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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2024

OR

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

For the transition period from                             to

Commission File Number 001-36603

LIBERTY TRIPADVISOR HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

46-3337365
(I.R.S. Employer
Identification No.)

12300 Liberty Boulevard, Englewood, Colorado 80112

(Address, including zip code, of Registrant’s principal executive offices)

Registrant’s telephone number, including area code: (720875-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Series A common stock

LTRPA

OTCQB Venture Market

Series B common stock

LTRPB

OTCQB Venture Market

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 every Interactive Data File required to be submitted 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 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.

Large Accelerated Filer

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

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 number of outstanding shares of Liberty TripAdvisor Holdings, Inc. common stock as of October 31, 2024 was:

Series A

Series B

Liberty TripAdvisor Holdings, Inc. common stock

73,084,484

4,232,532

Table of Contents

Table of Contents

Part I – Financial Information

Item 1. Financial Statements

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Balance Sheets (unaudited)

I-3

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Operations (unaudited)

I-5

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)

I-6

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (unaudited)

I-7

LIBERTY TRIPADVISOR HOLDINGS, INC. Condensed Consolidated Statements of Equity (unaudited)

I-8

LIBERTY TRIPADVISOR HOLDINGS, INC. Notes to Condensed Consolidated Financial Statements (unaudited)

I-10

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

I-26

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-37

Item 4. Controls and Procedures

I-38

Part II Other Information

Item 1. Legal Proceedings

II-1

Item 1A. Risk Factors

II-1

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

II-1

Item 5. Other Information

II-1

Item 6. Exhibits

II-2

SIGNATURES

II-3

I-2

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(unaudited)

    

September 30,

    

December 31,

 

2024

2023

 

amounts in millions

 

Assets

Current assets:

Cash and cash equivalents

$

1,127

 

1,090

Accounts receivable and contract assets, net of allowance for credit losses of $28 million and $21 million, respectively

 

243

 

192

Income taxes receivable

46

3

Other current assets

 

62

 

39

Total current assets

 

1,478

 

1,324

Property and equipment, net

 

81

 

87

Intangible assets not subject to amortization:

Goodwill

 

1,392

 

1,387

Trademarks

 

525

 

522

 

1,917

 

1,909

Intangible assets subject to amortization, net

 

122

 

116

Other assets

 

145

 

124

Total assets

$

3,743

 

3,560

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

    

September 30,

    

December 31,

 

2024

2023

 

amounts in millions

 

Liabilities and Equity

Current liabilities:

Deferred merchant and other payables

$

423

 

265

Current portion of debt, including $309 million measured at fair value as of September 30, 2024

 

314

 

Deferred revenue

 

61

 

49

Series A Preferred Stock liability (note 6)

265

Accrued liabilities and other current liabilities

 

306

 

262

Total current liabilities

 

1,369

 

576

Long-term debt, including $0 and $287 million measured at fair value as of September 30, 2024 and December 31, 2023, respectively (note 5)

 

886

 

1,180

Deferred income tax liabilities

 

31

 

49

Financial instrument liabilities (note 4)

21

Series A Preferred Stock liability (note 6)

249

Other liabilities

 

163

 

253

Total liabilities

 

2,449

 

2,328

Equity:

Series A common stock, $.01 par value. Authorized 200,000,000 shares; issued and outstanding 73,084,484 shares at September 30, 2024 and 73,066,321 at December 31, 2023

1

1

Series B common stock, $.01 par value. Authorized shares 7,500,000; issued and outstanding 4,232,532 shares at September 30, 2024 and 4,057,532 at December 31, 2023

Series C common stock, $.01 par value. Authorized 200,000,000 shares; no shares issued

Additional paid-in capital

304

307

Accumulated other comprehensive earnings (loss), net of taxes

 

 

(2)

Retained earnings (deficit)

 

(737)

 

(724)

Total stockholders' equity

 

(432)

 

(418)

Noncontrolling interests in equity of subsidiaries

 

1,726

 

1,650

Total equity

 

1,294

 

1,232

Commitments and contingencies (note 8)

Total liabilities and equity

$

3,743

 

3,560

See accompanying notes to condensed consolidated financial statements.

I-4

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended

 

Nine months ended

 

September 30,

 

September 30,

 

    

2024

    

2023

    

2024

    

2023

 

amounts in millions, except

 

per share amounts

 

Total revenue, net

$

532

533

1,424

1,398

Operating costs and expenses:

Operating expense, including stock-based compensation (note 2)

 

120

 

109

352

318

Selling, general and administrative, including stock-based compensation (note 2)

 

325

 

324

926

915

Depreciation and amortization

 

21

 

21

63

63

Impairment of goodwill and intangible assets

1,025

1,025

Restructuring and other related reorganization costs (benefits)

(1)

18

1

18

 

465

 

1,497

1,342

2,339

Operating income (loss)

 

67

 

(964)

82

(941)

Other income (expense):

Interest expense

 

(19)

 

(17)

(53)

(50)

Dividend and interest income

13

13

39

36

Realized and unrealized gains (losses) on financial instruments, net

3

(8)

12

(1)

Other, net

 

(2)

 

(2)

(6)

(4)

 

(5)

 

(14)

(8)

(19)

Earnings (loss) before income taxes

 

62

 

(978)

74

(960)

Income tax (expense) benefit

 

(27)

 

14

(84)

(63)

Net earnings (loss)

 

35

 

(964)

(10)

(1,023)

Less net earnings (loss) attributable to noncontrolling interests

 

31

 

(730)

3

(768)

Net earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders

$

4

 

(234)

(13)

(255)

Basic net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):

$

0.05

(3.04)

(0.17)

 

(3.36)

Diluted net earnings (loss) attributable to Series A and Series B Liberty TripAdvisor Holdings, Inc. shareholders per common share (note 3):

$

0.05

(3.04)

(0.17)

 

(3.36)

See accompanying notes to condensed consolidated financial statements.

I-5

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2024

2023

2024

2023

amounts in millions

Net earnings (loss)

$

35

(964)

(10)

(1,023)

Other comprehensive earnings (loss), net of taxes:

Foreign currency translation adjustments

 

20

(13)

9

(8)

Credit risk on fair value debt instruments gains (loss)

6

(1)

(8)

Reclassification adjustments included in net income (loss), net of tax

3

Other comprehensive earnings (loss)

 

26

(14)

12

(16)

Comprehensive earnings (loss)

 

61

(978)

2

(1,039)

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

47

(741)

13

(775)

Comprehensive earnings (loss) attributable to Liberty TripAdvisor Holdings, Inc. shareholders

$

14

(237)

(11)

(264)

See accompanying notes to condensed consolidated financial statements.

I-6

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LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Nine months ended

 

September 30,

 

2024

2023

 

amounts in millions

 

Cash flows from operating activities:

    

    

    

    

Net earnings (loss)

$

(10)

 

(1,023)

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities

Depreciation and amortization

 

63

 

63

Impairment of goodwill and intangible assets

1,025

Stock-based compensation

 

93

 

74

Realized and unrealized (gains) losses on financial instruments, net

(12)

1

Deferred income tax expense (benefit)

 

(24)

 

(61)

Non-cash interest expense

20

18

Other charges (credits), net

 

6

 

3

Changes in operating assets and liabilities

Current and other assets

 

(107)

 

(16)

Payables and other liabilities

 

110

 

164

Net cash provided (used) by operating activities

 

139

 

248

Cash flows from investing activities:

Capital expended for property and equipment, including capitalized website development

 

(51)

 

(47)

Net cash provided (used) by investing activities

 

(51)

 

(47)

Cash flows from financing activities:

Borrowings of debt

500

Repayments of debt

 

(500)

 

Payment of withholding taxes on net share settlements of equity awards

 

(17)

 

(14)

Shares repurchased by subsidiary

(25)

(75)

Other financing activities, net

(13)

(8)

Net cash provided (used) by financing activities

 

(55)

 

(97)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

 

4

 

(7)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

37

 

97

Cash, cash equivalents and restricted cash at beginning of period

 

1,090

 

1,053

Cash, cash equivalents and restricted cash at end of period

$

1,127

 

1,150

See accompanying notes to condensed consolidated financial statements.

I-7

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Equity

(unaudited)

Stockholders' equity

Accumulated

Noncontrolling

Additional

other

interest in

Common Stock

paid-in

comprehensive

Retained

equity of

Total

Series A

Series B

Series C

capital

earnings (loss)

earnings (deficit)

subsidiaries

equity

amounts in millions

Balance at January 1, 2024

    

$

1

    

    

    

307

    

(2)

    

(724)

    

1,650

    

1,232

Net earnings (loss)

 

 

(13)

    

3

    

(10)

Other comprehensive earnings (loss)

 

2

 

    

10

    

12

Stock-based compensation

22

 

 

    

80

    

102

Withholding taxes on net share settlements of stock-based compensation

(17)

 

 

    

    

(17)

Shares issued by subsidiary

(3)

3

Shares repurchased by subsidiary

(5)

(20)

(25)

Balance at September 30, 2024

$

1

 

 

 

304

 

 

(737)

    

1,726

    

1,294

Stockholders' equity

Accumulated

Noncontrolling

Additional

other

interest in

Common Stock

paid-in

comprehensive

Retained

equity of

Total

Series A

Series B

Series C

capital

earnings (loss)

earnings (deficit)

subsidiaries

equity

amounts in millions

Balance at June 30, 2024

$

1

300

(10)

(741)

1,652

1,202

Net earnings (loss)

4

31

35

Other comprehensive earnings (loss)

10

16

26

Stock-based compensation

7

27

34

Withholding taxes on net share settlements of stock-based compensation

(3)

(3)

Balance at September 30, 2024

$

1

304

(737)

1,726

1,294

See accompanying notes to condensed consolidated financial statements.

I-8

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Condensed Consolidated Statements of Equity (continued)

(unaudited)

Stockholders' equity

Accumulated

Noncontrolling

Additional

other

interest in

Common Stock

paid-in

comprehensive

Retained

equity of

Total

Series A

Series B

Series C

capital

earnings (loss)

earnings (deficit)

subsidiaries

equity

amounts in millions

Balance at January 1, 2023

    

$

1

    

    

    

287

    

9

    

(439)

    

2,404

    

2,262

Net earnings (loss)

 

 

(255)

    

(768)

    

(1,023)

Other comprehensive earnings (loss)

 

(9)

 

    

(7)

    

(16)

Stock-based compensation

19

 

 

    

63

    

82

Withholding taxes on net share settlements of stock-based compensation

(14)

(14)

Shares issued by subsidiary

(6)

6

Shares repurchased by subsidiary

24

(99)

(75)

Balance at September 30, 2023

$

1

 

 

 

310

 

 

(694)

    

1,599

    

1,216

Stockholders' equity

 

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Common Stock

paid-in

comprehensive

Retained

equity of

Total

 

Series A

Series B

Series C

capital

earnings (loss)

earnings (deficit)

subsidiaries

equity

 

amounts in millions

 

Balance at June 30, 2023

$

1

 

 

 

307

 

3

 

(460)

    

2,317

    

2,168

Net earnings (loss)

(234)

(730)

(964)

Other comprehensive earnings (loss)

(3)

(11)

(14)

Stock-based compensation

7

21

28

Withholding taxes on net share settlements of stock-based compensation

(2)

(2)

Shares issued by subsidiary

(2)

2

Balance at September 30, 2023

$

1

 

 

 

310

 

 

(694)

    

1,599

    

1,216

See accompanying notes to condensed consolidated financial statements.

I-9

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Liberty TripAdvisor Holdings, Inc. and its controlled subsidiaries (collectively, "TripCo," "Consolidated TripCo," the "Company," "we," "us," or “our,” unless the context otherwise requires). TripCo does not have any operations outside of its controlling interest in its subsidiary Tripadvisor, Inc. (“Tripadvisor”).

The accompanying (a) condensed consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with the current period presentation, none of which were material to the presentation of the accompanying unaudited condensed consolidated financial statements. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2023 as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Under the accounting guidance in Accounting Standards Codification Topic 205, Presentation of Financial Statements (“ASC 205”), when preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As a result of the considerations articulated below, we believe there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

In applying the accounting guidance in ASC 205, TripCo considered its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its conditional and unconditional obligations due over the twelve months after the date that its financial statements were issued. The Company specifically considered the redemption of the Series A Preferred Stock and TripCo’s 0.50% Exchangeable Senior Debentures due 2051 (the “Debentures”) in its analysis.  

As disclosed in note 6, TripCo’s 8% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) is required to be redeemed for cash on March 27, 2025.  As of September 30, 2024, the Redemption Price (as defined in note 6) of the Series A Preferred Stock was $266 million. As disclosed in note 5, the Debentures may be redeemed by TripCo, in whole or in part, on or after March 27, 2025. Holders of the Debentures also have the right to require TripCo to purchase their Debentures on March 27, 2025. As of September 30, 2024, the fair value of the Debentures was $309 million. If all holders exchanged their Debentures on March 27, 2025 and upon the redemption of the Company’s Series A Preferred Stock, TripCo would not have sufficient cash on hand to cover these obligations as of September 30, 2024. We note that Tripadvisor has sufficient cash to cover these obligations, but TripCo does not have ready access to Tripadvisor’s cash.

On February 9, 2024, TripCo’s board of directors authorized TripCo to engage in discussions with respect to a potential transaction (“Potential Transaction”), pursuant to which all of the outstanding stock of TripCo and all of the outstanding common stock and Class B common stock of Tripadvisor, would be acquired concurrently for cash. The board of directors of Tripadvisor has formed a special committee comprised of independent and disinterested directors of the board of directors of Tripadvisor (“Special Committee”). TripCo and the Special Committee have ceased discussions with third parties with respect to a Potential Transaction. Strategic alternatives with respect to TripCo remain under consideration. In light of current circumstances, management’s plans do not alleviate the substantial doubt that the entity will continue as a going concern.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) recognition and recoverability of goodwill, intangible and long-lived assets and (ii) accounting for income taxes to be its most significant estimates.

Tripadvisor and the Company were negatively impacted by the risks and uncertainties related to the COVID-19 pandemic and Tripadvisor’s business would be adversely and materially affected upon a resurgence of COVID-19 or the emergence of any new pandemic or other health crisis that results in reinstated travel bans and/or other government restrictions and mandates. Following the lifting of restrictions in connection with the COVID-19 pandemic, travel demand increased. In addition, the U.S. and other countries have seen elevated and fluctuating levels of inflation and decreases in discretionary spending patterns by consumers. If macroeconomic conditions deteriorate, consumer demand and spending may decline, Tripadvisor may not be able to pass on increased costs to its customers and any inability to navigate the macroeconomic environment could harm its business, results of operations and financial condition.

Additionally, natural disasters, public health-related events, 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, Tripadvisor’s financial results in the future.

Consumer travel expenditures have historically followed a seasonal pattern. Correspondingly, travel partner advertising investments, and therefore Tripadvisor’s revenue and operating profits, have also historically followed a seasonal pattern. Tripadvisor’s financial performance tends to be seasonally highest in the second and third quarters of a given year, which includes the seasonal peak in consumer demand, including traveler accommodation stays, and travel experiences taken, compared to the first and fourth quarters, which represent seasonal low points. In addition, during the first half of the year, experience bookings typically exceed the amount of completed experiences, 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, such as significant shifts in Tripadvisor’s business mix, adverse economic conditions, or public health-related events, as well as other factors.

TripCo has entered into certain agreements, including the services agreement, the facilities sharing agreement and the tax sharing agreement, with Qurate Retail, Inc. (“Qurate Retail”) and/or Liberty Media Corporation (“Liberty Media”) (or certain of their subsidiaries).  Pursuant to the services agreement (except as described below in respect to Gregory B. Maffei), Liberty Media provides TripCo with general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. TripCo reimburses Liberty Media for direct, out-of-pocket expenses incurred by Liberty Media in providing these services and TripCo pays a services fee to Liberty Media under the services agreement that is subject to adjustment semi-annually, as necessary.

Pursuant to the services agreement, in connection with Liberty Media’s employment arrangement with Gregory B. Maffei, TripCo’s Chairman, President and Chief Executive Officer, components of Mr. Maffei’s compensation will either be paid directly to him or reimbursed to Liberty Media, in each case, based on allocations among Liberty Media and the Service Companies set forth in the amended services agreement, currently set at 5% for the Company but subject to adjustment on an annual basis and upon the occurrence of certain events.

Under the facilities sharing agreement, TripCo shares office space with Liberty Media and related amenities at Liberty Media’s corporate headquarters in Englewood, Colorado.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and TripCo and other agreements related to tax matters.

Under these agreements approximately $1 million was reimbursable to Liberty Media for both of the three months ended September 30, 2024 and 2023, and approximately $2 million was reimbursable to Liberty Media for both of the nine months ended September 30, 2024 and 2023.

(2) Stock-Based Compensation

TripCo - Equity Awards

TripCo has granted to certain of its directors and employees restricted stock units (“RSUs”) and stock options to purchase shares of TripCo common stock (collectively, “Awards”). TripCo measures the cost of employee services received in exchange for an equity classified Award based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award).  The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and re-measures the fair value of the Award at each reporting date.

TripCo has calculated the GDFV for all of its equity classified options and any subsequent re-measurement of its liability classified options using the Black-Scholes-Merton model. TripCo estimates the expected term of the options based on historical exercise and forfeiture data. The volatility used in the calculation for options is based on the historical volatility of TripCo common stock. TripCo uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, the majority of which relates to Tripadvisor as discussed below:

Three months ended

 

Nine months ended

 

September 30,

 

September 30,

 

    

2024

    

2023

    

2024

    

2023

 

amounts in millions

 

Operating expense

$

13

10

39

31

Selling, general and administrative expense

 

18

 

15

54

 

43

$

31

 

25

93

 

74

Stock-based compensation expense related to Tripadvisor was $31 million and $24 million for the three months ended September 30, 2024 and 2023, respectively, and $92 million and $72 million for the nine months ended September 30, 2024 and 2023, respectively.

TripCo - Outstanding Awards

As of September 30, 2024, there were 1,035 thousand TripCo Series A common stock (“LTRPA”) options outstanding and 1,011 thousand LTRPA options exercisable at a weighted average exercise price (“WAEP”) of $6.04 and $6.05, respectively, a weighted average remaining contractual life of 2.6 years and an aggregate intrinsic value of zero. There were no options to purchase LTRPA granted, exercised or canceled during the nine months ended September 30, 2024.

As of September 30, 2024, there were 600 thousand TripCo Series B common stock (“LTRPB”) options outstanding and exercisable at a WAEP of $4.23, a weighted average remaining contractual life of 3.1 years and an aggregate intrinsic value of $223 thousand.  There were no grants, exercises or cancellations of LTRPB options during the nine months ended September 30, 2024. On May 31, 2023, TripCo and our CEO agreed that TripCo would cancel the CEO’s vested and unexercised nonqualified stock options to purchase 1.8 million shares of LTRPB, which had been granted in December 2014 with an exercise price equal to $27.83 per share, in exchange for an immaterial cash payment.

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Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

During the nine months ended September 30, 2024, pursuant to an agreement among TripCo, Liberty Media and our CEO, TripCo granted a cash award equal to $875,000 in satisfaction of the annual grant pursuant to which he was entitled under his employment agreement. The cash award cliff vests one year from the month of grant, subject to the satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.

As of September 30, 2024, the total unrecognized compensation cost related to unvested Awards was approximately $196 thousand. Such amount will be recognized in the Company's condensed consolidated statements of operations over a weighted average period of approximately one year.

As of September 30, 2024, TripCo reserved 1.6 million shares of LTRPA and LTRPB for issuance under exercise privileges of outstanding stock options.

Tripadvisor Equity Grant Awards

The following table presents the number and WAEP of the Awards to purchase Tripadvisor common stock (“TRIP common stock”) granted to certain officers, employees and directors of Tripadvisor.

Weighted

average

TRIP

remaining

Aggregate

common stock

contractual

intrinsic

options

WAEP

life

value

in thousands

in years

in millions

Outstanding at January 1, 2024

 

3,927

$

35.56

Granted

 

45

$

24.96

Exercised

 

(80)

24.36

Cancelled or expired

(1,131)

$

35.76

Outstanding at September 30, 2024

 

2,761

$

35.63

 

4.5

$

Exercisable at September 30, 2024

 

2,193

$

39.12

 

3.7

$

Vested and expected to vest after September 30, 2024

 

2,761

$

35.63

 

4.5

$

Tripadvisor’s stock options generally have a term of ten years from the date of grant and typically vest equally over a four-year requisite service period. Tripadvisor amortizes the GDFV of its stock option grants as stock-based compensation expense over the vesting term on a straight-line basis, with the amount of compensation expense recognized at any date at least equaling the portion of the GDFV of the award that is vested at that date. The weighted average GDFV of options issued was $13.37 per share for the nine months ended September 30, 2024.

Additionally, during the nine months ended September 30, 2024, Tripadvisor granted approximately 6 million units, vested and released approximately 4 million units, and had cancellations of approximately 1 million units, which included primarily service-based RSUs, as well as a limited number of performance-based RSUs (“PSUs”) and market-based restricted stock units (“MSUs”) under the TripAdvisor, Inc. 2018 Stock and Annual Incentive Plan. The estimated GDFV per RSU and PSU was measured based on the quoted price of TRIP common stock at the date of the grant, with PSUs calculated upon the establishment of performance targets and amortized on a straight-line basis over the requisite service period. Based upon actual attainment relative to the target financial metrics, employees have the ability to receive up to 200% of the target number originally granted, or to be issued none at all.  As the MSUs provide for vesting based upon Tripadvisor’s total shareholder return, or “TSR,” performance, the potential outcomes of future stock prices and TSR of Tripadvisor and the Nasdaq Composite Total Return Index, was used to calculate the GDFV of these awards. The weighted average GDFV for RSUs, PSUs and MSUs granted, vested and released, and cancelled during the nine months ended

I-13

Table of Contents

LIBERTY TRIPADVISOR HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

September 30, 2024 was $25.94 per share, $24.17 per share, and $23.15 per share, respectively.

As of September 30, 2024, the total unrecognized compensation cost related to Tripadvisor stock-based awards, substantially RSUs, was approximately $275 million and will be recognized over a weighted average period of approximately 2.7 years.

(3) Earnings (Loss) Per Common Share (“EPS”)

Basic EPS is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding (“WASO”) for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Excluded from EPS for both of the three months ended September 30, 2024 and 2023 are 1 million of potential common shares due to stock options because their inclusion would be antidilutive. Excluded from EPS for the nine months ended September 30, 2024 and 2023 are 1 million and 2 million, respectively, of potential common shares due to stock options because their inclusion would be antidilutive.  

TripCo Common Stock

Three months ended

Nine months ended

September 30,

September 30,

2024

2023

2024

2023

number of shares in millions

Basic WASO

 

77

 

77

 

77

76

Potentially dilutive shares (1)

 

1

 

2

 

1

2

Diluted WASO

 

78

 

79

 

78

78

(1)Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

(4) Assets and Liabilities Measured at Fair Value

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 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any material recurring assets or liabilities measured at fair value that would be considered Level 3.

The Company’s assets and liabilities measured at fair value are as follows:

September 30, 2024

December 31, 2023

 

Quoted prices

Significant

Quoted prices

Significant

 

in active

other

in active

other

 

markets for

observable

markets for

observable

 

identical assets

inputs

identical assets

inputs

 

Description

Total

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

 

amounts in millions

 

Cash equivalents

    

$

310

    

310

    

  &#