in 2019 included trade names, customer lists, supplier relationships, subscriber relationships, and technology, with an overall weighted-average life of 6 years[384] - In 2018, one acquisition was completed for a purchase price of $23 million, resulting in $11 million in goodwill and $14 million in intangible assets[386][387] NOTE 4: REVENUE RECOGNITION Revenue is recognized when performance obligations are satisfied, primarily from click-based advertising and commissions across segments, with COVID-19 impacting contract balances - Revenue is recognized when performance obligations are satisfied by transferring control of promised services to a customer, primarily at a point in time for all reported segments[389][408] - Hotels, Media & Platform revenue is largely from click-based advertising (CPC) on Tripadvisor-branded websites, with revenue recognized as clicks occur, also including subscription-based advertising and CPA model commissions recognized upon booking[394][395] - Experiences & Dining revenue is primarily from commissions on booking transactions, recognized when the activity occurs, with Dining revenue also including transaction fees (per seated diner) and subscription fees[399][400] - The 'Other' segment (Rentals, Flights & Car, Cruise) generates revenue from commissions on rental transactions (recognized at rental commencement) and click-based/display advertising[401][404] Major Products/Revenue Sources (in millions) | Major products/revenue sources | 2020 | 2019 | 2018 | | :----------------------------- | :--- | :--- | :--- | | Tripadvisor-branded hotels | $292 | $779 | $848 | | Tripadvisor-branded display and platform | $69 | $160 | $153 | | Total Hotels, Media & Platform | $361 | $939 | $1,001 | | Experiences & Dining | $186 | $456 | $372 | | Other | $57 | $165 | $242 | | Total Revenue | $604 | $1,560 | $1,615 | - In 2020, the company recorded approximately $6 million of incremental allowance for expected credit losses on accounts receivable and contract assets due to COVID-19[411] - Deferred revenue balances were impacted by COVID-19, with $11 million refunded due to cancellations in 2020, compared to $2 million in 2019[412] NOTE 5: FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Tripadvisor's financial instruments include $418 million in cash, short-term forward contracts for foreign currency risk, and equity method investments, with Senior Notes valued at $542 million - As of December 31, 2020, cash and cash equivalents totaled $418 million, consisting of bank deposits[416] - The company uses short-term foreign currency forward exchange contracts (not designated as hedges) to reduce foreign currency risk, primarily for Euro vs. U.S. Dollar, with a net notional value of $3 million as of December 31, 2020[417][419] - The fair value of the $500 million Senior Notes was estimated at approximately $542 million as of December 31, 2020, classified as a Level 2 fair value measurement[422] - In November 2019, Tripadvisor acquired a 40% equity investment in Chelsea Investment Holding Company PTE Ltd. (China business combination) for $41 million, accounted for under the equity method, with its carrying value at $38 million as of December 31, 2020[424][425] - Other minority equity investments in privately-held companies had a total carrying value of $2 million as of December 31, 2020, down from $14 million in 2019 due to a $10 million redemption for collateralized notes receivable[427][429] - In June 2020, the company received $20 million in collateralized Notes Receivable from a privately-held company in exchange for an existing equity investment and other long-term receivables, with a $3 million allowance for credit loss recorded on these notes[431] NOTE 6: PROPERTY AND EQUIPMENT, NET Property and equipment, net, totaled $240 million in 2020, including capitalized software and finance lease assets, with $63 million capitalized and $67 million amortized Property and Equipment, Net (in millions) | Category | Dec 31, 2020 | Dec 31, 2019 | | :----------------------------------- | :----------- | :----------- | | Capitalized software and website development | $371 | $335 | | Finance lease right-of-use asset | $114 | $114 | | Leasehold improvements | $49 | $49 | | Computer equipment and purchased software | $71 | $70 | | Furniture, office equipment and other | $21 | $21 | | Less: accumulated depreciation | $(386) | $(319) | | Total | $240 | $270 | - The carrying value of capitalized software and website development costs, net of accumulated amortization, was $108 million as of December 31, 2020[434] - In 2020, the company capitalized $63 million in software and website development costs and recorded $67 million in amortization for these costs[434] - During 2020, $31 million of fully depreciated capitalized software and website development assets were retired and disposed of[436] NOTE 7: LEASES Tripadvisor leases office space globally, with total lease liabilities of $143 million in 2020, recognizing ROU assets and liabilities based on present value of payments - Tripadvisor's Headquarters Lease in Needham, Massachusetts, is accounted for as a finance lease, while other office spaces globally are operating leases[346][441][447] - Operating lease ROU assets and liabilities are recognized at lease commencement based on the present value of lease payments, using the estimated incremental borrowing rate[442] Lease Assets and Liabilities (in millions) | Category | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------------------- | :----------- | :----------- | | Finance lease ROU assets | $95 | $105 | | Operating lease ROU assets | $54 | $74 | | Current finance lease liabilities | $5 | $5 | | Current operating lease liabilities | $21 | $20 | | Noncurrent finance lease liabilities | $71 | $78 | | Noncurrent operating lease liabilities | $46 | $64 | | Total lease liabilities | $143 | $167 | Components of Lease Expense (in millions) | Category | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Operating lease cost | $28 | $24 | | Finance lease amortization | $10 | $9 | | Finance lease interest | $4 | $4 | | Sublease income on operating leases | $(3) | $(3) | | Total lease cost, net | $39 | $34 | Future Lease Payments (as of Dec 31, 2020, in millions) | Year Ending December 31, | Operating Leases | Finance Lease | | :----------------------- | :--------------- | :------------ | | 2021 | $25 | $10 | | 2022 | $21 | $10 | | 2023 | $13 | $10 | | 2024 | $8 | $10 | | 2025 | $3 | $10 | | Thereafter | $2 | $46 | | Total future lease payments | $72 | $96 | NOTE 8: GOODWILL AND INTANGIBLE ASSETS, NET Goodwill was reallocated to new reporting units in 2020, with a $3 million impairment for Tripadvisor China, and no further impairment found in annual tests - In Q2 2020, Tripadvisor reorganized its reporting units, reallocating goodwill from legacy Dining and Flights/Cruises/Car into four new units: TheFork, Tripadvisor Restaurants, Flights & Car, and Cruises[456][457] - A goodwill impairment charge of $3 million was recognized in Q3 2020, representing all goodwill allocated to the Tripadvisor China reporting unit, due to strategic operating decisions[458] - The annual goodwill impairment test in Q4 2020, a qualitative assessment, determined that the fair value of all remaining reporting units exceeded their carrying values, with no further impairment charges[458] Goodwill Activity by Reportable Segment (in millions) | Segment | Dec 31, 2019 | Re-allocation of goodwill | Impairment | Disposition | Foreign currency translation adjustments | Other adjustments | Dec 31, 2020 | | :-------------------- | :----------- | :------------------------ | :--------- | :---------- | :--------------------------------------- | :---------------- | :----------- | | Hotels, Media & Platform | $405 | $2 | — | — | — | — | $407 | | Experiences & Dining | $333 | — | — | — | $21 | $8 | $362 | | Other | $102 | $(2) | $(3) | $(6) | $2 | — | $93 | | Total | $840 | — | $(3) | $(6) | $23 | $8 | $862 | - Intangible assets with definite lives, totaling $56 million net as of December 31, 2020, are amortized on a straight-line basis, with amortization expense at $26 million in 2020[465] - Indefinite-lived intangible assets (trade names and trademarks) totaled $30 million, with a qualitative assessment in Q4 2020 concluding no impairment[465][467] Estimated Amortization Expense for Definite-Lived Intangible Assets (in millions) | Year | Amount | | :--- | :----- | | 2021 | $20 | | 2022 | $13 | | 2023 | $10 | | 2024 | $6 | | 2025 | $4 | | 2026 and thereafter | $3 | NOTE 9: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities decreased to $160 million in 2020, driven by lower accrued salary, bonus, marketing costs, and payment of $42 million in restructuring costs Accrued Expenses and Other Current Liabilities (in millions) | Category | Dec 31, 2020 | Dec 31, 2019 | | :--------------------------------------- | :----------- | :----------- | | Accrued salary, bonus, and related benefits | $49 | $74 | | Accrued marketing costs | $13 | $27 | | Interest payable | $18 | — | | Current income taxes payable | $1 | $14 | | Finance lease obligation - current portion | $5 | $5 | | Operating lease liabilities - current portion | $21 | $20 | | Restructuring and other related reorganization costs | — | $1 | | Other | $53 | $62 | | Total | $160 | $203 | - Total accrued expenses and other current liabilities decreased by $43 million in 2020[473] - The company incurred $41 million in pre-tax restructuring and other related reorganization costs in 2020, primarily for employee severance and benefits due to COVID-19 related workforce reductions, with all $42 million of accrued liability from 2019 and 2020 charges paid by year-end 2020[473][475] NOTE 10: DEBT Tripadvisor's debt structure changed significantly in 2020 with amendments to its 2015 Credit Facility and the issuance of $500 million in 7.000% Senior Notes due 2025 - The 2015 Credit Facility was amended in May and December 2020 to suspend the leverage ratio covenant, add a minimum liquidity covenant, secure obligations, decrease capacity to $500 million (from $1.2 billion), and extend the maturity date to May 12, 2024[477][479] - In Q1 2020, Tripadvisor borrowed $700 million under the 2015 Credit Facility as a precautionary measure, which was fully repaid in Q3 2020[480] - The company issued $500 million aggregate principal amount of 7.000% Senior Notes due July 15, 2025, in July 2020, with net proceeds of $490 million used to repay a portion of the 2015 Credit Facility borrowings[486](