trip-ex991

NEEDHAM, MA, February 11, 2016 — TripAdvisor, Inc. (NASDAQ: TRIP) today reported financial results for the fourth quarter and full year ended December 31, 2015.

“The fourth quarter capped off an important year for our business, as we continue building the best end-to-end user experience in travel,” said Steve Kaufer, TripAdvisor’s President and Chief Executive Officer. “User reviews and opinions reached 320 million and our content continues to attract the world’s largest global travel audience. We are building on those advantages by launching instant booking globally, and enabling more users to seamlessly book places to stay, things to do and places to eat – all conveniently on TripAdvisor.”

	Three Months Ended December 31,							Year Ended December 31,
In millions, except percentages and per share amounts	2015		2014		% Change			2015		2014		% Change
Revenue	$	309	$	288		7	%	$	1,492	$	1,246		20	%
Adjusted EBITDA (1)	$	87	$	98		(11	)%	$	466	$	468		0	%
Net Income:
GAAP (2)	$	3	$	36		(92	)%	$	198	$	226		(12	)%
Non-GAAP (1)	$	66	$	52		27	%	$	302	$	284		6	%

Diluted Earnings per Share:
GAAP (2)	$	0.02	$	0.25		(92	)%	$	1.36	$	1.55		(12	)%
Non-GAAP (1)	$	0.45	$	0.35		29	%	$	2.05	$	1.93		6	%

Cash flow from operating activities	$	74	$	62		19	%	$	382	$	387		(1	)%
Free cash flow (1)	$	58	$	36		61	%	$	273	$	306		(11	)%

Chief Financial Officer Ernst Teunissen added, “Fourth quarter Revenue and Adjusted EBITDA results were solid in light of significant currency headwinds and our accelerated rollout of instant booking. Looking ahead to 2016, though instant booking will continue to dilute our near-term results, it positions our business for significant long-term growth.”

Revenue for the fourth quarter of 2015 was $309 million, an increase of $21 million, or 7%. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by approximately 12%.

	Three Months Ended December 31,
In millions, except percentages	2015			2014			% Change
Revenue by Segment:
Hotel	$	260		$	251			4	%
Other		49			37			32	%
Total Revenue	$	309		$	288			7	%

Revenue by Product:
Click-based advertising	$	180		$	181			(1	)%
Display-based advertising		42			36			17	%
Subscription, transaction and other		87			71			23	%
Total Revenue	$	309		$	288			7	%

Revenue by Geography (% of total):
North America		53	%		51	%
EMEA		29	%		31	%
APAC		13	%		12	%
LATAM		5	%		6	%

GAAP costs and expenses for the fourth quarter of 2015 were $334 million, an increase of 46% from the fourth quarter of 2014, primarily due to a $67 million non-cash contribution to settle our pledge obligation with the Foundation that was settled in company stock, or $59 million of incremental charitable contributions expense during the quarter.

Adjusted EBITDA for the fourth quarter of 2015 was $87 million, and Adjusted EBITDA margin was 28%. Hotel Segment Adjusted EBITDA was $95 million for a 37% Adjusted EBITDA margin and Other Segment Adjusted EBITDA was negative $8 million, for a negative 16% Adjusted EBITDA margin.

GAAP net income for the fourth quarter of 2015 was $3 million, or $0.02 per diluted share, primarily due to an incremental $36 million after-tax charitable contribution expense over the fourth quarter of 2014, to settle our pledge obligation with the Foundation.

Non-GAAP net income for the fourth quarter of 2015 increased 27% to $66 million, or $0.45 per diluted share.

Cash flow from operating activities for the fourth quarter of 2015 was $74 million, an increase of $12 million year-over-year, or 19%.

Cash and cash equivalents, short and long term marketable securities were $698 million as of December 31, 2015, an increase of $104 million year-over-year.

Employees - TripAdvisor had 3,008 employees as of December 31, 2015, compared to 2,781 at December 31, 2014 and 2,961 employees at September 30, 2015.

TripAdvisor has posted supplemental financial information and an investor presentation on the Investor Relations section of TripAdvisor’s website at http://ir.tripadvisor.com. TripAdvisor will host a conference call today, February 11, 2015, at 8:00 a.m., Eastern Time, to discuss TripAdvisor’s fourth quarter and full year 2015 operating results, as well as other forward-looking information about TripAdvisor’s business. Domestic callers may access the earnings conference call by dialing (877) 224-9081 (International callers, dial (224) 357-2223). Investors and other interested parties may also go to the Investor Relations section of TripAdvisor’s website at http://ir.tripadvisor.com/events.cfm for a live webcast of the conference call. Please access the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the conference call, including Q&A, will be available on TripAdvisor’s website noted above or by phone (dial (855) 859-2056 and enter the passcode 12684756) until February18, 2015 and the webcast will be accessible at http://ir.tripadvisor.com/events.cfm for at least twelve months following the conference call.

TripAdvisor^® is the world's largest travel site**, enabling travelers to plan and book the perfect trip. TripAdvisor offers trusted advice from real travelers and a wide variety of travel choices and planning features with seamless links to booking tools that check hundreds of websites to find the best hotel prices. TripAdvisor branded sites make up the largest travel community in the world, reaching 350 million average monthly unique visitors, and reached 320 million reviews and opinions covering 6.2 million accommodations, restaurants and attractions. The sites operate in 47 countries worldwide.

TripAdvisor^® (NASDAQ:TRIP), through its subsidiaries, manages and operates websites under 23 other travel media brands: www.airfarewatchdog.com, www.bookingbuddy.com, www.cruisecritic.com, www.everytrail.com, www.familyvacationcritic.com, www.flipkey.com, www.thefork.com (including www.lafourchette.com, www.eltenedor.com, www.iens.nl, www.besttables.com and www.dimmi.com.au), www.gateguru.com, www.holidaylettings.co.uk, www.holidaywatchdog.com, www.independenttraveler.com, www.jetsetter.com, www.niumba.com, www.onetime.com, www.oyster.com, www.seatguru.com, www.smartertravel.com, www.tingo.com, www.travelpod.com, www.tripbod.com, www.vacationhomerentals.com, www.viator.com, and www.virtualtourist.com.

	Three Months Ended									Year Ended
	December 31, 2015			September 30, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Revenue	$	309		$	415		$	288		$	1,492		$	1,246
Costs and expenses:
Cost of revenue		12			16			12			58			40
Selling and marketing (1)		145			197			115			692			502
Technology and content (1)		55			54			46			207			171
General and administrative (1)(2)		96			37			34			210			128
Depreciation		16			13			14			57			47
Amortization of intangible assets		10			10			7			36			18
Total costs and expenses		334			327			228			1,260			906
Operating income (loss)		(25	)		88			60			232			340
Other income (expense), net		(1	)		10			(5	)		7			(18	)
Income (loss) before income taxes		(26	)		98			55			239			322
Benefit (provision) for income taxes		29			(24	)		(19	)		(41	)		(96	)
Net income	$	3		$	74		$	36		$	198		$	226
Earnings per share attributable to common stockholders:
Basic	$	0.02		$	0.51		$	0.25		$	1.38		$	1.58
Diluted	$	0.02		$	0.51		$	0.25		$	1.36		$	1.55
Weighted average common shares outstanding:
Basic		144			144			143			144			143
Diluted		146			146			146			146			146
(1) Includes stock-based compensation expense as follows:
Selling and marketing	$	4		$	4		$	3		$	16		$	13
Technology and content	$	8		$	8		$	8		$	28		$	27
General and administrative	$	7		$	7		$	6		$	28		$	23

	December 31,			December 31,
		2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	614		$	455
Short-term marketable securities		47			108
Accounts receivable, net of allowance for doubtful accounts of $6 and $7 at December 31, 2015 and December 31, 2014, respectively		180			151
Prepaid expenses and other current assets		24			23
Total current assets		865			737
Long-term marketable securities		37			31
Property and equipment, net		247			195
Intangible assets, net		176			214
Goodwill		732			734
Other long-term assets		71			37
TOTAL ASSETS	$	2,128		$	1,948
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	10		$	19
Deferred merchant payables		105			93
Deferred revenue		64			57
Current portion of debt		1			78
Taxes payable		9			20
Accrued expenses and other current liabilities		123			114
Total current liabilities		312			381
Deferred income taxes, net		15			29
Other long-term liabilities		189			154
Long-term debt		200			259
Total Liabilities		716			823

Stockholders’ equity:
Preferred stock, $0.001 par value		—			—
Authorized shares: 100,000,000
Shares issued and outstanding: 0 and 0
Common stock, $0.001 par value		—			—
Authorized shares: 1,600,000,000
Shares issued: 133,836,242 and 132,315,465
Shares outstanding: 132,443,111 and 130,121,292
Class B common stock, $0.001 par value		—			—
Authorized shares: 400,000,000
Shares issued and outstanding: 12,799,999 and 12,799,999
Additional paid-in capital		741			673
Retained earnings		826			628
Accumulated other comprehensive income (loss)		(63	)		(31	)
Treasury stock-common stock, at cost, 1,393,131 and 2,194,173 shares		(92	)		(145	)
Total Stockholders’ Equity		1,412			1,125
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,128		$	1,948

	Three Months Ended									Year Ended
	December 31, 2015			September 30, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Operating activities:
Net income	$	3		$	74		$	36		$	198		$	226
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment, including amortization of internal-use software and website development		16			13			14			57			47
Amortization of intangible assets		10			10			7			36			18
Stock-based compensation expense		19			19			17			72			63
Non-cash contribution to charitable foundation		67			—			—			67			—
Gain on sale of business		(3	)		(17	)		—			(20	)		—
Deferred tax (benefit) expense		(41	)		(5	)		(9	)		(37	)		(17	)
Excess tax benefits from stock-based compensation		(4	)		(2	)		—			(36	)		(20	)
Other, net		2			7			5			9			18
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:		5			(91	)		(8	)		36			52

Net cash provided by operating activities		74			8			62			382			387
Investing activities:
Capital expenditures, including internal-use software and website development		(16	)		(39	)		(26	)		(109	)		(81	)
Acquisitions, net of cash acquired		—			—			(47	)		(29	)		(331	)
Proceeds from sale of business, net of cash sold		3			22			—			25			—
Purchases of marketable securities		(55	)		(58	)		(32	)		(205	)		(251	)
Sales of marketable securities		115			27			11			187			336
Maturities of marketable securities		19			30			5			71			93
Net cash provided by (used in) investing activities		66			(18	)		(89	)		(60	)		(234	)
Financing activities:
Proceeds from Chinese credit facilities		—			—			2			4			13
Payments to Chinese credit facilities		—			—			—			(41	)		(3	)
Principal payments on term loan		—			—			(10	)		(300	)		(40	)
Proceeds from revolving credit facility, net of financing costs		—			—			—			287			—
Payments to revolving credit facility		(90	)		—			—			(90	)		—
Proceeds from exercise of stock options		3			—			1			12			3
Payment of minimum withholding taxes on net share settlements of equity awards		(7	)		(3	)		(1	)		(73	)		(33	)
Excess tax benefits from stock-based compensation		4			2			—			36			20
Other financing activities, net		—			1			2			12			(1	)
Net cash used in financing activities		(90	)		—			(6	)		(153	)		(41	)
Effect of exchange rate changes on cash and cash equivalents		(3	)		(6	)		(3	)		(10	)		(8	)
Net increase (decrease) in cash and cash equivalents		47			(16	)		(36	)		159			104
Cash and cash equivalents at beginning of period		567			583			491			455			351
Cash and cash equivalents at end of period	$	614		$	567		$	455		$	614		$	455

	Three Months Ended
	December 31, 2015			September 30, 2015			December 31, 2014			Q/Q Growth			Y/Y Growth
REVENUE:
Hotel	$	260		$	340		$	251			(24	)%		4	%
Other		49			75			37			(35	)%		32	%
Total revenue	$	309		$	415		$	288			(26	)%		7	%
Adjusted EBITDA (1):
Hotel	$	95		$	121		$	100			(21	)%		(5	)%
Other		(8	)		9			(2	)		(189	)%		(300	)%
Total Adjusted EBITDA	$	87		$	130		$	98			(33	)%		(11	)%
Adjusted EBITDA Margin (1):
Hotel		37	%		36	%		40	%
Other		(16	)%		12	%		(5	)%


	Year ended December 31,									% Change
	2015			2014			2013			2015 vs. 2014			2014 vs. 2013
REVENUE:
Hotel	$	1,263		$	1,135		$	899			11	%		26	%
Other		229			111			46			106	%		141	%
Total revenue	$	1,492		$	1,246		$	945			20	%		32	%
Adjusted EBITDA (1):
Hotel	$	472		$	472		$	384			0	%		23	%
Other		(6	)		(4	)		(5	)		(50	)%		20	%
Total Adjusted EBITDA	$	466		$	468		$	379			0	%		23	%
Adjusted EBITDA Margin (1):
Hotel		37	%		42	%		43	%
Other		(3	)%		(4	)%		(11	)%

To supplement our unaudited consolidated financial statements, which are prepared and presented in GAAP in our press release and related conference call or webcast, we also report certain non-GAAP financial measures. A “non-GAAP financial measure” refers to a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in such company’s financial statements. We use the following non-GAAP measures: non-GAAP selling and marketing expense, non-GAAP technology and content expense, non-GAAP general and administrative expense, non-GAAP net income, non-GAAP diluted shares, non-GAAP net income per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, non-GAAP revenue before effects of foreign exchange, non-GAAP click-based advertising revenue before effects of foreign exchange, non-GAAP hotel segment revenue before effects of foreign exchange, and Adjusted EBITDA before effects of foreign exchange.

The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of TripAdvisor’s liquidity. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, as defined in our non-GAAP definitions below, which are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, even where similarly titled, limiting their usefulness for comparison purposes and therefore should not be used to compare TripAdvisor’s performance to that of other companies. We endeavor to compensate for the limitation of the non-GAAP financial measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP financial measures.

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

TripAdvisor defines “non-GAAP Selling and Marketing”, “non-GAAP Technology and Content” and “non-GAAP General and Administrative” expenses as GAAP Selling and Marketing, GAAP Technology and Content and GAAP General and Administrative expenses, respectively, before stock-based compensation expense and other stock-settled obligations, and other non-recurring expenses.

TripAdvisor defines “non-GAAP net income” as GAAP net income excluding, net of their related tax effects: (1) stock-based compensation expense and other stock-settled obligations; (2) amortization of intangible assets; (3) certain gains, losses, and other expenses that we do not believe are indicative of our ongoing operating results; (4) goodwill, long-lived assets and intangible asset impairments and (5) other non-recurring expenses. Non-GAAP net income generally captures all items on the statements of operations that occur in normal course of operations that have been, or ultimately will be, settled in cash, except for depreciation, which management believes is an ongoing cost of doing business.

TripAdvisor defines “non-GAAP net income per diluted share” as non-GAAP net income divided by non-GAAP diluted shares. Non-GAAP diluted shares includes potential dilution from options calculated using the treasury stock method under GAAP plus weighted average shares for all outstanding RSUs.

TripAdvisor defines “Adjusted EBITDA” as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) depreciation of property and equipment, including amortization of internal use software and website development; (4) amortization of intangible assets; (5) stock-based compensation and other stock-settled obligations; (6) goodwill, long-lived assets and intangible asset impairments; and (7) other non-recurring expenses. Adjusted EBITDA is the primary metric by which management evaluates the performance of its business and on which internal budgets and forecasts are based. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. We believe that by excluding certain non-cash expenses, such as stock-based compensation, stock-settled obligations, asset impairments, amortization and other expense, Adjusted EBITDA corresponds more closely to the cash that operating income generated from our business and allows investors to gain an understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made and debt is serviced.

TripAdvisor defines “Adjusted EBITDA margin” as Adjusted EBITDA as a percentage of revenue.

TripAdvisor defines “free cash flow” as net cash provided by operating activities less capital expenditures, which are purchases of property and equipment, including capitalization of internal-use software development costs. We believe this financial measure can provide useful supplemental information to help investors better understand underlying trends in our business.

TripAdvisor calculates our foreign exchange effect of revenue or, “non-GAAP revenue before effects of foreign exchange”, “non-GAAP click-based advertising revenue before effects of foreign exchange” and “non-GAAP hotel segment before effects of foreign exchange” on a constant currency basis by excluding the effects of foreign exchange on revenue by translating actual revenue for the current year three months and year ended using the prior year's quarterly average exchange rates for our settlement currencies other than the U.S. dollar. We believe this is a useful metric that facilitates comparison to our historical performance.

TripAdvisor calculates our foreign exchange effect of Adjusted EBITDA or, “Adjusted EBITDA before effects of foreign exchange,” on a constant currency basis, by excluding the effects of foreign exchange by translating all amounts included in Adjusted EBITDA for the current year three months and year ended using the prior year's quarterly average exchange rates for our settlement currencies other than the U.S. dollar. We believe this is a useful metric that facilitates comparison to our historical performance.

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

(in millions, except share amounts which are reflected in thousands, and per share amounts and percentages)

	Three Months Ended									Year Ended
	December 31, 2015			September 30, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Non-GAAP operating expenses:
GAAP Selling and marketing	$	145		$	197		$	115		$	692		$	502
Subtract: Stock-based compensation expense		4			4			3			16			13
Non-GAAP Selling and marketing	$	141		$	193		$	112		$	676		$	489
GAAP Technology and content	$	55		$	54		$	46		$	207		$	171
Subtract: Stock-based compensation expense		8			8			8			28			27
Non-GAAP Technology and content	$	47		$	46		$	38		$	179		$	144
GAAP General and administrative (2)	$	96		$	37		$	34		$	210		$	128
Subtract: Stock-based compensation expense and other non-recurring expenses		7			7			6			30			23
Subtract: Non-cash charitable contribution (1)		67			-			-			67			-
Non-GAAP General and administrative	$	22		$	30		$	28		$	113		$	105
Non-GAAP net income and net income per share:
GAAP net income (2)	$	3		$	74		$	36		$	198		$	226
Add: Stock-based compensation expense		19			19			17			72			63
Add: Amortization of intangible assets		10			10			7			36			18
Add: Non-cash charitable contribution (1)		67			-			-			67			-
Add: Other non-recurring expenses		-			-			-			2			-
Subtract: Gain on sale of business		3			17			-			20			-
Subtract: Income tax effect of Non-GAAP adjustments (3)		30			8			8			53			23
Non-GAAP net income	$	66		$	78		$	52		$	302		$	284
GAAP diluted shares		146,211			145,828			145,680			145,967			145,800
Add: Additional restricted stock units		1,257			1,327			1,107			1,279			992
Non-GAAP diluted shares		147,468			147,155			146,787			147,246			146,792
GAAP net income per diluted share	$	0.02		$	0.51		$	0.25		$	1.36		$	1.55
Non-GAAP net income per diluted share		0.45			0.53			0.35			2.05			1.93

Adjusted EBITDA:
GAAP net income (2)	$	3		$	74		$	36		$	198		$	226
Add: Provision (benefit) for income taxes		(29	)		24			19			41			96
Add: Other expense (income), net		1			(10	)		5			(7	)		18
Add: Depreciation and amortization of intangible assets		26			23			21			93			65
Add: Stock-based compensation		19			19			17			72			63
Add: Non-cash charitable contribution (1)		67			-			-			67			-
Add: Other non-recurring expenses		-			-			-			2			-
Adjusted EBITDA	$	87		$	130		$	98		$	466		$	468

Divide by:
Revenue	$	309		$	415		$	288		$	1,492		$	1,246
Adjusted EBITDA margin		28	%		31	%		34	%		31	%		38	%

Free Cash Flow:
Net cash provided by operating activities	$	74		$	8		$	62		$	382		$	387
Subtract: Capital expenditures		16			39			26			109			81
Free cash flow	$	58		$	(31	)	$	36		$	273		$	306

	Three Months Ended							Year Ended
	December 31, 2015			September 30, 2015		December 31, 2014		December 31, 2015			December 31, 2014
Revenue Before Effects of Foreign Exchange:
Total Revenue	$	309		$	415	$	288	$	1,492		$	1,246
Effects of foreign exchange		13			27		6		92			(2	)
Non-GAAP revenue before effects of foreign exchange	$	322		$	442	$	294	$	1,584		$	1,244
Year/Year Growth (4)		12	%						27	%
Click-based Advertising Revenue Before Effects of Foreign Exchange:
Click-based advertising revenue	$	180		$	261	$	181	$	956		$	870
Effects of foreign exchange		10			21		5		71			(1	)
Non-GAAP click-based advertising revenue before effects of foreign exchange	$	190		$	282	$	186	$	1,027		$	869
Year/Year Growth (4)		5	%						18	%
Hotel Segment Revenue Before Effects of Foreign Exchange:
Total hotel segment revenue	$	260		$	340	$	251	$	1,263		$	1,135
Effects of foreign exchange		10			21				74
Non-GAAP hotel segment revenue before effects of foreign exchange	$	270		$	361			$	1,337
Year/Year Growth (4)		8	%						18	%
Adjusted EBITDA Before Effects of Foreign Exchange:
Adjusted EBITDA	$	87		$	130	$	98	$	466		$	468
Effects of foreign exchange		9			20		5		69			14
Adjusted EBITDA before effects of foreign exchange	$	96		$	150	$	103	$	535		$	482
Year/Year Growth (4)		(2	)%						14	%

Statements in this press release regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, including, without limitation, statements relating to TripAdvisor’s future financial performance on both a GAAP and non-GAAP basis, and the company’s prospects as a comprehensive destination for hotels, attractions, and restaurants, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by our chief executive officer with respect to growth objectives, strategic investments, and statements regarding management’s plans, objectives and strategies, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors detailed in TripAdvisor’s filings with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, TripAdvisor’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. TripAdvisor is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.