3Q21 Shareholder Letter & Call Transcript

Q3 2021

Q3 2021

Q3 2020

Q3 2019

Revenue

• Q3 2021 performance demonstrates continued relative U.S. strength as well as a broadening recovery

$303M $151M $428M

101% Y/Y

(29)% Y/2Y

Net Income / (Loss)	$1M	$(48)M	$50M
● Q3 2021 Net Income (Loss)

improved primarily due to revenue improvement

Adjusted EBITDA (1)	$72M	$15M	$129M
● Generated positive

adjusted EBITDA and more than doubled margin(2) in Q3 2021 vs. Q2 2021

1. Adjusted EBITDA is a non-GAAP profit measure and is defined 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, intangible asset, and long-lived asset impairments; (6) legal reserves and settlements; (7) restructuring and other related reorganization costs; and (8) non-recurring expenses and income.
2. Adjusted EBITDA margin is a non-GAAP profit measure and is defined as Adjusted EBITDA divided by Revenue.

Letter to Shareholders

We are pleased with our Q3 results. As vaccination rates continued to increase and countries reopened, we saw solid recovery in our business, and our results improved meaningfully versus the second quarter. In addition to macro improvements in travel, our results also highlight the resilience of our diversified offerings, our strong operating leverage, and steady prudent cost management.

Total revenue of $303 million was 71% of Q3 2019 levels, reflecting a year-over-year increase of 101%, and a quarter-over-quarter increase of 29%. Net income (loss) improved $41 million versus Q2 2021 to $1 million. Adjusted EBITDA was $72 million, an improvement of $57 million year-over-year and $47 million quarter-over-quarter. Adjusted EBITDA margin improved to 24% from 10% a year ago and 11% last quarter.

The recent easing of travel restrictions in the U.S. and Europe continues to provide optimism for the recovery of leisure travel. In the last few months, governments in the U.S. and Europe have announced the removal of certain restrictions, which are expected to accelerate travel's recovery, both domestically and internationally. While all of this should be viewed positively, we would also note that the Delta variant did cause a modest step back in our recovery trajectory in September, which is reflective of the non-linear path we've seen so far this year.

In our key strategic initiatives, we made strong progress. As we'll cover later in the letter, our Experiences revenue grew strongly quarter-over-quarter and as a percent of 2019 (pre-Covid-19 period), reflecting our focus and competitive position in this business. As we noted publicly last month, we have also made progress on the evolution of our Tripadvisor Plus subscription offering, and are currently testing our new Vacation Funds feature.

Q3 2021 Consolidated Financial Results

Revenue recovery broadened in Q3. Q3 2021 total revenue was $303 million, representing a year-over-year increase of 101% and a 29% increase versus Q2 2021, which is well beyond typical seasonality. At approximately 71% of 2019's comparable period, Q3 2021 revenue performance improved by 15-percentage points versus Q2 2021, which performed at 56% of 2019's comparable period.

Consolidated revenue in the months of July, August, and September for 2021 was approximately 71%, 74%, and 68%, respectively, of 2019's comparable periods and exceeded all pandemic impacted months from last year.

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Q3 profitability and liquidity position highlights our strong operating leverage and continued prudent cost management. Q3 2021 consolidated net income turned positive to $1 million, up from a $48 million loss in Q3 2020, driven primarily by revenue improvement, partially offset by increased variable marketing expenses.

Q3 2021 Adjusted EBITDA was $72 million and improved by $57 million year-over-year, driven primarily by revenue improvement against our stable fixed cost base, partially offset by increased variable marketing expenses. We believe we have positioned the business for operating leverage as travel demand and our revenue recovers further.

Additionally, we maintained ample liquidity. We had $682 million of cash and cash equivalents as of September 30, 2021.

Business Update

Monthly unique users improved in Q3 and were largely in line with our revenue recovery. Overall average monthly unique users on Tripadvisor-brandedwebsites in Q3 were approximately 76% of 2019's comparable period, up from approximately 70% in Q2, and 55% in Q1.

Monthly unique users were generally stable throughout the quarter. Strong traffic on our site remains a leading indicator of consumers' desire to travel, which is why we are pleased to see these improving quarterly trends.

From a geographic perspective, we saw European monthly users as a percentage of 2019 catch up to the U.S. in Q3, with Rest-of-World still behind in the recovery.

Taking a look across business segments, we continued to see signs of a broad return to travel during the quarter.

Hotel, Media & Platform (HM&P)

Revenue in our HM&P segment was $172 million, reflecting year over year growth of 115%. As a percent of 2019 revenue levels, HM&P reached 72%, an increase from 61% in Q2 and 35% in Q1.

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• Within the quarter, monthly revenue progression for July, August and September was approximately 73%, 75%, and 69%, respectively.
• Total hotel auction revenue as a percent of 2019 levels increased in Q3, to 76% of 2019 levels. Geographically, U.S. hotel metasearch auction revenue exceeded 2019 levels despite a modest stepback in September which we attribute to the Delta variant. In Europe, auction revenue in Q3 increased significantly to 66% of 2019 revenue, a sequential increase of almost 30 points.
• The remaining revenue within Tripadvisor-branded hotels (Hotel B2B services) also improved vs Q2, but lagged the pace of recovery in the hotel auction.
• In Tripadvisor-branded display and platform, revenue as a percentage of 2019 levels reached 71% of 2019 levels in Q3, up from 58% in Q2 and 37% in Q1.

Experiences & Dining (E&D)

Revenue in our E&D segment was $114 million, reflecting year over year growth of 115%. As a percent of 2019 levels, we demonstrably exceeded internal expectations by reaching 81% of 2019 revenue in Q3.

Experiences

Experiences revenue reached 75% of 2019 levels during Q3. This was led by the Viator point of sale, which roared back to approximately 100% of 2019 revenue levels. In October, we saw further improvement on all Experiences points of sale, delivering combined booking levels that now exceed 2019.

We are very pleased with the progress we are making in our Experiences business this year, as we take full advantage of recovering markets and of our strong competitive position. This year, we have successfully adapted to a market that skews more domestic and more mobile by honing our offering accordingly. Given our historically strong position for booking Experiences for international trips, we are optimistic that the projected upcoming growth in international travel will further propel growth in our Experiences business.

We also continued to improve our merchandising this quarter, raising our on-site conversion consistently. We are also testing, with excellent results so far, a new option for suppliers called Accelerate, which improves a client's visibility on our site to help drive incremental bookings. Additionally, new customer acquisition remains a top priority in the travel recovery. To that effect we continued to lean into paid traffic acquisition, at a positive ROI based on our demonstrated lifetime value, while improving our performance of free channels and repeat usage.

Dining

Our Dining revenue improved significantly in Q3, exceeding 90% of 2019 levels as restaurants in most of the European countries re-opened for in-restaurant dining, a significant uptick from Q2 levels. We are heartened by the return in restaurant activity, as well as the continued evolution of our offerings. For example, we are seeing good uptake on TheFork Pay, which offers our diners the ability to pay via the app in participating restaurants. We are also excited about our new gift card offer, although it is in early stages. We see excellent opportunities for further improvement in this business as travel and dining return to normal.

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