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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

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

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

We refer to ~~TripAdvisor,~~Tripadvisor, Inc. and our wholly-owned subsidiaries as ~~“TripAdvisor,”~~“Tripadvisor”, “the ~~Company,” “us,”~~Company”, “us”, “we” and “our” in these notes to the unaudited condensed consolidated financial statements.

~~TripAdvisor~~Tripadvisor operates the world’s largest travel guidance platform, connecting a global audience of prospective travelers with travel partners through rich content, price comparison tools, and online reservation and related services for destinations, accommodations, travel activities and experiences, and restaurants. Our mission is ~~an online travel company, empowering users~~ to help people around the world plan, book and ~~book~~experience the perfect ~~trip. TripAdvisor’s~~trip.

In 2000, under our flagship brand Tripadvisor, we launched www.Tripadvisor.com in the U.S. Since then, we have built a portfolio of travel ~~platform aggregates reviews~~guidance brands and ~~opinions of members about~~ businesses, seamlessly connecting travelers to destinations, accommodations, travel activities and ~~attractions,~~experiences, and restaurants throughout the world so that our users have access to trusted advice wherever their trips take them. Our platform helps users plan their trips with our unique user-generated content and enables users to compare real-time pricing and availability so that they can book hotels, flights, cruises, vacation rentals, activities and attractions, and restaurant reservations.

~~Our flagship brand is TripAdvisor. TripAdvisor-branded websites include tripadvisor.com~~ in ~~the United States and localized versions of the website in 48~~over 40 markets ~~and 28 languages~~ worldwide. In addition to the flagship TripAdvisor brand, we manage and operate the following 20 other travel media brands, connected by the common goal of providing users the most comprehensive travel-planning and trip-taking resources in the travel industry: www.airfarewatchdog.com, www.bookingbuddy.com, www.citymaps.com, www.cruisecritic.com, www.familyvacationcritic.com, www.flipkey.com, www.thefork.com (including www.lafourchette.com, www.eltenedor.com, www.iens.nl, and www.dimmi.com.au), www.gateguru.com, www.holidaylettings.co.uk, www.holidaywatchdog.com, www.housetrip.com, www.jetsetter.com, www.niumba.com, www.onetime.com, www.oyster.com, www.seatguru.com, www.smartertravel.com, www.tingo.com, www.vacationhomerentals.com, and www.viator.com.

Risks and Uncertainties

We continue to be subject to risks and uncertainties as a result of the COVID-19 pandemic. The timing of widespread vaccine distributions, efficacy against any future or existing variants (e.g., Delta and Omicron) of COVID-19, whether there will be resurgences of the virus and subsequent government restrictions, the extent and effectiveness of containment actions taken, and whether consumers' demand for travel and hospitality services continue to be negatively impacted remain uncertain. We do not know the future path or potential rate of global or regional COVID-19 resurgences, including existing COVID-19 variants (e.g., Delta and Omicron) or future variants, if any, nor do we have visibility into when remaining or reinstated restrictions will be lifted, and where

additional restrictions may be implemented or reinstated in the future due to resurgence of the virus. Correspondingly, we still do not have forward-looking visibility into the long-term impacts related to consumer demand for travel, usage patterns on our platform, and travel behavior patterns when all travel bans and other government restrictions and mandates are fully lifted.

Therefore, the continuing extent of the impact of the COVID-19 pandemic on our business, results of operations, liquidity and financial condition remains uncertain, and is dependent on future developments that cannot be accurately predicted at this time. We continue to believe the travel, leisure, hospitality, and restaurant industries (collectively, the “travel industry”), and our financial results, will continue to be adversely and materially affected if any new variants emerge and lingering travel bans and other government restrictions and mandates continue to remain in place or be reinstated, all of which negatively impact consumer demand, sentiment and discretionary spending patterns.

We use estimates and assumptions in the preparation of our unaudited condensed 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 unaudited condensed 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 unaudited condensed consolidated financial statements ~~include: (i) recognition and recoverability of goodwill, intangible and other long-lived assets; (ii)~~is accounting for income ~~taxes;~~taxes. The COVID-19 pandemic has created significant uncertainty in macroeconomic conditions, which may cause further business disruptions and ~~(iii) stock-based compensation.~~continue to adversely and materially impact our results of operations. As a result, some 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.

NOTE 3: REVENUE RECOGNITION

In January 2017, the FASB issued new accounting guidance to clarify the definition of a business and provide additional guidance to assist entities with evaluating whether transactions should be accounted for as asset acquisitions (or asset disposals) or business combinations (or disposals of a business). Under this new guidance, an entity first determines whether substantiallyWe generate all of the fair value of the assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this criterion is met, the transaction should be accounted for as an asset acquisition as opposed to a business combination. This distinction is important because the accounting for an asset acquisition significantly differs from the accounting for a business combination. This new guidance eliminates the requirement to evaluate whether a market participant could replace missing elements (e.g. inputs or processes), narrows the definition of outputs and requires that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. This new guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted including adoption in any interim or annual periods in which the financial statements have not been issued or made available for issuance. The new guidance will be applied prospectively to any transactions occurring within the period of adoption. We anticipate adopting this new guidance on January 1, 2018. Upon adoption, the new guidance will impact how we assess acquisitions (or disposals) of assets or businesses.

In January 2017, the FASB issued new accounting guidance to simplify the accounting for goodwill impairment. The new guidance removes Step two of the goodwill impairment test, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill, which requires a hypothetical purchase price allocation, with the carrying amount of that reporting unit’s goodwill. Under this new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests occurring after January 1, 2017. The new guidance will be applied prospectively. We are currently evaluating this guidance, including the date we will adopt this guidance and what the impact upon adoption will be, if any.

In November 2016, the FASB issued new accounting guidance on the classification and presentation of restricted cash in the statement of cash flows to address the diversity in practice. This new guidance requires entities to show changes in cash, cash equivalents and restricted cash on a combined basis in the statement of cash flows. In addition, this accounting guidance requires a reconciliation of the total cash, cash equivalent and restricted cash in the statement of cash flows to the related captions in the balance sheet if cash, cash equivalents and restricted cash are presented in more than one line item in the balance sheet. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Upon adoption, an entity may apply the new guidance only retrospectively to all prior periods presented in the financial statements. We anticipate adopting this new guidance on January 1, 2018 and currently do not expect this new guidance will have a material impact on our ~~consolidated financial statements and related disclosures.~~

In October 2016, the FASB issued new accounting guidance on income tax accounting associated with intra-entity transfers of assets other than inventory. This accounting update, which is part of the FASB's simplification initiative, is intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual reporting period for which interim or annual financial statements have not been issued. Upon adoption, an entity may apply the new guidance only on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We anticipate adopting this new guidance on January 1, 2018 and do not expect this new guidance will have a material impact on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued new accounting guidance which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The new guidance specifically addresses the following cash flow topics in an effort to reduce diversity in practice: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon bonds; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. Upon adoption, an entity may apply the new guidance only retrospectively to all prior periods presented in the financial statements. We anticipate adopting this new guidance on January 1, 2018 and we do not expect this new guidance will have a material impact on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued new accounting guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable, and available-for-sale debt securities. For financial assets measured at amortized cost, this new guidance requires an entity to: (1) estimate its lifetime expected credit losses upon recognition of the financial assets and establish an allowance to present the net amount expected to be collected; (2) recognize this allowance and changes in the allowance during subsequent periods through net income; and (3) consider relevant information about past events, current conditions and reasonable and supportable forecasts in assessing the lifetime expected credit losses. For available-for-sale debt securities, this new guidance made several targeted amendments to the existing other-than-temporary impairment model, including: (1) requiring disclosure of the allowance for credit losses; (2) allowing reversals of the previously recognized credit losses until the entity has the intent to sell, is more-likely-than-not required to sell the securities or the maturity of the securities; (3) limiting impairment to the difference between the amortized cost basis and fair value; and (4) not allowing entities to consider the length of time that fair value has been less than amortized cost as a factor in evaluating whether a credit loss exists. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted, including interim periods within those fiscal years beginning after December 15, 2018. We are currently considering our timing of adoption and in the process of evaluating the impact of adopting this guidance on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets (right-of-use-assets) and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. The new guidance will classify leases as either finance or operating leases, with classification determining the presentation of expenses and cash flows on our consolidated financial statements. Initial costs directly attributable to negotiating and arranging the lease will be included in the asset. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. The transition guidance also provides specific guidance for sale and leaseback transactions, build-to-suit leases and amounts previously recognized in accordance with the business combinations guidance for leases. We will also be required to provide additional qualitative and quantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases which include, among other things, the computation and disclosure of our weighted average remaining lease term and discount rate, cash paid for amounts included in the measurement of lease liabilities, and supplemental non-cash information on lease liabilities arising from obtaining the right-of-use assets. These disclosures are intended to provide supplemental information to the amounts recorded in the financial statements so that users can better understand the nature of an entity’s leasing activities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, which will require the recognition and measurement of leases at the beginning of the earliest comparative period presented in the financial statements using a modified retrospective approach. We anticipate adopting this new guidance on January 1, 2019.

To date, we have made measurable progress toward evaluating the new lease guidance and have begun updating accounting policies, accounting position memos, and evaluating our existing population of contracts to ensure all contracts that meet the definition of a lease contract under the new standard upon adoption are identified. We are also in the process of implementing additional lease software to support our accounting and reporting process under the new lease accounting guidance, including the new quantitative and qualitative financial disclosure requirements. In addition, we are evaluating the impact of the system implementation on our internal controls. We will continue to provide updates of our assessment of the effect, that this new lease guidance will have on our consolidated financial statements, disclosures, systems and related controls, and will disclose any material effects, if any, when known.

In January 2016, the FASB issued a new accounting update which amends the guidance on the classification and measurement of financial instruments. Although the accounting update retains many current requirements, it significantly revises accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The accounting update also amends certain fair value disclosures of financial instruments and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with the entity’s evaluation of their other deferred tax assets. The update requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures and limited liability companies at fair value, with fair value changes recognized through net income. This requirement does not apply to investments that qualify for equity method accounting, investments that result in consolidation of the investee or investments in which the entity has elected the practicability exception to fair value measurement. Under current GAAP, available-for-sale investments in equity securities, with a readily determinable fair value, are re-measured to fair value each reporting period with changes in fair value recognized in accumulated other comprehensive income (loss). However, under the new guidance, fair value adjustments will be recognized through net income. For equity securities currently accounted for under the cost method (as they do not have a readily determinable fair value), the new guidance requires those equity investments to be carried at fair value with changes in net income, unless an entity elects to measure those investments, at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company intends to elect this measurement alternative for equity securities without a readily determinable fair value. Additionally, this accounting update will simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. In addition, this accounting update eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at amortized cost in the balance sheet. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Upon adoption, an entity will apply the new guidance on a modified retrospective basis, which is to record a cumulative-effect adjustment to beginning retained earnings as of the beginning of the first reporting period in which the guidance is adopted, with two exceptions. The amendments related to equity investments without readily determinable fair values (including disclosure requirements) will be effective prospectively. The requirement to use the exit price notion to measure the fair value of financial instruments for disclosure purposes will also be applied prospectively. We anticipate adopting this new guidance on January 1, 2018 and based on the composition of our current investments, we do not expect the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers which will replace numerous requirements in GAAP, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. ~~The core principle~~We recognize revenue when we satisfy a performance obligation by transferring control of the ~~new standard is that a company should recognize revenue to depict the transfer of~~ promised ~~goods or~~ services to ~~customers~~a customer in an amount that reflects the consideration that we expect to ~~which the company expects to be entitled~~receive in exchange for those ~~goods~~services. When we act as an agent in the transaction, we recognize revenue for only our commission on the arrangement. We determine revenue recognition through the following steps:

(1) Identification of the contract, or ~~services.~~contracts, with a customer

(2) Identification of the performance obligations in the contract

(3) Determination of the transaction price

(4) Allocation of the transaction price to the performance obligations in the contract

(5) Recognition of revenue when, or as, we satisfy a performance obligation

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a service (or a bundle of services) that is distinct. To identify the performance obligations, we consider all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. We have provided qualitative information about our performance obligations for our principal revenue streams discussed below. There was no significant revenue recognized in the three months ended March 31, 2022 and 2021, respectively, related to performance obligations satisfied in prior periods. We have applied a practical expedient and do not disclose the value of unsatisfied performance obligations that have an original expected duration of less than one year, and we do not have any material unsatisfied performance obligations over one year. The value related to our remaining or partially satisfied performance obligations relates to subscription services that are satisfied over time or services that are recognized at a point in time, but not yet achieved. Our timing of services, invoicing and payments are discussed in more detail below and do not include a significant financing component. Our customer invoices are generally due 30 days from the time of invoicing.

The application of our revenue recognition policies and a description of our principal activities, organized by segment, from which we generate our revenue, are presented below.

Hotels, Media & Platform Segment

Tripadvisor-branded Hotels Revenue. Our largest source of Hotels, Media & Platform segment revenue is generated from click-based advertising on Tripadvisor-branded websites, or hotel auction revenue, which is primarily comprised of contextually-relevant booking links to our travel partners’ websites. Our click-based travel partners are predominantly online travel agencies ("OTAs") and hotels. Click-based advertising is generally priced on a cost-per-click (“CPC”), basis, with payments from travel partners determined by the number of travelers who click on a link multiplied by the CPC rate for each specific click. CPC rates are determined in a dynamic, competitive auction process, where our travel partner CPC bids for rates and availability to be listed on our platform are submitted. When a CPC bid is submitted, the travel partner agrees to pay us the bid amount each time a traveler clicks on the link to that travel partner’s websites. Bids can be submitted periodically – as often as daily – on a property-by-property basis. We record click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner websites as our performance obligation is fulfilled at that time. Click-based revenue is generally billed to our travel partners on a monthly basis consistent with the timing of the service. We also generate revenue from our cost-per-action (“CPA”) model, which consists of contextually-relevant booking links to our travel partners’ websites which are advertised on our platform. We earn a commission from our travel partners, based on a pre-determined contractual commission rate, for each traveler who clicks to and books a hotel reservation on the travel partners’ website, which results in a traveler stay. CPA revenue is billable only upon the completion of each traveler’s stay resulting from a hotel reservation. The travel partners provide the service to the travelers and we act as an agent under ASC 606 – Revenue from Contracts with Customers (“ASC 606”). Our performance obligation is complete at the time of the hotel reservation booking, and the commission earned is recognized upon booking, as we have no post-booking service obligations. We recognize this revenue net of an estimate of the impact of cancellations, using historical cancellation rates and current trends. Contract assets are recognized at the time of booking for commissions that are billable at the time of stay. CPA revenue is generally billed to our travel partners on a monthly basis consistent with the timing of the service.

In addition, we offer hotel business to business (“B2B”) solutions, including subscription-based advertising to hotels, owners of B&Bs and other specialty lodging properties. Our performance obligation is generally to enable subscribers to advertise their businesses on our platform, as well as to manage and promote their website URL, email address, phone number, special offers and other information related to their business. Subscription-based advertising services are predominantly sold for a flat fee for a contracted period of time of one year or less and revenue is recognized on a straight-line basis over the period of the subscription service as efforts are expended evenly throughout the contract period. Subscription-based advertising services are generally billed at the inception of the service. When prepayments are received, we recognize deferred revenue initially on our unaudited condensed consolidated balance sheet for the amount of prepayment in excess of revenue recognized, until the performance obligation is satisfied. To a lesser extent, we offer travel partners the opportunity to advertise and promote their business through hotel sponsored placements on our platform. This ~~guidance~~service is generally priced on a CPC basis, with payments from travel partners determined by the number of travelers who click on the sponsored link multiplied by the CPC rate for each specific click. CPC rates for hotel sponsored placements that our travel partners pay are generally based on bids submitted as part of an auction by our travel partners. When a CPC bid is submitted, the travel partner agrees to pay us the bid amount each time a traveler clicks on a link to our travel partner’s websites. Bids may be submitted periodically – as often as daily – on a property-by-property basis. We record this click-based advertising revenue as the click occurs and traveler leads are sent to the travel partner as our performance obligation is fulfilled at that time. Hotel sponsored placements revenue is generally billed to our travel partners on a monthly basis consistent with the timing of the service.

Tripadvisor-branded Display and Platform Revenue.We offer travel partners the ability to promote their brands through display-based advertising placements on our platform across all of our segments and business units. Our display-based advertising clients are predominantly direct suppliers of hotels, airlines and cruises, as well as destination marketing organizations. We also ~~requires additional disclosures about~~sell

display-based advertising to OTAs and other travel related businesses, as well as advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions, or CPM, basis. The performance obligation in our display-based advertising arrangements is to display a number of advertising impressions on our platform and we recognize revenue for impressions as they are delivered. Services are generally billed monthly. We have applied the practical expedient to measure progress toward completion, as we have the right to invoice the customer in an amount that directly corresponds with the value to the customer of our performance to date, which is measured based on impressions delivered.

Experiences & Dining Segment

We provide information and services that allow travelers to research and book tours, activities and attractions in popular travel destinations in our Viator online marketplace. We also power travel tours, activities and attractions booking capabilities to travelers on third-party distribution partner websites, including the Tripadvisor platform, and some of the world’s top airlines, hotel chains, and online and offline travel agencies.

We work with local tour, activities, and attraction operators (the “operator”) to provide travelers (the “customer”) the ability to book tours, activities and attractions (the “experience”) in destinations worldwide. We generate commissions for each booking transaction we facilitate through our online reservation system, in exchange for certain activities, including the use of the Company’s booking platform, post-booking customer support (24/7) until the time of the experience and payment processing activities as merchant of record, which is the completion of the performance obligation. These activities are not distinct from each other and are not separate performance obligations. As a result, the Company’s single performance obligation is to facilitate an experience, which is complete upon the time the experience occurs, and when revenue is recognized. We do not control the experience or have inventory risk before the operator provides the experience to our customer and therefore act as agent for substantially all of these transactions under ASC 606.

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

To a much lesser extent, we earn commissions from third-party merchant partners (the “customer”) who display and promote on their websites the operator experiences available on our platform to generate bookings. In these transactions, where we are not the merchant of record, and we generally invoice and receive commissions directly from the third-party merchant partners. Our performance obligation is to allow the third-party distribution partners to display and promote on their website experiences, offered by operators who utilize our platform, and we earn a commission when travelers book and complete an experience on the third-party merchant partner website. We do not control the service or have inventory risk, and therefore act as an agent for these transactions under ASC 606. We receive payment shortly after the booking in the majority of these transactions and make payments to the operators after the experience is complete. Our performance obligation is complete, and revenue is recognized at the time of the booking, as we have no post-booking obligations to the customer. We recognize this revenue net of an estimate of the impact of cancellations, which is not material, using historical cancellation rates and current trends. Contract assets are recognized for commissions that are contractually billable contingent upon completion of the experience.

We also provide information and services for consumers to research and book restaurant reservations in popular travel destinations through our dedicated online restaurant reservations offering, TheFork, and on our Tripadvisor-branded websites and mobile apps. We primarily generate transaction fees (or per seated diner fees) that are paid by our restaurant customers for diners seated primarily from bookings through TheFork’s online reservation system. The transaction fee is recognized as revenue after the reservation is fulfilled, or as diners are seated by our restaurant customers. We invoice restaurants monthly for transaction fees. To a lesser extent, we also generate subscription fees for subscription-based advertising to restaurants, access to certain online reservation management services, marketing analytic tools, and menu syndication services provided by TheFork and Tripadvisor. As the performance obligation is to provide restaurants with access to these services over the subscription period, subscription fee revenue is recognized over the period of the subscription service on a straight-line basis as efforts are expended evenly throughout the contract period. Subscription fees are generally billable in advance of service. When prepayments are received, we recognize deferred revenue initially on our unaudited condensed consolidated balance sheet, for the amount of prepayment in excess of revenue recognized until the performance obligation is satisfied. In addition, we also offer restaurant partners the opportunity to advertise and promote their business through restaurant media advertising placements on our platform. This service is generally priced on a CPC basis, with payments from restaurant partners determined by the number of consumers who click on the sponsored link multiplied by the CPC rate for each specific click. CPC rates for media advertising placements that our restaurant partners pay are based on a pre-determined contractual rate. We record this click-based advertising revenue as the click occurs and diner leads are sent to the restaurant partner as our performance obligation is fulfilled at that time. Click-based revenue is generally billed to our restaurant partners on a monthly basis consistent with the timing of the service.

Other

We provide information and services that allow travelers to research and book vacation and short-term rental properties, including full homes, condominiums, villas, beach properties, cabins and cottages. Our Rentals offering primarily generates revenue by offering individual property owners and managers the ability to list their properties on our platform thereby connecting with travelers through a free-to-list, commission-based option. These properties are listed on www.flipkey.com, www.holidaylettings.co.uk, www.housetrip.com, www.niumba.com, and www.vacationhomerentals.com, and on our Tripadvisor-branded websites and mobile apps. We earn commissions associated with rental transactions through our free-to-list model from both the traveler, and the property owner or manager. We provide post-booking service to the travelers, property owners and managers until the time the rental commences, which is the time the performance obligation is completed. Revenue from transaction fees is recognized at the time that the rental commences. We act as an agent, under ASC 606, in the transactions as we do not control any properties before the property owner provides the accommodation to the traveler and do not have inventory risk. We generally collect payment from the traveler at the time of booking, representing the amount due to the property owner or manager, as well as our commission. That portion of the payment representing our commission is recorded as deferred revenue on our unaudited condensed consolidated balance sheet until revenue is recognized, and that portion of the payment representing the amount due to the property owner is recorded as deferred merchant payables on our unaudited condensed consolidated balance sheet until payment is made to the property owner after the completion of the rental.

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

We disaggregate revenue from contracts with customers into major products/revenue sources. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows ~~arising~~are affected by economic factors. As noted in “Note 12: Segment Information,” our business consists of 2 reportable segments – (1) Hotels, Media & Platform; and (2) Experiences & Dining. Other consists of a combination of business units and does not constitute a reportable segment.

A reconciliation of disaggregated revenue to segment revenue is also included below:


	Three months ended March 31,
	2022		2021
Major products/revenue sources (1):	(in millions)
Hotels, Media & Platform
Tripadvisor-branded hotels	$	136	$	74
Tripadvisor-branded display and platform		24		14
Total Hotels, Media & Platform		160		88

Experiences & Dining		92		28
Other		10		7
Total Revenue	$	262	$	123

(1)

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

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


	March 31, 2022		December 31, 2021
Accounts receivable		132		105
Contract assets		48		37
Total	$	180	$	142

Accounts receivable are recognized when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for services that we have transferred to a customer ~~contracts, including significant judgments~~when that right is conditional on something other than the passage of time, such as commission payments that are contingent upon the completion of the service by the principal in the transaction. The difference between the opening and ~~changes in judgments and~~closing balances of our contract assets ~~recognized~~primarily results from ~~costs incurred to obtain or fulfill a contract. In March 2016,~~ the ~~FASB issued additional guidance which clarifies principal versus agent considerations and, in April 2016, the FASB issued further guidance which clarifies the identification of~~timing difference between when we satisfy our performance obligations and the ~~implementation guidance~~time when the principal completes the service in the transaction. Our contract assets increased during the first quarter of 2022, as a result of the ongoing recovery of consumer travel demand, and increased utilization of our CPA model by travel partners.

Contract liabilities generally include payments received in advance of performance under the contract and are realized as revenue as the performance obligation to the customer is satisfied, which we present as deferred revenue on our consolidated balance sheet. As of January 1, 2022 and 2021, we had $36 million and $28 million, respectively, recorded as deferred revenue on our unaudited condensed consolidated balance sheets, of which $18 million and $11 million, respectively, was recognized in revenue and $2 million was refunded due to cancellations by travelers during both the three months ended March 31, 2022 and 2021, respectively. The difference between the opening and closing balances of our deferred revenue primarily results from the timing differences between when we receive customer payments and the time in which we satisfy our performance obligations.

There were no significant changes in contract assets or deferred revenue during both the three months ended March 31, 2022 and 2021, respectively, related to business combinations, impairments, cumulative catch-ups or other material adjustments. However, to the extent the COVID-19 pandemic resurges, or new variants emerge, we may incur additional significant and unanticipated cancellations by consumers related to future travel, accommodations and tour bookings, which have been reserved by travelers and recorded as deferred revenue on our unaudited condensed consolidated balance sheet as of March 31, 2022.

NOTE 4: FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels:

Level 1—Valuations are based on quoted market prices for ~~licensing.~~ identical assets and liabilities in active markets.

Level 2—Valuations are based on observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations are based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Cash, Cash Equivalents and Marketable Securities

As of March 31, 2022, we had $781 million of cash and cash equivalents, which consisted of available on demand cash deposits and term deposits with maturities of 90 days or less at the date of purchase, respectively, in major global financial institutions. As of December 31, 2021, we had $723 million of cash and cash equivalents, which consisted of available on demand cash deposits in major global financial institutions. We had 0 outstanding investments classified as either short-term or long-term marketable securities as of March 31, 2022 and December 31, 2021, respectively, and there were no purchases or sales of any marketable securities during and for the three months ended March 31, 2022 and 2021.

The following table shows our cash equivalents that are measured at fair value on a recurring basis and were categorized using the fair value hierarchy, as well as their classification on our unaudited condensed consolidated balance sheet as of March 31, 2022 (in millions):


	Amortized Cost		Fair Value (1)		Cash Equivalents
Level 2:
Term deposits	$	160	$	160	$	160
Total	$	160	$	160	$	160

(1)

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

We had 0 material financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2021.

We generally classify cash equivalents and marketable securities, if any, within Level 1 and Level 2 as we value these financial instruments using quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we use to measure the fair value of money market funds is derived from quoted prices in active markets for identical assets or liabilities. Fair values for Level 2 investments are considered “Level 2” valuations because they are obtained from independent pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Our procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from our independent pricing services against fair values obtained from another independent source.

Derivative Financial Instruments

We generally use forward contracts to reduce the effects of foreign currency exchange rate fluctuations on our cash flows primarily for the Euro versus the U.S. Dollar. For the three months ended March 31, 2022 and 2021, our forward contracts have not

been designated as hedges and generally had maturities of less than 90 days. Our outstanding or unsettled forward contracts are carried at fair value on our unaudited condensed consolidated balance sheets at March 31, 2022 and December 31, 2021. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets. We recognize any gain or loss resulting from the change in fair value of our foreign currency forward contracts in other income (expense), net on our unaudited condensed consolidated statement of operations, which was not material during both the three months ended March 31, 2022 and 2021, respectively.

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

(1)

Derivative contracts address foreign currency exchange fluctuations for the Euro versus the U.S. dollar. These outstanding derivatives are not designated as hedging instruments and have an original maturity period of 90 days or less.

(2)

The fair value of our outstanding derivatives as of March 31, 2022 and December 31, 2021, respectively, was not material. The notional amount of a forward contract is the contracted amount of foreign currency to be exchanged and is not recorded on the unaudited condensed consolidated balance sheet.

Counterparties to our outstanding forward contracts consist of major global financial institutions. We monitor our positions and the credit ratings of the counterparties involved and, by policy limits, the amount of credit exposure to any one party. We do not use derivatives for trading or speculative purposes. We were not entered into any cash flow, fair value or net investment hedges as of March 31, 2022 or December 31, 2021.

Other Financial Assets and Liabilities

As of March 31, 2022 and December 31, 2021, financial instruments not measured at fair value on a recurring basis including accounts payable, accrued expenses and other current liabilities, and deferred merchant bookings, were carried at cost on our unaudited condensed consolidated balance sheets, which approximates their fair values because of the short-term nature of these items. Accounts receivable and contract assets, on our unaudited condensed consolidated balance sheets, as well as certain other financial assets, were measured at amortized cost and are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected.

The following table shows the aggregate principal and fair value amount of our outstanding 2025 Senior Notes and 2026 Senior Notes as of the periods presented, which are classified as long-term debt on our unaudited condensed consolidated balance sheets and considered Level 2 fair value measurements. Refer to “Note 6: Debt” for additional information on our 2025 Senior Notes and 2026 Senior Notes.


	March 31, 2022		December 31, 2021
	(in millions)
2025 Senior Notes
Aggregate principal amount	$	500	$	500
Carrying value amount (1)		494		493
Fair value amount (2)		516		531

2026 Senior Notes
Aggregate principal amount	$	345	$	345
Carrying value amount (3)		340		340
Fair value amount (2)		293		305

(1)

Net of $6 million and $7 million of unamortized debt issuance costs as of March 31, 2022 and December 31, 2021, respectively.

(2)

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

(3)

Net of $5 million in unamortized debt issuance costs as of both March 31, 2022 and December 31, 2021, respectively.

Risks and Concentrations

In addition to the risk we face from COVID-19, which is discussed in “Note 1: Business Description and Basis of Presentation”, our business is subject to certain financial risks and concentrations, including concentration related to dependence on our relationships with our customers. For the year ended December 31, 2021, our two ~~permitted transition methods~~most significant travel partners, Expedia Group, Inc. (and its subsidiaries) and Booking Holdings, Inc. (and its subsidiaries), each of which accounted for 10% or more of our consolidated revenue and together accounted for approximately 34% of our consolidated revenue, with nearly all of this revenue concentrated in our Hotels, Media & Platform segment.

Financial instruments, which potentially subject us to concentration of credit risk, generally consist, at any point in time; of cash and cash equivalents, corporate debt securities, forward contracts, capped calls, and accounts receivable. We maintain some cash balances with financial institutions that are in excess of Federal Deposit Insurance Corporation insurance limits. Our cash is generally composed of available on demand bank deposits or term deposits with major global financial institutions primarily denominated in U.S. dollars, Euros, British pounds, and Australian dollars. We invest in highly-rated corporate debt securities, and our investment policy limits the amount of credit exposure to any one issuer, industry group and currency. Our credit risk related to corporate debt securities is also mitigated by the relatively short maturity period required by our investment policy. Forward contracts and capped calls are transacted with major international financial institutions with high credit standings. Forward contracts, which to date, have typically had maturities of less than 90 days, also mitigates risk. Our overall credit risk related to accounts receivable is mitigated by the relatively short collection period.

Assets Measured at Fair Value on a Non-recurring Basis

Non-Marketable Investments

Equity Securities Accounted for under the Equity Method

The Company owns a 40% equity investment in Chelsea Investment Holding Company PTE Ltd, which is majority owned by Ctrip Investment Holding Ltd, a majority-owned subsidiary of Trip.com Group Limited. The Company accounts for this minority investment under the equity method, given it has the ability to exercise significant influence, but not control, over the investee. The carrying value of this minority investment was $34 million as of both March 31, 2022 and December 31, 2021, and is included in non-marketable investments on our unaudited condensed consolidated balance sheets. During the three months ended March 31, 2022, our share of the investee’s net loss recorded in other income (expenses), net within the unaudited condensed consolidated statement of operations, was not material. During the three months ended March 31, 2021, we recognized $1 million, representing our share of the investee’s net loss in other income (expenses), net within the unaudited condensed consolidated statement of operations. The Company evaluates this investment for impairment when factors indicate that a decline in the value of its investment has occurred and the carrying amount of its investment may not be recoverable. An impairment loss, based on the excess of the carrying value over the estimated fair value of the investment based on Level 3 inputs, is recognized in earnings when an impairment is deemed to be other than temporary. During both the three months ended March 31, 2022 and 2021, we did 0t record any impairment loss on this equity investment.

The Company maintains various commercial agreements with Chelsea Investment Holding Company PTE Ltd. and/or its subsidiaries. Transactions under these agreements are considered related-party transactions, and were not material during both the three months ended March 31, 2022 and 2021.

Other Long-Term Assets

The Company holds collateralized notes (the “Notes Receivable”) issued by a privately held company with a total principal amount of $20 million. The Company has classified the Notes Receivable as held-to-maturity, as the Company has concluded it has the positive intent and ability to hold the Notes Receivable until maturity, with 50% due in 5 years and the remaining 50% due in 10 years from issuance date. As of both March 31, 2022 and December 31, 2021, the carrying value of the Notes Receivable was $9 million, net of accumulated allowance for credit losses, and is classified in other long-term assets, net on our unaudited condensed consolidated balance sheets at amortized cost. On a quarterly basis, we perform a qualitative assessment considering impairment indicators to evaluate whether the Notes Receivable are impaired and monitor for changes to our allowance for credit losses.

NOTE 6: DEBT

The Company’s outstanding debt consisted of the following for the periods presented:


March 31, 2022	Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
(in millions)
Long-Term Debt:
2025 Senior Notes	$	500	$	(6	)	$	494
2026 Senior Notes		345		(5	)		340
Total Long-Term Debt	$	845	$	(11	)	$	834

December 31, 2021	Outstanding Principal Amount		Unamortized Debt Issuance Costs			Carrying Value
(in millions)
Long-Term Debt:
2025 Senior Notes	$	500	$	(7	)	$	493
2026 Senior Notes		345		(5	)		340
Total Long-Term Debt	$	845	$	(12	)	$	833

Credit Facility

We are party to a credit agreement with a group of lenders initially entered into in June 2015 (as amended, the “Credit Agreement”), which, among other things, provides for a $500 million unsecured revolving credit facility (the “Credit Facility”) with a maturity date of May 12, 2024. The Company may borrow from the Credit Facility in U.S. dollars and Euros. In addition, our Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swing Line borrowings on same-day notice. The Credit Facility, among other things, requires us to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control.

As of March 31, 2022 and December 31, 2021, the Company had 0 outstanding borrowings under the Credit Facility and had issued $3 million of undrawn standby letters of credit under the Credit Facility. For both the three months ended March 31, 2022 and 2021, we recorded total interest expense and commitment fees on our Credit Facility of $1 million to interest expense on our unaudited condensed consolidated statements of operations.

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

The Company remained in the Leverage Covenant Holiday as of March 31, 2022. Based on the Company’s existing leverage ratio, any outstanding or future borrowings under the Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBO rate for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.25% (“Eurocurrency Spread”) with a London Inter-Bank Offered Rate (“LIBOR”) floor of 1.00% per annum; or (ii) the Alternate Base Rate (“ABR”) Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum, and (c) the Adjusted LIBO Rate (or LIBO rate multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00% (“ABR Spread”). In addition, based on the Company’s existing leverage ratio, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.50%, which was 0.20% as of March 31, 2022, on the daily unused portion of the Credit Facility for each fiscal quarter during the Leverage Covenant Holiday and in connection with the issuance of letters of credit.

There is no specific repayment date prior to the maturity date for any borrowings under the Credit Agreement. We may voluntarily repay any outstanding borrowing under the Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Additionally, the Company believes that the likelihood of the lender exercising any subjective acceleration rights, which would permit the lenders to accelerate repayment of any outstanding borrowings, is remote. As such, we classify any borrowings under this ~~new accounting guidance~~facility as long-term debt. The Credit Agreement contains a number of covenants that,

among other things, restrict our ability to incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change our fiscal year. The Credit Agreement also limits the Company from repurchasing shares of its common stock and paying dividends, among other restrictions, during the Leverage Covenant Holiday. In addition, to secure the obligations under the Credit Agreement, the Company and certain subsidiaries have granted security interests and liens in and on substantially all of their assets as well as pledged shares of certain of the Company’s subsidiaries. The Credit Agreement also contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of all amounts due under the Credit Facility. As of March 31, 2022 and December 31, 2021, we were in compliance with our covenants.

2025 Senior Notes

On July 9, 2020, the Company completed the sale of $500 million aggregate principal amount of 7.0% Senior Notes due 2025 (the “2025 Senior Notes”), pursuant to a purchase agreement, dated July 7, 2020, among the Company, the guarantors party thereto and the initial purchasers party thereto in a private offering to qualified institutional buyers. The 2025 Senior Notes were issued pursuant to an indenture, dated July 9, 2020 (the “2025 Indenture”), among the Company, the guarantors and the trustee. The 2025 Indenture provides, among other things, that interest is payable on the 2025 Senior Notes semiannually on January 15 and July 15 of each year, which began on January 15, 2021, and continue until their maturity date of July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the ~~full retrospective method,~~Company and are guaranteed by certain of the Company’s domestic subsidiaries.

The Company has the option to redeem all or a portion of the 2025 Senior Notes at any time on or after July 15, 2022 at the redemption prices set forth in the 2025 Indenture, plus accrued and unpaid interest, if any. The Company may also redeem all or any portion of the 2025 Senior Notes at any time prior to July 15, 2022, at a price equal to 100% of the aggregate principal amount thereof plus a make-whole premium and accrued and unpaid interest, if any. In addition, before July 15, 2022, the Company may redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 2025 Indenture, provided that certain conditions are met. Subject to certain limitations, in the event of a Change of Control Triggering Event (as defined in the 2025 Indenture), the Company will be required to make an offer to purchase the 2025 Senior Notes at a price equal to 101% of the aggregate principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. These features have been evaluated as embedded derivatives under GAAP; however, the Company has concluded they do not meet the requirements to be accounted for separately.

As of March 31, 2022 and December 31, 2021, unpaid interest on our 2025 Senior Notes totaled approximately $7 million and $16 million, respectively, and is included in accrued expenses and other current liabilities on our unaudited condensed consolidated balance sheet, and $9 million and $8 million was recorded as interest expense on our unaudited condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021, respectively.

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

2026 Senior Notes

On March 25, 2021, we entered into a purchase agreement for the sale of $300 million aggregate principal amount of 0.25% Convertible 2026 Senior Notes due 2026 (the “2026 Senior Notes”) in a private offering to qualified institutional buyers. The 2026 Senior Notes included of an over-allotment option that provided the initial purchasers of the 2026 Senior Notes with the option to purchase an additional $45 million aggregate principal amount of the 2026 Senior Notes; such over-allotment option was fully exercised. In connection with the issuance of the 2026 Senior Notes, the Company entered into an Indenture, dated March 25, 2021 (the “2026 Indenture”), among the Company, the guarantors party thereto and the trustee. The terms of the 2026 Senior Notes are governed by the 2026 Indenture. The 2026 Senior Notes mature on April 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Senior Notes are senior unsecured obligations of the Company, although guaranteed by certain of the Company’s domestic subsidiaries, with interest payable semiannually in arrears on April 1 and October 1 of each year, which began on October 1, 2021. As of March 31, 2022 and December 31 2021, unpaid interest on our 2026 Senior Notes was not material.

The 2026 Senior Notes will be redeemable, in whole or in part, at our option at any time, and from time to time, on or after April 1, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Senior Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale

price per share of our common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (2) the trading day immediately before the date we send such notice. In addition, calling any such note for redemption will constitute a make-whole fundamental change with respect to that note, in which case the ~~guidance~~conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption.

The 2026 Senior Notes are unconditionally guaranteed, on a joint and several basis, by the guarantors on a senior, unsecured basis. The 2026 Senior Notes are our general senior unsecured obligations and rank equally in right of payment with all of our existing and future senior indebtedness, and senior in right of payment to all of our future subordinated indebtedness. The 2026 Senior Notes will be effectively subordinated to any of our existing and future secured indebtedness, including borrowings under our Credit Facility, to the extent of the value of the assets securing such indebtedness.

Holders may convert their 2026 Senior Notes at any time prior to the close of business on the business day immediately preceding January 1, 2026, in multiples of $1,000 principal amount, only under the following conditions and circumstances:

•

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

•

during the 5 business day period after any 5 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2026 Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

•

upon the occurrence of specified corporate events as described in the 2026 Indenture.

In addition, holders may convert their 2026 Senior Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after January 1, 2026, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the 2026 Senior Notes, without regard to the foregoing circumstances.

The initial conversion rate for the 2026 Senior Notes is 13.5483 shares of common stock per $1,000 principal amount of 2026 Senior Notes, which is equivalent to an initial conversion price of approximately $73.81 per share of common stock, or approximately 4.7 million shares of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the 2026 Indenture. Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.

The Company accounts for the 2026 Senior Notes as a liability measured at its amortized cost, and no other features of the 2026 Senior Notes are bifurcated and recognized as a derivative. The proceeds from the issuance of the 2026 Senior Notes were approximately $340 million, net of debt issuance costs of $5 million comprised primarily of the initial purchasers’ discount, and the Company used a portion of the proceeds from the 2026 Senior Notes to enter into capped call transactions, as discussed below. The Company intends to use the remainder of the proceeds from this offering for general corporate purposes, which may include repayment of debt, including the partial redemption and/or purchase of our 2025 Senior Notes prior to maturity. The debt issuance costs will be amortized over the remaining term of the 2026 Senior Notes, using the effective interest rate method, and recorded to interest expense on our unaudited condensed consolidated statements of operations. During the three months ended March 31, 2022 and 2021, our effective interest rate, including the debt issuance costs, was 0.52 % and 0.60%, respectively, and total interest expense on our 2026 Senior Notes was not material in any period.

The 2026 Senior Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other indebtedness, or restrictions on the issuance or repurchase of securities by the Company.

Capped Call Transactions

In connection with the issuance of the 2026 Senior Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”) at a cost of approximately $35 million. The Capped Calls are separate transactions entered into by the Company with each of the Option Counterparties, and are not part of the terms of the 2026 Senior

Notes and therefore will not affect any noteholder’s rights under the 2026 Senior Notes. Noteholders will not have any rights with respect to the Capped Calls.

The Capped Calls cover, subject to anti-dilution adjustments, substantially similar to those applicable to the conversion rate of the 2026 Senior Notes, the number of shares of common stock initially underlying the 2026 Senior Notes, or up to approximately 4.7 million shares of our common stock. The Capped Calls are expected generally to reduce potential dilution to the common stock upon any conversion of 2026 Senior Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted 2026 Senior Notes, as the case may be, with such reduction and/or offset subject to a cap. The strike price of the Capped Calls is $73.81, while the cap price of the Capped Calls will initially be $107.36 per share of our common stock, which represents a premium of 100% over the close price of our common stock of $53.68 per share on March 22, 2021 and is subject to certain customary adjustments under the terms of the Capped Calls.

The Capped Calls are considered indexed to our own stock and are considered equity classified under GAAP, and included as a reduction to additional paid-in-capital within stockholders’ equity on the unaudited condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively. The Capped Calls are not accounted for as derivatives and their fair value is not remeasured each reporting period. In addition, we recorded a deferred tax asset of $9 million associated with the Capped Calls on our unaudited condensed consolidated balance sheet during the three months ended March 31, 2021, as we made an income tax election allowable under Internal Revenue Service (the “IRS”) regulations in order to recover the cost of the Capped Calls as interest expense for income tax purposes only over the term of the 2026 Senior Notes.

NOTE 7: INCOME TAXES

Each interim period is considered an integral part of the annual period; accordingly, we measure our income tax expense using an estimated annual effective tax rate. An enterprise is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim period.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act made tax law changes to provide financial relief to companies as a result of the business impacts of COVID-19. Key income tax provisions of the CARES Act include changes in net operating losses (“NOL”) carryback and carryforward rules, increase of the net interest expense deduction limit, and immediate write-off of qualified improvement property. The CARES Act allowed the Company to carryback our U.S. federal NOLs incurred in 2020, generating an expected U.S. federal tax benefit of $76 million, of which we expected $48 million to be refunded. This refund is recorded in income taxes receivable on our unaudited condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021. In April 2022, we received the entire $48 million of this refund.

In addition, certain governments have passed legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, wage tax relief or other financial aid. Some of these governments have extended or are considering extending these programs. We have participated in several of these programs, including the CARES Act in the U.S., the United Kingdom's job retention scheme, as well as programs in other jurisdictions'. In addition, in certain countries, such as within the European Union, Singapore, Australia, and other jurisdictions, we are also participating in programs where government assistance is in the form of wage subsidies and reductions in wage-related employer taxes paid by us. During the three months ended March 31, 2022, government grants and other assistance benefits recognized were not material, while we recognized $3 million in benefits during the three months ended March 31, 2021. These amounts are not income tax related and were recorded as a reduction of personnel and overhead costs in the unaudited condensed consolidated statements of operations.

We had an income tax provision of $1 million and an income tax benefit of $16 million for the three months ended March 31, 2022 and 2021, respectively. The change in our income taxes during the three months ended March 31, 2022, when compared to the same period in 2021, was primarily due to a decrease in pretax losses recognized as of March 31, 2022.

Our policy is to recognize accrued interest and penalties related to unrecognized tax benefits and income tax liabilities as part of our income tax expense. As of March 31, 2022, we had an accrued interest liability of $40 million and 0 penalties have been accrued.

By virtue of consolidated income tax returns previously filed with Expedia, we are currently under an IRS audit for the 2009, 2010 and short-period 2011 tax years. We are separately under examination by the IRS for the short-period 2011, 2012 through 2016, and 2018 tax years, and have various ongoing audits for foreign and state income tax returns. These audits include questioning the timing and amount of income and deductions and the allocation of income among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax authorities for years prior to 2009. As of March 31, 2022, no material assessments have resulted, except as noted below regarding our 2009, 2010, and

2011 IRS audit with Expedia, our 2012 through 2016 standalone IRS audit, and our 2012 through 2016 HM Revenue & Customs (“HMRC”) audit.

In January 2017 and April 2019, as part of the IRS audit of Expedia, we received Notices of Proposed Adjustment from the IRS for the 2009, 2010, and 2011 tax years. Subsequently, in September 2019, as part of our standalone audit, we received Notices of Proposed Adjustment from the IRS for the 2012 and 2013 tax years; and in August 2020, we received Notices of Proposed Adjustment from the IRS for the 2014, 2015, and 2016 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries, and would result in an increase to our worldwide income tax expense in an estimated range of $100 million to $110 million at the close of the audit if the IRS prevails, which includes $20 million to $30 million related to the 2009 through 2011 pre Spin-Off tax years. The estimated range takes into consideration competent authority relief and transition tax regulations, and is exclusive of deferred tax consequences and interest expense, which would be ~~applied~~significant. We disagree with the proposed adjustments and we intend to ~~each prior reporting period presented~~defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the ~~cumulative effect of applying~~regulations and available case law, we believe the guidance would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the guidance would be recognized at the date of initial application. We will adopt this new guidance on January 1, 2018 under the modified retrospective method, which means that revenues for 2016 and 2017 will be reported on a historical basis and revenues for 2018 will be reported on the new basis and also disclosed on the historical basis.

~~To date,~~position we have ~~made significant progress toward completing~~taken with regard to transfer pricing with our evaluation of the potential changes from adopting the new standard on our future financial reporting and disclosures. We have established a cross-functional implementation team from across our organization and have made significant progress in the review of our contracts portfolio and our current accounting policies and practices to identify potential differences that could result from applying the requirements of the new standard to our revenue contracts. To date, we have evaluated the significant majority of our revenue streams and based on the Company's preliminary analysis; we expect the revenue standard will change the timing of revenue recognition for our instant booking revenue recorded under the consumption model. Upon adoption, this revenue will be recognized at the transaction booking date for a hotel accommodation rather than upon completion of the stay by the traveler, whichforeign subsidiaries is ~~how it is currently recorded. The Company does not currently expect this timing change to have a material impact to its financial statements, either on an annual or quarterly basis.~~sustainable. In addition to the ~~changes~~risk of additional tax for 2009 through 2016 transactions, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in ~~our instant booking revenue~~subsequent years, we would be subject to significant additional tax liabilities. We have requested competent authority assistance under the ~~consumption model,~~Mutual Agreement Procedure (“MAP”) for tax years 2009 through 2016. We expect the ~~new guidance will result in other immaterial changes~~competent authorities to present a resolution for the 2009 through 2011 tax years in the ~~timing of certain other revenue streams. We currently do not expect any major reengineering required to our accounting systems or to our internal controls related to~~near future. Upon receipt, we will assess the ~~above accounting changes or related to the additional disclosure requirements required~~resolution provided by the standard. However, while we have made significant progress, and are in our implementation phase of this project, we are still evaluating less material portions of our revenue, and, in addition, our costs incurred to obtain or fulfill a contract. We will continue to update our assessment of the effect that the new revenue guidance will have on our consolidated financial statements, disclosures and related controls, and will disclose any material effects, if any, when known.

~~Recently Adopted Accounting Pronouncements~~

In October 2016, the FASB issued new accounting guidance which amends the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity should treat indirect interests in the entity held through related parties that are under common control within the reporting entity when determining whether it is the primary beneficiary of that variable interest entity. We adopted this new guidance on January 1, 2017, on a retrospective basis, with nocompetent authorities as well as its impact on our ~~consolidated financial statements~~existing income tax reserves for all open subsequent years.

In January 2021, we received from HMRC an issue closure notice relating to adjustments for 2012 through 2016 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and ~~related disclosures.~~ would result in an increase to our worldwide income tax expense in an estimated range of $45 million to $55 million, exclusive of interest expense, at the close of the audit if HMRC prevails. We disagree with the proposed adjustments and we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable.

NOTE 8: COMMITMENTS AND CONTINGENCIES

~~There~~As of March 31, 2022, there have been no material changes to our ~~significant accounting policies~~commitments and contingencies since December 31, ~~2016. For additional information about our accounting policies and estimates, refer~~2021. Refer to “Note ~~2: Significant Accounting Policies”~~13: Commitments and Contingencies,” in the notes to our consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~NOTE 3: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS~~2021.

~~Stock-Based Compensation Expense~~Legal Proceedings

~~The following table presents~~In the ~~amount~~ordinary course of ~~stock-based compensation expense related~~business, we are party to ~~stock-based awards, primarily stock options~~legal, regulatory and ~~restricted stock units (“RSUs”)~~administrative matters, including threats thereof, arising out of, or in connection with our operations. These matters may involve claims involving intellectual property rights (including privacy, alleged infringement of third-party intellectual property rights), ontax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition and consumer protection matters), defamation and reputational claims, personal injury claims, labor and employment matters and commercial disputes. Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. We record the estimated loss in our ~~unaudited condensed~~ consolidated statements of operations ~~during~~when (i) it is probable that an asset has been impaired or a liability has been incurred; and (ii) the ~~periods presented:~~

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

(in millions)

(in millions)

Selling and marketing

$
5

$
5

$
16

$
15

Technology and content

12

11

31

30

General and administrative

9

6

25

19

Total stock-based compensation

26

22

72

64

Income tax benefit from stock-based compensation

(9
)

(8
)

(27
)

(23
)
Total stock-based compensation, net of tax effect

$
17

$
14

$
45

$
41

~~During~~amount of the ~~three~~loss can be reasonably estimated and ~~nine months ended September 30, 2017,~~is material. We provide disclosures in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. We base accruals on the best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, we ~~capitalized $3 million and $10 million, respectively,~~do not believe that the final disposition of stock-based compensation expense as internal-use software and website development costs. During the three and nine months ended September 30, 2016, we capitalized $3 million and $9 million, respectively,any of ~~stock-based compensation expense as internal-use software and website development costs.~~

~~Stock-Based Award Activity and Valuation~~

~~2017 Stock Option Activity~~

During the nine months ended September 30, 2017, we have issued 1,529,127 service-based non-qualified stock options under the Company’s Amended and Restated 2011 Stock and Annual Incentive Plan (the “2011 Incentive Plan”). Generally our stock optionsthese matters will have a ~~term~~material adverse effect on our business. However, the final outcome of ~~ten years~~these matters could vary significantly from ~~the date~~our estimates. Finally, there may be claims or actions pending or threatened against us of ~~grant and generally vest equally over a four-year requisite service period.~~

~~The following table presents a summary of our stock option activity during the nine months ended September 30, 2017:~~

Weighted

Weighted

Average

Average

Exercise

Remaining

Aggregate

Options

Price Per

Contractual

Intrinsic

Outstanding

Share

Life

Value

(in thousands)

(in years)

(in millions)

Options outstanding at December 31, 2016

5,818

$
57.60

Granted

1,529

42.81

Exercised (1)

(488
)

29.49

Cancelled or expired

(572
)

68.82

Options outstanding at September 30, 2017

6,287

$
55.16

6.4

$
7

Exercisable as of September 30, 2017

3,337

$
52.51

4.7

$
7

Vested and expected to vest after September 30, 2017 (2)

6,287

$
55.16

6.4

$
7

~~(1)~~

Inclusive of 288,751 of options which were not converted into shares due to net share settlement in order to cover the aggregate exercise price and the required amount of employee withholding taxes. Potential shares that had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Incentive Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited condensed consolidated statements of cash flows.

~~(2)~~

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

~~Aggregate intrinsic value represents the difference between the closing stock price of our common stock~~which we are currently not aware and the ~~exercise price~~ultimate disposition of ~~outstanding, in-the-money options. Our closing stock price as reported~~which could have a material adverse effect on us. All legal fees incurred by the Company related to any regulatory and legal matters are expensed in the period incurred.

Income and Non-Income Taxes

We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and non-income tax matters. We have reserved for potential adjustments that may result from examinations by, or any negotiated agreements with, these tax authorities. Although we believe our tax estimates are reasonable, the final determination of audits could be materially different from our historical tax provisions and accruals. The ~~NASDAQ Global Select Market as~~results of ~~September 30, 2017 was $40.53. The total intrinsic value~~an audit could have a material effect on our financial position,

results of ~~stock options exercised was $8 million and $23 million, for~~operations, or cash flows in the ~~nine months ended September 30, 2017 and 2016, respectively.~~

The fair value of stock option grants under the 2011 Incentive Plan has been estimated at the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions for the periods presented:

Three months ended

Nine months ended

September 30,

September 30,

2017

2016

2017

2016

Risk free interest rate

1.84
%

1.15
%

1.90
%

1.20
%
Expected term (in years)

5.32

5.17

5.35

4.85

Expected volatility

41.31
%

42.68
%

41.52
%

41.83
%
Expected dividend yield

—  %

—  %

—  %

—  %

The weighted-average grant date fair value of options granted was $15.49 and $17.16 for the three and nine months ended September 30, 2017, respectively. The weighted-average grant date fair value of options granted was $24.97 and $22.95 for the three and nine months ended September 30, 2016, respectively. The total fair value of stock options vested was $39 million and $27 million for the nine months ended September 30, 2017 and 2016, respectively. Cash received from stock option exercises was $3 million and $6 million for the nine months ended September 30, 2017 and 2016, respectively.

On June 5, 2017, the Section 16 Committee of our Board of Directors approved an amendment to the nonqualified stock option award (the “Option”) granted on August 28, 2013 to Stephen Kaufer, the Company’s President and Chief Executive Officer. The amendment provides that the Option will expire on the tenth anniversary, instead of the seventh anniversary, of the grant date. Vesting conditions under the Option were not affected by this amendment. As a result of the modification, incremental fair value of $5 million will be recognized to stock-based compensation expense on a straight-line basis over the remaining vesting term, which is through August 2018.

~~2017 RSU Activity~~

~~During the nine months ended September 30, 2017, we issued 4,241,561 RSUs under the 2011 Incentive Plan~~period for which ~~the fair value was measured based~~that determination is made. Refer to “Note 7: Income Taxes” for further information on ~~the quoted price of our common stock on the date of grant. These RSUs generally vest over a four-year requisite service period.~~potential contingencies surrounding income taxes.

~~The following table presents a summary of our RSU activity during the nine months ended September 30, 2017:~~

Weighted

Average

Grant-

Aggregate

RSUs

Date Fair

Intrinsic

Outstanding

Value Per Share

Value

(in thousands)

(in millions)

Unvested RSUs outstanding as of December 31, 2016

2,856

$
69.35

Granted

4,241

42.65

Vested and released (1)

(868
)

67.89

Cancelled

(641
)

55.02

Unvested RSUs outstanding as of September 30, 2017

5,588

$
50.84

$
226

Expected to vest after September 30, 2017 (2)

5,588

$
50.84

$
226

~~(1)~~

Inclusive of 251,082 RSUs withheld due to net share settlement to satisfy required employee tax withholding requirements. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2011 Incentive Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the unaudited condensed consolidated statements of cash flows.

~~(2)~~

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

Total current income tax benefits associated with the exercise or settlement of TripAdvisor stock-based awards held by our employees were $1 million and $17 million for the three and nine months ended September 30, 2017, respectively. Total current income tax benefits associated with the exercise or settlement of TripAdvisor stock-based awards held by our employees was $2 million and $18 million for the three and nine months ended September 30, 2016.

~~Unrecognized Stock-Based Compensation~~

A summary of our remaining unrecognized stock-based compensation expense and the weighted average remaining amortization period at September 30, 2017 related to our non-vested stock options and RSU awards is presented below:

Stock

Options

RSUs

Unrecognized compensation expense

$
49

$
229

Weighted average period remaining (in years)

2.4

3.0

NOTE 9: STOCK BASED AWARDS AND OTHER EQUITY INSTRUMENTS

~~NOTE 4: EARNINGS PER SHARE~~Stock-Based Compensation Expense

~~Basic Earnings Per Share Attributable to Common Stockholders~~

~~We compute basic earnings per share (“Basic EPS”) by dividing net income by~~The following table presents the ~~weighted average number~~amount of common shares outstanding during the period. We compute the weighted average number of common shares outstanding during the reporting period using the total of common stock and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted average of any additional shares issued and outstanding less the weighted average of any common shares repurchased during the reporting period.

~~Diluted Earnings Per Share Attributable~~stock-based compensation expense related to ~~Common Stockholders~~

~~Diluted earnings per share (“Diluted EPS”) include the potential dilution of common equivalent shares outstanding that could occur from~~ stock-based awards, and other stock-based commitments using the treasury stock method. We compute Diluted EPS by dividing net income by the sum of the weighted average number of common and common equivalent shares outstanding during the period. We computed the weighted average number of common and common equivalent shares outstanding during the period using the sum of (i) the number of shares of common stock and Class B common stock used in the basic earnings per share calculation as indicated above, and (ii) if dilutive, the incremental weighted average common stock that we would issue upon the assumed exercise of outstanding common equivalent shares related toprimarily stock options and the vesting of restricted stock units using the treasury stock method, and (iii) if dilutive, performance based awards based on the number of shares that would be issuable as of the end of the reporting period assuming the end of the reporting period was also the end of the contingency period.

Under the treasury stock method, the assumed proceeds calculation includes the actual proceeds to be received from the employee upon exercise of outstanding equity awards and the average unrecognized compensation cost during the period. The treasury stock method assumes that a company uses the proceeds from the exercise of an equity award to repurchase common stock at the average market price for the reporting period.

Below is a reconciliation of the weighted average number of shares of common stock outstanding in calculating Diluted EPS (shares in thousands and dollars in millions, except per share amounts) for the periods presented:

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

Numerator:

Net income

$
25

$
55

$
65

$
119

Denominator:

Weighted average shares used to compute Basic EPS

138,779

145,678

140,961

145,618

Weighted average effect of dilutive securities:

Stock options

193

1,135

312

1,229

RSUs

416

404

408

314

Weighted average shares used to compute Diluted EPS

139,388

147,217

141,681

147,161

Basic EPS

$
0.18

$
0.38

$
0.46

$
0.82

Diluted EPS

$
0.18

$
0.37

$
0.46

$
0.81

~~The following potential common shares related to stock options and~~ RSUs, ~~were excluded from the calculation of Diluted EPS (in thousands) because their effect would have been anti-dilutive for the periods presented:~~

Three months ended September 30,

Nine months ended September 30,

2017(1)

2016(2)

2017(1)

2016(2)

Stock options

4,643

3,065

4,626

2,997

RSUs

1,756

691

1,940

753

Total

6,399

3,756

6,566

3,750

~~(1)~~

These totals do not include 125,000 performance based options representing the right to acquire the equivalent number of shares of potential common stock for which all targets required to trigger vesting had not been achieved; therefore such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods.

~~(2)~~

These totals do not include 125,000 performance based options and 12,799 performance based RSUs representing 137,799 shares of potential common stock for which all targets required to trigger vesting had not been achieved; therefore such awards were excluded from the calculation of weighted average shares used to compute Diluted EPS for those reporting periods.

~~NOTE 5: FINANCIAL INSTRUMENTS~~

~~Cash, Cash Equivalents and Marketable Securities~~

The following tables show our cash and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by fair value hierarchy and significant investment category recorded as cash and cash equivalents or short and long-term marketable securities as of the dates presented (in millions):

September 30, 2017

Cash and

Short-Term

Long-Term

Amortized

Unrealized

Unrealized

Fair

Cash

Marketable

Marketable

Cost

Gains

Losses

Value

Equivalents

Securities

Securities

Cash

$
747

$
-

$
-

$
747

$
747

$
-

$
-

Level 1:

Money market funds

2

-

-

2

2

-

-

Level 2:

U.S. agency securities

4

-

-

4

1

2

1

U.S. treasury securities

1

-

-

1

-

1

-

Certificates of deposit

2

-

-

2

-

1

1

Corporate debt securities

13

-

-

13

-

9

4

Subtotal

20

-

-

20

1

13

6

Total

$
769

$
-

$
-

$
769

$
750

$
13

$
6

December 31, 2016

Cash and

Short-Term

Long-Term

Amortized

Unrealized

Unrealized

Fair

Cash

Marketable

Marketable

Cost

Gains

Losses

Value

Equivalents

Securities

Securities

Cash

$
595

$
-

$
-

$
595

$
595

$
-

$
-

Level 1:

Money market funds

17

-

-

17

17

-

-

Level 2:

U.S. agency securities

23

-

-

23

-

21

2

U.S. treasury securities

8

-

-

8

-

8

-

Certificates of deposit

16

-

-

16

-

15

1

Commercial paper

5

-

-

5

-

5

-

Corporate debt securities

82

-

-

82

-

69

13

Subtotal

134

-

-

134

-

118

16

Total

$
746

$
-

$
-

$
746

$
612

$
118

$
16

Our cash and cash equivalents consist of cash on hand in global financial institutions, money market funds and marketable securities with maturities of 90 days or less at the date purchased. The remaining maturities of our long-term marketable securities range from one to three years and our short-term marketable securities include maturities that were greater than 90 days at the date purchased and have 12 months or less remaining at September 30, 2017 and December 31, 2016, respectively.

~~For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels:~~

~~Level 1—Valuations are based on quoted market prices for identical assets and liabilities in active markets.~~

We classify our cash equivalents and marketable securities within Level 1 and Level 2 as we value our cash equivalents and marketable securities using quoted market prices (Level 1) or alternative pricing sources (Level 2). The valuation technique we used to measure the fair value of money market funds were derived from quoted prices in active markets for identical assets or liabilities. Fair values for Level 2 investments are considered “Level 2” valuations because they are obtained from independent pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Our procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from our independent pricing services against fair values obtained from another independent source.

There were no material realized gains or losses related to sales of our marketable securities for the three and nine months ended September 30, 2017 and 2016. Realized gains and losses on the sale of securities were determined by specific identification of each security’s cost basis. We consider any individual investments in an unrealized loss position to be temporary in nature and do not consider any of our investments other-than-temporarily impaired as of September 30, 2017.

~~Derivative Financial Instruments~~

In certain circumstances, we enter into foreign currency forward exchange contracts, or forward contracts, to reduce the effects of fluctuating foreign currency exchange rates on our cash flows denominated in foreign currencies. We do not use derivatives for trading or speculative purposes.

Our forward contracts, which have been entered into during both the three and nine months ended September 30, 2017 have not been designated as hedges and had current maturities of less than 90 days. Consequently, any gain or loss resulting from the change in fair value has been recognized in our unaudited condensed consolidated statement of operations, which were not material for both the three and nine months ended September 30, 2017. The net gain or loss related to our forward contracts for the three months ended September 30, 2016 was not material and we recorded a net gain of $1 million for the nine months ended September 30, 2016 related to our settled and outstanding forward contracts in “Interest income and other, net” on our unaudited condensed consolidated statements of operations.

~~The following table shows the notional principal amounts of our outstanding derivative instruments that are not designated as hedging instruments as of the dates presented:~~

September 30, 2017

December 31, 2016

(in millions)

Foreign exchange-forward contracts (1), (2)
$
-

$
6

~~(1)~~

Derivative contracts address foreign currency exchange fluctuations for the Euro versus the U.S. Dollar. The Company had no outstanding derivative contracts as of September 30, 2017 and two outstanding derivative contracts as of December 31, 2016.

~~(2)~~

The fair value of our derivatives was not material as of December 31, 2016. We measure the fair value of our outstanding or unsettled derivatives using Level 2 fair value inputs, as we use a pricing model that takes into account the contract terms as well as current foreign currency exchange rates in active markets.

~~The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3 at September 30, 2017 and December 31, 2016.~~

~~Other Financial Instruments~~

Other financial instruments not measured at fair value on a recurring basis include accounts receivable, accounts payable, deferred merchant payables, short-term debt, accrued and other current liabilities and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value because of the short maturity of these instruments as reported on our unaudited condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively. The carrying value of the long-term debt from our 2015 Credit Facility bears interest at a variable rate and therefore is also considered to approximate fair value.

We also hold investments in equity securities of privately-held companies with carrying values of $12 million and $14 million at September 30, 2017 and December 31, 2016, respectively. These investments are accounted for under the cost method and included in "Other long-term assets" in the Company's unaudited condensed consolidated balance sheet. Under the cost method, investments are carried at cost and are adjusted only for other-than-temporary declines in fair value, certain distributions, and additional investments. The Company evaluates its investments on a quarterly basis to determine if any indicators of other-than-temporary impairment exist. The Company recognized a loss of $2 million related to an investment in one of these privately-held companies during the three months ended September 30, 2017 in “Interest income and other, net” on our unaudited condensed consolidated statements of operations.

~~NOTE 6: DEBT~~

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

September 30,

December 31,

2017

2016

(in millions)

Short-Term Debt:

Chinese Credit Facilities

$
7

$
7

2016 Credit Facility

-

73

Total Short-Term Debt

$
7

$
80

Long-Term Debt:

2015 Credit Facility

$
265

$
91

Total Long-Term Debt

$
265

$
91

~~2015 Credit Facility~~

In June 2015, we entered into a five year credit agreement with a group of lenders which, among other things, provided for a $1 billion unsecured revolving credit facility (the “2015 Credit Facility”). On May 12, 2017, the 2015 Credit Facility was amended to, among other things, (i) increase the aggregate amount of revolving loan commitments available from $1.0 billion to $1.2 billion; and (ii) extend the maturity date of the 2015 Credit Facility from June 26, 2020 to May 12, 2022 (the “First Amendment”). Borrowings under the 2015 Credit Facility generally bear interest, at the Company’s option, at a rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBO rate for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.00% (“Eurocurrency Spread”), based on the Company’s leverage ratio; or (ii) the Alternate Base Rate (“ABR”) Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBO Rate (or LIBO rate multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00% (“ABR Spread”), based on the Company’s leverage ratio. The Company may borrow from the revolving credit facility in U.S dollars, Euros and British pound sterling.

During the nine months ended September 30, 2017, the Company borrowed an additional $415 million and repaid $241 million of our outstanding borrowings under the 2015 Credit Facility. These net borrowings during the year were primarily used to repurchase shares of our outstanding common stock under the Company’s repurchase program, which is described in “Note 9: Stockholders Equity”. As of September 30, 2017, based on the Company’s leverage ratio, our borrowings bear interest at LIBO rate; plus an applicable margin of 1.25%, or the Eurocurrency Spread. The Company is currently borrowing under a one-month interest rate period or a weighted average rate of 2.50% per annum as of September 30, 2017, using a one-month interest period Eurocurrency Spread, which will reset periodically. Interest will be payable on a monthly basis while the Company is borrowing under the one-month interest rate period. We are also required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.30%, on the daily unused portion of the revolving credit facility for each fiscal quarter and additional fees in connection with the issuance of letters of credit. As of September 30, 2017, our unused revolver capacity is subject to a commitment fee of 0.15%, given the Company’s leverage ratio. The 2015 Credit Facility includes $15 million of borrowing capacity available for letters of credit and $40 million for Swing Line borrowings on same-day notice. As of September 30, 2017, we had issued $3 million of outstanding letters of credit under the 2015 Credit Facility. We recorded total interest expense and commitment fees on our 2015 Credit Facility of $2 million and $4 million for the three and nine months ended September 30, 2017, respectively, and $1 million and $3 million for the three and nine months ended September 30, 2016, respectively, to “Interest expense” on our unaudited condensed consolidated statements of operations. All unpaid interest and commitment fee amounts as of September 30, 2017 and December 31, 2016, respectively, were not material.

In connection with the First Amendment, we incurred additional lender fees and debt financing costs totaling $2 million, which were capitalized as deferred financing costs and recorded to “Other long-term assets” on the unaudited condensed consolidated balance sheet. As of September 30, 2017, the Company has $3 million remaining in deferred financing costs in connection with the 2015 Credit Facility. These costs will be amortized over the remaining term using the effective interest rate method and recorded to “Interest expense” on our unaudited condensed consolidated statements of operations. The resulting write down of previous deferred financing costs as a result of the First Amendment was not material.

There is no specific repayment date prior to the maturity date for borrowings under this credit agreement. We may voluntarily repay any outstanding borrowing under the 2015 Credit Facility at any time without premium or penalty, other than customary breakage costs with respect to Eurocurrency loans. Certain wholly-owned domestic subsidiaries of the Company have agreed to guarantee the Company’s obligations under the 2015 Credit Facility. The 2015 Credit Facility contains a number of covenants that,

among other things, restrict our ability to: incur additional indebtedness, create liens, enter into sale and leaseback transactions, engage in mergers or consolidations, sell or transfer assets, pay dividends and distributions, make investments, loans or advances, prepay certain subordinated indebtedness, make certain acquisitions, engage in certain transactions with affiliates, amend material agreements governing certain subordinated indebtedness, and change our fiscal year. The 2015 Credit Facility also requires us to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the 2015 Credit Facility will be entitled to take various actions, including the acceleration of all amounts due under the 2015 Credit Facility. Additionally, the 2015 Credit Facility includes a subjective acceleration clause, which could be triggered by the lenders if a representation, warranty or statement made by the Company proves to be incorrect in any material respect, which in turn would permit the lenders to accelerate repayment of any outstanding obligations. The Company believes that the likelihood of the lender exercising this right is remote and, as such, we classify borrowings under this facility as long-term debt. As of September 30, 2017, we were in compliance with all of our debt covenants.

~~2016 Credit Facility~~

In September 2016, we entered into an uncommitted facility agreement, which provides for a $73 million unsecured revolving credit facility (the “2016 Credit Facility”) with no specific expiration date. The 2016 Credit Facility is available at the lender’s discretion and can be canceled at any time. Repayment terms for borrowings under the 2016 Credit Facility are generally one to six month periods or such other periods as the parties may mutually agree and bear interest at LIBOR plus 112.5 basis points. The Company may borrow from the 2016 Credit Facility in U.S dollars only and we may voluntarily repay any outstanding borrowing at any time without premium or penalty. Any overdue amounts under or in respect of the 2016 Credit Facility not paid when due shall bear interest in the case of principal at the applicable interest rate plus 1.50% per annum. In addition, TripAdvisor, LLC, a wholly-owned domestic subsidiary of the Company, has agreed to guarantee the Company’s obligations under the 2016 Credit Facility. There are no specific financial or incurrence covenants.

The Company repaid all outstanding borrowings during the first three months of 2017 and, as of September 30, 2017, we had no outstanding borrowings under the 2016 Credit Facility. During the three and nine months ended September 30, 2017, total interest recorded with respect to our 2016 Credit Facility to “Interest expense” on our unaudited condensed consolidated statements of operations ~~was not material.~~

~~Chinese Credit Facilities~~

~~In addition to our borrowings under the 2015 Credit Facility and 2016 Credit Facility, we maintain two credit facilities in China (jointly, the “Chinese Credit Facilities”).~~

We are parties to a $30 million, one-year revolving credit facility with Bank of America (the “Chinese Credit Facility—BOA”) that is currently subject to review on a periodic basis with no specific expiration period. Borrowings under our Chinese Credit Facility—BOA generally bear interest at a rate based on People’s Bank of China benchmark, including certain adjustments which may be made in accordance with the market condition at the time of borrowing. As of September 30, 2017, there were no outstanding borrowings under our Chinese Credit Facility—BOA.

We are also parties to a RMB 70,000,000 (approximately $10 million), one-year revolving credit facility with J.P. Morgan Chase Bank (“Chinese Credit Facility—JPM”). Borrowings under our Chinese Credit Facility—JPM generally bear interest at a rate based on People’s Bank of China benchmark, including certain adjustments which may be made in accordance with the market condition at the time of borrowing. As of September 30, 2017 and December 31, 2016, respectively, we had $7 million of outstanding borrowings from the Chinese Credit Facility – JPM at a weighted average rate of 4.35%.

~~NOTE 7: INCOME TAXES~~

Each interim period is considered an integral part of the annual period and, accordingly, we measure our income tax expense using an estimated annual effective tax rate. An enterprise is required, at the end of each interim reporting period, to make its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the ~~interim period.~~periods presented:

~~Our effective tax rate for the three~~


	Three months ended
	March 31,
	2022			2021
	(in millions)
Selling and marketing	$	3		$	4
Technology and content		9			12
General and administrative		10			13
Total stock-based compensation		22			29
Income tax benefit from stock-based compensation		(4	)		(5	)
Total stock-based compensation, net of tax effect	$	18		$	24

We capitalized $2 million and ~~nine months ended September 30, 2017 was 34.2% and 39.3%, respectively.~~ ~~Our effective tax rate for the three and nine months ended September 30, 2016 was 12.7% and 18.5%, respectively.~~ For both the three and nine months ended September 30, 2017, the effective tax rate is greater than the federal statutory rate primarily due to valuation allowances on losses in jurisdictions outside the United States, recognition of stock compensation shortfalls, and a change in the relative mix of pretax income among jurisdictions. ~~These same drivers also resulted in an increase in the effective tax rate for the three and nine months ended September 30, 2017, when compared to same periods in 2016~~.

Our policy is to recognize accrued interest and penalties related to unrecognized tax benefits and income tax liabilities as part of our income tax expense. As of September 30, 2017, accrued interest was $8$3 million ~~net of federal and state benefit, and no penalties have been accrued.~~

~~By virtue of previously filed consolidated income tax returns filed with Expedia, we are currently under an~~ IRS audit for the 2009, 2010 and 2011 tax years, and have various ongoing state income tax audits. We are separately under examination by the IRS for the 2012 and 2013 tax years and under an employment tax audit by the IRS for the 2013 and 2014 tax years. These audits include questioning of the timing and the amount of income and deductions and the allocation of income among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax authorities for years prior to 2009. As of September 30, 2017, no material assessments have resulted, except as noted below regarding our 2009 and 2010 IRS audit with Expedia.

In January 2017, we received Notices of Proposed Adjustment from the IRS for the 2009 and 2010 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries, and would result in an increase to our worldwide income tax expense in an estimated range totaling $10 million to $14 million for those specific years, after consideration of competent authority relief, exclusive of interest and penalties. During the quarter ended June 30, 2017, we filed a request for Mutual Agreement Procedure consideration under Article 26 of the United States / United Kingdom Income Tax Convention and Rev. Proc. 2015-40, 2015-35 I.R.B. 236. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable. As such, we disagree with the proposed adjustments and intend to defend our position through applicable administrative and, if necessary, judicial remedies. In addition to the risk of additional tax for 2009 and 2010 transactions, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we could be subject to significant additional tax liabilities.

In July 2015, the United States Tax Court (the “Court”) issued an opinion favorable to Altera Corporation (“Altera”) with respect to Altera’s litigation with the IRS. This opinion was submitted as a final decision under Tax Court Rule 155 during December 2015. The litigation relates to the treatment of stock-based compensation expense as website development costs during the three months ended March 31, 2022 and 2021, respectively.

Stock-Based Award Activity and Valuation

2022 Stock Option Activity

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


				Weighted		Weighted
				Average		Average
				Exercise		Remaining		Aggregate
	Options			Price Per		Contractual		Intrinsic
	Outstanding			Share		Life		Value
	(in thousands)					(in years)		(in millions)
Options outstanding at December 31, 2021		5,671		$	47.03
Granted		23			27.03
Exercised (1)		(7	)		24.50
Cancelled or expired		(327	)		54.01
Options outstanding at March 31, 2022		5,360		$	46.55		4.8	$	1
Exercisable as of March 31, 2022		3,976		$	49.82		3.7	$	1
Vested and expected to vest after March 31, 2022 (2)		5,360		$	46.55		4.8	$	1

(1)

Inclusive of approximately 4,000 stock options which were not converted into shares due to net share settlement in ~~an inter-company cost-sharing arrangement~~order to cover the aggregate exercise price and the required amount of employee withholding taxes. Potential shares which had been convertible under stock options that were withheld under net share settlement remain in the authorized but unissued pool under the 2018 Stock and Annual Incentive Plan (the “2018 Plan”) and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the consolidated statements of cash flows.

(2)

Aggregate intrinsic value represents the difference between the closing stock price of our common stock and the exercise price of outstanding, in-the-money options. Our closing stock price as reported on Nasdaq as of March 31, 2022 was $27.12. The total intrinsic value of stock options exercised for the three months ended March 31, 2022 was not material, and for the three months ended March 31, 2021 was $8 million.

The fair value of stock option grants has been estimated at the date of grant using the Black–Scholes option pricing model with ~~Altera’s foreign subsidiary. In its opinion,~~ the ~~Court accepted Altera’s position~~following weighted average assumptions for the periods presented:


	Three months ended
	March 31,
	2022			2021
Risk free interest rate		1.53	%		0.65	%
Expected term (in years)		5.15			5.33
Expected volatility		50.32	%		49.69	%
Expected dividend yield	0 %			0 %
Weighted-average grant date fair value	$	12.26		$	20.35

Our stock options generally have a term of ~~excluding~~ten years from the date of grant and typically vest equally over a four-year requisite service period. We amortize the grant-date fair value of our stock ~~based~~option grants as stock-based compensation ~~from its inter-company cost-sharing arrangement. The IRS appealed~~expense over the ~~Court decision~~vesting term on ~~February 19, 2016. At this time,~~a straight-line basis, with the ~~U.S. Department~~amount of compensation expense recognized at any date at least equaling the portion of the ~~Treasury has~~grant-date fair value of the award that is vested at that date. The total fair value of stock options vested was $6 million and $8 million for the three months ended March 31, 2022 and 2021, respectively.

2022 RSU Activity

A summary of our activity with respect to restricted stock units (“RSUs”), consisting primarily of service-based vesting terms, is presented below:


				Weighted
				Average
				Grant-		Aggregate
	RSUs			Date Fair		Intrinsic
	Outstanding			Value Per Share		Value
	(in thousands)					(in millions)
Unvested RSUs outstanding as of December 31, 2021		5,786		$	36.82
Granted		4,829			27.24
Vested and released (1)		(1,272	)		41.56
Cancelled		(401	)		36.61
Unvested RSUs outstanding as of March 31, 2022 (2)		8,942		$	30.98	$	243

(1)

Inclusive of approximately 295,000 RSUs withheld due to net share settlement to satisfy required employee tax withholding requirements. Potential shares which had been convertible under RSUs that were withheld under net share settlement remain in the authorized but unissued pool under the 2018 Plan and can be reissued by the Company. Total payments for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the consolidated statements of cash flows.

(2)

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

We amortize the ~~requirement from its regulations to include~~grant-date fair value of RSUs as stock-based compensation ~~in intercompany cost-sharing arrangements.~~expense over the vesting term, which is typically over a four-year requisite service period on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the grant-date fair value of the award that is vested at that date.

A summary of our activity related to market-based RSUs (“MSUs”), is presented below:


				Weighted
				Average
				Grant-		Aggregate
	MSUs			Date Fair		Intrinsic
	Outstanding			Value Per Share		Value
	(in thousands)					(in millions)
Unvested MSUs outstanding as of December 31, 2021		120		$	28.15
Cancelled		(35	)		28.15
Unvested MSUs outstanding as of March 31, 2022 (1)		85		$	28.15	$	2

(1)

MSUs provide for vesting based upon the Company’s total shareholder return, or TSR, performance over the period commencing January 1, 2020 through December 31, 2022 relative to the TSR performance of The ~~Company recorded an~~Nasdaq Composite Total Return Index. Based upon actual attainment relative to the target performance metric, the grantee has the ability to receive up to 200% of the target number of MSUs originally granted, or to receive NaN at all.

Total current income tax ~~benefit, based~~ benefits associated with the exercise or settlement of Tripadvisor stock-based awards held by our employees was $2 million ~~the Court’s acceptance of Altera’s position, of $3 million~~ and $5$9 million during the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2022 and 2021, respectively.

Unrecognized Stock-Based Compensation

A summary of our remaining unrecognized stock-based compensation expense and the weighted average remaining amortization period at March 31, 2022 related to our non-vested equity awards is presented below (in millions, except in years information):


	Stock
	Options		RSUs/MSUs
Unrecognized compensation expense	$	13	$	233
Weighted average period remaining (in years)		2.3		3.2

NOTE ~~9: STOCKHOLDERS’ EQUITY~~11: EARNINGS PER SHARE

~~On January 25, 2017, our Board~~Basic Earnings Per Share Attributable to Common Stockholders

We compute basic earnings per share, or Basic EPS, by dividing net income (loss) by the weighted average number of ~~Directors authorized~~common shares outstanding during the ~~repurchase~~period. We compute the weighted average number of ~~$250 million~~common shares outstanding during the reporting period using the total of ~~our~~common stock and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted average of any additional shares issued and outstanding less the weighted average of any common shares repurchased during the reporting period.

Diluted Earnings Per Share Attributable to Common Stockholders

Diluted earnings per share, or Diluted EPS, includes the potential dilution of common equivalent shares outstanding that could occur from stock-based awards and other stock-based commitments using the treasury stock method. We compute Diluted EPS by dividing net income (loss) by the sum of the weighted average number of common and common equivalent shares outstanding during the period. We computed the weighted average number of common and common equivalent shares outstanding during the period using the sum of (i) the number of shares of common stock ~~under a new share repurchase program. Our Board~~and Class B common stock used in the Basic EPS calculation as indicated above, and (ii) if dilutive, the incremental weighted average common stock that we would issue upon the assumed exercise of ~~Directors authorized~~outstanding common equivalent shares, primarily related to stock options and ~~directed management, working with~~ the ~~Executive Committee~~vesting of ~~our Board~~restricted stock units using the treasury stock method, and (iii) if dilutive, performance-based and market-based awards based on the number of ~~Directors to affect the share repurchase program in compliance with applicable legal requirements. As of June 30, 2017, we had repurchased a total of 6,079,003~~ shares that would be issuable as of the ~~Company’s~~end of the reporting period assuming the end of the reporting period was also the end of the contingency period.

In periods of ~~$41.13, or $250 million in the aggregate, and completed this share repurchase program.~~

~~NOTE 10: RELATED PARTY TRANSACTIONS~~

~~We consider Liberty TripAdvisor Holdings, Inc. (“LTRIP”) a related party. As of September 30, 2017, LTRIP beneficially owned approximately 18.2 million~~net income, shares of our common stock subject to the potential conversion of the 2026 Senior Notes outstanding during the period is also included in our weighted average number of shares outstanding used to calculate Diluted EPS using the if-converted method under GAAP, as share settlement is presumed. The Capped Calls are excluded from the calculation of Diluted EPS, as they would be antidilutive. However, upon conversion of the 2026 Senior Notes, unless the market price of our common stock exceeds the cap price, an exercise of the Capped Calls would generally offset any dilution from the 2026 Senior Notes from the

conversion price up to the cap price. As of March 31, 2022 and ~~12.8~~2021, the market price of a share of our common stock did not exceed the $107.36 cap price.

In periods of a net loss, common equivalent shares are excluded from the calculation of Diluted EPS as their inclusion would have an antidilutive effect. Accordingly, for periods in which we report a net loss, such as for the three months ended March 31, 2022 and 2021, respectively, Diluted EPS is the same as Basic EPS, since dilutive common equivalent shares are not assumed to have been issued if their effect is antidilutive.


	Three months ended March 31,
	2022			2021
Numerator:
Net income (loss)	$	(34	)	$	(80	)
Denominator:
Weighted average shares used to compute Basic EPS		139,092			135,746
Weighted average effect of dilutive securities:
Stock options		—			—
RSUs/MSUs		—			—
2026 Senior Notes (Note 6)		—			—
Weighted average shares used to compute Diluted EPS		139,092			135,746
Basic EPS	$	(0.24	)	$	(0.59	)
Diluted EPS	$	(0.24	)	$	(0.59	)

Potential common shares, consisting of outstanding stock options, RSUs, MSUs, and those issuable under the 2026 Senior Notes, totaling approximately 19.0 million shares and 17.8 million shares for the three months ended March 31, 2022 and 2021, respectively, have been excluded from the calculation of ~~our~~Diluted EPS because their effect would have been antidilutive. In addition, potential common shares from certain performance-based awards of approximately 0.1 million shares for the three months ended March 31, 2022 and 2021, respectively, for which all targets required to trigger vesting had not been achieved, were also excluded from the calculation of weighted average shares used to compute Diluted EPS.

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. In addition, our non-vested RSUs and MSUs are entitled to dividend equivalents, which ~~shares constitute 14.4%~~are payable to the holder subject to, and only upon vesting of, the ~~outstanding shares~~underlying awards and are therefore forfeitable. Given such dividend equivalents are forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two‑class method of common stock and 100% of the outstanding shares of Class B common stock. Assuming the conversion of all of LTRIP’s shares of Class B common stock into common stock, LTRIP would beneficially own 22.3% of the outstanding common stock. Because each share of Class B common stock generally is entitled to ten votesdetermining earnings per ~~share and each share of common stock is entitled to one vote per share, LTRIP may be deemed to beneficially own equity securities representing 57.5% of our voting power.~~share.

~~We had no related party transactions with LTRIP during the nine months ended September 30, 2017 and 2016.~~

NOTE ~~11:~~12: SEGMENT INFORMATION

~~Our reporting structure includes two~~We have 2 reportable segments: ~~Hotel~~(1) Hotels, Media & Platform; and ~~Non-Hotel.~~

~~Hotel~~

(2) Experiences & Dining. Our ~~Hotel~~Hotels, Media & Platform reportable segment includes ~~revenue generated from~~ the following revenue sources:

~~TripAdvisor-branded Click-based~~ (1) Tripadvisor-branded hotels revenue – primarily consisting of hotel auction revenue, CPA revenue, subscription-based advertising revenue, and ~~Transaction Revenue.~~ ~~Our largest source of Hotel segment~~hotel sponsored placements revenue; and (2) Tripadvisor-branded display and platform revenue is generated from click-based advertising on TripAdvisor-branded websites, which is primarily comprised of contextually-relevant booking links to our partners’ sites. Our click-based advertising partners are predominantly online travel agencies, or OTAs, and direct suppliers in the hotel product category. Click-based advertising is generally priced on a cost-per-click, or “CPC”, basis, with payments from advertisers determined by the number of users who click on a link multiplied by the price that partner is willing to pay for that click, or hotel shopper lead. CPC rates are determined in a dynamic, competitive auction process, or metasearch auction, that enables our partners to use our proprietary, automated bidding system to submit CPC bids to have their hotel rates and availability listed on our site. Transaction revenue is generated from our instant booking feature, which enables the merchant of record, generally an OTA or hotel partner, to pay a commission to TripAdvisor for a user that completes a hotel reservation on our website.

~~TripAdvisor-branded Display-based Advertising and Subscription Revenue.~~ ~~Advertising partners can promote their brands in a contextually-relevant manner through a variety~~– consisting of display-based advertising ~~placements on~~revenue. Our Experiences & Dining reportable segment includes an aggregation of our ~~websites. Our display-based advertising clients are predominately direct suppliers~~Experiences and Dining operating segments. All remaining business units, including Rentals, Flights & Car, and Cruises have been combined into and reported as “Other”, which does not constitute a reportable segment, as none of ~~hotels, airlines and cruises,~~these businesses meet the quantitative thresholds and/or other criteria to qualify as well as destination marketing organizations. We also accept display-based advertising from OTAs and attractions, as well as advertisers from non-travel categories. Display-based advertising is sold predominantly on a cost per thousand impressions, or CPM, basis. Subscription-based advertising is offered to hotels, B&Bs and other specialty lodging properties. This advertising product is sold for a flat fee and enables subscribers to list, for a contracted period of time, a website URL, email address and phone number on our TripAdvisor-branded websites, as well as to post special offers for travelers.

•

~~Other Hotel Revenue.~~ Our other hotel revenue primarily includes revenue from non-TripAdvisor branded websites, such as bookingbuddy.com, cruisecritic.com, and onetime.com, which includes click-based advertising revenue, display-based

~~advertising revenue, hotel room reservations sold through the websites, and advertising revenue from making cruise reservations available for price comparison and booking.~~

~~Non-Hotel~~

~~Our Non-Hotel segment consists~~reportable segments. The nature of the ~~aggregation of three operating segments, our Attractions, Restaurants~~services provided and ~~Vacation Rentals businesses.~~

~~Attractions.~~ ~~We provide information and services for users to research and book activities and attractions~~revenue recognition policies are summarized by reported segment in popular travel destinations through our dedicated Attractions business, Viator, as well as on our TripAdvisor website and applications. We generate revenue by charging the operators a commission for each transaction we facilitate through our online reservation systems. In addition to its consumer-direct business, Viator also powers activity and attractions booking capabilities to its affiliate partners, including some of the world’s top airlines, hotel chains and online and offline travel agencies. Viator’s bookable inventory is available on www.viator.com as well as TripAdvisor-branded websites and mobile applications.

~~Restaurants.~~ We provide information and services for users to research and book restaurants in popular travel destinations through our dedicated restaurant reservations business, TheFork, as well as on our TripAdvisor website and applications. TheFork is an online restaurant booking platform operating on a number of sites (including www.lafourchette.com, www.eltenedor.com, www.iens.nl and www.dimmi.com.au), with a network of restaurant partners primarily across Europe and Australia. We generate revenue by charging our restaurant partners a fee for each restaurant guest, or seated diner, that we facilitate through our online reservation systems. TheFork also provides flexible online booking and a premium data and analytics tool, for which the restaurant owner pays a subscription fee. TheFork’s bookable inventory is also available on TripAdvisor-branded websites and mobile applications.

~~Vacation Rentals~~“Note 3: Revenue Recognition. We provide information and services for users to research and book vacation and short-term rental properties, including full home rentals, condominiums, villas, beach rentals, cabins and cottages. The Vacation Rentals business generates revenue primarily by offering individual property owners and property managers the ability to list their properties on our websites and mobile applications through a free-to-list, commission-based option and, to a lesser extent, by an annual subscription-based fee structure. These properties are listed on a number of websites, including www.flipkey.com, www.holidaylettings.co.uk, www.housetrip.com, www.niumba.com, and www.vacationhomerentals.com, as well as on our TripAdvisor-branded websites.

” Our operating segments are determined based on how our chief operating decision maker manages our business, regularly ~~assesses~~accesses information and evaluates performance for operating decision-making purposes, including allocation of resources. ~~The chief operating decision maker for~~

All direct general and administrative costs are included in the ~~Company is our Chief Executive Officer.~~applicable segments and business units; however, all corporate general and administrative costs are included in the Hotels, Media & Platform reportable segment. In addition, the Hotels, Media & Platform reportable segment includes all Tripadvisor-related brand advertising expenses (primarily television advertising), technical infrastructure, and other costs supporting the Tripadvisor platform.

Adjusted EBITDA is our segment profit measure and a key measure used by our management and ~~board~~Board of ~~directors~~Directors to understand and evaluate the operating performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. We define Adjusted EBITDA as net income (loss) plus: (1) ~~provision~~(provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation ~~of property~~ and ~~equipment, including amortization of internal use software and website development;~~amortization; (4) ~~amortization of intangible assets; (5)~~ stock-based compensation and other stock-settled obligations; ~~(6)~~(5) goodwill,

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

The following tables present our segment information for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021 and ~~include~~includes a reconciliation of Adjusted EBITDA to Net ~~Income.~~Income (Loss). We record depreciation ~~of property~~ and ~~equipment, including~~ amortization, ~~of internal-use software and website development, amortization of intangible assets,~~ stock-based compensation and other stock-settled obligations, goodwill, intangible asset and other ~~income (expense), net,~~long-lived asset impairments, legal reserves and settlements, restructuring and other related reorganization costs, and other non-recurring expenses and income, net, ~~and income taxes,~~ which are excluded from segment operating performance, in corporate and unallocated. In addition, we do not report our assets, capital expenditures and related depreciation expense by segment as our ~~chief operating decision maker~~CODM does not use this information to evaluate operating segments. Accordingly, we do not regularly provide such information by segment to our ~~chief operating decision maker.~~CODM. Intersegment revenue is not material and ~~in addition, already~~is included and eliminated in ~~the information by segment provided to our chief operating decision maker. Our consolidated~~Other.


	Three months ended March 31, 2022
	Hotels, Media & Platform (1)		Experiences & Dining			Other		Corporate and Unallocated			Total
	(in millions)
Revenue	$	160	$	92		$	10	$	0		$	262
Adjusted EBITDA		46		(22	)		3		0			27
Depreciation and amortization									(25	)		(25	)
Stock-based compensation									(22	)		(22	)
Operating income (loss)												(20	)
Other income (expense), net												(13	)
Income (loss) before income taxes												(33	)
(Provision) benefit for income taxes												(1	)
Net income (loss)												(34	)


	Three months ended March 31, 2021
	Hotels, Media & Platform (1)			Experiences & Dining			Other		Corporate and Unallocated			Total
	(in millions)
Revenue	$	88		$	28		$	7	$	—		$	123
Adjusted EBITDA		(3	)		(24	)		1		0			(26	)
Depreciation and amortization										(29	)		(29	)
Stock-based compensation										(29	)		(29	)
Operating income (loss)													(84	)
Other income (expense), net													(12	)
Income (loss) before income taxes													(96	)
(Provision) benefit for income taxes													16
Net income (loss)													(80	)

(1)

Includes allocated corporate general and administrative costs of $19 million and $16 million for the three months ended March 31, 2022 and 2021, respectively, and Tripadvisor-branded advertising expenses ~~excluding stock-based compensation costs, are shared by all operating segments. Each operating segment receives an allocated charge based on~~of $1 million for both the ~~segment’s percentage of~~three months ended March 31, 2022 and 2021, respectively.

Customer Concentrations

Refer to “Note 4: Financial Instruments and Fair Value Measurements” under the ~~Company’s total personnel costs.~~section entitled “Risks and Concentrations” for information regarding our major customer concentrations.

Three months ended September 30, 2017

Hotel

Non-Hotel

Corporate and Unallocated

Total

(in millions)

Revenue

$
312

$
127

$
-

$
439

Adjusted EBITDA (1)

51

44

-

95

Depreciation

(19
)

(19
)
Amortization of intangible assets

(8
)

(8
)
Stock-based compensation

(26
)

(26
)
Operating income (loss)

42

Other expense, net

(4
)
Income before income taxes

38

Provision for income taxes

(13
)
Net income

$
25

Three months ended September 30, 2016

Hotel

Non-Hotel

Corporate and Unallocated

Total

(in millions)

Revenue

$
320

$
101

$
-

$
421

Adjusted EBITDA (2)

99

15

-

114

Depreciation

(18
)

(18
)
Amortization of intangible assets

(8
)

(8
)
Stock-based compensation

(22
)

(22
)
Operating income (loss)

66

Other expense, net

(3
)
Income before income taxes

63

Provision for income taxes

(8
)
Net income

$
55

Nine months ended September 30, 2017

Hotel

Non-Hotel

Corporate and Unallocated

Total

(in millions)

Revenue

$
952

$
283

$
-

$
1,235

Adjusted EBITDA (1)

223

46

-

269

Depreciation

(57
)

(57
)
Amortization of intangible assets

(25
)

(25
)
Stock-based compensation

(72
)

(72
)
Operating income (loss)

115

Other expense, net

(8
)
Income before income taxes

107

Provision for income taxes

(42
)
Net income

$
65

Nine months ended September 30, 2016

Hotel

Non-Hotel

Corporate and Unallocated

Total

(in millions)

Revenue

$
939

$
225

$
-

$
1,164

Adjusted EBITDA (2)

309

(15
)

-

294

Depreciation

(51
)

(51
)
Amortization of intangible assets

(23
)

(23
)
Stock-based compensation

(64
)

(64
)
Operating income (loss)

156

Other expense, net

(10
)
Income before income taxes

146

Provision for income taxes

(27
)
Net income

$
119

~~(1)~~

~~(2)~~

Includes allocated general and administrative expenses in our Hotel segment of $22 million and $60 million for the three and nine months ended September 30, 2017, respectively, and in our Non-Hotel segment of $11 million and $30 million for the same periods.

Includes allocated general and administrative expenses in our Hotel segment of $21 million and $63 million for the three and nine months ended September 30, 2016, respectively, and in our Non-Hotel segment of $10 million and $28 million for the same periods.

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

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q, and the consolidated financial statements and accompanying notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

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 ~~this Quarterly~~our Annual Report on Form ~~10-Q~~10-K for the ~~nine months~~year ended ~~September 30, 2017,~~December 31, 2021, Part ~~II,~~I, Item 1A, ~~“Risk Factors.~~“Risk Factors,” as well as those discussed elsewhere in

this report. Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation to, and do not intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this report and in our other reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

Overview

~~TripAdvisor, Inc., by and through its subsidiaries, owns and~~

Tripadvisor operates ~~a portfolio of leading online travel brands. TripAdvisor, our flagship brand, is~~ the world’s largest travel ~~site,~~guidance platform, connecting a global audience of prospective travelers with travel partners through rich content, price comparison tools, and ~~its~~online reservation and related services for destinations, accommodations, travel activities and experiences, and restaurants. Our mission is to help people around the world plan, book and experience the perfect ~~trip. We accomplish this by, among other things, aggregating millions~~trip.

In 2000, under our flagship brand Tripadvisor, we launched www.Tripadvisor.com in the U.S. Since then, we have built a portfolio of ~~members’ reviews~~travel guidance brands and ~~opinions about~~ businesses, seamlessly connecting travelers to destinations, accommodations, travel activities and ~~attractions,~~experiences, and restaurants worldwide, thereby creating the foundation for a unique platform that enables users to research and plan their travel experiences. Our platform also enables users to compare real-time pricing and availability for these experiences as well as to book hotels, flights, cruises, vacation rentals, tours, activities and attractions, and restaurants, either on a TripAdvisor site or mobile app, or on the site or app of one of our travel partner sites.

~~Our TripAdvisor-branded websites include tripadvisor.com~~ in ~~the United States and localized versions of the TripAdvisor website in 48~~over 40 markets and 28over 20 languages worldwide. ~~Our TripAdvisor-branded websites reached 455 million average~~

Executive Financial Summary

Tripadvisor is the world’s largest travel guidance platform, as measured by unique users de-duplicated monthly, ~~unique visitors during the quarter ended September 30, 2017,~~ according to ~~our internal log files. We currently feature over 570 million~~

reviews and opinions on 7.3 million places to stay, places to eat and things to do – including 1.2 million hotels and accommodations and 780,000 vacation rentals, 4.4 million restaurants and 875,000 activities and attractions worldwide. In addition to the flagship TripAdvisor brand, we now manage and operate the following 20 other travel media brands, connected by the common goal of providing users the most comprehensive travel-planning and trip-taking resources in the travel industry: www.airfarewatchdog.com, www.bookingbuddy.com, ~~www.citymaps.com, www.cruisecritic.com, www.familyvacationcritic.com, www.flipkey.com,~~ ~~www.thefork.com~~ ~~(including www.lafourchette.com, www.eltenedor.com, www.iens.nl, and~~ ~~www.dimmi.com.au), www.gateguru.com, www.holidaylettings.co.uk, www.holidaywatchdog.com,~~ ~~www.housetrip.com, www.jetsetter.com, www.niumba.com, www.onetime.com, www.oyster.com, www.seatguru.com, www.smartertravel.com, www.tingo.com, www.vacationhomerentals.com, and www.viator.com.~~

Our reporting structure includes two reportable segments: Hotel and Non-Hotel. Our Non-Hotel reportable segment consists of three operating segments, which includes our Attractions, Restaurants and Vacation Rentals businesses. The segments are determined based on how the chief operating decision maker regularly assesses information and evaluates performance for operating decision-making purposes, including allocation of resources.

~~Executive Summary and Trends~~

SimilarWeb. As ~~the largest online travel platform, we believe we are~~a result, Tripadvisor represents an attractive ~~marketing channel~~platform for ~~advertisers—~~travel partners – including hotel chains, independent hoteliers, ~~online travel agencies, or~~ OTAs, destination marketing organizations, experience operators, restaurants, and other travel-related and non-travel related product and service ~~providers—~~providers – who seek to market and sell their products and services to a global audience. Tripadvisor’s platform and product offerings enable consumers to discover, research and price shop a variety of travel products, including hotels, flights, cruises, cars, vacation rentals, tours, travel activities and other experiences, and restaurants; and book a number of these travel experiences either directly on our platform, or on our travel partners’ websites or mobile apps.

Our Long-Term Growth Strategy

The global travel market (which excludes dining) is expected to reach $1.4 trillion of bookings in 2024, according to Phocuswright, an independent travel, tourism and hospitality research firm. Given we have the world’s largest travel audience, we believe that Tripadvisor’s influence in the travel ecosystem is significant. Our long-term growth strategy aims to increase consumer engagement on our platform and drive profitable growth through:

•

offering products that delight travelers by reducing friction throughout the travel planning and trip-taking journey;

•

driving consumer loyalty to our platform through user experience and by offering products and services that increase engagement with our platform and result in membership growth, new and repeat bookings, mobile app engagement and repeat usage;

•

driving traveler and diner engagement, bookings, and loyalty on our branded platforms by offering industry-leading choices for online bookable experiences and restaurants in top destinations worldwide;

•

deepening travel partner engagement on our platform by expanding the number of products and services we offer; and

•

leveraging our platform’s brand and scale and our unique attributes to expand and grow our offerings such as hotel and restaurant B2B solutions, direct-to-consumer products and services where consumers pay us on a per trip planned or an annual subscription basis and click-based and display-based media advertising.

We expect to enable our growth through investment in:

•

organic investment in marketing and technology (e.g., machine learning) to further improve the experiences we can deliver to consumers and travel partners on our platform; and

•

inorganically by opportunistically pursuing strategic acquisitions.

Business Trends

The online travel industry in which we operate is large ~~user base.~~and also highly dynamic and competitive. Our overall strategy is to deliver more value to consumers and travel partners in order to generate more monetization on our platform. While we operate with a long-term growth focus, our specific growth objectives and resource allocation strategies can differ in both duration and magnitude within our segments. We ~~offer users the ability to do real-time price comparison through our metasearch product,~~describe below these dynamics, as well as the ~~ability to book hotels, flights, cruises, vacation rentals, tours, activities~~current trends affecting our overall business and ~~attractions, and restaurants either directly on our website or mobile app through our instant booking product or on one of our travel partner sites. The~~reportable segments, key drivers of our financial results, ~~are described below, including~~and uncertainties that may impact our ability to execute on our objectives and strategies.

COVID-19

The COVID-19 pandemic has caused a ~~summary~~significant negative impact on the travel, leisure, hospitality, and restaurant industries (collectively, the “travel industry”), and consequently has adversely and materially affected our business, results of operations, liquidity and financial condition since early 2020, continuing, albeit, at a lessening degree and unevenly at times, throughout 2021 and through the three months ended March 31, 2022. Among other impacts, COVID-19 has negatively impacted global consumer travel demand and consumers’ ability to travel and take part in other travel, leisure, and dining activities at varying degrees during this time period, and at various times causing many of our ~~growth strategy, current~~travel partners to operate at significantly reduced and/or intermittent service levels during this timeframe.

Traffic trends ~~affecting~~on our ~~business,~~platform, a leading indicator of consumer travel demand have improved substantially since the trough of significant declines seen in the second half of March 2020 and throughout April 2020. By means of showing a comparison to a pre-COVID-19 timeframe, average monthly unique users on Tripadvisor-branded websites during the first quarter of 2022 was approximately 71% of 2019’s comparable period, an increase from approximately 55% of 2019’s comparable period during the first quarter of 2021. This improvement was largely driven by vaccine progress, the easing of various government restrictions, albeit unevenly, and consumer travel demand’s continuous improving recovery.

Our consolidated revenue for the three months ended March 31, 2022 was $262 million, or an increase of 113% when compared to the same period in 2021. In addition, by means of showing a comparison to a pre-COVID-19 timeframe, consolidated revenue for the first quarter of 2022 reached approximately 70% of 2019’s comparable period, an increase from approximately 33% of 2019’s comparable period during the first quarter of 2021. This increase in revenue was driven by strong performance in our Experiences and Dining segment, ~~information.~~supported by steady recovery in our Tripadvisor-branded hotels and display and platform offerings due to vaccine progress, the easing of various government restrictions and consumer travel demand’s improving recovery.

~~Our Growth Strategy~~

~~We leverage significant investments in technology,~~The ultimate duration of the negative impact of COVID-19 on our results of operations, ~~brand-building,~~liquidity and ~~relationships with advertisers~~financial condition remains uncertain and is dependent upon factors beyond our control, such as the continued transmission rate of COVID-19, including new variants and/or additional resurgences of existing variants, if any, the extent and effectiveness of containment actions that are taken, vaccine efficacy, and the ultimate long-term impact of these and other ~~partners to expand~~factors on consumer demand for travel and usage patterns on our ~~business~~platform. Although uncertainty remains, we generally saw continuous, albeit uneven, improvement in the travel market in 2021 and ~~enhance our global competitive position. We~~during the first quarter of 2022 and expect that the market will continue to ~~focus~~improve as 2022 progresses, driven by continued vaccination programs, the gradual lifting of government restrictions, and what we believe to be continued significant pent-up consumer demand for travel industry related services.

Hotels, Media & Platform Segment

Our Hotels, Media & Platform segment is comprised of Tripadvisor-branded hotels revenue and Tripadvisor-branded Display and Platform Revenue.

Tripadvisor-branded hotels revenue primarily consists of hotel auction revenue and, to a lesser extent, hotel B2B revenue, which primarily includes subscription-based advertising services that we offer to travel partners and click-based revenue generated from hotel sponsored placement advertising that enables hotels to enhance their visibility on ~~the following areas~~Tripadvisor hotel pages. Tripadvisor-branded Display and Platform Revenue primarily includes impression-based advertising revenue.

Our overall strategic objective in our Hotels, Media & Platform segment is to ~~grow our business:~~

~~Delivering~~drive revenue and profits while delivering compelling services to consumers and driving a ~~Great User Experience.~~ ~~Over the past few years, we have made significant product enhancements aimed at delivering an end-to-end~~holistic user experience, ~~– from discovery, to researching, price shopping~~increased customer engagement and ~~booking – on the TripAdvisor platform. These enhancements include introducing hotel price comparison tools in 2013, enabling users to book accommodations on our platforms~~monetization, as well as ~~expanding our~~offering travel partners a diverse set of advertising opportunities on the Tripadvisor platform.

For consumers, we test and implement product ~~offerings to include attractions and restaurants. More recently, we launched~~enhancements that deliver a ~~newly redesigned website that offers a simplified,~~ more engaging and comprehensive hotel shopping ~~experience~~experience. This includes providing rich, immersive content – reviews, photos, videos and ratings, among other contributions, increasing the number of travel partners and properties as well as the available hotel supply on ~~TripAdvisor. Over~~our platform. We believe providing consumers tools to discover, research, price shop and book a comprehensive selection of accommodations helps increase brand

awareness and brand loyalty and, over time, ~~we believe that a continued focus on delivering more robust products to our users will~~can result in deeper consumer engagement, more ~~repeat usage on our platform, higher conversion~~qualified leads delivered to ~~transactions for our~~travel partners and greater monetization ~~for~~on our business. Our innovative “Speed Wins” culture supports quickly identifying what users want as they conduct their travel research and booking and bringing product enhancements to our users quickly. This includes growing high-quality content, offering best room price availability on hotel listings, building a large marketplace of bookable supply for in-destination activities, and providing users timely email and mobile push notifications, helping them to find and book great travel options at the lowest prices.platform.

~~Increasing High-Quality Traffic to Our Platform.~~ TripAdvisor is a globally-recognized travel brand and, with 455 million average monthly unique visitors, according to our internal log files, this represents the largest online audience of any travel brand. We seek to ~~amplify~~monetize our ~~global brand~~influence through hotel-related product improvements, supply and ~~products~~marketing efforts and customer advertising opportunities. Historically, we have generated a significant amount of hotel shoppers from search engines, such as Google. A hotel shopper is a visitor to our platform that views either a listing of hotels in a city or a specific hotel page. Our key ongoing objective related to traffic acquisition is to attract or acquire hotel shoppers at or above our desired marketing return on investment targets. Over the long-term, we are focused on driving a greater percentage of our traffic from direct traffic sources rather than search engines, which comes with little to no traffic acquisition costs.

As noted in the “COVID-19” discussion above, easing of travel restrictions across the world, rising vaccination rates, and an increase in consumer travel demand drove improved financial results during the first quarter of 2022, as Hotel, Media & Platform revenue increased by 82% during the three months ended March 31, 2022, when compared to the same period in 2021, despite the significant impact from the Omicron variant in the month of January 2022, as travel demand and revenue rebounded significantly in the months of February and March of 2022. During the three months ended March 31, 2022, Hotels, Media & Platform revenue reached approximately 63% of 2019’s comparable period, an increase from approximately 35% of 2019’s comparable period during the first quarter of 2021. Tripadvisor-branded hotels revenue increased 84% during the three months ended March 31, 2022, when compared to the same period in 2021, primarily driven by growth in our hotel auction revenue. During the three months ended March 31, 2022, Tripadvisor-branded hotels revenue reached approximately 63% of 2019’s comparable period, an increase from approximately 34% of 2019’s comparable period during the first quarter of 2021. The Company saw strength of recovery in all markets during the first quarter of 2022. In particular, our U.S. hotel auction revenue during the first quarter of 2022 showed continued improvement when compared to the same period in 2019 on strong consumer travel demand, despite the impact of the Omicron variant early in the first quarter of 2022. However, our hotel auction revenue decreased sequentially during the fourth quarter of 2021 and the first quarter of 2022, when compared as a percentage to 2019's comparable periods, due to the emergence of the Omicron variant. In addition, our U.S. hotel auction CPC rates regained 2019 levels in early May 2021 and have remained near or above 2019 levels through ~~various online~~March 31, 2022, demonstrating strong travel partner engagement on our platform as consumer travel demand recovers in the U.S. Although slower to recover, hotel auction revenue in our largest European markets showed significant improvement during first quarter of 2022; however, as with the U.S., Europe and ~~offline~~the rest of the world performance was also negatively impacted by the emergence of the Omicron variant. As a result of these overall positive trends noted above, we increased our performance marketing investment during the first quarter of 2022 in correlation with the increase in consumer travel demand and a more favorable hotel auction environment. Relative strength in CPC pricing allowed us to increase spend in marketing channels at a profitable ROAS (return on ad spend), while our free traffic, in ~~order~~particular SEO traffic, has been slower to recover.

While slower to recover than Tripadvisor-branded hotels revenue, our display and platform revenue increased by 71% during the three months ended March 31, 2022, when compared to the same period in 2021. In addition, and by means of also showing a comparison to a pre-COVID-19 timeframe, Tripadvisor-branded display and platform revenue for the three months ended March 31, 2022 was approximately 63% of 2019’s comparable period, an increase from approximately 37% of 2019’s comparable period during the ~~number~~three months ended March 31, 2021. This overall improvement during the first quarter of ~~users who navigate~~2022 was primarily driven by an increase in marketing spend from our advertisers in correlation with increasing consumer travel demand, as discussed above.

Over the long-term, we believe that improving our offerings to deepen consumer engagement on our ~~site either directly, also known as domain direct traffic, or~~platform will enable us to more effectively monetize our influence. For example, in Tripadvisor-branded display and platform revenue, we enable travel partners to amplify their brand, generate brand impressions, and potentially drive qualified leads and bookings for their businesses. We continue to work on initiatives to better leverage our audience, content, data, travel influence and platform breadth to open up new media advertising opportunities through a more modern, high-powered advertising suite spanning native, video and programmatic solutions. Our platform is open to advertising from ~~other marketing channels. We utilize a number of offline advertising channels,~~travel endemic and non-travel endemic partners, including ~~permanent branding campaigns~~industries such as ~~TripAdvisor branded campaigns (awards, certificates, stickers~~entertainment, spirits, and ~~badges,~~finance. On the consumer side, we are focused on making Tripadvisor membership more valuable for ~~example)~~consumers. As an example, during 2021, we launched Tripadvisor Plus, an annual subscription-based membership that offers financial incentives, benefits and television advertising. We also leverage a number of online advertising channels, including: customer relationship management, or CRM; email campaigns; social networks; search engine marketing, or SEM, which promotesperks to members who book hotels and experiences on our ~~websites by~~platform.

These efforts demonstrate our continued focus on increasing their visibility in search engine results through paid placements, contextual advertising and paid inclusions; and retargeting, which targets consumers based on their search behavior. In addition, for sources of user traffic, we also rely on search engine optimization, or SEO, which promotes websites with relevant and current content that rank well in “organic,” or unpaid search engine results, as well as referrals from partners whose sites contain links to TripAdvisor content. In order to continue growing unique visitors to our websites and enhancing the quality of ~~those visits,~~customer engagement on our platform, including driving membership growth, increasing personalization, and innovating our mobile app experience. We believe delivering – and improving upon – a great experience for users will encourage more users to use our services more frequently, increase member growth and member engagement, and drive loyalty to our brand and services. In turn, we ~~intend~~believe this makes our platform more attractive for travel partners, and can result in increased monetization over time for us and our travel partners.

Experiences & Dining Segment

Our Experiences & Dining offerings contribute to the comprehensive user experience we deliver, which we believe helps to increase awareness of, loyalty to, and engagement with our products, drive more bookings to Experiences & Dining travel partners

and generate greater revenue and increased profitability on our platform. Given the significant market opportunities in these large categories, we expect to continue to invest aggressively in ~~some or~~building these offerings to drive consumer engagement, bookings and revenue growth for the long-term. Since the first quarter of 2020, this segment has been negatively and materially impacted at varying levels by a significant reduction in consumer demand due to the COVID-19 pandemic, which has reduced consumer willingness to research, purchase, and consume travel activities. This negative impact has also been driven by a wide variety of government-instituted actions and restrictions around the globe aimed at limiting the spread of the virus, all of which have impacted consumer access to experience offerings and restaurants. For example, during the ~~aforementioned channels, as well as any new channels that we may identify~~first quarter of 2021, restaurants in most of the European countries in which our Dining business operates were ordered to remain closed.

However, during most of 2021, our Experiences & Dining segment’s financial results improved significantly and this trend continued in the ~~future.~~

•

~~Enhancing Our Mobile Phone Offerings~~. Innovating and improving our mobile phone products are key priorities since mobile phone devices continue to proliferate and consumers increasingly conduct more internet searches and commerce on these devices. During thefirst quarter ended September 30, 2017, over half of our average monthly unique visitors came from mobile phone, growing 30% year-over-year, according to our internal log files. We anticipate that the growth rate in mobile phone monthly unique visitors will continue to exceed the growth rate of our overall monthly unique visitors, resulting in an increased proportion of users continuing to use their mobile phone devices to access the full range of services available on our websites and applications. We are investing significant resources to improve the features, functionality, engagement, and commercialization of our travel products on our mobile websites and applications.

~~Growing Our Attractions, Restaurants and Vacation Rentals Businesses.~~ ~~A significant percentage~~ of ~~our 455 million average monthly unique users visit our websites to review content related~~2022, as revenue in this segment increased by 229% during the three months ended March 31, 2022, when compared to the ~~875,000 activities~~same period in 2021, driven by both an increase in experiences and attractions, 4.4 million restaurants, and 780,000 vacation rentals on our platform, and we believe that continuing to grow the number of listings and bookable products, especially in our in-destination Attractions and Restaurants businesses, will enable TripAdvisor to capitalize ondining revenue, as a unique opportunity to delight users in more moments during more trips. We believe continuing to invest in improving the product experience, especially on mobile phone, enhancing our supply network and growing demand via online marketing channels will generate increased user demand, repeat usage, increased travel bookings and more revenue on our platform.

~~Current Trends in Our Business~~

~~Hotel Segment~~

During 2017, we have continued to improve our hotel shopping experience, which included the launch of a redesigned TripAdvisor website and mobile applications. In addition to making the site cleaner and faster over the past year, another core product focus for us has been to make it easier for our users to find the lowest hotel prices on TripAdvisor. We have and will continue to seek new ways to provide a better end-to-end hotel shopping experience, by improving room-level content, optimizing the room selection process and helping users book with our hotelier and OTA partners. On the supply side, we continue to on-board more partners that have unique brand, supply or room pricing to provide consumers a more comprehensive selection of accommodations in an effort to achieve higher repeat usage and conversion of hotel shoppers to bookings and higher cost-per-click rates on our platform.

The market to help users find and book hotels online is large and growing. It also remains highly competitive. We compete with other travel companies and search engines for hotel shoppers, or the users we try to bring to view TripAdvisor hotel pages. Over time, increased competition has caused hotel shoppers visiting our websites and applications from paid online marketing channels, such as SEM, to grow faster than traffic from unpaid online marketing channels, such as SEO. Hotel shoppers from unpaid online marketing channels, such as users that navigate directly to our homepage or applications through branded search queries on search engines, areresult of the ~~highest value~~growing travel demand recovery driven by vaccine progress and various government restrictions being lifted. By means of showing a comparison to a pre-COVID-19 timeframe, our ~~business. Following~~Experiences & Dining segment revenue for the launch of our new hotel shopping experience, we launched a brand advertising campaign, or television campaign, in June 2017 aimed at increasing usage of TripAdvisor as a place to find and book the best hotels at the lowest prices. We also continue to leverage a number of other marketing channels, both paid and unpaid, to achieve this objective, including online efforts such as social media and CRM, as well as offline efforts such as TripAdvisor-branded advertising campaigns. We will continue to optimize our mix of marketing investments based on the relative growth opportunity, the expected returns and the competitive environment in which we operate. We believe optimizing our marketing mix to include brand advertising will help TripAdvisor establish a more durable, long-lasting direct relationship with users shopping for hotels, with a greater financial return than we would be able to achieve from online paid marketing. However, this marketing strategy comes with a near-term trade-off, as online paid marketing may better enable us to generate a short-term hotel shopper and click-based and transaction revenue, whereas we expect our television advertising campaign to generate such returns over a longer timeframe. Over time, we believe that, as more users visit TripAdvisor to compare hotel prices before they book, we will be able to drive revenue, marketing efficiency and profit growth.

~~A key objective is to grow the number of hotel shoppers on our platform. In the third~~first quarter of ~~2017,~~2022 was approximately 115% of 2019’s comparable period, an increase from approximately 35% of 2019’s comparable period during the first quarter of 2021.

During the three months ended March 31, 2022, our ~~average monthly unique hotel shoppers increased 7%~~Experiences revenue grew over 350%, when compared to the same period in ~~2016, according to our internal log files. The increase is primarily due to the success~~2021, and was approximately 127% of 2019’s comparable period revenue. As a result of strong consumer demand in our ~~paid online~~Viator business with the growing travel demand recovery during the first quarter of 2022, we significantly increased investments in performance marketing ~~strategy,~~channels in order to capture additional market share while maintaining a positive return on investment measured over the projected lifetime of a customer. From a geographical perspective, we continued to see strong revenue growth in the U.S., as well as in Europe this quarter. In Dining, we have seen a notable recovery since mid-May 2021, as restaurants in most European countries in which TheFork operates began reopening for in-restaurant dining. However, late in the general trend of an increasing number of hotel shoppers visiting our websites and apps on mobile phones, partially offset by marketing spend tradeoffs resulting from increased brand advertising investment in our television campaign, as discussed above.

~~During the third~~fourth quarter of ~~2017, hotel shoppers that visited our websites~~2021 and apps on mobile phones continued to grow significantly faster than traffic from desktop and tablet devices. Mobile phones currently generate significantly lower revenue per hotel shopper compared to desktop and tablet devices. We believe that this monetization difference is due to a number of factors, includingearly into the reduced ability to achieve marketing attribution on the mobile phone for facilitating traffic to partner websites and applications; our limited advertising opportunities on smaller screen devices; our historic positioning as a place to read reviews; and general consumer purchasing patterns on mobile phones resulting in lower booking intent, lower conversion to a booking, lower cost-per-click, and lower average gross booking value. As a result, the growth in hotel shoppers on mobile phones has remained a headwind against our revenue per hotel shopper and our TripAdvisor-branded click-based and transaction revenue. In addition, the

general trend of increasing traffic to our websites and apps on mobile phones reduces our ability to grow TripAdvisor-branded display-based advertising revenue, as we believe prioritizing and preserving a cleaner user experience over increasing advertising units on smaller screen devices is the most appropriate way to engage more users on our mobile phone products. We continue to align product and marketing in mobile and invest in product development in order to improve the mobile user experience as well as to improve mobile phone traffic acquisition to increase our user base. We believe that, over the long-term, these efforts will result in increased usage and engagement, conversion of hotel shoppers to bookings for our hotel advertising partners and higher monetization rates for us.

~~Non-Hotel Segment~~

Our ongoing product efforts to deliver an end-to-end user experience extend to our Non-Hotel segment, which includes our Attractions, Restaurants, and Vacation Rentals businesses. Our key growth strategies have been to grow users, improve our products and grow bookable supply. We continued to deliver on those objectives in the thirdfirst quarter of ~~2017, as monthly unique users~~2022, Omicron-related restrictions and related impact to ~~these pages on our websites and applications continued~~consumer demand within Europe again began to ~~grow rapidly, we enhanced our product experience on all devices, and we grew~~impact Dining. Overall, Dining revenue during the number of suppliers and bookable products on our platform. Notably, we have been able to increasingly leverage strong user growth on the TripAdvisor-branded platform to drive increased bookings, particularly in our Attractions business. Additionally, our Attractions and Restaurants businesses have both experienced increased engagement on mobile phones.

~~Continued successful execution of our key growth strategies and increased marketing and operating efficiencies primarily contributed to this segment’s revenue growth and profit growth in the third~~first quarter of ~~2017, as~~2022, increased by approximately 125%, when compared to the same period in ~~2016. Our ongoing~~2021, primarily driven by the re-opening of restaurants for in-restaurant dining which were ordered to remained closed in most European countries during the first quarter of 2021. By means of showing a comparison to a pre-COVID-19 timeframe, Dining revenue during the first quarter of 2022 nearly reached parity of 2019's comparable period, an increase from approximately 44% of 2019’s comparable period during the first quarter of 2021.

We continue to explore new initiatives to delight and engage consumers. For example, we improved our site navigation, recommendations, sort orders, quality of our experience products, and offered new consumer payment options and customer support improvements, as new customer acquisition remains top priority during the growing travel recovery. In addition, we remain focused on enhancing and promoting our mobile app experience, further improving the traveler experience. For operators, we continued to scale a new advertising program, Viator Accelerate, which is aimed at helping operators increase their visibility on the platform through targeted advertising, ultimately with the goal of increasing bookings and reach.

Other

Other is a combination of our Rentals, Flights & Car, and Cruise offerings and is not considered a reportable segment. Similar to our other business units, financial results in Other also improved during the three months ended March 31, 2022, when compared to the same period in 2021, as a result of increased consumer demand due to the growing travel demand recovery. We continue to operate these businesses opportunistically as they complement our overall strategic objectives ~~are~~ to ~~continue~~deliver more value to ~~enhance the user experience, drive increased user engagement~~consumers and ~~grow traffic, bookable products, and bookings in these businesses.~~travel partners.

~~Segments~~Employees

Refer to “Note 11: Segment Information” in the notes to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for financial information and additional descriptive information related to our segments.

~~Employees~~

As of ~~September 30, 2017, we~~March 31, 2022, the Company had ~~3,236~~2,760 employees. ~~Of these~~Approximately 55%, 35%, and 10% of the Company’s current employees ~~51% were~~are based in Europe, the ~~United States.~~U.S., and the rest of world, respectively. Our number of employees increased approximately 7% compared to March 31, 2021. Additionally, we use independent contractors to supplement our workforce. We believe ~~that~~ we have good relationships with our employees and contractors, including relationships with employees represented by international works councils or other similar organizations.

Seasonality

~~Traveler~~Consumers’ travel expenditures ~~in the global travel market tend to follow~~have historically followed a seasonal pattern. ~~As such, expenditures by~~Correspondingly, travel ~~advertisers to market to potential travelers~~partners’ advertising investments, and therefore our ~~financial performance, or~~ revenue and operating profits, ~~tend to be~~have also historically followed a seasonal ~~as well. As a result, our~~pattern. Our financial performance tends to be seasonally highest in the second and third quarters of a given year, ~~as it is a key period for leisure travel research and trip-taking,~~ which includes the seasonal peak in consumer demand, traveler hotel and ~~vacation~~ rental stays, and ~~tours~~travel activities and ~~attractions~~experiences taken, compared to the first and fourth quarters,

which represent seasonal low ~~points. Further~~points. During the first half of the year, experience and rentals bookings typically exceed the amount of completed experiences and rental stays, resulting in higher cash flow related to working capital, while during the second half of the year, particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative.

Other factors may also impact typical seasonal fluctuations, which include further significant shifts in our business mix or adverse economic conditions that could result in future seasonal patterns that are different from historical trends. For example, although consumer travel demandgenerally remained materially lower than historic levels due to the impact of COVID-19 on our business, these trends improved during 2021, resulting in increased revenues, and working capital and operating cash flow more akin to typical historical seasonality trends, which has continued during the three months ended March 31, 2022. However, it is difficult to predict the seasonality for the upcoming quarters, given the sustained uncertainty related to the continued economic impact of the COVID-19 pandemic and/or potential resurgences, and the pace of continued recovery in our key markets.

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 management use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance with GAAP. Preparation of the consolidated financial statements and accompanying notes requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as revenue and expenses during the periods reported. Management bases its estimates on historical experience, when applicable and other assumptions that it believes are reasonable under the circumstances. Actual results may differ from estimates under different assumptions or conditions.

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

•

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~~

and/or

•

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.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021.

Significant Accounting Policies and New Accounting Pronouncements

See “Note 2: Significant Accounting Policies” in the notes to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for an overview of new accounting pronouncements that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.

There have been no material changes to our significant accounting policies since December 31, ~~2016. For additional information about our accounting policies and estimates, refer~~2021, as compared to those described under “Note 2: Significant Accounting ~~Policies”~~Policies”, in the notes to ~~our~~ consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

~~Results~~30

Statements of Operations

Selected Financial Data

(in millions, except percentages)


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change				Three months ended March 31,						% Change
	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016				2022			2021			2022 vs. 2021
Revenue	$	439		$	421			4	%	$	1,235		$	1,164			6	%		$	262		$	123			113	%

Costs and expenses:
Cost of revenue		20			19			5	%		56			55			2	%			22			12			83	%
Selling and marketing		247			210			18	%		683			584			17	%			141			73			93	%
Technology and content		61			62			(2	)%		184			185			(1	)%			54			55			(2	)%
General and administrative		42			38			11	%		115			110			5	%			40			38			5	%
Depreciation		19			18			6	%		57			51			12	%
Amortization of intangible assets		8			8			0	%		25			23			9	%
Depreciation and amortization																					25			29			(14	)%
Total costs and expenses:		397			355			12	%		1,120			1,008			11	%			282			207			36	%
Operating income		42			66			(36	)%		115			156			(26	)%
Other income (expense):
Operating income (loss)																					(20	)		(84	)		(76	)%
Other income (expense)
Interest expense		(4	)		(3	)		33	%		(11	)		(10	)		10	%			(12	)		(11	)		9	%
Interest income and other, net		-			-			0	%		3			-			100	%			(1	)		(1	)		0	%
Total other income (expense), net		(4	)		(3	)		33	%		(8	)		(10	)		(20	)%			(13	)		(12	)		8	%
Income before income taxes		38			63			(40	)%		107			146			(27	)%
Provision for income taxes		(13	)		(8	)		63	%		(42	)		(27	)		56	%
Net income	$	25		$	55			(55	)%	$	65		$	119			(45	)%
Income (loss) before income taxes																					(33	)		(96	)		(66	)%
(Provision) benefit for income taxes																					(1	)		16		n.m.
Net income (loss)																				$	(34	)	$	(80	)		(58	)%

Other Financial Data:
Adjusted EBITDA (1)	$	95		$	114			(17	)%	$	269		$	294			(9	)%		$	27		$	(26	)	n.m.

(1) See “Adjusted EBITDA” discussion below for more information.
n.m. = not meaningful (1) See “Adjusted EBITDA” discussion below for more information.																			n.m. = not meaningful (1) See “Adjusted EBITDA” discussion below for more information.

Revenue and Segment Information


	Three months ended March 31,						% Change
	2022			2021			2022 vs. 2021
Revenue by Segment:	(in millions)
Hotels, Media & Platform	$	160			88			82	%
Experiences & Dining		92			28			229	%
Other		10			7			43	%
Total revenue	$	262		$	123			113	%
Adjusted EBITDA by Segment:
Hotels, Media & Platform	$	46		$	(3	)	n.m.
Experiences & Dining		(22	)		(24	)		(8	)%
Other		3			1			200	%
Total Adjusted EBITDA	$	27		$	(26	)	n.m.
Adjusted EBITDA Margin by Segment (1):
Hotels, Media & Platform		29	%		(3	)%
Experiences & Dining		(24	)%		(86	)%
Other		30	%		14	%

n.m. = not meaningful

Three months ended September 30,

% Change

Nine months ended September 30,

% Change

2017

2016

2017 vs. 2016

2017

2016

2017 vs. 2016

Revenue by Segment:

(in millions)

(in millions)

Hotel

$
312

$
320

(3
)%

$
952

$
939

1
%
Non-Hotel

127

101

26
%

283

225

26
%
Total revenue

$
439

$
421

4
%

$
1,235

$
1,164

6
%
Adjusted EBITDA by Segment (1):

Hotel

$
51

$
99

(48
)%

$
223

$
309

(28
)%
Non-Hotel

44

15

193
%

46

(15
)

407
%
Total Adjusted EBITDA

$
95

$
114

(17
)%

$
269

$
294

(9
)%
Adjusted EBITDA Margin by Segment (2):

Hotel

16
%

31
%

23
%

33
%

Non-Hotel

35
%

15
%

16
%

(7
)%

(1)

"Adjusted EBITDA Margin by Segment" is defined as Adjusted EBITDA by segment divided by revenue by segment.



~~(1)~~	Included in Adjusted EBITDA is a general and administrative expense allocation for each segment, which is based on the segment’s percentage of our total personnel costs, excluding stock-based compensation. See “Note 11: Segment Information” in the notes to our unaudited condensed consolidated financial statements for more information.
~~(2)~~	~~We define “Adjusted EBITDA Margin by Segment”, as Adjusted EBITDA by segment divided by revenue by segment.~~

~~Hotel~~Hotels, Media & Platform Segment

~~Our Hotel~~Hotels, Media & Platform segment revenue ~~decreased~~increased by $8$72 million, or 82%, during the three months ended ~~September 30, 2017,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, primarily due to increased hotel auction revenue, particularly in the U.S. and Europe, and,

to a ~~decrease~~lesser extent, an increase in Tripadvisor-branded display and platform revenue, due to the impact of ~~$11~~growing consumer travel demand and increasing travel industry recovery on our business, as discussed above.

Adjusted EBITDA in our Hotels, Media & Platform segment increased $49 million ~~in TripAdvisor-branded click-based and transaction revenue~~ during the three months ended September 30, 2017, partially offset by an increase of $3 million in TripAdvisor-branded display-based advertising and subscription revenue, all of which are discussed below. Our Hotel segment revenue increased by $13 million during the nine months ended September 30, 2017,March 31, 2022, when compared to the same period in ~~2016,~~2021. This was primarily due to an increase in revenue as noted above, partially offset by an increase in direct selling and marketing expenses related to search engine marketing, or SEM, and other online paid traffic acquisition costs in response to increasing consumer travel demand as travel restrictions ease, vaccination rates increase, and the travel industry recovers.

The following is a detailed discussion of ~~$23 million in TripAdvisor-branded click-based and transaction~~the revenue ~~during~~sources within our Hotels, Media & Platform segment:


	Three months ended March 31,				% Change
	2022		2021		2022 vs. 2021
	(in millions)
Hotels, Media & Platform:
Tripadvisor-branded hotels	$	136	$	74		84	%
Tripadvisor-branded display and platform		24		14		71	%
Total Hotels, Media & Platform revenue	$	160	$	88		82	%

Tripadvisor-branded Hotels Revenue

For the ~~nine~~three months ended ~~September 30, 2017, which~~March 31, 2022 and 2021, 85% and 84%, respectively, of our total Hotels, Media & Platform segment revenue was ~~primarily offset by a decrease of $11~~derived from Tripadvisor-branded hotels revenue. Tripadvisor-branded hotels revenue increased $62 million, ~~in other hotel revenue during the nine months ended September 30, 2017, all of which are discussed below.~~

~~Adjusted EBITDA and Adjusted EBITDA margin in our Hotel segment decreased by $48 million and decreased to 16%~~or 84%, during the three months ended ~~September 30, 2017, respectively,~~March 31, 2022, when compared to the same period in ~~2016,~~2021. This increase was primarily driven by our hotel auction revenue across all markets, particularly in the U.S. and our largest European markets, and, to a lesser extent, an increase in hotel auction revenue in the rest of the world, despite the impact of the Omicron variant early in the first quarter of 2022, due to ~~costs~~rising consumer travel demand and travel industry recovery, given rising vaccination rates and easing of government travel and leisure restrictions. As consumer travel demand continued to increase during the first quarter of 2022, the Company saw continued improvement in hotel auction monetization, as CPC rates during the first quarter of 2022 were near or exceeded parity of 2019's comparable period, driven by continued strength in the U.S. and improving trends in Europe and the rest of the world, which enabled increased efficient marketing investment on performance channels, enhancing our ~~brand~~2022 hotel auction revenue growth. See “Business Trends” above for further discussion.

Tripadvisor-branded Display and Platform Revenue

For the three months ended March 31, 2022 and 2021, 15% and 16%, respectively, of Hotels, Media & Platform segment revenue was derived from our Tripadvisor-branded display and platform revenue, which consists of revenue from Tripadvisor-branded display-based advertising ~~campaign,~~across our platform.

Tripadvisor-branded display-based advertising revenue increased by $10 million, or ~~television campaign, which launched in June 2017. Adjusted EBITDA and Adjusted EBITDA margin in our Hotel segment decreased by $86 million and decreased to 23%~~71%, during the ~~nine~~three months ended ~~September 30, 2017, respectively,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, primarily ~~due to costs related to~~driven by an increase in marketing spend from our ~~television campaign, and also due to~~advertisers in correlation with increasing consumer travel demand, as discussed above.

Experiences & Dining Segment

Experiences & Dining segment revenue increased ~~SEM and other online traffic acquisition costs~~by $64 million, or 229%, during ~~the first six months of 2017. During~~ the three months ended ~~September 30, 2017, our SEM and other online traffic costs were essentially flat,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, driven by both experiences and dining revenue, as ~~we reduced our spending in online marketing channels~~a result of the growing consumer travel demand recovery, driven by vaccine progress and ~~increased our spending in connection with our television campaign~~various government restrictions being lifted during the ~~third quarter~~same time period, which is discussed further in “Business Trends” above.

Experiences & Dining segment Adjusted EBITDA loss of ~~2017.~~

~~The following is a detailed table showing the revenue sources within our Hotel segment:~~

Three months ended September 30,

% Change

Nine months ended September 30,

% Change

2017

2016

2017 vs. 2016

2017

2016

2017 vs. 2016

(in millions)

(in millions)

Hotel:

TripAdvisor-branded click-based and transaction

$
195

$
206

(5
)%

$
619

$
596

4
%
TripAdvisor-branded display-based advertising and subscription

76

73

4
%

215

214

0
%
Other hotel revenue

41

41

0
%

118

129

(9
)%
Total Hotel revenue

$
312

$
320

(3
)%

$
952

$
939

1
%

~~TripAdvisor-branded Click-based and Transaction Revenue~~

TripAdvisor-branded click-based and transaction revenue includes cost-per-click-based advertising revenue from our TripAdvisor-branded websites as well as transaction-based revenue from our hotel instant booking feature. For$22 million for the three ~~and nine~~ months ended September 30, 2017, 63% and 65%, respectively, of our total Hotel segment revenue came from our TripAdvisor-branded click-based and transaction revenue. For the three and nine months ended September 30, 2016, 64% and 63%, respectively, of our total Hotel segment revenue was derived from our TripAdvisor-branded click-based and transaction revenue. TripAdvisor-branded click-based and transaction revenueMarch 31, 2022, decreased by $2 million during the three months ended ~~September 30, 2017 decreased $11 million,~~March 31, 2022 when compared to the same period in ~~2016,~~2021, primarily due to ~~a decrease of 11%~~an increase in revenue ~~per hotel shopper, which was partially~~as noted above, largely offset by an increase in selling and marketing expenses related to SEM and other online paid traffic acquisition costs in response to increased consumer demand for experiences and restaurants as part of 7%the growing consumer travel demand recovery and, to a lesser extent, an increase in ~~average monthly unique hotel shoppers~~personnel and overhead costs to help support business growth during the ~~three months ended September 30, 2017,~~growing travel demand recovery and increased direct costs from credit card payments and other revenue-related transaction costs in direct correlation with the increase in revenue.

Other

Other revenue, which ~~is explained below. TripAdvisor-branded~~includes Rentals revenue, in addition to primarily click-based advertising and ~~transaction~~display-based advertising revenue from our Flights & Cars, and Cruises offerings on Tripadvisor websites and mobile apps, increased by $3 million or 43% during the ~~nine months~~year ended ~~September 30, 2017 increased $23 million,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, primarily due to ~~an increase~~the impact of 9%growing consumer travel demand and increasing travel industry recovery on our business, as discussed above.

Adjusted EBITDA in ~~average monthly unique hotel shoppers~~Other increased $2 million or 200% during the ~~nine months~~year ended ~~September 30, 2017, which was partially offset by a decrease of 4% in revenue per hotel shopper, which is explained below.~~

Our largest source of Hotel segment revenue is click-based advertising revenue from our TripAdvisor-branded websites, which include links to our partners’ sites and contextually-relevant branded and related text links. Click-based advertising is generated primarily through our metasearch auction, a description of which follows. Our click-based advertising partners are predominantly OTAs and hoteliers. Click-based advertising is generally priced on a cost-per-click, or CPC, basis, with payments from advertisers based on the number of users who click on each type of link or, in other words, the conversion of a hotel shopper to a paid click. CPC is the price that a partner is willing to pay us for a hotel shopper lead and is determined in a competitive process that enables our partners to use our proprietary, automated bidding system to submit CPC bids to have their rates and availability listed on our site. When a partner submits a CPC bid, they are agreeing to pay the amount of that bid each time a user subsequently clicks on the link to the partner’s website. Bids can be submitted periodically – as often as daily– on a property-by-property basis. Primary factors used to determine the placement of partner links on our site include, but are not limited to, room night price, the size of the bid relative to other bids, and other variables. CPCs are generally lower in markets outside the U.S. market, and hotel shoppers visiting via mobile phones currently monetize at a significantly lower rate than hotel shoppers visiting via desktop or tablet.

Our Hotel segment transaction-based revenue is comprised of revenue from our hotel instant booking feature, which enables the merchant of record, generally an OTA or hotel partner, to pay a commission to TripAdvisor for a user that completes a hotel reservation on our website. Instant booking revenue is currently recognized under two different models: the transaction model and the consumption model. Under the consumption model, which currently represents the majority of our instant booking revenue, commission revenue is not recorded until such time as the traveler completes their stay, at which time our consumption partner is liable to us for commission payment. Under the transaction model commission revenue is recorded at the time a traveler books a hotel reservation on our site, as our transaction partner is liable for commission payments to us upon booking and the partner assumes the cancellation risk. OTA and hotel partner placement, as well as comparative hotel prices available to the traveler in the booking process under both models, is determined by a bidding process within our proprietary automated bidding system, that takes into account a number of variables, primarily hotel room prices, but also including other factors, such as conversion rates and commission rates, depending on the specific hotel selected. Instant booking commissions are primarily a function of average gross booking value generated from hotel reservations, cancellation rates experienced, and commission rates negotiated with each of our partners.

The key drivers of TripAdvisor-branded click-based and transaction revenue include growth in average monthly unique hotel shoppers and revenue per hotel shopper growth, the latter of which measures how effectively we convert our hotel shoppers into revenue. We measure performance by calculating revenue per hotel shopper on an aggregate basis by dividing total TripAdvisor-branded click-based and transaction revenue by total average monthly unique hotel shoppers on TripAdvisor-branded websites for the periods presented.

While we believe that total traffic growth, or growth in monthly visits from unique visitors, is reflective of our overall brand growth, we also track and analyze sub-segments of our traffic and their correlation to revenue generation and utilize data regarding hotel shoppers as one of the key indicators of revenue growth. Hotel shoppers are visitors who view either a listing of hotels in a city or on a specific hotel page. The number of hotel shoppers tends to vary based on seasonality of the travel industry and general economic conditions, as well as other factors outside of our control. Given these factors, as well as the trend towards increased usage on mobile phones and international expansion, quarterly and annual hotel shopper growth is a difficult metric to forecast.

The below table summarizes our revenue per hotel shopper calculation and growth rate, in aggregate, for the periods presented (in millions, except calculated revenue per hotel shopper and percentages):

Three months ended September 30,

% Change

Nine months ended September 30,

% Change

2017

2016

2017 vs. 2016

2017

2016

2017 vs. 2016

Revenue per hotel shopper:

TripAdvisor-branded click-based and transaction revenue

$
195

$
206

(5
)%

$
619

$
596

4
%
Divided by: Total average unique monthly hotel shoppers for the quarter

490

458

7
%

1,398

1,286

9
%

$
0.40

$
0.45

(11
)%

$
0.44

$
0.46

(4
)%

~~Revenue per hotel shopper decreased 11% during the three months ended September 30, 2017,~~March 31, 2022, when compared to the same period in 2016, according to our internal log files. The decrease was driven primarily by lower CPCs received in our click-based metasearch auction, as we observed partners increase marketing efficiency on our channel during the third quarter of 2017 resulting in lower CPC bids in all geographic areas, as well as the general trend of a greater percentage of hotel shoppers visiting TripAdvisor-branded websites and apps on mobile phones.

Revenue per hotel shopper decreased 4% during the nine months ended September 30, 2017, when compared to the same period in 2016, according to our internal log files. The decrease was driven primarily by the factors noted above, as well as by factors that primarily impacted us during the first six months of 2017, including dilution from product testing related to the second-quarter 2017 launch of our redesigned website and applications, foreign currency fluctuations and the timing of our instant booking feature rollout in certain non-U.S. markets during the first half of 2016, partially offset by strong growth in U.S. revenue per hotel shopper during the first six months of 2017.

Our aggregate average monthly unique hotel shoppers on TripAdvisor-branded websites increased by 7% and 9% during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, according to our internal log files. The increase in hotel shoppers for the three and nine months ended September 30, 2017 is primarily due to the success in our paid online marketing strategy, as well as the general trend of an increasing number of hotel shoppers visiting our websites and apps on mobile phones, partially offset by increased brand advertising spend related to our television campaign as part of our marketing mix, which we believe has a longer term return in comparison to online marketing spend.

~~TripAdvisor-branded Display-based Advertising and Subscription Revenue~~

For the three and nine months ended September 30, 2017, 24% and 23%, respectively, of our Hotel segment revenue came from our TripAdvisor-branded display-based advertising and subscription revenue, which primarily consists of revenue from display-based advertising and subscription-based hotel advertising revenue. For both the three and nine months ended September 30, 2016, 23% of our Hotel segment revenue was derived from our TripAdvisor-branded display-based advertising and subscription revenue.

Our TripAdvisor-branded display-based advertising and subscription revenue increased by $3 million or 4%, during the three months ended September 30, 2017, when compared to the same period in 2016. Display-based advertising revenue increased2021, primarily due to an increase in impressions sold, partially offset by a slight decrease in pricing and the general trend of increasing traffic visiting our websites and apps on mobile phones. While we continue to focus on new product initiatives to drive growth, our subscription revenue was flat primarily as we work to enhance our product offering to hoteliers and increase our sales pipeline in this business, as well as hotel industry consolidation. Our TripAdvisor-branded display-based advertising and subscription revenue increased slightly by $1 million or 0%, during the nine months ended September 30, 2017, when compared to the same period in 2016.

~~Other Hotel Revenue~~

For the three and nine months ended September 30, 2017, 13% and 12%, respectively, of our Hotel segment revenue came from other hotel revenue. For the three and nine months ended September 30, 2016, 13% and 14%, respectively, of our Hotel segment revenue was derived from other hotel revenue. Our other hotel revenue primarily includes revenue from non-TripAdvisor branded websites, such as bookingbuddy.com, cruisecritic.com, and onetime.com, including click-based advertising revenue, display-based advertising revenue and room reservations sold through these websites. Our other hotel revenue was flat and decreased by $11 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily due to increased focus on return on marketing spend from paid marketing channels within this revenue stream.

~~Non-Hotel Segment~~

Our Non-Hotel segment revenue increased by $26 million or 26%, and $58 million or 26% during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily driven by increased bookable supply, user demand, and increased bookings in our Attractions and Restaurants businesses.

Strong revenue growth in our Attractions business has been driven by the following factors: growth in bookings sourced by TripAdvisor, growth in bookable products, which leads to better consumer choice, as well as by growth in free and paid traffic sources. Another contributing factor is the improved shopping experience from the introduction of new features, such as attractions instant booking for mobile phone, which enables users to purchase tickets and tours seamlessly without leaving the mobile app. These factors are all contributing to more consumer choice and continued revenue growth as a result of increased bookings. Similarly, in our Restaurants business, continued strong revenue growth can be attributed to increased bookings in our most established markets, growth in mobile bookings, a continually improving user experience and an increase in bookable supply of restaurant listings during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016.

Non-Hotel segment Adjusted EBITDA increased $29 million and $61 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016. This increase was primarily due to increased revenue growth, for the reasons noted above, and increased efficiencies in paid online marketing channels and other operational efficiencies in our Attractions business, partially offset primarily by increased personnel and overhead costs to support growth in this segment for the three and nine months ended September 30, 2017.

~~Revenue by Geography~~

~~The following table presents our consolidated revenue by geographic region. Revenue by geography is based on the geographic location of our websites.~~

Three months ended September 30,

% Change

Nine months ended September 30,

% Change

2017

2016

2017 vs. 2016

2017

2016

2017 vs. 2016

(in millions)

(in millions)

Revenue by geographic region:

United States

$
245

$
225

9
%

$
699

$
627

11
%
Europe

124

123

1
%

331

329

1
%
ROW

70

73

(4
)%

205

208

(1
)%
Total

$
439

$
421

4
%

$
1,235

$
1,164

6
%

~~(1)~~

In the first quarter of 2017, we reclassified Canada, Middle East, Africa, Asia-Pacific (“APAC”) and Latin America (“LATAM”) into rest of world (“ROW”) when presenting our revenue by geographic region. Prior period amounts were reclassified to conform to the current presentation. This change had no effect on our consolidated financial statements in any reporting period.

Our U.S. revenue increased $20 million or 9%, during the three months ended September 30, 2017, when compared to the same period in 2016. U. S. revenue represented 56% and 53% of total revenue during the three months ended September 30, 2017 and 2016, respectively. This increase in the U.S. was due primarily to growth in our Attractions business. Revenue outside of the U.S., or non-U.S. revenue, decreased $2 million, or 1%, during the three months ended September 30, 2017, when compared to the same period in 2016. Non-U.S. revenue represented 44% and 47% of total revenue during the three months ended September 30, 2017 and 2016, respectively. The decline in our non-U.S. revenue as a percentage of total revenue during this period was primarily due to growth in our Attractions business in the U.S and a higher growth rate in mobile phone hotel shoppers and a higher percentage of total hotel shoppers from mobile devices in non-U.S. markets during the period. noted above.

Our U.S. revenue increased $72 million or 11%, during the nine months ended September 30, 2017, when compared to the same period in 2016. U. S. revenue represented 57% and 54% of total revenue during the nine months ended September 30, 2017 and 2016, respectively. This increase was due to an increase in U.S. TripAdvisor-branded click-based and transaction revenue, driven by growth in U.S. revenue per hotel shopper during the nine months ended September 30, 2017, when compared to the same period in 2016, as well as growth in our Attractions business. Revenue outside of the U.S., or non-U.S. revenue, decreased $1 million or 0%, during the nine months ended September 30, 2017, when compared to the same period in 2016. Non-U.S. revenue represented 43% and 46% of total revenue during the nine months ended September 30, 2017 and 2016, respectively. The decline in our non-U.S. revenue, as a percentage of total revenue during these periods, was primarily driven by the factors noted above, as well as, foreign currency fluctuations and the timing of our instant booking feature rollout in certain non-U.S. markets during the first half of 2016.

Consolidated Expenses

Cost of Revenue

Cost of revenue consists of expenses that are directly related or closely correlated to revenue generation, including direct costs, such as credit card and other booking transaction payment fees, data center costs, costs associated with prepaid tour tickets, ad serving fees, flight search fees, ~~credit card fees~~ and other transaction ~~costs, and data center~~ costs. In addition, cost of revenue includes personnel and overhead expenses, including salaries, benefits, stock-based compensation ~~expense~~ and bonuses for certain customer support personnel who are directly involved in revenue generation.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change			Three months ended March 31,						% Change
	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016			2022			2021			2022 vs. 2021
	(in millions)									(in millions)									(in millions)
Direct costs	$	15		$	14			7	%	$	42		$	40			5	%	$	15		$	7			114	%
Personnel and overhead		5			5			0	%		14			15			(7	)%		7			5			40	%
Total cost of revenue	$	20		$	19			5	%	$	56		$	55			2	%	$	22		$	12			83	%
% of revenue		4.6	%		4.5	%					4.5	%		4.7	%					8.4	%		9.8	%

Cost of revenue increased $1$10 million during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022, when compared to the same ~~periods~~period in ~~2016,~~2021, primarily due to increased direct costs from ~~merchant~~ credit card payment and other revenue-related transaction ~~fees~~costs in our ~~Non-Hotel~~Experiences & Dining segment in direct correlation with the increase in revenue, as well as, and to a ~~result of revenue growth.~~lesser extent, an increase in contingent staff costs to help support business growth across all segments during the growing travel demand recovery.

Selling and Marketing

Selling and marketing expenses ~~primarily~~ consist of direct costs, including traffic generation costs from SEM and other online traffic acquisition costs, syndication costs and affiliate ~~program~~marketing commissions, social media costs, brand advertising (including television and other offline ~~advertising,~~advertising), promotions and public relations. In addition, our ~~sales~~selling and marketing expenses consist of indirect costs such as personnel and overhead expenses, including salaries, commissions, benefits, stock-based compensation, ~~expense~~ and bonuses for sales, sales support, customer support and marketing employees.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change			Three months ended March 31,						% Change
	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016			2022			2021			2022 vs. 2021
	(in millions)									(in millions)									(in millions)
Direct costs	$	195		$	159			23	%	$	526		$	430			22	%	$	94		$	29			224	%
Personnel and overhead		52			51			2	%		157			154			2	%		47			44			7	%
Total selling and marketing	$	247		$	210			18	%	$	683		$	584			17	%	$	141		$	73			93	%
% of revenue		56.3	%		49.9	%					55.3	%		50.2	%					53.8	%		59.3	%

Direct selling and marketing costs increased ~~$36~~$65 million during the three months ended ~~September 30, 2017,~~March 31, 2022, when compared to the same period in ~~2016, driven~~2021, primarily bydue to an increase of ~~$42~~approximately $62 million in ~~costs incurred related to the launch of our television campaign in June of 2017, which is recorded in our Hotel segment, partially offset by a decrease in other advertising costs.~~ SEM and other online traffic acquisition spend, majority of which was in our Experiences & Dining segment, in response to increasing consumer travel demand as travel activity restrictions ease and the travel industry recovers.

Personnel and overhead costs ~~were essentially flat~~increased $3 million during the three months ended ~~September 30, 2017,~~March 31, 2022, when compared to the same period in ~~2016, as we shifted marketing spend~~2021, primarily due to ~~our television campaign.~~

Direct selling and marketing costs increased $96 million during the nine months ended September 30, 2017, when compared to the same period in 2016, driven primarily by an increase of $58 million in costs incurred related to the launch of our television campaign in June of 2017, which is recorded in our Hotel segment, as well as an increase in ~~SEM~~contingent staff and ~~other online traffic acquisition costs of $43 million, driven by our Hotel segment, partially offset by a decrease in other advertising costs.~~additional headcount to help support business growth during the growing travel demand recovery.

Technology and Content

Technology and content expenses consist primarily of personnel and overhead expenses, including salaries and benefits, stock-based compensation expense, and bonuses for salaried employees and contractors engaged in the design, development, testing, content support, and maintenance of our ~~websites and mobile apps.~~platform. Other costs include licensing, maintenance expense, computer supplies, telecom costs, content translation and localization costs, and consulting costs.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change			Three months ended March 31,						% Change
	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016			2022			2021			2022 vs. 2021
	(in millions)									(in millions)									(in millions)
Personnel and overhead	$	55		$	56			(2	%)	$	166		$	161			3	%	$	48		$	50			(4	%)
Other		6			6			0	%		18			24			(25	%)		6			5			20	%
Total technology and content	$	61		$	62			(2	%)	$	184		$	185			(1	%)	$	54		$	55			(2	%)
% of revenue		13.9	%		14.7	%					14.9	%		15.9	%					20.6	%		44.7	%

~~Technology~~Personnel and ~~content~~overhead costs decreased $1$2 million during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022, when compared to the same period in ~~2016. Personnel and overhead costs decreased $1 million during the three months ended September 30, 2017, when compared to the same period in 2016,~~2021, primarily due to a decrease in contingent staff costs, partially offset by an increase in personnel costs to support our mobile phone and website initiatives, as well as to support business growth. Personnel and overhead costs increased $5 million during the nine months ended September 30, 2017, when compared to the same period in 2016, primarily to support our mobile phone and website initiatives, as well as to support business growth, partially offset by a decrease in contingent staff costs. Other costs decreased by $6 million during the nine months ended September 30, 2017, when compared to the same period in 2016, primarily due to a decrease in content translation costs.stock-based compensation expense.

General and Administrative

General and administrative expenses consist primarily of personnel and related overhead costs, including personnel engaged in ~~executive~~ leadership, finance, legal, and human resources, as well as stock-based compensation expense for those same personnel. General and administrative costs also include professional service fees and other fees including audit, legal, tax and accounting, and other costs including bad debt expense, non-income taxes, such as sales, use and other non-income related ~~taxes, and charitable contributions.~~taxes.


	Three months ended September 30,						% Change			Nine months ended September 30,						% Change			Three months ended March 31,						% Change
	2017			2016			2017 vs. 2016			2017			2016			2017 vs. 2016			2022			2021			2022 vs. 2021
	(in millions)									(in millions)									(in millions)
Personnel and overhead	$	29		$	27			7	%	$	85		$	77			10	%	$	31		$	29			7	%
Professional service fees and other		13			11			18	%		30			33			(9	%)		9			9			0	%
Total general and administrative	$	42		$	38			11	%	$	115		$	110			5	%	$	40		$	38			5	%
% of revenue		9.6	%		9.0	%					9.3	%		9.5	%					15.3	%		30.9	%

General and administrative costs increased $4 million and $5 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016. Personnel and overhead costs increased $2 million and $8 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily related to an increase in stock-based compensation of $3 million and $6 million, respectively. Professional service fees and other increased $2 million during the three months ended ~~September 30, 2017,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, primarily due to an increase in ~~bad debt~~personnel and overhead costs ~~and non-income taxes,~~of $2 million driven by additional headcount to help support business growth during the growing travel demand recovery, partially offset by a decrease in ~~consulting costs. Professional service fees~~stock-based compensation expense.

Depreciation and other decreased $3 million during the nine months ended September 30, 2017, when compared to the same period in 2016, primarily due to a decrease in consulting costs and non-income taxes, partially offset by an increase in bad debt costs. Amortization

~~Depreciation~~

Depreciation expense consists of depreciation on computer equipment, leasehold improvements, furniture, office equipment and other assets, ~~our corporate headquarters building~~ and amortization of capitalized ~~software and~~ website development ~~costs.~~

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

(in millions)

(in millions)

Depreciation

$
19

$
18

$
57

$
51

% of revenue

4.3
%

4.3
%

4.6
%

4.4
%

~~Depreciation expense increased $1 million~~costs and ~~$6 million during the three and nine months ended September 30, 2017, respectively, when compared to the same periods in 2016, primarily due to increased amortization~~right-of-use (“ROU”) assets related to ~~capitalized software and website development costs.~~

~~Amortization of Intangible Assets~~

our finance lease. Amortization consists of the amortization of definite-lived intangibles purchased ~~definite-lived intangibles.~~in business acquisitions.

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016			Three months ended March 31,
	(in millions)						(in millions)						2022			2021
													(in millions)
Depreciation													$	22		$	23
Amortization of intangible assets	$	8		$	8		$	25		$	23			3			6
Total depreciation and amortization													$	25		$	29
% of revenue		1.8	%		1.9	%		2.0	%		2.0	%		9.5	%		23.6	%

~~Amortization of intangible assets remained flat~~Depreciation and amortization decreased $4 million during the three months ended ~~September 30, 2017, when compared to the same periods in 2016. Amortization of intangible assets increased $2 million during the nine months ended September 30, 2017,~~March 31, 2022, when compared to the same period in ~~2016,~~2021, primarily due to ~~incremental~~the completion of amortization ~~from purchased indefinite lived intangibles~~ related to ~~our 2016~~certain intangible assets from business ~~acquisitions.~~acquisitions in previous years.

Interest Expense

Interest expense primarily consists of interest incurred, commitment fees, and debt issuance cost amortization related to our ~~2015~~ Credit Facility, ~~2016 Credit Facility, and Chinese Credit Facilities,~~2025 Senior Notes, 2026 Senior Notes, as well as interest on ~~our financing obligation related to our corporate headquarters.~~finance leases.


	Three months ended March 31,
	2022			2021
	(in millions)
Interest expense	$	(12	)	$	(11	)

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

(in millions)

(in millions)

Interest expense

$
(4
)

$
(3
)

$
(11
)

$
(10
)

Interest expense increased $1 million during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2022, when compared to the same ~~periods~~period in ~~2016,~~2021, primarily ~~due~~related to ~~an increase in interest incurred due to higher average outstanding borrowings and effective interest rates during~~ the ~~first nine months~~timing of ~~2017.~~the issuance of our 2026 Senior Notes on March 25, 2021. Refer to “Note 6: ~~Debt”~~Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q for ~~additional information on~~further information.

(Provision) Benefit for Income Taxes



	Three months ended March 31,
	2022			2021
	(in millions)
(Provision) benefit for income taxes	$	(1	)	$	16
Effective tax rate		(3.0	%)		16.7	%

For the three months ended March 31, 2022, our ~~2015 Credit Facility, 2016 Credit Facility,~~negative effective tax rate was primarily the result of discrete items recorded in the period related to share-based payment arrangements.

We had an income tax provision of $1 million and ~~Chinese Credit Facilities.~~

~~Interest Income~~an income tax benefit of $16 million for the three months ended March 31, 2022 and ~~Other, Net~~

~~Interest~~2021, respectively. The change in our income and other, net primarily consists of interest earned and amortization of discounts and premiums on our marketable securities, net foreign exchange gains and losses, and gains and losses on sales of our marketable securities and sale of businesses.

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

(in millions)

(in millions)

Interest income and other, net

$
-

$
-

$
3

$
-

~~Interest income and other, net remained flat and increased $3 million~~taxes during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022, when compared to the same ~~periods~~period in ~~2016,~~2021, was primarily due ~~higher transaction gains of $2 million and $5 million, respectively, as~~to a ~~result of the fluctuation of foreign exchange rates, partially offset by a loss of $2 million related to one of our cost-method investments~~decrease in pretax losses recognized during the three months ended ~~September 30, 2017.~~

~~Provision~~March 31, 2022. Refer to “Note 7: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q for ~~Income Taxes~~further information.

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

(in millions)

(in millions)

Provision for income taxes

$
13

$
8

$
42

$
27

Effective tax rate

34.2
%

12.7
%

39.3
%

18.5
%

~~For both~~Net income (loss)


	Three months ended March 31,
	2022			2021
	(in millions)
Net income (loss)	$	(34	)	$	(80	)
Net income (loss) margin		(13.0	%)		(65.0	%)

Net loss improved by $46 million during the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022, when compared to the ~~effective tax rate is greater than the federal statutory rate~~same period in 2021, primarily due to ~~valuation allowances on losses in jurisdictions outside the United States, recognition of stock compensation shortfalls, and a change in the relative mix of pretax income among jurisdictions.~~ ~~These same drivers also resulted in~~ an increase in revenue, as described in more detail above under “Revenue and Segment Information”, largely offset by an increase in selling and marketing expenses in response to increasing consumer travel demand as travel activity restrictions ease and the ~~effective tax rate for~~travel industry recovers and, to a lesser extent, an increase in personnel and overhead costs to help support business growth during the growing consumer travel demand recovery and increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in revenue during the three ~~and nine~~ months ended ~~September 30, 2017, respectively, when compared to same periods~~March 31, 2022, all of which is described in ~~2016.~~more detail above under “Consolidated Expenses.”

Adjusted EBITDA

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

Adjusted EBITDA is also our segment profit measure and a key measure used by our management and board of directors to understand and evaluate the ~~operating~~financial performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons and better enables management and investors to compare financial results between periods as these costs may vary independent of ~~our~~ongoing core ~~business.~~business performance. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of

directors. We define Adjusted EBITDA as net income (loss) plus: (1) ~~provision~~(provision) benefit for income taxes; (2) other income (expense), net; (3) depreciation ~~of property~~ and ~~equipment, including amortization of internal use software and website development;~~amortization; (4) ~~amortization of intangible assets; (5)~~ stock-based compensation and other stock-settled obligations; ~~(6)~~(5) goodwill, intangible asset, and long-lived asset impairments; (6) legal reserves and ~~intangible asset impairments;~~settlements; (7) restructuring and ~~(7)~~other related reorganization costs; and (8) other non-recurring expenses and income.

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

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~~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, such as 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; ~~and~~

•

~~Other~~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.

The following table presents a reconciliation of Adjusted EBITDA to Net Income (Loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the periods presented:

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

(in millions)

Net income

$
25

$
55

$
65

$
119

Add: Provision for income taxes

13

8

42

27

Add: Other expense (income), net

4

3

8

10

Add: Stock-based compensation

26

22

72

64

Add: Amortization of intangible assets

8

8

25

23

Add: Depreciation

19

18

57

51

Adjusted EBITDA

$
95

$
114

$
269

$
294


	Three months ended March 31,
	2022			2021
	(in millions)
Net income (loss)	$	(34	)	$	(80	)
Add: (Benefit) provision for income taxes		1			(16	)
Add: Other expense (income), net		13			12
Add: Stock-based compensation		22			29
Add: Depreciation and amortization		25			29
Adjusted EBITDA	$	27		$	(26	)

Related Party Transactions

For information on our relationship with ~~Liberty TripAdvisor Holdings, Inc.,~~LTRIP, which may be deemed to beneficially own equity securities representing nearly 57.0% of our voting power as of March 31, 2022, refer to “Note ~~10: Related Party Transactions”~~1: Business Description and Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q. We had no related party transactions with LTRIP during both the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, respectively.~~2021.

Stock-Based Compensation

Refer to “Note 3: 9: Stock Based Awards and Other Equity ~~Instruments”~~Instruments” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q for further information on current year equity award activity, including the issuance of ~~1,529,127 service-based stock options with a weighted average grant-date fair value per option of $17.16 and 4,241,561~~approximately 4.8 million service-based RSUs with a weighted average grant-date fair value of ~~$42.65~~$27.24 during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2022.

Liquidity and Capital Resources

Our principal source of liquidity is cash ~~flows~~flow generated from operations and our existing cash and cash equivalents ~~and marketable securities, although~~balance. Our liquidity needs can also be met through drawdowns under our ~~2015~~ Credit ~~Facility, 2016 Credit Facility, and Chinese Credit Facilities.~~Facility. As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, we had ~~$769~~$781 million and ~~$746~~$723 million, respectively, of cash and cash equivalents, and short and long-term available-for-sale marketable securities. As of September 30, 2017, approximately $586 million of our cash, cash equivalents and short and long-term marketable securities are held by our subsidiaries outside the United States. Cumulative undistributed earnings of foreign subsidiaries that we intend to indefinitely reinvest outside of the United States totaled approximately $866 million as of September 30, 2017. Should we distribute, or be treated under certain U.S. tax rules as having distributed, the earnings of foreign subsidiaries in the form of dividends or otherwise, we may be subject to U.S. income taxes. To date, we have permanently reinvested our foreign earnings outside of the United States and we currently do not intend to repatriate these earnings to fund U.S. operations. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. The majority of cash on hand is denominated in U.S. dollars.

During the nine months ended September 30, 2017, we borrowed an additional $415 million and repaid $241 million of outstanding borrowings under the 2015 Credit Facility. These net borrowings during the year were primarily used to repurchase shares of our outstanding common stock under the Company’s share repurchase program described below. As of September 30, 2017, we had outstanding borrowings of $265 million in long-term debt, within our U.S. subsidiaries, and approximately $932 million of borrowing capacity available under our 2015 Credit Facility, which we are currently borrowing under a one-month interest period, which will reset periodically. The weighted average rate of our outstanding borrowings under the 2015 Credit Facility as of September 30, 2017 was 2.5% per annum. As of September 30, 2017, we were in compliance with the covenants in our 2015 Credit Facility. In addition, we had $73 million of additional borrowing capacity available under our 2016 Credit Facility. The Company repaid all outstanding borrowings under the 2016 Credit Facility during the three months ended March 31, 2017. Finally, as of September 30, 2017, we had short-term borrowings of $7 million and approximately $33$497 million of available borrowing capacity under our ~~Chinese~~ Credit ~~Facilities,~~Facility. As of March 31, 2022, approximately $170 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which ~~currently~~nearly 50% was located in the U.K. As of March 31, 2022, the significant majority of our cash was denominated in U.S. dollars.

As of March 31, 2022, we had $446 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of March 31, 2022, we maintained a deferred income tax liability on our unaudited condensed consolidated balance sheet, which was not material, for the U.S. federal and state income tax and foreign withholding tax liabilities on the cumulative undistributed foreign earnings that we no longer consider indefinitely reinvested.

As of March 31, 2022, we are party to our Credit Facility, which, among other things, provides for a $500 million revolving credit facility with a maturity date of May 12, 2024. The Company may borrow from the Credit Facility in U.S. dollars and Euros. The Credit Facility requires us to maintain a maximum leverage ratio and contains certain customary affirmative covenants and events of default, including a change of control.

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

The Company remained in the Leverage Covenant Holiday as of March 31, 2022. Based on the Company’s existing leverage ratio, any outstanding or future borrowings under the Credit Facility generally bear interest, at the Company’s option, at a ~~weighted average~~rate per annum equal to either (i) the Eurocurrency Borrowing rate, or the adjusted LIBO rate for the interest period in effect for such borrowing; plus an applicable margin ranging from 1.25% to 2.25% (“Eurocurrency Spread”) with a London Inter-Bank Offered Rate (“LIBOR”) floor of 1.00% per annum; or (ii) the Alternate Base Rate (“ABR”) Borrowing, which is the greatest of (a) the Prime Rate in effect on such day, (b) the New York Fed Bank Rate in effect on such day plus 1/2 of 1.00% per annum, and (c) the Adjusted LIBO Rate (or LIBO rate multiplied by the Statutory Reserve Rate) for an interest period of one month plus 1.00%; in addition to an applicable margin ranging from 0.25% to 1.00% (“ABR Spread”). In addition, based on the Company’s existing leverage ratio, we are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.15% to 0.50%, which was 0.20% as of March 31, 2022, on the daily unused portion of the Credit Facility for each fiscal quarter during the Leverage Covenant Holiday and in connection with the issuance of letters of credit. The Credit Facility includes restrictions on the Company’s ability to make certain payments and distributions, including share repurchases and dividends.

As of March 31, 2022 and December 31, 2021, respectively, we had no outstanding borrowings and were in compliance with our covenant requirements in effect under the Credit Facility. While there can be no assurance that we will be able to meet the leverage ratio covenant after the Leverage Covenant Holiday ceases, based on our current projections, we do not believe there is a material risk we will not remain in compliance throughout the next twelve months.

As of March 31, 2022, the Company had $845 million in long-term debt, as a result of the issuance of our 2025 Senior Notes in July 2020 and 2026 Senior Notes in March 2021, as discussed below.

In July 2020, the Company completed the sale of $500 million in 2025 Senior Notes. The 2025 Senior Notes provide, among other things, that interest, at an interest rate of ~~4.35%.~~ 7.0% per annum, is payable on January 15 and July 15 of each year, which began on January 15, 2021, until their maturity on July 15, 2025. The 2025 Senior Notes are senior unsecured obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.

In March 2021, the Company completed the sale of $345 million of our 2026 Senior Notes. The 2026 Senior Notes provide, among other things, that interest, at an interest rate of 0.25% per annum, is payable on April 1 and October 1 of each year, which began on October 1, 2021, until their maturity on April 1, 2026. Concurrently, the Company used a portion of the proceeds from the 2026 Senior Notes to enter into privately negotiated capped call transactions with certain of the initial purchasers of the 2026 Senior Notes and/or their respective affiliates and/or other financial institutions at a cost of approximately $35 million. The Company intends to use the remainder of the proceeds from this offering for general corporate purposes, which may include repayment of debt, including the partial redemption and/or purchase of the 2025 Senior Notes prior to maturity. The 2026 Senior Notes are senior unsecured obligations of the Company and are guaranteed by certain of the Company’s domestic subsidiaries.

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

For further ~~discussion~~information on our ~~credit facilities~~Credit Facility, 2025 Senior Notes, and 2026 Senior Notes, refer to “Note 6: ~~Debt”~~Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q.

As of March 31, 2022, we had $75 million remaining available to repurchase shares of our common stock under our existing share repurchase program authorized by our Board of Directors. During the three months ended March 31, 2022 and 2021, respectively, the Company did not repurchase any shares of outstanding common stock under the share repurchase program. The terms of our Credit Agreement were amended to limit the Company from share repurchases during the Leverage Covenant Holiday and the terms of the 2025 Indenture related to the 2025 Senior Notes also impose certain limitations and restrictions on share repurchases.

Our business typically experiences seasonal fluctuations that affect the timing of our annual cash flows during the year related to working capital. In our ~~Vacation~~Experiences and Rentals free-to-list ~~model and our Attractions business,~~models, we receive cash from travelers at the time of booking or prior to the occurrence of an experience or rental, and we record these amounts, net of commissions, on our consolidated balance ~~sheets~~sheet as deferred merchant payables. We pay the ~~suppliers,~~operator, or the ~~vacation~~experience supplier and/or property rental owners, ~~and tour providers, respectively,~~ after the travelers’ use. Therefore, we generally receive cash from the traveler prior to paying the ~~supplier~~operator and this operating cycle represents a ~~working capital~~ source or use of cash to us. ~~Seasonal fluctuations in these transactions affect the timing of our annual cash flows related to working capital.~~ During the first half of the year

~~vacation~~ experiences and rentals ~~and attractions~~ bookings typically exceed ~~stays~~the amount of completed experiences and ~~tour-taking,~~rental stays, resulting in higher cash flow related to working capital, while during the second half of the year, particularly in the third quarter, this pattern reverses and cash flows from these transactions are typically negative. ~~While we expect~~Although consumer travel demandgenerally remained materially lower than historic levels due to the impact of COVID-19 on our business, these trends improved during 2021 from 2020, resulting in increased revenues, and working capital and operating cash flow more akin to typical historical seasonality trends, which continued during the three months ended March 31, 2022. However, the ultimate extent and longevity of the COVID-19 pandemic, including new or resurgences of existing variants (i.e. Delta and/or Omicron), and its impact on travel, regional and global markets, and overall economic activity in currently affected countries and/or globally remains unknown and impossible to predict with certainty, as such, the impacts on our business, including our operating cash flows, while generally improving, remain uncertain at this point in time. Other factors may also impact typical seasonal fluctuations, ~~to continue,~~which include further significant shifts in our business mix or adverse economic conditions unrelated to COVID-19 that could result in future seasonal patterns that are different from historical trends. In addition, new or different payment options offered to our customers could impact the timing of cash flows. For example, our “Reserve Now, Pay Later” payment option, which allows our travelers the option to reserve certain experiences and defer payment until a date no later than two days before the experience date, which although used in a minority of bookings to date, may continue to increase, and affect the timing of our future cash flows and working capital.

~~On January 25, 2017,~~As discussed in “Note 7: Income Taxes” in the notes to our ~~Board~~unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q, we have received Notices of ~~Directors authorized~~Proposed Adjustments issued by the ~~repurchase~~IRS for tax years 2009 through 2016, as of ~~$250~~March 31, 2022. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries, and would result in an increase to our worldwide income tax expense in an estimated range of $100 million to $110 million, exclusive of interest expense, at the close of the audit if the IRS prevails. In addition, we received from HMRC in the U.K. an issue closure notice relating to adjustments for 2012 through 2016 tax years, as of March 31, 2022. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our worldwide income tax expense in an estimated range of $45 million to $55 million, exclusive of interest expense, at the close of the audit if HMRC prevails. We disagree with the proposed adjustments and we intend to defend our positions through applicable administrative and, if necessary, judicial remedies. Although the ultimate timing for resolution of these matters is uncertain, any future payments would negatively impact our operating cash flows.

The CARES Act, enacted in March 2020, made tax law changes to provide financial relief to companies as a result of the impact to businesses related to COVID-19. Key income tax provisions of the CARES Act include changes in NOL carryback and carryforward rules, increase of the net interest expense deduction limit, and immediate write-off of qualified improvement property. The CARES Act allowed us to carryback our U.S. federal NOL incurred in 2020, generating an expected tax refund of $48 million, which is reported in income taxes receivable on our unaudited condensed consolidated balance sheet as of March 31, 2022. In April 2022, we received the entire $48 million of our shares of common stock under a new share repurchase program. As of June 30, 2017, we had repurchased a total of 6,079,003 shares of the Company’s outstanding common stock at an average share price of $41.13, or $250 million in the aggregate, and completed this ~~share repurchase program.~~refund.

We believe that our available cash and ~~marketable securities, combined with expected~~ cash ~~flows generated by operating activities and available cash from our credit facilities,~~equivalents will be sufficient to fund our foreseeable working capital requirements, capital expenditures, existing business growth initiatives, debt and interest obligations, lease commitments, and other financial commitments through at least the next twelve months. Our future capital requirements may also include capital needs for acquisitions ~~share repurchases,~~ and/or other expenditures in support of our business ~~strategy; thus~~strategy, which may potentially ~~reducing~~reduce our cash balance and/or ~~increasing~~require us to borrow under our ~~debt. We expect total capital expenditures~~ ~~for~~ ~~2017~~Credit Facility or to ~~be comparable to our 2016 spending levels.~~seek other financing alternatives.

Our cash flows ~~from/(used in) in operating, investing~~for the three months ended March 31, 2022 and ~~financing activities during the periods presented,~~2021, as reflected in ~~the~~our unaudited condensed consolidated statements of cash flows, are summarized in the following table:

Nine months ended September 30,

2017

2016

(in millions)

Net cash provided by (used in):

     Operating activities

$
220

$
276

     Investing activities

64

(140
)
     Financing activities

(163
)

(133
)

~~For~~


	Three months ended March 31,
	2022			2021
	(in millions)
Net cash provided by (used in):
Operating activities	$	86		$	(19	)
Investing activities		(14	)		(10	)
Financing activities		(10	)		287

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, our primary use of cash was financing activities (including payment of withholding taxes on net share settlements of our equity awards of $8 million), and investing activities (including capital expenditures incurred during the three months ended March 31, 2022 of $14 million). This use of cash was funded with cash and cash equivalents, and operating cash flow.

During the three months ended March 31, 2021, our primary use of cash was from operations, financing activities (including payment of withholding taxes on net share settlements of our equity awards of $23 million and purchase of the Capped Calls of $35 million), and investing activities (including capital expenditures incurred during the three months ended March 31, 2021 of $10 million). This use of cash was funded primarily with cash and cash equivalents, and financing activities, which includes $340 million of proceeds from the issuance of our 2026 Senior Notes, net of financing costs.

Net cash provided by operating activities ~~decreased by $56 million or 20% when compared to~~for the same period in 2016, primarily due to a decrease in net income of $54 million and a net decrease in working capital of $22 million, partially offset by an increase in non-cash items affecting cash flow of $20 million. The decrease in working capital movements of $22 million was primarily due to timing of collection of receivables, income tax payments, and vendor payments, partially offset by an increase in operating cash flow from deferred merchant payables primarily due to growth in our Attractions business.

~~For the nine~~three months ended ~~September 30, 2017, net cash provided by investing activities~~March 31, 2022, increased by ~~$204~~$105 million when compared to the same period in ~~2016,~~2021, primarily due to a decrease in net losses of $46 million and an increase in working capital of $50 million, primarily driven by an increase in deferred merchant payables and deferred revenue reflecting the cash ~~generated~~received from travelers due to an increase in experiences bookings which exceeded our payments to traveler suppliers, partially offset by an increase in accounts receivable across the ~~purchase, sales,~~business, all largely reflective of the increasing consumer demand for travel activities during the first quarter of 2022, in addition to timing of vendor payments and ~~maturities~~collection of ~~our marketable securities~~receivables, as well as, and to a lesser extent, an increase in non-cash items of ~~$175~~$9 million which was primarily due to an increase in deferred income tax benefits, partially offset by a decrease in ~~cash paid for business acquisitions of $23 million and a decrease in capital expenditures of $7 million.~~stock-based compensation expense.

~~For the nine months ended September 30, 2017, net~~Net cash used in ~~financing~~investing activities for the three months ended March 31, 2022 increased by ~~$30~~$4 million when compared to the same period in ~~2016, primarily~~2021, due to an increase ~~of $229 million~~ in capital expenditures in the business.

Net cash used in 2017 to purchase shares of our common stock under the authorized share repurchase program, net new borrowings on our 2016 Credit Facility of $73 million in 2016 which was subsequently repaid in 2017, partially offsetprovided by ~~an increase in net borrowings under our 2015 Credit Facility of $352 million~~ financing activities for the ~~first nine~~three months ~~of 2017,~~ended March 31, 2022 decreased by $297 million when compared to the same period in ~~2016.~~2021, primarily due to proceeds received from the issuance of our 2026 Senior Notes of $340 million, net of financing costs, partially offset by payments of $35 million for the Capped Calls in connection with our 2026 Senior Notes during three months ended March 31, 2021, both of which did not reoccur in 2022.

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

~~Since December 31, 2016, there~~There have been no material changes outside the normal course of business to our contractual obligations and commercial ~~commitments.~~commitments since December 31, 2021. As of ~~September 30, 2017,~~March 31, 2022, other than our contractual obligations and commercial commitments, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC. Refer to ~~“Liquidity~~“Liquidity and Capital ~~Resources”~~Resources” in Part II, Item 7. —Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 for a discussion of our contractual obligations and commercial commitments.

Contingencies

In the ordinary course of business, we ~~and our subsidiaries~~ are ~~parties~~party to legal, regulatory and ~~legal matters.~~administrative matters, including threats thereof, arising out of or in connection with our operations. These matters may ~~relate to~~involve claims involving patent and other intellectual property rights (including privacy, alleged infringement of third-party intellectual property ~~rights, defamation, taxes,~~rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition, consumer matters and ~~other~~data privacy), defamation and reputational claims. Periodically, we review the status of all significant outstanding matters to assess ~~the~~any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been ~~incurred,~~incurred; and (ii) the amount of the loss can be reasonably estimated and is material, we record the estimated loss in our consolidated statements of operations. We provide ~~disclosure~~disclosures in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial

statements. ~~Significant judgment is required to determine the probability that a liability~~

~~has been incurred and whether such liability is reasonably estimable.~~ We base accruals ~~made~~ on the best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, ~~the Company does~~we do not believe that the final disposition of any of these matters will have a material adverse effect on ~~the~~our business. However, the final outcome of these matters could vary significantly from our estimates. Moreover, such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention from the Company's business objectives and adversely affect the Company's business, results of operations, financial condition and cash flows. ThereFinally, there may ~~also~~ be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which ~~would~~could have a material adverse effect on us.

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

By virtue of ~~previously filed~~ consolidated income tax returns previously filed with Expedia, we are currently under an IRS audit for the 2009, 2010 and short-period 2011 tax ~~years, and have various ongoing state income tax audits.~~years. We are separately under examination by the IRS for the short-period 2011, 2012 through 2016, and ~~2013~~2018 tax years, and ~~under an employment~~have various ongoing audits for foreign and state income tax ~~audit by the IRS for the 2013 and 2014 tax years.~~returns. These audits include questioning of the timing and the amount of income and deductions and the allocation of income among various tax jurisdictions. These examinations may lead to proposed or ordinary course adjustments to our taxes. We are no longer subject to tax examinations by tax authorities for years prior to 2009. As of ~~September 30, 2017,~~March 31, 2022, no material assessments have resulted, except as noted below regarding our 2009, 2010, and ~~2010~~2011 IRS audit with ~~Expedia.~~Expedia and our 2012 through 2016 standalone IRS audit.

In January 2017 and April 2019, as part of the IRS audit of Expedia, we received Notices of Proposed Adjustment from the IRS for the 2009, 2010, and ~~2010~~2011 tax years. Subsequently, in September 2019, as part of Tripadvisor’s standalone audit, we received Notices of Proposed Adjustment from the IRS for the 2012 and 2013 tax years, and in August 2020, we received Notices of Proposed Adjustments from the IRS for the 2014, 2015 and 2016 tax years. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries, and would result in an increase to our worldwide income tax expense in an estimated range ~~totaling $10~~of $100 million to ~~$14~~$110 million ~~for those specific years, after~~at the close of the audit if the IRS prevails. The estimated range takes into consideration of competent authority relief and transition tax regulations, and is exclusive of deferred tax consequences and interest expense, which would be significant. We disagree with the proposed adjustments and ~~penalties. During the quarter ended June 30, 2017,~~ we ~~filed a request for Mutual Agreement Procedure consideration under Article 26 of the United States / United Kingdom Income Tax Convention~~intend to defend our position through applicable administrative and, ~~Rev. Proc. 2015-40, 2015-35 I.R.B. 236.~~if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable. ~~As such, we disagree with the proposed adjustments and intend to defend our position through applicable administrative and, if necessary, judicial remedies.~~ In addition to the risk of additional tax for 2009 ~~and 2010~~through 2016 transactions, if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we ~~could~~would be subject to significant additional tax liabilities.

~~Additionally,~~ We have requested competent authority assistance under MAP for tax years 2009 through 2016. We expect the competent authorities to present a resolution for the 2009 through 2011 tax years in the near future. Upon receipt, we continue to accumulate positive cash flows in foreign jurisdictions, which we consider indefinitely reinvested. Any repatriation of funds currently held in foreign jurisdictions may result in higher effective tax rates and incremental cash tax payments. In addition, there have been proposals to amend U.S. tax laws that would significantly impactwill assess the ~~manner in which U.S. companies are taxed on foreign earnings. Although we cannot predict whether or in what form any legislation will pass, if enacted, it could have a material adverse~~resolution provided by the competent authorities as well as its impact on our ~~U.S.~~existing income tax reserves for all subsequent years which remain open.

In January 2021, we received an issue closure notice relating to adjustments for 2012 through 2016 tax years from HMRC. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries and would result in an increase to our worldwide income tax expense in an estimated range of $45 million to $55 million, exclusive of interest expense, at the close of the audit if HMRC prevails. We disagree with the proposed adjustments and ~~cash flows.~~ we intend to defend our position through applicable administrative and, if necessary, judicial remedies. Our policy is to review and update tax reserves as facts and circumstances change. Based on our interpretation of the regulations and available case law, we believe the position we have taken with regard to transfer pricing with our foreign subsidiaries is sustainable.

~~See~~Over the last several years, The Organization for Economic Cooperation and Development (“OECD”) has been working on a Base Erosion and Profit Shifting Project to address the tax challenges arising from digitalization. The OECD/G20 Inclusive Framework has issued various guidelines, policy notes, and proposals that if adopted could result in an overhaul of the international taxation system under which our current tax obligations are determined. In October 2021, more than 130 countries tentatively signed on to a framework, expected to be implemented in 2023, which calls for a minimum tax rate on corporations of 15% and a reallocation of profits from the largest and most profitable businesses to countries where they make sales. The proposed framework, once enacted, envisages new international tax rules and the removal of all digital services taxes. As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax obligations is uncertain. As the OECD/G20 continues to drive toward a consensus framework, several countries which have previously enacted unilateral digital services tax initiatives, such as France, Italy, Spain, and the U.K., will continue to impose these revenue-based taxes until implementation of the consensus framework. During the three months ended March 31, 2022, we recorded $1 million of digital service tax to general and administrative expense on our unaudited condensed consolidated statement of operations, while this amount was not material during the three months ended March 31, 2021.

Due to the one-time transition tax on the deemed repatriation of undistributed foreign subsidiary earnings and profits in 2017, as a result of the 2017 Tax Act, the majority of previously unremitted earnings have been subjected to U.S. federal income tax. To the extent future distributions from these subsidiaries will be taxable, a deferred income tax liability has been accrued on our unaudited condensed consolidated balance sheet, which was not material as of March 31, 2022. As of March 31, 2022, $446 million of our cumulative undistributed foreign earnings were no longer considered to be indefinitely reinvested.

Refer to “Note 7: Income ~~Taxes”~~Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q for further information on potential tax contingencies, ~~surrounding~~including current audits by the IRS and various other domestic and foreign tax authorities, and other income tax and non-income tax matters.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks, including changes in interest rates and foreign currency exchange rates that could adversely affect our results of operations or financial condition. Our exposure to market risk includes our revolving credit facilities, derivative instruments and cash and cash equivalents, short term and long term marketable securities, accounts receivable, intercompany balances, accounts payable and deferred merchant payables denominated in foreign currencies. We manage our exposure to these risks through established policies and procedures and by assessing the anticipated near-term and long-term fluctuations in interest rates and foreign currency exchange rates. Our objective is to mitigate potential income statement, cash flow and market exposures from changes in foreign currency exchange rates and interest rates.

There has been no material change in our market risk profile during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2022 since December 31, 2021. For a discussion of current market conditions and impacts on the Company’s financials resulting from the COVID-19 pandemic, refer to “Note 1: Business Description and Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q, and for further information, Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations,” and to Part II, Item 1A, "Risk Factors”. For additional information ~~see~~about our market risk profile, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A. in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. We are exposed to market risks primarily due to our international operations, our ongoing investment and financial activities, as well as changes in economic conditions in all significant markets in which we operate which has been heightened during the COVID-19 pandemic. The risk of loss can be assessed from the perspective of adverse changes in our future earnings, cash flows, fair values of our assets, and financial condition. Our exposure to market risk, at any point in time, may include risk, including to any borrowings under our Credit Facility, or outstanding debt related to our 2025 Senior Notes and 2026 Senior Notes, derivative instruments, capped calls, cash and cash equivalents, short-term and long-term marketable securities, if any, accounts receivable, intercompany receivables/payables, accounts payable, deferred merchant payables and other balances and transactions denominated in foreign currencies. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage and attempt to mitigate our exposure to such risks.

We expect that we will continue to increase our operations internationally as, or when, COVID-19 restrictions are fully lifted and international markets continue to reopen. Our exposure to potentially volatile movements in foreign currency exchange rates will increase as we increase our operations in these international markets. The economic impact to us of foreign currency exchange rate movements is linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our foreign currency risk strategies. For example, Brexit (pursuant to which the United Kingdom ceased to be a member of the European Union) has caused volatility in currency exchange rates, including between the U.S. dollar and the British pound. Although, the U.K. and E.U. finalized the terms of the departure on December 24, 2020, certain decisions still need to be made on financial services, among others, and disputes may lead to tariffs being imposed on some goods in the future. Continued uncertainty regarding our international operations and U.K. and E.U. relations may result in future currency exchange rate volatility which may impact our business and results of operations. In addition, the geopolitical tensions resulting from Russia’s invasion of Ukraine, including increased cyberattacks, military conflicts and sanctions may result in additional financial volatility that may adversely affect our results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 2022, our management, with the participation of our ~~President and~~ Chief Executive Officer and President and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule ~~13a-15(b)~~13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our ~~President and~~ Chief Executive Officer and President and our Chief Financial Officer concluded that, as of ~~September 30, 2017,~~March 31, 2022, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s, or the SEC’s, rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our ~~President and~~ Chief Executive Officer and President and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2017~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we are ~~parties~~party to legal, ~~proceedings~~regulatory and administrative matters, including threats thereof, arising out of, or in connection with our operations. These matters may involve claims involving intellectual property rights (including privacy, alleged infringement of third-party intellectual property ~~rights, defamation, taxes,~~rights), tax matters (including value-added, excise, transient occupancy and accommodation taxes), regulatory compliance (including competition and ~~other claims. Rules~~consumer protection matters), defamation and ~~regulations promulgated by~~reputational claims, personal injury claims, labor and employment matters and commercial disputes. Periodically, we review the ~~SEC require~~status of all significant outstanding matters to assess any potential financial exposure. We record the ~~description~~estimated loss in our consolidated statements of ~~material pending legal proceedings, other than ordinary, routine litigation incident~~operations when (i) it is probable that an asset has been impaired or a liability has been incurred; and (ii) the amount of the loss can be reasonably estimated and is material. We provide disclosures in the notes to the ~~registrant’s business, and advise~~consolidated financial statements for loss contingencies that ~~proceedings ordinarily need~~do not meet both of these conditions if there is a reasonable possibility that a loss may have been incurred that would be ~~described if they primarily involve damages claims for amounts (exclusive~~material to the consolidated financial statements. We base accruals on the best information available at the time which can be highly subjective. Although occasional adverse decisions or settlements may occur, we do not believe that the final disposition of ~~interest and costs) not individually exceeding 10%~~any of these matters will have a material adverse effect on our business. However, the ~~current assets~~final outcome of ~~the registrant and its subsidiaries on a consolidated basis. In the judgment of management, none of the pending litigation~~these matters ~~that we are defending involves or is likely to involve amounts of that magnitude.~~ ~~Such matters, however, even if not meritorious,~~ could ~~result in the expenditure of significant financial and managerial resources, divert management's attention~~vary significantly from ~~the Company's business objectives and adversely affect the Company's business, results of operations, financial condition and cash flows. In addition, there~~our estimates. Finally, there may be claims or actions pending or threatened against us of which we are currently not aware and the ultimate disposition of which could have a material adverse effect on us.

Item 1A. Risk Factors

~~You should consider carefully~~While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of the risks ~~described below together with all of the other information included in this Quarterly Report as they may impact~~and uncertainties which could materially and adversely affect our business, financial condition, cash flows and results of operations, ~~and/or financial condition.~~and the trading price of our common stock. The risks and uncertainties described ~~below~~ are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business, results of operations or financial condition. ~~If any of~~During the ~~following risks occur,~~quarter ended March 31, 2022, there have been no material changes in our ~~business, financial condition, operating results and cash flows could be materially adversely affected.~~

~~If we are unable to continue to increase visitors to~~risk factors from those disclosed in Part 1, Item 1A., “Risk Factors” in our ~~websites and mobile apps and to cost-effectively convert these visitors into revenue-generating users, our revenue, financial results and business could be harmed.~~

~~Our long term success depends~~Annual Report on our continued ability to maintain and increase the overall number of visitors flowing through our platforms in a cost effective manner, to engage users throughout the travel planning and booking phases and to attract consumers who will share their reviews from their trips. The primary asset that we use to attract visitors to our websites and convert these visitors into engaged users and bookers is our ability to collect or create, organize and distribute high-quality, commercially valuable content and products that meet users’ specific interests. Our traffic and user engagement could be adversely affected by a number of factors, including but not limited to increased competition, reduced consumer awareness of our brands, declines or inefficiencies in traffic acquisition, and macroeconomic conditions. Certain of our competitors have advertising campaigns expressly designed to drive consumer traffic directly to their websites, and these campaigns may negatively impact traffic to our site. There can be no assurances that we will continue to provide content and products in a cost-effective manner, in a manner that meets rapidly changing consumer demand and in a manner that encourages users to book on our platform. Any failure to obtain and manage content and products in a cost-effective manner that will engage users, or any failure to provide content and products that are perceived as useful, reliable and trustworthy, could adversely affect user experiences and their repeat behavior, reduce traffic to our websites and negatively impact our business and financial performance.

~~Our dedication to making the user experience our highest priority may cause us to prioritize rapid innovation and user experience over short-term financial results.~~

We strive to create the best experience for our users, providing them with the information, research and tools to enable them to plan, book, and experience the perfect trip. We believe that in doing so we will increase our rates of conversion, revenue per shopper and, ultimately, our financial performance over the long-term. We have taken actions in the past and may continue to make decisions in the future that have the effect of reducing our short-term revenue or profitability if we believe that the decisions benefit the aggregate user experience. For example, we may introduce changes to existing products or new products that direct users away from formats or use cases where we have a proven means of monetization. In addition, our approach of putting users first may negatively impact our relationship with existing or prospective advertisers. These actions and practices could result in a loss of advertisers, which in turn could harm our results of operations. The short-term reductions in revenue or profitability could be more severe than we anticipate or these decisions may not produce the long-term benefits that we expect, in which case our user growth and engagement, our relationships with users and advertisers, and our business and results of operations could be harmed.

~~We derive a substantial portion of our revenue from advertising and any significant reduction in spending by advertisers or redirections of advertising spend could harm our business.~~

We derive a substantial portion of our revenue from the sale of advertising, primarily through click-based advertising and, to a lesser extent, display-based advertising. We enter into master advertising contracts with our advertising partners, however, the agreement terms are generally limited to matters such as privacy and compliance, payment terms and conditions, termination and indemnities and most of these contracts can be terminated by our partners at will or on short notice. Our ability to grow advertising revenue with our existing or new advertising partners is dependent in large part on our ability to generate revenue for them relative to other alternatives. Advertisers will not continue to do business with us if their investment in such advertising does not generate sales leads, customers, bookings, or revenue and profit on a cost-effective basis. Our ability to provide value to our advertising partners depends on a number of factors, including acceptance of online advertising versus more traditional forms of advertising or more effective models, competitiveness of our products, traffic quality, perception of our platform, availability and accuracy of analytics and measurement solutions to demonstrate our value, and macroeconomic conditions, whether in the advertising industry generally, among specific types of marketers or within particular geographies. We cannot guarantee that our current advertisers will fulfill their obligations under existing contracts, continue to advertise beyond the terms of existing contracts or enter into any additional contracts with us.

~~Click-based advertising revenue accounts~~Form 10-K for the majority of our advertising revenue. Our CPC pricing for click-based advertising depends, in part, on competition between advertisers. If our large advertisers become less competitive with each other, merge with each other or with our competitors, focus more on per-click profit than on traffic volume, or are able to reduce CPCs, this could have an adverse impact on our click-based advertising revenue which would, in turn, have an adverse effect on our business, financial condition and results of operations.

~~We rely on a relatively small number of significant advertising partners and any reduction in spending by or loss of these partners could seriously harm our business.~~

~~We derive a substantial portion of our revenue from a relatively small number of advertising partners and rely significantly on our relationships. For example, for the~~fiscal year ended December 31, 2016, our two most significant advertising partners, Expedia and Priceline (and their subsidiaries), accounted for a combined 46% of total revenue. While we enter into master advertising contracts with our partners, the terms of these agreements generally address matters such as privacy and compliance, payment terms and conditions, termination and indemnities and most of these contracts can be terminated by our partners at will or on short notice. If any of our significant advertisers were to cease or significantly curtail advertising on our websites, we could experience a rapid decline in our revenue over a relatively short period of time which would have a material impact on our business.2021.

Changes in internet search engine algorithms and dynamics, or search engine disintermediation, could have a negative impact on traffic for our sites and, ultimately, our business and results of operations.

We rely heavily on internet search engines, such as Google, to generate traffic to our websites, principally through the purchase of travel-related keywords as well as through free, or organic, search. Pricing and operating dynamics for these traffic sources can change rapidly, both technically and competitively. Search engines frequently update and change the logic that determines the placement and display of results of a user’s search, such that the purchased or algorithmic placement of links to our websites can be negatively affected. In addition, a search engine could, for competitive or other purposes, alter its search algorithms or results causing our websites to place lower in organic search query results. If a major search engine changes its algorithms in a manner that negatively affects the search engine ranking of our websites or those of our partners, or if competitive dynamics impact the cost or effectiveness

of SEO or SEM in a negative manner, our business and financial performance would be adversely affected. Furthermore, our failure to successfully manage our SEO and SEM strategies could result in a substantial decrease in traffic to our websites, as well as increased costs if we were to replace free traffic with paid traffic.

In addition, to the extent that Google or other leading search or metasearch engines that have a significant presence in our key markets, disintermediate OTAs or travel content providers, whether by offering their own comprehensive travel planning or shopping capabilities, or by referring leads to suppliers, other favored partners or themselves directly, there could be a material adverse impact on our business and financial performance. To the extent these actions have a negative effect on search results and traffic to our site, our business and financial performance could be adversely affected.

We also rely on application marketplaces, such as Apple’s App Store and Google’s Play, to drive downloads of our applications. In the future, Apple, Google or other marketplace operators may make changes to their marketplaces that make access to our products more difficult. For example, our applications may receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which they appear within marketplaces. Similarly, if problems arise in our relationships with providers of application marketplaces, traffic to our site and our user growth could be harmed.

~~We continue to invest significant time and effort towards educating users about our brand and our product offerings and there can be no assurances that these efforts will be successful.~~

The markets for the services we offer are intensely competitive, and some of our current and potential competitors have access to significantly greater and more diversified resources than we do, and they may be able to leverage other aspects of their businesses to enable them to compete more effectively with us. In an effort to be more competitive, we engage in marketing efforts aimed at increasing awareness of our ability to find our users the right hotels at the lowest prices. Specifically, we initiated a television advertising campaign and reallocated some of our marketing efforts and dollars among the different marketing channels available to us. We expect to continue our television advertising campaign and to adjust our marketing efforts and spend among the different marketing channels, in each case as we think appropriate based on the relative growth opportunity, the expected returns and the competitive environment in the different segments and businesses in which we operate. There is no assurance that these actions will have a positive impact on our marketing efficiencies and/or operating margins or when the financial benefit expected to results from these efforts will exceed the costs of such efforts.

~~Consumer adoption and use of mobile phone devices creates new challenges and, if we are unable to operate effectively on mobile phone devices, our business may be adversely affected.~~

The number of people who access the internet through mobile phones has increased substantially in the last few years and we anticipate that the rate of use of these devices will continue to grow. The mobile phone market in general remains a rapidly evolving market and mobile phones continue to monetize at a significantly lower rate than desktops and tablets. Advertising opportunities may be more limited on mobile phone devices. Given the device sizes and technical limitations of these devices, mobile phone consumers may not be willing to download multiple apps from multiple companies providing similar service and instead prefer to use one or a limited number of apps for their hotel, restaurant and attractions activity. In addition, as new devices and platforms are released, users may begin consuming content in a manner that is more difficult to monetize.

To address these growing user demands, we continue to extend our platform to develop and improve upon our mobile applications and monetization strategies. If we are unable to continue to rapidly innovate and create new, user-friendly and differentiated mobile phone offerings and websites optimized for mobile phone devices and efficiently and effectively advertise and distribute on these platforms, or if our mobile phone offerings are not used by consumers, our future growth and results of operations could be negatively impacted.

~~Declines or disruptions in the economy in general and travel industry in particular could adversely affect our businesses and financial performance.~~

Our businesses and financial performance are affected by the health of the global economy generally as well as the travel industry and leisure travel in particular. Sales of travel services tend to decline or grow more slowly during economic downturns and recessions when consumers engage in less discretionary spending, are concerned about unemployment or economic weakness, have reduced access to credit or experience other concerns that reduce their ability or willingness to travel. The global economy may be adversely impacted by unforeseen events beyond our control including incidents of actual or threatened terrorism, regional hostilities or instability, unusual weather patterns, natural disasters, political instability and health concerns (including epidemics or pandemics), defaults on government debt, significant increases in fuel and energy costs, tax increases and other matters that could reduce discretionary spending, tightening of credit markets and further declines in consumer confidence. Decreased travel expenditures could reduce the demand for our services and have a negative impact on our business, working capital and financial performance.

In addition, the uncertainty of macro-economic factors and their impact on consumer behavior, which may differ across regions, makes it more difficult to forecast industry and consumer trends and the timing and degree of their impact on our markets and business, which in turn could adversely affect our ability to effectively manage our business and adversely affect our results of operations.

On June 23, 2016, the United Kingdom held a referendum in which a majority of voters voted to exit the European Union (“Brexit”). Since the referendum, global markets and foreign currency exchange rates have experienced increased volatility. To leave the European Union, the United Kingdom must negotiate the terms of its exit and the process could take two years or more. Brexit could adversely affect European and global economic or market conditions and could contribute to instability in global financial markets, although the effects of Brexit are not yet known and will depend upon, among other things, the terms, nature and timing of the exit. Any of these effects of Brexit, and others we cannot anticipate, may have a negative effect on the travel industry and may adversely affect our business.

We rely on the value of our brands and consumer trust in our brands. If we are not able to protect, maintain and enhance our brands, or if events occur that damage our reputation and brands, our business may be harmed.

We believe that the strength of our brands (particularly the TripAdvisor brand) has contributed significantly to our success and that maintaining and enhancing our brands is critical to expanding our base of users, creating content and attracting advertisers. As a result, we invest significantly in brand marketing. We expect these investments to continue, and even increase, as a result of a variety of factors, including relatively high levels of advertising spending from competitors, the increasing costs of supporting multiple brands, expansion into new geographies, product positioning where our brands are less well known, inflation in media pricing, and the continued emergence and relative traffic share growth of search engines as destination sites for travelers. Such efforts may not maintain or enhance consumer awareness of our brands and, even if we are successful in our branding efforts, such efforts may not be cost-effective or as efficient as they have been historically. If we are unable to maintain or enhance consumer awareness of our brands or to generate demand in a cost-effective manner, it would have a material adverse effect on our business and financial performance.

Our ability to protect, maintain and enhance our brands also depends largely on our ability to maintain consumer confidence in our products and in the quality and integrity of our content and other information found on our platform. If consumers do not believe our recommended reviews to be useful and reliable, they may seek other services to obtain the information for which they are looking and may not return to our platform as often in the future, or at all. In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data protection, product changes, competitive pressures, reviews and content, litigation or regulatory activity, could adversely affect our reputation with our users and our advertisers. Such negative publicity also could have an adverse effect on the size, engagement, and loyalty of our user base and result in decreased revenue, which could adversely affect our business and financial results.

~~We operate in an increasingly competitive global environment and our failure to compete effectively could reduce our market share and harm our financial performance.~~

We compete in rapidly evolving and competitive markets. We face competition for content, users, advertisers, online travel search and price comparison services, or what is known in the industry as hotel metasearch, and online reservations. In the competition to attract users to our platform, we rely on our ability to acquire traffic through offline brand recognition and brand-direct efforts such as online search, email and television. These marketing strategies can be impacted by competitive site content, changes to our website architecture and page designs, changes to search engine ranking algorithms, updates in competitor advertising strategies, or changes to display ordering in search engine results such as preferred placement for internal products offered by search engines.

We also compete with different types of companies in the various markets and geographies we participate in, including large and small companies in the travel space as well as broader service providers. More specifically:

In our Hotel segment, we face competition from OTAs (including Expedia, Inc. and The Priceline Group Inc. and certain of their respective subsidiaries), hotel metasearch providers (including Trivago, Kayak, Ctrip.com International, Ltd., and HotelsCombined), large online search, social media, and marketplace companies (including Google, Microsoft Bing, Yahoo, Baidu, Facebook, Alibaba, and Amazon), traditional offline travel agencies, and global hotel chains seeking to promote direct bookings.

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We also face competition from different companies in each of the operating segments in our Non-Hotel segment. Our Attractions business competes with traditional travel agencies, wholesalers, and individual tour operators as well as Airbnb and similar websites that have added other travel services such as tours and activities. Our Restaurants business competes with other online restaurant reservation services, such as SeatMe (owned by Yelp) and OpenTable (a

subsidiary of Priceline). Our Vacation Rentals business competes with companies focused on alternative lodging, shared accommodations and online accommodation searches, including Airbnb, HomeAway (a subsidiary of Expedia) and booking.com (a subsidiary of Priceline).

Many of our competitors have significantly greater financial, technical, marketing and other resources compared to us and have expertise in developing online commerce and facilitating internet traffic as well as large client bases. They also have the ability to leverage other aspects of their business to enable them to compete more effectively against us. In addition, many of our competitors, including online search companies, continue to expand their voice and artificial intelligence capabilities, which may provide them with a competitive advantage in travel. We cannot assure you that we will be able to compete successfully against our current, emerging and future competitors or on platforms that may emerge, or provide differentiated products and services to our traveler base.

Certain of the companies we do business with, including some of our click-based advertising partners, are also our competitors. The consolidation of our competitors and partners, including Expedia (through its acquisitions of Orbitz, Travelocity, and HomeAway) and Priceline (through its acquisitions of Kayak and OpenTable), may affect our relative competitiveness and our partner relationships. Competition and consolidation could result in higher traffic acquisition costs, reduced margins on our advertising services, loss of market share, reduced customer traffic to our websites and reduced advertising by travel companies on our websites.

As the industry shifts towards online travel services and the technology supporting it continues to evolve, including platforms such as mobile phone and tablet computing devices, competition is likely to intensify. Competition in our industry may result in pricing pressure, loss of market share or decreased member engagement, any of which could adversely affect our business and financial performance.

~~We rely on information technology to operate our business and remain competitive, and any failure to adapt to technological developments or industry trends could harm our businesses.~~

We depend on the use of sophisticated information technologies and systems for, among other things, website and mobile apps, supplier connectivity, communications, reservations, payment processing, procurement, customer service and fraud prevention. Our future success depends on our ability to continuously improve and upgrade our systems and infrastructure to meet rapidly evolving consumer trends and demands while at the same time maintaining the reliability and integrity of our systems and infrastructure. We may not be able to maintain or replace our existing systems or introduce new technologies and systems as quickly as we would like or in a cost-effective manner. We may not be successful, or as successful as our competitors, in developing technologies and systems that operate effectively across multiple devices and platforms in a way that is appealing to our users.

In addition, the emergence of alternative platforms such as mobile phone and tablet computing devices and the emergence of niche competitors who may be able to optimize products, services or strategies for such platforms will require new investment in technology. New developments in other areas, such as cloud computing, could also make it easier for competition to enter our markets due to lower up-front technology costs.

~~If we do not continue to innovate and provide tools and services that are useful to travelers, we may not remain competitive, and our business and financial performance could suffer.~~

Our success depends in part on continued innovation to provide features and services that make our platform compelling to travelers. Our competitors are continually developing innovations in online travel-related services and features. As a result, we are continually working to improve our business model and user experience in order to drive user traffic and conversion rates. We can give no assurances that the changes we make will yield the benefits we expect and will not have unintended or adverse impacts that we did not anticipate. If we are unable to continue offering innovative products and services and quality features that travelers want to use, existing users may become dissatisfied and use competitors’ offerings and we may be unable to attract additional users, which could adversely affect our business and financial performance.

We are dependent upon the quality of traffic in our network to provide value to online advertisers, and any failure in our quality control could have a material adverse effect on the value of our websites to our advertisers and adversely affect our revenue.

We use technology and processes to monitor the quality of the internet traffic that we deliver to online advertisers and have identified metrics to demonstrate the quality of that traffic. These metrics are used to not only identify the value of advertising on our website but also to identify low quality clicks such as non-human processes, including robots, spiders or other software; the mechanical automation of clicking; and other types of invalid clicks or click fraud. Even with such monitoring in place, there is a risk that a certain amount of low-quality traffic, or traffic that online advertisers deem to be invalid, will be delivered to such online

advertisers. As a result, we may be required to credit amounts owed to us by our advertisers. Furthermore, low-quality or invalid traffic may be detrimental to our relationships with advertisers, and could adversely affect our advertising pricing and revenue.

~~We rely on assumptions and estimates and data to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.~~

We believe that certain metrics are key to our business, including but not limited to unique visitors, hotel shoppers, revenue per hotel shopper, and number of reviews and opinions. As the industry in which we operate and our business continues to evolve, so too might the metrics by which we evaluate our business. While the calculation of these metrics is based on what we believe to be reasonable estimates, our internal tools are not independently verified by a third party and have a number of limitations and, furthermore, our methodologies for tracking these metrics may change over time. For example, a single person may have multiple accounts or browse the internet on multiple browsers or devices, some users may restrict our ability to accurately identify them across visits, some mobile applications automatically contact our servers for regular updates with no user action, and we are not always able to capture user information on all of our platforms. As such, the calculations of our unique visitors may not accurately reflect the number of people actually visiting our platforms. We continue to improve upon our tools and methodologies to capture data and believe that our current metrics are more accurate; however, the improvement of our tools and methodologies could cause inconsistency between current data and previously reported data, which could confuse investors or lead to questions about the integrity of our data. Also if the internal tools we use to track these metrics under-count or over-count performance or contain algorithm or other technical errors, the data we report may not be accurate. In addition, historically, certain metrics were calculated by independent third parties. Accordingly readers should not place undue reliance on these numbers.

~~The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.~~

Our future success depends upon the continued contributions of our senior corporate management and other key employees. In particular, the contributions of Stephen Kaufer, our co-founder, President and Chief Executive Officer, are critical to our overall management. We cannot ensure that we will be able to retain the services of these individuals, and the loss of one or more of our key personnel could seriously harm our business. We do not maintain any key person life insurance policies.

In addition, competition remains intense for well-qualified employees in certain aspects of our business, including software engineers, developers, product management and development personnel, and other technology professionals. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate existing employees. As a global company, we aim to attract quality employees from all over the world, so any restrictions on travel for professional or personal purposes, such as those put in place in the United States in early 2017, may cause significant disruption to our businesses or negatively affect our ability to attract and retain employees on a global basis. If we do not succeed in attracting well-qualified employees or retaining or motivating existing employees, our business would be adversely affected.

~~The online vacation rental market is rapidly evolving and if we fail to predict the manner in which the market develops, our business and prospects may suffer.~~

We offer vacation rental services on our TripAdvisor-branded sites as well as through our U.S.-based FlipKey and Vacation Home Rentals and European-based Holiday Lettings and Niumba businesses. The vacation rental market has been and continues to be, subject to regulatory development that affects the vacation rental industry and the ability of companies like us to list those vacation rentals online. For example, some states and local jurisdictions have adopted or are considering statutes or ordinances that prohibit property owners and managers from renting certain properties for fewer than 30 consecutive days or otherwise limit their ability to do so, and other states and local jurisdictions may introduce similar regulations. Some states and local jurisdictions also have fair housing or other laws governing whether and how properties may be rented, which they assert apply to vacation rentals. Many homeowners, condominium and neighborhood associations have adopted rules that prohibit or restrict short-term vacation rentals. Many of the fundamental statutes and ordinances that impose taxes or other obligations on travel and lodging companies were established before the growth of the internet and e-commerce, which creates a risk of these laws being used in ways not originally intended that could burden property owners and managers or otherwise harm our business. Operating in this dynamic regulatory environment requires significant management attention and financial resources. We cannot assure that our efforts will be successful, and the investment and additional resources required to manage growth will produce the desired levels of revenue or profitability.

We may be subject to claims that we violated intellectual property rights of others and these claims can be extremely costly to defend and could require us to pay significant damages and limit our ability to operate.

Certain companies in the internet and technology industries that own patents, copyrights, trademarks and trade secrets frequently enter into litigation based on allegations of infringement or other violations of those intellectual property rights in order to extract value from technology companies, such as royalties in connection with grants of licenses. We have received in the past, and expect in the future to receive notices that claim we have misappropriated or misused other parties’ intellectual property rights. Any intellectual property claim against us, regardless of merit, could be time-consuming and expensive to settle or litigate and could divert management’s attention and other resources. These claims also could subject us to significant liability for damages and could result in our having to stop using technology or content found to be in violation of another party’s rights. We might be required or may opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, or content, which could require significant effort and expense and make us less competitive in the relevant market. Any of these results could harm our business and financial performance.

~~Acquisitions, investments, significant commercial arrangements and/or new business strategies could disrupt our ongoing business and present new challenges and risks.~~

Our success will depend, in part, on our ability to expand our product offerings and expand user engagement in order to grow our business in response to changing technologies, user and advertiser demands and competitive pressures. As a result, we have acquired, invested in and/or entered into significant commercial arrangements with a number of new business in the past and our future growth may depend, in part, on future acquisitions, investments, commercial arrangements/or changes in business strategies, any of which could be material to our financial conditions and results of operations. Such endeavors may involve significant risks and uncertainties, including, but not limited to, the following:

~~Expected and unexpected costs incurred in identifying and pursuing these endeavors, and performing due diligence on potential targets that may or may not be successful;~~

Use of cash resources and incurrence of debt and contingent liabilities in funding these endeavors that may limit other potential uses of our cash, including stock repurchases, retirement of outstanding indebtedness and/or dividend payments;

~~Amortization expenses related to acquired intangible assets and other adverse accounting consequences;~~

~~Diversion of management’s attention or other resources from our existing business;~~

Difficulties and expenses in integrating the operations, products, technology, privacy protection systems, information systems or personnel of the company, including the assimilation of corporate cultures;

~~Difficulties in implementing and retaining uniform standards, controls, procedures, policies and information systems;~~

~~The assumption of known and unknown debt and liabilities of the acquired company, including costs associated with litigation and other claims relating to the acquired company;~~

Failure of any company which we have acquired, in which we have invested, or with which we have a commercial arrangement, to achieve anticipated revenues, earnings or cash flows or to retain key management or employees;

~~Failure to generate adequate returns on acquisitions and investments;~~

With respect to minority investments, limited management or operational control and reputational risk, which risk is heightened if the controlling person in such case has business interests, strategies or goals that are inconsistent with ours;

~~Entrance into markets in which we have no direct prior experience and increased complexity in our business;~~

~~Impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising from acquisitions; and~~

~~Adverse market reaction to acquisitions.~~

We have recently invested, and may in the future invest, in privately-held companies and these investments are currently accounted for under the cost method. Such investments are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may not be or may never become profitable, may not be able to secure additional funding or their technologies, services or products may not be successfully developed or introduced into the market. Further, our ability to liquidate any such investments is typically dependent upon some liquidity event, such as a public offering or acquisition, since no public market exists for such securities. Valuations of such privately-held companies are inherently complex and uncertain

due to the lack of liquid market for the company’s securities. Moreover, we could lose the full amount of any of our investments and any impairment of our investments could have a material adverse effect on our financial condition and results of operations.

We cannot assure you that these investments will be successful or that such endeavors will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible or that we will achieve these benefits within a reasonable period of time.

~~If we fail to manage our growth effectively, our brand, results of operations and business could be harmed.~~

We have experienced rapid growth in our headcount and operations, including through acquisitions of other businesses and in new international markets. We continue to make substantial investments in our technology and sales and marketing organizations. This growth places substantial demands on management and our operational infrastructure. In addition, as our business matures, we make periodic changes and adjustments to our organization in response to various internal and external considerations, including market opportunities, the competitive landscape, new and enhanced products and acquisitions. These changes may result in a temporary lack of focus or productivity or otherwise impact our business.

To manage our growth, we may need to improve our operational, financial and management systems and processes which may require significant capital expenditures and allocation of valuable management and employee resources. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, including employees in international markets, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively, the quality of our platform and efficiency of our operations could suffer, which could harm our brand, results of operations and business.

~~We are regularly subject to claims, suits, government investigations, and other proceedings that may result in adverse outcomes.~~

We are regularly subject to claims, suits, government investigations and other proceedings involving competition, intellectual property, privacy and data protection, consumer protection, tax, labor and employment, commercial disputes, content generated by our users, free speech issues, goods and services offered by advertisers or publishers using our platforms, and other matters. In addition, our businesses face intellectual property litigation that exposes us to the risk of exclusion and cease and desist orders, which could limit our ability to sell products and services.

Such claims, suits, government investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, any of these types of legal proceedings can have an adverse impact on us because of legal costs, diversion of management resources, injunctions or damage awards and other factors. Determining reserves for our pending litigation or other legal proceedings is a complex, fact-intensive process that requires significant judgment. It is possible that a resolution of one or more such proceedings could result in substantial fines and penalties that could adversely affect our business, consolidated financial position, results of operations, or cash flows in a particular period. These proceedings could also result in reputational harm, criminal sanctions, consent decrees, or orders preventing us from offering certain features, functionalities, products, or services, requiring a change in our business practices or other field action, or requiring development of non-infringing or otherwise altered products or technologies. Any of these consequences could adversely affect our business and results of operations.

~~We are a global company that operates in many different jurisdictions and these operations expose us to additional risks, which risks increase as our business continues to expand.~~

We operate in a number of jurisdictions both inside and outside of the United States and continue to expand our operations both domestically and internationally. Many regions have different economic conditions, languages, currencies, consumer expectations, levels of consumer acceptance and use of the internet for commerce, legislation, regulatory environments (including labors laws and customs), tax laws and levels of political stability. We are subject to associated risks typical of global businesses, including, but not limited to, the following:

•Compliance with additional laws, including the Foreign Corrupt Practices Act and U.K. Bribery Act, data privacy requirements, labor and employment law, laws regarding advertisements and promotions and anti-competition regulations;

•~~Diminished ability to legally enforce contractual rights;~~

•~~Increased risk and limits on enforceability of intellectual property rights;~~

•~~Restrictions on repatriation of cash as well as restrictions on investments in operations in certain countries;~~

•~~Financial risk arising from transactions in multiple currencies as well as foreign currency exchange restrictions;~~

•~~Slower adoption of the internet as an advertising, broadcast and commerce medium in certain international markets;~~

•~~Difficulties in managing staff and operations due to distance, time zones, language and cultural differences;~~

•~~Uncertainty regarding liability for services, content and intellectual property rights, including uncertainty as a result of local laws and lack of precedent;~~

• ~~Economic or political instability; and~~

•~~Threatened or actual acts of terrorism.~~

For example, we have a business operating in China, which creates particular risks and uncertainties relating to the laws in China. The laws and regulations of China restrict foreign investment in areas including air-ticketing and travel agency services, internet content provision, mobile communication and related businesses. Although we have established effective control of our Chinese business through a series of agreements, future developments in the interpretation or enforcement of Chinese laws and regulations or a dispute relating to these agreements could restrict our ability to operate or restructure this business or to engage in strategic transactions. The success of this business, and of any future investments in China, is subject to risks and uncertainties regarding the application, development and interpretation of China’s laws and regulations.

Additionally, we continue to accumulate positive cash flows in foreign jurisdictions, which we consider indefinitely reinvested. The repatriation of such funds for use in the United States, including for corporate purposes such as acquisitions, stock repurchases, dividends or debt refinancings, may result in additional U.S. income tax expense and higher cost for such capital.

~~A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely affect our business or financial performance.~~

Our business and financial performance could be adversely affected by unfavorable changes in or interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our business, including those relating to the internet and online commerce, internet advertising, consumer protection, data security and privacy, travel and vacation rental licensing and listing requirements and tax. In some cases, these laws continue to evolve.

For example, there is, and will likely continue to be, an increasing number of laws and regulations pertaining to the internet and online commerce that may relate to liability for information retrieved from or transmitted over the internet, online editorial and user-generated content, user privacy, data security, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of products and services. In addition, enforcement authorities continue to rely on their authority under existing consumer protection laws to take action against companies relating to data privacy and security practices. The growth and development of online commerce may prompt calls for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional burdens on online businesses generally.

Further, our Vacation Rentals business has been and continues to be subject to regulatory developments that affect the vacation rental industry and the ability of competitors like us to list those vacation rentals online. For example, some states and local jurisdictions have adopted or are considering adopting statutes or ordinances that prohibit property owners and managers from renting certain properties for fewer than 30 consecutive days. Some states and local jurisdictions also have fair housing or other laws governing whether and how properties may be rented, which they assert apply to vacation rentals. Many homeowners, condominium and neighborhood associations have adopted rules that prohibit or restrict short-term vacation rentals.

We also have been subject, and we will likely be subject in the future, to inquiries from time to time from regulatory bodies concerning compliance with consumer protection, competition, tax and travel industry-specific laws and regulations. The failure of our businesses to comply with these laws and regulations could result in fines and/or proceedings against us by governmental agencies and/or consumers, which if material, could adversely affect our business, financial condition and results of operations. Further, if such laws and regulations are not enforced equally against other competitors in a particular market, our compliance with such laws may put us a competitive disadvantage vis-à-vis competitors who do not comply with such requirements.

The promulgation of new laws, rules and regulations, or the new interpretation of existing laws, rules and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we provide services could require us to change certain aspects of our business, operations and commercial relationships to ensure compliance, which could decrease demand for services, reduce revenues, increase costs and/or subject the company to additional liabilities. Unfavorable changes could decrease demand for products and services, limit marketing methods and capabilities, increase costs and/or subject us to additional liabilities. Violations of these laws and regulations could result in finds and/or criminal sanctions against us, our officers or our employees and/or prohibitions on the conduct of our business.

~~We cannot be sure that our intellectual property is protected from copying or use by others, including potential competitors.~~

Our websites rely on content, brands and technology, much of which is proprietary. We protect our proprietary content, brands and technology by relying on a combination of trademarks, copyrights, trade secrets, patents and confidentiality agreements. Any misappropriation or violation of our rights could have a material adverse effect on our business. Even with these precautions, it may be possible for another party to copy or otherwise obtain and use our proprietary technology, content or brands without authorization or to develop similar technology, content or brands independently.

Effective intellectual property protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and expenses and the costs of defending our rights. In addition, effective intellectual property protection may not be available in every jurisdiction in which our services are made available, and policing unauthorized use of our intellectual property is difficult and expensive. Therefore, in certain jurisdictions, we may be unable to protect our intellectual property adequately against unauthorized third-party copying or use, which could adversely affect our business or ability to compete. We cannot be sure that the steps we have taken will prevent misappropriation or infringement of our intellectual property. Furthermore, we may need to go to court or other tribunals or administrative bodies in order to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. These proceedings might result in substantial costs and diversion of resources and management attention. Our failure to protect our intellectual property in a cost-effective or effective manner could have a material adverse effect on our business and ability to protect our technology, content and brands.

We currently license from third parties and incorporate the technologies and content into our websites. As we continue to introduce new services that incorporate new technologies and content, we may be required to license additional technology, or content. We cannot be sure that such technology or content will be available on commercially reasonable terms, if at all.

~~Our processing, storage and use of personal information and other data exposes us to risks of external and internal security breaches and could give rise to liabilities.~~

We are subject to a variety of laws in the United States and abroad regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other consumer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent between countries or conflict with other rules. In addition, the security of data when engaging in electronic commerce is essential to maintaining consumer and travel service provider confidences in our services. The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet have recently come under increased public scrutiny. The U.S. Congress and federal agencies, including the Federal Trade Commission and the Department of Commerce, are reviewing the need for greater regulation for the collection and use of information concerning consumer behavior on the internet. Various U.S. courts are also considering the applicability of existing federal and state statutes, including computer trespass and wiretapping laws, to the collection and exchange of information online. In addition, the European Union has adopted a new data protection legal framework, effective in May 2018, which may result in a greater compliance burden for companies, including us, with users in Europe and increased costs of compliance.

Potential security breaches to our systems, whether resulting from internal or external sources, could significantly harm our business. A party, whether internal or external, that is able to circumvent our security systems could misappropriate user information or proprietary information or cause significant interruptions in our operations. In the past, we have experienced “denial-of-service” type attacks on our systems that have made portions of our websites unavailable for short periods of time as well as allowed unauthorized access of our systems and data. We also face risks associated with security breaches affecting third parties conducting business over the internet. Much of our business is conducted with third party marketing affiliates or, more recently, through business partners powering our instant booking feature. In addition, we frequently use third parties to process credit card payments. A security breach at such third party could be perceived by consumers as a security breach of our systems and could result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability and subject us to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements, which could expose us to liability.

We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection. Any failure or perceived failure by us to comply with our privacy policies, privacy-related obligations to users or other third parties, or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation or public statements that could harm our reputation and cause our customers and members to lose trust in us, which could have an adverse effect on our business, brand, market share and results of operations. We may need to expend significant resources to protect against security breaches or to investigate and address problems caused by breaches. Reductions in website availability could cause a loss of substantial business volume during the occurrence of any such incident. Because the techniques used to sabotage security change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the

world, we may be unable to proactively address these techniques or to implement adequate preventive measures. Security breaches could result in negative publicity, damage to reputation, exposure to risk of loss or litigation and possible liability due to regulatory penalties and sanctions. Security breaches could also cause travelers and potential users to lose confidence in our security, which would have a negative effect on the value of our brand. Failure to adequately protect against attacks or intrusions, whether for our own systems or systems of vendors, could expose us to security breaches that could have an adverse impact on financial performance.

We have acquired a number of companies over the years and may continue to do so in the future. While we make significant efforts to address any information technology security issues with respect to our acquisitions, we may still inherit such risks when we integrate the acquired businesses.

~~System interruption and the lack of redundancy in some of our internal information systems may harm our business.~~

We rely on computer systems to deliver content and services. We have experienced and may in the future experience system interruptions that make some or all of these systems unavailable or prevent us from efficiently providing content and services to users and third parties. Significant interruptions, outages or delays in internal systems, or systems of third parties that we rely upon, or deterioration in the performance of any such systems, would impair our ability to process transactions or display content and decrease the quality of the services we offer to travelers and users. These interruptions could include security intrusions and attacks on our systems for fraud or service interruption (called “denial of service” or “bot” attacks). Fire, flood, power loss, telecommunications failure, break-ins, earthquakes, acts of war or terrorism, acts of God, computer viruses, electronic intrusion attempts from both external and internal sources and similar events or disruptions may damage or impact or interrupt computer or communications systems or business processes at any time. If we experience frequent or persistent system failures, our reputation and brand could be permanently and significantly harmed.

Although we have put measures in place to protect certain portions of our facilities and assets, any of these events could cause system interruption, delays and loss of critical data, and could prevent us from providing content and services to users, travelers and/or third parties for a significant period of time. In addition, remediation may be costly and we may not have adequate insurance to cover such costs. Moreover, the costs of enhancing infrastructure to attain improved stability and redundancy may be time consuming and expensive and may require resources and expertise that are difficult to obtain.

~~We may have future capital needs and may not be able to obtain additional financing on acceptable terms.~~

We are currently party to a credit agreement with respect to a $1.2 billion revolving credit facility maturing in May 2022, or (as more fully discussed above) the “2015 Credit Facility.” This agreement includes restrictive covenants that may impact the way we manage our business and may limit our ability to secure significant additional financing in the future on favorable terms. Our ability to secure additional financing and satisfy our financial obligations outstanding from time to time will depend upon our future operating performance, which is subject to then prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control. There can be no assurance that sufficient financing will be available on desirable or even any terms to fund investments, acquisitions, stock repurchases, dividends, debt refinancing or extraordinary actions or that counterparties in any such financings would honor their contractual commitments.

~~We have indebtedness which could adversely affect our business and financial condition.~~

~~We currently have outstanding $265 million in long-term debt. Risks relating to our indebtedness include:~~

~~Increasing our vulnerability to general adverse economic and industry conditions;~~

Requiring us to dedicate a portion of our cash flow from operations to principal and interest payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

~~Making it more difficult for us to optimally capitalize and manage the cash flow for our businesses;~~

~~Limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate;~~

~~Possibly placing us at a competitive disadvantage compared to our competitors that have less debt;~~

~~Limiting our ability to borrow additional funds or to borrow funds at rates or on other terms that we find acceptable; and~~

~~Exposing us to the risk of increased interest rates because our outstanding debt is expected to be subject to variable rates of interest.~~

In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business. The terms of our 2015 Credit Facility allow us to incur additional debt subject to certain limitations; however, there is no assurance that additional financing will be available to us on terms favorable to us, if at all. In addition, if new debt is added to current debt levels, the risks described above could intensify.

Our 2015 Credit Facility provides for various provisions that limit our discretion in the operation of our business and require us to meet financial maintenance tests and other covenants and the failure to comply with their covenants could have a material adverse effect on us.

We are party to a credit agreement providing for our 2015 Credit Facility. The agreements that govern the 2015 Credit Facility contain various covenants, including those that limit our ability to, among other things:

~~Incur indebtedness;~~

~~Pay dividends on, redeem or repurchase our capital stock;~~

~~Enter into certain asset sale transactions, including partial or full spin-off transactions;~~

~~Enter into secured financing arrangements;~~

~~Enter into sale and leaseback transactions; and~~

~~Enter into unrelated businesses.~~

These covenants may limit our ability to optimally operate our business. In addition, our 2015 Credit Facility requires that we meet certain financial tests, including a leverage ratio test. Any failure to comply with the restrictions of our credit facility may result in an event of default under the agreements governing such facilities. Such default may allow the creditors to accelerate the debt incurred thereunder. In addition, lenders may be able to terminate any commitments they had made to supply us with further funds (including periodic rollovers of existing borrowings).

~~Our effective tax rate is impacted by a number of factors that could have a material impact on our financial results and could increase the volatility of those results.~~

Due to the global nature of our business, we are subject to income taxes in the United States and other foreign jurisdictions. In the event we incur net income in certain jurisdictions but incur losses in other jurisdictions, we generally cannot offset the income from one jurisdiction with the loss from another. This lack of flexibility increases our effective tax rate. Furthermore, significant judgment is required to calculate our worldwide provision for income taxes and depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. In the ordinary course of our business there are many transactions and calculations where the ultimate tax determination is uncertain.

We believe our tax estimates are reasonable. However, we are routinely under audit by federal, state and foreign taxing authorities. The taxing authorities of jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which would increase our effective tax rate and harm our financial position and results of operations. As we operate in numerous taxing jurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by taxing authorities of these jurisdictions. It is not uncommon for taxing authorities of different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. The final determination of audits could be materially different from our income tax provisions and accruals and could have a material effect on our financial position, results of operations, or cash flows in the period or periods for which that determination is made.

Additionally, we continue to accumulate positive cash flows in foreign jurisdictions, which we consider indefinitely reinvested. Any repatriation of funds currently held in foreign jurisdictions may result in higher effective tax rates and incremental cash tax payments. In addition, there have been proposals to amend U.S. tax laws that would significantly impact the manner in which U.S. companies are taxed on foreign earnings. Although we cannot predict whether or in what form any legislation will pass, if enacted, it could have a material adverse impact on our U.S. tax expense and cash flows.

~~Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial position and results of operations.~~

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Our existing corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax laws. However, the tax benefits that we intend to eventually derive could be undermined due to changing tax laws. In particular, the current U.S. administration and key members of Congress have made public statements indicating that tax reform is a priority, resulting in uncertainty not only with respect to the future corporate tax rate, but also the U.S. tax consequences of income derived from income related to intellectual property earned overseas in low tax jurisdictions. Certain changes to U.S. tax laws, including, but not limited to, limitations on the ability to defer U.S. taxation on earnings outside of the United States until those earnings are repatriated to the United States, could affect the tax treatment of our foreign earnings.

In addition, the taxing authorities in the United States and other jurisdictions where we do business regularly examine our income and other tax returns as well as the tax returns of Expedia, our former parent. The ultimate outcome of these examinations (including the IRS audit described below) cannot be predicted with certainty. Should the IRS or other taxing authorities assess additional taxes as a result of examinations, we may be required to record charges to our operations, which could harm our business, operating results and financial condition.

~~In connection with the Spin-Off, we could be subject to significant tax liabilities.~~

Under the Tax Sharing Agreement between us and Expedia entered into in connection with the Spin-Off, we are generally required to indemnify Expedia for any taxes resulting from the Spin-Off (and any related interest, penalties, legal and professional fees, and all costs and damages associated with related stockholder litigation or controversies) to the extent such amounts resulted from (i) any act or failure to act by us described in the covenants in the tax sharing agreement, (ii) any acquisition of our equity securities or assets or those of a member of our group, or (iii) any failure of the representations with respect to us or any member of our group to be true or any breach by us or any member of our group of any covenant, in each case, which is contained in the separation documents or in the documents relating to the IRS private letter ruling and/or the opinion of counsel.

We continue to be responsible for potential tax liabilities in connection with consolidated income tax returns filed with Expedia prior to or in connection with the Spin-Off. By virtue of previously filed consolidated tax returns with Expedia, we are currently under an IRS audit for the 2009, 2010, and 2011 tax years. In connection with that audit, we received, in January 2017, notices of proposed adjustment from the IRS for the 2009 and 2010 tax years, which would result in an increase in our worldwide income tax expense. The proposed adjustments would result in an increase to our worldwide income tax expense in an estimated range totaling $10 million to $14 million for those specific years after consideration of competent authority relief, exclusive of interest and penalties. We are also subject to various ongoing state income tax audits. The outcome of these matters or any other audits could subject us to significant tax liabilities.

~~We are subject to fluctuation in foreign currency exchange risk.~~

We conduct a significant and growing portion of our business outside the United States but report our results in U.S. dollars. As a result, we face exposure to movements in foreign currency exchange rates, particularly those related to the Euro, British pound sterling, and Australian dollar. These exposures include, but are not limited to re-measurement of gains and losses from changes in the value of foreign denominated assets and liabilities; translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars upon consolidation; and planning risk related to changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur.

Depending on the size of the exposures and the relative movements of exchange rates, if we were to choose not to hedge or were to fail to hedge effectively our exposure, we could experience a material adverse effect on our financial statements and financial condition. As seen in some recent periods, in the event of severe volatility in exchange rates the impact of these exposures can increase, and the impact on results of operations can be more pronounced. In addition, the current environment and the increasingly global nature of our business have made hedging these exposures both more complex. We hedge certain short-term foreign currency exposures with the purchase of forward exchange contracts. These forward exchange contracts only help mitigate the impact of changes in foreign currency rates that occur during the term of the related contract period and carry risks of counter-party failure. There can be no assurance that our forward exchange contracts will have their intended effects.

Significant fluctuations in foreign currency exchange rates can affect consumer travel behavior. Volatility in foreign currency exchange rates and its impact on consumer behavior, which may differ across regions, makes it more difficult to forecast industry and

consumer trends and the timing and degree of their impact on our markets and business, which in turn could adversely affect our ability to effectively manage our business and adversely affect our results of operations.

~~Liberty TripAdvisor Holdings, Inc. currently is a controlling stockholder.~~

Liberty TripAdvisor Holdings, Inc., or LTRIP, effectively controls the outcome of all matters submitted to a vote or for the consent of our stockholders (other than with respect to the election by the holders of our common stock of 25% of the members of our Board of Directors and matters as to which Delaware law requires separate class votes), including but not limited to, corporate transactions such as mergers, business combinations or dispositions of assets, the authorization or issuance of new equity or debt securities and determinations with respect to our business direction and policies. Our Chairman Greg Maffei, and one of our Directors Albert Rosenthaler also serve as officers and directors of LTRIP. LTRIP may have interests that differ from those of our other stockholders and they may vote in a way with which our other stockholders may not agree or that may be adverse to other stockholders’ interests. LTRIP is not restricted from investing in other businesses involving or related to our business. Liberty’s control of us, as well as the existing provisions of our organizational documents and Delaware law, may discourage or prevent a change of control that might otherwise be beneficial, which may reduce the market price of our common stock.

We are currently relying on the “controlled company” exemption under NASDAQ Stock Market Listing Rules, pursuant to which “controlled companies” are exempt from certain corporate governance requirements otherwise applicable under NASDAQ listing rules.

The NASDAQ Stock Market Listing Rules exempt “controlled companies,” or companies of which more than 50% of the voting power is held by an individual, a group or another company, from certain corporate governance requirements, including those requirements that:

~~A majority of the Board of Directors consist of independent directors;~~

~~Compensation of officers be determined or recommended to the Board of Directors by a majority of its independent directors or by a compensation committee comprised solely of independent directors; and~~

~~Director nominees be selected or recommended to the Board of Directors by a majority of its independent directors or by a nominating committee that is composed entirely of independent directors.~~

We currently rely on the controlled company exemption for certain of the above requirements. Accordingly, our stockholders will not be afforded the same protections generally as stockholders of other NASDAQ-listed companies with respect to corporate governance for so long as we rely on these exemptions from the corporate governance requirements.

If we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in our reported financial information and our stock price and business may be adversely impacted.

As a public company, we are required to maintain internal control over financial reporting and our management is required to evaluate the effectiveness of our internal control over financial reporting as of the end of each fiscal year. Additionally, we are required to disclose in our Annual Reports on Form 10-K our management’s assessment of the effectiveness of our internal control over financial reporting and a registered public accounting firm’s attestation report on this assessment. If we are not successful in maintaining effective internal control over financial reporting, there could be inaccuracies or omissions in the consolidated financial information we are required to file with the SEC. Additionally, even if there are no inaccuracies or omissions, we could be required to publicly disclose the conclusion of our management that our internal control over financial reporting or disclosure controls and procedures are not effective. These events could cause investors to lose confidence in our reported financial information, adversely impact our stock price, result in increased costs to remediate any deficiencies, attract regulatory scrutiny or lawsuits that could be costly to resolve and distract management’s attention, limit our ability to access the capital markets or cause our stock to be delisted from NASDAQ or any other securities exchange on which we are then listed.

~~The market price and trading volume of our common stock may be volatile and may face negative pressure.~~

Our stock price has experienced, and could continue to experience in the future, substantial volatility. The market price of our common stock is affected by a number of factors, including the risk factors described in this section and other factors beyond our control. Factors affecting the trading price of our common stock could include:

~~Quarterly variations in our or our competitors’ results of operations;~~

~~Changes in earnings estimates or recommendations by securities analysts;~~

•

~~Failure to meet market expectations;~~

~~The announcement of new products or product enhancements by us or our competitors;~~

Repurchases of our common stock pursuant to our share repurchase program which could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock;

~~Developments in our industry, including changes in governmental regulations; and~~

~~General market conditions and other factors, including factors related to our operating performance or the operating performance of our competitors.~~

Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations and general economic, political and market conditions, such as recessions, interest rate changes or foreign currency exchange fluctuations, may negatively impact the market price of our common stock regardless of our actual operating performance.

~~Future sales of shares of our common stock in the public market, or the perception that such sales may occur, may depress our stock price.~~

For the nine months ended September 30, 2017, the average daily trading volume of our common stock on NASDAQ was approximately 2.9 million shares. If our existing stockholders or their distributees sell substantial amounts of our common stock in the public market, the market price of the common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares of common stock could also depress the trading price of our common stock. In addition, certain stockholders have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. If LTRIP or some other stockholder sells substantial amounts of our common stock in the public market, or if there is a perception in the public market that LTRIP might sell shares of our common stock, the market price of our common stock could decrease significantly. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities.

Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.

Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change of control of our company or changes in our Board of Directors that our stockholders might consider favorable. These provisions include:

~~Authorization and issuance of Class B common stock that entitles holders to ten votes per share;~~

~~Authorization of the issuance of preferred stock which can be created and issued by the Board of Directors without prior stockholder approval, with rights senior to those of our common stock;~~

~~Prohibiting our stockholders from filling board vacancies or calling special stockholder meetings; and~~

~~Limiting who may call special meetings of stockholders.~~

We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our Board of Directors or initiate actions that are opposed by our then-current Board of Directors, including a merger, tender offer or proxy contest involving our company. Any delay or prevention of a change of control transaction or changes in our Board of Directors could cause the market price of our common stock to decline.

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

Unregistered Sales of Equity Securities

During the quarter ended ~~September 30, 2017,~~March 31, 2022, we did not issue or sell any shares of our common stock, Class B common stock or other equity securities pursuant to unregistered transactions in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended.

Share Repurchases

~~On January 25, 2017,~~

During the quarter ended March 31, 2022, we did not repurchase any shares of our common stock under our existing share repurchase program. As of March 31, 2022, we had $75 million remaining available to repurchase shares of our common stock under our previously authorized share repurchase program.

While the Board of Directors authorized the repurchase of $250 million of our shares of common stock under a new share repurchase program. Our Board of Directors authorized and directed management, working with the Executive Committee of our Board of Directors to affecthas not suspended or terminated the share repurchase program, the terms of our Credit Agreement limit the Company from engaging in ~~compliance with applicable legal requirements.~~

Asshare repurchases and the terms of ~~June 30, 2017, we had repurchased a total of 6,079,003 shares of outstanding common stock under the~~our 2025 Indenture related to our 2025 Senior Notes impose certain limitations and restrictions on share ~~repurchase program at an average share price of approximately $41.13, or $250 million~~repurchases. Refer to “Note 6: Debt” in the ~~aggregate,~~notes to the unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report on Form 10-Q for further information about our Credit Agreement and ~~have completed this share repurchase program authorized by~~ our ~~Board of Directors. We did not repurchase any of our shares of common stock during the three months ended September 30, 2017.~~2025 Indenture.

Item 3. Defaults Upon Senior Securities

~~Not applicable.~~None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not ~~applicable.~~Applicable.

Item 6. Exhibits

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

Exhibit

Filed

Incorporated by Reference

No.

Exhibit Description

Herewith

Form

SEC File No.

Exhibit

Filing Date

10.1+

~~Executive Severance Plan~~RSU Agreement (Time-Based) between Stephen Kaufer and ~~Summary Plan Description~~Tripadvisor, Inc. dated ~~August 7, 2017~~as of December 31, 2021

~~10-Q~~

~~001-35362~~

~~10.4~~

~~8/8/17~~

~~31.1~~10.2+

Option Agreement (Domestic) between Stephen Kaufer and Tripadvisor, Inc. dated as of December 31, 2021

31.1

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

31.2

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

32.1

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

32.2

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

~~101~~101.INS

~~The following financial statements from~~Inline XBRL Instance Document - the ~~Company’s Quarterly Report on Form 10-Q for~~instance document does not appear in the period ended September 30, 2017, formatted in XBRL: (i) Unaudited Condensed Consolidated Statements of Operations, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income, (iii) Unaudited Condensed Consolidated Balance Sheets, (iv) Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity, (v) Unaudited Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

+ Indicates a management contract or a compensatory plan, contract or arrangement.

SIGNATURES

S~~IGNATURES~~

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.


~~TripAdvisor,~~Tripadvisor, Inc.
~~By:~~By		/s/ Ernst Teunissen
		Ernst Teunissen
		Chief Financial Officer

~~By:~~By		/s/ ~~Noel Watson~~Geoffrey Gouvalaris
		~~Noel Watson~~Geoffrey Gouvalaris
		Chief Accounting Officer

~~November 6, 2017~~May 4, 2022

5744


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


Class		Outstanding Shares at ~~November 1, 2017~~April 28, 2022
Common Stock, $0.001 par value per share		~~126,079,380~~126,819,417 shares
Class B common stock, $0.001 par value per share		12,799,999 shares


		Page
Part I—Financial Information
Item 1. Unaudited Condensed ~~Consolidated~~ Financial Statements
Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021		3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021		4
Unaudited Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2022 and December 31, ~~201~~20216		5
Unaudited Condensed Consolidated ~~Statement~~Statements of Changes in Stockholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 201~~March 31, 2022 and 20217		6
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021		7
Notes to Unaudited Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures about Market Risk		4041
Item 4. Controls and Procedures		41
Part II—Other Information
Item 1. Legal Proceedings		4142
Item 1A. Risk Factors		4142
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		5542
Item 3. Defaults Upon Senior Securities		5642
Item 4. Mine Safety Disclosures		5643
Item 5. Other Information		5643
Item 6. Exhibits		5643
Signatures		5744


	September 30,			December 31,			March 31,			December 31,
		2017			2016		2022			2021
ASSETS
Current assets:
Cash and cash equivalents (Note 5)	$	750		$	612
Short-term marketable securities (Note 5)		13			118
Accounts receivable, net of allowance for doubtful accounts of $15 and $9, respectively		254			189
Cash and cash equivalents (Note 4)							$	781		$	723
Accounts receivable and contract assets, net of allowance for credit losses of $29 and $28, respectively (Note 3)								180			142
Income taxes receivable (Note 7)								49			49
Prepaid expenses and other current assets		25			31			33			26
Total current assets		1,042			950			1,043			940
Long-term marketable securities (Note 5)		6			16
Property and equipment, net of accumulated depreciation of $166 and $111, respectively		266			260
Intangible assets, net of accumulated amortization of $107 and $80, respectively		150			167
Property and equipment, net of accumulated depreciation of $481 and $460, respectively								209			215
Operating lease right-of-use assets								39			42
Intangible assets, net of accumulated amortization of $204 and $202, respectively								62			65
Goodwill		756			736			839			843
Non-marketable investments (Note 4)								36			36
Deferred income taxes, net		58			42			54			54
Other long-term assets		70			67
Other long-term assets, net of allowance for credit losses of $10 and $10, respectively								90			94
TOTAL ASSETS	$	2,348		$	2,238		$	2,372		$	2,289

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	15		$	14		$	12		$	27
Deferred merchant payables		203			128			197			113
Deferred revenue		65			64
Current portion of debt (Note 6)		7			80
Taxes payable		4			10
Accrued expenses and other current liabilities		128			127
Deferred revenue (Note 3)								59			36
Accrued expenses and other current liabilities (Note 5)								199			181
Total current liabilities		422			423			467			357
Long-term debt (Note 6)		265			91			834			833
Finance lease obligation, net of current portion								63			65
Operating lease liabilities, net of current portion								25			29
Deferred income taxes, net		16			12			1			1
Other long-term liabilities		228			210			215			215
Total Liabilities		931			736			1,605			1,500

Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value		-			-
Stockholders’ equity: (Note 10)
Preferred stock, $0.001 par value								0			0
Authorized shares: 100,000,000
Shares issued and outstanding: 0 and 0
Common stock, $0.001 par value		-			-
Common stock, $0.001 par value								0			0
Authorized shares: 1,600,000,000
Shares issued: 135,510,995 and 134,706,467, respectively
Shares outstanding: 126,036,505 and 131,310,980, respectively
Class B common stock, $0.001 par value		-			-
Shares issued: 145,636,700 and 144,656,649, respectively
Shares outstanding: 126,792,086 and 125,812,035, respectively
Class B common stock, $0.001 par value								0			0
Authorized shares: 400,000,000
Shares issued and outstanding: 12,799,999 and 12,799,999, respectively
Shares issued and outstanding: 12,799,999 and 12,799,999, respectively
Additional paid-in capital		901			831			1,342			1,326
Retained earnings		1,010			945			207			241
Accumulated other comprehensive income (loss)		(47	)		(77	)		(60	)		(56	)
Treasury stock-common stock, at cost, 9,474,490 and 3,395,487 shares, respectively		(447	)		(197	)
Treasury stock-common stock, at cost, 18,844,614 and 18,844,614 shares, respectively								(722	)		(722	)
Total Stockholders’ Equity		1,417			1,502			767			789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,348		$	2,238		$	2,372		$	2,289

	Three months ended				Nine months ended
	September 30,				September 30,
	2017		2016		2017		2016
Net income	$	25	$	55	$	65	$	119
Other comprehensive income (loss):
Foreign currency translation adjustments (1)		10		3		30		4
Total other comprehensive income (loss)		10		3		30		4
Comprehensive income	$	35	$	58	$	95	$	123


	Three months ended March 31, 2022
															Accumulated
					Class B				Additional						other
	Common stock				common stock				paid-in			Retained			comprehensive			Treasury Stock
	Shares		Amount		Shares		Amount		capital			earnings			income (loss)			Shares			Amount			Total
Balance as of December 31, 2021		144,656,649	$	—		12,799,999	$	—	$	1,326		$	241		$	(56	)		(18,844,614	)	$	(722	)	$	789
Net income (loss)													(34	)											(34	)
Other comprehensive income (loss), net of tax																(4	)								(4	)
Issuance of common stock related to exercises of options and vesting of RSUs		980,051		—						—															—
Withholding taxes on net share settlements of equity awards										(8	)														(8	)
Stock-based compensation										24															24
Balance as of March 31, 2022		145,636,700	$	—		12,799,999	$	—	$	1,342		$	207		$	(60	)		(18,844,614	)	$	(722	)	$	767

	Three months ended March 31, 2021
															Accumulated
					Class B				Additional						other
	Common stock				common stock				paid-in			Retained			comprehensive			Treasury Stock
	Shares		Amount		Shares		Amount		capital			earnings			income (loss)			Shares			Amount			Total
Balance as of December 31, 2020		140,775,221	$	—		12,799,999	$	—	$	1,253		$	389		$	(34	)		(18,844,614	)	$	(722	)	$	886
Net income (loss)													(80	)											(80	)
Other comprehensive income (loss), net of tax																(12	)								(12	)
Issuance of common stock related to exercises of options and vesting of RSUs		2,139,630		—						7															7
Purchase of capped calls, net of tax of $9 million (Note 6)										(26	)														(26	)
Withholding taxes on net share settlements of equity awards										(23	)														(23	)
Stock-based compensation										33															33
Balance as of March 31, 2021		142,914,851	$	—		12,799,999	$	—	$	1,244		$	309		$	(46	)		(18,844,614	)	$	(722	)	$	785

	Three months ended September 30,				Nine months ended September 30,
	2017(1)		2016(2)		2017(1)		2016(2)
Stock options		4,643		3,065		4,626		2,997
RSUs		1,756		691		1,940		753
Total		6,399		3,756		6,566		3,750

	September 30, 2017
									Cash and		Short-Term		Long-Term
	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable		Marketable
	Cost		Gains		Losses		Value		Equivalents		Securities		Securities
Cash	$	747	$	-	$	-	$	747	$	747	$	-	$	-
Level 1:
Money market funds		2		-		-		2		2		-		-
Level 2:
U.S. agency securities		4		-		-		4		1		2		1
U.S. treasury securities		1		-		-		1		-		1		-
Certificates of deposit		2		-		-		2		-		1		1
Corporate debt securities		13		-		-		13		-		9		4
Subtotal		20		-		-		20		1		13		6
Total	$	769	$	-	$	-	$	769	$	750	$	13	$	6

	December 31, 2016
									Cash and		Short-Term		Long-Term
	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable		Marketable
	Cost		Gains		Losses		Value		Equivalents		Securities		Securities
Cash	$	595	$	-	$	-	$	595	$	595	$	-	$	-
Level 1:
Money market funds		17		-		-		17		17		-		-
Level 2:
U.S. agency securities		23		-		-		23		-		21		2
U.S. treasury securities		8		-		-		8		-		8		-
Certificates of deposit		16		-		-		16		-		15		1
Commercial paper		5		-		-		5		-		5		-
Corporate debt securities		82		-		-		82		-		69		13
Subtotal		134		-		-		134		-		118		16
Total	$	746	$	-	$	-	$	746	$	612	$	118	$	16

	Three months ended September 30, 2017
	Hotel		Non-Hotel		Corporate and Unallocated			Total
	(in millions)
Revenue	$	312	$	127	$	-		$	439
Adjusted EBITDA (1)	51			44		-			95
Depreciation						(19	)		(19	)
Amortization of intangible assets						(8	)		(8	)
Stock-based compensation						(26	)		(26	)
Operating income (loss)									42
Other expense, net									(4	)
Income before income taxes									38
Provision for income taxes									(13	)
Net income								$	25

	Three months ended September 30, 2016
	Hotel		Non-Hotel		Corporate and Unallocated			Total
	(in millions)
Revenue	$	320	$	101	$	-		$	421
Adjusted EBITDA (2)		99		15		-			114
Depreciation						(18	)		(18	)
Amortization of intangible assets						(8	)		(8	)
Stock-based compensation						(22	)		(22	)
Operating income (loss)									66
Other expense, net									(3	)
Income before income taxes									63
Provision for income taxes									(8	)
Net income								$	55

	Nine months ended September 30, 2017
	Hotel		Non-Hotel		Corporate and Unallocated			Total
	(in millions)
Revenue	$	952	$	283	$	-		$	1,235
Adjusted EBITDA (1)	223			46		-			269
Depreciation						(57	)		(57	)
Amortization of intangible assets						(25	)		(25	)
Stock-based compensation						(72	)		(72	)
Operating income (loss)									115
Other expense, net									(8	)
Income before income taxes									107
Provision for income taxes									(42	)
Net income								$	65

	Nine months ended September 30, 2016
	Hotel		Non-Hotel			Corporate and Unallocated			Total
	(in millions)
Revenue	$	939	$	225		$	-		$	1,164
Adjusted EBITDA (2)	309			(15	)		-			294
Depreciation							(51	)		(51	)
Amortization of intangible assets							(23	)		(23	)
Stock-based compensation							(64	)		(64	)
Operating income (loss)										156
Other expense, net										(10	)
Income before income taxes										146
Provision for income taxes										(27	)
Net income									$	119

March 31, 2022

December 31, 2021

(in millions)

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