Expedia Group, Inc. - Annual Report: 2023 (Form 10-K)

We hold term deposit investments with financial institutions. Term deposits with original maturities of less than three months are classified as cash equivalents. Those with remaining maturities of less than one year are classified within short-term investments and those with remaining maturities of greater than one year are classified within long-term investments and other assets.

As of December 31, 2023 and 2022, our cash and cash equivalents consisted primarily of term deposits and money market funds with maturities of three months or less and bank account balances.

We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating liabilities. As of December 31, 2023, we were party to outstanding forward contracts hedging our liability exposures with a total net notional value of $ billion. As of December 31, 2023 and 2022, we had net forward liability of $ million ($ million gross forward liability) recorded in accrued expenses and other current liabilities and $ million ($ million gross forward asset) recorded in prepaid expenses and other current assets. We recorded $() million, $() million and $ million in net gains (losses) from foreign currency forward contracts in 2023, 2022 and 2021.

On March 2, 2022, we entered into fixed-to-fixed cross-currency interest rate swaps with an aggregate notional amount of € million, and maturity dates of February 2026. The swaps were designated as net investment hedges of Euro assets with the objective to protect the U.S. dollar value of our net investments in the Euro foreign operations due to movements in foreign currency. The fair value of the cross-currency interest rate swaps was an $ million asset as of December 31, 2023 and a $ million asset as of December 31, 2022, recorded in long-term investments and other assets. The gain recognized in interest expense was $ million during the years ended December 31, 2023 and 2022.

Our equity investments include our marketable equity investment in Despegar, a publicly traded company, which is included in long-term investments and other assets in our consolidated balance sheets. During the years ended December 31, 2023, 2022, and 2021, we recognized gains (losses) of approximately $ million, $() million and $() million, respectively, within other, net in our consolidated statements of operations related to the fair value changes of this equity investment.

In connection with our disposition of Egencia (our former corporate travel arm) in November 2021 as discussed in NOTE 16 – Divestitures, we became an indirect holder of approximately % interest in GBT JerseyCo Ltd. (“GBT”), doing business as American Express Global Business Travel, with an initial fair value of $ million. In May 2022, GBT completed a deSPAC business combination with Apollo Strategic Growth Capital. This combination resulted in a newly publicly traded company, Global Business Travel Group, Inc. (“GBTG”), which together with GBT’s pre-combination shareholders owned all of GBT. Post combination and as of December 31, 2022, we had an approximately % ownership interest in GBT and a commensurate voting interest in GBTG. In July 2023, GBTG simplified its organizational structure, and we exchanged our previously held GBT shares for an equal number of GBTG shares with no change to our ownership interest. Our previous GBT shares were exchangeable on a :1 basis for GBTG shares, and as such, we valued our investment based on the GBTG’s share

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% ownership interest in GBTG. In 2023 and 2022, we recognized a loss of approximately $ million and approximately $ million within other, net in our consolidated statements of operations related to the fair value changes of this equity investment.

Assets Measured at Fair Value on a Non-recurring Basis

Our non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity method investments for which we have not elected the fair value option, are adjusted to fair value when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements are based predominately on Level 3 inputs. We measure our minority investments that do not have readily determinable fair values at cost less impairment, adjusted by observable price changes with changes recorded within other, net on our consolidated statements of operations.

Goodwill. During 2023, we recognized a goodwill impairment charge of $ million related to our trivago segment. This impairment charge resulted from trivago’s recent strategic shift which included intensifying its brand marketing investments with an anticipated decrease in profitability. As a result, we concluded that sufficient indicators existed that to require us to perform an interim quantitative assessment of goodwill for our trivago segment as of September 30, 2023, in which we compared the fair value of the reporting unit to its carrying value. The fair value estimate for the reporting unit was based on a blended analysis of the present value of future discounted cash flows and market value approach, Level 3 inputs. The significant estimates used in the discounted cash flows model included our weighted average cost of capital, projected cash flows and the long-term rate of growth. Our assumptions were based on the actual historical performance of the reporting unit and considered the weakening of operating results, and implied risk premiums based on market prices of our equity and debt as of the assessment date. Our significant estimates in the market approach model included identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The excess of the reporting unit's carrying value over our estimate of the fair value was recorded as the goodwill impairment charge in third quarter of 2023. As of December 31, 2023, our trivago segment had no goodwill remaining.

As noted above, trivago is subject to its own reporting and filing requirements and, therefore, assesses goodwill at a lower level, which could result in possible differences in the ultimate amount or timing of impairments recognized. Additionally, as the stock of our trivago segment is publicly traded, it is difficult to predict market dynamics and the extent or duration of any stock declines.

During 2021, we recognized a goodwill impairment charge of $ million in our B2B segment resulting from valuing a component of our Egencia reporting unit that remained after the sale on November 1, 2021.

Intangible and Long-term Assets. During 2023, we recognized intangible asset impairment charges of $ million related to indefinite-lived trade names that resulted from changes in estimated future revenues of the related brands, of which $ million related to our B2C segment and $ million related to our trivago segment. The indefinite-lived intangible assets, classified as Level 3 measurements, were valued using the relief-from-royalty method, which includes unobservable inputs, including projected revenues and royalty rates, which ranged from % to % with a weighted average royalty rate of %.

During 2022, we recognized intangible impairment charges of $ million related to an indefinite-lived trade name within our trivago segment that resulted from changes in the weighted average cost of capital. The indefinite-lived trade name asset, classified as Level 3 measurements, was valued using the relief-from-royalty method, which includes unobservable inputs, including projected revenues, royalty rates and weighted average cost of capital.

During 2021, we recognized long-term asset impairment charges of $ million in our B2B segment resulting from the write-off of capitalized software of a component of our Egencia reporting unit that remained after the sale on November 1, 2021.

Minority Investments without Readily Determinable Fair Values. As of both December 31, 2023 and 2022, the carrying values of our minority investments without readily determinable fair values totaled $ million. During 2023, 2022 and 2021, we had material gains or losses recognized related to these minority investments. As of December 31, 2023, total cumulative adjustments made to the initial cost basis of these investments included $ million in unrealized upward adjustments and $ million in unrealized downward adjustments (including impairments).

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$ Computer equipment Furniture and other equipment Buildings and leasehold improvements Land Less: accumulated depreciation()()Projects in progress Property and equipment, net$ $

As of December 31, 2023 and 2022, our recorded capitalized software development costs, net of accumulated amortization, which have been placed in service were $ million and $ million. For the years ended December 31, 2023, 2022 and 2021, we recorded amortization of capitalized software development costs of $ million, $ million and $ million included in depreciation and amortization expense.

As of December 31, 2023, 2022 and 2021, we had $ million, $ million and $ million, respectively, included in accounts payable for the acquisition of property and equipment, which is considered a non-cash investing activity in the consolidated statements of cash flows.

to years, some of which include options to extend the leases for up to , and some of which include options to terminate the leases within .

Operating lease costs were $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021, respectively.

$ $ Right-of-use assets obtained in exchange for lease obligations: Operating leases $ Current lease liabilities, included within Accrued expenses and other current liabilities$ $ Long-term lease liabilities, included within Operating lease liabilities Total operating lease liabilities$ $ Weighted average remaining lease term years yearsWeighted average discount rate % %

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2025 2026 2027 2028 2029 and thereafter Total lease payments Less: imputed interest()Total$

$ Intangible assets with indefinite lives Intangible assets with definite lives, net $ $

Impairment Assessments. We perform our annual assessment of possible impairment of goodwill and indefinite-lived intangible assets as of October 1, or more frequently if events and circumstances indicate that an impairment may have occurred.

During 2023, due to trivago’s recent strategic shift which included intensifying its brand marketing investments with an anticipated decrease in profitability, in addition to our annual assessment, we deemed it necessary to perform an interim assessment of goodwill and intangible assets. As a result of the assessment during the third quarter of 2023, we recognized a goodwill impairment charge of $ million related to our trivago segment as well as intangible impairment charges of $ million related to indefinite-lived trade name within our trivago segment. In addition, during the fourth quarter of 2023, we recognized intangible impairment charges of $ million related to indefinite-lived trade names within our B2C segment.

During 2022, we recognized intangible impairment charges of $ million related to an indefinite-lived trade name within our trivago segment. During 2021, we recognized a goodwill impairment charge of $ million.

Goodwill. $ $ $ Foreign exchange translation and other() ()()Balance as of December 31, 2022 Impairment charges ()()Total$

% senior notes due 2025$ $

% senior notes due 2026

% convertible senior notes due 2026

% senior notes due 2027

% senior notes due 2028

% senior notes due 2030

% senior notes due 2031

Long-term debt(1)

$ $

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Redemption of Senior Notes

During 2022, we early redeemed all of our € million registered senior unsecured notes that were due June 2022 and bore interest at % (the “% Notes”), all of our $ million registered senior unsecured notes that were due December 2023 and bore interest at % (the “% Notes”), and all of our $ million registered senior unsecured notes that were due August 2024 and bore interest at % (the “% Notes”), which resulted in the recognition of a loss on debt extinguishment of $ million during the year ended December 31, 2022. This loss primarily reflected the payment of "make-whole" premiums of $ million for the % and % Notes as well as the write-off of unamortized debt issuance costs and discounts of $ million.

In addition, during 2022, we settled a tender offer to purchase $ million in aggregate principal of our % Senior Notes due 2031 (the “% Notes”) for an aggregate cash repurchase price of approximately $ million, which resulted in

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million. The net gain included the write-off of debt issuance costs and discounts of $ million as well as fees of $ million.

During 2021, we redeemed all of our then outstanding % senior notes due 2025 as well as settled the tender offer to purchase $ million in aggregate principal of our % senior notes due 2025, which resulted in the recognition of a loss on debt extinguishment of $ million during the year ended December 31, 2021. This loss primarily reflected the payment of early payment premiums and fees associated with the tender offer as well as the write-off of unamortized debt issuance costs.

Outstanding Debt

Senior Notes Outstanding. In prior years, we issued the following senior notes, which are still outstanding as of December 31, 2023:

•Approximately $ billion of senior unsecured notes that are due in May 2025 that bear interest at % (the “% Notes”), which reflects the 2021 tender offer to purchase $ million in aggregate principal discussed above. The % Notes were issued at a price of % of the aggregate principal amount. Interest is payable semi-annually in arrears in May and November of each year. We may redeem some or all of the % Notes at any time prior to February 1, 2025 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some or all of the % Notes on or after February 1, 2025 at par plus accrued and unpaid interest, if any.

•$ million of registered senior unsecured notes that are due in February 2026 that bear interest at % (the “% Notes”). The % Notes were issued at % of par resulting in a discount, which is being amortized over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem the % Notes at our option at any time in whole or from time to time in part. If we elect to redeem the % Notes prior to November 12, 2025, we may redeem them at a redemption price of % of the principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem the % Notes on or after November 12, 2025, we may redeem them at a redemption price of % of the principal plus accrued interest.

•$ million of registered senior unsecured notes that are due in August 2027 that bear interest at % (the “% Notes”). The % Notes were issued at a price of % of the aggregate principal amount. Interest is payable semi-annually in arrears in February and August of each year. We may redeem some or all of the % Notes at any time prior to May 1, 2027 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some or all of the % Notes on or after May 1, 2027 at par plus accrued and unpaid interest, if any.

•$ billion of registered senior unsecured notes that are due in February 2028 that bear interest at % (the “% Notes”). The % Notes were issued at % of par resulting in a discount, which is being amortized over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem the % Notes at our option at any time in whole or from time to time in part. If we elect to redeem the % Notes prior to November 15, 2027, we may redeem them at a redemption price of % of the principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem the % Notes on or after November 15, 2027, we may redeem them at a redemption price of % of the principal plus accrued interest.

•$ billion of registered senior unsecured notes that are due in February 2030 and bear interest at % (the “% Notes”). The % Notes were issued at % of par resulting in a discount, which is being amortized over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem the % Notes at our option at any time in whole or from time to time in part. If we elect to redeem the % Notes prior to November 15, 2029, we may redeem them at a redemption price of % of the principal plus accrued interest, plus a “make-whole” premium. If we elect to redeem the % Notes on or after November 15, 2029, we may redeem them at a redemption price of % of the principal plus accrued interest.

•$ million of senior unsecured notes that are due in March 2031 and bear interest at %, which reflects the 2022 tender offer to purchase $ million in aggregate principal discussed above. The % Notes were issued at a price of % of the aggregate principal amount. Interest is payable semi-annually in arrears in March and September of each year and the interest rate is subject to adjustment based on certain ratings events. We may redeem some or all of the % Notes at any time prior to December 15, 2030 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some or all of the % Notes on or after December 15, 2030 at par plus accrued and unpaid interest, if any.

All of our outstanding senior notes (collectively the "Senior Notes") are senior unsecured obligations issued by Expedia Group and guaranteed by certain domestic Expedia Group subsidiaries. The Senior Notes rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations of Expedia Group and the guarantor subsidiaries. In addition, the Senior Notes include covenants that limit our ability to (i) create certain liens, (ii) enter into sale/leaseback

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% of the principal plus accrued and unpaid interest. Accrued interest related to the Senior Notes was $ million as of both December 31, 2023 and 2022.

Convertible Notes Outstanding. The net carrying amount of the Convertible Notes as of December 31, 2023 and 2022 was $ million and $ million, respectively, which reflects the $ billion in principal less unamortized debt issuance costs of $ million and $ million, respectively. Interest expense related to the amortization of the debt issuance costs for the Convertible Notes was $ million during both of the years ended December 31, 2023 and 2022.

The Convertible Notes are unsecured, unsubordinated obligations and rank equally in right of payment with each other and with all of our existing and future unsecured and unsubordinated obligations, including our existing senior notes. The Convertible Notes are fully and unconditionally guaranteed by the subsidiary guarantors, which include each domestic subsidiary that is a borrower under or guarantees the obligations under our existing senior secured credit agreement. So long as the guarantees are in effect, each subsidiary guarantor’s guarantee will be the unsecured, unsubordinated obligation of such subsidiary guarantor and will rank equally in right of payment with each other and with all of such subsidiary guarantor’s existing and future unsecured and unsubordinated obligations, including such subsidiary guarantor’s guarantees of our existing senior notes.

The Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. The Convertible Notes will not bear regular interest, and the principal amount of the Convertible Notes will not accrete.

The Convertible Notes have an initial conversion rate of 3.9212 shares of common stock of Expedia Group with a par value $ per share (referred to as “our common stock” herein), per $1,000 principal amount of Convertible Notes, which is equal to an initial conversion price of approximately $ per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding November 15, 2025, holders may convert their Convertible Notes at their option only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least trading days (whether or not consecutive) during the period of consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is equal to or greater than % of the conversion price then in effect on each applicable trading day;

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

• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the business day immediately prior to the redemption date, but only with respect to the Convertible Notes called for redemption (or deemed called for redemption); or

• upon the occurrence of specified corporate events.

Irrespective of the foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Additionally, upon the occurrence of a corporate event that constitutes a “make-whole fundamental change” per the indenture, or if we call the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion rate in certain circumstances as described in the indenture. Upon conversion, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

We may not redeem the Convertible Notes prior to February 20, 2024. On or after February 20, 2024 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of our common stock has been at least % of the conversion price then in effect for at least trading days (whether or not consecutive) during any consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, we may redeem for cash all or part of the Convertible Notes at a redemption price equal to % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, except as otherwise described in the indenture.

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billion and $ billion as of December 31, 2023 and 2022. Additionally, the estimated fair value of the Convertible Notes was $ million and $ million as of December 31, 2023 and 2022. The fair value was determined based on quoted market prices in less active markets and is categorized according as Level 2 in the fair value hierarchy.

Credit Facility

As of December 31, 2023 and 2022, Expedia Group maintained a $ billion revolving credit facility that matures in April 2027. As of December 31, 2023 and 2022, we had revolving credit facility borrowings outstanding. Loans under the revolving credit facility bear interest at a rate equal to an index rate plus a margin (a) in the case of term benchmark loans, ranging from % to % per annum, depending on Expedia Group's credit ratings, and (b) in the case of base rate loans, ranging from % to % per annum, depending on Expedia Group's credit ratings. A fee is payable quarterly in respect of undrawn commitments under the revolving credit facility at a rate ranging from % to % per annum, depending on Expedia Group's credit ratings. The terms of the revolving credit facility require Expedia Group to not exceed a specified maximum consolidated leverage ratio as of the end of each fiscal quarter.

The revolving credit facility has a $ million letter of credit (“LOC”) sublimit, and the amount of LOCs issued under the facility reduced the credit amount available. As of December 31, 2023 and 2022, there was $ million and $ million of outstanding stand-by LOCs issued under the facility.

% of their eligible compensation on a pre-tax and/or Roth basis. Employees may also contribute up to % after-tax, not to exceed % of pay and not more than statutory limits. Expedia Group makes matching contributions in an amount equal to % of participant 401(k) contributions up to the first % of their compensation each payroll period. Our contribution vests with the employee after the employee completes of service. Participating employees have the option to invest in our common stock, but there is no requirement for participating employees to invest their contribution or our matching contribution in our common stock. We also have various defined contribution plans for our international employees. Our contributions to these benefit plans were $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021.

million shares of common stock reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan. We issue new shares to satisfy the exercise or release of stock-based awards. $ Granted Vested() Cancelled() Balance as of December 31, 2023

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$ Granted

Performance Shares Adjustment(1)

Vested() Cancelled() Shares probable to be issued as of December 31, 2023

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(1)Outcome for vested performance-based awards is updated based upon achievement of certain stock price growth rate targets of the Company’s common stock. Probable outcome for unvested performance-based awards is based upon achievement of certain stock price growth rate targets of the Company’s common stock as of December 31, 2023.

The total market value of RSU and PSU shares vested during the years ended December 31, 2023, 2022 and 2021 was $ million, $ million and $ million.

$ Shares not subject to the achievement of minimum performance thresholds Shares that could be issued if maximum performance thresholds are met $ Exercised() Cancelled() Balance as of December 31, 2023 $ Exercisable as of December 31, 2023 Vested and expected to vest after December 31, 2023

The aggregate intrinsic value of outstanding options shown in the stock option activity table above represents the total pretax intrinsic value at December 31, 2023, based on our closing stock price of $ as of the last trading date in 2023. The total intrinsic value of stock options exercised was $ million, $ million and $ million for the years ended December 31, 2023, 2022 and 2021.

There were options granted during 2023 or 2022.

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%Expected volatility %Expected life (in years)Dividend yield %Weighted-average estimated fair value of options granted during the year$

In 2023, 2022 and 2021, we recognized total stock-based compensation expense of $ million, $ million and $ million. The total income tax benefit related to stock-based compensation expense was $ million, $ million and $ million for 2023, 2022 and 2021. We capitalized $ million, $ million and $ million of stock-based compensation expense associated with the cost of developing internal-use software in 2023, 2022 and 2021.

Cash received from stock-based award exercises for the years ended December 31, 2023, 2022 and 2021 was $ million, $ million and $ million, respectively. Total current income tax benefits during the years ended December 31, 2023, 2022 and 2021 associated with the exercise of stock-based awards held by our employees were $ million, $ million and $ million, respectively.

As of December 31, 2023, there was approximately $ million of unrecognized stock-based compensation expense related to unvested stock-based awards, which is expected to be recognized in expense over a weighted-average period of years.

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan (“ESPP”), which allows shares of our common stock to be purchased by eligible employees at three-month intervals at % of the fair market value of the stock on the last day of each three-month period. Eligible employees were allowed to contribute up to % of their base compensation. During 2023, 2022 and 2021, approximately , , and shares were purchased under this plan for an average price of $, $ and $ per share. As of December 31, 2023, we have reserved approximately million shares of our common stock for issuance under the ESPP.

$ $()Foreign Total$ $ $()

Provision for Income Taxes

$ $ State Foreign Current income tax expense Deferred income tax (benefit) expense:U.S. federal ()()State()()()Foreign() Deferred income tax (benefit) expense ()Income tax (benefit) expense$ $ $()

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million, $ million, and $ million for the years ended December 31, 2023, 2022 and 2021 for tax deductions attributable to stock-based compensation.

Deferred Income Taxes

$ Deferred loyalty rewards Net operating loss and tax credit carryforwards Stock-based compensation Property and equipment Capitalized research and development Operating lease liabilities Long-term investments Other Total deferred tax assets Less valuation allowance()()Net deferred tax assets$ $ Deferred tax liabilities:Goodwill and intangible assets()()Anticipatory foreign tax credits() Operating lease ROU assets()()Other ()Total deferred tax liabilities$()$()Net deferred tax assets$ $

As of December 31, 2023, we had state and foreign net operating loss carryforwards (“NOLs”) of approximately $ million and $ million. State NOLs of $ million may be carried forward indefinitely, and state NOLs of $ million expire at various times starting from 2025. Foreign NOLs of $ million may be carried forward indefinitely, and foreign NOLs of $ million expire at various times starting from 2024.

As of December 31, 2023, we had a valuation allowance of approximately $ million related to certain tax attribute carryforwards for which it is more likely than not the tax benefits will not be realized. The valuation allowance increased by $ million from the amount recorded as of December 31, 2022, primarily due to the unrealized capital losses on minority investments. The amount of the deferred tax asset considered realizable may be adjusted if capital gains are realized or if, in certain jurisdictions, objective negative evidence in the form of cumulative GAAP losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

Most of our foreign undistributed earnings have already been subject to U.S. federal income tax. We do not assert indefinite reinvestment on the undistributed earnings of our foreign subsidiaries.

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$ $()Foreign tax rate differential()() U.S. federal research and development credit()()()Excess tax benefits related to stock-based compensation ()()Nondeductible compensation Unrecognized tax benefits and related interest Change in valuation allowances ()Return to provision true-ups()() State taxes ()Non-creditable foreign withholding tax Non-deductible goodwill impairment Divestitures and entity restructuring ()Foreign-derived intangible income()() Other, net Income tax (benefit) expense$ $ $()

Our effective tax rate for 2023 was higher than the 21% U.S. federal statutory income tax rate due to a non-deductible goodwill impairment and the TripAdvisor audit assessment discussed below, partially offset by research and experimentation credits. Our effective tax rate for 2022 was higher than the 21% U.S. federal statutory income tax rate due to valuation allowances on minority investments and nondeductible compensation, partially offset by research and experimentation credits. Our effective tax rate for 2021 was higher than the 21% U.S. federal statutory income tax rate due to excess tax benefits related to stock-based compensation, release of valuation allowances and research and experimentation credits, partially offset by nondeductible compensation, measured against a pre-tax loss.

Unrecognized Tax Benefits and Interest

$ $ Increases to tax positions related to the current year Increases to tax positions related to prior years Decreases to tax positions related to prior years ()Settlements during current year()()()Interest and penalties Balance, end of year$ $ $

As of December 31, 2023, we had $ million of gross unrecognized tax benefits, $ million of which, if recognized, would affect the effective tax rate. As of December 31, 2022, we had $ million of gross unrecognized tax benefits, $ million of which, if recognized, would affect the effective tax rate. As of December 31, 2021, we had $ million of gross unrecognized tax benefits, $ million of which, if recognized, would affect the effective tax rate.

We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes in our consolidated statement of operations. Accrued interest and penalties of $ million and $ million were reflected in our consolidated balance sheets as of December 31, 2023 and 2022.

The Company is routinely audited by U.S. federal, state, local and foreign income tax authorities. These audits include questioning the timing and amount of income and deductions, and the allocation of income and deductions among various tax

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million, which would result in federal income tax of approximately $ million, subject to interest. We do not agree with the position of the IRS. We have formally filed a protest for our 2011 to 2013 tax years and the case is currently in Appeals. During the third quarter of 2023, the IRS issued final adjustments related to transfer pricing with our foreign subsidiaries for our 2014 to 2016 tax years. The adjustments would increase our U.S. taxable income by $ billion, which would result in federal income tax of approximately $ million, subject to interest. We do not agree with the position of the IRS and intend to formally file a protest. We are also under examination by the IRS for our 2017 to 2020 tax years. We believe it is reasonably possible that the audit of the 2011 to 2013 tax years will conclude within the next 12 months.

On December 20, 2011, we completed a spin-off of TripAdvisor into a separate publicly-traded corporation. Pursuant to the tax sharing agreement between Expedia Group and TripAdvisor, TripAdvisor is responsible for its potential income tax liabilities in connection with any consolidated income tax returns filed as a part of Expedia Group’s consolidated income tax return prior to or in connection with the spin-off. TripAdvisor is required to indemnify Expedia Group for any such taxes, including interest, penalties, legal, and professional fees.

million, inclusive of interest and state tax effects, for transfer pricing adjustments with its foreign subsidiaries for the 2009 through 2011 tax years. The assessment is a tax liability for tax years when TripAdvisor was part of Expedia Group's consolidated income tax return and is covered by the indemnification pursuant to the tax sharing agreement. In May 2023, Expedia Group received from the IRS the final assessment for the 2009 through 2011 tax years related to the TripAdvisor matter. Expedia Group remitted $ million in settlement payments to the IRS, as the primary obligor for this assessment, and received the reimbursement required from TripAdvisor in settlement of the indemnification receivable for this matter. During 2023, we recorded $ million of additional income tax expense and a corresponding tax indemnification adjustment in other, net in our consolidated statements of operations representing the estimate of the incremental assessed payment to the IRS, including state tax effects.

billion shares of common stock with par value of $ per share, and million shares of Class B common stock with par value of $ per share. Both classes of common stock qualify for and share equally in dividends, if declared by our Board of Directors, and generally vote together on all matters. Common stock is entitled to vote per share and Class B common stock is entitled to votes per share. Holders of common stock, voting as a single, separate class are entitled to elect % of the total number of directors. Class B common stockholders may, at any time, convert their shares into common stock, on a for one share basis. Upon conversion, the Class B common stock is retired and is not available for reissue. In the event of liquidation, dissolution, distribution of assets or winding-up of Expedia Group, Inc., the holders of both classes of common stock have equal rights to receive all the assets of Expedia Group, Inc. after the rights of the holders of the preferred stock, if any, have been satisfied.

Preferred Stock and Warrants

In 2020, we issued and sold to (1) AP Fort Holdings, L.P., an affiliate of Apollo Global Management, Inc. (the “Apollo Purchaser”), shares of the Company’s newly created Series A Preferred Stock, par value $ per share (the “Series A Preferred Stock”) and Warrants (the “Warrants”) to purchase million shares of our common stock for an aggregate purchase price of $ million and (2) SLP V Fort Holdings II, L.P., affiliates of Silver Lake Group, L.L.C. (the “Silver Lake Purchasers”), shares of Series A Preferred Stock and Warrants to purchase million shares of common stock, for an aggregate purchase price of $ million.

In 2021, we redeemed all of the remaining outstanding Series A Preferred Stock at a price equal to % of the Preference Amount, plus accrued and unpaid distributions as to the redemption date using cash on-hand of $ million, including a $ million redemption premium and $ million of accrued dividends. The loss on redemption of Preferred Stock was $ million during the year ended December 31, 2021, which included a charge to additional paid-in capital for the redemption premium as well as $ million related to the original issuance discount, issuance costs and the Warrants value. As

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remaining Series A Preferred Stock outstanding. The Series A Preferred Stock accumulated and we paid $ million (or $ per share of Series A Preferred Stock) in total dividends during the year ended December 31, 2021, including those mentioned above.

Warrants to Purchase Company Common Stock. Pursuant to the investment agreements in 2020, we issued to each of (1) the Silver Lake Purchasers (in the aggregate) and (2) the Apollo Purchaser, Warrants to purchase million shares of our common stock at an exercise price of $ per share. In 2021, the Apollo Purchaser exercised all of the Warrants it held and received approximately million shares of our common stock in respect thereof, and the Silver Lake Purchasers exercised all of the Warrants they held and received approximately million shares of our common stock in respect thereof. As of December 31, 2021, warrants remained outstanding.

Treasury Stock

As of December 31, 2023, the Company's treasury stock was comprised of approximately million common stock and million Class B shares. As of December 31, 2022, the Company's treasury stock was comprised of approximately million shares of common stock and million Class B shares.

Share Repurchases. In 2018 and 2019, the Board of Directors and the Executive Committee of the Board, pursuant to a delegation of authority from the Board, authorized a program to repurchase up to million shares and million shares of our common stock (the “2018 Share Repurchase Program” and the “2019 Share Repurchase Program”). In October 2023, the Executive Committee of the Board of Directors, pursuant to a delegation of authority from the Board, authorized an additional program to repurchase up to $ billion of our common stock (“2023 Share Repurchase Program”). The 2018 and 2019 Share Repurchase Programs have been completed. Our 2023 Share Repurchase Program does not have fixed expiration dates and does not obligate the Company to acquire any specific number of shares. Under the program, shares may be repurchased in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be subject to the discretion of the Company and depend on a variety of factors, including the market price of Expedia Group’s common stock, general market and economic conditions, regulatory requirements and other business considerations.

million millionAverage price per share$ $ $

Total cost of repurchases (in millions)(1)

$ $ $

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(1)Amount excludes transaction costs and the excise tax due under the Inflation Reduction Act of 2022.

As of December 31, 2023, $ billion remains authorized for repurchase with no fixed termination date for the repurchases. Subsequent to the end of 2023, we repurchased an additional million shares for a total cost of $ million, excluding transaction costs and excise tax, representing an average of $ per share.

Accumulated Other Comprehensive Income (Loss)

The balance of accumulated OCI as of December 31, 2023 and 2022 was comprised of foreign currency translation adjustments. These translation adjustments include foreign currency transaction gains at December 31, 2023 and 2022 of $ million ($ million before tax) and $ million ($ million before tax) associated with our cross-currency interest rate swaps. Additionally, translation adjustments include foreign currency transaction losses of $ million ($ million before tax) as of both December 31, 2023 and 2022 associated with previously settled Euro-denominated notes that were designated as net investment hedges. See NOTE 2 — Significant Accounting Policies for more information.

Non-redeemable Non-controlling Interests

As of December 31, 2023 and 2022, our ownership interest in trivago was approximately % and %.

During 2023, trivago paid a one-time extraordinary dividend totaling approximately EUR million (or approximately EUR per share), which included intercompany payments to Expedia Group as well as $ million to third-parties included in other, net in financing activities on the consolidated statement of cash flows.

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$ $ Preferred stock dividend ()Loss on redemption of preferred stock ()Net income (loss) attributable to Expedia Group, Inc. common stockholders$ $ $()Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders:Basic$ $ $()Diluted ()Weighted average number of shares outstanding (000's):Basic Dilutive effect of:Convertible Notes Stock-based awards Other dilutive securities Diluted

For the years ended December 31, 2023 and 2022, approximately million and approximately million of outstanding stock-based awards have been excluded from the calculations of diluted earnings per share attributable to common stockholders because their effect would have been antidilutive. For the year ended December 31, 2021, approximately million of outstanding stock-based awards and approximately million shares related to the potential share settlement impact related to our Convertible Notes were excluded.

The earnings per share amounts are the same for common stock and Class B common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation.

million in restructuring and related reorganization charges during 2021. We did t recognize any restructuring and related organization charges during 2023 and 2022. We continue to evaluate additional cost reduction efforts and should we make decisions in future periods to take further actions we may incur additional reorganization charges.

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)$()$()Gains (losses) on minority equity investments, net ()()TripAdvisor tax indemnification adjustment Other Total$()$()$()

$ $ $ $ Guarantees Letters of credit $ $ $ $ $

Our purchase obligations represent the minimum obligations we have under agreements with certain of our vendors. These minimum obligations are less than our projected use for those periods. Payments may be more than the minimum obligations based on actual use.

We have guarantees which consist primarily of bonds relating to tax assessments that we are contesting as well as bonds required by certain foreign countries’ aviation authorities for the potential non-delivery, by us, of packaged travel sold in those countries. The authorities also require that a portion of the total amount of packaged travel sold be bonded. Our guarantees also include certain surety bonds related to various company performance obligations.

Our LOCs consist of stand-by LOCs, underwritten by a group of lenders, which we primarily issue for certain regulatory purposes as well as to certain hotel properties to secure our payment for hotel room transactions. The contractual expiration dates of these LOCs are shown in the table above. There were no material claims made against any stand-by LOCs during the years ended December 31, 2023, 2022 and 2021.

Legal Proceedings

In the ordinary course of business, we are a party to various lawsuits. Management does not expect these lawsuits to have a material impact on the liquidity, results of operations, or financial condition of Expedia Group. We also evaluate other potential contingent matters, including value-added tax, excise tax, sales tax, transient occupancy or accommodation tax and similar matters. We do not believe that the aggregate amount of liability that could be reasonably possible with respect to these matters would have a material adverse effect on our financial results; however, litigation is inherently uncertain and the actual losses incurred in the event that our legal proceedings were to result in unfavorable outcomes could have a material adverse effect on our business and financial performance.

Litigation Relating to Occupancy Taxes. lawsuits have been filed by or against cities, counties and states involving hotel occupancy and other taxes. lawsuits are currently active. These lawsuits are in various stages and we continue to defend against the claims made in them vigorously. With respect to the principal claims in these matters, we believe that the statutes or ordinances at issue do not apply to us or the services we provide and, therefore, that we do not owe the taxes that are claimed to be owed. We believe that the statutes or ordinances at issue generally impose occupancy and other

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of these lawsuits have been dismissed. Some of these dismissals have been without prejudice and, generally, allow the governmental entity or entities to seek administrative remedies prior to pursuing further litigation. dismissals were based on a finding that we and the other defendants were not subject to the local tax ordinance or that the local government lacked standing to pursue its claims. As a result of this litigation and other attempts by certain jurisdictions to levy such taxes, we have established a reserve for the potential settlement of issues related to hotel occupancy and other taxes, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount of $ million and $ million as of December 31, 2023 and 2022. Our settlement reserve is based on our best estimate of probable losses and the ultimate resolution of these contingencies may be greater or less than the liabilities recorded. An estimate for a reasonably possible loss or range of loss in excess of the amount reserved cannot be made. Changes to the settlement reserve are included within legal reserves, occupancy tax and other in the consolidated statements of operations.

Pay-to-Play. Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as “pay-to-play.” Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest.

We are in various stages of inquiry or audit with various tax authorities, some of which, including in the City of Los Angeles regarding hotel occupancy taxes, may impose a pay-to-play requirement to challenge an adverse inquiry or audit result in court.

Matters Relating to International VAT. We are in various stages of inquiry or audit in multiple European Union jurisdictions regarding the application of VAT to our European Union related transactions. While we believe we comply with applicable VAT laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe additional taxes. In certain jurisdictions, including the United Kingdom, we may be required to “pay-to-play” any VAT assessment prior to contesting its validity. While we believe that we will be successful based on the merits of our positions with regard to audits in pay-to-play jurisdictions, it is nevertheless reasonably possible that we could be required to pay any assessed amounts in order to contest or litigate the applicability of any assessments and an estimate for a reasonably possible amount of any such payments cannot be made.

million, which was paid in the second quarter of 2022, and to cover the ACCC’s costs arising from the proceedings. million with respect to these proceedings in a previous period and an additional loss of approximately $ million during the first quarter of 2022, for a total of approximately $ million previously included in accrued expenses and other current liabilities as of March 31, 2022.

million within gain on sale of business, net in the consolidated statement of operations during the year ended December 31, 2021 and divested cash and restricted cash of $ million. We received no cash for this transaction but on the date of sale Expedia Group became an indirect holder of an approximately % interest of GBT with an initial fair value of $ million, and a subsidiary entered into a lodging supply agreement with GBT. During 2023 and 2022, we recognized immaterial gains of approximately $ million and $ million related to this transaction. See NOTE 3 — Fair Value Measurements for additional information on our ongoing investment.

In addition, during 2021, in connection with our efforts to focus on our core businesses and streamline our activities, we committed to plans to divest certain smaller businesses primarily within our B2C segment. As a result, in 2021, we completed the sales of certain smaller businesses, including Classic Vacations and Alice, which combined resulted in net gains of $ million and net cash received of $ million. The resulting gains in these transactions were recorded within gain on sale of business, net in the consolidated statement of operations.

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million gain related to the sales of businesses in a prior year. We had disposition activity during 2022.

% ownership interest in aircraft that may be used by both companies. Members of the aircraft flight crews are employed by an entity in which the Company and IAC each have a % ownership interest. The Company and IAC have agreed to share costs relating to flight crew compensation and benefits pro-rata according to each company’s respective usage of the aircraft, for which they are separately billed by the entity described above. We share equally in fixed and nonrecurring costs for the aircraft; direct operating costs are pro-rated based on actual usage. Another aircraft that had previously been jointly-owned by the companies was sold in November 2022, with each company receiving % of the $ million in net sale proceeds.

In addition, in 2021, we entered into agreements pursuant to which we may use additional aircraft owned by a subsidiary of IAC on a cost basis. Total payments made to this entity by the Company were not material.

As of December 31, 2023 and 2022, the net basis in our ownership interest in the aircrafts then jointly-owned was $ million and $ million, respectively, recorded in long-term investments and other assets. In 2023, 2022 and 2021, operating and maintenance costs paid directly to the jointly-owned subsidiary for the aircraft were not material.

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$ $ $ $ Intersegment revenue ()— Revenue$ $ $ $()$ Adjusted EBITDA$ $ $ $()$ Depreciation()()()()()Amortization of intangible assets ()()Impairment of goodwill ()()Intangible and other long-term asset impairment ()()Stock-based compensation ()()Legal reserves, occupancy tax and other ()()Realized (gain) loss on revenue hedges () Operating income (loss)$ $ $ $() Other expense, net()Income before income taxes Provision for income taxes()Net income Net loss attributable to non-controlling interests Net income attributable to Expedia Group, Inc.$

Year ended December 31, 2022

B2C

B2B

trivago

Corporate & Eliminations

Total

(In millions)

Third-party revenue

Intersegment revenue

()

—

Revenue

()

Adjusted EBITDA

()

Depreciation

()

Amortization of intangible assets

()

Intangible and other long-term asset impairment

()

Stock-based compensation

()

Legal reserves, occupancy tax and other

()

Realized (gain) loss on revenue hedges

Operating income (loss)

()

Other expense, net

()

Income before income taxes

Provision for income taxes

()

Net income

Net loss attributable to non-controlling interests

Net income attributable to Expedia Group, Inc.

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$ $ $ $ Intersegment revenue ()— Revenue$ $ $ $()$ Adjusted EBITDA$ $ $ $()$ Depreciation()()()()()Amortization of intangible assets ()()Impairment of goodwill ()()Intangible and other long-term asset impairment ()()Stock-based compensation ()()Legal reserves, occupancy tax and other ()()Restructuring and related reorganization charges ()()Realized (gain) loss on revenue hedges Operating income (loss)$ $ $ $() Other expense, net()Loss before income taxes()Provision for income taxes Net income Net income attributable to non-controlling interests()Net income attributable to Expedia Group, Inc. Preferred stock dividend()Loss on redemption of preferred stock()Net loss attributable to Expedia Group, Inc. common stockholders$()

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$ $ Agency Advertising, media and other

Total revenue

$ $ $ Service TypeLodging$ $ $ Air Advertising and media

Other(1)

Total revenue

$ $ $

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Our B2C and B2B segments generate revenue from the merchant, agency and advertising, media and other business models as well as all service types. trivago segment revenue is generated through advertising and media.

$ $ All other countries $ $ $ $ All other countries $ $

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$ $()$ $ Other reserves () 2022Allowance for expected credit losses$ $ $()$()$ Other reserves ()()() 2021Allowance for doubtful accounts$ $ $()$()$ Other reserves ()

___________________________________

(1)Charges to other accounts primarily relates to amounts acquired through acquisitions or disposed of through sales of businesses, net translation adjustments and reclassifications.

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Expedia Group, Inc. - Annual Report: 2023 (Form 10-K)

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