TripAdvisor(TRIP) - 2021 Q3 - Quarterly Report

Part I—Financial Information Item 1. Unaudited Condensed Financial Statements This section presents Tripadvisor's unaudited condensed consolidated financial statements, including statements of operations, comprehensive income (loss), balance sheets, changes in stockholders' equity, and cash flows for the periods ended September 30, 2021, and December 31, 2020, along with detailed notes Unaudited Condensed Consolidated Statements of Operations | Metric (in millions) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $303 | $151 | $661 | $488 | | Operating income (loss) | $16 | $(46) | $(103) | $(237) | | Net income (loss) | $1 | $(48) | $(119) | $(217) | | Basic EPS | $0.01 | $(0.36) | $(0.87) | $(1.61) | | Diluted EPS | $0.01 | $(0.36) | $(0.87) | $(1.61) | | Basic Shares O/S | 138 | 134 | 137 | 135 | | Diluted Shares O/S | 144 | 134 | 137 | 135 | Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric (in millions) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $1 | $(48) | $(119) | $(217) | | Foreign currency translation adjustments, net of tax | $(10) | $13 | $(19) | $7 | | Reclassification adjustments included in net income (loss), net of tax | $2 | — | $2 | $1 | | Total other comprehensive income (loss), net of tax | $(8) | $13 | $(17) | $8 | | Comprehensive income (loss) | $(7) | $(35) | $(136) | $(209) | Unaudited Condensed Consolidated Balance Sheets | Metric (in millions) | Sep 30, 2021 | Dec 31, 2020 | | :------------------- | :----------- | :----------- | | Total current assets | $960 | $573 | | Total assets | $2,312 | $1,969 | | Total current liabilities | $363 | $242 | | Total liabilities | $1,518 | $1,083 | | Total Stockholders' Equity | $794 | $886 | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric (in millions) | Balance as of Dec 31, 2020 | Net Income (Loss) | Other Comprehensive Income (Loss) | Issuance of common stock | Withholding taxes | Stock-based compensation | Balance as of Sep 30, 2021 | | :------------------- | :------------------------- | :---------------- | :-------------------------------- | :----------------------- | :---------------- | :----------------------- | :------------------------- | | Additional paid-in capital | $1,253 | — | — | $8 | $(39) | $101 | $1,297 | | Retained earnings | $389 | $(119) | — | — | — | — | $270 | | Accumulated other comprehensive income (loss) | $(34) | — | $(17) | — | — | — | $(51) | | Total Stockholders' Equity | $886 | $(119) | $(17) | $8 | $(39) | $101 | $794 | Unaudited Condensed Consolidated Statements of Cash Flows | Metric (in millions) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :------------------- | :-------------------------- | :-------------------------- | | Net cash provided by (used in) operating activities | $43 | $(180) | | Net cash provided by (used in) investing activities | $(41) | $(46) | | Net cash provided by (used in) financing activities | $269 | $349 | | Net increase in cash, cash equivalents and restricted cash | $264 | $127 | | Cash, cash equivalents and restricted cash at end of period | $682 | $446 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering business description, accounting policies, revenue recognition, financial instruments, debt, income taxes, commitments, contingencies, stock-based awards, stockholders' equity, earnings per share, segment information, and other income/expense NOTE 1: BUSINESS DESCRIPTION AND BASIS OF PRESENTATION Tripadvisor is a global online travel guidance platform. The financial statements are prepared in accordance with GAAP, consolidating wholly-owned subsidiaries and variable interest entities. Liberty TripAdvisor Holdings, Inc. (LTRIP) holds a significant voting interest (57.0%). The company continues to face risks and uncertainties due to the COVID-19 pandemic, which has impacted travel demand and led to restructuring actions Description of Business - Tripadvisor is a leading online travel company operating a global travel guidance platform[37] - Connects travelers with partners through content, price comparison, and online reservation services for destinations, accommodations, activities, and restaurants[37] - Operates the flagship Tripadvisor brand in over 40 markets and a portfolio of other online travel brands[37] Basis of Presentation - Financial statements are consolidated, including wholly-owned subsidiaries and variable interest entities (VIEs) in China[38] - Prepared in accordance with GAAP and SEC interim reporting requirements[39] - LTRIP beneficially owns 57.0% of voting power as of September 30, 2021[40] Risks and Uncertainties - COVID-19 pandemic continues to pose significant risks and uncertainties, impacting travel demand and leading to government restrictions[41][42][44] - Company undertook restructuring actions in 2020, including headcount reductions, recognizing $42 million in costs[43][44] - Uncertainty remains regarding vaccine distribution, efficacy against variants (e.g., Delta), and the long-term impact on consumer travel demand[44] Accounting Estimates - Significant estimates include goodwill recognition/recoverability and income taxes[45] - COVID-19 has increased judgment and variability in estimates[45] Seasonality - Historically, financial performance is highest in Q2 and Q3 due to peak consumer travel[46] - COVID-19 disrupted typical seasonal patterns in 2020, but trends improved in Q2 and Q3 2021[46] - Future seasonality remains uncertain due to the pandemic and potential shifts in business mix[46] NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The company early adopted new FASB guidance in Q1 2021, simplifying accounting for convertible debt instruments, specifically applied to its 2026 Senior Notes, with no impact on prior periods. No other significant changes to accounting policies since December 31, 2020 - Early adopted new FASB guidance in Q1 2021 for convertible debt instruments, treating them as a single liability at amortized cost[47] - Applied to 2026 Senior Notes, with no impact on prior periods[47] - No other significant changes to accounting policies since December 31, 2020[48] NOTE 3: REVENUE RECOGNITION