TripAdvisor Inc

Previous wording

The Tripadvisor Group operates as a family of brands with a purpose of connecting people to experiences worth sharing. The Company's vision is to be the world’s most trusted source for travel and experiences. The Company operates across three business segments: Brand Tripadvisor, Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.

Current wording

The Tripadvisor Group operates as a family of brands with a purpose of connecting people to experiences worth sharing. The Company's vision is to be the world’s most trusted source for travel and experiences. The Company operates across three reportable segments: Brand Tripadvisor, Viator, and TheFork. We leverage our brands, technology platforms, and capabilities to connect our large, global audience with partners by offering rich content, travel guidance products and services, and two-sided marketplaces for experiences, accommodations, restaurants, and other travel categories.

Previous wording

The Brand Tripadvisor segment plays an important role in our portfolio. For over two decades, we believe we have built difficult to replicate assets such as a trusted brand, authentic content, a large community of contributors, and one of the largest global travel audiences available. Our long-term strategy for the Brand Tripadvisor segment builds on our heritage and the reasons hundreds of millions of travelers come to Tripadvisor each year. Fundamental to this strategy will be: (1) innovating and enhancing world-class travel guidance and planning products to help travelers make confident decisions in a world where it is hard to find advice you can trust; (2) prioritizing deeper engagement with travelers by leveraging our rich data and technology assets to provide more relevant, curated, and contextual content throughout the traveler journey; and (3) driving a step change in the value we can deliver to our partners by accelerating and diversifying the monetization of our valuable audience across key categories, including hotel meta, media advertising, and experiences.

Current wording

The Brand Tripadvisor segment plays an important role in our portfolio. For over two decades, we believe we have built difficult to replicate assets such as a trusted brand, authentic content, a large community of contributors, and one of the largest global travel audiences available. Our long-term strategy for the Brand Tripadvisor segment builds on our heritage and the reasons hundreds of millions of travelers come to Tripadvisor each year. Fundamental to this strategy will be: (1) innovating and enhancing world-class travel guidance and planning products to help travelers make confident decisions in a world where it is hard to find advice you can trust; (2) prioritizing deeper engagement with travelers, increasing members, and repeat customers by leveraging our rich data and technology assets to provide more relevant, curated, and contextual content throughout the traveler journey; and (3) driving a step change in the value we can deliver to our partners by accelerating and diversifying the monetization of our valuable audience across key categories, including hotel meta, media advertising, and experiences.

Previous wording

In our Viator and TheFork segments, we provide two-sided marketplaces that connect travelers and diners to operators of bookable experiences and restaurants, respectively. Within our Viator segment, we are investing in growth, future scale, and market share gains to accelerate our market leadership position, while improving unit economics on both sides of the marketplace that provide visibility to sustainable future profitability. This means driving awareness and higher quality audience engagement, which we believe will drive greater repeat behavior, more direct traffic, and translate into improved unit economics over time. Our investments on both sides of our marketplace, as well as in our primary offerings, are intended to deliver a differentiated value proposition that we believe will drive sustainable market leadership as our partners, operators, and travelers find themselves in an increasingly competitive marketplace environment. We are focused on continuing to grow both our supplier base and our user base by offering innovative tools and features on our branded platforms, and through continued awareness of our brand through marketing efforts.

Current wording

In our Viator and TheFork segments, we provide two-sided marketplaces that connect travelers and diners to operators of bookable experiences and restaurants, respectively. Within our Viator and TheFork segments, we are investing in growth, future scale, and market share gains to accelerate our market leadership position, while improving unit economics on both sides of the marketplace that provide visibility to sustainable future profitability. This means driving awareness and higher quality audience engagement, which we believe will drive greater repeat bookings, more direct traffic, and translate into improved unit economics over time. Our investments on both sides of our marketplace, as well as in our primary offerings, are intended to deliver a differentiated value proposition that we believe will drive sustainable market leadership as our partners, operators, and travelers find themselves in an increasingly competitive marketplace environment. We are focused on continuing to grow both our supplier base and our user base by offering innovative tools and features on our branded platforms, and through continued awareness of our brand through marketing efforts.

Previous wording

The online travel industry in which we operate is large, highly dynamic and competitive. We describe below current trends affecting our overall business and segments, including uncertainties that may impact our ability to execute on our objectives and strategies. Public health-related events, such as a pandemic, political instability, geopolitical conflicts, including the evolving events in the Middle East, acts of terrorism, fluctuations in currency values, and changes in global economic conditions, are examples of other events that could have a negative impact on the travel industry and, as a result, our financial results in the future.

Current wording

The online travel industry in which we operate is large, highly dynamic and increasingly competitive. We describe below current trends affecting our overall business and segments, including uncertainties that may impact our ability to execute on our objectives and strategies. Public health-related events, such as a pandemic, political instability, geopolitical conflicts, including the evolving events in the Middle East, acts of terrorism, fluctuations in currency values, and changes in global economic conditions, are examples of other events that could have a negative impact on the travel industry and, as a result, our financial results in the future.

Previous wording

Prior to Google introducing changes to its search engine results page (“SERP”), we generated a significant amount of direct traffic from search engines, such as Google, through strong search engine optimization (“SEO”) performance across all segments. We believe our SEO traffic acquisition performance has been negatively impacted in the past, and may be impacted in the future, by metasearch and search engines (primarily Google) changing their search result placement and underlying algorithms, including to increase the prominence of their own products in search results across our business, most notably within our hotel meta offering within our Brand Tripadvisor segment.

Current wording

Prior to Google introducing changes to its search engine results page (“SERP”), we generated a significant amount of direct traffic from search engines, including Google, through strong search engine optimization (“SEO”) performance across all segments. We believe our SEO traffic acquisition performance has been negatively impacted in the past, and may be impacted in the future, by metasearch and search engines (primarily Google) changing their search result placement and underlying algorithms, including to increase the prominence of their own products in search results across our business, most notably within our hotel meta offering within our Brand Tripadvisor segment.

Previous wording

In response to the large underpenetrated market for experiences, Viator continues to invest in marketing to drive awareness and grow market share in this attractive market. Over the long-term, we are focused on driving a greater percentage of our bookings from direct channels. We are doing this by continuing to focus on increasing our brand recognition and improving the user experience across products on our website and mobile app, providing high-quality customer service, and offering leading customer choice for online bookable experiences supply.

Current wording

In response to the large underpenetrated market for experiences, Viator continues to invest in marketing to drive awareness and grow market share. Over the long-term, we are focused on driving a greater percentage of our bookings from direct channels. We are doing this by continuing to focus on increasing our brand recognition and improving the user experience across products on our website and mobile app, providing high-quality customer service, and offering leading customer choice for online bookable experiences supply.

Previous wording

The global experiences market is large, growing, and highly fragmented, with the vast majority of bookings still occurring through traditional offline sources. We are observing a secular shift, however, as this market continues to grow and accelerate the pace of online adoption. Likewise, the global restaurants category is also benefiting from increased online adoption by both consumers and restaurant partners, particularly in Europe. Given the competitive positioning of our businesses relative to the attractive growth prospects in these categories, we expect to continue to invest in these categories across the Tripadvisor Group and, in particular, within the Viator and TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.

Current wording

The global experiences market is large, growing, and highly fragmented, with the vast majority of bookings still occurring through traditional offline sources. We are observing a secular shift, however, as this market continues to grow and accelerate the pace of online adoption. Likewise, the global restaurants category is also benefiting from increased online adoption by both consumers and restaurant partners, particularly in Europe. Given the competitive positioning of our businesses relative to the attractive growth prospects in these categories, we expect to continue to invest in these categories across Tripadvisor Group and, in particular, within the Viator and TheFork segments, to continue accelerating revenue growth, operating scale, and market share gains for the long-term.

Previous wording

As disclosed in our 2023 Annual Report, the Company received a NOPA issued by the IRS for the 2014, 2015, and 2016 tax years during August 2020. These proposed adjustments are related to certain transfer pricing arrangements with our foreign subsidiaries. We have previously requested competent authority assistance under MAP for these tax years. In January 2024, we received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which we accepted in February 2024. In the first quarter of 2024, we recorded additional income tax expense as a discrete item, inclusive of interest, of $46 million related to this settlement on our unaudited condensed consolidated statement of operations. We reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent open tax years during the first quarter of 2024, which resulted in an income tax benefit, inclusive of estimated interest, of $4 million. The net impact of these adjustments resulted in an incremental income tax expense on our unaudited condensed consolidated statement of operations of $42 million for the three months ended March 31, 2024. We anticipate this will result in an estimated net operating cash outflow of $110 million to $120 million, inclusive of related interest expense, to be substantially settled during the second quarter of 2024.

Current wording

As disclosed in our 2023 Annual Report, in August 2023, we received a NOPA from the IRS for the 2014 through 2016 tax years relating to certain transfer pricing arrangements with our foreign subsidiaries. In response, we requested competent authority assistance under the MAP for the 2014 through 2016 tax years. In January 2024, we received notification of a MAP resolution agreement for the 2014 through 2016 tax years, which we accepted in February 2024. During the six months ended June 30, 2024, we recorded additional income tax expense as a discrete item, inclusive of interest, of $45 million related to this settlement on our unaudited condensed consolidated statement of operations, including $46 million recorded during the first quarter of 2024. We reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent open tax years during the first quarter of 2024, which resulted in an income tax benefit, inclusive of estimated interest, of $4 million. During the three months ended June 30, 2024, we made a payment to the IRS of $141 million, inclusive of estimated interest, to satisfy this audit settlement. We anticipate a competent authority refund from a foreign jurisdiction and certain federal tax benefits, net of state tax payments due, associated with this IRS audit settlement which will be substantially settled in the next twelve months, resulting in an estimated net cash inflow of $25 million to $35 million, inclusive of related interest. Refer to “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 of this Quarterly Report for further information regarding potential material contingencies related to ongoing audits regarding income taxes.

Previous wording

As of March 31, 2024, the Company had approximately 2,829 employees. Approximately 59%, 35%, and 6% of the Company’s current employees are based in Europe, the U.S., and the rest of world (“ROW”), respectively. Additionally, we use independent contractors to supplement our workforce. We believe we have good relationships with our employees and contractors, including relationships with employees represented by international works councils or other similar organizations.

Current wording

As of June 30, 2024, the Company had approximately 2,850 employees. Approximately 59%, 35%, and 6% of the Company’s current employees are based in Europe, the U.S., and the rest of world (“ROW”), respectively. Additionally, we use independent contractors to supplement our workforce. We believe we have good relationships with our employees and contractors, including relationships with employees represented by international works councils or other similar organizations.

Previous wording

Brand Tripadvisor segment revenue decreased by $4 million during the three months ended March 31, 2024, when compared to the same period in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue, partially offset by an increase in Tripadvisor experiences revenue and media and advertising revenue.

Current wording

Brand Tripadvisor segment revenue decreased by $29 million and $33 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue.

Previous wording

Adjusted EBITDA in our Brand Tripadvisor segment increased $6 million during the three months ended March 31, 2024 when compared to the same period in 2023, while adjusted EBITDA margin increased by 3 percentage points during the three months ended March 31, 2024 when compared to the same period in 2023. The improvement in adjusted EBITDA was primarily due to a decrease in direct selling and marketing expenses related to search engine marketing (“SEM”) and other online paid traffic acquisition costs of $9 million, and personnel and overhead costs driven by a reduction in headcount related to cost reduction measures taken during 2023. These improvements were partially offset by a decrease in revenue as noted above, and an increase in direct revenue generation costs related to data center and media production costs, primarily in media and advertising. The improvement in adjusted EBITDA margin during the three months ended March 31, 2024 when compared to the same period in 2023, was largely due to the decrease of selling and marketing costs as a percent of revenue related to more efficient marketing spend, primarily generating Tripadvisor experiences revenue.

Current wording

Adjusted EBITDA in our Brand Tripadvisor segment decreased by $12 million and $7 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, while adjusted EBITDA margin remained constant and increased 1 percentage point during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. The decrease in Adjusted EBITDA was primarily due to a decrease in revenue as noted above, and to a lesser extent, an increase in brand advertising costs, direct revenue generation costs related to data center and media production costs, primarily in media and advertising, partially offset by a decrease in direct selling and marketing expenses related to online paid traffic acquisition costs, and personnel and overhead costs driven by a reduction in headcount related to cost reduction measures taken during 2023. The improvement in adjusted EBITDA margin during the six months ended June 30, 2024, when compared to the same period in 2023, was largely due to the decrease of selling and marketing costs as a percent of revenue, partially offset by an increase in cost of revenue direct costs and technology and content personnel costs as a percent of revenue.

Previous wording

Tripadvisor-branded hotels revenue decreased $9 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue. The decrease in our hotel meta revenue was primarily driven by our European hotel meta revenue and, to a lesser extent, U.S. and ROW hotel meta revenue, as well as an increased competitive environment in paid online marketing channels and product decisions we have implemented to provide more qualified referrals to our partners, leading to a decrease in click volumes. This decrease in click volumes was partially offset by continued strength in hotel meta monetization in the U.S. and ROW, as cost-per-click (“CPC”) rates remained robust when compared to the same period in 2023.

Current wording

Tripadvisor-branded hotels revenue decreased by $24 million and $34 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decrease in our hotel meta revenue and, to a lesser extent, a decrease in hotel B2B revenue, as the Company transitions from a sales-led model to a self-service model. The decrease in our hotel meta revenue was primarily driven by declines in our U.S. and European hotel meta revenue and, to a lesser extent, ROW hotel meta revenue, primarily due to weaker demand due to increased competition in paid online marketing channels and continued headwinds impacting free channels, or SEO, during the second quarter of 2024, contributing to a decrease in click volumes.

Previous wording

Media and advertising revenue consists of revenue from display-based advertising (or “media advertising”) across our Tripadvisor Group platform and increased by $3 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily driven by an increase in marketing spend from our advertisers in correlation with increased consumer demand.

Current wording

Media and advertising revenue consists of revenue from display-based advertising (or “media advertising”) across our Tripadvisor Group platform and decreased $1 million during the three months ended June 30, 2024, and increased $1 million during the six months ended June 30, 2024, when compared to the same periods in 2023, partially due to the timing of certain advertising campaigns.

Previous wording

Tripadvisor experiences and dining revenue, which includes intercompany (intersegment) revenue consisting of affiliate marketing commissions earned primarily from experience bookings and, to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, are eliminated on a consolidated basis, in addition to revenue earned from Tripadvisor's restaurants service offerings. Tripadvisor experiences and dining revenue increased $3 million during the three months ended March 31, 2024 when compared to the same period in 2023, driven by strong consumer demand for experiences, combined with enhancements to our websites and mobile apps, partially offset by a decline in dining revenue as we move from a sales-led model to a self-service model.

Current wording

Tripadvisor experiences and dining revenue, which includes intercompany (intersegment) revenue consisting of affiliate marketing commissions earned primarily from experience bookings and, to a lesser extent, restaurant reservation bookings on Tripadvisor-branded websites and mobile apps, fulfilled by Viator and TheFork, respectively, are eliminated on a consolidated basis, in addition to revenue earned from Tripadvisor's restaurants service offerings. Tripadvisor experiences and dining revenue decreased $2 million during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to a decline in dining revenue as we move from a sales-led model to a self-service model, and to a lesser extent some deceleration in experiences growth during the second quarter. Tripadvisor experiences and dining revenue increased $1 million during the six months ended June 30, 2024, when compared to the same period in 2023, driven by experiences revenue, mostly offset by a decline in dining revenue as we move from a sales-led model to a self-service model, as noted above.

Previous wording

Other revenue includes alternative accommodation rentals revenue, in addition to click-based advertising and display-based advertising revenue from our cruise, flights, and rental cars offerings on Tripadvisor websites and mobile apps. Other revenue decreased $1 million during the three months ended March 31, 2024 when compared to the same period in 2023 primarily due to a decline in alternative accommodation rentals revenue, partially offset by an increase in cruise revenue.

Current wording

Other revenue includes alternative accommodation rentals revenue, in addition to click-based advertising and display-based advertising revenue from our cruise, flights, and rental cars offerings on Tripadvisor websites and mobile apps. Other revenue decreased $2 million and $1 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to a decline in alternative accommodation rentals revenue, partially offset by an increase in cruise revenue.

Previous wording

Viator segment revenue increased by $26 million during the three months ended March 31, 2024 when compared to the same period in 2023, driven by strong consumer demand for experiences across all geographies, including growth in both bookings and pricing of experiences, as well as, enhancements to our websites and mobile apps. In addition, and to a lesser extent, Viator benefited from incremental demand due to the timing of the Easter holiday, which fell during the first quarter in 2024, while occurring in the second quarter in 2023. Viator is also benefiting from a larger macro trend, as the large global market in which it operates continues to grow and migrate online from traditional offline sources.

Current wording

Viator segment revenue increased by $28 million and $54 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, driven by consumer demand for experiences across all geographies, driving growth in bookings. The increase in revenue during the three months ended June 30, 2024, when compared to the same period in 2023, was slightly offset by the timing of the Easter holiday during the second quarter of 2023, while the Easter holiday occurred during the first quarter in 2024, and as noted above, some deceleration in growth in the Brand Tripadvisor point-of-sale during the second quarter of 2024. We continue to believe that Viator is benefiting from a larger macro trend, as the large global market in which it operates continues to grow and migrate online from traditional offline sources.

Previous wording

Adjusted EBITDA loss in our Viator segment improved by $3 million during the three months ended March 31, 2024 when compared to the same period in 2023, and adjusted EBITDA margin improved by 7 percentage points during the three months ended March 31, 2024 when compared to the same period in 2023. The improvement in adjusted EBITDA was primarily due to an increase in revenue as noted above, partially offset by an increase in selling and marketing expenses related to SEM and other online paid traffic acquisition costs of $15 million, in response to strong consumer demand for experiences and increased investment to grow market share, acquire new customers, and drive brand awareness. In addition, increases in personnel and overhead costs to support business growth related to strong consumer demand and, to a lesser extent, an increase in revenue generation costs resulting from credit card payments in direct correlation with the increase in revenue negatively impacted adjusted EBITDA. The improvement in adjusted EBITDA margin during the three months ended March 31, 2024 when compared to the same period in 2023 was primarily due to the timing of the Easter holiday, as discussed above, and a decrease of selling and marketing costs as a percent of revenue.

Current wording

Adjusted EBITDA in our Viator segment improved by $12 million and $13 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, and adjusted EBITDA margin improved by 5 percentage points and 4 percentage points during three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. These improvements in adjusted EBITDA were primarily due to increased leverage as we scale the business and drive greater bookings from more profitable repeat customers. These improvements were partially offset by our continued investment in marketing in response to consumer demand for experiences and increased investment to grow market share, acquire new customers, and drive brand awareness. In addition, increased personnel and overhead costs to support business growth and invest in our product experience and, to a lesser extent, increased digital service taxes, and an increase in revenue generation costs resulting from credit card payments in direct correlation with the increase in revenue, all negatively impacted adjusted EBITDA. The improvements in adjusted EBITDA margin were primarily due to a decrease in selling and marketing costs as a percent of revenue.

Previous wording

TheFork segment revenue increased by $6 million during the three months ended March 31, 2024 when compared to the same period in 2023. This improvement was driven by increased consumer demand for dining in Europe, including increased bookings and pricing, during the first quarter of 2024 when compared to the same period in 2023.

Current wording

TheFork segment revenue increased by $4 million and $10 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. These improvements were driven by increased consumer demand for dining in Europe, including increased bookings and pricing, during the three and six months ended June 30, 2024, when compared to the same periods in 2023.

Previous wording

March 31, 2024 when compared to the same period in 2023. The improvement in adjusted EBITDA was primarily due to an increase in revenue as noted above and, to a lesser extent, lower personnel and overhead costs. The improvement in adjusted EBITDA margin during the three months ended March 31, 2024 when compared to the same period in 2023, was primarily due to the decrease of selling and marketing costs as a percent of revenue related to more efficient marketing spend and lower personnel and overhead costs.

Current wording

Adjusted EBITDA in TheFork segment improved by $7 million and $14 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, while adjusted EBITDA margin improved by 18 percentage points and 19 percentage points during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. The improvement in adjusted EBITDA was primarily due to an increase in revenue as noted above, and lower personnel and overhead costs. The improvement in adjusted EBITDA margin was primarily due to lower personnel and overhead costs as a percent of revenue, and to a lesser extent, selling and marketing costs as a percent of revenue as a result of efficient marketing spend.

Previous wording

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, media production costs, ad serving fees, and other revenue generating costs. In addition, cost of revenue includes personnel and overhead expenses, including salaries, benefits, stock-based compensation and bonuses for certain customer support personnel who are directly involved in revenue generation.

Current wording

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, including cloud-based solutions, media production costs, ad serving fees, and other revenue generating costs. In addition, cost of revenue includes personnel and overhead expenses, including salaries, benefits, stock-based compensation and bonuses for certain customer support personnel who are directly involved in revenue generation.

Previous wording

Cost of revenue increased $6 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to increased direct costs from credit card payment processing fees and other revenue-related transaction costs in our Viator segment in direct correlation with the increase in revenue, as Viator serves as the merchant of record for the significant majority of its experience booking transactions, as well as increased direct revenue generation costs related to data center costs and media production costs in our Brand Tripadvisor segment.

Current wording

Cost of revenue increased $5 million and $11 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. The increase in cost of revenue was primarily due to increased direct revenue generation costs related to data center costs and media production costs in our Brand Tripadvisor segment, as well as, increased direct costs from credit card payment processing fees and other revenue-related transaction costs in our Viator segment in direct correlation with the increase in revenue, as Viator serves as the merchant of record for the significant majority of its experience booking transactions.

Previous wording

Direct selling and marketing costs increased $4 million during the three months ended March 31, 2024 when compared to the same period in 2023, while direct selling and marketing costs as a percentage of consolidated revenue was 43% during the three months ended March 31, 2024, a slight decrease from 44% when compared to the same period in 2023. This incremental expense was primarily driven by an increase in paid online traffic acquisition costs, including SEM and other paid online traffic acquisition spend, incurred within our Viator segment to capture strong consumer demand, including increased investment within our Viator segment to grow market share, partially offset by a decrease in SEM spend in our Brand Tripadvisor segment.

Current wording

Direct selling and marketing costs as a percentage of consolidated revenue was 42% during both the three and six months ended June 30, 2024, a slight decrease from 43% when compared to the same periods in 2023. Direct selling and marketing costs decreased by $4 million and remained flat during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily driven by a decrease in paid online traffic acquisition costs in Brand Tripadvisor of $17 million and $26 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023. These decreases were partially offset by an increase in paid online traffic acquisition costs in Viator of $9 million and $24 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, to capture consumer demand, including increased investment within our Viator segment to grow market share, acquire new customers, and drive brand awareness.

Previous wording

Technology and content costs increased $8 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to increased personnel and overhead costs resulting from additional headcount to support business growth within the Viator and Brand Tripadvisor segments.

Current wording

Technology and content costs increased $4 million and $12 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to increased personnel and overhead costs resulting from additional headcount to support business growth and our strategic initiatives within our Viator and Brand Tripadvisor segments, respectively.

Previous wording

Personnel and overhead costs decreased $2 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily driven by a reduction in headcount related to our cost-reduction measures taken during 2023 in our Brand Tripadvisor segment.

Current wording

Personnel and overhead costs increased by $2 million and remained flat during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily driven by an increase in stock-based compensation of $4 million and $5 million, respectively, largely offset by a reduction in headcount related to cost reduction measures taken during 2023 in our Brand Tripadvisor segment.

Previous wording

Interest expense did not change materially during the three months ended March 31, 2024 when compared to the same period in 2023, as our capital structure did not change significantly. The majority of interest expense reported during the three months ended March 31, 2024 and 2023 was related to the 2025 Senior Notes. Refer to “Note 6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on the 2025 Senior Notes.

Current wording

Interest expense did not change materially during the three and six months ended June 30, 2024 when compared to the same periods in 2023, as our capital structure did not change significantly as of June 30, 2024. The majority of interest expense reported during the three and six months ended June 30, 2024 and 2023 was related to the 2025 Senior Notes. Refer to “Note 6: Debt” and “Note 14: Subsequent Events” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on material capital structure changes subsequent to June 30, 2024.

Previous wording

Interest income increased $2 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to an increase in the average amount of cash invested and increased interest rates received on bank deposits, as well as an increase in interest earned on money market funds during the quarter.

Current wording

Interest income increased $1 million and $3 million during the three and six months ended June 30, 2024, respectively, when compared to the same periods in 2023, primarily due to an increase in the average amount of cash invested and increased interest rates received on bank deposits, as well as an increase in interest earned on money market funds during the three and six months ended June 30, 2024.

Previous wording

Other expense, net increased $2 million during the three months ended March 31, 2024 when compared to the same period in 2023, primarily due to net foreign exchange gains and losses incurred as a result of foreign currency movements.

Current wording

Other expense, net decreased $1 million during the three months ended June 30, 2024, when compared to the same period in 2023, primarily due to net foreign exchange gains and losses incurred as a result of foreign currency movements. Other expense, net increased $2 million during the six months ended June 30, 2024, when compared to the same period in 2023, primarily due to a loss on disposal of certain assets, partially offset by net foreign exchange gains and losses incurred as a result of foreign currency movements.

Previous wording

Our first quarter of 2024 effective tax rate differs from the U.S. federal statutory rate of 21%, primarily as a result of a discrete item recorded during the quarter, as described below.

Current wording

Our effective tax rate for the three months ended June 30, 2024 differs from the U.S. federal statutory rate of 21%, primarily due to state taxes and unfavorable stock-based compensation tax effects. Our effective tax rate for the six months ended June 30, 2024 differs from the U.S. federal statutory rate of 21%, primarily as a result of a discrete item recorded during the first quarter of 2024, as described below.

Previous wording

We recorded an income tax provision of $43 million for the three months ended March 31, 2024. The change in our income tax provision and our effective tax rate during the three months ended March 31, 2024, when compared to the same period in 2023, was primarily the result of an IRS audit settlement and the related adjustment to our existing transfer pricing income tax reserves for subsequent tax years, totaling a net of $42 million, recorded during the three months ended March 31, 2024. During the three months ended March 31, 2023, we recorded a net income tax expense of $55 million related to an IRS audit settlement and related adjustment to existing transfer pricing income tax reserves for subsequent tax years. Refer to “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information.

Current wording

We recorded an income tax provision of $14 million and $57 million for the three and six months ended June 30, 2024, respectively. The change in our income tax provision and our effective tax rate during the six months ended June 30, 2024, when compared to the same period in 2023, was primarily the result of an IRS audit settlement, which we recorded additional income tax expense as a discrete item, inclusive of interest, of $45 million related to this settlement on our unaudited condensed consolidated statement of operations, including $46 million recorded during the first quarter of 2024. In addition, we reviewed the impact of the acceptance of this settlement position against our existing transfer pricing income tax reserves for the subsequent open tax years during the first quarter of 2024, which resulted in an income tax benefit, inclusive of estimated interest, of $4 million. During the three months ended March 31, 2023, we recorded a net income tax expense of $55 million related to an IRS audit settlement and related adjustment to existing transfer pricing income tax reserves for subsequent tax years. Refer to “Note 8: Income Taxes” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information.

Previous wording

Net loss improved by $14 million during the three months ended March 31, 2024 when compared to the same period in 2023. The improvement in net loss was largely driven by increased revenue, as described in more detail above under “Revenue and Segment Information”, as well as a decrease in income tax expense of $15 million, as described in more detail above under “(Provision) Benefit for Income Taxes”. These improvements were largely offset by increased direct selling and marketing costs in response to strong consumer demand and investment to grow market share in our experiences offerings, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue, increased personnel and overhead costs in technology and content to support the business growth, and an estimated accrual for the potential settlement of a regulatory related matter of $10 million, during the three months ended March 31, 2024, all of which is described in more detail above under “Consolidated Expenses.”

Current wording

Net loss improved by $14 million during the six months ended June 30, 2024 when compared to the same period in 2023. The improvement in net loss was largely driven by increased revenue, as described in more detail above under “Revenue and Segment Information”, a decrease in income tax expense of $21 million, as described in more detail above under “(Provision) Benefit for Income Taxes”, as well as a decrease in direct selling and marketing costs and personnel and overhead costs primarily in our Brand Tripadvisor segment, as described in more detail above under “Consolidated Expenses”. These improvements were largely offset by increased direct selling and marketing costs in response to consumer demand and investment to grow market share in our experiences offerings, increased direct revenue generation costs related to data center costs and media production costs in our Brand Tripadvisor segment, as well as, increased direct costs from credit card payment and other revenue-related transaction costs in direct correlation with the increase in experiences revenue, increased personnel and overhead costs to support growth in our Viator segment, and an estimated accrual for the potential settlement of a regulatory related matter of $10 million during the first quarter of 2024, all of which is described in more detail above under “Consolidated Expenses.”

Previous wording

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 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 ongoing core 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) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived asset, and intangible assets impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income.

Current wording

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 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 ongoing core 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) benefit for income taxes; (2) other income (expense), net; (3) depreciation and amortization; (4) stock-based compensation and other stock-settled obligations; (5) goodwill, long-lived asset, and intangible assets impairments; (6) legal reserves and settlements, including indirect tax reserves related to audit settlements and the impact of one-time changes resulting from enacted tax legislation; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income.

Previous wording

The Company expensed certain transaction costs of $1 million during the first quarter of 2024 to general and administrative expenses on our unaudited condensed consolidated statement of operations. The Company expensed $3 million of previously capitalized transaction costs during the first quarter of 2023 to general and administrative expenses on our unaudited condensed consolidated statement of operations. The Company considers such costs to be non-recurring in nature.

Current wording

The Company expensed certain transaction costs of $2 million and $3 million during the three and six months ended June 30, 2024, respectively, to general and administrative expenses on our unaudited condensed consolidated statements of operations. The Company expensed $3 million of previously capitalized transaction costs during the first quarter of 2023 to general and administrative expenses on our unaudited condensed consolidated statement of operations. The Company considers such costs to be non-recurring in nature.

Previous wording

Represents an estimated accrual for the potential settlement of a regulatory related matter of $10 million expensed during the first quarter of 2024 to general and administrative expenses on our unaudited condensed consolidated statement of operations.

Current wording

Includes a one-time charge of $4 million during the second quarter of 2024, resulting from enacted tax legislation in Canada during June 2024 related to digital services taxes, which requires retrospective application back to January 1, 2022. This amount represents the one-time retrospective liability for the periods prior to April 1, 2024, while the liability for the three months ended June 30, 2024 and all prospective periods are and will be included within adjusted EBITDA. In addition, this amount includes an estimated accrual for the potential settlement of a regulatory related matter of $10 million, expensed during the first quarter of 2024. These costs are reflected in general and administrative expenses on our unaudited condensed consolidated statements of operations.

Previous wording

For information on our relationship with LTRIP, which may be deemed to beneficially own equity securities representing approximately 57% of our voting power as of March 31, 2024, refer to “Note 1: Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report. We had no related party transactions with LTRIP during the three months ended March 31, 2024 and 2023.

Current wording

For information on our relationship with LTRIP, which may be deemed to beneficially own equity securities representing approximately 57% of our voting power as of June 30, 2024, refer to “Note 1: Basis of Presentation” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report. We had no related party transactions with LTRIP during both of the three and six months ended June 30, 2024 and 2023.

Previous wording

Refer to “Note 10: Stock Based Awards and Other Equity Instruments” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on current year equity award activity, including the issuance of approximately 4.9 million service-based RSUs with a weighted average grant-date fair value of $26.84 during the three months ended March 31, 2024.

Current wording

Refer to “Note 10: Stock Based Awards and Other Equity Instruments” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report for further information on current year equity award activity, including the issuance of approximately 5.3 million service-based RSUs with a weighted average grant-date fair value of $26.49 during the six months ended June 30, 2024.

Previous wording

Our principal source of liquidity is cash flow generated from operations and our existing cash and cash equivalents balance. Our liquidity needs can also be met through drawdowns under the Credit Facility. As of March 31, 2024 and December 31, 2023, we had approximately $1.2 billion and $1.1 billion, respectively, of cash and cash equivalents, and $497 million of available borrowing capacity under the Credit Facility. As of March 31, 2024, approximately $192 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which approximately 35% was located in the U.K. As of March 31, 2024, the significant majority of our cash was denominated in U.S. dollars.

Current wording

Our principal source of liquidity is cash flow generated from operations and our existing cash and cash equivalents balance. Our liquidity needs can also be met through drawdowns under the Credit Facility. As of June 30, 2024 and December 31, 2023, we had approximately $1.2 billion and $1.1 billion, respectively, of cash and cash equivalents, and $497 million of available borrowing capacity under the Credit Facility. As of June 30, 2024, $226 million of our cash and cash equivalents were held by our international subsidiaries outside of the U.S., of which approximately 41% was held in the U.K. As of June 30, 2024, the significant majority of our cash was denominated in U.S. dollars.

Previous wording

As of March 31, 2024, we had $469 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of March 31, 2024, 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.

Current wording

As of June 30, 2024, we had $537 million of cumulative undistributed earnings in foreign subsidiaries that are no longer considered to be indefinitely reinvested. As of June 30, 2024, 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.

Previous wording

As of March 31, 2024, we are party to a credit agreement, which, among other things, provides for a $500 million revolving credit facility (the “Credit Facility”) with a maturity date of June 29, 2028 (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such specified debt is $200 million or more, then the maturity date will be such business day). As of March 31, 2024 and December 31, 2023, we had no outstanding borrowings under the Credit Facility. We are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.25% to 0.40%, on the daily unused portion of the Credit Facility for each fiscal quarter and in connection with the issuance of letters of credit. As of March 31, 2024, our unused revolver capacity was subject to a commitment fee of 0.25%, given the Company’s total net leverage ratio. The Credit Facility, among other things, requires us to maintain a maximum total net leverage ratio and contains certain customary affirmative and negative covenants and events of default, including for a change of control. As of March 31, 2024 and December 31, 2023, we 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 total net leverage ratio covenant in the future, based on our current projections, we do not believe there is a material risk that we will not remain in compliance throughout the next twelve months.

Current wording

As of June 30, 2024, we are party to a credit agreement, which, among other things, provides for a $500 million revolving Credit Facility with a maturity date of June 29, 2028 (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such specified debt is $200 million or more, then the maturity date will be such business day). As of June 30, 2024 and December 31, 2023, we had no outstanding borrowings under the Credit Facility. We are required to pay a quarterly commitment fee, at an applicable rate ranging from 0.25% to 0.40%, on the daily unused portion of the Credit Facility for each fiscal quarter and in connection with the issuance of letters of credit. As of June 30, 2024, our unused revolver capacity was subject to a commitment fee of 0.25%, given the Company’s total net leverage ratio. The Credit Facility, among other things, requires us to maintain a maximum total net leverage ratio and contains certain customary affirmative and negative covenants and events of default, including for a change of control. As of June 30, 2024 and December 31, 2023, we 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 total net leverage ratio covenant in the future, based on our current projections, we do not believe there is a material risk that we will not remain in compliance throughout the next twelve months.

Previous wording

For further information related to the Credit Facility, 2025 Senior Notes, and 2026 Senior Notes, refer to “Note 6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report.

Current wording

For further information on the Credit Agreement, the Credit Facility, the Term Loan B Facility, the 2025 Senior Notes and 2026 Senior Notes, refer to “Note 6: Debt” in the notes to our unaudited condensed consolidated financial statements in Item 1 in this Quarterly Report.

Previous wording

On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a share repurchase program. This share repurchase program, which has a term of two years, does not obligate the Company to acquire any particular number of shares and may be modified, suspended or discontinued at any time. During the three months ended March 31, 2024, the Company did not repurchase any shares of outstanding common stock under the share repurchase program. As of March 31, 2024, we had $225 million remaining available to repurchase shares of our common stock under this share repurchase program.

Current wording

On September 7, 2023, our Board of Directors authorized the repurchase of $250 million in shares of our common stock under a share repurchase program. This share repurchase program, which has a term of two years, does not obligate the Company to acquire any particular number of shares and may be modified, suspended or discontinued at any time. During the three months ended June 30, 2024, we repurchased 1,366,385 shares of our outstanding common stock at an average price of $18.28 per share, exclusive of fees and commissions, or $25 million in the aggregate. As of June 30, 2024, we had $200 million remaining available to repurchase shares of our common stock under this share repurchase program. During the three months ended June 30, 2023, we repurchased 4,724,729 shares of our outstanding common stock at an average price of $15.85 per share, exclusive of fees and commissions, or $75 million in the aggregate, which completed a previous share repurchase program.