Trivago Prospectus

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FiledpursuanttoRule424(b)(4)
RegistrationNo.333214591
26,110,118ADSs
travelB.V.
AmericanDepositaryShares
Representing26,110,118ClassAShares
ThisistheinitialpublicofferingofAmericanDepositaryShares,orADSs,oftravelB.V.,aDutchprivatecompanywithlimitedliability
(beslotenvennootschapmetbeperkteaansprakelijkheid).EachADSwillrepresentoneClassAsharewithanominalvalueof0.06per
share.Weareoffering18,110,091ADSs,andcertainofourexistingshareholdersnamedinthisprospectus(theSellingShareholders)are
offering8,000,027ADSsinthisoffering.WewillnotreceiveanyproceedsfromthesaleofADSsbytheSellingShareholders.Nopublic
marketcurrentlyexistsforourADSsorourClassAshares.Theinitialpublicofferingpriceis$11.00perADS.
OurADSshavebeenapprovedforlistingontheNASDAQGlobalSelectMarketunderthesymbolTRVG.
Wewillhavetwoclassesofsharesoutstandingafterthisoffering,ClassAsharesandClassBshares.EachClassAshareentitlesitsholder
toonevoteonallmatterspresentedtoourshareholdersgenerally.Uponcompletionofthisoffering,ClassBshareswillbeheldsolelyby
Expedia,Inc.anditsaffiliates,orExpedia.Aftercompletionofthisoffering,weandeachofMessrs.Schrmgens,VinnemeierandSiewert,
whomwecollectivelyrefertoastheFounders,willsubmitrequestsfortaxrulingsfromGermantaxauthoritiesinconnectionwithaplanto
simplifyourcorporatestructure,whichwerefertoasthepostIPOcorporatereorganization.AlthoughweexpecttocompletethepostIPO
corporatereorganizationassoonaspracticable,ExpediaandtheFoundershaveagreedtodeterminewithintwelvemonthsofthe
completionofthisofferinghowtoproceedwiththepostIPOcorporatereorganization,whetherornottaxrulingsarereceived,andexpectto
implementanydecisionwithinfourmonthsaftermakingsuchdetermination.WhetherweareabletoimplementthepostIPOcorporate
reorganizationwithinfourmonthsaftersuchdeterminationdependsonhowquicklyweareabletosubmitnecessaryfilingstogovernment
authorities,havesuchfilingsregisteredbysuchauthoritiesand,ifapplicable,concludediscussionswithemployeesregardingtheir
supervisoryboardparticipationrightsinourGermansubsidiaryunderGermanlaw.SeeCorporatestructurePostIPOcorporate
reorganization.FollowingthepostIPOmergerasdescribedherein,assumingitoccursascontemplated,ClassBshareswillalsobeheldby
theSellingShareholders.EachClassBshareentitlesitsholdertotenvotesonallmatterspresentedtoourshareholdersgenerally.
Immediatelyfollowingthisoffering,theholdersofADSsrepresentingourClassAshareswillcollectivelyhold11.1%oftheeconomic
interestsand1.2%ofthevotingpowerinus,andholdersofourClassBshareswillholdtheremaining88.9%oftheeconomicinterestsand
98.8%ofthevotingpowerinus.FollowingthepostIPOmerger,assumingitoccursascontemplated,theholdersofADSsrepresentingour
ClassAshareswillcollectivelyhold7.5%oftheeconomicinterestsand0.8%ofthevotingpowerinus,theFounderswillhold32.3%ofthe
ClassBsharesand34.6%ofthevotingpowerinus,andExpediawillhold65.1%oftheClassBsharesand64.6%ofthevotingpowerinus.
IntheeventthepostIPOmergerisnotconsummated,theFounderswillholdtheirownershipinterestintrivagoSE,asubsidiaryoftrivago
N.V.,withtherighttocontributesuchsharestotrivagoN.V.inexchangeforClassAsharesorClassBshares.SeeCorporatestructure
PostIPOcorporatereorganization.Asaresult,bothimmediatelyfollowingthisofferingandafterthepostIPOcorporatereorganizationas
describedherein,wewillbeacontrolledcompanywithinthemeaningofthecorporategovernancestandardsoftheNASDAQGlobal
SelectMarket.SeeManagementControlledcompanyexemption.
WearebothanemerginggrowthcompanyandaforeignprivateissuerunderapplicableSecuritiesandExchangeCommissionrulesand
willbeeligibleforreducedpubliccompanydisclosurerequirements.SeeProspectussummaryImplicationsofbeinganemerginggrowth
companyandaforeignprivateissuer.InvestinginourADSsinvolvesrisks.SeeRiskfactorsbeginningonpage21.
NeithertheSecuritiesandExchangeCommissionnoranystatesecuritiescommissionhasapprovedordisapprovedofthese
securitiesorpassedupontheadequacyoraccuracyofthisprospectus.Anyrepresentationtothecontraryisacriminaloffense.
PublicOfferingPrice
UnderwritingDiscount(1)
Proceedstous(beforeexpenses)
ProceedstotheSellingShareholders
PerADS
$ 11.00
$ (0.5775)
$10.4225
$10.4225
Total
$ 287,211,298
$ (15,078,593)
$ 188,752,423
$ 83,380,281
(1) WereferyoutoUnderwritingforadditionalinformationregardingunderwritingcompensation.
Theunderwritersmayalsoexercisetheiroptiontopurchaseupto2,716,515additionalADSsfromusandanadditional1,200,002ADSs
fromtheSellingShareholdersatthepublicofferingprice,lesstheunderwritingdiscount,for30daysafterthedateofthisprospectus.
TheunderwritersexpecttodelivertheADSstopurchasersonoraboutDecember21,2016throughthebookentryfacilitiesofThe
DepositoryTrustCompany.
https://www.sec.gov/Archives/edgar/data/1683825/000119312516795038/d246736d424b4.htm
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J.P.Morgan
Allen&CompanyLLC
CowenandCompany
Goldman,Sachs&Co.
BofAMerrillLynch
Citigroup
MorganStanley
DeutscheBankSecurities
GuggenheimSecurities
ThedateofthisprospectusisDecember15,2016
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Tableofcontents
Prospectussummary
Riskfactors
21
Presentationoffinancialandotherinformation
52
Cautionarynoteregardingforwardlookingstatements
53
Marketandindustrydata
55
Trademarks,servicemarksandtradenames
55
Exchangerates
56
Corporatestructure
57
Useofproceeds
61
Dividendpolicy
61
Capitalization
63
Dilution
65
Selectedconsolidatedfinancialdata
67
Managementsdiscussionandanalysisoffinancialconditionandresultsofoperations
70
Business
102
Management
117
Principalandsellingshareholders
129
Relatedpartytransactions
131
Descriptionofsharecapitalandarticlesofassociation
138
SharesandADSseligibleforfuturesale
160
DescriptionofAmericanDepositaryShares
162
Materialtaxconsiderations
173
Underwriting
201
Expensesoftheoffering
208
Legalmatters
209
Experts
209
Enforcementofcivilliabilities
210
Whereyoucanfindmoreinformation
211
Indextofinancialstatements
F1
ForinvestorsoutsidetheUnitedStates:Neitherwenortheunderwritershavedoneanythingthatwouldpermitthisofferingorpossessionor
distributionofthisprospectusinanyjurisdictionotherthantheUnitedStateswhereactionforthatpurposeisrequired.Personsoutsidethe
UnitedStateswhocomeintopossessionofthisprospectusmustinformthemselvesabout,andobserveanyrestrictionsrelatingto,the
offeringofourADSsandthedistributionofthisprospectusoutsidetheUnitedStates.
WeareincorporatedintheNetherlands,andmanyofouroutstandingsecuritiesareownedbynonU.S.residents.Undertherulesofthe
U.S.SecuritiesandExchangeCommission,orSEC,wearecurrentlyeligiblefor
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treatmentasaforeignprivateissuer.Asaforeignprivateissuer,wewillnotberequiredtofileperiodicreportsandfinancialstatementswith
theSECasfrequentlyoraspromptlyasdomesticregistrantswhosesecuritiesareregisteredundertheSecuritiesExchangeActof1934,as
amended,ortheExchangeAct.
Weareresponsiblefortheinformationcontainedinthisprospectus.NeitherwenortheSellingShareholdershaveauthorized
anyonetoprovideyouwithdifferentinformation,andneitherwenortheSellingShareholderstakeresponsibilityforanyother
informationothersmaygiveyou.We,theSellingShareholders,andtheunderwritersarenotmakinganoffertosellthese
securitiesinanyjurisdictionwheretheofferorsaleisnotpermitted.Youshouldnotassumethattheinformationcontainedinthis
prospectusisaccurateasofanydateotherthanitsdate.
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Prospectussummary
Thissummaryhighlightsinformationcontainedelsewhereinthisprospectus.Thissummarymaynotcontainalltheinformationthatmay
beimportanttoyou,andweurgeyoutoreadthisentireprospectuscarefully,includingtheRiskfactors,BusinessandManagements
discussionandanalysisoffinancialconditionandresultsofoperationssectionsandourconsolidatedauditedandcondensed
consolidatedunauditedfinancialstatements,includingthenotesthereto,includedinthisprospectus,beforedecidingtoinvestinour
ADSs.
Overview
Ourbusiness
trivagoisaglobalhotelsearchplatform.Ourmissionistobethetravelersfirstandindependentsourceofinformationforfindingthe
idealhotelatthelowestrate.Wearefocusedonreshapingthewaytravelerssearchforandcomparehotels,whileenablinghotel
advertiserstogrowtheirbusinessesbyprovidingaccesstoabroadaudienceoftravelersviaourwebsitesandapps.Ourplatformallows
travelerstomakeinformeddecisionsbypersonalizingtheirhotelsearchandprovidingaccesstoadeepsupplyofhotelinformationand
prices.InthetwelvemonthsendedSeptember30,2016,wehad487millionqualifiedreferralsandofferedaccesstoapproximately
1.3millionhotelsinover190countries.SeeManagementsdiscussionandanalysisoffinancialconditionandresultsofoperations
HowweearnandmonitorrevenueandOperatingperformanceindicatorsforadiscussionofqualifiedreferrals.
Ourbrandpositionsusasakeystartingpointfortravelerssearchingfortheiridealhotel.Ourfastandintuitivehotelsearchplatform
enablestravelerstofindtheiridealhotelbymatchingindividualtravelerpreferenceswithdetailedhotelcharacteristicssuchasprice,
location,availability,amenitiesandratings,acrossavastsupplyofglobalhotels.InthetwelvemonthsendedSeptember30,2016,
comparingacrossallofourlocalizedwebsitesandapps,weprovidedarangeofpricesperhotelwiththecheapestadvertiserofferinga
priceonaverage19%lowerthanthemostexpensiveadvertiser.
Webelievethatthenumberoftravelersaccessingourwebsitesandappsmakesusanimportantandscalablemarketingchannelforour
advertisers.Additionally,ourabilitytorefineuserintentthroughoursearchfunctionallowsustoprovideadvertiserswithtransaction
readyreferrals.Hoteladvertisers,whichincludeonlinetravelagencies,orOTAs,hotelchainsandindependenthotels,advertisetheir
supplyonourglobalmarketplaceonacostperclick,orCPC,basis,wherebyanadvertiserischargedwhenauserclicksonan
advertisedrateforahotelandisreferredtothatadvertiserswebsitewheretheusercancompletethebooking.Inthetwelvemonths
endedSeptember30,2016,anaverageoftenadvertisersperhotelacrossallourlocalizedwebsitesandappsplacedCPCbids.Our
CPCbiddingfunctionenablesadvertiserstoinfluencetheirownreturnoninvestmentandthevolumeofreferraltrafficwegeneratefor
them.
RigorousanalysisandapplicationofdataandtechnologyarecriticalpartsofourDNA.Wecapturealargeamountofdataonhowusers
searchonandengagewithoursiteandourapps,enablingustocontinuallytestnewfeaturesandtheeffectivenessofexistingones,
refineoursearchalgorithmsandtherebyimproveourproduct.Wehavebuilttoolsthatcapturedataandcalculateourreturnonmany
elementsofourbrandandperformancemarketing.Ourapplicationofdataledimprovementandinnovationalsoinformsourmarketing
strategy,whichwebelieveenablesustobecomeincreasinglymoreeffectivewithourmarketingspend.
Ourhotelsearchplatformcanbeaccessedgloballyvia55localizedwebsitesandappsin33languages.Userscansearchourplatform
ondesktopandmobiledevices,butbenefitfromafamiliaruserinterface,resultingina
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consistentuserexperience.InJune2016,ourrevenuefrommobilewebsitesandappsexceededourrevenuefromourdesktopwebsites
forthefirsttime,whichisconsistentwithanexpectedlongertermshifttowardsmobile.
Beginninginthesecondquarterof2016,managementidentifiedthreereportablesegments,whichcorrespondtoourthreeoperating
segments:theAmericas,DevelopedEuropeandtheRestofWorld.OurAmericassegmentiscurrentlycomprisedofArgentina,Brazil,
Canada,Chile,Colombia,Ecuador,Mexico,Peru,theUnitedStatesandUruguay.OurDevelopedEuropesegmentiscomprisedof
Austria,Belgium,Denmark,Finland,France,Germany,Ireland,Italy,theNetherlands,Norway,Portugal,Spain,Sweden,Switzerland
andtheUnitedKingdom.OurRestofWorldsegmentiscomprisedofallothercountries,themostsignificantbyrevenueofwhichare
Australia,HongKong,Japan,NewZealandandPoland.FortheninemonthsendedSeptember30,2016,wegeneratedrevenueof
223.5million,276.0millionand79.8millionfromtheAmericas,DevelopedEuropeandtheRestofWorld,respectively,comparedto
137.6million,209.1millionand45.6millionfortheninemonthsendedSeptember30,2015,respectively.Ourreportablesegment
revenueexcludesotherrevenueof1.5millionand5.7millionfortheninemonthsendedSeptember30,2015and2016,respectively,
whichisincludedincorporateandeliminations.
Wehavegrownsignificantlysinceourincorporationin2005.IntheyearsendedDecember31,2014and2015andtheninemonths
endedSeptember30,2015and2016,wegeneratedrevenueof309.3million,493.1million,393.8millionand585.0million,
respectively.Duringthesameperiods,wehadnetlossesof23.1million,39.4million,37.4millionand51.5million,respectively.In
theyearsendedDecember31,2014and2015andtheninemonthsendedSeptember30,2015and2016,ouradjustedEBITDAwas
3.5million,(1.1)million,(13.4)millionand16.3million,respectively.SeeSelectedconsolidatedfinancialdataforadescriptionof
adjustedEBITDAandareconciliationofadjustedEBITDAtonetloss,themostdirectlycomparableGAAPfinancialmeasure.
Ourindustry
Thedevelopmentofourindustryisinfluencedbyseveralkeyfactors.
Largeandgrowingtravelmarket
AccordingtoPhocuswrightData,globaltravelspendgrewtoanestimated$1.1trillionin2015,excludingCanada,LatinAmericaand
EasternEurope,representingacompoundannualgrowthrate,orCAGR,of4.1%since2010,outpacingaverageglobaleconomic
growthof2.9%peryearinthesameperiod.
Growthinhotelspend
AccordingtoPhocuswrightData,globalhotelspendgrewto$375billionin2015,excludingCanada,LatinAmericaandEasternEurope,
representingaCAGRof3.9%since2010,tobecome35%ofthetotaltravelspend.Hotelshaverespondedtorisingdemandby
increasingcapacityandinvestingintheoverallattractivenessandqualityoftheirhotelswhileincreasingtheirmarketingspend.
Offlinetoonlineshiftinhoteldistribution
Leisureandbusinesstravelersareincreasinglymovingtheirpurchaseactivityonline.AccordingtotheGlobalOnlineTravelOverview,in
2010,thetotalpercentageofhotelbookingsmadethroughhotelwebsitesandOTAsgloballywas22%,withtheUnitedStateshavingthe
highestpenetrationat31%,followedbyWesternEuropeat21%,theAsiaPacificregion,orAPAC,at18%andtheMiddleEastat
7%.AccordingtoPhocuswrightData,by2015,thesefiguresgrewto33%globally,to36%,35%,29%and25%intheUnitedStates,
Europe,APACand
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theMiddleEast,respectively.Inaddition,thereisaportionofcorporatetravelbeingbookedonline,whichisnotincludedintheonline
penetrationnumbersabove.
Againstthisbackdrop,hotelsareincreasinglymovingdistributionandassociatedadvertisingspendtoonlinechannels.Accordingtothe
GlobalOnlineTravelOverviewandPhocuswrightData,hotelshaveincreasedtheirbookingsmadethroughtheirownrespectivehotel
websitesandOTAsfrom$69billionin2010to$125billionin2015,representinga12.4%CAGR.
Independenthotelsearchplatformsasanincreasinglyimportanttoolforconsumersandadvertisers
Consumersareincreasinglylookingfortoolstoenablethemtonavigatethroughmultiplehotelbookingoptionssimultaneouslyand
compareprices.Independentsearchplatformsthatprovidemetasearchcapabilitiesaggregatefragmentedtraveldataacrossthe
Internetintooneplace,resultingintransparencyofprice,availability,qualityandotherhotelattributes.Theseplatformscanoffer
advertisersaccesstoalargepooloftransactionreadyconsumers,whichencouragesOTAs,hotelchainsandindependenthotelsto
advertiseontheseplatformsforthepurposeofdrivingbookings.Basedonourresearch,U.S.leisuretravelershaveincreasinglyfavored
metasearchservices,withusagegrowingfrom14%in2011to28%in2013.IntheUnitedStates,travelersaged18to34arealmost
twiceaslikelytousemetasearchservicesthanthose35andolder,accordingtothePhocuswrightConsumerTravelReport.
Increasingusageofmobile
Globalmobiledatatraffichasgrownsubstantiallyinrecentyears,achievinga74%growthratein2015over2014,andisexpectedto
growata53%CAGRfrom2015to2020,basedonourresearch.Thistrendhasalsoimpactedtheshareofmobiletravelbookings,
whichisexpectedtoincreasefrom2015to2017,from16%oftotalonlinetravelbookingsto24%intheUnitedStates,17%to24%in
Europeand24%to37%inAPAC,accordingtotheGlobalOnlineTravelOverview.Basedonourresearch,itisestimatedthatin2016,
73%ofAmericantravelerswilluseamobiledevicetoresearchatrip,ofwhich91%willuseasmartphoneastheirmobiletoolofchoice.
Theshifttowardsmobileusageisespeciallystrongamongyoungergenerations,asthisdemographictrendstowardsgreatermobile
basedtravelpurchases.
Evolvingtravelerbehavior
Travelersareincreasinglyprioritizingexperiences,with71%oftravelersgloballywillingtoexceedtheirallocatedtravelbudgetifthey
discoverinterestingtravelexperiences,accordingtoa2015MillwardBrownstudy.Webelievethechoiceofaccommodationisbecoming
moremeaningfultoconsumersasameanstocustomizetravelexperiences.Inaddition,barrierstotravelaredecreasingasnew
internationallowfareairlineoptionshavemadeitmoreaffordabletoflyaroundtheworld.Basedonourresearch,lowcostcarriers
controlapproximately25%ofthemarketforairtravelandaregrowingataboveindustryaveragerates.Youngergenerationsaretaking
moretripsonaverage,withmillennialsexpectedtotake7.2tripsperyear,comparedtoGenerationX,orpersonsagedapproximately35
to52,andBabyBoomers,orpersonsagedapproximately52to70,eachexpectedtotake6.6tripsperyearin2016,accordingtoa
2015AARPreport.
Thetrivagohotelsearchplatform
Webelievethatwearereshapinghoteldiscoveryforourusers,whilechangingthewayhoteladvertisersidentify,engagewithand
acquiretravelers.
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Oursearchplatformformsthecoreofouruserexperience.Itcapturesandseekstorefineuserintentandpreferencesand,asof
September30,2016,itprovideduserswithaccesstoapproximately1.3millionhotelsworldwide.Itorganizesalargeamountof
informationfrommultiplesourcesandgiveseachuserwhatwebelievetobetheoptimalbasistomakeadecision.Wehelpusersto
convertinitialinterestintoaclearandspecificbookingintention.
Weenablehoteladvertiserstoadvertiseoffersforeachindividualhotel.ByplacingbidsinourCPCbasedbiddingsystem,each
advertisercaninfluencethelikelihoodthattrafficisdriventoitsownplatform.Advertiserscanreachabroadglobalaudiencewhile
generatingtargeted,transactionreadyreferrals.
Keybenefitsforusers
Globalaggregationofrealtimehotelsupply
Weaggregatehotelavailabilityfromarangeofadvertisersglobally.Thissupplyiscontinuallyupdatedinornearrealtime,souserscan
viewcurrentavailabilityfromabroadrangeofadvertisers.Webelievetravelersuseourhotelsearchplatformastheirentrypointfor
hotelresearch,confidentthattheyreceivecomprehensivecoverageoftheiroptionstobookahotel.
Tailoredhotelsearchfunction
Oursearchfunctionisdesignedtoenableindividualuserstofindtheiridealhotel.Wepersonalizeresultsbasedonauserssearch
terms,selectedfiltersandotherinteractionswithoursitesandapps.Inaddition,weaggregateandanalyzemultiplesourcesof
informationtobuildaprofileforeachindividualhotel.Oursearchalgorithms,whicharerefinedbymillionsofsearcheseachday,create
matchesamongstthetwosetsofinformation.
Transparentpricecomparison
Ourdepthofadvertisersmeansthatusersareabletochoosefrommultipleadvertisersandarangeofpricesforeachhotel.Our
algorithmselectsthelowestavailablepriceforeachhotelanddisplaysroomtypeswithabroadrangeofpricingoptionsavailablefrom
ouradvertisers.Thisreducestheneedfortravelerstospendtimesearchingacrossmultiplesitesandappstoconfirmthelowest
availablerate.InthetwelvemonthsendedSeptember30,2016,comparingacrossallofourlocalizedwebsitesandapps,weprovideda
rangeofpricesperhotelwiththecheapestadvertiserofferingapriceonaverage19%lowerthanthemostexpensiveadvertiser.
Deepcontentandeasytouseinformationonhotels
Weobtainhotelinformationfrommanysources,suchastravelbookingsites,hotelwebsites,reviewsites,directlyfromhotelsand
internalresources.Thisinformationincludespictures,descriptions,reviews,ratings,amenitiesandroomtypes.Wesynthesizeand
enrichthisinformation.Forexample,ourratingscoredistillsreviewinformationfrommultiplesourcesintoasingleeasytousescorefor
thetraveler.
Keybenefitsforadvertisers
Broadtravelerreach
Weofferadvertisersahighlyscalablechanneloftravelers,givenourbroadpresenceacrossmultiplegeographiesandlanguages.
Additionally,formanytravelers,webelievewearetheentrypointtotheirhotelsearch,enablingadvertiserstoengagewithpotentialnew
customers.
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Deliveryoftransactionreadyreferrals
Weprovideadvertiserswithmotivatedtravelerswhohaveproactivelyexpressedtheirspecificintentviaoursearchplatform.Duetothe
breadthofhotelinformationweprovideandourpersonalizedmatchingalgorithms,travelersreferredbytrivagooftenalreadyhavea
comprehensiveunderstandingofthehotelanditsvaluepropositionforthem,whichwebelievemakesthemmorelikelytocompletea
bookingontheadvertiserssite.
Marketdriven,referralbasedpricingstructure
Webelieveouradvertisersvaluetheflexibilitytocontrolthepricingandvolumeofreferralstheygeneratefromourmarketplace.The
transparencyofourmodelmakesiteasyforadvertiserstoevaluatetheperformanceoftheirspendandinfluencetheirownreturnon
investment.
Improveadvertiserscompetitiveness
Hoteladvertisershavevaryinglevelsofexperience,scaleandresourcestodedicatetotheirmarketingefforts.Weprovideour
advertiserswithadvice,actionabledatainsightsandadvertisertoolstohelpthemoptimizetheirinvestmentonourmarketplaceby
improvingthequalityofavailablecontentabouttheirhotel.
Ourstrengths
Webelievethatourcompetitiveadvantagesarebasedonthefollowingkeystrengths:
Industryleadingproductanduserexperience
Webelievethatweprovidethemosteffectiveandintuitivehotelsearchplatformfortravelers.Wehaveinvestedinourproductover
manyyearsandcontinuetospendsignificanttimeandresourcesonfurtherrefiningourwebsitesandappstoprovidethebestpossible
userexperience.Weregularlytestandrefinemultipleaspectsofourwebsitesandapps,believingthatincrementalenhancementsover
timeadduptoimprovementsinoveralluserexperience.Thisapproachbenefitsbothourusersandadvertisersbyenablingmore
satisfyingandeffectiveengagementwithourplatform.
Significantscale
Wehaveachievedsignificantscale,withapproximately1.3millionhotelsavailableonourplatformasofSeptember30,2016,supported
by55localizedversionsofourwebsiteservedin33languages.Additionally,webelieveweworkwithalmostallsignificantinternational,
regionalandlocalOTAs.Bringingtogetheradvertisersandusersatthisscalecreatespowerfulnetworkeffects,improvingthequalityof
thetrivagoexperienceforallparties.
Powerfuldataandanalytics
Wecapturelargeamountsofdataacrossourplatform,includingtravelerdata,advertiserdata,publiclyavailablecontentanddataon
howtravelersandadvertisersinteractwithourplatform.Wetakeadatadriven,testingbasedapproach,whereweuseourproprietary
toolsandprocessestomeasureandoptimizeendtoendperformanceofourplatform.Ourabilitytoanalyzeandrapidlyrespondtothis
dataenablesustocontinuouslyimproveourplatform.
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Highbrandrecognitionanduserloyalty
Wehavecontinuouslyinvestedinourbrandovermanyyearsandhaveachievedstrongbrandrecognitionglobally.Ourbranddrives
traffictooursitebyunderpinningtheconnectiontravelersmakebetweentrivagoandhotelsearch.Thisdirectlysupportsourpositionas
usersentrypointtohoteldiscovery,withmorethan50%ofourtrafficcomingfrombrandedsources(suchasTVmarketing,video
marketing(suchasYouTube),radioandoutofhomeadvertising)in2015andthefirstninemonthsof2016.Additionally,webelievethat
ourbrandtrafficimprovestheeffectivenessofourmarketplacetoadvertisers,asourinternaldataindicatesthattheconversionratesof
ourreferralstobookingsarehigherfrombrandedthannonbrandedtrafficfortheadvertisersincludedinresearchweconducted.Such
researchshowsthatouraidedbrandawarenessinAugust2016inItaly,Spain,Germany,theUnitedKingdom,France,Australiaandthe
UnitedStateswas92%,89%,86%,80%,79%,77%and63%,respectively.
Scalablebusinessmodel
Wehaveascalablebusinessmodelthatenablesustogrowrapidlyandefficiently.Wecanexpandwithincurrentmarketsaswellasinto
newmarkets,whileincurringlimitedincrementalinvestmentininfrastructure,benefittinginpartfromourexistingscaleandacommon
globalplatform.
Employeesandculture
Webelievethatourentrepreneurialcultureandflatorganizationalstructurearekeyingredientsinoursuccess.Thesehavebeen
designedtoreflectthefastmovingtechnologyspaceinwhichweoperate,aswellasourdeterminationtoremainpioneersinourfield.
Ouremployeesactasentrepreneursintheirareasofresponsibility,continuouslystrivingforinnovationandimprovement.Weencourage
ouremployeestoregularlytakeonnewchallengeswithinthecompanytobroadentheirperspectives,acceleratetheirlearning,ensurea
highlevelofmotivationandfostercommunication.Culturalfitisakeypartofourrecruitingprocess,asweseektohireindividuals
comfortableworkinginaflatorganizationalstructurethatrewardsthosewhotakeinitiativeandcontinuallyseektounderstandandlearn,
takerisksandinnovate.Weregardfailureasanopportunitytolearnandinformimprovedapproachesgoingforward.
Ourstrategy
Ourstrategyisshapedbyourmissiontobethetravelersfirstandindependentsourceofinformationforfindingtheidealhotelatthe
lowestrate.Werunourbusinessandsetourprioritiesandstrategyaccordingtoourmission.
...travelers...
Wedesignedourhotelsearchplatformtobeusefulforeverytravelerwitheveryreasontotravel.Wefocusoncontinuingtooptimizeour
websitesandapps,ensuringtheirintuitivenavigationandhighperformance.
...first...
Wewanttobethestartingpointfortravelersseekingtodiscovertheiridealhotelatthelowestrate.Webelieveweprovideavaluable
servicetotravelers,allowingthemtoquicklyandeffectivelynavigateacrowdedhotelbookingecosystem.Weintendtobeeach
travelersfirstsourceofhotelinformationbygrowingour
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engagementwithtravelersthroughcontinuousinvestmentinbothonlineandofflinemarketingtobuildourbrandefficientlyanddrive
stronguseracquisitionandretention.Weplantocontinueenhancingourmobileofferingsanduserengagementonmobiledevices,
therebyfurtherincreasingaccessfortravelerstoourservicesanytimeandanywhere.
...andindependent...
Webelievewehavecreatedahotelsearchplatformthatisfairandtransparentforusers,offeringthemapowerfultooltoeasilyaccess
informationinthecomplexhotelmarket.Weprovideuserstheinformationsotheycanindependentlydecidewheretostay.
...sourceofinformation...
Wefocusonprovidinginformationtoourusersratherthansellingthemproductsorservices.Wesupporttravelerssearchesby
aggregatinghotelinformationfromacrosstheInternetanddisplayingitinasimple,easytonavigateformat.Wealsointendtocontinue
growingournumberofdirectrelationshipswithhotels,therebyincreasingthevolumeandqualityofinformationwecanprovideto
travelers.Webelievethatitiscrucialtothesuccessofouruserexperiencethatweprovidecomprehensive,relevantandeasily
accessibleinformation.
...findingtheideal...
Webelievethereisanidealhotelforeverytraveler.Weaimtocontinuouslyoptimizeoursearchalgorithmstoconsistentlydeliverhotel
suggestionstoeachofourusersforeachspecificstaysotheycanfindtheiridealhotel.Whilewebelieveweofferabestinclasshotel
searchexperience,weacknowledgethereistheopportunityforfurtherinnovationintheareasofsearchpersonalizationandhotel
categorizationandrating.Weareinvestinginnewtechnologieslikesemanticsearchtocontinuouslyimproveourusersdiscovery
experienceandmayexploreadditionaltechnologyledacquisitionsgoingforward.
...hotel...
Wearefocusedonthehotelsector.Ourmarketplaceandalgorithmsareoptimizedtodisplayandmatchuserswithspecifichotel
characteristics.Asourtechnologyisadvancingandtravelerpreferencesareshifting,weincreasinglycomplementourtraditionalhotel
offeringswithotherformsofaccommodation,suchasvacationrentalsandprivateapartmentsthatarerelevanttoourusers.
...atthelowestrate.
Providingthelowestratetoourusersisatthecoreofwhatwedo.Ourabilitytoprovidepricingtransparencybyidentifyingthelowest
availableratesfromouradvertisersisdriveninpartbythelargenumberofadvertisersonourmarketplace.Aswecontinuebuildingout
ouradvertiserbasegloballyandsupportingadvertisersinefficientlyusingourmarketplace,thisshouldhelpprovidetravelerswith
consistentlylowpricesacrossoursupplyofavailablehotels.
RelationshipwithExpedia,Inc.
Expedia,Inc.anditsaffiliates,orExpedia,ourcontrollingshareholder,owned63.5%ofoursharecapitalasofSeptember30,2016.Day
today,weoperateourbusinessasastandaloneandindependentmemberofthe
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Expediagroupofcompanies.Weindependentlytestanddevelopourtechnologyanddesignandimplementourmarketingstrategyand
effortstogrowouruserandadvertiserbase.WemaintaincommercialrelationshipsoncustomarytermswithbrandswithintheExpedia
groupofcompaniesintheircapacitiesasadvertisersonourmarketplace.IntheyearsendedDecember31,2014and2015andforthe
ninemonthsendedSeptember30,2015and2016,Expediaaccountedfor32%,39%,39%and35%ofourrevenue,respectively.
AsfurtherdiscussedinRelatedpartytransactions,Expediahashistoricallyprovided(oraugmented),andmaycontinuetoprovide(or
augment),certainofourcorporatefunctions,includingwithinthelegal,tax,treasury,auditandcorporatedevelopmentareas,andhosts
alloftheserversweusethatarelocatedwithintheUnitedStates.
WehaveenteredintovariousagreementswithExpediaandtheFoundersregardingthemanagementofourbusinessandthe
implementationofthecorporatereorganization(asdefinedherein).SeeRelatedpartytransactions.
Corporatereorganization
TheactionsdescribedinthissectionrelatetothepreIPOcorporatereorganizationandthepostIPOcorporatereorganizationare
referredtocollectivelyhereinasthecorporatereorganization.PleaseseeCorporatestructureCorporatereorganizationformore
information.
travelB.V.isanewlyformedDutchprivatecompanywithlimitedliability(beslotenvennootschapmetbeperkteaansprakelijkheid).Prior
tocompletionofthisoffering,travelB.V.willbeconvertedunderDutchlawintoapubliclimitedcompany(naamlozevennootschap)
pursuanttoadeedofamendmentandconversion.ThelegaleffectoftheconversionontravelB.V.underDutchlawwillbelimitedtothe
changeinthelegalform.travelB.V.willneitherbedissolvednorwoundup,butwillcontinueitsexistenceasthesamelegalentitywitha
newlegalform.Asofthemomentofconversion,itwillberenamedtrivagoN.V.
trivagoN.V.willactasaholdingcompanyoftrivagoGmbH,thehistoricaloperatingcompanyofthetrivagogroup.Inthisprospectus,
unlessthecontextotherwiserequires,thetermswe,us,our,trivagoandthecompanyrefertotrivagoGmbH,travelB.V.and
trivagoN.V.,andtheirrespectiveconsolidatedsubsidiaries,asapplicable.
PreIPOcorporatereorganization
AsofDecember1,2016,i.e.,priortothecompletionofthisofferingandthecontributionsdescribedinthisparagraph,Expediaowned
63.5%andtheFoundersowned36.5%,inaggregate,ofthesharecapitaloftrivagoGmbH.Priortothecompletionofthisoffering,
ExpediawillcontributeallofitsunitsoftrivagoGmbHtotravelB.V.inacapitalincreaseinexchangefornewlyissuedClassBsharesof
travelB.V.,tobeconvertedintoClassBsharesoftrivagoN.V.TheFounderswillcontribute940unitsoftrivagoGmbH,representing
6.7%oftheiraggregateunitholdingintrivagoGmbH,totravelB.V.inacapitalincreaseinexchangefornewlyissuedClassAsharesof
travelB.V.,tobeconvertedintoClassAsharesoftrivagoN.V.Asaresultofthesecontributions,96.3%ofthesharecapitaland99.6%
ofthevotingpowerintravelB.V.willbeheldbyExpediaand3.7%ofthesharecapitaland0.4%ofthevotingpowerintravelB.V.willbe
heldbytheFounders,whereas66.0%oftheunitsoftrivagoGmbHwillbeheldbytravelB.V.and34.0%oftheunitsintrivagoGmbHwill
beheldbytheFounders.ADSsrepresentingtheClassAsharesoftheFounderswillsubsequentlybesoldinthisoffering.Wereferto
theforegoingtransactionsasthepreIPOcorporatereorganization.
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Immediatelyupontheclosingofthisoffering,asubstantialportionofthenetproceedstousfromtheofferingwillbetransferredtotrivago
GmbHinexchangefornewunitsissuedbytrivagoGmbH,whichwerefertoasthecapitalincrease.Thenumberofnewunitsoftrivago
GmbHtobesubscribedforwillbeequivalenttothenumberofADSssoldbyusintheoffering,dividedbytheexchangeratioof
8,510.66824,roundeddowntothenearestwholeunit.Afterthecapitalincrease,67.7%oftheunitsoftrivagoGmbHwillbeheldby
trivagoN.V.and32.3%oftheunitsoftrivagoGmbHwillbeheldbytheFounders.UponcompletionofthepreIPOcorporate
reorganization,thisofferingandthecapitalincrease,trivagoN.V.willbeaholdingcompanyanditsonlymaterialassetswillbeits
ownershipoftheunitsoftrivagoGmbH.InconnectionwiththepreIPOcorporatereorganization,weexpecttoimplementcertainrelated
arrangementsoncustomarycommercialtermswithtrivagoGmbH,includingintercompanyloanarrangementsandmanagement
servicesarrangements.
ThefollowingchartdepictsourcorporatestructureupontheconversionoftravelB.V.intoapubliclimitedcompany(naamloze
vennootschap),thecompletionofthisoffering,thecontributionsandthecapitalincreasedescribedintheaboveparagraph.
PostIPOcorporatereorganization
Aspromptlyaspracticable,butinanyeventwithinthreemonthsofthedatethereof,eachoftrivagoGmbHandeachoftheFounderswill
submitarequestforataxrulingfromtheGermantaxauthoritiesinconnectionwithaplantosimplifyourcorporatestructureafter
completionofthisoffering.ThetaxrulingrequestofthecompanywillrequestadecisionfromtheGermantaxauthoritieswithrespectto,
interalia,the:(i)applicationoftheGermanReorganizationTaxAct(RTAUmwandlungssteuergesetz)tothepostIPOmergerand
(ii)fulfilmentofthespecificrequirementsundersec.11par.2RTA,inparticular,thatthetransferredassetswillstillbesubjecttoGerman
corporateincometaxandthatGermanyisnotprecludedorlimitedinexercisingitsrightstotaxanycapitalgainsfromthedisposalof
thoseassetsattheleveloftrivagoN.V.asaresultofthepostIPOmerger.ThetaxrulingrequestofeachoftheFounderswillrequesta
decisionfromtheGermantaxauthoritieswithrespectto,interalia,the:(i)applicationoftheGermanReorganizationTaxAct(RTA
Umwandlungssteuergesetz)tothepostIPOmerger(asdefinedbelow)and(ii)thefulfillmentofthespecificrequirementsundersec.13
par.2RTAforataxfreeexchangebytheFoundersoftheirsharesand(iii)certainothermatters.Webelievethattherelevant
governmentalauthoritiestypicallyissuerulingssuchastheonedescribedabovewithintwotofourmonthsafterarequestissubmitted.
Thereisnoguarantee,however,thattherulingstoberequestedbytrivagoGmbHandtheFounderswillbeissuedwithinthistime(orat
all),andsucharulingmaytakeconsiderablylonger.IfweandeachoftheFoundersreceivepositivetaxrulings(and/orcertainother
conditionsaremet,asdescribedmorefullyintheIPOStructuringAgreement,seeRelatedpartytransactionsRelationshipwith
ExpediaIPOStructuringAgreement),weintendtoconsummateatransactionpursuanttowhichtrivagoGmbHwillbemergedwith
andintotrivagoN.V.,whichwerefertoasthepost
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IPOmerger,andtheFounderswilleffectivelyexchangealloftheirunitsoftrivagoGmbHremainingafterthepreIPOcorporate
reorganizationforClassBsharesoftrivagoN.V.Thefollowingchartdepictsourcorporatestructureifweareabletocompletethepost
IPOmerger:
IftrivagoGmbHoranyoftheFoundersdoesnotreceiveafavorablerulingfromtheGermantaxauthoritieswithrespecttothematters
describedabove,oriftrivagoGmbHoranyoftheFoundersdoesnotreceivearulingwithintwelvemonthsfromthecompletionofthe
offering(andineachcasecertainotherconditionsarenotmet,asdescribedmorefullyintheIPOStructuringAgreement,seeRelated
partytransactionsRelationshipwithExpediaIPOStructuringAgreement),trivagoGmbHwillnotconsummatethepostIPOmerger.
Aftersuchtime,theFounderswillhavearighttoexchangetheirsharesintrivagoGmbHforourClassAsharesorClassBsharesatthe
exchangeratioof8,510.66824,subjecttocertainadjustmentsforsplitsandsimilartransactions.IfthepostIPOmergerisnot
consummated,trivagoGmbHwillchangeitslegalformfirstintoaGermanstockcorporation(Aktiengesellschaft)andthenintoa
Europeanpubliclimitedliabilitycompany(SocietasEuropaea),whichwerefertoastheSEstructure.Werefertothecompanyfollowing
implementationoftheSEstructureastrivagoSE.UponcompletionoftheSEstructure,theownershipoftrivagoGmbH/SEwillbeas
follows:
IftheSEstructureisimplemented,wewillremainaholdingcompany,theFounderswillowntheremainingsharesoftrivagoSEandwill
continuetohavetherighttoexchangetheirsharesoftrivagoSEforourClassAsharesorClassBsharesattheexchangeratioof
8,510.66824,subjecttocertainadjustmentsforsplitsandsimilartransactions.SeeRelatedpartytransactionsIPOStructuring
AgreementandRiskfactorsTaxrisksrelatedtothecorporatereorganization.InconnectionwiththepreIPOcorporate
reorganization,weexpecttoimplementcertainrelatedarrangementsoncustomarycommercialtermswithtrivagoGmbH,including
intercompanyloanarrangementsandmanagementservicesarrangements.WerefertothepostIPOmergerandtheSEstructure,
collectively,asthepostIPOcorporatereorganization.AlthoughweexpecttocompletethepostIPOcorporatereorganizationassoonas
practicable,ExpediaandtheFoundershaveagreedtodeterminewithintwelvemonthsofthecompletionofthisofferinghowtoproceed
withthepostIPOcorporate
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reorganization,whetherornottaxrulingsarereceived,andexpecttoimplementanydecisionwithinfourmonthsaftermakingsuch
determination.WhetherweareabletoimplementthepostIPOcorporatereorganizationwithinfourmonthsaftersuchdetermination
dependsonhowquicklyweareabletosubmitnecessaryfilingstogovernmentauthorities,havesuchfilingsregisteredbysuch
authoritiesand,ifapplicable,concludediscussionswithemployeesregardingtheirsupervisoryboardparticipationrightsinourGerman
subsidiaryunderGermanlaw.Eveniffavorabletaxrulingsarereceived,ExpediaandtheFoundersmaychoosetoconsummatetheSE
structureratherthanthepostIPOmerger.Wewillissueapressreleaseassoonaspracticableafterthetimeofsuchdeterminationto
announcethefinalizationofourpostIPOcorporatereorganization.
Ourshareholders
Following(i)thecompletionofthisofferingandthepreIPOcorporatereorganizationand(ii)assumingthecompletionofthepostIPO
merger,theownershipoftrivagoN.V.willbeasfollows:
Followingthecompletionofthe
preIPOcorporatereorganization
Assumingthe
Assumingthe
underwritersoption
underwritersoption
topurchaseadditional
ADSsis
ADSsis
notexercised:
exercisedinfull:
ClassA
shares
ClassB
shares
ClassA
shares

(1)
(1)
(1)
11.1%
11.1%
88.9%
(1)
(1)
(1)

88.9%

(1)
(1)
(1)
12.6%
12.6%
Expedia
RolfSchrmgens
PeterVinnemeier
MalteSiewert
Freefloat
Total
Assumingthecompletionofthe
postIPOmerger
Assumingthe
Assumingthe
underwritersoption
underwritersoption
ADSsis
ADSsis
notexercised:
exercisedinfull:
ADSs
ADSs
representing
representing
ClassA
ClassB
ClassA
ClassB
ClassB
shares
shares
shares
shares
shares
87.4%
60.2%
59.7%
(1)
(1)
(1)

87.4%

7.5%
7.5%
16.8%
12.8%
2.6%

92.5%

8.6%
8.6%
16.5%
12.6%
2.5%
91.4%
(1) Followingthecompletionofthisofferingandthecapitalincrease,Messrs.Schrmgens,VinnemeierandSiewertwillown16.8%,12.8%and2.6%,respectively,of
noncontrollinginterestsintrivagoGmbH,assumingtheunderwritersoptiontopurchaseadditionalADSsisnotexercised,and16.7%,12.7%and2.5%,respectively,of
noncontrollinginterestsintrivagoGmbH,assumingtheunderwritersoptiontopurchaseadditionalADSsisexercisedinfull.AssumingthecompletionofthepostIPO
merger,theFoundersnoncontrollinginterestswillbeconvertedintoClassAsharesorClassBsharesoftrivagoN.V.
IftheSEstructureisimplemented,theFounderswillholdsharesoftrivagoSEandnottrivagoN.V.andthusMessrs.Schrmgens,
VinnemeierandSiewertwillown16.8%,12.8%and2.6%ofnoncontrollinginterestsintrivagoSE,respectively,assumingthe
underwritersoptiontopurchaseadditionalsharesisnotexercised.
Corporateinformation
OurprincipalexecutiveofficesarelocatedatBennigsenPlatz1,40474Dsseldorf,FederalRepublicofGermany.Ourtelephone
numberatthisaddressis+4921154065110.
Ourwebsiteaddressiswww.trivago.com.Wealsomaintainlocalizedversionsofourwebsite.Theinformationcontainedon,orthatcan
beaccessedthrough,ourwebsitesisnotapartof,andshallnotbeincorporatedbyreferenceinto,thisprospectus.Wehaveincluded
ourwebsiteaddressasaninactivetextualreferenceonly.
Risksassociatedwithourbusiness
Ourbusinessissubjecttoanumberofrisksofwhichyoushouldbeawarebeforemakinganinvestmentdecision.Youshouldcarefully
consideralloftheinformationsetforthinthisprospectusand,inparticular,
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shouldevaluatethespecificfactorssetforthundertheRiskfactorssectionofthisprospectusindecidingwhethertoinvestinour
securities.Amongtheseimportantrisksarethefollowing:
ourabilitytoeffectivelymanageourgrowth
wemaynotbeabletomaintainourhistoricalgrowthrates
globalpoliticalandeconomicinstabilityandothereventsbeyondourcontrol
increasingcompetitionandconsolidationinourindustry
ouradvertiserandgeographicconcentration
ourcounterpartiesmaydefaultontheirperformanceobligations
ourabilitytomaintainandincreaseourbrandawarenessandbrandstrength
ourabilitytomaintainand/orexpandrelationshipswith,anddevelopnewrelationshipswith,hotelchainsandindependenthotelsas
wellasOTAs
ourmaterialweaknessinourinternalcontroloverfinancialreportingandourabilitytoestablishandmaintainaneffectivesystemof
internalcontroloverfinancialreporting
ourrelianceonsearchengines,whichmaychangetheiralgorithms
ourrelianceonthirdpartytechnology
ourabilitytoattract,trainandretainexecutivesandotherqualifiedemployees
ourbrandreputationalrisk
ourentrepreneurialcultureanddecentralizeddecisionmakingand
ourstatusasacontrolledcompanyandourrelationshipwithExpedia.
Implicationsofbeinganemerginggrowthcompanyandaforeignprivateissuer
WeareanemerginggrowthcompanyasdefinedintheJumpstartOurBusinessStartupsAct,orJOBSAct.Assuch,weareeligible,
foruptofiveyears,totakeadvantageofcertainexemptionsfromvariousreportingrequirementsthatareapplicabletootherpublicly
tradedentitiesthatarenotemerginggrowthcompanies.Theseexemptionsinclude:
theabilitytopresentmorelimitedfinancialdata,includingpresentingonlytwoyearsofauditedfinancialstatementsandonlytwo
yearsofselectedfinancialdataintheregistrationstatementonFormF1ofwhichthisprospectusisapart
notbeingrequiredtocomplywiththeauditorattestationrequirementsofSection404oftheSarbanesOxleyActof2002
notbeingrequiredtocomplywithanyrequirementthatmaybeadoptedbythePublicCompanyAccountingOversightBoard,or
PCAOB,regardingmandatoryauditfirmrotationorasupplementtotheauditorsreportprovidingadditionalinformationaboutthe
auditandthefinancialstatements(i.e.,anauditordiscussionandanalysis)
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notbeingrequiredtosubmitcertainexecutivecompensationmatterstoshareholderadvisoryvotes,suchassayonpay,sayon
frequencyandsayongoldenparachutesand
notbeingrequiredtodisclosecertainexecutivecompensationrelateditemssuchasthecorrelationbetweenexecutivecompensation
andperformanceandcomparisonsofthechiefexecutiveofficerscompensationtomedianemployeecompensation.
Wemaytakeadvantageoftheseprovisionsuntilthelastdayofourfiscalyearfollowingthefifthanniversaryofthecompletionofthis
offeringorsuchearliertimethatwearenolongeranemerginggrowthcompany.Asaresult,wedonotknowifsomeinvestorswillfind
ourADSslessattractive.TheresultmaybealessactivetradingmarketforourADSs,andthepriceofourADSsmaybecomemore
volatile.
Section107oftheJOBSActalsoprovidesthatanemerginggrowthcompanycantakeadvantageoftheextendedtransitionperiod
providedinSection13(a)oftheExchangeAct,forcomplyingwithneworrevisedaccountingstandards.Inotherwords,anemerging
growthcompanycandelaytheadoptionofcertainaccountingstandardsuntilthosestandardswouldotherwiseapplytoprivate
companies.Wearechoosingtoirrevocablyoptoutofthisextendedtransitionperiod,andasaresult,wewillcomplywithneworrevised
accountingstandardsontherelevantdatesonwhichadoptionofsuchstandardsisrequiredfornonemerginggrowthcompanies.Under
federalsecuritieslaws,ourdecisiontooptoutoftheextendedtransitionperiodisirrevocable.
Wewillremainanemerginggrowthcompanyuntiltheearliestof:(i)thelastdayofthefirstfiscalyearinwhichourannualgross
revenuesexceed$1billion(ii)thelastdayofthefiscalyearfollowingthefifthanniversaryofthedateofthisoffering(iii)thedatethat
webecomealargeacceleratedfilerasdefinedinRule12b2undertheExchangeAct,whichwouldoccurifthemarketvalueofour
ADSsthatisheldbynonaffiliatesexceeds$700millionasofthelastbusinessdayofourmostrecentlycompletedsecondfiscalquarter
or(iv)thedateonwhichwehaveissuedmorethan$1billioninnonconvertibledebtsecuritiesduringanythreeyearperiod.
Uponcompletionofthisoffering,wewillreportundertheExchangeActasanonU.S.companywithforeignprivateissuerstatus.Even
afterwenolongerqualifyasanemerginggrowthcompany,aslongaswequalifyasaforeignprivateissuerundertheExchangeActwe
willbeexemptfromcertainprovisionsoftheExchangeActthatareapplicabletoU.S.domesticpubliccompanies,including:
thesectionsoftheExchangeActregulatingthesolicitationofproxies,consentsorauthorizationsinrespectofasecurityregistered
undertheExchangeAct
thesectionsoftheExchangeActrequiringinsiderstofilepublicreportsoftheirstockownershipandtradingactivitiesandliabilityfor
insiderswhoprofitfromtradesmadeinashortperiodoftimeand
therulesundertheExchangeActrequiringthefilingwiththeSECofquarterlyreportsonForm10Qcontainingunauditedfinancial
andotherspecificinformation,orcurrentreportsonForm8K,upontheoccurrenceofspecifiedsignificantevents.
Bothforeignprivateissuersandemerginggrowthcompaniesarealsoexemptfromcertainmorestringentexecutivecompensation
disclosurerules.Thus,evenifwenolongerqualifyasanemerginggrowthcompanybutremainaforeignprivateissuer,wewillcontinue
tobeexemptfromthemorestringentcompensationdisclosuresrequiredofcompaniesthatareneitheranemerginggrowthcompany
noraforeignprivateissuerandwillinsteadbepermittedtofollowourhomecountrypracticeonsuchmatters.
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Statusasacontrolledcompany
UponthecompletionofthisofferingandthepostIPOmerger,assumingitiscompleted,Expediawillown209,008,088ClassBshares,
representing64.6%ofthevotingpowerofourissuedandoutstandingshares.Inthealternative,iftheSEstructureisimplemented,
Expediawillown209,008,088ClassBshares,representing98.8%ofthevotingpowerofourissuedandoutstandingshares.See
CorporatestructurePostIPOcorporatereorganization.Asaresult,followingthepostIPOcorporatereorganization,undereither
scenario,wewillremainacontrolledcompanywithinthemeaningofthelistingrulesandthereforeweareeligiblefor,and,intheevent
wenolongerqualifyasaforeignprivateissuer,weintendtorelyon,certainexemptionsfromthecorporategovernancelisting
requirements,ofNASDAQ.SeeManagementControlledcompanyexemption.
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Theoffering
ADSsofferedbyus
18,110,091ADSs,eachrepresentingoneClassAshare.
ADSsofferedbytheSelling
Shareholders
8,000,027ADSs,eachrepresentingoneClassAshare.
ClassAsharestobeoutstanding 26,110,118ClassAshares(30,026,635ClassAsharesiftheunderwritersexercisetheiroptionin
afterthisoffering
fulltopurchaseadditionalADSsfromusandtheSellingShareholders).
ClassBsharestobeoutstanding 209,008,088ClassBshares.
afterthisoffering
TotalClassAandClassBshares 235,118,206shares(239,034,723sharesiftheunderwritersexercisetheiroptioninfulltopurchase
tobeoutstandingafterthis
additionalADSsfromusandtheSellingShareholders).
offering
TotalClassAandClassBshares 347,110,088shares(349,826,603sharesiftheunderwritersexercisetheiroptioninfulltopurchase
tobeoutstandingassumingthe additionalADSsfromusandtheSellingShareholders).
completionofthepostIPO
merger
Optiontopurchaseadditional
ADSs
Wehavegrantedtheunderwriterstheoptiontopurchaseupto2,716,515additionalADSs
representing2,716,515ClassAshares,andtheSellingShareholdershavegrantedthe
underwriterstheoptiontopurchaseupto1,200,002additionalADSsrepresenting1,200,002Class
Ashareswithin30daysofthedateofthisprospectus.
SellingShareholders
ExpediawillnotsellanyADSsinthisoffering.RolfSchrmgens,PeterVinnemeierandMalte
SiewertwillsellADSsinthisoffering.SeePrincipalandsellingshareholders.
TheunderwriterswilldeliverourClassAsharesintheformofADSs.EachADS,whichmaybe
evidencedbyanAmericanDepositaryReceipt,orADR,representsanownershipinterestinoneof
ourClassAshares.AsanADSholder,wewillnottreatyouasoneofourshareholders.The
depositary,DeutscheBankTrustCompanyAmericas,willbetheholderoftheClassAshares
underlyingyourADSs.YouwillhaveADSholderrightsasprovidedinthedepositagreement.Under
thedepositagreement,youmayonlyvotetheClassAsharesunderlyingyourADSsifweaskthe
depositarytorequestvotinginstructionsfromyou.Thedepositarywillpayyouthecashdividendsor
otherdistributions,ifany,itreceivesonourClassA
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sharesafterdeductingitsfeesandexpensesandapplicablewithholdingtaxes.Youmayneedto
payafeeforcertainservices,asprovidedinthedepositagreement.Youareentitledtothedelivery
oftheClassAsharesunderlyingyourADSsuponthesurrenderofsuchADSs,thepaymentof
applicablefeesandexpensesandthesatisfactionofapplicableconditionssetforthinthedeposit
agreement.
TobetterunderstandthetermsoftheADSs,youshouldcarefullyreadDescriptionofAmerican
DepositaryShares.Wealsoencourageyoutoreadthedepositagreement,theformofwhichis
attachedasanexhibittotheregistrationstatementofwhichthisprospectusformsapart.Weare
offeringADSssothatourcompanycanbequotedontheNASDAQGlobalSelectMarketand
investorswillbeabletotradeoursecuritiesandreceivedividendsontheminU.S.dollars.
Depositary
DeutscheBankTrustCompanyAmericas
Custodian
DeutscheBankAG
Useofproceeds
Thenetproceedstousfromthisofferingwillbeapproximately$183million,orapproximately$212
millioniftheunderwritersexercisetheiroptiontopurchaseadditionalADSsinfull,afterdeducting
theunderwritingdiscountsandcommissionsandofferingexpenses.Wewillnotreceiveany
proceedsfromthesaleofADSsbytheSellingShareholders.
Theprincipalreasonsforthisofferingaretoincreaseourfinancialflexibility,increaseourpublic
profileandawareness,createapublicmarketforourADSsandtofacilitateourfutureaccessto
publicequitymarkets.Wehavenotquantifiedorallocatedanyspecificportionofthenetproceeds
tousorrangeofthenetproceedstousforanyparticularpurpose.SeeUseofproceeds.
Votingrights
Followingthisoffering,wewillhavetwoclassesofshares,ClassAsharesandClassBshares.
ClassAsharesareentitledtoonevotepershareandClassBsharesareentitledtotenvotesper
share.
HoldersofourClassAsharesandClassBshareswillgenerallyvotetogetherasasingleclass,
unlessotherwiserequiredbylaworourarticlesofassociation.TheholdersofouroutstandingClass
Bshareswillhold98.8%ofthevotingpowerofouroutstandingsharesfollowingthisoffering(and
99.2%ofthevotingpowersubsequenttothepostIPOmerger)andwillhavetheabilitytocontrol
theoutcomeofmatterssubmittedtoourshareholdersforapproval,includingtheappointmentofour
managementboardmembersandsupervisoryboardmembersandtheapprovalofanychangeof
controltransaction.SeePrincipalandsellingshareholdersandDescriptionofsharecapitaland
articlesofassociationforadditionalinformation.
Dividendpolicy
Theamountofanydistributionswilldependonmanyfactors,includingourresultsofoperations,
financialcondition,futureprospects,contractualrestrictions,restrictionsimposedbyapplicablelaw
andotherfactorsour
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managementboardandsupervisoryboarddeemsrelevant.Wedonotanticipatepayingany
dividendsintheforeseeablefuture.
Afterthecompletionofthisoffering,butpriortotheconsummationofthepostIPOmerger,the
FoundersandExpediahaveagreed,pursuanttotheIPOStructuringAgreement,toeffectaone
timedividendpaymentinrespectoffiscalyear2016intheamountof0.5million,whichshallbe
paidtotheshareholdersofrecordoftrivagoGmbHpriortotheconsummationofthepostIPO
mergerbutnotbeforeJanuary1,2017.
Lockupagreements
WehaveagreedwithJ.P.MorganSecuritiesLLC,Goldman,Sachs&Co.andMorganStanley&
Co.LLC,asrepresentativesoftheseveralunderwriters,subjecttocertainexceptions,nottosellor
disposeofanyofourADSsorsecuritiesconvertibleintoorexchangeableorexercisableforour
ADSsorClassAsharesuntil180daysafterthedateofthisprospectus.OurSellingShareholders,
Expediaandourmanagementboard,supervisoryboardmembersandcertainemployeeshave
agreedtosimilarlockuprestrictionsforaperiodof180days.SeeUnderwriting.
Controlledcompany
WeareacontrolledcompanyunderthecorporategovernancerulesoftheNASDAQGlobalSelect
Market.FollowingthecompletionofthepostIPOmerger,assumingitoccursascontemplated,
Expedia,Inc.anditsaffiliateswillhold209,008,088ClassBsharesand64.6%ofthevotingpower
inus.Asaresult,wewillremainacontrolledcompanywithinthemeaningoftheNASDAQ
corporategovernancerules.SeeManagementControlledcompanyexemption.
Listing
OurADSshavebeenapprovedforlistingontheNASDAQGlobalSelectMarket,orNASDAQ,
underthesymbolTRVG.
ThenumberofourClassAsharestobeoutstandinguponcompletionofthisofferingisbasedonsharesoutstandingasofDecember1,
2016andexcludesClassAsharesissuableupon(i)theexerciseof7,706,752shareoptionsoutstandingasofDecember1,2016ata
weightedaverageexercisepriceof2.83pershareand(ii)theconversionofClassBsharesheldbyExpedia,Inc.anditsaffiliatesand
theconversionof111,991,882ClassBsharestobeheldbytheFoundersfollowingthepostIPOmerger,ifimplemented,orthe
exchangeofsharesoftrivagoSE,iftheSEstructureisimplemented.
Unlessotherwiseindicated,allinformationcontainedinthisprospectusassumesorgiveseffectto:
noexerciseoftheoutstandingoptionsdescribedaboveafterDecember1,2016
noexercisebytheunderwritersoftheiroptiontopurchaseadditionalADSsinthisoffering
thepreIPOcorporatereorganizationand
thesharecapitaladjustmentdescribedinCorporatestructureCorporatereorganizationPreIPOcorporatereorganization.
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Summaryconsolidatedfinancialdata
ThefollowingsummaryconsolidatedstatementofoperationsandbalancesheetdataforthefiscalyearsendedDecember31,2014and
2015havebeenderivedfromtheauditedconsolidatedfinancialstatementsoftrivagoGmbHincludedelsewhereinthisprospectus.The
unauditedfinancialdatafortheninemonthsendedSeptember30,2015and2016hasbeenderivedfromthecondensedconsolidated
financialstatementsoftrivagoGmbHincludedelsewhereinthisprospectus.SeePresentationoffinancialandotherinformation.
ThefollowingtablealsocontainstranslationsofeuroamountsintoU.S.dollarsasofandforthefiscalyearendedDecember31,2015
andtheninemonthsendedSeptember30,2016.Thesetranslationsaresolelyfortheconvenienceofthereaderandwerecalculatedat
thenoonbuyingrateinNewYorkCityforcabletransfersinforeigncurrenciesascertifiedforcustomspurposesbytheFederalReserve
BankinNewYorkontheperiodenddatefortheapplicableperiod,whichasofDecember31,2015was1.00=$1.0859andasof
September30,2016was1.00=$1.1238.Youshouldnotassumethat,onthatoranyotherdate,onecouldhaveconvertedthese
amountsofeurointoU.S.dollarsatthisoranyotherexchangerate.
Thefinancialdatasetforthbelowshouldbereadinconjunctionwith,andisqualifiedbyreferenceto,Selectedconsolidatedfinancial
data,Managementsdiscussionandanalysisoffinancialconditionandresultsofoperationsandtheconsolidatedfinancialstatements
andnotestheretoincludedelsewhereinthisprospectus.Ourhistoricalresultsdonotnecessarilyindicateresultsexpectedforanyfuture
period.
(inmillions)
Consolidatedstatementofoperations:
Revenue
Revenuefromrelatedparty
Totalrevenue
Costsandexpenses:
Costofrevenue,includingrelatedparty,excludingamortization
(1)(2)
Sellingandmarketing(1)
Technologyandcontent(1)
Generalandadministrative,includingrelatedparty(1)(3)
Amortizationofintangibleassets
Operatingincome(loss)
YearendedDecember31,
2014
2015
2015

(unaudited)
1.4
286.3
15.4
6.5
30.0
(30.3)
2.9
461.3
28.7
18.1
30.0
(47.9)
Otherincome(expense):
Interestexpense
Other,net
Totalotherincome(expense),net
Income(loss)beforeincometaxes
Expense(benefit)forincometaxes
Netloss
Netlossattributabletononcontrollinginterests
NetlossattributabletotrivagoGmbH
Proformabasicanddilutedearnings(loss)pershare(4)
(31.7)
(8.6)
(23.1)

(23.1)
(0.0)
(1.4)
(1.4)
$
$
324.6 239.4 378.7 $425.6

210.9 154.4 206.3 231.8
535.5 393.8 585.0 657.4
3.1
501.0
31.2
19.7
32.6
(52.1)
2.0
383.5
20.9
12.4
22.5
(47.5)
3.1
538.1
40.6
42.2
11.3
(50.3)
(0.1)
(2.7)
(2.8)
(50.7)
(11.3)
(39.4)
0.3
(39.1)
(0.12)
209.1 298.9 $
100.2 194.2
309.3 493.1
Ninemonthsended
September30,
2015
2016
2016
(unaudited)
(0.1)
(2.9)
(3.0)
3.5
604.7
45.6
47.4
12.7
(56.5)
(0.1)
0.5
0.4
(0.1)
0.6
0.5
(0.1)
(0.7)
(0.8)
(55.1)
(12.3)
(42.8)
0.3
(42.5)
(0.13)
(48.3)
(10.9)
(37.4)
0.1
(37.3)
(49.9)
1.6
(51.5)
0.5
(51.0)
(0.16)
$
$
(56.0)
1.8
(57.8)
0.6
(57.2)
(0.18)
Keyperformanceindicator
AdjustedEBITDA(5)
3.5 (1.1) $
(1.2) (13.4) 16.3 $ 18.3
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(1) Includessharebasedcompensationexpenseasfollows:
(inmillions)
Costofrevenue,includingrelatedparty
Sellingandmarketing
Technologyandcontent
Generalandadministrative
2014

1.1
1.2
0.1
2015(a)
2015(a)

(unaudited)
0.2
$
0.2
3.4
3.7
4.5
4.9
6.0
6.5
2015
0.2
2.4
3.3
3.9
Ninemonthsended
September30,
2016(a)
2016(a)
(unaudited)
0.7 $ 0.8
10.4 11.7
15.3 17.2
25.6 28.8
(a) Sharebasedcompensationexpenseisprimarilyattributabletoliabilityawardaccountingtreatmentforsharebasedawardsgrantedinpriorperiods,seeNote6
Sharebasedawardsandotherequityinstrumentsinthenotestoourconsolidatedfinancialstatements.
(2) Excluding:
(inmillions)
AmortizationofacquiredtechnologyincludedinAmortizationofintangibleassets
AmortizationofinternalusesoftwareandwebsitedevelopmentcostsincludedinTechnologyand
content
2014

19.9
0.2
2015
2015

(unaudited)
19.9
$
21.6
0.5
0.5
Ninemonthsended
September30,
2015
2016
2016
(unaudited)
14.9
3.7
$ 4.2
0.3
0.7
0.8
(3) Includes:
(inmillions)
2014
2015
2015
(unaudited)
Ninemonthsended
September30,
2015
2016
2016
(unaudited)
Relatedpartysharedservicesfee
1.5
2.3
2.8
3.0
2.9
$ 3.3
(4) Proformabasicanddilutedearnings(loss)pershareiscomputedbydividing(A)netincome(loss)attributabletotrivagoGmbH,afteradjustingfornoncontrollinginterestas
aresultofthepreIPOcorporatereorganization,by(B)basicweightedaveragesharesoutstanding(controllinginterestClassBsharesassumingExpediacontributedits
ownershipintrivagoGmbHunitstotravelB.V.andClassAsharesassumingtheFounderscontributedthe940unitstotravelB.V.).Thepotentialdilutivesecuritiesoftravel
B.V.,whichincludeoptions,havebeenexcludedfromthecomputationofdilutednetlosspershareastheeffectwouldbeantidilutive.Therefore,onaproformabasis
givingeffecttothepreIPOcorporatereorganization,theweightedaveragenumberofcombinedClassAandClassBsharesoutstandingof213,985,688and216,686,178
fortheyearendedDecember31,2015andtheninemonthsendedSeptember30,2016,respectively,wasusedtocalculatebothproformabasicanddilutednetlossper
shareattributabletoshareholders.Thehistoricalweightedaveragenumberofsharesoutstandingexcludesallsharesbeingsoldbyusinthisoffering.SeeCapitalization.
(5) WedefineadjustedEBITDAasnetlossplus:(1)benefit(provision)forincometaxes(2)totalotherincome(expense),net(3)depreciationofpropertyandequipment,
includingamortizationofinternalusesoftwareandwebsitedevelopment(4)amortizationofintangibleassetsand(5)sharebasedcompensation.
AdjustedEBITDAisanonGAAPfinancialmeasure.AnonGAAPfinancialmeasurereferstoanumericalmeasureofacompanyshistoricalorfuturefinancial
performance,financialposition,orcashflowsthatexcludes(orincludes)amountsthatareincludedin(orexcludedfrom)themostdirectlycomparablemeasurecalculated
andpresentedinaccordancewithGAAPinsuchcompanysfinancialstatements.WepresentthisnonGAAPfinancialmeasurebecauseitisusedbymanagementto
evaluateouroperatingperformance,formulatebusinessplans,andmakestrategicdecisionsoncapitalallocation.WealsobelievethatthisnonGAAPfinancialmeasure
providesusefulinformationtoinvestorsandothersinunderstandingandevaluatingouroperatingperformanceandconsolidatedresultsofoperationsinthesamemanner
asourmanagementandincomparingfinancialresultsacrossaccountingperiods.
OuruseofadjustedEBITDAhaslimitationsasananalyticaltool,andyoushouldnotconsideritinisolationorasasubstituteforanalysisofourresultsreportedin
accordancewithGAAP,includingnetloss.Someoftheselimitationsare:
AdjustedEBITDAdoesnotreflectourcashexpendituresorfuturerequirementsforcapitalexpendituresorcontractualcommitments
AdjustedEBITDAdoesnotreflectchangesin,orcashrequirementsfor,ourworkingcapitalneeds
Althoughdepreciationandamortizationarenoncashcharges,theassetsbeingdepreciatedandamortizedmayhavetobereplacedinthefuture,andadjustedEBITDA
doesnotreflectcashcapitalexpenditurerequirementsforsuchreplacementsorfornewcapitalexpenditurerequirementsand
Othercompanies,includingcompaniesinourownindustry,maycalculateadjustedEBITDAdifferentlythanwedo,limitingitsusefulnessasacomparativemeasure.
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WehaveprovidedareconciliationbelowofadjustedEBITDAtonetloss,themostdirectlycomparableGAAPfinancialmeasure.
(inmillions)(unaudited)
Netloss
Add/(less):
Interestexpense
Other,net(i)
Add:
Depreciation
EBITDA
Add:
Sharebasedcompensation
AdjustedEBITDA
2014
2015
2015
(23.1) (39.4) $(42.8)
(8.6) (11.3) (12.3)
(31.7) (50.7) (55.1)
0.0 0.1 0.1

1.4 2.7 2.9
(30.3) (47.9) (52.1)
1.4 2.7 2.8

30.0 30.0 32.6
1.1
2.4
3.5
NinemonthsendedSeptember30,
2015
2016
2016
(37.4)
(51.5) $
(57.8)
(10.9)
1.6
1.8
(48.3)
(49.9)
(56.0)
0.1
0.1
0.1
0.7
(0.5)
(0.6)
(47.5)
(50.3)
(56.5)
1.8
3.3
3.7
22.5
11.3
12.7
(23.2)
(35.7)
(40.1)
9.8
52.0
58.4
(13.4)
16.3 $
18.3
(15.2)
14.1
(1.1)
(16.6)
15.3
$ (1.3)
(i) Consistsprimarilyofforeignexchangegain/lossintheyearsendedDecember31,2014and2015,andtheninemonthsendedSeptember30,2015and2016andthe
nonrecurringreversalofa1.6millionindemnificationassetin2015relatedtothe2013acquisitionbyExpedia.
Balancesheetdata:
(inmillions)
Cash
Totalassets
Totalcurrentliabilities
Retainedearnings(accumulateddeficit)
Totalmembersequity
2014
6.1
750.8
16.0
(90.0)
664.6
AsofDecember31,
2015
2015

(unaudited)
17.6
$
19.1
760.3
825.6
72.0
78.2
(129.2)
(140.3)
622.3
$
675.8
Asof
September30,
2016
2016
(unaudited)
4.2
$
4.7
808.4
908.5
84.6
95.1
(180.1)
(202.4)
637.7
$ 716.6
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Riskfactors
Youshouldcarefullyconsidertherisksdescribedbelowbeforemakinganinvestmentdecision.Additionalrisksnotpresentlyknowntousor
thatwecurrentlydeemimmaterialmayalsoimpairourbusinessoperations.Ourbusiness,financialcondition,resultsofoperationsor
prospectscouldbemateriallyandadverselyaffectedbyanyoftheserisks.ThetradingpriceandvalueofourADSscoulddeclineduetoany
oftheserisks,andyoumayloseallorpartofyourinvestment.Thisprospectusalsocontainsforwardlookingstatementsthatinvolverisks
anduncertainties.Ouractualresultscoulddiffermateriallyfromthoseanticipatedintheseforwardlookingstatementsasaresultofcertain
factors,includingtherisksfacedbyusdescribedbelowandelsewhereinthisprospectus.
Risksrelatedtoourindustryandbusiness
Ourfailuretomanageourgrowtheffectivelycouldnegativelyaffectourcorporateculture,harmourabilitytoattractandretainkey
personnelandadverselyimpactourresultsofoperationsandfuturegrowth.
Ourentrepreneurialandcollaborativecultureisimportanttous,andwebelieveithasbeenamajorcontributortooursuccess.Wemayhave
difficultiesmaintainingourcultureoradaptingitsufficientlytomeettheneedsofourfutureandevolvingoperationsaswecontinuetogrow.
Inaddition,ourabilitytomaintainourcultureasapubliccompany,withtheattendantchangesinpolicies,practices,corporategovernance
andmanagementrequirements,andasaresultofthecorporatereorganization,maybechallenged.Failuretomaintainourculturecould
haveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Wehaverapidlyandsignificantlyexpandedouroperationsandanticipateexpandingfurtheraswepursueourgrowthstrategy.Ourworkforce
worldwidehasgrownfromfewerthan300employeesasofDecember31,2012tomorethan1,000employeesasofSeptember30,2016.
Suchexpansionincreasesthecomplexityofourbusinessandplacesasignificantstrainonourmanagement,operations,technicalsystems,
financialresourcesandinternalcontrolsoverfinancialreportingfunctions.Asaresult,wemaynotbeabletomanageourexpansion
effectively.Ourcurrentandplannedpersonnel,systems,proceduresandcontrolsmaynotbeadequatetosupportandeffectivelymanage
ourfutureoperations,especiallyasweemploypersonnelinseveralgeographiclocations.Wemaynotbeabletohire,train,retain,motivate
andmanagerequiredpersonnel,whichmaylimitourgrowth,damageourreputationandmayhaveamaterialadverseeffectonour
business,resultsofoperations,financialconditionandprospects.Thesepressuresandchallengesmaybeenhancedbyourbecominga
publiccompanyandthecorporatereorganization.
Wemaynotbeabletomaintainourhistoricalgrowthratesinfutureperiods.
Our2015revenuegrewby59%comparedto2014,andourrevenueforthefirstninemonthsof2016grewby49%comparedtothefirstnine
monthsof2015.Whileweexpectourbusinesstocontinuetogrow,wemaynotbeabletomaintainourhistoricalgrowthratesinfuture
periods.Revenuegrowthmaysloworrevenuesmaydeclineforanynumberofreasons,includingourinabilitytoattractandretainusers,
decreaseduserspending,increasedcompetition,slowinggrowthoftheoverallonlinehotelsearchmarket,theemergenceofalternative
businessmodels,changesingovernmentpoliciesandgeneraleconomicconditions.Asthesizeofouruserbasecontinuestoincrease,we
anticipatethatthegrowthrateofouruserbasemaydeclineovertime.Wemayalsoloseusersforotherreasons,suchasafailuretodeliver
satisfactorysearchresultsortransactionexperiencesorhighqualityservices.Inaddition,evenifouruserbasecontinuestogrow,our
revenuesmaynotgrowatthesamerateoratall.Ifourgrowthratesdecline,investorsperceptionsofourbusinessandbusinessprospects
maybeadverselyaffected.
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Wearedependentoneconomicconditionsanddeclinesintravelordiscretionaryspendinggenerallycouldreducethedemandfor
ourservices.
Ourresultsofoperationsandfinancialprospectsaresignificantlydependentupontravelersusingourservicesandtheprosperityand
solvencyoftheOTAs,hotelchainsandindependenthotelsthathaverelationshipswithus.Travel,includinghotelroomreservations,is
dependentonpersonaldiscretionaryspendinglevels.Travelservicestendtodecline,alongwiththeadvertisingbudgetsspentbyhotelsand
otheraccommodationaggregators,duringgeneraleconomicdownturnsandrecessions.Conditionsthatreducedisposableincomeor
consumerconfidence,suchasanincreaseininterestrates(which,amongotherthings,couldcauseconsumerstoincurhighermonthly
expensesundermortgages),unemploymentrates,directorindirecttaxes,fuelpricesorothercostsofliving,mayleaduserstoreduceor
stoptheirspendingontravelortooptforlowercostproductsandservices,andtheseconditionsmaybeparticularlyprevalentduringperiods
ofrecession,economicdownturnormarketvolatilityanddisruption.Forexample,inmid2016,certainhotelchainscuttheirgrowthforecasts
fortheremainderoftheyearduetoglobaleconomicuncertainty,andsomeanalystssuggestedthattheU.S.hotelindustrymayhave
reachedacyclicalpeak.
Anysignificantdeclineintravel,consumerdiscretionaryspendingortheoccurrenceofanyoftheforegoingconditionsmayreducedemand
forourservices,causeadvertiserstobecomeinsolventorfailtopayusforserviceswehavealreadyprovided.Theoccurrenceofanyofthe
abovecouldhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Manyeventsbeyondourcontrolmayadverselyaffectthetravelindustry.
Certaineventsbeyondourcontrolmayadverselyaffectthetravelindustry,withacorrespondingnegativeimpactonourbusinessandresults
ofoperations.Naturaldisasters,includinghurricanes,tsunamis,earthquakesorvolcaniceruptions,aswellasothernaturalphenomena,
suchasoutbreaksoftheZikavirus,theEbolavirus,avianfluandotherpandemicsandepidemics,havedisruptednormaltravelpatternsand
levelsinthepast.Thetravelindustryisalsosensitivetoeventsthatmaydiscouragetravel,suchasworkstoppagesorlaborunrest,political
instability,regionalhostilities,increasesinfuelprices,impositionoftaxesorsurchargesbyregulatoryauthorities,travelrelatedaccidentsand
terroristattacksorthreats.Wedonothaveinsurancecoverageagainstlossorbusinessinterruptionresultingfromwarandterrorism.The
occurrenceofanyoftheforegoingeventsmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionand
prospects.
Increasingcompetitionandconsolidationinourindustrycouldresultinadecreaseintheamountandtypesofhotelinformation
wedisplay,thevalueofourservicestousersandalossofusers,whichwouldadverselyaffectourbusiness,financial
performanceandprospects.
Generalcompetition
Weoperateinthehighlyandincreasinglycompetitivetravelindustry.Manyofourcurrentandpotentialcompetitors,includinghotels
themselves(bothhotelchainsandindependenthotels),globalmetasearchandreviewwebsites,suchasKayakandTripAdvisor,locally
focusedmetasearchenginessuchasQunar,OnlineTravelAgents,orOTAs,suchasBooking.com,CtripandBrandExpedia,alternative
accommodationwebsites,suchasAirbnbandHomeAway,andotherhotelwebsites,mayhaveexistedlonger,mayhavelargeruserbases,
mayhaveawiderrangeproductsandservices,mayhavegreaterbrandrecognitionandcustomerloyaltyincertainmarketsand/or
significantlygreaterfinancial,marketing,personnel,technicalandotherresourcesthanwedo.Someofthesecompetitorsmaybeableto
offerproductsandservicesonmorefavorableterms.Metasearchwebsitesarealsoexpandinggloballyandarebecomingincreasingly
competitive.Inaddition,many
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ofthesecompetitorsmaybeabletodevotesignificantlygreaterresourcestomarketingandpromotionalcampaignsattractingandretaining
keyemployeessecuringparticipationofhotelsandaccesstohotelinformation,includingproprietaryorexclusivecontentwebsiteand
systemsdevelopmentresearchanddevelopmentandenhancingthespeedatwhichtheirservicesreturnusersearchresults.Manyof
thesecompetitorsmayalsoofferuserincentives,suchasloyaltypointsorpriorityaccesstoservices,whichmaynotbeavailableiftravelers
bookthroughthirdpartysitesorservices.
Advertisercompetition
Wecompeteforhoteladvertisingrevenuewithsearchengines,suchasBaidu,Bing,GoogleandYahoo!,whichofferpayperclickorpay
perimpressionadvertisingservices.Thesecompetitorsmayhavesignificantlygreaterfinancial,technical,marketingandotherresources
thanwedoandlargeestablisheduserbases.Inaddition,wecompetewithnewspapers,magazinesandothertraditionalmediacompanies
thatprovideofflineandonlineadvertisingopportunitiesforhotels.Weexpecttofaceadditionalcompetitionasotherestablishedand
emergingcompaniesenterthehoteladvertisingmarket.Competitioncouldresultinhighertrafficacquisitioncosts,lowercostperclick,or
CPC,pricingandreducedmarginsonouradvertisingservices,lossofmarketshare,reducedusertraffictoourwebsitesandreduced
advertisingbyhotelcompaniesandotheraccommodationadvertisersonourwebsites.Iffeweradvertiserschoosetoadvertiseonour
website,wewillhavelessinformationavailabletodisplay,whichmakesourserviceslessvaluabletousers.
Advertiserconsolidation
Inaddition,consolidationamongadvertisers,orachangetomorecoordinatedorcentralizedmarketingactivitieswithinOTAgroupsand
hotelchains,couldreducethenumberofofferswehaveavailableinourmarketplaceforeachhotel,whichcouldcauseourservicesto
becomelessvaluableandpopularforusersandcouldresultinadvertisersbiddinglessforoffersoreventerminatingtheirrelationshipswith
us.
Asaresult,competitionandconsolidation,individuallyorintheaggregate,couldresultinhighertrafficacquisitioncosts,reducedoperating
margins,lossofmarketshare,reducedcustomertraffictoourwebsitesandreducedadvertisingbyOTAsandhotelsonourwebsites.
Furthermore,ourCPCpricingforclickbasedadvertisingdepends,inpart,oncompetitionamongadvertisers,withthosepayinghigherCPCs
generallyreceivingbetteradvertisingplacementandmorereferralsfromus.Ifourlargecustomersbecomelesscompetitivewitheachother,
mergewitheachother,focusmoreonprofitthanontrafficvolume,orareabletoreduceCPCs,thiswouldhaveanadverseimpactonour
CPCswhich,inturn,mayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.Inaddition,
competitionandconsolidationamongouradvertisersmaycausesomeofthemtohavefinancialdifficulties,defaultonormateriallydelay
theirobligationstopayusforserviceswehavealreadyprovidedorbecomeinsolvent.Asaresult,wemaynotbeabletocompete
successfullyagainstcurrentandfuturecompetitors,andcompetitionand/orconsolidationamongadvertisersmayhaveamaterialadverse
effectonourbusiness,resultsofoperations,financialconditionandprospects.
Wecouldbeadverselyaffectedbyouradvertiserconcentrationandthegeographicconcentrationofouruserbase.
OuradvertiserbaseconsistsofOTAs,hotelchainsandindependenthotels,andwegeneratethelargemajorityofourrevenuefromOTAs.
Certainbrandsaffiliatedasofthedatehereofwithourmajorityshareholder,Expedia,includingBrandExpedia,Hotels.com,Orbitz,
Travelocity,Hotwire,Wotif,ebookersandVenere,intheaggregate,accountedfor39%and35%ofourtotalrevenuefortheninemonths
endedSeptember30,2015and2016,respectively.ThePricelineGroupanditsaffiliatedbrands,Booking.comand,through2015,Agoda,
accountedfor27%and43%ofourtotalrevenuefortheninemonthsendedSeptember30,2015and2016,respectively.
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Inaddition,ouruserbaseisgeographicallyconcentrated.Asignificantportionofourrevenuecomesfrompointsofsaleinafewmarkets,
suchastheUnitedStates,Germany,theUnitedKingdom,SpainandItaly.Thesemarketsaccountedfor17.6%,18.7%,15.1%,8.3%and
7.5%ofourrevenuefortheyearendedDecember31,2014,respectively,and26.1%,13.7%,12.5%,5.9%and5.4%ofourrevenueforthe
yearendedDecember31,2015,respectively.
Thisconcentrationofkeycustomersandgeographicconcentrationofouruserbasemayimpactouroverallexposuretochangesin
economicandindustryconditions,eitherpositivelyornegatively,asthesekeycustomersandmarketsmaybesimilarlyaffectedbysuch
conditions.Thelossofanymajorcustomer,orasignificantweakeninginthebusinessconditionsand/orthefinancialconditionsofOTAsand
hotelsgenerallyorinthemarketsinwhichourrevenueisconcentrated,couldresultinsignificantdecreasesinrevenue,aswellasan
increaseincreditlosses,andhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Wearesubjecttocounterpartydefaultrisks.
Wearesubjecttotheriskthatacounterpartytooneormoreofourcustomerarrangementswilldefaultonitsperformanceobligations.A
counterpartymaynotcomplywithitscommercialcommitments,whichcouldthenleadittodefaultonitsobligationswithlittleornonoticeto
us.Thiscouldlimitourabilitytotakeactiontomitigateourexposure.Additionally,ourabilitytomitigateourexposuresmaybeconstrainedby
thetermsofourcommercialarrangementsorbecausemarketconditionspreventusfromtakingeffectiveaction.Inaddition,ourabilityto
recoveranyfundsfromfinanciallydistressedorinsolventcounterpartiesislimited,andourrecoveryrateshavehistoricallybeenverylow.
BecauseamajorityofouraccountsreceivableareowedbythreelargeOTAs,delaysorafailuretopaybyanyoftheseadvertiserscould
resultinasignificantincreaseinourcreditlosses,andwemaybeunabletofundouroperations.Ifoneofourcounterpartiesbecomes
insolventorfilesforbankruptcy,ourabilitytorecoveranylossessufferedasaresultofthatcounterpartysdefaultmaybelimitedbythe
liquidityofthecounterpartyortheapplicablelawsgoverningthebankruptcyproceedings.Intheeventofsuchdefault,wecouldincur
significantlosses,whichcouldadverselyimpactourbusiness,resultsofoperations,financialconditionandprospects.
Wemaybeunabletomaintainandincreasebrandawareness,whichcouldlimitourabilitytomaintainourcurrentfinancial
performanceorachieveadditionalgrowth.
Werelyheavilyonthetrivagobrand.Awareness,perceivedqualityandperceiveddifferentiatedattributesofourbrandareimportantaspects
ofoureffortstoattractandexpandthenumberoftravelersusingourwebsitesandapps.Manyofourcompetitorshavemoreresourcesthan
wedoandcanspendmoreonadvertisingtheirbrandsandservices.Asaresult,wearerequiredtospendconsiderableamountsofmoney
andotherresourcestopreserveandincreaseourbrandawarenessandgrowourbusiness.Competitionfortopofmindawarenessand
brandpreferenceisintenseamongonlinehotelsearchservices,globallyandinkeygeographies.Ifweareunabletoeffectivelypreserveand
increaseourbrandawareness,wemaybeunabletosuccessfullymaintainorenhancethestrengthofourbrand.
In2009,webeganasuccessfulbroadreachTVmarketingcampaign.WeexpecttocontinuetoinvestinTVmarketingcampaignsinlightof
increasedspendingfromcompetitors,ourexpansionintogeographieswhereourbrandislesswellknown,increasingpricesandthe
increasingtrafficsharegrowthofsearchenginesasdestinationsitesforusers.Sucheffortsmaynotmaintainorenhanceconsumer
awarenessofourbrandand,evenifwearesuccessfulinourbrandingefforts,sucheffortsmaynotbecosteffectiveorasefficientasthey
havebeenhistorically.Weintendtocontinueexpandingouroperationsglobally,includingincountrieswherewehavelimitedoperating
experience,thatmayhavedifferentcompetitiveconditionsandwheretravelersmay
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havedifferenttravelpreferences.Usersinothercountriesmaynotbefamiliarwithourbrand,ormaybelessfamiliarwithourbrandthanthat
ofacompetitor,andwemayneedtobuildbrandawarenessinsuchcountriesthroughgreaterinvestmentsinadvertisingandpromotional
activities.Inaddition,significantincreasesinthepricingofoneormoreofourmarketingandadvertisingchannelscouldincreaseour
advertisingexpenseorcauseustochooselesseffectivemarketingandadvertisingchannels.TVadvertisingcomprisesalargepercentage
ofouradvertisingexpenseandmayhavehighercoststhanotherchannelsandwhichcouldhaveamaterialadverseeffectonour
profitability.IfTVadvertisingbecomeslesseffectiveorifweexperiencediminishingreturnsfromTVadvertisingoverallorinkeymarkets,we
mayinsteadinvestinother,moreexpensivechannels,whichmaynotbeassuccessful.Ifweareunabletomaintainorenhanceconsumer
awarenessofourbrandortogeneratedemandinacosteffectivemanner,itmayhaveamaterialadverseeffectonourbusiness,resultsof
operations,financialconditionandprospects.
Wehaveregistereddomainnamesforwebsitesthatweuseinourbusiness,suchaswww.trivago.com,www.trivago.deand
www.trivago.co.uk.Ifwelosetheabilitytouseadomainname,wewouldbeforcedtoincursignificantexpensestomarketourservices
underanewdomainname,whichcouldsubstantiallyharmourbusiness.Inaddition,ourcompetitorscouldattempttocapitalizeonour
brandrecognitionbyusingdomainnamessimilartoours.DomainnamessimilartoourshavebeenregisteredintheUnitedStatesand
elsewhere,andinsomecountriesthetopleveldomainnametrivagoisownedbyotherparties.Wemaybeunabletopreventthirdparties
fromacquiringandusingdomainnamesthatinfringeon,aresimilarto,orotherwisedecreasethevalueof,ourbrandorourtrademarksor
servicemarks.Protectingandenforcingourrightstoourdomainnamesanddeterminingtherightsofothersmayrequirelitigation,which
couldresultinsubstantialcostsanddiversionofmanagementattention.
Ourbrandsaresubjecttoreputationalrisksandimpairment.
Wehavedevelopedourtrivagobrandthroughextensivemarketingcampaigns,websitepromotions,customerreferralsandtheuseofa
dedicatedsalesforce.Wecannotguaranteethatourbrandwillnotbedamagedbycircumstancesthatareoutsideourcontrolorbythird
parties,suchashackers,orinterfaceswiththeirclients,suchassubcontractorsemployeesorsalesforces,witharesultingnegativeimpact
onouractivities.Forexample,theindependentactorswerelyoninvariouscountrieswhereweadvertisehavecometorepresentourbrand,
suchasMr.trivagointheUnitedStatesandthetrivagogirlinAustralia.Theactionsofsuchactorsarenotinourcontrol,andnegative
publicityaboutsuchactorscouldaffectourbrandimage.Also,itispossiblethattheuseoftestimonialsintheadvertisingandpromotionof
ourbrandscouldhaveanegativeimpactoncustomerretentionandacquisitionifthereputationofthetestimonialproviderisdamaged.A
failureonourparttoprotectourimage,reputationandthebrandunderwhichwemarketourproductsandservicesmayhaveamaterial
adverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Ifweareunabletomaintainorestablishrelationshipswithadvertisers,orifadvertiserschoosetoreduceoreveneliminatethe
feestheypayus,ourfinancialperformancecouldbemateriallyadverselyaffected.
Ourabilitytoattractuserstoourservicesdependsinlargepartonprovidingacomprehensivesetofsearchresultsandtransparentpricing
information.Todoso,wemaintainrelationshipswithOTAs,hotelchainsandindependenthotelstoincludetheirdatainoursearchresults.
Thelossofexistingrelationshipswithadvertisers,orourinabilitytocontinuetoaddnewones,maycauseoursearchresultstoprovide
incompletepricing,availabilityandotherinformationimportanttousersofourservices.Thisdeficiencycouldreduceuserconfidenceinthe
searchresultsweprovide,makinguslesspopular.
Inaddition,nearlyallofouragreementswithOTAs,hotelchainsandindependenthotelsmaybeterminatedatwilloruponthreetoseven
dayspriornoticebyeitherparty.Wecannotguaranteethatouradvertiserswill
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continuetoworkwithus.Wemayalsobeunabletonegotiateaccess,pricingorothertermsthatareconsistentormorefavorablethanour
currentterms.Afailuretoretaincurrenttermsorobtainmorefavorabletermswith,orincreaseormaintainourrelationshipswith,our
advertisersmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Wehaveidentifiedamaterialweaknessinourinternalcontroloverfinancialreportingandmayidentifyadditionalmaterial
weaknessesinthefuturethatmaycauseustofailtomeetourreportingobligationsorresultinmaterialmisstatementsofour
financialstatements.Ifwefailtoremediateourmaterialweaknessorifwefailtoestablishandmaintainaneffectivesystemof
internalcontroloverfinancialreporting,wemaynotbeabletoreportourfinancialresultsaccuratelyortopreventfraud.Any
inabilitytoreportandfileourfinancialresultsaccuratelyandtimelycouldharmourbusinessandadverselyimpactthetrading
priceofoursecurities.
Ourmanagementisresponsibleforestablishingandmaintaininginternalcontrolsoverfinancialreporting,disclosurecontrols,andcomplying
withotherrequirementsoftheSarbanesOxleyActandtherulespromulgatedbytheSECthereunder.Internalcontroloverfinancialreporting
isaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancial
statementsinaccordancewithU.S.generallyacceptedaccountingprinciples.Amaterialweaknessisdefinedasadeficiency,ora
combinationofdeficiencies,ininternalcontroloverfinancialreporting,suchthatthereisareasonablepossibilitythatamaterialmisstatement
ofacompanysannualorinterimfinancialstatementswillnotbepreventedordetectedonatimelybasisbythecompanysinternalcontrols
Priortothisoffering,wehavebeenaprivatecompanywithlimitedaccountingpersonnelandotherresourceswithwhichtoaddressour
internalcontroloverfinancialreporting.Inaddition,wehavehistoricallypreparedourbooksandrecordsinaccordancewiththeGerman
CommercialCode(Handelsgesetzbuch),orGermanGAAP.OurbooksandrecordswerethenconvertedtoU.S.GAAP,forpurposesofthis
offering,byaccountingpersonnelwhohavelimitedexperienceinmaintainingbooksandrecordsandpreparingfinancialstatementsinU.S.
GAAP.
Inconnectionwiththeauditofour2015financialstatements,weidentifiedamaterialweakness,primarilyrelatedtothelackofsufficient
accountingandsupervisorypersonnelwiththeappropriateleveloftechnicalaccountingexperienceandtrainingnecessaryorprocessesand
procedures,particularlyintheareasofsharebasedcompensation,buildtosuitleaseaccountingandinternalusesoftwareand
capitalizationofwebsitedevelopmentcostsandothercomplex,judgmentalareasandconsequentlymustrelyontheassistanceofoutside
advisorswithexpertiseinthesematterstoassistusinourpreparationofU.S.GAAPfinancialstatementsandourcompliancewithSEC
reportingobligations.Thesedeficienciesrepresentamaterialweaknessinourinternalcontroloverfinancialreportinginbothdesignand
operation.During2016,weappointedachieffinancialofficerwhoisresponsibleforidentifyingthestaffingandresourceneedsofour
companyrequiredtoremediatethematerialweakness.Theseindividualswillberequiredtohavesufficientexperienceinmaintainingbooks
andrecordsandpreparingfinancialstatementsinU.S.GAAP.Wehaveinitiatedthehiringofadditionalstaffthathavebeguntoaddress
theseneeds.Additionally,wewillexpandouraccountingpoliciesandproceduresaswellasprovideadditionaltrainingtoouraccountingand
financestaff.Whileweareworkingtoremediatethematerialweaknessasquicklyandefficientlyaspossibleandexpecttohaveremediated
thematerialweaknessduringtheyearendedDecember31,2017,atthistimewecannotprovideanestimateofcostsexpectedtobe
incurredinconnectionwithimplementingthisremediationplan.Theseremediationmeasuresmaybetimeconsuming,costly,andmight
placesignificantdemandsonourfinancialandoperationalresources.Ifweareunabletosuccessfullyremediatethismaterialweakness,and
ifweareunabletoproduceaccurateandtimelyfinancialstatements,ourfinancialstatementscouldcontainmaterialmisstatementsthat,
whendiscoveredinthefuture,couldcauseustofailtomeetourfuturereportingobligationsandcausethepriceofourADSstodecline.
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UntiltheendofthefiscalyearforwhichwewillfileoursecondannualreportonForm20Fafterbecomingapubliccompany,wewillnotbe
requiredtomakeaformalassessmentoftheeffectivenessofourinternalcontrolsoverfinancialreporting.Evenfromthetimesuch
requirementapplies,ourmanagementcannotguaranteethatourinternalcontrolsanddisclosurecontrolswillpreventallpossibleerrorsor
allfraud.ForaslongasweareanemerginggrowthcompanyundertheJOBSAct,ourindependentregisteredpublicaccountingfirmwill
notberequiredtoattesttotheeffectivenessofourinternalcontrolsoverfinancialreportingpursuanttoSection404oftheSarbanesOxley
Act.Furthermore,afterthedatewearenolongeranemerginggrowthcompany,ourindependentregisteredpublicaccountingfirmwillonly
berequiredtoattesttotheeffectivenessofourinternalcontrolsoverfinancialreportingdependingonourmarketcapitalization.An
independentassessmentoftheeffectivenessofourinternalcontrolscoulddetectproblemsthatourmanagementsassessmentmightnot.
IfwearenotabletoestablishandmaintainaneffectivesystemofinternalcontrolsandotherwiseimplementtherequirementsofSection404
inatimelymannerorwithadequatecompliance,ourindependentregisteredpublicaccountingfirmmayissueanadverseopiniondueto
ineffectiveinternalcontrolsoverfinancialreportingandwemaybesubjecttosanctionsorinvestigationbyregulatoryauthorities,suchasthe
SEC.Asaresultofmisstatementsorrestatementsinourfinancialstatementsoranadverseassessmentbymanagementorauditorsabout
theeffectivenessofourinternalcontrols,therecouldbeanegativereactioninthefinancialmarketsduetoalossofconfidenceinthe
reliabilityofourfinancialstatements.Inaddition,wemayberequiredtoincurcostsinimprovingourinternalcontrolssystemandthehiringof
additionalpersonnel.Anysuchactioncouldnegativelyaffectourresultsofoperationsandcashflow,harmourreputationandadversely
affectthetradingpriceofourADSs.
Werelyonsearchengines,whichmaychangetheirbusinessmodelsorsearchenginealgorithmsinwaysthatcouldhavea
negativeimpactonourbusiness,financialperformanceandprospects.
WeuseBaidu,Bing,Google,Yahoo!andotherInternetsearchenginestogeneratetraffictoourwebsites,principallythroughthepurchase
ofhotelrelatedkeywords.Weobtainasignificantamountoftrafficviasearchenginesandthereforeutilizetechniques,suchassearch
engineoptimizationandsearchenginemarketingtoimproveourplacementinrelevantsearchqueries.Googleandothersearchengines
frequentlyupdateandchangethelogicthatdeterminestheplacementanddisplayofresultsofauserssearch.Thesechangescould
negativelyaffectthepurchasedoralgorithmicplacementoflinkstoourwebsites.Inaddition,asignificantamountoftrafficisdirectedtoour
websitesthroughourparticipationindisplayadvertisingcampaignsonsearchengines,advertisingnetworks,affiliatewebsitesandsocial
networkingsites.Pricingandoperatingdynamicsforthesetrafficsourcescanexperiencerapidchange,bothtechnicallyandcompetitively.
Moreover,anyoftheseproviderscould,forcompetitiveorotherpurposes,altertheirsearchalgorithmsorresults,causingourwebsitesto
placelowerinsearchresults.Ifamajorsearchenginechangesitsalgorithmsinamannerthatnegativelyaffectsthesearchengineranking,
paidorunpaid,ofourwebsitesorthatofourthirdpartydistributionpartners,orifcompetitivedynamicsimpactthecostsoreffectivenessof
searchengineoptimization,searchenginemarketingorothertrafficgeneratingarrangementsinanegativemanner,itmayhaveamaterial
Werelyoninformationtechnologytooperateourbusinessesandmaintainourcompetitiveness,andanyfailuretoinvestinand
adapttotechnologicaldevelopmentsandindustrytrendscouldharmourbusiness.
Wedependontheuseofsophisticatedinformationtechnologiesandsystems,includingtechnologyandsystemsusedforwebsitesand
apps,customerservice,supplierconnectivity,communications,frauddetectionandadministration.Asouroperationsgrowinsize,scopeand
complexity,weneedtocontinuouslyimproveand
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upgradeoursystemsandinfrastructuretoofferanincreasingnumberofuserenhancedservices,featuresandfunctionalities,while
maintainingorimprovingthereliabilityandintegrityofoursystemsandinfrastructure.
Ourfuturesuccessalsodependsonourabilitytoadaptourservicesandinfrastructuretomeetrapidlyevolvingconsumertrendsand
demandswhilecontinuingtoimprovetheperformance,featuresandreliabilityofourserviceinresponsetocompetitiveserviceofferings.The
emergenceofalternativeplatformssuchassmartphoneandtabletcomputingdevicesandtheemergenceofnichecompetitorswhomaybe
abletooptimizeservicesorstrategiessuchplatformshaverequired,andwillcontinuetorequire,newandcostlyinvestmentsintechnology.
Wemaynotbesuccessful,orwemaybelesssuccessfulthanourcurrentornewcompetitors,indevelopingtechnologiesthatoperate
effectivelyacrossmultipledevicesandplatformsandthatareappealingtousers,eitherofwhichwouldnegativelyimpactourbusinessand
financialperformance.Newdevelopmentsinotherareas,suchascloudcomputingandsoftwareasaserviceproviders,couldalsomakeit
easierforcompetitorstoenterourmarketsduetolowerupfronttechnologycosts.Inaddition,wemaynotbeabletomaintainourexisting
systemsorreplaceorintroducenewtechnologiesandsystemsasquicklyaswewouldlikeorinacosteffectivemanner.Failuretoinvestin
andadapttotechnologicaldevelopmentsandindustrytrendsmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,
financialconditionandprospects.
Ifwedonotcontinuetoinnovateandprovidetoolsandservicesthatareusefultousersandadvertisers,wemaynotremain
competitive,andourrevenuesandresultsofoperationscouldsuffer.
Oursuccessdependsoncontinuedinnovationtoprovidefeaturesandservicesthatmakeourwebsitesandappsusefulforusers.Our
competitorsareconstantlydevelopinginnovationsinonlinehotelrelatedservicesandfeatures.Asaresult,wemustcontinuetoinvest
significantresourcesinresearchanddevelopmentinordertocontinuouslyimprovethespeed,accuracyandcomprehensivenessofour
services.Wehaveinvested,andinthefuturemayinvest,innewbusinessstrategiesandservices.Thesestrategiesandservicesmaynot
succeed,and,evenifsuccessful,ourrevenuesmaynotincrease.Ifweareunabletocontinueofferinginnovativeservices,wemaybe
unabletoattractadditionalusersandadvertisersorretainourcurrentusersandadvertisers,whichmayhaveamaterialadverseeffecton
ourbusiness,resultsofoperations,financialconditionandprospects.
ChangesinInternetbrowserfunctionalitycouldresultinadecreaseinouroverallrevenues.
Wegeneraterevenues,inpart,byredirectinguserstoouradvertiserswebsites.Changesinbrowserfunctionalitymayeitherpreventorlimit
ourabilitytoredirectuserstoouradvertisers.Asaresult,ourrevenuecoulddeclineifwearenolongerabletoofferthisfeaturetoourusers.
Theintroductionofcertaintechnologiesmayreducetheeffectivenessofourservices.Forexample,someofourservicesandmarketing
activitiesrelyoncookies,whichareplacedonindividualbrowserswhenusersvisitwebsites.Weusethesecookiestooptimizeour
marketingcampaignsandouradvertiserscampaigns,tobetterunderstandouruserspreferencesandtodetectandpreventfraudulent
activity.Userscanblockordeletecookiesthroughtheirbrowsersoradblockingsoftwareorapps.ThemostcommonInternetbrowsers
allowuserstomodifytheirbrowsersettingstopreventcookiesfrombeingacceptedbytheirbrowsers,oraresettoblockthirdpartycookies
bydefault.Increaseduseofmethods,softwareorappsthatblockcookies,orthedisaffectionofusersresultingfromouruseofsuch
marketingactivities,mayhaveanadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
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Oneofourproductfeaturesdependsinpartonourrelationshipwiththirdpartiestoprovideuswithconsumerreviews.
Thirdpartiesprovideuswithconsumerreviewsthatweprovideusersalongwithourproprietaryratingscore.Ifthesethirdpartydata
providersterminatetheirrelationshipswithus,theinformationthatweprovidetousersmaybelimitedorthequalityoftheinformationmay
suffer,whichmaynegativelyaffectusersperceptionofthevalueofourproductandourreputation.
Anysignificantdisruptioninserviceonourwebsitesandappsorinourcomputersystems,someofwhicharecurrentlyhostedby
thirdpartyproviders,coulddamageourreputationandresultinalossofusers,whichwouldharmourbusinessandresultsof
operations.
Ourbrand,reputationandabilitytoattractandretainuserstouseourwebsitesandappsdependuponthereliableperformanceofour
networkinfrastructureandcontentdeliveryprocesses.Wehaveexperiencedinterruptionsinthesesystemsinthepast,includingserver
failuresthattemporarilysloweddowntheperformanceofourwebsitesandapps,andwemayexperienceinterruptionsinthefuture.
Interruptionsinthesesystems,whetherduetosystemfailures,computervirusesorphysicalorelectronicbreakins,couldaffectthesecurity
oravailabilityofourservicesonourwebsitesandappsandpreventorinhibittheabilityofuserstoaccessourservices.Problemswiththe
reliabilityorsecurityofoursystemscouldharmourreputation,anddamagetoourreputationandthecostofremedyingtheseproblems
couldnegativelyaffectourbusiness,financialconditionandresultsofoperations.
Substantiallyallofthecommunications,networkandcomputerhardwareusedtooperateourwebsitearelocatedatfacilitiesintheUnited
States,Germany,HongKongandChina.Weeitherleaseorownourserversandhaveserviceagreementswithdatacenterproviders.Our
systemsandoperationsarevulnerabletodamageorinterruptionfromfire,flood,powerloss,telecommunicationsfailure,terroristattacks,
actsofwar,electronicandphysicalbreakins,computerviruses,earthquakesandsimilarevents.Theoccurrenceofanyoftheforegoing
eventscouldresultindamagetooursystemsandhardwareorcouldcausethemtofailcompletely,andourinsurancemaynotcoversuch
eventsormaybeinsufficienttocompensateusforlossesthatmayoccur.Oursystemsarenotcompletelyredundant,soafailureofour
systematonesitecouldresultinreducedfunctionalityforourusers,andatotalfailureofoursystemscouldcauseourwebsitesorappsto
beinaccessiblebyourusers.Problemsfacedbyourthirdpartyserviceproviderswiththetelecommunicationsnetworkproviderswithwhich
theycontractorwiththesystemsbywhichtheyallocatecapacityamongtheirusers,includingus,couldadverselyaffecttheexperienceof
ourusers.Ourthirdpartyserviceproviderscoulddecidetoclosetheirfacilitieswithoutadequatenotice.Anyfinancialdifficulties,suchas
bankruptcyorreorganization,facedbyourthirdpartyserviceprovidersoranyoftheserviceproviderswithwhomtheycontractmayhave
negativeeffectsonourbusiness,thenatureandextentofwhicharedifficulttopredict.Ifourthirdpartyserviceprovidersareunabletokeep
upwithourgrowingneedsforcapacity,thiscouldhaveanadverseeffectonourbusiness.Anyerrors,defects,disruptionsorother
performanceproblemswithourservicescouldharmourreputationandmayhaveamaterialadverseeffectonourbusiness,resultsof
operations,financialconditionandprospects.
Weprocess,storeandusepersonaldatawhichexposesustorisksofinternalandexternalsecuritybreachesandcouldgiverise
toliabilities,includingasaresultofgovernmentalregulationanddifferinglegalobligationsapplicabletodataprotectionand
privacyrights.
Wemayacquirepersonallyidentifiableinformationorconfidentialinformationfromusersofourwebsitesandapps.Breachesorintrusionsto
oursystem,whetherresultingfrominternalorexternalsources,couldsignificantlyharmourbusiness.Itispossiblethatadvancesin
computercircumventioncapabilities,new
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discoveriesorotherdevelopments,includingourownactsoromissions,couldresultinacompromiseorbreachofpersonallyidentifiable
informationand/orconfidentialuserinformation.
Wecannotguaranteethatourexistingsecuritymeasureswillpreventallsecuritybreaches,intrusionsorattacks.Aparty,whetherinternalor
external,thatisabletocircumventoursecuritysystemscouldstealuserinformationorproprietaryinformationorcausesignificant
disruptionstoouroperations.Inthepast,wehaveexperienceddenialofservicetypeattacksonoursystemthathavemadeportionsofour
websiteunavailableforperiodsoftime.Wemayneedtoexpendsignificantresourcestoprotectagainstsecuritybreaches,intrusions,
attacksorotherthreatsortoaddressproblemscausedbybreaches.Anyactionsthatimpacttheavailabilityofourwebsiteandappscould
causealossofsubstantialbusinessvolumeduringtheoccurrenceofanysuchincidentandcouldresultinreputationalharmandimpact
negativelyourabilitytoattractnewcustomersand/orretainexistingones.Theriskofsecuritybreaches,intrusionsandotherattacksislikely
toincreaseasweexpandthenumberofmarketsinwhichweoperateandasthetoolsandtechniquesusedinthesetypesofattacks
becomemoreadvanced.Securitybreachescouldresultinnegativepublicity,damagetoourreputation,exposeustoriskoflossorlitigation
andpossibleliabilityandsubjectustoregulatorypenaltiesandsanctionsaswellascivillitigation.Securitybreachescouldalsocauseusers
andpotentialuserstoloseconfidenceinoursecurity,whichwouldhaveanegativeeffectonthevalueofourbrand.
WealsofacerisksassociatedwithsecuritybreachesaffectingthirdpartiesconductingbusinessovertheInternet.Usersgenerallyare
concernedwithsecurityandprivacyontheInternet,andanypublicizedsecurityproblemsimpactingothercompaniescouldinhibitthegrowth
ofourbusiness.Additionally,securitybreachesatthirdpartiesuponwhichwerely,suchashotels,couldresultinnegativepublicity,damage
toourreputation,exposeustoriskoflossorlitigationandpossibleliabilityandsubjectustoregulatorypenaltiesandsanctionsaswellas
civillitigation.
Wecurrentlyprovideuserswiththeoptiontocompletecertainhotelbookingsbytransferringusersdetailsdirectlytothehotelsbooking
forms.Inconnectionwithfacilitatingthesetransactions,wereceiveandstorecertainpersonallyidentifiableinformation,includingcreditcard
information.Thisinformationisincreasinglysubjecttolegislationandregulationsinnumerousjurisdictionsaroundtheworld,including
throughoutthememberstatesoftheEuropeanUnionasaresultofEuropeanCommissionDirective95/46/ECandimplementinglegislation
ineffectinmemberstatesoftheEuropeanUnion.Governmentregulationofprivacyanddatasecurityistypicallyintendedtoprotectthe
privacyofpersonallyidentifiableinformationthatiscollected,processedandtransmittedinorfromthegoverningjurisdiction.Sincewe
collect,processandtransmitpersonallyidentifiableinformationinandfromnumerousjurisdictionsaroundtheworld,wearesubjectto
privacy,dataprotectionanddatasecuritylegislationandregulationsinanumberofcountriesaroundtheworld.Wecouldbeadversely
affectedifwefailtocomplyfullywithalloftheserequirements.Inaddition,wecouldbeadverselyaffectediflegislationorregulationsare
expandedtorequirechangesinourbusinesspracticesorifgoverningjurisdictionsinterpretorimplementtheirlegislationorregulationsin
waysthatmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Afailuretocomplywithcurrentlaws,rulesandregulationsorchangestosuchlaws,rulesandregulationsandotherlegal
uncertaintiesmayadverselyaffectourbusiness,financialperformance,resultsofoperationsorbusinessgrowth.
Ourbusinessandfinancialperformancecouldbeadverselyaffectedbyunfavorablechangesinorinterpretationsofexistinglaws,rulesand
regulationsorthepromulgationofnewlaws,rulesandregulationsapplicabletousandourbusinesses,includingthoserelatingtohotels,the
Internetandonlinecommerce,Internetadvertisingandpricedisplay,consumerprotection,anticorruption,antitrustandcompetition,
economicandtradesanctions,tax,banking,datasecurityandprivacy.Asaresult,regulatoryauthoritiescould
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preventortemporarilysuspendusfromcarryingonsomeorallofouractivitiesorotherwisepenalizeusifourpracticeswerefoundnotto
complywithapplicableregulatoryorlicensingrequirementsoranybindinginterpretationofsuchrequirements.Unfavorablechangesor
interpretationscoulddecreasedemandforourservices,limitmarketingmethodsandcapabilities,affectourmargins,increasecostsor
subjectustoadditionalliabilities.
Forexample,thereare,andwilllikelycontinuetobe,anincreasingnumberoflawsandregulationspertainingtotheInternetandonline
commercethatmayrelatetoliabilityforinformationretrievedfromortransmittedovertheInternet,displayofcertaintaxesandfees,online
editorialandusergeneratedcontent,userprivacy,datasecurity,behavioraltargetingandonlineadvertising,taxation,liabilityforthirdparty
activitiesandthequalityofservices.Furthermore,thegrowthanddevelopmentofonlinecommercemaypromptcallsformorestringent
consumerprotectionlawsandmoreaggressiveenforcementefforts,whichmayimposeadditionalburdensononlinebusinessesgenerally.
Likewise,theSEC,U.S.DepartmentofJusticeandU.S.OfficeofForeignAssetsControls,orOFAC,aswellasotherforeignregulatory
authorities,havecontinuedtoincreasetheenforcementofeconomicandtraderegulationsandanticorruptionlaws,acrossindustries.U.S.
tradesanctionsrelatetotransactionswithdesignatedforeigncountries,includingCuba,Iran,SudanandSyria,andnationalsandothersof
thosecountries,aswellascertainspecificallytargetedindividualsandentities.WebelievethatouractivitiescomplywithOFACtrade
regulationsandanticorruptionregulations,includingtheU.S.ForeignCorruptPracticesActandtheUKBriberyAct.Asregulationscontinue
toevolveandregulatoryoversightcontinuestoincrease,wecannotguaranteethatourprogramsandpolicieswillbedeemedcompliantby
allapplicableregulatoryauthorities.Intheeventourcontrolsshouldfailorarefoundtobenotincomplianceforotherreasons,wecouldbe
subjecttomonetarydamages,civilandcriminalmonetarypenalties,litigationanddamagetoourreputationandthevalueofourbrand.
Thepromulgationofnewlaws,rulesandregulations,orthenewinterpretationofexistinglaws,rulesandregulations,ineachcasethat
restrictorotherwiseunfavorablyimpacttheabilityormannerinwhichweprovidehotelsearchservicescouldrequireustochangecertain
aspectsofourbusiness,operationsandcommercialrelationshipstoensurecompliance,whichcoulddecreasedemandforservices,reduce
revenues,increasecostsorsubjectthecompanytoadditionalliabilities.
Applicationofexistingtaxlaws,rulesorregulationsaresubjecttointerpretationbytaxingauthorities.
Theapplicationofvariousnationalandinternationalincomeandnonincometaxlaws,rulesandregulationstoourhistoricalandnew
servicesissubjecttointerpretationbytheapplicabletaxingauthorities.Thesetaxingauthoritieshavebecomemoreaggressiveintheir
interpretationandenforcementofsuchlaws,rulesandregulationsovertime,asgovernmentsareincreasinglyfocusedonwaystoincrease
revenues.Thishascontributedtoanincreaseinauditactivityandharsherstancesbytaxauthorities.Assuch,additionaltaxesorother
assessmentsmaybeinexcessofourcurrenttaxreservesormayrequireustomodifyourbusinesspracticestoreduceourexposureto
additionaltaxesgoingforward,anyofwhichmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialcondition
andprospects.
Significantjudgmentandestimationisrequiredindeterminingourworldwidetaxliabilities.Intheordinarycourseofourbusiness,thereare
transactionsandcalculations,includingintercompanytransactionsandcrossjurisdictionaltransferpricing,forwhichtheultimatetax
determinationisuncertainorotherwisesubjecttointerpretation.Taxauthoritiesmaydisagreewithourintercompanycharges,includingthe
amountoforbasisforsuchcharges,crossjurisdictionaltransferpricingorothermattersandassessadditionaltaxes.Althoughwebelieve
ourtaxestimatesarereasonable,thefinaldeterminationoftaxauditscouldbemateriallydifferentfromourhistoricalincometaxprovisions
andaccrualsinwhichcasewemaybesubjecttoadditionaltax
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liabilities,possiblyincludinginterestandpenalties,whichcouldhaveamaterialadverseeffectonourcashflows,resultsofoperations,
financialconditionandprospects.
Amendmentstoexistingtaxlaws,rulesorregulationsorenactmentofnewunfavorabletaxlaws,rulesorregulationscouldhave
anadverseeffectonourbusinessandfinancialperformance.
Manyoftheunderlyinglaws,rulesorregulationsimposingtaxesandotherobligationswereestablishedbeforethegrowthoftheInternetand
ecommerce.Ifthetaxorotherlaws,rulesorregulationswereamended,orifnewunfavorablelaws,rulesorregulationswereenacted,the
resultscouldincreaseourtaxpaymentsorotherobligations,prospectivelyorretrospectively,subjectustointerestandpenalties,decrease
thedemandforourservicesifwepassonsuchcoststotheuser,resultinincreasedcoststoupdateorexpandourtechnicalor
administrativeinfrastructureoreffectivelylimitthescopeofourbusinessactivitiesifwedecidednottoconductbusinessinparticular
jurisdictions.Asaresult,thesechangesmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionand
prospects.
Inaddition,inthepast,Germanyandforeigngovernmentshaveintroducedproposalsfortaxlegislation,orhaveadoptedtaxlaws,thatcould
haveasignificantadverseeffectonourtaxrate,orincreaseourtaxliabilities,thecarryingvalueofdeferredtaxassets,orourdeferredtax
liabilities.Forexample,inOctober2015,theOrganizationforEconomicCoOperationandDevelopmentreleasedafinalpackageof
measurestobeimplementedbymembernationsinresponsetoa2013actionplancallingforacoordinatedmultijurisdictionalapproachto
baseerosionandprofitshiftingbymultinationalcompanies.Multiplememberjurisdictions,includingthecountriesinwhichweoperate,
havebegunimplementingrecommendedchangessuchasproposedcountrybycountryreportingbeginningasearlyas2016.Additional
multilateralchangesareanticipatedinupcomingyears.Anychangestonationalorinternationaltaxlawscouldimpactthetaxtreatmentof
ourearningsandadverselyaffectourprofitability.Wecontinuetoworkwithrelevantauthoritiesandlegislatorstoclarifyourobligationsunder
existing,newandemergingtaxlawsandregulations.Oureffectivetaxrateinthefuturecouldalsobeadverselyaffectedbychangestoour
operatingstructure,changesinthemixofearningsincountrieswithdifferingstatutorytaxrates,changesinthevaluationofdeferredtax
assetsandliabilities,orthediscontinuationofbeneficialtaxarrangementsincertainjurisdictions.
Ourglobaloperationsinvolveadditionalrisksandourexposuretotheseriskswillincreaseasourbusinesscontinuestoexpand.
Weoperateinanumberofjurisdictionsandintendtocontinuetoexpandourglobalpresence,includinginemergingmarkets.Asof
September30,2016,wederived38%ofourtotalrevenuefromouroperationsintheAmericas,47%ofourrevenuefromouroperationsin
DevelopedEuropeand14%ofourrevenuefromouroperationsintheRestofWorld.SeeManagementsdiscussionandanalysisof
financialconditionandresultsofoperationsforafurtherdescriptionofourgeographicaloperatingsegments.Inaddition,ouruserbaseis
geographicallyconcentrated.Asignificantportionofourrevenuecomesfrompointsofsaleinafewmarkets,suchastheUnitedStates,
Germany,theUnitedKingdom,SpainandItaly.Thesemarketsaccountedfor17.6%,18.7%,15.1%,8.3%and7.5%ofourrevenueforthe
yearendedDecember31,2014,respectively,and26.1%,13.7%,12.5%,5.9%and5.4%ofourrevenuefortheyearendedDecember31,
2015,respectively.Wefacecomplex,dynamicandvariedrisklandscapesinthejurisdictionsinwhichweoperate.Asweentercountriesand
marketsthatarenewtous,wemusttailorourservicesandbusinessmodelstotheuniquecircumstancesofsuchcountriesandmarkets,
whichcanbecomplex,difficult,costlyanddivertmanagementandpersonnelresources.Inaddition,wemayfacecompetitioninother
countriesfromcompaniesthatmayhavemoreexperiencewithoperationsinsuchcountriesorwithglobaloperationsingeneral.Lawsand
businesspracticesthatfavorlocalcompetitorsorprohibitorlimitforeignownershipofcertainbusinessesorourfailuretoadaptourpractices,
systems,processesandbusinessmodelseffectivelytotheuserandsupplierpreferencesofeachcountryinto
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whichweexpand,couldslowourgrowth.Certainmarketsinwhichweoperatehavelowermarginsthanmorematuremarkets,whichcould
haveanegativeimpactonouroverallmarginsasourrevenuesfromthesemarketsgrowovertime.
Inadditiontotherisksoutlinedelsewhereinthissection,ourglobaloperationsaresubjecttoanumberofotherrisks,including:
currencyexchangerestrictionsorcostsandexchangeratefluctuations
exposuretolocaleconomicorpoliticalinstability,threatenedoractualactsofterrorismandsecurityconcernsingeneral
compliancewithvariousregulatorylawsandrequirementsrelatingtoanticorruption,antitrustorcompetition,economicsanctions,data
contentandprivacy,consumerprotection,employmentandlaborlaws,healthandsafety,andadvertisingandpromotions
differences,inconsistentinterpretationsandchangesinvariouslawsandregulations,includinginternational,nationalandlocaltaxlaws
weakeroruncertainenforcementofourcontractualandintellectualpropertyrights
preferencesbylocalpopulationsforlocalproviders
sloweradoptionoftheInternetasanadvertising,broadcastandcommercemediumandthelackofappropriateinfrastructuretosupport
widespreadInternetusageinthosemarkets
ourabilitytosupportnewtechnologies,includingmobiledevices,thatmaybemoreprevalentincertainglobalmarkets
difficultiesinattractingandretainingqualifiedemployeesincertaininternationalmarkets,aswellasmanagingstaffingandoperationsdue
toincreasedcomplexity,distance,timezones,languageandculturaldifferencesand
uncertaintyregardingliabilityforservicesandcontent,includinguncertaintyasaresultoflocallawsandlackofprecedent.
TheresultsoftheUnitedKingdomsreferendumonwithdrawalfromtheEuropeanUnionmayhaveanegativeeffectonglobal
economicconditions,financialmarketsandourbusiness,whichcouldreducethepriceofourADSs.
Weareamultinationalcompanywithworldwideoperations,includingsignificantbusinessoperationsinEurope.InJune2016,amajorityof
votersintheUnitedKingdominanationalreferendumelectedtowithdrawfromtheEuropeanUnion.Thereferendumwasadvisory,andthe
termsofanywithdrawalaresubjecttoanegotiationperiodthatcouldlastatleasttwoyearsafterthegovernmentoftheUnitedKingdom
formallyinitiatesawithdrawalprocess.Nevertheless,thereferendumhascreatedsignificantuncertaintyaboutthefuturerelationship
betweentheUnitedKingdomandtheEuropeanUnion,andhasgivenrisetocallsforthegovernmentsofotherEuropeanUnionmember
statestoconsiderwithdrawal.
Thesedevelopments,ortheperceptionthatanyofthemcouldoccur,havehadandmaycontinuetohaveamaterialadverseeffectonglobal
economicconditionsandthestabilityofglobalfinancialmarkets,andcouldsignificantlyreduceglobalmarketliquidityandrestricttheability
ofkeymarketparticipantstooperateincertainfinancialmarkets.Assetvaluations,currencyexchangeratesandcreditratingsmaybe
especiallysubjecttoincreasedmarketvolatility.LackofclarityaboutfutureUnitedKingdomlawsandregulationsasthe
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UnitedKingdomdetermineswhichEuropeanUnionlawstoreplaceorreplicateintheeventofawithdrawalcoulddepresseconomicactivity
andrestrictouraccesstocapital.IftheUnitedKingdomandtheEuropeanUnionareunabletonegotiateacceptablewithdrawaltermsorif
otherEuropeanUnionmemberstatespursuewithdrawal,barrierfreeaccessbetweentheUnitedKingdomandotherEuropeanUnion
memberstatesoramongtheEuropeanEconomicAreaoverallcouldbediminishedoreliminated.Anyofthesefactorsmayhaveamaterial
adverseeffectonourbusiness,resultsofoperations,financialconditionandprospectsandreducethepriceofourADSs.
Ourglobaloperationsexposeustorisksassociatedwithcurrencyfluctuations,whichmayadverselyaffectourbusiness.
WeconductasignificantandgrowingportionofourbusinessoutsidetheEurozone.Asaresult,wefaceexposuretomovementsincurrency
exchangeratesaroundtheworld.Theseexposuresincludebutarenotlimitedtoremeasurementgainsandlossesfromchangesinthe
valueofforeigndenominatedmonetaryassetsandliabilitiestranslationgainsandlossesonforeignsubsidiaryfinancialresultsthatare
translatedintoeurosuponconsolidationfluctuationsinhotelrevenueandplanningriskrelatedtochangesinexchangeratesbetweenthe
timeweprepareourannualandquarterlyforecastsandwhenactualresultsoccur.
Wedonotcurrentlyhedgeourforeignexchangeexposure.Dependingonthesizeoftheexposuresandtherelativemovementsofexchange
rates,ifwechoosenottohedgeorfailtohedgeeffectivelyourexposure,wecouldexperienceamaterialadverseeffectonourfinancial
statementsandfinancialcondition.Aswehaveseeninsomerecentperiods,intheeventofseverevolatilityinforeignexchangerates,these
exposurescanincrease,andtheimpactonourresultsofoperationscanbemorepronounced.Inaddition,thecurrentenvironmentandthe
increasinglyglobalnatureofourbusinesshavemadehedgingtheseexposuresmorecomplex.
Werelyontheperformanceofhighlyskilledpersonnel,includingseniormanagementandourtechnologyprofessionals,andifwe
areunabletoretainormotivatekeypersonnelorhire,retainandmotivatequalifiedpersonnel,ourbusinesswouldbeharmed.
Webelieveoursuccesshasdepended,andcontinuestodepend,ontheeffortsandtalentsofourseniormanagementandourhighlyskilled
teammembers,includingoursoftwareengineers.Ourfuturesuccessdependsonourcontinuingabilitytoattract,develop,motivateand
retainhighlyqualifiedandskilledemployees.
TheAmendedandRestatedShareholdersAgreementcontainscertainprovisionsthatcouldresultinthedepartureofcertainofoursenior
management.IftheFounders,collectively,holdlessthan15%ofouroutstandingClassAsharesandClassBshares(calculatedasifall
securitiesconvertible,exercisableorexchangeableforClassAsharesorClassBshareshadbeenconverted,exercisedorexchanged),
theylosecertaincontractualrightstonominatemembersofourmanagementboard.Insuchcase,oursupervisoryboardmayalsorequest
fromtheFounders,theresignationofmembersofthesupervisoryboardwhohavebeennominatedbytheFounders.Inaddition,thegeneral
meetingofshareholders,whichiscontrolledbyExpedia,hasbroaddiscretiontoremovemembersofourmanagementboardwithand
withoutcause,irrespectiveoftheFoundersholdings.Ifthegeneralmeetingofshareholdershasreasonablecause,asdefinedinthe
AmendedandRestatedShareholdersAgreement,forsuchremoval,Expediahastheunilateralright,subjecttocertainexceptions,to
purchaseallofsuchmembersshares.IftheFoundersandothermembersofourmanagementboardareremoved,suchremovalcould
materiallyadverselyaffectourabilitytobuildontheeffortstheyhaveundertakenandtoexecuteourbusinessplan,andwemaynotbeable
tofindadequatereplacements.Inparticular,thecontributionsofcertainkeyseniormanagementarecriticaltoouroverallsuccess.
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Competitionforwellqualifiedemployeesinallaspectsofourbusiness,includingsoftwareengineersandothertechnologyprofessionals,is
intenseglobally.Ourcontinuedabilitytocompeteeffectivelydependsonourabilitytoattractnewemployeesandtoretainandmotivate
existingemployees.Oursoftwareengineersandtechnologyprofessionalsarekeytodesigningcodeandalgorithmsnecessarytoour
business.Ifwedonotsucceedinattractingwellqualifiedemployeesorretainingandmotivatingexistingemployeesandkeysenior
management,itmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Wearesubjecttorisksassociatedwithacorporateculturethatpromotesentrepreneurialismamongitsemployees,decentralized
decisionmakingandcontinuouslearning.
Wehavedelegatedconsiderableoperationalautonomyandresponsibilitytoouremployees,includingallowingcertainemployeesflexible
workinghoursthatallowemployeestodeterminewhen,whereandforhowlongtheywork.Inaddition,atthecoreofourcultureisallowing
ouremployeestogrow,ensuringthattheycontinuouslyacceptnewchallengesandtakeonnewresponsibilities.
Asaconsequence,wemayhavelessexperiencedpeopleinkeypositions,andwerotateexperiencedemployeestootherjobswithinthe
company.Asouremployeeshavesignificantautonomy,thiscouldresultinpoordecisionmaking,whichcouldhaveamaterialadverseeffect
onourbusiness,resultsofoperations,financialconditionandprospects.
Ourdualclasssharestructurewithdifferentvotingrights,andcertainprovisionsintheAmendedandRestatedShareholders
Agreement,willlimityourabilityasaholderofClassAsharestoinfluencecorporatemattersandcoulddiscourageothersfrom
pursuinganychangeofcontroltransactionsthatholdersofourClassAsharesmayviewasbeneficial.
Priortothecompletionofthisofferingandsubjecttotheapprovalofourexistingshareholders,weexpecttocreateadualclassshare
structuresuchthatoursharecapitalwillconsistofClassAsharesandClassBshares.Inrespectofmattersrequiringthevotesof
shareholders,basedonourproposeddualclasssharestructure,holdersofClassAshareswillbeentitledtoonevotepershare,while
holdersofClassBshareswillbeentitledtotenvotespershare.WeandtheSellingShareholderswillsellADSs(representingClassA
shares)inthisoffering.EachClassBshareisconvertibleintooneClassAshareatanytimebytheholderthereof,whileClassAsharesare
notconvertibleintoClassBsharesunderanycircumstances.
AftercompletionofthepostIPOmerger,assumingitoccursascontemplated,itisexpectedthatExpediawillbeneficiallyownapproximately
64.6%,andtheFounderswillownapproximately34.6%,oftheaggregatevotingpowerofourissuedandoutstandingsharesduetothe
disparatevotingpowersassociatedwithourdualclasssharestructure,assumingtheunderwritersdonotexercisetheoverallotmentoption.
SeePrincipalandsellingshareholders.Asaresultofthedualclasssharestructureandtheconcentrationofownership,aswellasthe
termsoftheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounderswillhaveconsiderableinfluenceovermatters
suchasdecisionsregardingmergers,consolidationsandthesaleofallorsubstantiallyallofourassets,appointmentanddismissalof
managementboardmembersandsupervisoryboardmembersandothersignificantcorporateactions.Thisconcentrationofownershipmay
discourage,delayorpreventachangeincontrolofourcompany,whichcouldhavetheeffectofdeprivingtheholdersofADSs,(representing
ClassAshares)oftheopportunitytoreceiveapremiumfortheirsharesaspartofasaleofourcompanyandmayreducethepriceofour
ClassAshares.ThisconcentratedcontrolwilllimityourabilitytoinfluencecorporatemattersthatholdersofClassAsharesmayviewas
beneficial.
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Therequirementsofbeingapubliccompanymaystrainourresourcesanddistractourmanagement,whichcouldmakeitdifficult
tomanageourbusiness,particularlyafterwearenolongeranemerginggrowthcompany.
AsapubliccompanywithADSstradedonanexchangelocatedintheUnitedStates,wewillincurlegal,accountingandotherexpensesthat
wedidnotpreviouslyincur.WewillbecomesubjecttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended,or
theExchangeAct,andtheSarbanesOxleyAct,thelistingrequirementsofNASDAQ,theDutchCorporateGovernanceCodeandother
applicablesecuritiesrulesandregulations.Compliancewiththeserulesandregulationswillincreaseourlegalandfinancialcompliance
costs,makesomeactivitiesmoredifficult,timeconsumingorcostlyandincreasedemandonoursystemsandresources,particularlyafter
wearenolongeranemerginggrowthcompany.TheExchangeActrequiresthatwefileannualandcurrentreportswithrespecttoour
business,financialconditionandresultsofoperations.TheSarbanesOxleyActrequires,amongotherthings,thatweestablishandmaintain
effectiveinternalcontrolsandproceduresforfinancialreporting.Furthermore,theneedtoestablishthecorporateinfrastructuredemandedof
apubliccompanymaydivertourmanagementsattentionfromimplementingourgrowthstrategy,whichcouldpreventusfromimprovingour
business,financialconditionandresultsofoperations.Wehavemade,andwillcontinuetomake,changestoourinternalcontrolsand
proceduresforfinancialreportingandaccountingsystemstomeetourreportingobligationsasapubliccompany.However,wehave
previouslyreliedonexpertsandthemeasureswetakemaynotbesufficienttosatisfyourobligationsasapubliccompany.Inaddition,these
rulesandregulationswillincreaseourlegalandfinancialcompliancecostsandwillmakesomeactivitiesmoretimeconsumingandcostly.
Forexample,weexpecttheserulesandregulationstomakeitmoredifficultandmoreexpensiveforustoobtaindirectorandofficerliability
insurance,andwemayberequiredtoincursubstantialcoststomaintainthesameorsimilarcoverage.Theseadditionalobligationscould
haveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandcashflow.
Inaddition,changinglaws,regulationsandstandardsrelatingtocorporategovernanceandpublicdisclosurearecreatinguncertaintyfor
publiccompanies,increasinglegalandfinancialcompliancecostsandmakingsomeactivitiesmoretimeconsuming.Theselaws,regulations
andstandardsaresubjecttovaryinginterpretations,inmanycasesduetotheirlackofspecificity,and,asaresult,theirapplicationin
practicemayevolveovertimeasnewguidanceisprovidedbyregulatoryandgoverningbodies.Thiscouldresultincontinuinguncertainty
regardingcompliancemattersandhighercostsnecessitatedbyongoingrevisionstodisclosureandgovernancepractices.Weintendto
investresourcestocomplywithevolvinglaws,regulationsandstandards,andthisinvestmentmayresultinincreasedgeneraland
administrativeexpensesandadiversionofourmanagementstimeandattentionfromrevenuegeneratingactivitiestocomplianceactivities.
Ifoureffortstocomplywithnewlaws,regulationsandstandardsdifferfromtheactivitiesintendedbyregulatoryorgoverningbodiesdueto
ambiguitiesrelatedtotheirapplicationandpractice,regulatoryauthoritiesmayinitiatelegalproceedingsagainstusandourbusiness,
financialcondition,resultsofoperationsandcashflowcouldbeadverselyaffected.
ForaslongasweareanemerginggrowthcompanyundertheJOBSAct,ourindependentregisteredpublicaccountingfirmwillnotbe
requiredtoattesttotheeffectivenessofourinternalcontrolsoverfinancialreportingpursuanttoSection404oftheSarbanesOxleyAct.We
couldbeanemerginggrowthcompanyforuptofiveyears.Furthermore,afterthedatewearenolongeranemerginggrowthcompany,our
independentregisteredpublicaccountingfirmwillonlyberequiredtoattesttotheeffectivenessofourinternalcontrolsoverfinancial
reportingdependingonourmarketcapitalization.Evenifourmanagementconcludesthatourinternalcontrolsoverfinancialreportingare
effective,ourindependentregisteredpublicaccountingfirmmaystilldeclinetoattesttoourmanagementsassessmentormayissueareport
thatisqualifiedifitisnotsatisfiedwithourcontrolsorthelevelatwhichourcontrolsaredocumented,designed,operatedorreviewed,orifit
interpretstherelevantrequirementsdifferentlyfromus.Inaddition,inconnectionwiththeimplementationof
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thenecessaryproceduresandpracticesrelatedtointernalcontrolsoverfinancialreporting,wemayidentifydeficienciesthatwemaynotbe
abletoremediateintimetomeetthedeadlineimposedbytheSarbanesOxleyActforcompliancewiththerequirementsofSection404.
FailuretocomplywithSection404couldsubjectustoregulatoryscrutinyandsanctions,impairourabilitytogrowourrevenue,cause
investorstoloseconfidenceintheaccuracyandcompletenessofourfinancialreportsandnegativelyaffectourshareprice.
Werelyontheforeignprivateissuerandcontrolledcompanyexemptionsfromcertaincorporategovernancerequirementsunder
NASDAQrules.
AsaforeignprivateissuerwhoseADSsarelistedonNASDAQ,wearepermittedtofollowcertainhomecountrycorporategovernance
practicespursuanttoexemptionsunderNASDAQrules.AforeignprivateissuermustdiscloseinitsannualreportsfiledwiththeSECeach
requirementunderNASDAQruleswithwhichitdoesnotcomply,followedbyadescriptionofitsapplicablehomecountrypractice.OurDutch
homecountrypracticesmayaffordlessprotectiontoholdersofourADSs.Wefollowincertaincasesourhomecountrypracticesandrelyon
certainexemptionsprovidedbyNASDAQrulestoforeignprivateissuers,including,amongothers,anexemptionfromtherequirementto
holdanannualmeetingofshareholdersnolaterthanoneyearafteranissuersfiscalyearend,exemptionsfromtherequirementthata
boardofdirectorsbecomprisedofamajorityofindependentdirectors,exemptionsfromtherequirementsthatanissuerscompensation
committeeshouldbecomprisedsolelyofindependentdirectors,andexemptionsfromtherequirementthatshareincentiveplansbe
approvedbyshareholders.SeeDescriptionofsharecapitalandarticlesofassociationComparisonofDutchcorporatelawandourarticles
ofassociationandU.S.corporatelawformoreinformationonthesignificantdifferencesbetweenourcorporategovernancepracticesand
thosefollowedbyU.S.companiesunderNASDAQrules.Asaresultofourrelianceonthecorporategovernanceexemptionsavailableto
foreignprivateissuers,youwillnothavethesameprotectionaffordedtoshareholdersofcompaniesthataresubjecttoallofNASDAQs
corporategovernancerequirements.
Intheeventwenolongerqualifyasaforeignprivateissuer,weintendtorelyonthecontrolledcompanyexemptionunderNASDAQ
corporategovernancerules.AcontrolledcompanyunderNASDAQcorporategovernancerulesisacompanyofwhichmorethan50%of
thevotingpowerisheldbyanindividual,grouporanothercompany.Ourprincipalshareholder,Expedia,controls,andfollowingthisoffering
willcontinuetocontrol,amajorityofthecombinedvotingpowerofouroutstandingshares,makingusacontrolledcompanywithinthe
meaningofNASDAQcorporategovernancerules.Asacontrolledcompany,weareeligibleto,and,intheeventwenolongerqualifyasa
foreignprivateissuer,weintendto,electnottocomplywithcertainofcorporategovernancestandards,includingtherequirementthata
majorityofoursupervisoryboardmembersareindependentandtherequirementthatourcompensationcommitteeconsistentirelyof
independentdirectors.
Furthermore,becausewequalifyasaforeignprivateissuerundertheExchangeAct,weareexemptfromcertainprovisionsoftheExchange
ActthatareapplicabletoU.S.publiccompanies,including(i)thesectionsoftheExchangeActregulatingthesolicitationofproxies,consents
orauthorizationsinrespectofasecurityregisteredundertheExchangeAct,(ii)thesectionsoftheExchangeActrequiringinsiderstofile
publicreportsoftheirshareownershipandtradingactivitiesandliabilityforinsiderswhoprofitfromtradesmadeinashortperiodoftimeand
(iii)therulesundertheExchangeActrequiringthefilingwiththeSECofquarterlyreportsonForm10Qcontainingunauditedfinancialand
otherspecifiedinformation,orcurrentreportsonForm8K,upontheoccurrenceofspecifiedsignificantevents.Asaresult,youmaynotbe
providedwiththesamebenefitsasaholderofsharesofaU.S.issuer.
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Wemayloseourforeignprivateissuerstatusinthefuture,whichcouldresultinsignificantadditionalcostsandexpenses.
Weareaforeignprivateissuer,assuchtermisdefinedinRule405undertheSecuritiesAct,andtherefore,wearenotrequiredtocomply
withalltheperiodicdisclosureandcurrentreportingrequirementsoftheExchangeActandrelatedrulesandregulations.UnderRule405,
thedeterminationofforeignprivateissuerstatusismadeannuallyonthelastbusinessdayofanissuersmostrecentlycompletedsecond
fiscalquarterand,accordingly,thenextdeterminationwillbemadewithrespecttousonJune30,2017.
Inthefuture,wewouldloseourforeignprivateissuerstatusifamajorityofourshareholders,directorsormanagementcontinuetobeU.S.
citizensorresidentsandwefailtomeetadditionalrequirementsnecessarytoavoidlossofforeignprivateissuerstatus.Althoughwehave
electedtocomplywithcertainU.S.regulatoryprovisions,ourlossofforeignprivateissuerstatuswouldmakesuchprovisionsmandatory.If
wearenotaforeignprivateissuer,wewillberequiredtofileperiodicreportsandregistrationstatementsonU.S.domesticissuerformswith
theSEC,whicharemoredetailedandextensivethantheformsavailabletoaforeignprivateissuer.Forexample,theannualreportonForm
10Krequiresdomesticissuerstodiscloseexecutivecompensationinformationonanindividualbasiswithspecificdisclosureregardingthe
domesticcompensationphilosophy,objectives,annualtotalcompensation(basesalary,bonusandequitycompensation)andpotential
paymentsinconnectionwithchangeincontrol,retirement,deathordisability,whiletheannualreportonForm20Fpermitsforeignprivate
issuerstodisclosecompensationinformationonanaggregatebasis.WewillalsohavetomandatorilycomplywithU.S.federalproxy
requirements,andourofficers,directorsandprincipalshareholderswillbecomesubjecttotheshortswingprofitdisclosureandrecovery
provisionsofSection16oftheExchangeAct.Wemayalsoberequiredtomodifycertainofourpoliciestocomplywithgoodgovernance
practicesassociatedwithU.S.domesticissuers.Inaddition,wemayloseourabilitytorelyuponexemptionsfromcertaincorporate
governancerequirementsonU.S.stockexchangesthatareavailabletoforeignprivateissuers.Suchconversionandmodificationswill
involveadditionalcostsandmaydivertourmanagementsattentionfromotherbusinessconcerns,whichcouldhaveamaterialadverse
effectonourbusiness,financialcondition,resultsofoperationsandcashflows.
Litigationcoulddistractmanagement,increaseourexpensesorsubjectustomaterialmoneydamagesandotherremedies.
Althoughwearenotcurrentlyapartytoanymateriallegalproceedings,wemaybeinvolvedfromtimetotimeinvariouslegalproceedings,
including,butnotlimitedto,actionsrelatingtobreachofcontractandintellectualpropertyinfringementthatmightnecessitatechangestoour
businessoroperations.Regardlessofwhetheranyclaimsagainstushavemerit,orwhetherweareultimatelyheldliableorsubjectto
paymentofdamages,claimsmaybeexpensivetodefendandmaydivertmanagementstimeawayfromouroperations.Ifanylegal
proceedingsweretoresultinanunfavorableoutcome,itcouldhaveamaterialadverseeffectonourbusiness,financialpositionandresults
ofoperations.Anyadversepublicityresultingfromactualorpotentiallitigationmayalsomateriallyandadverselyaffectourreputation,which
inturncouldadverselyaffectourresults.
CompaniesintheInternet,technologyandmediaindustriesarefrequentlysubjecttoallegationsofinfringementorotherviolationsof
intellectualpropertyrights.Wearecurrentlysubjecttoseveralclaimsandmaybesubjecttofutureclaimsrelatingtointellectualproperty
rights.Aswegrowourbusinessandexpandouroperationswemaybesubjecttointellectualpropertyclaimsbythirdparties.Weplanto
vigorouslydefendourintellectualpropertyrightsandourfreedomtooperateourbusinesshowever,regardlessofthemeritsoftheclaims,
intellectualpropertyclaimsareoftentimeconsumingandextremelyexpensivetolitigateorsettleandarelikelytocontinuetodivert
managerialattentionandresourcesfromourbusinessobjectives.Successfulinfringementclaimsagainstuscouldresultinsignificant
monetaryliabilityorpreventusfromoperatingourbusinessorportionsofour
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business.Resolutionofclaimsmayrequireustoobtainlicensestouseintellectualpropertyrightsbelongingtothirdparties,whichmaybe
expensivetoprocure,orwemayberequiredtoceaseusingintellectualpropertyofthirdpartiesaltogether.Manyofouragreementswith
hotels,OTAsandotherpartnersrequireustoindemnifytheseentitiesagainstthirdpartyintellectualpropertyinfringementclaims,which
wouldincreaseourdefensecostsandmayrequirethatwepaydamagesiftherewereanadverserulinginanysuchclaims.Anyofthese
eventsmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Integrationofacquiredassetsandbusinessescouldresultinoperatingdifficultiesandotherharmfulconsequences.
Wehaveacquiredbusinessesinthepast,comprisingmyhotelshopGmbH,ormyhotelshop,base7booking.comS.r.l.,orbase7,andB264
GmbH,orRheinfabrik.Weexpecttocontinuetoevaluateawidearrayofpotentialstrategictransactions.Wecouldenterintotransactions
thatcouldbematerialtoourfinancialconditionandresultsofoperations.Theprocessofintegratinganacquiredcompany,businessor
technologymaycreateunforeseenoperatingdifficultiesandexpenditures.Theareaswherewefacerisksinrespectofpotentialacquisitions
andintegrationsinclude:
diversionofmanagementtimeandfocusfromoperatingourbusinesstoacquisitiondiligence,negotiationandclosingprocesses,aswell
aspostclosingintegrationchallenges
implementationorremediationofcontrols,proceduresandpoliciesattheacquiredcompany
coordinationofproduct,engineeringandsalesandmarketingfunctions
retentionofemployeesfromthebusinessesweacquire
responsibilityforliabilitiesorobligationsassociatedwithactivitiesoftheacquiredcompanybeforetheacquisition
litigationorotherclaimsinconnectionwiththeacquiredcompanyand
inthecaseofforeignacquisitions,theneedtointegrateoperationsacrossdifferentgeographies,culturesandlanguagesandtoaddress
theparticulareconomic,currency,politicalandregulatoryrisksassociatedwithspecificcountries.
Furthermore,companiesthatwehaveacquired,andthatwemayacquireinthefuture,mayemploysecurityandnetworkingstandardsat
levelswefindunsatisfactory.Theprocessofenhancinginfrastructuretoimprovesecurityandnetworkstandardsmaybetimeconsuming
andexpensiveandmayrequireresourcesandexpertisethataredifficulttoobtain.Acquisitionscouldalsoincreasethenumberofpotential
vulnerabilitiesandcouldcausedelaysindetectionofasecuritybreach,orthetimelinesofrecoveryfromabreach.Failuretoadequately
protectagainstattacksorintrusionscouldexposeustosecuritybreachesof,amongotherthings,personaluserdataandcreditcard
informationthatmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Ourfailuretoaddresstheserisksorotherproblemsencounteredinconnectionwithourpastorfutureacquisitionsandinvestmentscould
delayoreliminateanyanticipatedbenefitsofsuchacquisitionsorinvestments,incurunanticipatedliabilitiesandmayhaveamaterial
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Risksrelatedtoourongoingrelationshipwithourshareholders
Expediacontrolsourcompanyandhastheabilitytocontrolthedirectionofourbusiness.
Expediaowned63.5%oftheeconomicandvotingrightsattributabletothesharesoftrivagoasofSeptember30,2016.Followingthe
completionofthisofferingandpostIPOmerger,assumingitoccursascontemplated,weexpectExpediatoown65.1%ofourClassB
sharesand64.6%ofthevotingpowerinus.AslongasExpediaownsamajorityofthevotingpowerinus,andpursuanttocertainrightsit
willbegrantedundertheAmendedandRestatedShareholdersAgreement,Expediawillbeabletocontrolmanycorporateactionsthat
requireashareholdervote.
Thisvotingcontrolwilllimittheabilityofothershareholderstoinfluencecorporatemattersand,asaresult,wemaytakeactionsthat
shareholdersotherthanExpediadonotviewasbeneficial.Thisvotingcontrolmayalsodiscouragetransactionsinvolvingachangeof
controlofourcompany,includingtransactionsinwhichyouasaholderofADSs(representingourClassAshares)mightotherwisereceivea
premiumforyourshares.Furthermore,ExpediagenerallyhastherightatanytimetosellorotherwisedisposeofanyClassAsharesand
ClassBsharesthatitowns,includingtheabilitytotransferacontrollinginterestinustoathirdparty,withouttheapprovaloftheholdersof
ourClassAsharesandwithoutprovidingforthepurchaseofClassAshares.
TheFoundershavecontractualrightstoexertcontrolovercertainaspectsofourbusiness.
PursuanttotheAmendedandRestatedShareholdersAgreement,aslongastheFounderscollectivelymaintainatleast15%ofour
outstandingClassAsharesandClassBshares(calculatedasifallsecuritiesconvertible,exercisableorexchangeableforClassAsharesor
ClassBshareshadbeenconverted,exercisedorexchanged),theFounderswillhavecertainrightstovetodecisionsaboutcertaincorporate
matters.ThesecontractualrightswilllimittheabilityofExpediatocontrolcertaincorporatemattersand,asaresult,wemayfailtotake
actionsthatothershareholdersmayviewasbeneficial.Thiscontractualcontrolmayalsodiscouragetransactionsinvolvingachangeof
controlorsaleofsubstantiallyallassetsofourcompany,includingtransactionsinwhichyouasaholderofADSsrepresentingourClassA
sharesmightotherwisereceiveapremiumforyoursharesordividendofproceedsrepresentingapremiumpriceforsuchassets.
Furthermore,subjecttocertainexceptions,solongastheFounderscollectivelymaintainatleast15%ofouroutstandingClassAandClass
Bshares(calculatedasifallsecuritiesconvertible,exercisableorexchangeableforClassAsharesorClassBshareshadbeenconverted,
exercisedorexchanged),theFounderswhoarethenservingasmanagingdirectorshavetheabilitytoselecttheothermanagingdirectors
and,asaresult,theFoundersandtheirappointeeswillcomprisethebodythathasprimarydaytodayoperationalcontrolofthecompany.In
addition,fromthedatethatMr.Schrmgensceasestoserveaschiefexecutiveofficerforaperiodofthreeyears,solongasaFounderis
servingaschiefexecutiveofficerandthereisnosetofcircumstancesthatwouldconstituteareasonablecause,suchFounderhastheright
tonominateasuccessorinitsfunctionofchiefexecutiveofficer,subjecttotheapprovalofExpediaandthereafter,thesupervisoryboard.
Expediasinterestsmayconflictwithourinterests,theinterestsoftheFoundersandtheinterestsofourshareholders,and
conflictsofinterestbetweenExpedia,theFoundersanduscouldberesolvedinamannerunfavorabletousandourshareholders.
Variousconflictsofinterestbetweenus,theFoundersandExpediacouldarise.OwnershipinterestsofdirectorsorofficersofExpediainour
sharesandownershipinterestsofmembersofourmanagementboardandsupervisoryboardinthestockofExpedia,orapersonsservice
aseitheradirectororofficerofbothcompanies,couldcreateorappeartocreatepotentialconflictsofinterestwhenthosedirectorsand
officersarefacedwithdecisionsrelatingtoourcompany.IntheyearsendedDecember31,2014and2015andforthenine
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monthsendedSeptember30,2015and2016,Expediaaccountedfor32%,39%,39%and35%ofourrevenue,respectively.
PotentialconflictsofinterestcouldalsoariseifwedecidetoenterintoanynewcommercialarrangementswithExpediasbusinessesinthe
futureorinconnectionwithExpediasdesiretoenterintonewcommercialarrangementswiththirdparties.
Expediahastherighttopursueacquisitionsofbusinessesthattrivagomayalsobeinterestedinacquiringandtherighttoacquire
companiesthatmaydirectlycompetewithus.Expediamaychoosetopursuethesecorporateopportunitiesotherthanthroughtrivago.
Furthermore,disputesmayarisebetweenExpediaandusrelatingtoourpastandongoingrelationships,andthesepotentialconflictsof
interestmaymakeitmoredifficultforustofavorablyresolvesuchdisputes,includingthoserelatedto:
tax,employeebenefit,indemnificationandothermattersarisingfromthisoffering
thenature,qualityandpricingofservicesExpediaagreestoprovidetous
salesorotherdisposalbyExpediaofalloraportionofitsownershipinterestinusand
businesscombinationsinvolvingus.
Wemaynotbeabletoresolveanypotentialconflicts,andevenifwedo,theresolutionmaybelessfavorabletousthanifweweredealing
withanunaffiliatedparty.WhilewearecontrolledbyExpedia,wemaynothavetheleveragetonegotiateamendmentstotheseagreements,
ifrequired,ontermsasfavorabletousasthosewewouldnegotiatewithanunaffiliatedthirdparty.Inaddition,shouldExpediachoosenotto
guaranteeanyfutureindebtednesswemayincur,thecostofsuchfinancingmayincreaseorfinancingmaynotbeavailableatall.
TheservicesthatExpediawillprovidetousfollowingthisofferingmaynotbesufficienttomeetourneeds,whichmayresultin
increasedcostsandotherwiseadverselyaffectourbusiness.
Priortocompletionofthisoffering,Expediahasprovideduswithsupportforsharedservicesrelatedtocorporatefunctionssuchaslegal,tax,
treasury,auditandcorporatedevelopmentandcertainserverhostingandotherservices.Followingthisoffering,weexpectExpediato
continuetoprovidecertainservicesforafeeunderformalandinformalarrangementsdescribedinRelatedpartytransactions.However,
Expediawillnotbeobligatedtoprovidetheseservicesinamannerthatdiffersfromthenatureoftheservicetoday,andthuswemaynotbe
abletomodifytheseservicesinamannerdesirabletousasastandalonepubliccompany.Further,ifwenolongerreceivetheseservices
fromExpedia,wemaynotbeabletoperformtheseservicesourselves,orfindappropriatethirdpartyarrangementsatareasonablecost,
andthecostmaybehigherthanthatchargedbyExpedia.
Risksrelatedtoourintellectualproperty
Wemaynotbeabletoadequatelyprotectourintellectualproperty,whichcouldharmthevalueofourbrandandadverselyaffect
ourbusiness.
Weregardourintellectualpropertyascriticaltooursuccess,andwerelyontrademarkandconfidentialityandlicenseagreementstoprotect
ourproprietaryrights.Ifwearenotsuccessfulinprotectingourintellectualproperty,itcouldhaveamaterialadverseeffectonourbusiness,
resultsofoperationsandfinancialcondition.
Effectivetrademarkandservicemarkprotectionmaynotbeavailableineverycountryinwhichourservicesareprovided.Thelawsofcertain
countriesdonotprotectproprietaryrightstothesameextentasthelawsoftheUnitedStatesand,therefore,incertainjurisdictions,wemay
beunabletoprotectourproprietarytechnology
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adequatelyagainstunauthorizedthirdpartycopyingoruse,whichcouldadverselyaffectourcompetitiveposition.Wehavelicensedinthe
past,andexpecttolicenseinthefuture,certainofourproprietaryrights,suchastrademarks,tothirdparties.Theselicenseesmaytake
actionsthatmightdiminishthevalueofourproprietaryrightsorharmourreputation,evenifwehaveagreementsprohibitingsuchactivity.
Moreover,weutilizeintellectualpropertyandtechnologydevelopedorlicensedbythirdparties,andwemaynotbeabletoobtainorcontinue
toobtainlicensesandtechnologiesfromthesethirdpartiesatalloronreasonableterms.Alsototheextentthatthirdpartiesareobligatedto
indemnifyusforbreachesofourintellectualpropertyrights,thesethirdpartiesmaybeunabletomeettheseobligations.Anyoftheseevents
mayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.
Claimsbythirdpartiesthatweinfringetheirintellectualpropertyrightscouldresultinsignificantcostsandhaveamaterial
adverseeffectonourbusiness,resultsofoperationsorfinancialcondition.
Wearecurrentlysubjecttovariouspatentandtrademarkinfringementclaims.Theseclaimsallege,amongotherthings,thatourwebsite
technologyinfringesuponownedpatentedtechnologyand/ortrademarksofthirdparties.Ifwearenotsuccessfulindefendingourselves
againsttheseclaims,wemayberequiredtopaymoneydamages,whichcouldhaveanadverseeffectonourresultsofoperations.In
addition,thecostsassociatedwiththedefenseoftheseclaimscouldhaveanadverseeffectonourresultsofoperations.Aswegrowour
businessandexpandouroperations,weexpectthatwewillcontinuetobesubjecttointellectualpropertyclaims.Resolvingintellectual
propertyclaimsmayrequireustoobtainlicensestouseintellectualpropertyrightsbelongingtothirdparties,whichmaybeexpensiveto
procure,orwemayberequiredtoceaseusingintellectualpropertyofthirdpartiesaltogether.Anyoftheseeventsmayhaveamaterial
Confidentialityagreementswithemployeesandothersmaynotadequatelypreventdisclosureoftradesecretsandother
proprietaryinformation.
Asubstantialamountofourprocessesandtechnologiesisprotectedbytradesecrecylaws.Inordertoprotectthesetechnologiesand
processes,werelyinpartonconfidentialityagreementswithouremployees,licensees,independentcontractorsandotheradvisors.These
agreementsmaynoteffectivelypreventdisclosureofconfidentialinformation,includingtradesecrets,andmaynotprovideanadequate
remedyintheeventofunauthorizeddisclosureofconfidentialinformation.Inaddition,othersmayindependentlydiscoverourtradesecrets
andproprietaryinformation,andinsuchcaseswecouldnotassertanytradesecrecyrightsagainstsuchparties.Totheextentthatour
employees,contractorsorotherthirdpartieswithwhichwedobusinessmayuseintellectualpropertyownedbyothersintheirworkforus
withoutourauthorization,disputesmayariseastotherightsinrelatedorresultingknowhowandinventions.Lawsregardingtradesecrecy
rightsincertainmarketsinwhichweoperatemayaffordlittleornoprotectiontoourtradesecrets.Thelossoftradesecretprotectioncould
makeiteasierforthirdpartiestocompetewithourservicesbycopyingfunctionality.Inaddition,anychangesin,orunexpected
interpretationsof,thetradesecretandotherintellectualpropertylawsinanycountryinwhichweoperatemaycompromiseourabilityto
enforceourtradesecretandintellectualpropertyrights.Costlyandtimeconsuminglitigationcouldbenecessarytoenforceanddetermine
thescopeofourproprietaryrights,andfailuretoobtainormaintaintradesecretprotectionmayhaveamaterialadverseeffectonour
business,resultsofoperations,financialconditionandprospects.
Ouruseofopensourcesoftwarecouldadverselyaffectourabilitytoofferourservicesandsubjectustopossiblelitigation.
Weuseopensourcesoftwareinconnectionwithourdevelopment.Fromtimetotime,companiesthatuseopensourcesoftwarehavefaced
claimschallengingtheuseofopensourcesoftwareorcompliancewithopensource
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licenseterms.Wecouldbesubjecttosuitsbypartiesclaimingownershipofwhatwebelievetobeopensourcesoftware,orclaimingnon
compliancewithopensourcelicensingterms.Someopensourcelicensesrequireuserswhodistributesoftwarecontainingopensourceto
makeavailableallorpartofsuchsoftware,whichinsomecircumstancescouldincludevaluableproprietarycodeoftheuser.Whilewe
monitortheuseofopensourcesoftwareandtrytoensurethatnoneisusedinamannerthatwouldrequireustodiscloseourproprietary
sourcecodeorthatwouldotherwisebreachthetermsofanopensourceagreement,suchusecouldinadvertentlyoccur,inpartbecause
opensourcelicensetermsareoftenambiguous.Anyrequirementtodiscloseourproprietarysourcecodeorpaydamagesforbreachof
contractmayhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospectsandcouldhelpour
competitorsdevelopservicesthataresimilartoorbetterthanours.
RisksrelatedtoownershipofourClassAsharesandADSs
Oursharepricemaybevolatileormaydeclineregardlessofouroperatingperformance.
ThemarketpriceforourADSsislikelytobevolatile,inpartbecauseourADSshavenohistoryofbeingpubliclytraded.Inaddition,the
marketpriceofourADSsmayfluctuatesignificantlyinresponsetoanumberoffactors,mostofwhichwecannotcontrol,including:
actualoranticipatedfluctuationsinourresultsofoperations
varianceinourfinancialperformancefromtheexpectationsofmarketanalysts
announcementsbyusorourcompetitorsofsignificantbusinessdevelopments,acquisitionsorexpansionplans
changesinthepricespaidtousbyourcustomersorofourcompetitors
ourinvolvementinlitigation
oursaleofADSsorothersecuritiesinthefuture
marketconditionsinourindustry
changesinkeypersonnel
thetradingvolumeofourADSs
changesintheestimationofthefuturesizeandgrowthrateofourmarketsand
generaleconomicandmarketconditions.
Thestockmarkets,includingNASDAQ,haveexperiencedextremepriceandvolumefluctuationsthathaveaffectedandcontinuetoaffect
themarketpricesofequitysecuritiesofmanyInternetcompanies.Inthepast,shareholdershaveinstitutedsecuritiesclassactionlitigation
followingperiodsofmarketvolatility.Ifwewereinvolvedinsecuritieslitigation,wecouldincursubstantialcostsandourresourcesandthe
attentionofmanagementcouldbedivertedfromourbusiness.
Seasonalitymaycausefluctuationsinourresultsofoperations.
Ourrevenuesandresultsofoperationshavevariedsignificantlyfromquartertoquarterbecauseourbusinessexperiencesseasonal
fluctuationsinthedemandforourservicesasaresultofseasonalpatternsintravel.Forexample,hotelsearchesandconsequentlyour
revenuearegenerallythehighestinthefirstthreequartersas
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travelersplanandbooktheirspring,summerandwinterholidaytravel.Ourrevenuetypicallydecreasesinthefourthquarter.Wegenerally
expecttoexperiencehigherreturnonadvertisingspendinthefourthquarteroftheyearaswetypicallyelecttoadvertiselessinthefourth
quarterduetotherelativelyhighercostofadvertisingintheperiod.Thecurrentstateoftheglobaleconomicenvironment,combinedwiththe
seasonalnatureofourbusiness,makesforecastingfutureresultsofoperationsdifficult.Becauseourbusinessischangingandevolving,our
historicalresultsofoperationsmaynotbeusefultoyouinpredictingourfutureresultsofoperations.Inaddition,discretionaryadvertising
spendinghashistoricallybeencyclicalinnature,reflectingoveralleconomicconditionsaswellasindividualpatterns.Ourrapidgrowthhas
tendedtomaskthecyclicalityandseasonalityofourbusiness.Inthefuture,asourgrowthrateslows,weexpectthecyclicalityand
seasonalityinourbusinesswillbecomemorepronouncedandcouldresultinmaterialfluctuationsofourrevenues,cashflows,resultsof
operationsandotherkeyperformancemeasuresfromperiodtoperiodandmayaffectthevolatilityofthepriceofourADSs.
TherehasbeennopriorpublicmarketforourClassAsharesorADSs,andanactivetradingmarketmaynotdevelop.
Priortothisoffering,therehasbeennopublicmarketforourClassAsharesorourADSs.Anactivetradingmarketmaynotdevelop
followingcompletionofthisofferingor,ifdeveloped,maynotbesustained.Thelackofanactivemarketmayimpairyourabilitytosellyour
ADSsatthetimeyouwishtosellthemoratapricethatyouconsiderreasonable.Thelackofanactivemarketmayalsoreducethefair
marketvalueofyourADSs.AninactivemarketmayalsoimpairourabilitytoraisecapitalbysellingourADSsandmayimpairourabilityto
acquireothercompaniesbyusingourADSsasconsideration.
Futuresalesand/orissuesofourADSs,ortheperceptioninthepublicmarketsthatthesesalesmayoccur,maydepressourADS
price.
SalesofasubstantialnumberofourADSsinthepublicmarket,ortheperceptionthatthesesalescouldoccur,couldadverselyaffectthe
priceofourADSsandcouldimpairourabilitytoraisecapitalthroughthesaleofadditionalADSs.Uponcompletionofthisoffering,wewill
haveADSsrepresenting26,110,118ClassAsharesoutstanding,209,008,088ClassBsharesoutstandingandtheFounderswillhavethe
righttoexchangetheirunitsintrivagoGmbHfor111,991,882ClassAsharesorClassBshares.TheADSsofferedinthisofferingwillbe
freelytradablewithoutrestrictionundertheSecuritiesAct,exceptforanyofourADSsthatmaybeheldoracquiredbyourmanagement
boardmembers,supervisoryboardmembers,executiveofficersandotheraffiliates,asthattermisdefinedintheSecuritiesAct,whichwill
berestrictedsecuritiesundertheSecuritiesAct.Restrictedsecuritiesmaynotbesoldinthepublicmarketunlessthesaleisregisteredunder
theSecuritiesActoranexemptionfromregistrationisavailable.
OurSellingShareholders,Expedia,membersofoursupervisoryboardandmembersofourmanagementboardhaveagreed,subjectto
specifiedexceptions,withtheunderwritersnottodirectlyorindirectlysell,offer,contractorgrantanyoptiontosell(includinganyshortsale),
pledge,transfer,establishanopenputequivalentpositionwithinthemeaningofRule16al(h)undertheExchangeActorotherwise
disposeofanyADSs,optionsorwarrantstoacquireADSs,orsecuritiesexchangeableorexercisablefororconvertibleintosharesorADSs
currentlyorhereafterownedeitherofrecordorbeneficiallyorpubliclyannounceanintentiontodoanyoftheforegoingforaperiodof
180daysafterthedateofthisprospectuswithoutthepriorwrittenconsentofJ.P.MorganSecuritiesLLC.SeeUnderwriting.
AllourADSsoutstandingasofthedateofthisprospectusmaybesoldinthepublicmarketbyexistingshareholders180daysafterthedate
ofthisprospectus,subjecttoapplicablelimitationsimposedunderfederalsecuritieslaws.OurClassBsharesareconvertibleintoClassA
shares,whichmaybesoldsubjecttocertain
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restrictions.SeeSharesandADSseligibleforfuturesaleforamoredetaileddescriptionoftherestrictionsonsellingourADSsafterthis
offering.
Inthefuture,wemayalsoissueoursecuritiesinconnectionwithinvestmentsoracquisitions.TheamountofADSsissuedinconnectionwith
aninvestmentoracquisitioncouldconstituteamaterialportionofourthenoutstandingADSs.Anyissuanceofadditionalsecuritiesin
connectionwithinvestmentsoracquisitionsmayresultinadditionaldilutiontoyou.
Ifsecuritiesorindustryanalystsdonotpublishresearchorpublishinaccurateorunfavorableresearchaboutourbusiness,our
ADSpriceandtradingvolumecoulddecline.
ThetradingmarketforourADSswilldependinpartontheresearchandreportsthatsecuritiesorindustryanalystspublishaboutusorour
business.IfsecuritiesorindustryanalystcoverageresultsindowngradesofourADSsorpublishesinaccurateorunfavorableresearchabout
ourbusiness,ourADSpricewouldlikelydecline.Ifoneormoreoftheseanalystsceasecoverageofusorfailtopublishreportsonus
regularly,demandforourADSscoulddecrease,whichcouldcauseourADSpriceandtradingvolumetodecline.
Wehavebroaddiscretionovertheuseofproceedswereceiveinthisofferingandmaynotapplytheproceedsinwaysthat
increasethevalueofyourinvestment.
Wewillhavebroaddiscretionintheapplicationofthenetproceedsfromthisofferingand,asaresult,youwillhavetorelyuponthejudgment
ofourmanagementwithrespecttotheuseoftheseproceeds.Ourmanagementmayspendaportionorallofthenetproceedsinwaysthat
notallshareholdersapproveoforthatmaynotyieldafavorablereturn.Thefailurebyourmanagementtoapplythesefundseffectivelycould
harmourbusinessandhaveanadverseeffectonthemarketpriceofourADSs.
YoumaynotbeabletoexerciseyourrighttovotetheClassAsharesunderlyingyourADSs.
HoldersofADSsmayexercisevotingrightswithrespecttotheClassAsharesrepresentedbytheirADSsonlyinaccordancewiththe
provisionsofthedepositagreement.Thedepositagreementprovidesthat,uponreceiptofnoticeofanymeetingofholdersofourClassA
shares,includinganygeneralmeetingofourshareholders,thedepositarywill,assoonaspracticablethereafter,fixarecorddateforthe
determinationofADSholderswhoshallbeentitledtogiveinstructionsfortheexerciseofvotingrights.Upontimelyreceiptofnoticefromus,
thedepositaryshalldistributetotheholdersasoftherecorddate(i)thenoticeofthemeetingorsolicitationofconsentorproxysentbyus,
(ii)astatementthatsuchholderwillbeentitledtogivethedepositaryinstructionsandastatementthatsuchholdermaybedeemed,ifthe
depositaryhasappointedaproxybankassetforthinthedepositagreement,tohaveinstructedthedepositarytogiveaproxytotheproxy
banktovotetheClassAsharesunderlyingtheADSsinaccordancewiththerecommendationsoftheproxybankand(iii)astatementasto
themannerinwhichinstructionsmaybegivenbytheholders.
YoumayinstructthedepositaryofyourADSstovotetheClassAsharesunderlyingyourADSs.Otherwise,youwillnotbeabletoexercise
yourrighttovoteunlessyouwithdrawourClassAsharesunderlyingtheADSsyouhold.However,youmaynotknowaboutthemeetingfar
enoughinadvancetowithdrawthoseClassAshares.Thedepositary,upontimelynoticefromus,willnotifyyouoftheupcomingvoteand
arrangetodelivervotingmaterialstoyou.Wecannotguaranteethatyouwillreceivethevotingmaterialsintimetoensurethatyoucan
instructthedepositarytovotetheClassAsharesunderlyingyourADSs.Inaddition,thedepositaryanditsagentsarenotresponsiblefor
failingtocarryoutvotinginstructionsorforthemannerofcarryingoutvotinginstructions.Thismeansthatyoumaynotbeabletoexercise
yourrighttovote,andtheremaybenothingyoucandoiftheClassAsharesunderlyingyourADSsarenotvotedasyourequested.
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UnderthedepositagreementfortheADSs,wemaychoosetoappointaproxybank.Inthisevent,thedepositarywillbedeemedtohave
beeninstructedtogiveaproxytotheproxybanktovotetheClassAsharesunderlyingyourADSsatshareholdersmeetingsifyoudonot
voteinatimelyfashionandinthemannerspecifiedbythedepositary.
TheeffectofthisproxyisthatyoucannotpreventtheClassAsharesrepresentingyourADSsfrombeingvoted,anditmaymakeitmore
difficultforshareholderstoexerciseinfluenceoverourcompany,whichcouldadverselyaffectyourinterests.HoldersofourClassAshares
arenotsubjecttothisproxy.
YoumaynotreceivedistributionsontheClassAsharesrepresentedbyourADSsoranyvalueforthemifitisillegalorimpractical
tomakethemavailabletoholdersofADSs.
ThedepositaryofourADSshasagreedtopaytoyouthecashdividendsorotherdistributionsitorthecustodianreceivesonourClassA
sharesafterdeductingitsfeesandexpenses.YouwillreceivethesedistributionsinproportiontothenumberofourClassAsharesyour
ADSsrepresent.However,thedepositaryisnotresponsibleifitdecidesthatitisunlawfulorimpracticaltomakeadistributionavailableto
anyholdersofADSs.WehavenoobligationtotakeanyotheractiontopermitthedistributiontoanyholdersofourADSsorClassAshares.
ThismeansthatyoumaynotreceivethedistributionswemakeonourClassAsharesoranyvaluefromthemifitisillegalorimpracticalfor
ustomakethemavailabletoyou.TheserestrictionsmayhaveamaterialadverseeffectonthevalueofyourADSs.
YoumaybesubjecttolimitationsonthetransferofyourADSs.
YourADSs,whichmaybeevidencedbyADRs,aretransferableonthebooksofthedepositary.However,thedepositarymaycloseitsbooks
atanytimeorfromtimetotimewhenitdeemsexpedientinconnectionwiththeperformanceofitsduties.Thedepositarymayrefuseto
deliver,transferorregistertransfersofyourADSsgenerallywhenourbooksorthebooksofthedepositaryareclosed,oratanytimeifweor
thedepositarythinkitisadvisabletodosobecauseofanyrequirementoflaw,governmentorgovernmentalbody,orunderanyprovisionof
thedepositagreement,orforanyotherreason.
Weareanemerginggrowthcompanyandwecannotbecertainwhetherthereduceddisclosurerequirementsapplicableto
emerginggrowthcompanieswillmakeourADSslessattractivetoinvestors.
Weareanemerginggrowthcompany,asdefinedintheJOBSAct,andwemaytakeadvantageofcertainexemptionsfromvarious
reportingrequirementsthatareapplicabletootherpubliccompaniesthatarenotemerginggrowthcompaniesincluding,butnotlimitedto,
notbeingrequiredtocomplywiththeauditorattestationrequirementsofSection404andreduceddisclosureobligationsregardingexecutive
compensationinourperiodicreportsandproxystatements.WecannotpredictifinvestorswillfindourADSslessattractiveifwerelyon
theseexemptions.IfsomeinvestorsfindourADSslessattractiveasaresult,theremaybealessactivetradingmarketforourADSsandour
ADSpricemaybemorevolatile.
Wedonotexpecttopayanydividendsfortheforeseeablefuture.
Thecontinuedoperationandgrowthofourbusinesswillrequiresubstantialcash.Accordingly,wedonotanticipatethatwewillpayany
dividendsonourADSsfortheforeseeablefuture.Anydeterminationtopaydividendsinthefuturewillbeatthediscretionofour
managementboardandwilldependuponourresultsofoperations,financialcondition,contractualrestrictionsrelatingtoindebtednesswe
mayincur,restrictionsimposedbyapplicablelawandotherfactorsourmanagementboarddeemsrelevant.
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Ifwepaydividends,wemayneedtowithholdtaxonsuchdividendspayabletoholdersofourADSsinbothGermanyandthe
Netherlands.
AsanentityincorporatedunderDutchlaw,butwithitsplaceofeffectivemanagementinGermany(andnotintheNetherlands),ourdividends
aregenerallysubjecttoGermandividendwithholdingtaxandnotDutchwithholdingtax.However,Dutchdividendwithholdingtaxwillbe
requiredtobewithheldfromdividendsifandwhenpaidtoDutchresidentholdersofourADSs(andnonDutchresidentholdersofourADSs
thathaveapermanentestablishmentintheNetherlandstowhichtheirshareholdingisattributable).WewillapproachDutchRevenueto
applyforataxrulingconfirmingthatnowithholdingofanyDutchdividendtaxisapplicableatall(asthedividendwithholdingtaxcan
generallybecreditedagainstaDutchresidentshareholdersincometaxanyway).Shouldwenotobtainthetaxruling,wewillberequiredto
identifyourshareholdersand/orADSholdersinordertoassesswhetherthereareDutchresidents(ornonDutchresidentswithapermanent
establishmenttowhichthesharesareattributable)inrespectofwhichDutchdividendtaxhastobewithheld.Suchidentificationmaynot
alwaysbepossibleinpractice.Iftheidentityofourshareholdersand/orADSholderscannotbeassesseduponapaymentofdividend,
withholdingofbothGermanandDutchdividendtaxfromsuchdividendmayoccur.
CertainofourADSholdersmaybeunabletoclaimtaxcreditstoreduceGermanwithholdingtaxapplicabletothepaymentof
dividends
WedonotanticipatepayingdividendsonourADSsfortheforeseeablefuture.AsaDutchincorporatedGermantaxresidentcompany,
however,ifwepaydividends,suchdividendswillbesubjecttoGerman(andpotentiallyDutch)withholdingtax.Currently,theapplicable
Germanwithholdingtaxrateis26.375%ofthegrossdividend.ThisGermantaxcanbereducedtotheapplicabledoubletaxtreatyrate,
whichisgenerally15%,however,byanapplicationfiledbythetaxpayercontainingaspecificGermantaxcertificatewiththeGerman
FederalCentralTaxOffice(BundeszentralamtfrSteuern).IfataxcertificatecannotbedeliveredtotheADSholderduetoapplicable
settlementmechanicsorlackofinformationregardingtheADSholder,holdersofthesharesorADSsofaGermantaxresidentcompany
maybeunabletobenefitfromanyavailabledoubletaxtreatyreliefandmaybeunabletofileforacreditofsuchwithholdingtaxinits
jurisdictionofresidence.Further,thepaymentmadetotheADSholderequaltothenetdividendmay,underthetaxlawapplicabletothe
ADSholder,qualifyastaxableincomethatisinturnsubjecttowithholding,whichcouldmeanthatadividendiseffectivelytaxedtwice.The
companyislistingADSsissuedbyadepositarywithadirectlinktotheU.S.DepositoryTrustCompany,orDTC,whichshouldreducethe
riskthattheapplicableGermanwithholdingtaxcertificatecannotbedeliveredtotheADSholder.However,therecanbenoguaranteethat
theinformationdeliveryrequirementcanbesatisfiedinallcases,whichcouldresultinadversetaxconsequencesforaffectedADSholders.
Investorsshouldnotethattheinterpretationcircular(BesteuerungvonAmericanDepositoryReceipts(ADR)aufinlndischeAktien)issued
bytheGermanFederalMinistryofFinance(BundesministeriumderFinanzen)datedMay24,2013(referencenumberIVC1
S2204/12/10003),whichwerefertoastheADRTaxCircular,isnotbindingforGermancourtsanditisnotclearwhetherornotaGermantax
courtwillfollowtheADRTaxCircularindeterminingtheGermantaxtreatmentofthespecificADSsofferedinthisoffering.Furtherconcerns
regardingtheapplicabilityoftheADRTaxCircularmayariseduetothefactthattheADRTaxCircularrefersonlytoGermanstockandnotto
sharesinaDutchN.V.IftheADSsaredeterminednottofallwithinthescopeofapplicationoftheADRTaxCircular,andthusprofit
distributionsmadewithrespecttotheADSsarenottreatedasadividendforGermantaxpurposes,theADSholderwouldnotbeentitledto
arefundofanytaxeswithheldonthedividendsunderGermantaxlaw.SeeMaterialtaxconsiderationsGermantaxationGerman
taxationofADSholders.
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Taxrisksrelatedtothecorporatereorganization
AspartofthepreIPOcorporatereorganization,ExpediawillcontributeallofitssharesoftrivagoGmbHtotravelB.V.,andtheFounderswill
contributeaportionoftheirsharesoftrivagoGmbHtotravelB.V.,eachinacapitalincreaseinexchangefornewlyissuedsharesoftravel
B.V.Suchcontributioninkindwillcauseachangeofcontrolfromataxperspectiveandmayhaveadversetaximpactsatthelevelofthe
subsidiariesoftravelB.V.SeeCorporatestructureCorporatereorganizationPreIPOcorporatereorganization.
Aspromptlyaspracticable,wewillrequestataxrulingfromtheGermantaxauthoritiestoconfirmthetaxneutralityofthepostIPOmerger
fromacorporateincometaxperspective.IfsuchrulingdoesnotconfirmthetaxneutralitytotrivagoGmbH,thepostIPOmergerwillmost
likelynotbeconsummated,andthetwotiercorporatestructurewouldremaininplace.
DividendsdistributedbytrivagoGmbH/AG/SEtotrivagoN.V.(andtotheFounders)wouldbesubjecttoGermanwithholdingtaxof26.375%
(includingsolidaritysurcharge)attheleveloftrivagoGmbH/AG/SE.AttheleveloftheGermantaxresidenttrivagoN.V.,only5%ofthe
dividendsdistributedbyandreceivedfromtrivagoGmbH/AG/SEafterJanuary2017wouldbeincludedastaxableincomesubjecttoGerman
corporateincometaxatataxrateof15.825%(includingsolidaritysurcharge)currentlyandtradetax(Gewerbesteuer)attheapplicablelocal
taxrateofaround16%currently.However,theGermanwithholdingtaxdeductedbytrivagoGmbH/AG/SEwouldbecreditedagainstthe
GermancorporateincometaxliabilityoftrivagoN.V.and,totheextentthattheGermanwithholdingtax(26.375%)exceedstheGerman
corporateincometaxliabilityoftrivagoN.V.,refundedwithapotentialtimelagofuptotwoyears.Theeffectivetaxrateondividends
receivedbytrivagoN.V.fromtrivagoGmbH/AG/SEwouldthusamounttoapproximately1.6%asaresultofthetwotiercorporatestructure.
Thisadditionaltaxofapproximately1.6%alsoappliesonconstructivedividendsincaseofanytransactionswhicharenotatarmslength
betweentrivagoGmbH/AG/SEandtrivagoN.V.Intheoppositedirectionthereisariskthatanynonarmslengthtransactionsinthetwotier
corporatestructurewouldbesubjecttoGermangifttax.
Thecompany,trivagoN.V.,intendstoprovidemanagementandlegaladvicetoitssubsidiariesinreturnforpayment.Thecompanyshould,
accordingtoourGermantaxcounselsview,beseenasanentrepreneurundertheGermanValueAddedTaxAct(Umsatzsteuergesetz).If
thecompanydoesnotqualifyasanentrepreneuritcannotreclaimanyinputvalueaddedtax.
IntheeventthatthepostIPOmergerisnotcarriedoutandtheFoundersareunabletoplacealloftheirsharesoftrivagoN.V.receivedin
returnforthecontributionoftheirsharesoftrivagoGmbHintotrivagoN.V.inthesecondaryoffering,aportionofthesharesintrivagoGmbH
receivedbytrivagoN.V.asbeneficialownerwouldbesubjecttoasevenyearreviewperiod,duringwhichtimetheFounderswouldhaveto
complywithcertainnotificationobligationsundertheRTA.Thesenotificationobligationsinclude,amongothers,annualfilingsevidencing
ownershipofthecontributedsharesoneachofthefirstsevenanniversariesofthecontribution.Thenotificationobligationsendattheearlier
of:(i)theendofthesevenyeartermand(ii)thetimetheFoundershavesoldalltheirremainingsharesintrivagoN.V.Failurebythe
FounderstocomplywiththesenotificationobligationsmayresultinataxablegainfortrivagoN.V.,5%ofsuchcapitalgainwouldbesubject
toGermancorporateincometaxatataxrateof15.825%(includingsolidaritysurcharge)currentlyandtradetaxattheapplicablelocaltax
rateofaround16%currentlyontheleveloftrivagoN.V.
Also,incaseaFounderexercisesitsputoptiongrantedundertheIPOStructuringAgreementtoexchangeatbookvalueallorpartsofthe
sharesoftrivagoGmbH/AG/SEforClassAsharesorClassBsharesoftrivagoN.V.,thesharesreceivedbytrivagoN.V.aslegaland/or
beneficialownerinsuchshareexchangebytherespectiveFounderwouldbesubjecttoasevenyearreviewperiod,duringwhichthe
respectiveFounderwillhavetocomplywiththesamenotificationobligationsasdescribedabove.Accordingly,failurebytherespective
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FoundertocomplywiththesenotificationobligationsmayresultinataxablegainfortrivagoN.V.5%ofsuchcapitalgainwouldbesubjectto
Germancorporateincometaxatataxrateof15.825%(includingsolidaritysurcharge)currentlyandtradetaxattheapplicablelocaltaxrate
ofaround16%currentlyattheleveloftrivagoN.V.However,nonotificationobligationneedstobefulfilled(andnorelatedtaxriskfortrivago
N.V.arises)incasetherespectiveFounderimmediatelysellsallofitstrivagoN.V.sharesorADSs,asapplicable,receivedintheshare
exchange.
Furthermore,expensesincurredbytrivagoGmbHandtrivagoN.V.relatingtothemeasuresdescribedhereinmayberegardedasincurred
forthebenefitoftheshareholders.Insuchcase,taxauthoritiesmaytaketheviewtotreatsuchexpensesasnotdeductiblefortaxpurposes
andassesswithholdingtaxatarateofupto26.375%onrespectiveamounts.
WemaybecometaxableinajurisdictionotherthanGermanyandthismayincreasetheaggregatetaxburdenonus.
Sinceincorporationweintendtohave,onacontinuousbasis,ourplaceofeffectivemanagementinGermany.Wewillthereforebeatax
residentofGermanyunderGermannationaltaxlaw.ByreasonofourincorporationunderDutchlaw,wearealsodeemedtaxresidentinthe
NetherlandsunderDutchnationaltaxlaw.However,basedonourcurrentmanagementstructureandcurrenttaxlawsoftheUnitedStates,
GermanyandtheNetherlands,aswellasapplicableincometaxtreaties,andcurrentinterpretationsthereof,weshouldbetaxresidentsolely
inGermanyforthepurposesoftheconventionbetweentheFederalRepublicofGermanyandtheNetherlandsfortheavoidanceofdouble
taxationwithrespecttotaxesonincomeof2012.
Theapplicabletaxlaws,taxtreatiesorinterpretationsthereofmaychange.Furthermore,whetherwehaveourplaceofeffective
managementinGermanyandareassuchtaxresidentinGermanyislargelyaquestionoffactanddegreebasedonallcircumstances,
ratherthanaquestionoflaw,whichfactsanddegreemayalsochange.Changestoapplicabletaxlaws,taxtreatiesorinterpretationsthereof
andchangestoapplicablefactsandcircumstances(e.g.,achangeofboardmembersortheplacewhereboardmeetingstakeplace),may
resultinusbecomingataxresidentofajurisdictionotherthanGermany,potentiallyalsotriggeringanexittaxliabilityinGermany.Asa
consequence,ouroveralleffectiveincometaxrateandincometaxexpensecouldmateriallyincrease,whichcouldhaveamaterialadverse
effectonourbusiness,resultsofoperations,financialconditionandprospects,whichcouldcauseourADSpriceandtradingvolumeto
decline.
TherightsofshareholdersincompaniessubjecttoDutchcorporatelawdifferinmaterialrespectsfromtherightsofshareholders
ofcorporationsincorporatedintheUnitedStates.
Uponthecompletionofthisoffering,wewillbeaDutchpubliccompanywithlimitedliability(naamlozevennootschap).Ourcorporateaffairs
aregovernedbyourarticlesofassociationandbythelawsgoverningcompaniesincorporatedintheNetherlands.Therightsofshareholders
andtheresponsibilitiesofmembersofourmanagementboardandsupervisoryboardmaybedifferentfromtherightsandobligationsof
shareholdersincompaniesgovernedbythelawsofU.S.jurisdictions.Intheperformanceoftheirduties,ourmanagementboardand
supervisoryboardarerequiredbyDutchlawtoconsidertheinterestsofourcompany,itsshareholders,itsemployeesandother
stakeholders.Itispossiblethatsomeofthesepartieswillhaveintereststhataredifferentfrom,orinadditionto,yourinterestsasaholderof
ADSsrepresentingourClassAshares.SeeDescriptionofsharecapitalandarticlesofassociationComparisonofDutchcorporatelaw
andourarticlesofassociationandU.S.corporatelaw.
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WearenotobligatedtoanddonotcomplywithallthebestpracticeprovisionsoftheDutchCorporateGovernanceCode.This
mayaffectyourrightsasashareholder.
Uponthecompletionofthisoffering,wewillbeaDutchpubliccompanywithlimitedliability(naamlozevennootschap)andwillbesubjectto
theDutchCorporateGovernanceCode,ortheDCGC.TheDCGCcontainsbothprinciplesandbestpracticeprovisionsformanagement
boards,supervisoryboards,shareholdersandgeneralmeetingsofshareholders,financialreporting,auditors,disclosure,complianceand
enforcementstandards.TheDCGCappliestoallDutchcompanieslistedonagovernmentrecognizedstockexchange,whetherin
theNetherlandsorelsewhere,includingNASDAQ.
TheDutchCorporateGovernanceCodeisbasedonacomplyorexplainprinciple.Accordingly,companiesarerequiredtodiscloseintheir
annualreports,filedintheNetherlandswhethertheycomplywiththeprovisionsoftheDutchCorporateGovernanceCode.Iftheydonot
complywiththoseprovisions(e.g.,becauseofaconflictingU.S.requirement),thecompanyisrequiredtogivethereasonsforsuchnon
compliance.WedonotcomplywithallthebestpracticeprovisionsoftheDutchCorporateGovernanceCode.
SeeDescriptionofsharecapitalandarticlesofassociationDutchCorporateGovernanceCode.Thismayaffectyourrightsasa
shareholderandyoumaynothavethesamelevelofprotectionasashareholderinaDutchcompanythatfullycomplieswiththeDutch
CorporateGovernanceCode.
U.S.investorsmayhavedifficultyenforcingcivilliabilitiesagainstusormembersofourmanagementboardandsupervisory
board.
WeareincorporatedintheNetherlands.MostmembersofourmanagementboardandsupervisoryboardarenonresidentsoftheUnited
States.ThemajorityofourassetsandtheassetsofthesepersonsarelocatedoutsidetheUnitedStates.Asaresult,itmaynotbepossible,
ormaybeverydifficult,toserveprocessonsuchpersonsorusintheUnitedStatesortoenforcejudgmentsobtainedinU.S.courtsagainst
themorusbasedoncivilliabilityprovisionsofthesecuritieslawsoftheUnitedStates.
ThereisnotreatybetweentheUnitedStatesandtheNetherlandsforthemutualrecognitionandenforcementofjudgments(otherthan
arbitrationawards)incivilandcommercialmatters.Therefore,afinaljudgmentforthepaymentofmoneyrenderedbyanyfederalorstate
courtintheUnitedStatesbasedoncivilliability,whetherornotpredicatedsolelyupontheU.S.federalsecuritieslaws,wouldnotbe
enforceableintheNetherlandsunlesstheunderlyingclaimisrelitigatedbeforeaDutchcourtofcompetentjurisdiction.Undercurrent
practice,however,aDutchcourtwillgenerally,subjecttocompliancewithcertainproceduralrequirements,grantthesamejudgmentwithout
areviewofthemeritsoftheunderlyingclaimifsuchjudgment(i)isafinaljudgmentandhasbeenrenderedbyacourtwhichhasestablished
itsjurisdictionvisvistherelevantDutchCompaniesorDutchCompany,asthecasemaybe,onthebasisofinternationallyaccepted
groundsofjurisdiction,(ii)hasnotbeenrenderedinviolationofelementaryprinciplesoffairtrial,(iii)isnotcontrarytothepublicpolicyofthe
Netherlands,and(iv)isnotincompatiblewith(a)apriorjudgmentofaNetherlandscourtrenderedinadisputebetweenthesameparties,or
(b)apriorjudgmentofaforeigncourtrenderedinadisputebetweenthesameparties,concerningthesamesubjectmatterandbasedon
thesamecauseofaction,providedthatsuchpriorjudgmentiscapableofbeingrecognizedintheNetherlands.Dutchcourtsmaydenythe
recognitionandenforcementofpunitivedamagesorotherawards.Moreover,aDutchcourtmayreducetheamountofdamagesgrantedby
aU.S.courtandrecognizedamagesonlytotheextentthattheyarenecessarytocompensateactuallossesordamages.Enforcementand
recognitionofjudgmentsofU.S.courtsintheNetherlandsaresolelygovernedbytheprovisionsoftheDutchCodeofCivilProcedure.
Basedontheforegoing,therecanbenoassurancethatU.S.investorswillbeabletoenforceanyjudgmentsobtainedinU.S.courtsincivil
andcommercialmatters,includingjudgmentsundertheU.S.federalsecurities
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laws,againstusormembersofourmanagementboardandsupervisoryboard,officersorcertainexpertsnamedhereinwhoareresidentsof
theNetherlandsorcountriesotherthantheUnitedStates.Inaddition,thereisdoubtastowhetheraDutchcourtwouldimposecivilliability
onus,themembersofourmanagementboardandsupervisoryboard,ourofficersorcertainexpertsnamedhereininanoriginalaction
predicatedsolelyupontheU.S.federalsecuritieslawsbroughtinacourtofcompetentjurisdictionintheNetherlandsagainstusorsuch
members,officersorexperts,respectively.SeeEnforcementofcivilliabilities.
GermanandEuropeaninsolvencylawsaresubstantiallydifferentfromU.S.insolvencylawsandmayofferourshareholdersless
protectionthantheywouldhaveunderU.S.insolvencylaws.
AsacompanywithitsregisteredofficeinGermany,wearesubjecttoGermaninsolvencylawsintheeventanyinsolvencyproceedingsare
initiatedagainstusincluding,amongotherthings,CouncilRegulation(EC)No.1346/2000ofMay29,2000oninsolvencyproceedings
(whichwillbereplacedbyRegulation(EU)2015/848oftheEuropeanParliamentandoftheCouncilofMay20,2015oninsolvency
proceedingsasofJune2017).ShouldcourtsinanotherEuropeancountrydeterminethattheinsolvencylawsofthatcountryapplytousin
accordancewithandsubjecttosuchEUregulations,thecourtsinthatcountrycouldhavejurisdictionovertheinsolvencyproceedings
initiatedagainstus.InsolvencylawsinGermanyortherelevantotherEuropeancountry,ifany,mayofferourshareholderslessprotection
thantheywouldhaveunderU.S.insolvencylawsandmakeitmoredifficultforthemtorecovertheamounttheycouldexpecttorecoverina
liquidationunderU.S.insolvencylaws.
Dutchlawandourarticlesofassociationmaycontainprovisionsthatmaydiscourageatakeoverattempt.
Dutchlawandprovisionsofourarticlesofassociationmayinthefutureimposevariousproceduralandotherrequirementsthatwouldmake
itmoredifficultforshareholderstoeffectcertaincorporateactionsandwouldmakeitmoredifficultforathirdpartytoacquirecontrolofusor
toeffectachangeinourmanagementboardandsupervisoryboard.Forexample,suchprovisionsincludeadualclasssharestructurethat
givesgreatervotingpowertotheClassBsharesownedbyExpediaandourFounders,thebindingnominationstructurefortheappointment
ofourmanagementboardmembersandsupervisoryboardmembers,andtheprovisioninourarticlesofassociationwhichprovidesthat
certainshareholderdecisionscanonlybepassedifproposedbyourmanagementboard.
Wemaybeclassifiedasapassiveforeigninvestmentcompany,orPFIC,whichcouldresultinadverseU.S.federalincometax
consequencestoU.S.HoldersoftheADSs.
BasedontheanticipatedmarketpriceofourADSsinthisoffering,theexpectedmarketpriceofourADSsfollowingthisofferingandthe
compositionofourincome,assetsandoperations,wedonotexpecttobetreatedasaPFICforU.S.federalincometaxpurposesforthe
currenttaxableyearorintheforeseeablefuture.However,theapplicationofthePFICrulestousissubjecttocertainambiguity.Inaddition,
thisisafactualdeterminationthatmustbemadeannuallyafterthecloseofeachtaxableyear.Therefore,therecanbenoassurancethatwe
willnotbeclassifiedasaPFICforthecurrenttaxableyearorforanyfuturetaxableyear.WewouldbeclassifiedasaPFICforanytaxable
yearif,aftertheapplicationofcertainlookthroughrules,either:(1)75%ormoreofourgrossincomeforsuchyearispassiveincome(as
definedintherelevantprovisionsoftheInternalRevenueCodeof1986,asamended),or(2)50%ormoreofthevalueofourassets
(determinedonthebasisofaquarterlyaverage)duringsuchyearisattributabletoassetsthatproduceorareheldfortheproductionof
passiveincome.CertainadverseU.S.federalincometaxconsequencescouldapplytoaU.S.Holder(asdefinedinMaterialtax
considerationsMaterialU.S.federalincometaxconsiderations)ifwearetreatedasaPFICforanytaxableyearduringwhichsuchU.S.
HolderholdsADSs.
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Aboutthisprospectus
Inthisprospectus,unlessthecontextotherwiserequires,thetermswe,us,our,trivagoandthecompanyrefertotrivagoGmbH,
travelB.V.andtrivagoN.V.,andtheirrespectiveconsolidatedsubsidiaries,asapplicable.SeeCorporatestructureCorporate
reorganization.
Presentationoffinancialandotherinformation
Ourfinancialstatementsincludedinthisprospectusarepresentedineurosand,unlessotherwisespecified,allmonetaryamountsarein
euros.Allreferencesinthisprospectusto$,US$,U.S.$,U.S.dollars,dollarsandUSDmeanU.S.dollars,andallreferencesto
andeuros,meaneuros,unlessotherwisenoted.TheexchangeratecalculatedatthenoonbuyingrateinNewYorkCityforcabletransfers
inforeigncurrenciesascertifiedforcustomspurposesbytheFederalReserveBankinNewYorkontheperiodenddatefortheapplicable
period,whichasofDecember31,2015was1.00=$1.0859andasofSeptember30,2016was1.00=$1.1238.Youshouldnotassume
that,onthatoranyotherdate,onecouldhaveconvertedtheseamountsofeurointoU.S.dollarsatthisoranyotherexchangerate.
WehavehistoricallyconductedourbusinessthroughtrivagoGmbH,andthereforeourhistoricalfinancialstatementspresenttheresultsof
operationsandfinancialconditionoftrivagoGmbHanditscontrolledsubsidiaries.Priortothecompletionofthisoffering,wewilleffectthe
preIPOcorporatereorganizationandtransactionsdescribedinCorporatestructureCorporatereorganizationpreIPOcorporate
reorganization,pursuanttowhichtravelB.V.willbeconvertedfromaprivatecompanywithlimitedliability(beslotenvennootschapmet
beperkteaansprakelijkheid)intoapubliclimitedcompany(naamlozevennootschap)underDutchlaw,pursuanttoadeedofamendmentand
conversion,andourcorporatenamewillbechangedtotrivagoN.V.FollowingthepreIPOcorporatereorganization,trivagoN.V.willbethe
holdingcompanyoftrivagoGmbHandthehistoricalconsolidatedfinancialstatementsoftrivagoGmbHincludedinthisRegistration
StatementwillbecomethehistoricalconsolidatedfinancialstatementsoftrivagoN.V.
ThehistoricalfinancialstatementsoftrivagoGmbHanditscontrolledsubsidiariesmakereferencetothemembersequityastrivagoGmbH
ClassAunitsandtrivagoGmbHClassBunits.TheequityofaGmbHisnotunitizedintosharesunderGermancorporatelaw.However,
pursuanttothecompanysarticlesofassociation,weunitizedmembersequityintotrivagoGmbHClassAunitsandClassBunits,witheach
trivagoGmbHClassBunithaving1/1,000ofthevotingrightsofatrivagoGmbHClassAunit.
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Cautionarynoteregardingforwardlookingstatements
Thisprospectuscontainsforwardlookingstatementsthatrelatetoourcurrentexpectationsandviewsoffutureevents.Theseforward
lookingstatementsarecontainedprincipallyinthesectionsentitledProspectussummary,Riskfactors,Useofproceeds,Managements
discussionandanalysisoffinancialconditionandresultsofoperationsandBusiness.Thesestatementsrelatetoeventsthatinvolve
knownandunknownrisks,uncertaintiesandotherfactors,includingthoselistedunderRiskfactors,whichmaycauseouractualresults,
performanceorachievementstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbythe
forwardlookingstatements.
Insomecases,theseforwardlookingstatementscanbeidentifiedbywordsorphrasessuchasmay,will,expect,anticipate,aim,
estimate,intend,plan,believe,potential,continue,is/arelikelytoorothersimilarexpressions.Forwardlookingstatements
containedinthisprospectusinclude,butarenotlimitedto,statementsabout:
ourfuturefinancialperformance,includingourrevenue,costofrevenue,operatingexpensesandourabilitytoachieveandmaintain
profitability
ourabilitytogeneratepositivecashflowandthesufficiencyofouroperatingcashflowtomeetourliquidityneeds
ouruseofthenetproceedsfromthesaleofADSsbyusinthisoffering
ourexpectationsregardingthedevelopmentofourindustryandthecompetitiveenvironmentinwhichweoperate
ourdevelopmentofnewproductsandservices
ourabilitytoincreasethenumberofvisitstoourhotelsearchplatformandreferralstoouradvertisers
ourabilitytoattractandmaintainrelationshipswithadvertisersandincreasethenumberofhotelsonourmarketplace
thegrowthintheusageofourmobiledevicesandourabilitytosuccessfullymonetizethisusage
ourabilitytoreceiveapositivetaxrulingandcompletethepostIPOmergerand
theeffectofthecorporatereorganization.
Theseforwardlookingstatementsaresubjecttorisks,uncertaintiesandassumptions,someofwhicharebeyondourcontrol.Inaddition,
theseforwardlookingstatementsreflectourcurrentviewswithrespecttofutureeventsandarenotaguaranteeoffutureperformance.
Actualoutcomesmaydiffermateriallyfromtheinformationcontainedintheforwardlookingstatementsasaresultofanumberoffactors,
including,withoutlimitation,theriskfactorssetforthinRiskfactorsandthefollowing:
ourabilitytoeffectivelymanageourgrowth
globalpoliticalandeconomicinstabilityandothereventsbeyondourcontrol
increasingcompetitionandconsolidationinourindustry
ouradvertiserconcentration
ourabilitytomaintainandincreaseourbrandawareness
ourabilitytomaintainand/orexpandrelationshipswith,anddevelopnewrelationshipswith,hotelchainsandindependenthotelsaswell
asOTAs
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ourrelianceonsearchengines,whichmaychangetheiralgorithms
ourrelianceontechnology
theeffectofthecorporatereorganization
ourmaterialweaknessinourinternalcontroloverfinancialreportingandourabilitytoestablishandmaintainaneffectivesystemof
internalcontroloverfinancialreporting
ourabilitytoattract,trainandretainexecutivesandotherqualifiedemployeesand
ourentrepreneurialcultureanddecentralizeddecisionmaking.
Weoperateinanevolvingenvironment.Newrisksemergefromtimetotime,anditisnotpossibleforourmanagementtopredictallrisks,
norcanweassesstheeffectofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactual
resultstodiffermateriallyfromthosecontainedinanyforwardlookingstatements.
Theforwardlookingstatementsmadeinthisprospectusrelateonlytoeventsorinformationasofthedateonwhichthestatementsare
madeinthisprospectus.Exceptasrequiredbylaw,weundertakenoobligationtoupdateorrevisepubliclyanyforwardlookingstatements,
whetherasaresultofnewinformation,futureeventsorotherwise,afterthedateonwhichthestatementsaremadeortoreflectthe
occurrenceofunanticipatedevents.Youshouldreadthisprospectusandthedocumentsthatwereferenceinthisprospectusandhavefiled
asexhibitstotheregistrationstatement,ofwhichthisprospectusisapart,completelyandwiththeunderstandingthatouractualfuture
resultsorperformancemaybemateriallydifferentfromwhatweexpect.
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Marketandindustrydata
Weobtainedtheindustry,marketandcompetitivepositiondatainthisprospectusfromourowninternalestimatesandresearchaswellas
frompubliclyavailableinformation,industryandgeneralpublicationsandresearch,surveysandstudiesconductedbythirdpartiessuchas
PhocuswrightInc.,orPhocuswright.Wehaveestimatedthesizeofourglobalmarketutilizingdataderivedfrompubliclyavailable
Phocuswrightdata.WedefineourglobalmarketascomprisingtheUnitedStates,WesternEurope,APACandtheMiddleEast.Wehave
includeddatafromthefollowingPhocuswrightreports:theAsiaPacificOnlineTravelOverviewNinthEdition,October2016,ortheAPAC
PhocuswrightReporttheEuropeanOnlineTravelOverviewEleventhEdition,January2016,ortheEuropeanPhocuswrightReportthe
MiddleEastOnlineTravelOverviewSecondEdition,August2015,ortheMiddleEastPhocuswrightReporttheU.S.OnlineTravelOverview
FifteenthEdition,January2016,ortheU.S.PhocuswrightReporttheU.S.OnlineTravelOverviewEleventhEditionMarketDataSheet,
January2012theAsiaPacificOnlineTravelOverviewFifthEdition,August2012theMiddleEastOnlineTravelOverviewFirstEdition,
March2013andtheEuropeanOnlineTravelOverviewSeventhEditionMarketDataSheet,January2012.Wecollectivelyrefertothese
reportsasthePhocuswrightData.WehavealsoincludedglobalonlinehotelmarketdatafromPhocuswrightsGlobalOnlineTravel
OverviewFourthEdition,November2016andrelateddataseparatelyprovidedbyPhocuswrightinAugust2016,whichwecollectivelycall
theGlobalOnlineTravelOverview,aswellasdatafromthePhocuswrightU.S.ConsumerTravelReportEighthEditionJune2016,whichwe
callthePhocuswrightConsumerTravelReport,andthePhocuswrightU.S.TravelAdvertisingMarketplace:IndustrySizingandTrends2015,
June2014,whichwecallthePhocuswrightU.S.TravelAdvertisingMarketplaceReport.Referencestoourresearcharereferencesto
publiclyavailableinformationexceptasotherwiseindicated.
Althoughneitherwenortheunderwritershaveindependentlyverifiedtheaccuracyorcompletenessofanythirdpartyinformation,we
believetheindustry,marketandcompetitiveinformationincludedinthisprospectusisreliable.Forecastsandotherforwardlooking
informationobtainedfromthesesourcesaresubjecttothesamequalificationsanduncertaintiesastheotherforwardlookingstatementsin
thisprospectusaswellasriskduetoavarietyoffactors,includingthosedescribedunderRiskfactorsandelsewhereinthisprospectus.
Theseandotherfactorscouldcauseresultstodiffermateriallyfromthoseexpressedintheestimatesmadebythethirdpartiesandbyus.
Trademarks,servicemarksandtradenames
Wehaveproprietaryrightstotrademarksusedinthisprospectuswhichareimportanttoourbusiness,manyofwhichareregisteredunder
applicableintellectualpropertylaws.
Solelyforconvenience,thetrademarks,servicemarks,logosandtradenamesreferredtointhisprospectusarewithouttheand
symbols,butsuchreferencesarenotintendedtoindicate,inanyway,thatwewillnotassert,tothefullestextentunderapplicablelaw,our
rightsortherightsoftheapplicablelicensorstothesetrademarks,servicemarksandtradenames.Thisprospectuscontainsadditional
trademarks,servicemarksandtradenamesofothers,whicharethepropertyoftheirrespectiveowners.Alltrademarks,servicemarksand
tradenamesappearinginthisprospectusare,toourknowledge,thepropertyoftheirrespectiveowners.Wedonotintendouruseordisplay
ofothercompaniestrademarks,servicemarks,copyrightsortradenamestoimplyarelationshipwith,orendorsementorsponsorshipofus
by,anyothercompanies.
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Exchangerates
Wemaintainourbooksandrecordsineuros,andourreportingcurrencyisineuros.Inthisprospectus,translationsofeuroamountsinto
U.S.dollarsaresolelyfortheconvenienceofthereaderandwerecalculatedatthenoonbuyingrateinNewYorkCityforcabletransfersin
foreigncurrenciesascertifiedforcustomspurposesbytheFederalReserveBankinNewYorkontheperiodenddatefortheapplicable
period,whichasofDecember31,2015was1.00=$1.0859andasofSeptember30,2016was1.00=$1.1238.Youshouldnotassume
that,onthatoranyotherdate,onecouldhaveconvertedtheseamountsofeurointoU.S.dollarsatthisoranyotherexchangerate.
FluctuationsintheexchangeratebetweentheeuroandtheU.S.dollarwillaffecttheU.S.dollaramountsreceivedbyownersofourADSs
onconversionofdividends,ifany,paidineuroontheADSs.Thefollowingtablepresentsinformationontheexchangeratesbetweenthe
euroandtheU.S.dollarfortheperiodsindicated:
(U.S.dollarper)
Period
end
YearendedDecember31:
2010
2011
2012
2013
2014
2015
1.3269
1.2973
1.3186
1.3779
1.2101
1.0859
Monthended:
January31,2016
February29,2016
March31,2016
April30,2016
May31,2016
June30,2016
July31,2016
August31,2016
September30,2016
October31,2016
November30,2016
December2016(throughDecember9,2016)
Averagefor
period
Low
1.3262
1.3931
1.2859
1.3281
1.3297
1.1959
1.2926
1.2062
1.2774
1.2101
1.1096
1.0524
High
1.4536
1.4875
1.3463
1.3816
1.3927
1.2015
1.0832
1.0868
1.1390
1.1441
1.1135
1.1032
1.1168
1.1146
1.1238
1.0962
1.0578
1.0855
1.1092
1.1134
1.1346
1.1312
1.1232
1.1055
1.1207
1.1218
1.1014
1.0792
1.0743
1.0868
1.0845
1.1239
1.1135
1.1024
1.0968
1.1078
1.1158
1.0866
1.0560
1.0964
1.1362
1.1390
1.1441
1.1516
1.1400
1.1168
1.1334
1.1271
1.1212
1.1121
1.0541
1.0666
1.0541
1.0758
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Corporatestructure
Corporatereorganization
travelB.V.isanewlyformedDutchprivatecompanywithlimitedliability(beslotenvennootschapmetbeperkteaansprakelijkheid).Priorto
completionofthisoffering,travelB.V.willbeconvertedunderDutchlawintoapubliclimitedcompany(naamlozevennootschap)pursuantto
adeedofamendmentandconversion.ThelegaleffectoftheconversionontravelB.V.underDutchlawwillbelimitedtothechangeinthe
legalform.travelB.V.willneitherbedissolvednorwoundup,butwillcontinueitsexistenceasthesamelegalentitywithanewlegalform.As
ofthemomentofconversion,itwillberenamedtrivagoN.V.
trivagoN.V.willactasaholdingcompanyoftrivagoGmbH,thehistoricaloperatingcompanyofthetrivagogroup.Inthisprospectus,unless
thecontextotherwiserequires,thetermswe,us,our,trivagoandthecompanyrefertotrivagoGmbH,travelB.V.andtrivagoN.V.,
andtheirrespectiveconsolidatedsubsidiaries,asapplicable.
PreIPOcorporatereorganization
AsofSeptember30,2016,i.e.,priortothecompletionofthisofferingandthecontributionsdescribedinthisparagraph,Expediaowned
63.5%andtheFoundersowned36.5%,inaggregate,ofthesharecapitaloftrivagoGmbH.Priortothecompletionofthisoffering,Expedia
willcontributeallofitsunitsoftrivagoGmbHtotravelB.V.inacapitalincreaseinexchangefornewlyissuedClassBsharesoftravelB.V.,to
beconvertedintoClassBsharesoftrivagoN.V.TheFounderswillcontribute940unitsoftrivagoGmbH,representing6.7%oftheir
aggregateunitholdingintrivagoGmbH,totravelB.V.inacapitalincreaseinexchangefornewlyissuedClassAsharesoftravelB.V.,tobe
convertedintoClassAsharesoftrivagoN.V.Asaresultofthesecontributions,96.3%ofthesharecapitaland99.6%ofthevotingpowerin
travelB.V.willbeheldbyExpediaand3.7%ofthesharecapitaland0.4%ofthevotingpowerintravelB.V.willbeheldbytheFounders,
whereas66.0%oftheunitsoftrivagoGmbHwillbeheldbytravelB.V.and34.0%oftheunitsintrivagoGmbHwillbeheldbytheFounders.
ADSsrepresentingtheClassAsharesoftheFounderswillsubsequentlybesoldinthisoffering.Werefertotheforegoingtransactionsas
thepreIPOcorporatereorganization.
Immediatelyupontheclosingofthisoffering,asubstantialportionofthenetproceedstousfromtheofferingwillbetransferredtotrivago
GmbHinexchangefornewunitsissuedbytrivagoGmbH,whichwerefertoasthecapitalincrease.Thenumberofnewunitsoftrivago
GmbHtobesubscribedforwillbeequivalenttothenumberofADSssoldbyusintheoffering,dividedbytheexchangeratioof8,510.66824,
roundeddowntothenearestwholeunit.Afterthecapitalincrease,67.7%oftheunitsoftrivagoGmbHwillbeheldbytrivagoN.V.and32.3%
oftheunitsoftrivagoGmbHwillbeheldbytheFounders.UponcompletionofthepreIPOcorporatereorganization,thisofferingandthe
capitalincrease,trivagoN.V.willbeaholdingcompanyanditsonlymaterialassetswillbeitsownershipoftheunitsoftrivagoGmbH.In
connectionwiththepreIPOcorporatereorganization,weexpecttoimplementcertainrelatedarrangementsoncustomarycommercialterms
withtrivagoGmbH,includingintercompanyloanarrangementsandmanagementservicesarrangements.
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ThefollowingchartdepictsourcorporatestructureupontheconversionoftravelB.V.intoapubliclimitedcompany(naamloze
vennootschap),thecompletionofthisoffering,thecontributionsandthecapitalincreasesdescribedintheparagraphabove.
PostIPOcorporatereorganization
Aspromptlyaspracticable,eachoftrivagoGmbHandeachoftheFounderswillsubmitarequestforataxrulingfromtheGermantax
authoritiesinconnectionwithaplantosimplifyourcorporatestructureaftercompletionofthisoffering.Thetaxrulingrequestofthecompany
willrequestadecisionfromtheGermantaxauthoritieswithrespectto,interalia,the:(i)applicationoftheGermanReorganizationTaxAct
(RTAUmwandlungssteuergesetz)tothepostIPOmergerand(ii)fulfilmentofthespecificrequirementsundersec.11par.2RTA,in
particular,thatthetransferredassetswillstillbesubjecttoGermancorporateincometaxandthatGermanyisnotprecludedorlimitedin
exercisingitsrightstotaxanycapitalgainsfromthedisposalofthoseassetsattheleveloftrivagoN.V.asaresultofthepostIPOmerger.
ThetaxrulingrequestofeachoftheFounderswillrequestadecisionfromtheGermantaxauthoritieswithrespectto,interalia,the:(i)
applicationoftheGermanReorganizationTaxAct(RTAUmwandlungssteuergesetz)tothepostIPOmerger(asdefinedbelow)and(ii)the
fulfillmentofthespecificrequirementsundersec.13par.2RTAforataxfreeexchangebytheFoundersoftheirsharesand(iii)certain
othermatters.Webelievethattherelevantgovernmentalauthoritiestypicallyissuerulingssuchastheonedescribedabovewithintwoto
fourmonthsafterarequestissubmitted.Thereisnoguarantee,however,thattherulingstoberequestedbytrivagoGmbHandthe
Founderswillbeissuedwithinthistime(oratall),andsucharulingmaytakeconsiderablylonger.IfweandeachoftheFoundersreceive
positivetaxrulings(and/orcertainotherconditionsaremet,asdescribedmorefullyintheIPOStructuringAgreement,seeRelatedparty
transactionsRelationshipwithExpediaIPOStructuringAgreement),weintendtoconsummateatransactionpursuanttowhichtrivago
GmbHwillbemergedwithandintotrivagoN.V.,whichwerefertoasthepostIPOmerger,andtheFounderswilleffectivelyexchangeallof
theirunitsoftrivagoGmbHremainingafterthepreIPOcorporatereorganizationforClassBsharesoftrivagoN.V.Thefollowingchart
depictsourcorporatestructureifweareabletocompletethepostIPOmerger:
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IftrivagoGmbHoranyoftheFoundersdoesnotreceiveafavorablerulingfromtheGermantaxauthoritieswithrespecttothematters
describedabove,oriftrivagoGmbHoranyoftheFoundersdoesnotreceivearulingwithintwelvemonthsfromthecompletionofthe
offering(andineachcasecertainotherconditionsarenotmet,asdescribedmorefullyintheIPOStructuringAgreement,seeRelatedparty
transactionsRelationshipwithExpediaIPOStructuringAgreement),trivagoGmbHwillnotconsummatethepostIPOmerger.Aftersuch
time,theFounderswillhavearighttoexchangetheirsharesintrivagoGmbHforourClassAsharesorClassBsharesattheexchangeratio
of8,510.66824,subjecttocertainadjustmentsforsplitsandsimilartransactions.IfthepostIPOmergerisnotconsummated,trivagoGmbH
willchangeitslegalformfirstintoaGermanstockcorporation(Aktiengesellschaft)andthenintoaEuropeanpubliclimitedliabilitycompany
(SocietasEuropaea),whichwerefertoastheSEstructure.WerefertothecompanyfollowingimplementationoftheSEstructureastrivago
SE.UponcompletionoftheSEstructure,theownershipoftrivagoGmbH/SEwillbeasfollows:
IftheSEstructureisimplemented,wewillremainaholdingcompany,theFounderswillowntheremainingsharesoftrivagoSEandwill
continuetohavetherighttoexchangetheirsharesoftrivagoSEforourClassAsharesorClassBsharesattheexchangeratioof
8,510.66824,subjecttocertainadjustmentsforsplitsandsimilartransactions.SeeRelatedpartytransactionsIPOStructuringAgreement
andRiskfactorsTaxrisksrelatedtothecorporatereorganization.InconnectionwiththepreIPOcorporatereorganization,weexpectto
implementcertainrelatedarrangementsoncustomarycommercialtermswithtrivagoGmbH,includingintercompanyloanarrangementsand
managementservicesarrangements.WerefertothepostIPOmergerandtheSEstructure,collectively,asthepostIPOcorporate
reorganization.AlthoughweexpecttocompletethepostIPOcorporatereorganizationassoonaspracticable,ExpediaandtheFounders
haveagreedtodeterminewithintwelvemonthsofthecompletionofthisofferinghowtoproceedwiththepostIPOcorporatereorganization,
whetherornottaxrulingsarereceived,andexpecttoimplementanydecisionwithinfourmonthsaftermakingsuchdetermination.Whether
weareabletoimplementthepostIPOcorporatereorganizationwithinfourmonthsaftersuchdeterminationdependsonhowquicklyweare
abletosubmitnecessaryfilingstogovernmentauthorities,havesuchfilingsregisteredbysuchauthoritiesand,ifapplicable,conclude
discussionswithemployeesregardingtheirsupervisoryboardparticipationrightsinourGermansubsidiaryunderGermanlaw.Evenif
favorabletaxrulingsarereceived,ExpediaandtheFoundersmaychoosetoconsummatetheSEstructureratherthanthepostIPOmerger.
WewillissueapressreleaseassoonaspracticableafterthetimeofsuchdeterminationtoannouncethefinalizationofourpostIPO
corporatereorganization.
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Theoffering
OnlyADSsrepresentingtrivagoN.V.ClassAshareswillbesoldtoinvestorspursuanttothisoffering.Immediatelyfollowingthecompletion
ofthisoffering,therewillbe235,118,206sharesinoursharecapitalissuedandoutstanding,whichconsistof26,110,118ClassAshares
issuedandoutstanding(or30,026,635ClassAsharesiftheunderwritersexerciseinfulltheiroptiontopurchaseadditionalADSsfromus
andtheSellingShareholders)and209,008,088ClassBsharesissuedandoutstanding.Weestimatethatournetproceedsfromthis
offering,afterdeductingtheunderwritingdiscountsandcommissionsandotherofferingrelatedexpenses,willbeapproximately$183million
(or$212millioniftheunderwritersexerciseinfulltheiroptiontopurchaseadditionalADSsfromus).
Following(i)thecompletionofthepreIPOreorganizationandthecompletionofthisofferingand(ii)assumingthecompletionofthepostIPO
merger,theownershipoftrivagoN.V.willbeasfollows:
Followingthecompletionofthe
preIPOcorporatereorganization
Assumingthe
Assumingthe
underwritersoption
underwritersoption
topurchase
additional
ADSsis
ADSsis
notexercised:
exercisedinfull:
ClassA
shares
ClassB
shares
ClassA
shares

(1)
(1)
(1)
11.1%
11.1%
88.9%
(1)
(1)
(1)

88.9%

(1)
(1)
(1)
12.6%
12.6%
Expedia
RolfSchrmgens
PeterVinnemeier
MalteSiewert
Freefloat
Total
Assumingthecompletionofthe
postIPOmerger
Assumingthe
Assumingthe
underwritersoption
underwritersoption
ADSsis
ADSsis
notexercised:
exercisedinfull:
ADSs
ADSs
representing
representing
ClassA
ClassB
ClassA
ClassB
ClassB
shares
shares
shares
shares
shares
87.4%
(1)
(1)
(1)

87.4%

7.5%
7.5%
60.2%
16.8%
12.8%
2.6%

92.5%

8.6%
8.6%
59.7%
16.5%
12.6%
2.5%
91.4%
(1) Followingthecompletionofthisofferingandthecapitalincrease,Messrs.Schrmgens,VinnemeierandSiewertwillown16.8%,12.8%and2.6%,respectively,ofnoncontrolling
interestsintrivagoGmbH,assumingtheunderwritersoptiontopurchaseadditionalADSsisnotexercised,and16.7%,12.7%and2.5%,respectively,ofnoncontrollinginterests
intrivagoGmbH,assumingtheunderwritersoptiontopurchaseadditionalADSsisexercisedinfull.AssumingthecompletionofthepostIPOmerger,theFounders
noncontrollinginterestswillbeconvertedintoClassAorClassBsharesoftrivagoN.V.
IftheSEstructureisimplementedinlieuofthepostIPOmerger,thefounderswillholdsharesoftrivagoSEandnottrivagoN.V.andthus
Messrs.Schrmgens,VinnemeierandSiewertwillown16.8%,12.8%and2.6%ofnoncontrollinginterestsintrivagoSE,respectively,
assumingtheunderwritersoptiontopurchaseadditionalsharesisnotexercised.
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Useofproceeds
Thenetproceedstousfromthisofferingwillbeapproximately$183million(orapproximately$212millioniftheunderwritersexercisetheir
optiontopurchaseadditionalADSsfromusinfull),afterdeductingtheunderwritingdiscountsandcommissionsandexpensesofthis
offering.
WewillnotreceiveanyproceedsfromthesaleofADSsbytheSellingShareholders.TheSellingShareholderswillreceiveallofthe
proceedsfromtheirsalesoftheirADSsinthisoffering,aftercommissionspayabletotheunderwriters.Expensesofthisofferingwillbepaid
byus.
Theprincipalreasonsforthisofferingaretoincreaseourfinancialflexibility,increaseourpublicprofileandawareness,createapublic
marketfortheADSsandtofacilitateourfutureaccesstopublicequitymarkets.Wehavenotquantifiedorallocatedanyspecificportionof
thenetproceedstousorrangeofthenetproceedstousforanyparticularpurpose.Weanticipatethatwewillusethenetproceedswe
receivefromthisoffering,includinganynetproceedswereceivefromtheexerciseoftheunderwritersoptiontoacquireadditionalADSsin
thisoffering,forgeneralcorporatepurposes,includingtofundinvestmentsintechnology,forworkingcapitaltofundourgrowthstrategies
describedelsewhereinthisprospectusandtopursuestrategicacquisitions,althoughwehavenoagreements,commitmentsor
understandingswithrespecttoanysuchtransaction.Immediatelyupontheclosingofthisoffering,asubstantialportionoftheproceedstous
fromthisofferingwillbetransferredtotrivagoGmbHinexchangefornewunitsissuedbytrivagoGmbH.
Theamountofwhat,andtimingofwhen,weactuallyspendforthesepurposesmayvarysignificantlyandwilldependonanumberof
factors,includingourfuturerevenueandcashgeneratedbyoperationsandtheotherfactorsdescribedinRiskfactors.Accordingly,our
managementboardandsupervisoryboardwillhavebroaddiscretionindeployingthenetproceedsofthisoffering.
Pendingtheiruse,weplantoholdthenetproceedsfromthisofferingincashandcashequivalents.
Dividendpolicy
WedonotanticipatepayinganydividendsonourClassAsharesintheforeseeablefuture.Weintendtoretainallavailablefundsandany
futureearningstofundthedevelopmentandexpansionofourbusiness.
UnderDutchlaw,wemayonlypaydividendstotheextentthatourshareholdersequity(eigenvermogen)exceedsthesumofthepaidup
andcalledupsharecapitalplusthereservesrequiredtobemaintainedunderDutchlaworbyourarticlesofassociation.Subjecttosuch
restrictions,anyfuturedeterminationtopaydividendswillbeatthediscretionofourmanagementboard(insomeinstances,subjectto
approvalbyaFounder),andwilldependuponanumberoffactors,includingourresultsofoperations,financialcondition,futureprospects,
contractualrestrictions,restrictionsimposedbyapplicablelawandotherfactorsourmanagementboarddeemsrelevant.
Assumingsuchrestrictions,asdescribed,abovewerealreadyapplicabletothehistoricalfinancialstatementsoftrivagoGmbHfortheyears
endedDecember31,2014and2015,ourreservesavailablefordividenddistributionwouldhavebeenatleast52.7millionand55.5
million,respectively,representingourContributionfromparentlessourSubscribedcapital.
Afterthecompletionofthisoffering,butpriortotheconsummationofthepostIPOmerger,theFoundersandExpediahaveagreed,pursuant
totheIPOStructuringAgreement,toeffectaonetimedividendpaymentinrespectoffiscalyear2016intheamountof0.5million,which
shallbepaidtotheunitholdersofrecordoftrivagoGmbHpriortotheconsummationofthepostIPOmergerbutnotbeforeJanuary1,2017.
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ForinformationregardingtheGermanwithholdingtaxapplicabletodividendsandrelatedU.S.refundprocedures,seeMaterialtax
considerationsGermantaxationGermantaxationofADSholders.andRiskfactorsRisksrelatedtoownershipofourClassAshares
andADSsAnydividendspaidbyusmaybesubjecttoGermanwithholdingtax.
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Capitalization
Thetablebelowsetsforthourcash,redeemablenoncontrollinginterestandcapitalizationasofSeptember30,2016,whichisderivedfrom
ourauditedfinancialstatementsincludedelsewhereinthisprospectus:
onanactualbasis
onaproformabasistogiveeffecttothepreIPOcorporatereorganization,assumingtheunderwritersoptiontopurchaseadditional
ADSsisnotexercised
onaproformaadjustedbasistogivefurthereffecttotheissuanceandsalebyusof18,110,091ADSsinthisofferingattheinitialpublic
offeringpriceof$11.00perADS,afterdeductingtheunderwritingdiscountsandcommissionsandofferingexpensesand
onapostIPOmergerproformaadjustedbasistogivefurthereffecttothepostIPOmerger.IntheeventthepostIPOmergerisnot
consummated,theFounderswillholdsharesoftrivagoSEinanaggregateamount,representinganoncontrollinginterestof32.3%.
Accordingly,ourcapitalizationaftertheimplementationoftheSEstructurewouldbeequivalenttoourproformaadjustedcapitalization
uponcompletionofthisoffering.TheFounderswillhavetheright,pursuanttotheIPOStructuringAgreement,tocontributesharesof
trivagoSEtotrivagoN.V.inexchangeforourClassAsharesorClassBshares,whichwouldreducetherelatednoncontrollinginterest,
andcanthereaftersellsuchsharesfromtimetotime.SeeRelatedpartytransactionsIPOStructuringAgreement.
InvestorsshouldreadthistableinconjunctionwithourauditedfinancialstatementsincludedinthisprospectusaswellasUseofproceeds,
SelectedconsolidatedfinancialdataandManagementsdiscussionandanalysisoffinancialconditionandresultsofoperations.There
havebeennosignificantadjustmentstoourcapitalizationsinceSeptember30,2016.
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(inmillions)
Cash
Totaldebt
Equity:
Subscribedcapital:(3)(4)
ClassAshares,0.06nominalvalue:nosharesauthorized,no
sharesissuedandoutstanding,actual700,000,000shares
authorized,8,000,027sharesissuedandoutstanding,pro
forma26,110,118sharesproformaasadjustedand
26,110,118sharespostIPOmergerproformaasadjusted
ClassBshares,0.60nominalvalue:nosharesauthorized,no
sharesissuedandoutstanding,actual320,000,000shares
authorized,209,008,088sharesissuedandoutstanding,pro
forma209,008,088sharesproformaasadjustedand
320,999,970sharespostIPOmergerproformaasadjusted
Reserves
Contributionfromparent
Accumulatedothercomprehensiveincome(loss)
TotalequityattributabletotrivagoGmbH
Noncontrollinginterests(5)(6)
Totalequity
Actual
4.2
Totalcapitalization
ProForma
4.2
AsofSeptember30,2016
PostIPOmerger
ProForma
ProForma
(1)
Adjusted
(2)
Adjusted
167.8
167.8
0.0
125.9
127.0
194.2
0.5
1.6
1.6

696.9
120.9
(0.0)
(180.1)
637.7

637.7
125.4
353.9
120.9

(180.1)
420.6
217.1
637.7
125.4
527.3
120.9

(180.3)
594.9
205.7
800.6
192.6
665.8
120.9
(180.3)
800.6
800.6
637.7
637.7
800.6
800.6
(1) Thisreflectstheimpactoftheonetime,0.5milliontrivagoGmbHdividendtoitsunitholders,ofwhich67.7%iscontributedtotrivagoN.V.and32.3%ispaidtothe
noncontrollinginterest,thusresultingina0.2millioncashoutflowtotrivagoN.V.onaconsolidatedbasis.SeeDividendpolicy.
(2) IntheeventthepostIPOmergerisnotconsummated,theFounderswillholdsharesoftrivagoSE,inanaggregateamountrepresentinganoncontrollinginterestof32.3%.
Accordingly,ourcapitalizationaftertheimplementationoftheSEstructurewouldbeequivalenttoourproformaadjustedcapitalizationuponcompletionofthisoffering.The
Founderswillhavetheright,pursuanttotheIPOStructuringAgreement,tocontributesharesoftrivagoSEtotrivagoN.V.inexchangeforourClassAsharesorClassBshares,
whichwouldreducetherelatednoncontrollinginterest,andcanthereaftersellsuchsharesfromtimetotime.SeeRelatedpartytransactionsIPOStructuringAgreement.
(3) TheSellingShareholderswillsellADSsrepresentingalloftheClassAsharesheldbythemfollowingthepreIPOcorporatereorganizationinthisoffering.FollowingthepreIPO
corporatereorganizationandthecapitalincrease,Messrs.Schrmgens,VinnemeierandSiewertwillown16.8%,12.8%and2.6%oftrivagoGmbH,respectively,whichwillbea
subsidiaryoftrivagoN.V.InconnectionwiththepostIPOmerger,theFoundersinterestsintrivagoGmbHwillbeexchangedfornewlyissuedClassBsharesoftrivagoN.V.See
CorporatestructureCorporatereorganization.
(4) Therewillbe235,118,206ClassAsharesandClassBsharesissuedandoutstandinguponcompletionofthisoffering.InadditiontotheClassAsharesandClassBsharestobe
reservedforissuancetotheFoundersinconnectionwithissuancesinconnectionwiththepostIPOmerger,10%ofourtotalissuedandoutstandingcapital,calculatedasifthe
postIPOmergerhadoccurred,willbereservedforissuanceasClassAsharesinconnectionwithawardsunderthe2016OmnibusIncentivePlan,whichisexpectedtobe
34,711,009ClassAshares.ThenumberofourClassAsharesshownasoutstandinginthetableaboveexcludes,aftergivingeffecttothepreIPOcorporatereorganization
describedinCorporatestructureCorporatereorganization,6,408,533ClassAsharesissuableupontheexerciseofshareoptionsoutstandingasofSeptember30,2016.Asof
December1,2016,aftergivingeffecttothepreIPOcorporatereorganization,therewere7,706,752optionsoutstandingforClassAsharesataweightedaverageexerciseprice
of2.83perADS.Suchshareoptionswillbeexercisableonacashless,netexercisebasis,afterdeductingsharestocovertheexercisepriceandwithholdingtaxes.
(5) ThepreIPOcorporatereorganizationwillresultin34.0%ofnoncontrollinginterestintrivagoGmbHforshareholdersoftrivagoN.V.(thedirectholdingcompanyoftrivago
GmbH).ThepostIPOmergerwillresultintheconversionoftheFounderstrivagoGmbHClassAunitstoClassBsharesoftrivagoN.V.,whichwillresultintheeliminationofthe
noncontrollinginterest.
(6) Thecapitalincreasefollowingcompletionoftheofferingwillresultin32.3%ofnoncontrollinginterestintrivagoGmbHforshareholdersoftrivagoN.V.(thedirectholdingcompany
oftrivagoGmbH).Ifimplemented,thepostIPOmergerwillresultintheconversionoftheFounderstrivagoGmbHClassAunitstoClassAorClassBsharesoftrivagoN.V.,
whichwillresultintheeliminationofthenoncontrollinginterest.
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Dilution
Offeringrelateddilution
IfyouinvestinourADSs,yourinterestwillbedilutedtotheextentofthedifferencebetweentheinitialpublicofferingpriceperADSandthe
nettangiblebookvalueperADSafterthisoffering.
OurproformanettangiblebookvalueatSeptember30,2016was$(34.4)million((30.6)million),correspondingtoanettangiblebook
valueof$(0.16)perADS((0.14)perADS).OurproformanettangiblebookvalueperADSrepresentstheamountofourtotalassetsless
ourtotalliabilities,excludinggoodwillandintangibleassets,net,dividedbythetotalnumberofoursharesoutstandingatSeptember30,
2016,aftergivingeffecttothepreIPOcorporatereorganization.
Aftergivingeffecttothesalebyusof18,110,091ADSsinthisofferingattheinitialpublicofferingpriceof$11.00perADS(9.79perADS),
afterdeductingtheunderwritingdiscountsandcommissionsandofferingexpenses,ourproformaasadjustednettangiblebookvalueat
September30,2016wouldhavebeen$149.5million(133.0million),representing$0.64perADS(0.57perADS).Thisrepresentsan
immediateincreaseinproformanettangiblebookvalueof$0.80perADS(0.71perADS)toexistingshareholdersandanimmediate
dilutioninnettangiblebookvalueof$10.36perADS(9.22perADS)tonewinvestorspurchasingADSsinthisofferingattheassumed
initialpublicoffering.DilutionperADStonewinvestorsisdeterminedbysubtractingproformaasadjustednettangiblebookvalueperADS
afterthisofferingfromtheassumedinitialpublicofferingpriceperADSspaidbynewinvestors.
BecausetheClassAsharesandClassBshareshavethesamedividendandotherrights,exceptforvotingandconversionrights,the
dilutionispresentedbasedonallissuedandoutstandingshares,includingClassAsharesandClassBshares.
ThefollowingtableillustratesthisdilutiontonewinvestorspurchasingADSsinthisoffering.
PublicofferingpriceperADS
ProformanettangiblebookvalueperADS
IncreaseinnettangiblebookvalueperADSattributabletothisoffering
ProformaasadjustednettangiblebookvalueperADS
DilutionperADStonewinvestors
$ 11.00
(0.16)
0.80
0.64
$ 10.36
9.79
(0.14)
0.71
0.57
9.22
IftheunderwritersexercisetheiroptiontopurchaseadditionalADSsfromusinfull,ourproformaasadjustednettangiblebookvalueper
ADSafterthisofferingwouldbe$0.74perADS(0.66perADS),representinganimmediateincreaseinproformaasadjustednettangible
bookvalueperADSof$0.90perADS(0.80perADS)toexistingshareholdersandimmediatedilutionof$10.26perADS(9.13perADS)
inproformaasadjustednettangiblebookvalueperADStonewinvestorspurchasingADSsinthisoffering.
SalesbytheSellingShareholdersinthisofferingwillreducethenumberofClassAsharesheldbysuchshareholderstozero.
IftheunderwritersexercisetheiroptiontopurchaseadditionalADSsfromusinfull,thefollowingwilloccur:
thepercentageofourClassAsharesheldbyexistingshareholderswilldecreasetoapproximately0%ofthetotalnumberofourClassA
sharesoutstandingafterthisofferingand
thepercentageofourClassAsharesheldbynewinvestorswillincreasetoapproximately100%ofthetotalnumberofourClassAshares
outstandingafterthisoffering.
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PostIPOmergerrelateddilution
UponcompletionofthepostIPOmerger,therewillbeanimmediatedilutioninproformaasadjustednettangiblebookvalueof$10.57per
ADS(9.41perADS)toinvestorsholdingClassAsharespurchasedinconnectionwiththisinitialpublicoffering,whichresultsinaproforma
asadjustednettangiblebookvalueof$0.43perADS(0.38perADS).Proformaasadjustednettangiblebookvaluerepresentstheamount
ofourasadjustedproformatotaltangibleassetslessourasadjustedproformatotalliabilitiesaftergivingfurthereffectto(i)theexchangeof
allsharesintrivagoGmbHheldbytheFounderstotrivagoN.V.fornewlyissuedClassBsharesinconnectionwiththepostIPOmergeror
(ii)thecontributionofallsharesintrivagoGmbHheldbytheFounderstotrivagoN.V.inexchangefornewlyissuedClassBshares.
IntheeventthatthepostIPOmergercannotbeconsummatedandtheSEstructureisconsummated,therewillbenoimmediatedilutive
effecttoinvestorsintrivagoN.V.,however,ifandwhentheFoundersexercisetheirputrights,theremaybedilutiveeffectstonettangible
bookvalueperADS.SeeCorporatestructureandRelatedpartytransactionsRelationshipwithExpediaIPOStructuringAgreement.
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Selectedconsolidatedfinancialdata
ThefollowingconsolidatedstatementofoperationsandbalancesheetdataforthefiscalyearsendedDecember31,2014and2015have
beenderivedfromourauditedconsolidatedfinancialstatementsincludedelsewhereinthisprospectus.Theunauditedfinancialdataforthe
ninemonthsendedSeptember30,2015and2016hasbeenderivedfromourcondensedconsolidatedfinancialstatementsincluded
elsewhereinthisprospectus.SeePresentationoffinancialandotherinformation.
ThefollowingtablealsocontainstranslationsofeuroamountsintoU.S.dollarsasofandforthefiscalyearendedDecember31,2015and
theninemonthsendedSeptember30,2016.Thesetranslationsaresolelyfortheconvenienceofthereaderandwerecalculatedatthenoon
buyingrateinNewYorkCityforcabletransfersinforeigncurrenciesascertifiedforcustomspurposesbytheFederalReserveBankinNew
Yorkontheperiodenddatefortheapplicableperiod,whichasofDecember31,2015was1.00=$1.0859andasofSeptember30,2016
was1.00=$1.1238.Youshouldnotassumethat,onthatoranyotherdate,onecouldhaveconvertedtheseamountsofeurointoU.S.
dollarsatthisoranyotherexchangerate.
Thefinancialdatasetforthbelowshouldbereadinconjunctionwith,andisqualifiedbyreferenceto,Managementsdiscussionand
analysisoffinancialconditionandresultsofoperationsandtheconsolidatedfinancialstatementsandnotestheretoincludedelsewherein
thisprospectus.Ourhistoricalresultsdonotnecessarilyindicateresultsexpectedforanyfutureperiod.
(inmillions,exceptshareandpersharedata)
Revenue
Totalrevenue
Costsandexpenses:
Costofrevenue,includingrelatedparty(1)
Generalandadministrative(1)
Interestexpense
Other,net
Netloss
Netincomeattributabletononcontrollinginterests
Proformabasicanddilutedearningspershare(2)
$ 324.6
210.9
535.5
2.9
461.3
28.7
18.1
30.0
(47.9)
3.1
501.0
31.2
19.7
32.6
(52.1)
(0.0)
(1.4)
(1.4)
(31.7)
(8.6)
(23.1)

(23.1)
1.4
286.3
15.4
6.5
30.0
(30.3)
298.9
194.2
493.1
3.5
(0.1)
(2.7)
(2.8)
(50.7)
(11.3)
(39.4)
0.3
(39.1)
(0.12)
(1.1)
239.4
154.4
393.8
2.0
383.5
20.9
12.4
22.5
(47.5)
(0.1)
(2.9)
(3.0)
(55.1)
(12.3)
(42.8)
0.3
(42.5)
(0.13)
(0.1)
(0.7)
(0.8)
(48.3)
(10.9)
(37.4)
0.1
(37.3)
(1.2)
$
$
2015
2016
2016
(unaudited)
209.1
100.2
309.3
Keyperformanceindicator
AdjustedEBITDA(3)
2014
2015
2015
(unaudited)
378.7
206.3
585.0
3.1
538.1
40.6
42.2
11.3
(50.3)
(13.4)
(0.1)
0.5
0.4
(49.9)
1.6
(51.5)
0.5
(51.0)
(0.16)
425.6
231.8
657.4
3.5
604.7
45.6
47.4
12.7
(56.5)
$
$
(0.1)
0.6
0.5
(56.0)
1.8
(57.8)
0.6
(57.2)
(0.18)
16.3
18.3
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(1) Includessharebasedcompensationexpenseasfollows:
(inmillions)
Sellingandmarketing
2014

1.1
1.2
0.1
2015
2015

(unaudited)
0.2
$
0.2
3.4
3.7
4.5
4.9
6.0
$
6.5
2015
0.2
2.4
3.3
3.9
2016
2016
(unaudited)
0.7
$0.8
10.4
11.7
15.3
17.2
25.6
$28.8
(2) Proformabasicanddilutedearnings(loss)pershareiscomputedbydividing(A)netincome(loss)attributabletotrivagoGmbH,afteradjustingfornoncontrollinginterestasa
resultofthepreIPOcorporatereorganization,by(B)basicweightedaveragesharesoutstanding(controllinginterestClassBsharesassumingExpediacontributeditsownership
intrivagoGmbHunitstotravelB.V.andClassAsharesassumingtheFounderscontributedthe940unitstotravelB.V.).ThepotentialdilutivesecuritiesoftravelB.V.,which
includeoptions,havebeenexcludedfromthecomputationofdilutednetlosspershareastheeffectwouldbeantidilutive.Therefore,onaproformabasisgivingeffecttothe
preIPOcorporatereorganization,theweightedaveragenumberofcombinedClassAandClassBsharesoutstandingof213,985,688and216,686,178fortheyearended
December31,2015andtheninemonthsendedSeptember30,2016,respectively,wasusedtocalculatebothproformabasicanddilutednetlosspershareattributableto
shareholders.Thehistoricalweightedaveragenumberofsharesoutstandingexcludesallsharesbeingsoldbyusinthisoffering.SeeCapitalization.
(3) WedefineadjustedEBITDAasnetlossplus:(1)benefit(provision)forincometaxes(2)totalotherincome(expense),net(3)depreciationofpropertyandequipment,including
amortizationofinternalusesoftwareandwebsitedevelopment(4)amortizationofintangibleassetsand(5)sharebasedcompensation.
AdjustedEBITDAisanonGAAPfinancialmeasure.AnonGAAPfinancialmeasurereferstoanumericalmeasureofacompanyshistoricalorfuturefinancialperformance,
financialposition,orcashflowsthatexcludes(orincludes)amountsthatareincludedin(orexcludedfrom)themostdirectlycomparablemeasurecalculatedandpresentedin
accordancewithGAAPinsuchcompanysfinancialstatements.WepresentthisnonGAAPfinancialmeasurebecauseitisusedbymanagementtoevaluateouroperating
performance,formulatebusinessplans,andmakestrategicdecisionsoncapitalallocation.WealsobelievethatthisnonGAAPfinancialmeasureprovidesusefulinformationto
investorsandothersinunderstandingandevaluatingouroperatingperformanceandconsolidatedresultsofoperationsinthesamemannerasourmanagementandin
comparingfinancialresultsacrossaccountingperiods.
OuruseofadjustedEBITDAhaslimitationsasananalyticaltool,andyoushouldnotconsideritinisolationorasasubstituteforanalysisofourresultsreportedinaccordance
withGAAP,includingnetloss.Someoftheselimitationsare:
AdjustedEBITDAdoesnotreflectourcashexpendituresorfuturerequirementsforcapitalexpendituresorcontractualcommitments
AdjustedEBITDAdoesnotreflectchangesin,orcashrequirementsfor,ourworkingcapitalneeds
Althoughdepreciationandamortizationarenoncashcharges,theassetsbeingdepreciatedandamortizedmayhavetobereplacedinthefuture,andadjustedEBITDAdoes
notreflectcashcapitalexpenditurerequirementsforsuchreplacementsorfornewcapitalexpenditurerequirementsand
Othercompanies,includingcompaniesinourownindustry,maycalculateadjustedEBITDAdifferentlythanwedo,limitingitsusefulnessasacomparativemeasure.
WehaveprovidedareconciliationbelowofadjustedEBITDAtonetloss,themostdirectlycomparableGAAPfinancialmeasure.
Netloss
Add/(less):
Interestexpense
Other,net(i)
Add:
Depreciation
EBITDA
Add:
AdjustedEBITDA
2014
2015
2015
(23.1) (39.4) $(42.8)
(8.6) (11.3) (12.3)
(31.7) (50.7) (55.1)
0.0 0.1 0.1

1.4 2.7 2.9
(30.3) (47.9) (52.1)
1.4 2.7 2.8

30.0 30.0 32.6
1.1 (15.2) (16.6)
2.4 14.1 15.3

3.5 (1.1) $ (1.3)
2015
2016
2016
(37.4)
(51.5) $
(57.8)
(10.9)
1.6
1.8
(48.3)
(49.9)
(56.0)
0.1
0.1
0.1
0.7
(0.5)
(0.6)
(47.5)
(50.3)
(56.5)
1.8
3.3
3.7
22.5
11.3
12.7
(23.2)
(35.7)
(40.1)
9.8
52.0
58.4
(13.4)
16.3 $
18.3
(i) Consistsprimarilyofforeignexchangegain/lossintheyearsendedDecember31,2014and2015,andfortheninemonthsendedSeptember30,2015and2016andthe
nonrecurringreversalofa1.6millionindemnificationassetin2015relatedtothe2013acquisitionbyExpedia.
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Balancesheetdata:
(inmillions)
Cash
Totalassets
Totalmembersequity
2014
6.1
750.8
16.0
(90.0)
664.6
AsofDecember31,
2015
2015

(unaudited)
17.6
$
19.1
760.3
825.6
72.0
78.2
(129.2)
(140.3)
622.3
$
675.8
AsofSeptember30,
2016
2016
(unaudited)
4.2
$
4.7
808.4
908.5
84.6
95.1
(180.1)
(202.4)
637.7
$ 716.6
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Managementsdiscussionandanalysisoffinancialconditionand
resultsofoperations
Youshouldreadthefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationsinconjunctionwiththesection
entitledSelectedconsolidatedfinancialdata,andourconsolidatedfinancialstatementsandtherelatednotesincludedelsewhereinthis
prospectus.Thisdiscussioncontainsforwardlookingstatementsandinvolvesnumerousrisksanduncertainties,including,butnotlimitedto,
thosedescribedintheRiskfactorssectionofthisprospectus.Actualresultscoulddiffermateriallyfromthosecontainedinanyforward
lookingstatements.
InNovember2016,travelB.V.wasorganizedunderthelawsoftheNetherlandstobecometheholdingcompanyoftrivagoGmbHin
connectionwiththisoffering.Priortothecompletionofthisoffering,wewillchangeourcorporateformfromaDutchprivatecompanywith
limitedliability(beslotenvenootschapmetbeperkteaansprakelijkheid)intoaDutchpubliclimitedcompany(naamlozevennootschap)and
changeourcorporatenamefromtravelB.V.totrivagoN.V.PleaseseeCorporatestructureCorporatereorganizationpreIPOcorporate
reorganization.travelB.V.hasengagedinactivitiesincidentaltoitsformation,thecorporatereorganizationandthisofferingofourADSs.
Accordingly,financialinformationfortravelB.V.andadiscussionandanalysisofitsresultsofoperationsandfinancialconditionforthe
periodofitsoperationspriortothepreIPOcorporatereorganizationwouldnotbemeaningfulandarenotpresented.FollowingthepreIPO
corporatereorganization,trivagoN.V.willbetheholdingcompanyoftrivagoGmbHandthehistoricalfinancialstatementsoftrivagoGmbH
includedinthisRegistrationStatementwillbecomethehistoricalconsolidatedfinancialstatementsoftrivagoN.V.
Overview
trivagoisaglobalhotelsearchplatform.Ourmissionistobethetravelersfirstandindependentsourceofinformationforfindingtheideal
hotelatthelowestrate.Wearefocusedonreshapingthewaytravelerssearchforandcomparehotels,whileenablinghoteladvertisersto
growtheirbusinessesbyprovidingaccesstoabroadaudienceoftravelers.InthetwelvemonthsendedSeptember30,2016,wehad487
millionqualifiedreferralsandofferedaccesstoapproximately1.3millionhotelsinover190countries.
Ourbrandpositionsusasakeystartingpointfortravelerssearchingfortheiridealhotel.Ourfastandintuitivehotelsearchplatformenables
travelerstofindtheiridealhotelbymatchingindividualtravelerpreferenceswithdetailedhotelcharacteristicssuchasprice,location,
availability,amenitiesandratings,acrossavastsupplyofglobalhotels.
Ourhotelsearchplatformcanbeaccessedgloballyvia55localizedwebsitesandappsin33languages.Userssearchourplatformon
desktopandmobiledevicesusingafamiliaruserinterfaceforaconsistentuserexperience.
trivagowasconceivedbygraduateschoolfriendsRolfSchrmgens,PeterVinnemeierandStephanStubnerandincorporatedin2005.Mr.
Stubnerleftthecompanyin2006andanothergraduateschoolfriend,MalteSiewert,joinedthefoundingteam.Between2006and2008,
severalinvestorsinvested1.4millionintrivago.In2010,InsightVenturePartnersacquired27.3%oftheequityownershipoftrivagofor
42.5million.Expediaacquired63.0%oftheequityownershipintrivagoin2013,purchasingalloutstandingequitynotheldbyfoundersor
employeesoftrivagofor477millionandsubscribingforacertainnumberofnewlyissuedshares.Expediasubsequentlyincreasedits
shareholdingsslightlyinthesecondquarterof2016throughthepurchaseofsharesheldbycertainemployeeswhohadpreviouslyexercised
stockoptions.
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Althoughmostofourgrowthhasbeenorganic,wehavemadethefollowingsmallstrategicacquisitions:
InDecember2014,weacquiredRheinfabrik,anAndroidandiOSappdevelopmentbusiness,foratotalpurchaseconsiderationof1.0
millionincash
InJuly2015,weacquired61.3%oftheinterestinmyhotelshop,anonlinemarketingmanagerforhotels,fortotalpurchaseconsideration
of0.6millionconsistingofcashandthesettlementofpreexistingdebtattheclosingoftheacquisitionand
InAugust2015,weacquired52.3%oftheequityofbase7,acloudbasedpropertymanagementserviceprovider,fortotalpurchase
considerationof2.1millionincash.
segments:theAmericas,DevelopedEuropeandtheRestofWorld.Thechangefromonetothreereportablesegmentswastheresultofa
managementreorganizationtomoreeffectivelymanagethebusiness.Thisreorganizationwasperformedtoalignthemanagementofthe
businesstoourfocusonuniquemarketopportunitiesandcompetitivedynamicsinherentwithineachoftheoperatingsegments.Our
AmericassegmentiscurrentlycomprisedofArgentina,Brazil,Canada,Chile,Columbia,Ecuador,Mexico,Peru,theUnitedStatesand
Uruguay.OurDevelopedEuropesegmentiscomprisedofAustria,Belgium,Denmark,Finland,France,Germany,Ireland,Italy,the
Netherlands,Norway,Portugal,Spain,Sweden,SwitzerlandandtheUnitedKingdom.OurRestofWorldsegmentiscomprisedofallother
countries,themostsignificantbyrevenueofwhichareAustralia,HongKong,Japan,NewZealandandPoland.Segmentrevenueis
comprisedentirelyofreferralrevenue.OtherrevenueisincludedinCorporateandeliminations,alongwithallcorporatefunctionsand
expensesexceptfordirectadvertising.
Wedeterminedouroperatingsegmentsbasedonhowourchiefoperatingdecisionmakersmanageourbusiness,makeoperatingdecisions
andevaluateoperatingperformance.Ourprimaryoperatingmetricisreturnonadvertisingforeachofoursegments,whichcomparescost
perclickrevenuestoadvertisingspend.
Keyfactorsaffectingourfinancialconditionandresultsofoperations
Howweearnandmonitorrevenue
Weearnsubstantiallyallofourrevenuewhenusersofourwebsitesandappsclickonhoteloffersinoursearchresultsandarereferredto
oneofouradvertisers.Wecallthisourreferralrevenue.Eachadvertiserdeterminestheamountthatitwantstopayforeachreferralby
biddingforadvertisementsonourmarketplace.Wealsoearnsubscriptionfeesforcertainservicesweprovidetoadvertisers,althoughsuch
subscriptionfeesdonotrepresentasignificantportionofourrevenue.
Keymetricsweusetomonitorourrevenueincludereturnonadvertisingspend,orROAS,thenumberofqualifiedreferralswemakeandthe
revenueweearnforeachqualifiedreferral,orRPQR.OurtotalrevenuefortheyearsendedDecember31,2014and2015andthenine
monthsendedSeptember30,2015and2016was309.3million,493.1million,393.8millionand585.0million,respectively.Ourreferral
revenuefortheyearsendedDecember31,2014and2015andtheninemonthsendedSeptember30,2015and2016was309.2million,
490.2million,392.3millionand579.3million,respectively.
Returnonadvertisingspend
Wetracktheratioofourreferralrevenuetoouradvertisingexpenses,orreturnonadvertisingspend.WebelievethatROASisanindicator
oftheeffectivenessofouradvertising.OurROASwas113.9%and113.4%fortheyearsendedDecember31,2014and2015,respectively,
and108.1%and116.1%fortheninemonthsendedSeptember30,2015and2016,respectively.OurROASintheAmericas,Developed
EuropeandtheRestofWorldwas90.4%,129.5%and91.7%fortheyearendedDecember31,2014,respectively,ascomparedto101.5%,
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133.2%and86.6%fortheyearendedDecember31,2015,respectively.OurROASintheAmericas,DevelopedEuropeandtheRestof
Worldwas96.2%,125.8%and85.2%fortheninemonthsendedSeptember30,2015,respectively,ascomparedto113.6%,130.6%and
87.7%fortheninemonthsendedSeptember30,2016,respectively.WebelievethedevelopmentofourROASamongthereportable
segmentsisprimarilyrelatedtothedifferentstagesofdevelopmentofourmarkets.Forexample,inDevelopedEurope,wherewehave
operatedthelongestonaverage,wehaveexperiencedthehighestaverageROAS.OurROASintheRestofWorldsegment,wherewe
havethelowestaverageROAS,isalsoimpactedsignificantlybythenumberofmarketsinthesegment,includingmarketsthatwehave
recentlyenteredandthusrequiresignificantadvertisingspendtoreachscale.Overtime,asourmarketscontinuetodevelop,webelievethat
wewillexperiencefurtherincreasesintheefficiencyofouradvertisingspendandthusimprovementsinouraverageROAS.Giventhat
advertisingexpensesarethesignificantmajorityofouroperatingexpenses,webelievethiswillhaveadirectimpactonouradjustedEBITDA
andoperatingmargins.
Historically,webelievethatouradvertisinghasbeensuccessfulingeneratingadditionalrevenue.Weinvestinmanykindsofmarketing
channels,suchasTV,outofhomeadvertising,radio,searchenginemarketing,displayandaffiliatemarketing,emailmarketing,social
media,onlinevideo,mobileappmarketingandcontentmarketing.
OurROASbyreportablesegmentfortheyearsendedDecember31,2014and2015andfortheninemonthsendedSeptember30,2015
and2016wasasfollows:
Yearended Ninemonthsended
December31,
September30,
2014
2015
2015
2016
90.4% 101.5% 96.2% 113.6%
129.5% 133.2% 125.8% 130.6%
91.7% 86.6% 85.2%
87.7%
(unaudited)
Americas
DevelopedEurope
RestofWorld
Qualifiedreferrals
Weusethetermreferraltodescribeeachtimeavisitortooneofourwebsitesorappsclicksonahotel
offerinoursearchresultsandisreferredtooneofouradvertisers.Wechargeouradvertisersforeachreferralonacostperclick,orCPC,
basis.
Sinceavisitormaygenerateseveralreferralsinaday,buttypicallyintendstoonlymakeonebookingonagivenday,wetrackandmonitor
thenumberofqualifiedreferralsfromourplatform.Wedefineaqualifiedreferralasauniquevisitorperdaythatgeneratesatleastone
referral.Forexample,ifasinglevisitorclicksonmultiplehoteloffersinoursearchresultsinagivenday,theycountasmultiplereferrals,but
asonlyonequalifiedreferral.Whilewechargeadvertisersforeveryreferral,webelievethatthequalifiedreferralmetricisahelpfulproxyfor
thenumberofuniquevisitorstooursitewithbookingintent,whichisthetypeofvisitorouradvertisersareinterestedinandwhichwebelieve
supportsbiddinglevelsinourmarketplace.Wehad215.5million,334.6million,260.5millionand413.1millionqualifiedreferralsforthe
yearsendedDecember31,2014and2015andtheninemonthsendedSeptember30,2015and2016,respectively.
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Webelievetheprimaryfactorsthatdriveourqualifiedreferraldevelopmentarethenumberofvisitstoourwebsitesandapps,thebooking
intentofourvisitors,thenumberofavailablehotelsonourhotelsearchplatform,content(thequalityandavailabilityofgeneralinformation,
reviewsandpicturesaboutthehotels),hotelroomprices(thepriceofaccommodationaswellasthenumberofpricesourcesforeach
accommodation),hotelratings,theusabilityofourwebsitesandappsandthedegreeofcustomizationofoursearchresultsforeachvisitor.
Ultimately,weaimtoincreasethenumberofqualifiedreferralswegeneratebyfocusingonmakingincrementalimprovementstoeachof
theseparameters.Inadditiontocontinuouslyseekingtoexpandournumberofrelationshipswithhoteladvertisers,wepartnerwithsuch
hotelstoimprovecontent,andweconstantlytestandimprovethefeaturesofourwebsitesandappstoimprovetheuserexperience,
includingourinterface,siteusabilityandpersonalizationforeachvisitor.
Thefollowingtablesetsforththenumberofqualifiedreferralsforourreportablesegmentsfortheperiodsindicated:
Americas
DevelopedEurope
RestofWorld
Total
Yearended
December31,
2014
2015
41.6
87.1
150.0
183.7
23.9
63.8
215.5
334.6
Ninemonthsended
September30,
2015
2016
64.5
112.5
147.8
204.2
48.2
96.4
260.5
413.1
Revenueperqualifiedreferral(RPQR)
Weuseaveragerevenueperqualifiedreferral,orRPQR,tomeasurehoweffectivelyweconvertqualifiedreferralstorevenue.RPQRis
calculatedasreferralrevenuedividedbythetotalnumberofqualifiedreferralsinagivenperiod.Alternatively,RPQRcanbeseparatedinto
itspriceandvolumecomponentsandcalculatedasfollows:
RPQR=RPRxclickoutrate
where
RPR=revenueperreferral
clickoutrate=referrals/qualifiedreferrals
RPRisdeterminedbythebidsouradvertiserssubmitonourmarketplace.Thebiddingbehaviorofouradvertisersisinfluencedbytherateat
whichourreferralsresultinbookingsontheadvertiserssites,orbookingconversion,andtheamountouradvertisersobtainfromreferrals
asaresultofhotelsbookedontheirsites,orbookingvalue,andthedegreetowhichadvertisersarewillingtosharetheoverallbooking
value,orrevenueshare.Weestimatebookingconversionandbookingvaluefromdatavoluntarilyprovidedtousbycertainadvertisersto
betterunderstandthedriversinourmarketplace.Advertiserscananalyzethenumberofreferralsobtainedfromtheiradvertisementsonour
marketplace,andtheconsequentvaluegeneratedfromareferral,todeterminetheamounttheyarewillingtobid.Generally,thehigherthe
potentialvaluegeneratedbyaqualifiedreferralandthemorecompetitivethebidding,themoreanadvertiseriswillingtobidforits
advertisement.Inearly2015,wechangedourmarketplacemechanicsbyintroducinghotellevelCPCbidding.Thechangeprovidesmore
flexiblepricingoptionsthatallowadvertiserstodeterminetheirCPCsforeachhotel,ratherthanchoosingfromapredeterminedselectionof
possibleCPCsforeachhotel.Ourcurrentmechanismgivesouradvertiserstheflexibilitytooptimizetheirbiddingstrategy,whichwebelieve
leadstoamoreefficientmarketplace.
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RPQRisakeyfinancialmetricthatdescribesthequalityofourreferrals,theefficiencyofourmarketplaceand,asaconsequence,how
effectivelywemonetizeourusers.FortheyearsendedDecember31,2014and2015andtheninemonthsendedSeptember30,2015and
2016,RPQRwas1.43,1.46,1.51and1.40,respectively.
WhilechangesinourgeographicrevenuemixcanresultinchangesinRPRandtheclickoutrate,wehaveexperiencedageneral
underlyingtrendofincreasingRPRanddecreasingclickoutrates,whichwebelieveisduetoproductoptimization(i.e.,fewerclicksper
user).Ourgoalistoincreaseuserinteractionwithourwebsitesandappstoimprovethequalityofourreferralsandreducetheclickoutrate,
increasingthevaluetoouradvertisers.
WeuseRPQRtohelpusdetectandanalyzechangesinmarketdynamics.Eachofoursegmentsisimpactedbysegmentspecificdynamics.
ThefollowingtablesetsforththeRPQRforourreportablesegmentsfortheperiodsindicated(basedonreferralrevenue):
(unaudited)
Americas
DevelopedEurope
RestofWorld
Total
Yearended
December31,
2014
1.76
1.40
1.07
1.43
2015
1.97
1.41
0.92
1.46
Ninemonthsended
September30,
Change
%increase
(decrease)
11.9%
0.8%
(13.9)%
2.1%
2015
2.13
1.41
0.95
1.51
2016
1.99
1.35
0.83
1.40
Change
%increase
(decrease)
(6.9)%
(4.4)%
(12.6)%
(6.9)%
ThefollowingtablessetforththepercentagechangeperiodonperiodineachofthecomponentsofRPQRforourreportablesegmentsfor
theperiodsindicated.Percentagescalculatedbelowarebasedontheunroundedamountsandthereforemaynotrecalculateonarounded
basis.
Yearended
December31,
20142015
13.0%
8.3%
(9.4)%
8.6%
%increase(decrease)inRPR(unaudited)
Americas
DevelopedEurope
RestofWorld
Total
Ninemonthsended
September30,
20152016
3.7%
7.1%
(1.4)%
4.4%
Yearended
December31,
20142015
107.5%
14.0%
153.3%
46.0%
%increase(decrease)innumberofreferrals(unaudited)
Americas
DevelopedEurope
RestofWorld
Total
Ninemonthsended
September30,
20152016
56.6%
23.3%
77.3%
41.5%
%increase(decrease)inqualifiedreferrals(unaudited)
Americas
DevelopedEurope
RestofWorld
Total
Yearended
December31,
20142015
109.6%
22.5%
166.7%
55.3%
Ninemonthsended
September30,
20152016
74.4%
38.1%
100.1%
58.6%
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%increase(decrease)inclickoutrate(unaudited)
Americas
DevelopedEurope
RestofWorld
Total
Yearended
December31,
20142015
(1.0)%
(6.9)%
(5.0)%
(6.0)%
Ninemonthsended
September30,
20152016
(10.2)%
(10.8)%
(11.4)%
(10.8)%
Keyfactorsofourgrowth
From2010to2015,ourrevenuegrewatacompoundannualgrowthrate,orCAGR,of90%,basedonourrevenueforsuchperiodsunder
GermanGAAP.ThereisnosignificantdifferenceintherevenuerecognitionprinciplesapplicabletothecompanyunderGermanGAAPas
comparedtoU.S.GAAP.Ourrevenueincreased48.6%fortheninemonthsendedSeptember30,2016over2015and59.4%fortheyear
endedDecember31,2015over2014.Thekeyfactorsaffectingourgrowthincludethefollowing:
Advertisingexpense
In2009,webeganintensifyingourmarketingactivities,primarilyTVadvertisements.FortheyearsendedDecember31,2014and2015and
theninemonthsendedSeptember30,2015and2016,wespent271.4million,432.2million,362.8millionand499.2millionon
advertising,respectively,representing87.7%,87.6%,92.1%and85.3%ofourtotalrevenueforsuchperiods.Webelievethatincreasing
brandawarenesscreatesselfreinforcingvaluebyresultinginagreaternumberofvisitstoourplatformandreferralstoouradvertisersthat
encouragemoreOTAsandhotelstoadvertisetheirsupplyinoursearchresults,whichinturnmakesourservicesmoreusefultousers,
furtherincreasingthenumberofvisitstoourwebsitesandappsandreferralstoouradvertisers.Webelievethattheseinvestments
contributedsignificantlytoourrevenuegrowthhistorically,althoughweexpectdecelerationinrevenuegrowthratesinourmoremature
marketsasourshareinthosemarketsincreasesandfurtheradvancesinbrandawarenessbecomeincreasinglydifficultandexpensiveto
achieve.Increasingbrandawarenessandusageofourplatformareimportantpartsofourgrowthstrategy,andatthistimeweexpectto
continuetoinvestinmarketingatorinexcessofcurrentspendfortheforeseeablefuture.
Globalpenetration
OurrevenuesfromtheAmericas,DevelopedEuropeandtheRestofWorldwere34.9%,52.6%and11.9%ofourtotalrevenue,respectively,
fortheyearendedDecember31,2015andwere38.2%,47.2%and13.6%ofourtotalrevenue,respectively,fortheninemonthsended
September30,2016.Webelievetherelativegrowthinrevenueacrossourreportablesegmentsisprimarilyrelatedtothedifferentstagesof
developmentofourmarkets.Wetypicallyexpecttohavehighergrowthratesinnewermarketsthaninmarketswherewehaveoperatedfor
alongtime.WegeneratethemostrevenueinDevelopedEurope,oursegmentthatincludesthemarketswherewehaveoperatedthe
longestandwherewehavethehighestbrandawarenessbutrelativelymoderategrowth.WeexpectourrevenueintheAmericasandthe
RestofWorldtoincreaseatafasterratethanrevenuefromtheDevelopedEuropemarkets.Wearefocusedoncomplementingourbroad
globalfootprintaswebelievethatglobalreachisimportanttoourbusiness.Wecontinuetoimprovethelocalizationofourwebsitesand
appsforeachmarketinanefforttoaugmenttheuserexperienceandtogrowouruserbaseglobally.Weinvestheavilyinmarketing
campaignsacrossourmarkets.
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Mobileproducts
TravelersincreasinglyaccesstheInternetfrommultipledevices,includingdesktopcomputers,smartphonesandtablets.Wecontinueto
developourwebsitesandappstofurtherenhanceourhotelsearchexperienceacrossalldevices.Weofferresponsivemobilewebsitesand
severalappsthatallowtravelerstouseourservicesfromsmartphonesandtabletsrunningonAndroidandiOS.InJune2016,ourrevenue
frommobilewebsitesandappsexceededourrevenuefromourdesktopwebsitesforthefirsttime,whichisconsistentwithanexpected
longertermshifttowardsmobile.
Visitorstoourhotelsearchplatformviamobilephoneandtabletgenerallyresultinbookingsforouradvertisersatalowerratethanvisitorsto
ourplatformviadesktop.Webelievethisisduetoageneraldifferenceintheusagepatternsofmobilephonesandtablets.Webelievemany
visitorsusemobilephonesandtabletsaspartoftheirhotelsearchprocess,butpreferfinalizinghotelselectionsandcompletingtheir
bookingsondesktopwebsites.Thismaybedueinparttousersgenerallyfindingthebookingcompletionprocesses,includingentering
paymentinformation,somewhateasierormoresecureonadesktopthanonamobiledevice.Webelievethatovertimeandasmore
travelersbecomeaccustomedtomobiletransactions,thissentimentmayshift.
Wehavehistoricallyhad,andcurrentlyhave,asinglebiddingpricestructureforreferralsfrombothdesktopandmobile.Wemaychooseto
adoptadifferentiatedpricingmodelbetweenmobileanddesktopapplications,whichwouldlikelyleadtoanincreaseindesktoprevenue
share,asthepricingfordesktopapplicationswouldincreaseduetohigherconversionrates,whilethepricingforappsonmobileandtablets
wouldlikelydecrease.Wedonotexpectthistohaveamaterialimpactonrevenues,aslongastherearesufficientactiveparticipantson
bothdesktopandmobiletoensureourmarketplacefunctionseffectively,aswebelievethatthecurrentbidsadvertisersplaceonourCPC
basedbiddingsystemreflecttheoverallefficacyofthecombineddesktopandmobilepricestheyreceive.
Webelievemobilewebsitesandappswillcontinuetogainpopularity,andweexpecttocontinuetocommitresourcestoimprovethe
features,functionalityandconversionratesofourmobilewebsitesandapps.
Advertiserdiversificationanddirectrelationshipswithhotels
WegeneratemostofourrevenuefromalimitednumberofOTAs.Certainbrandsaffiliatedasofthedatehereofwithourmajority
shareholder,Expedia,includingBrandExpedia,Hotels.com,Orbitz,Travelocity,Hotwire,Wotif,ebookersandVenere,intheaggregate,
accountedfor39%and35%ofourtotalrevenuefortheninemonthsendedSeptember30,2015and2016,respectively.ThePriceline
Groupanditsaffiliatedbrands,Booking.comand,through2015,Agoda,accountedfor27%and43%ofourtotalrevenueforthenine
monthsendedSeptember30,2015and2016,respectively.Webelievethatourbusinesssuccessinthelongtermwillbeenhancedby
diversificationamongouradvertisers,inparticularbymeansofexpandingourdirectrelationshipswithindependenthotelsandhotelchains
andcontinuingtoactasaplatformthatenablestravelerstobookatthelowestrateregardlessofwhetherhotelroomsareofferedbysmaller
andlocalOTAsorindependenthotelsorbytheleadinginternationalbrands.
Advertiserdiversificationallowsustoimprovetheuserexperiencebyexpandingthedepthofourhotelofferingstofacilitateprice
transparencyaswellastoimprovethecontentquality,availabilityandusabilityofouradvertisersoffers,therebyincreasingthevalueour
usersderivefromourwebsitesandapps.Forexample,someindependenthotelsandsmallerhotelchainsrelyexclusivelyontheirown
websitesand/oranOTAtodistributetheirofferings.Ourengagementwithsuchadvertiserspermitsustodisplayanofferonbehalfofthat
advertiserdirectly,makingtheofferaccessibletoourusers,orincreasingthenumberofoffersifanaccommodationwaspreviouslyonly
availablethroughanOTA.Directengagementalsopermitsanadvertiserto
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havemorecontrolofthecontentandplacementofitsoffer,sinceweareabletooffertoolsandassistancetooptimizecontentandoffer
strategyonourmarketplace.Inaddition,werecentlybeganofferingabookingengineproductforourdirecthotelrelationshipsinorderto
makeiteasierforouruserstobookanaccommodationonlineforanadvertiserthatdidnototherwisehaveanonlinebookingengine
available.
Webelieveadvertiserdiversificationcouldbecomemoreimportantifadditionalconsolidationwithinthetravelcontentmarketplaceoccurs,as
thiscouldreducethenumberofofferswehaveavailableonourplatformforeachhotel,whichcould,incertaingeographies,causeour
servicestobecomelessvaluabletousers.Correspondingly,withfewerbidsforoffersfromaconsolidatedgroupofadvertisers,ourrevenue
perreferralcoulddecrease.Webelievethatasaresultofthenumberofmarketplaceparticipantsandthecompetitionamongvariousbrands
withinconsolidatedOTAs,theimpactofconsolidationinourmostrelevantmarketshashistoricallybeenlimited.Suchmarketshave
historicallybeensufficientlyliquidtosustaincompetitivebidlevels,suchthatifthetopbidderleavestheplatform,thenexthighestbidder
movesintopositiontoatleastpartiallysustainourrevenue.Inlessliquidgeographiesorifconsolidationdynamicsweretochange,our
initiativetoconnecthotelsdirectlytoourplatformmaymitigate,atleastinpart,apotentialdecreaseinOTAmarketplaceparticipants.Asof
September30,2016,wehaddirectrelationshipswithover220,000hotels,representingaround15%ofthetotalnumberofhotelsadvertised
ontrivago.
Continuedshifttoonlinetravel
ThehoteldistributionmarkethasshiftedtowardsonlinechannelsasconsumersareincreasinglyusingtheInternettobooktheirtravel.
AccordingtotheGlobalOnlineTravelOverview,hotelshaveincreasedtheironlinegrossbookingsthroughhotelwebsitesandOTAsfrom
$69billionin2010to$125billionin2015,representinganincreasefrom22%to33%oftotalgrossbookings,respectively.Thistrendof
increasingonlinepenetrationisconsistentwithgrowthintheonlinesegmentofthetravelmarket,whichisestimatedtohavegrownby9.8%
from2010to2015,comparedtototaltravelmarketgrowthof4.1%inthesameperiod,whichrepresenteda39%onlinepenetrationin2015.
Inaddition,thereisaportionofcorporatetravelbeingbookedonline,whichisnotincludedintheonlinepenetrationnumbersabove.
Webelievethatduetoincreasingworldwideonlinepenetration,theInternetwillcontinuetofacilitateconsumerssearchingfor,comparing
andbookingtravelproducts,particularlygivenimprovementsinconsumersabilitytorefinesearches,comparedestinationswithbetter
precision,viewrealtimepricingacrossrealtimeavailabilitydataandcompletebookings.Wewillcontinuetoadaptouruserexperiencein
responsetoachangingInternetenvironmentandusagetrends.
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Resultsofoperations
ComparisonofninemonthsendedSeptember30,2015and2016
Thefollowingtablessetforthourresultsofoperationsfortheperiodspresentedineurosandasapercentageofrevenue.
Ninemonthsended
September30,
Revenue
Totalrevenue
Costsandexpenses:
Costsofrevenue,includingrelatedparty
Sellingandmarketing
Generalandadministrative,includingrelatedparty
2015
Interestexpense
Other,net
Netloss
Net(income)lossattributabletononcontrollinginterests
239.4
154.4
393.8
2.0
383.5
20.9
12.4
22.5
(47.5)
(0.1)
(0.7)
(0.8)
(48.3)
(10.9)
(37.4)
0.1
(37.3)
378.7
206.3
585.0
3.1
538.1
40.6
42.2
11.3
(50.3)
(0.1)
0.5
0.4
(49.9)
1.6
(51.5)
0.5
(51.0)
%increase
(decrease)
139.3
51.9
191.2
1.1
154.6
19.7
29.8
(11.2)
(2.8)
(0.0)
1.2
1.2
(1.6)
12.5
(14.1)
0.4
(13.7)
58.2%
33.6
48.5
Amount
increase
(decrease)
2016
Change
55.0
40.3
94.3
240.3
(49.8)
5.9
(171.4)
(150.0)
3.3
114.7
37.7
400.0
36.7
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Ninemonthsended
September30,
2015
2016
(unaudited)
Consolidatedstatementofoperationsasapercentofrevenue:
Revenue
Totalrevenue
Costsandexpenses:
Sellingandmarketing
Interestexpense
Other,net
Netloss
60.8%
39.2
100
0.5
97.4
5.3
3.1
5.7
(12.1)
0.0
(0.2)
(0.2)
(12.3)
(2.8)
(9.5)
0.0
(9.5)
64.7%
35.3
100
0.5
92.0
6.9
7.2
1.9
(8.6)
0.0
0.1
0.1
(8.5)
0.3
(8.8)
0.1
(8.7)
Revenue
TotalrevenuefortheninemonthsendedSeptember30,2016was585.0million,representinganincreaseof191.2million,or48.5%,
comparedtotheninemonthsendedSeptember30,2015.Revenuefromrelatedpartiesincreasedby51.9million,or33.6%,forthenine
monthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015,whilerevenuefromthirdpartiesincreasedby
139.3million,or58.2%,fortheninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.
OurtotalrevenueintheninemonthsendedSeptember30,2016consistedofreferralrevenueof579.3millionandotherrevenueof5.7
million.OurtotalrevenueintheninemonthsendedSeptember30,2015consistedofreferralrevenueof392.3millionandotherrevenueof
1.5million.
ReferralrevenueintheninemonthsendedSeptember30,2016increasedby187.0million,or47.7%,comparedtotheninemonthsended
September30,2015.Thisgrowthwasprimarilyduetoanincreaseof58.6%inthenumberofqualifiedreferralsintheninemonthsended
September30,2016comparedtotheninemonthsendedSeptember30,2015.
Duringthesameperiod,RPQRdecreasedby0.10,or6.9%,asanincreaseinRPRof4.4%periodonperiodwasoffsetbyasignificant
decreaseintheclickoutrate.ThedecreaseinRPQRwasprimarilyduetotheintroductionofhotellevelCPCbiddingandthechangeinthe
mechanicsofthemarketplaceinearly2015.Afteraperiodofbiddingadjustmentsandtestsbyouradvertisers,whichledtoveryhighCPC
bids,themarketplaceadaptedtothenewbiddingfunctionalityduringthecourseof2016,whichresultedinincreasedandmoreefficient
biddingbyouradvertisersandhighercustomervalueduetomorecompetitiveRPQRlevels.
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Thebreakdownofreferralrevenuebyreportablesegmentisasfollows:
Americas
DevelopedEurope
RestofWorld
2015
137.6
209.1
45.6
Change
2016
223.5
276.1
79.8
Amount
increase
(decrease)
85.9
67.0
34.2
%increase
(decrease)
62.5%
32.0
74.9
ReferralrevenueintheAmericasintheninemonthsendedSeptember30,2016increasedby85.9million,or62.5%,comparedtothenine
monthsendedSeptember30,2015.GrowthinrevenueintheAmericaswasprimarilyduetoanincreaseof74.4%inthenumberofqualified
referralsintheninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.Thisgrowthwas
significantlyimpactedbygrowthintheUnitedStates,wherewefocusedourmarketingactivitiestofurtherdevelopourpositioninthemarket
duringtheninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.Duringthesameperiod,
RPQRintheAmericasdecreasedby0.15,or6.9%,eventhoughRPRfortheperiodincreasedby3.7%.Thiswasduetoadecreaseinthe
clickoutrateof10.2%fortheperiod,aconsequenceofourproductoptimization,whichtypicallyleadstofewerreferralsperqualifiedreferral.
ReferralrevenueinDevelopedEuropeintheninemonthsendedSeptember30,2016increasedby67.0million,or32.0%,comparedtothe
ninemonthsendedSeptember30,2015.Thisgrowthwasprimarilyduetoanincreaseof38.1%inthenumberofqualifiedreferralsinthe
ninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.Duringthesameperiod,RPQRin
DevelopedEuropedecreasedby0.06,or4.4%,eventhoughRPRincreasedby7.1%fortheperiodduetoareductionintheclickoutrate
of10.8%fortheperiod.
ReferralrevenueintheRestofWorldintheninemonthsendedSeptember30,2016increasedby34.2million,or74.9%,comparedtothe
ninemonthsendedSeptember30,2015.Thisgrowthwasprimarilyduetoanincreaseof100.1%inthenumberofqualifiedreferralsinthe
ninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.Duringthesameperiod,RPQRinthe
RestofWorlddecreasedby0.12,or12.6%,duetoadecreaseinRPRof1.4%fortheperiodandadecreaseintheclickoutrateof11.4%
fortheperiod.IncreasedmarketinginnewermarketsinourRestofWorldsegment,particularlyinJapan,hadasignificantimpactonour
revenuegrowthinthesegmentfortheninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015.
Otherrevenueincreasedby4.2million,or272.1%,primarilyduetoanincreaseinsubscriptionrevenueforHotelManagerPro.
Costofrevenueandexpenses
Ourcostofrevenueconsistsprimarilyofourdatacentercosts,salariesandsharecompensationforourdatacenteroperationsstaffandour
customerserviceteam.Costsofrevenue,includingfromrelatedparty,was2.0millionand3.1millionfortheninemonthsended
September30,2015and2016,respectively.CostofrevenuesfortheninemonthsendedSeptember30,2016increasedby1.1million,or
55.0%,duetoanincreaseinsharebasedcompensationexpenseprimarilydrivenbyfluctuationsinthefairvalueaccountingtreatmentof
liabilityclassifiedawardsgrantedinpriorperiods.SeeNote6Sharebasedawardsandotherequityinstrumentsinthenotestoour
unauditedcondensedconsolidatedfinancialstatements.
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Sellingandmarketing
Sellingandmarketingconsistsofallsellingandmarketingrelatedcostsandisdividedintoadvertisingexpenseandotherexpenses.
AdvertisingexpenseconsistsoffeesthatwepayforourvariousmarketingchannelslikeTV,outofhomeadvertising,radio,searchengine
marketing,searchengineoptimization,displayandaffiliatemarketing,emailmarketing,onlinevideo,appmarketingandcontentmarketing.
Othersellingandmarketingexpensesincluderesearchcosts,productioncostsforourTVspotsandothermarketingmaterial,aswellas
salariesandsharebasedcompensationforourmarketing,sales,hotelrelationsandcountrydevelopmentteams.
Advertisingexpense
%oftotalrevenue
Othersellingandmarketing
%oftotalrevenue
%oftotalrevenue
Totalsellingandmarketingexpense
%oftotalrevenue
Ninemonths
endedSeptember
30,
2015
362.8
92.1%
18.3
4.6%
2.4
0.6%
383.5
97.4%
Change
2016
499.2
85.3%
28.5
4.9%
10.4
1.8%
538.1
92.0%
Amount
increase
(decrease)
136.4
%increase
(decrease)
37.6%
10.2
55.7
8.0
333.3
154.6
40.3
AdvertisingexpensefortheninemonthsendedSeptember30,2016increasedby136.4million,or37.6%,comparedtotheninemonths
endedSeptember30,2015,aswecontinuedtoinvestinperformancemarketingandotheradvertisingtoincreaseourbrandawarenessin
eachofourthreeoperatingsegments,theAmericas,DevelopedEuropeandtheRestofWorld.Othersellingandmarketingexpensesforthe
ninemonthsendedSeptember30,2016increasedby10.2millionor55.7%comparedtotheninemonthsendedSeptember30,2015due
tohigherpersonnelexpensesof7.1millionprimarilyduetoanincreaseinheadcountfrom365employeesasofSeptember30,2015to526
employeesasofSeptember30,2016.Sharebasedcompensationexpensesincreasedby8.0millionfortheninemonthsendedSeptember
30,2016comparedtotheninemonthsendedSeptember30,2015,whichwasprimarilydrivenbyfluctuationsinthefairvalueaccounting
treatmentofliabilityclassifiedawardsgrantedinpriorperiods.
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Technologyandcontentexpenseisprincipallycomprisedoftechnologydevelopment,productdevelopmentandcontentpersonneland
overhead,depreciationandamortizationoftechnologyassetsincludinghardware,purchasedandinternallydevelopedsoftwareandother
costs(primarilylicensingandmaintenanceexpense).
Personnel
Sharebasedcompensation,netofcapitalizedinternaluse
softwareandwebsitedevelopmentcosts
Depreciationandamortizationoftechnologyassets
Other
Totaltechnologyandcontent
%oftotalrevenue
Ninemonthsended
September30,
2015
12.6
3.3
1.0
4.0
20.9
5.3%
2016
16.6
Change
15.3
2.7
6.0
40.6
6.9%
Amount
increase
(decrease)
4.0
%increase
(decrease)
31.7%
12.0
1.7
2.0
19.7
363.6
170.0
50.0
94.3
TechnologyandcontentexpensefortheninemonthsendedSeptember30,2016increasedby19.7million,or94.3%,comparedtothenine
monthsendedSeptember30,2015,primarilyduetoanincreaseof12.0millioninsharebasedcompensationexpensedrivenby
fluctuationsinthefairvalueaccountingtreatmentofliabilityclassifiedawardsgrantedinpriorperiods,andanincreaseinpersonnelcostsof
4.0milliontosupportkeytechnologyprojectsprimarilyforourcorporatetechnologyfunctionwhichresultedinanincreaseinheadcount
from383employeesasofSeptember30,2015to491employeesasofSeptember30,2016,respectively.SeeNote6Sharebased
awardsandotherequityinstrumentstoourunauditedcondensedfinancialstatements.Additionally,depreciationandamortizationof
technologyassetsincreasedby1.7millionandotheroverheadcostsincreasedby2.0million.
Generalandadministrativeexpenseconsistsprimarilyofpersonnelrelatedcosts,includingthoseofourexecutiveleadership,finance,legal
andhumanresourcefunctions,sharedservicescostscalculatedandallocatedbyExpedia,Inc.tous,andprofessionalfeesforexternal
servicesincludinglegal,taxandaccounting,andothercostsincludingrent,depreciationandotheroverheadcosts.
Personnel
Relatedpartysharedservicesallocation
Professionalfeesandother
Totalgeneralandadministrative,includingrelatedparty
%oftotalrevenue
Ninemonthsended
September30,
2015
4.1
3.9
2.3
2.1
12.4
3.1%
Change
2016
6.6
25.6
2.9
7.1
42.2
7.2%
Amount
increase
(decrease)
2.5
21.7
0.6
5.0
29.8
%increase
(decrease)
61.0%
556.4
26.1
238.1
240.3
GeneralandadministrativeexpensefortheninemonthsendedSeptember30,2016increasedby29.8million,or240.3%,comparedtothe
ninemonthsendedSeptember30,2015,primarilyduetoanincreaseof
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21.7millionofsharebasedcompensationexpenseprimarilydrivenbyfluctuationsinthefairvalueaccountingtreatmentofliabilityclassified
awardsgrantedinpriorperiodsandanincreaseinpersonnelcostsof2.5millionprimarilyrelatedtoanincreaseinheadcountfrom123
employeesasofSeptember30,2015to159employeesasofSeptember30,2016.Professionalfeesandotherincreasedby5.0million,a
significantportionofwhichwasduetoanincreaseof1.9millioninprofessionalfeesincurredprimarilyinconjunctionwiththepreparationof
theRegistrationStatement,ofwhichthisprospectusformsapart,includingconsolidatedU.S.GAAPfinancialstatementsandrelatedaudits.
Otherfactorscontributingtotheincreaseincludedescalatingrentpayments,includinggroundrentassociatedwiththenewcorporate
headquarterslease,higheroverheadcostsduetoincreasedheadcount,aswellasincreasedexpenserelatedtodepreciationand
amortization.Further,weincurredincreasedrelatedpartysharedservicesallocationexpenseof0.6million,a26.1%increase,primarily
attributabletoanincreaseinlegalcosts.
Amortizationofintangibleassetswas11.3millionintheninemonthsendedSeptember30,2016,comparedto22.5millioninthenine
monthsendedSeptember30,2015duetocertaintechnologyassetsbeingfullyamortizedduringthefirstquarterof2016.These
amortizationcostsrelatepredominantlytointangibleassetsrecognizedbyExpediaupontheacquisitionofamajoritystakeintrivagoGmbH
in2013whichwerepusheddowntotrivagoGmbH.ThefinancialstatementsreflectExpediasbasisofaccountingduetothischangein
controlin2013.
Operatingloss
Ouroperatinglosswas50.3millionfortheninemonthsendedSeptember30,2016comparedtoanoperatinglossof47.5millionforthe
ninemonthsendedSeptember30,2015.Theincreasedoperatinglossisprimarilyduetoanincreaseof136.4millionofadvertisingspend,
42.2millioninsharebasedcompensationexpenseprimarilydrivenbyfluctuationsinthefairvalueaccountingtreatmentofliabilityclassified
awardsgrantedinpriorperiods,13.5millionincreaseinpersonnelexpense,9.3millionincreaseinothercostsprimarilyrelatedto
overhead,rentandsoftwaredevelopment,anincreaseindepreciationof1.5millionandanincreaseof0.6millionintherelatedparty
sharedservicesallocation,offsetprimarilybyanincreaseinrevenueof191.2millionperiodoverperiodandadeclineinamortization
expenseof11.2million.
Benefitforincometaxes
Effectivetaxrate
Ninemonthsended
September30,
2015
(10.9)
22.6%
Change
2016
1.6
(3.2)%
Amount
increase
(decrease)
12.5
%increase
(decrease)
114.7%
Wedetermineourprovisionforincometaxesforinterimperiodsusinganestimateofourannualeffectivetaxrate.Werecordanychanges
affectingtheestimatedannualtaxrateintheinterimperiodinwhichthechangeoccurs,includingdiscretetaxitems.Ouractualeffectiverate
was22.6%and(3.2)%fortheninemonthsendedSeptember30,2015and2016,respectively.Thechangeinoureffectivetaxrateforthe
ninemonthsendedSeptember30,2016comparedtotheninemonthsendedSeptember30,2015wasprimarilydrivenbyanincreasein
nondeductiblesharebasedcompensationexpense,primarilydrivenbyfluctuationsinthefairvalueaccountingtreatmentofliability
classifiedawardsinpriorperiods,whichincreasedby42.2million,from9.8millionintheninemonthsendedSeptember30,2015to52.0
millionfortheninemonthsendedSeptember30,2016.
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ComparisonofyearendedDecember31,2014and2015
Thefollowingtablesetsforthourresultsofoperationsfortheperiodspresentedineurosandasapercentageofrevenue.
Yearended
December31,
2014
(inmillions)
Revenue
Totalrevenue
Costsandexpenses:
Sellingandmarketing
1.4
286.3
15.4
6.5
30.0
(30.3)
2.9
461.3
28.7
18.1
30.0
(47.9)
Interestexpense
Other,net
Netloss
(0.0)
(1.4)
(1.4)
(31.7)
(8.6)
(23.1)

(23.1)
(0.1)
(2.7)
(2.8)
(50.7)
(11.3)
(39.4)
0.3
(39.1)
2015
209.1
100.2
309.3
298.9
194.2
493.1
Change
Amount
increase
(decrease)
%increase
(decrease)
89.8
94.0
183.8
1.5
175.0
13.3
11.6
0.0
(17.6)
(0.1)
(1.3)
(1.4)
(19.0)
(2.7)
(16.3)
0.3
(16.0)
42.9%
93.8
59.4
107.1
61.1
86.4
178.5
0.0
(58.1)
n.m.
(92.9)
(100.0)
(59.9)
(31.4)
(70.6)
n.m.
(69.3)
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2014
Consolidatedstatementofoperationsasapercentofrevenue:
Revenue
Totalrevenue
Costsandexpenses:
Sellingandmarketing
Interestexpense
Other,net
Netloss
67.6%
32.4
100.0
0.6
93.6
5.8
3.7
6.1
(9.7)
0.0
(0.5)
(0.5)
(10.2)
(2.8)
(7.5)
0.0
(7.5)
60.6%
39.4
100.0
0.5
92.6
5.0
2.1
9.7
(9.8)
Yearended
December31,
2015
0.0
(0.5)
(0.5)
(10.3)
(2.3)
(8.0)
0.1
(7.9)
Revenue
TotalrevenueforyearendedDecember31,2015was493.1million,representinganincreaseof183.8million,or59.4%,comparedtothe
yearendedDecember31,2014.RevenuefromrelatedpartiesfortheyearendedDecember31,2015increasedby94.0million,or93.8%,
comparedto2014whilerevenuefromthirdpartiesincreased42.9%forthesameperiod,whichthecompanybelievesisduetohigher
biddingforadvertisingonourmarketplacein2015comparedto2014bytheExpedia,Inc.groupofcompanies,intheaggregate.
OurtotalrevenueintheyearendedDecember31,2015consistedofreferralrevenueof490.2millionandotherrevenueof2.8million.Our
totalrevenueintheyearendedDecember31,2014consistedofreferralrevenueof309.2millionandotherrevenueof0.2million.
ReferralrevenueintheyearendedDecember31,2015increasedby181.1million,or58.6%,comparedto2014.Thisgrowthwasprimarily
duetoanincreaseof55.3%inthenumberofqualifiedreferralsintheyearendedDecember31,2015comparedto2014.Duringthesame
period,RPQRincreasedby2.1%drivenbya8.6%increaseinRPRfortheperiodandadecreaseintheclickoutrateof6.0%fortheperiod.
TheintroductionofhotellevelCPCbiddinginearly2015ledtohigherRPQRsduetoadvertisersplacinghigherbids.Thedecreaseinthe
clickoutrateof6.0%wasdrivenbyproductoptimization.
Thebreakdownofreferralrevenuebyreportablesegmentisasfollows:
(inmillions)
Americas
DevelopedEurope
RestofWorld
Yearended
December31,
2014
73.3
210.2
25.6
Change
2015
171.9
259.6
58.8
Amount
increase
(decrease)
98.6
49.3
33.2
%increase
(decrease)
134.5%
23.5
129.6
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ReferralrevenueintheAmericasintheyearendedDecember31,2015increasedby98.6million,or134.5%,comparedtotheyearended
December31,2014.Thisgrowthwasprimarilyduetoanincreaseof109.6%inthenumberofqualifiedreferralsintheyearendedDecember
31,2015comparedto2014.Duringthesameperiod,RPQRintheAmericasincreasedby0.21,or11.9%,comparedto2014.Thisincrease
wasprimarilydrivenbya13.0%increaseinRPRastheclickoutratedecreasedbyonly1.0%fortheperiod.
ReferralrevenueforDevelopedEuropeintheyearendedDecember31,2015increasedby49.3million,or23.5%,comparedtotheyear
endedDecember31,2014.Thisgrowthwasprimarilyduetoanincreaseof22.5%inthenumberofqualifiedreferralsintheyearended
December31,2015comparedto2014.Duringthesameperiod,RPQRinDevelopedEuropeincreasedby0.01,or0.8%,andtheRPRfor
theperiodincreasedby8.3%.TheincreaseinRPRwasalmostcompletelyoffsetbyadecreaseintheclickoutrateof6.9%fortheperiod,
whichwebelieveisaresultofourproductoptimization.
ReferralrevenuefortheRestofWorldintheyearendedDecember31,2015increasedby33.2million,or129.6%,comparedtotheyear
endedDecember31,2014.Thisgrowthwasprimarilyduetoanincreaseof166.7%inthenumberofqualifiedreferralsintheyearended
December31,2015comparedto2014.Duringthesameperiod,RPQRintheRestofWorlddecreasedby0.15,or13.9%,whichwas
primarilydrivenbyadecreaseinRPRof9.4%andadecreaseintheclickoutrateof5.0%fortheperiod.
Costofrevenueandexpenses
Costsofrevenue,includingfromrelatedparty,was1.4millionand2.9millionfortheyearsendedDecember2014and2015,respectively.
CostofrevenuefortheyearendedDecember31,2015increasedby1.5millionor107.1%duetoa1.0millionincreaseinpersonnel
relatedcostsprimarilydrivenbyincreasesinsharebasedcompensationexpenseof0.2million,andheadcountfrom10employeesasof
December31,2014to21employeesasofDecember31,2015,respectively,anda0.5millionincreaseindepreciationandmaintenanceof
servers.
Sellingandmarketing
(inmillions)
Advertisingexpense
%oftotalrevenue
Othersellingandmarketing
%oftotalrevenue
%oftotalrevenue
Totalsellingandmarketingexpense
%oftotalrevenue
Yearended
December31,
2014
271.4
87.7%
13.8
4.5%
1.1
0.4%
286.3
92.6%
Change
2015
432.2
87.6%
25.7
5.2%
3.4
0.7%
461.3
93.6%
Amount
increase
(decrease)
160.8
11.9
86.2
209.1
61.1
2.3
%increase
(decrease)
59.2%
175.0
SellingandmarketingexpensesfortheyearendedDecember31,2015increasedby175million,or61.1%,comparedtotheyearended
December31,2014,primarilydrivenbyanincreaseinmarketingactivitiesacrossallmarkets.Othersellingandmarketingexpensesforthe
yearendedDecember31,2015increased
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11.9million,or86.2%,comparedtotheyearendedDecember31,2014duetohigherpersonnelexpensesprimarilydrivenbyincreased
headcountfrom276employeesasofDecember31,2014to433employeesasofDecember31,2015.Sharebasedcompensationexpense
increased2.3million,or209.1%,intheyearendedDecember31,2015comparedtotheyearendedDecember31,2014,whichwas
primarilyattributabletothesharebasedcompensationaccountingmodificationinthethirdquarterof2015,asthisresultedinachangein
theclassificationofcertainawardsfromequitytoliabilityaccountingtreatment.
Yearended
December31,
(inmillions)
Personnel
Sharebasedcompensation,netofcapitalizedinternalusesoftwareand
websitedevelopmentcosts
Depreciationoftechnologyassets
Other
Totaltechnologyandcontent
%oftotalrevenue
2014
9.9
Amount
increase
(decrease)
7.1
%increase
(decrease)
71.7%
1.2
0.7
3.6
15.4
5.0%
4.5
1.4
5.8
28.7
5.8%
2015
17.0
Change
3.3
0.7
2.2
13.3
275.0
100.0
61.1
86.4
TechnologyandcontentexpensefortheyearendedDecember31,2015increasedby13.3million,or86.4%,comparedtotheyearended
December31,2014,primarilyduetoincreasedpersonnelcostsof7.1milliontosupportkeytechnologyprojectsprimarilyforourcorporate
technologyfunction,whichresultedinanincreaseinheadcountfrom274employeesasofDecember31,2014to399employeesasof
December31,2015.Further,sharebasedcompensationexpenseincreased3.3million,or275.0%,intheyearendedDecember31,2015
comparedtotheyearendedDecember31,2014,whichwasprimarilyattributabletothesharebasedcompensationaccountingmodification
inthethirdquarterof2015,asthisresultedinachangeintheclassificationofcertainawardsfromequitytoliabilityaccountingtreatment.
TheincreaseofothercostsfortheyearendedDecember31,2015wasduetoincreasesinwebsitecontentcostsof0.8million,thirdparty
researchfeesof0.5millionandrentexpenseof1.4million,partiallyoffsetbyadecreaseinthirdpartywebsitedevelopmentcostsof0.5
million.
Yearended
December31,
(inmillions)
Personnel
Relatedpartysharedservicesallocation
Professionalfeesandother
Totalgeneralandadministrative
%ofrevenue
2014
3.0
0.1
1.5
1.9
6.5
2.1%
2015
5.4
6.0
2.8
3.9
18.1
3.7%
Change
Amount
increase
(decrease)
2.4
5.9
1.3
2.0
11.6
%increase
(decrease)
80.0%
n.m.
86.7
105.3
178.5
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GeneralandadministrativeexpensefortheyearendedDecember31,2015increasedby11.6million,or178.5%,comparedtotheyear
endedDecember31,2014,primarilyduetoincreasedsharebasedcompensationexpenseof5.9million,whichwasprimarilyattributableto
thesharebasedcompensationaccountingmodificationinthethirdquarterof2015,asthisresultedinachangeintheclassificationofcertain
awardsfromequitytoliabilityaccountingtreatment.PersonnelcostsfortheyearendedDecember31,2015increasedby2.4million,or
80%,comparedtotheyearendedDecember31,2014,primarilydrivenbyanincreaseinheadcountfrom62employeesasofDecember31,
2014to121employeesasofDecember31,2015.Professionalfeesandotherincreasedby2.0million,primarilyasaresultofincreased
rentof0.3million,groundrentexpenseassociatedwiththebuildtosuitleaseof0.9millionandcostsassociatedwiththe2015
acquisitionsof0.3million.Foradditionalinformationregardingourbuildtosuitlease,seeNote2Significantaccountingpoliciesinthe
notestoourconsolidatedfinancialstatements.IncreasedsharedservicescostsallocatedtousbyExpedia,Inc.of1.3millionwereprimarily
drivenbyanincreaseincostsrelatedtoservicesprovidedbythirdpartiesinconnectionwithouracquisitionsduring2015.
Amortizationofintangibleassetswas30.0millionineachoftheyearsendedDecember31,2014and2015.Theseamortizationcosts
relatepredominantlytointangibleassetsrecognizedbyExpediaupontheacquisitionofamajoritystakeintrivagoGmbHin2013.The
financialstatementsreflectExpediasbasisofaccountingduetothischangeincontrolin2013.
Operatingloss
Ouroperatinglosswas47.9millionfortheyearendedDecember31,2015comparedtoanoperatinglossof30.3millionfortheyear
endedDecember31,2014.Theincreasedoperatinglossisprimarilyduetoanincreaseof11.7millioninsharebasedcompensation
expensein2015comparedto2014primarilyattributabletothesharebasedcompensationaccountingmodificationinthethirdquarterof
2015,whichresultedinachangeintheclassificationofcertainawardsfromequitytoliabilityaccountingtreatment,aswellasanincreasein
sellingandmarketingexpenseinexcessofrevenuegrowth.
Interestexpense
Interestexpenseincreasedby0.1millionfortheyearendedDecember31,2015comparedto2014primarilyduetotheinterestpaidon
borrowings.
Other,net
Other,netisprimarilycomprisedofforeignexchangegainsandlossesof1.6millionand1.0millionfortheyearsendedDecember31,
2014and2015,respectivelyaswellasareversalofanindemnificationassetrelatedtoanuncertaintaxpositionandrelatedinterestof1.7
millionfortheyearendedDecember31,2015.
(inmillions)
Effectivetaxrate
Yearended
December31,
2014
(8.6)
27.2%
Change
2015
(11.3)
22.3%
Amount
increase
(decrease)
(2.7)
%increase
(decrease)
(31.4)%
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Thedecreaseintheeffectivetaxratefrom27.2%for2014comparedto22.3%for2015isprimarilyduetoanincreaseinnondeductible
sharebasedcompensationexpensefrom0.7million(nontaxeffectedamountof2.4million)in2014to4.4million(nontaxeffected
amountof14.1million)fortheyearendedDecember31,2015primarilydrivenbyfluctuationsinthefairvalueaccountingtreatmentof
liabilityclassifiedawardsgrantedinpriorperiods.Furthermore,nondeductiblecorporateallocationcoststhatwerepusheddownfrom
Expediaincreasedfrom1.5millionin2014to2.8millionin2015.Theincreaseinnondeductiblecostsdecreasedtheincometaxbenefit
becauseofournetlossposition,whichyieldedalowereffectivetaxrateyearoveryear.
Quarterlydata
ThefollowingtablepresentsunauditedconsolidatedfinancialdataforthetrailingeightquartersendedSeptember30,2016.Theoperating
resultsarenotnecessarilyindicativeoftheresultsforanysubsequentquarter.
Dec.31,
2014
46.9

21.9

68.8

0.5

52.5

4.5

2.7

7.5

1.1

(0.0)

(0.6)

(0.6)

0.5

0.2
Revenue
Totalrevenue
Costsandexpenses
Costofrevenues,includingrelatedparty(1)
Generalandadministrative,includingrelatedparty(1)
Interestexpense
Other,net(2)
Netincome(loss)
Netincome(loss)attributabletononcontrollinginterest
March31,
2015
63.8
42.1
105.9
0.5
94.6
5.4
1.9
7.5
(4.0)
(0.0)
(1.0)
(1.0)
(5.0)
(1.2)
June30,
2015
81.3
47.3
128.6
0.6
128.6
6.0
3.0
7.5
(17.1)
(0.0)
(0.0)
(0.0)
(17.1)
(4.6)
Sept.30,
2015
94.3
65.0
159.3
0.9
160.3
9.5
7.5
7.5
(26.4)
(0.0)
0.3
0.3
(26.1)
(5.0)
Dec.31,
2015
59.5
39.8
99.3
0.9
77.8
7.8
5.7
7.5
(0.4)
(0.1)
(2.0)
(2.1)
(2.5)
(0.5)
Threemonthsended
Sept.30,
June30,
2016
2016
120.8 156.6
58.2
90.1
179.0 246.7
1.4
1.0
172.5 224.0
22.9
10.1
29.7
9.7
2.5
2.5
(50.0)
(0.6)
(0.1)
(0.0)
0.2
0.3
0.1
0.3
(49.9)
(0.3)
0.1
1.2
(0.0)
(50.0)
(1.5)
0.1
0.2
0.2
0.1 (49.8)
(1.3)
March31,
2016
101.3
58.0
159.3
0.7
141.6
7.6
2.8
6.3
0.3
(0.0)
0.0
0.0
0.3
0.3
0.3

0.3
(3.8)

(3.8)
(12.5)

(12.5)
(21.1)
0.1
(21.0)
(2.0)
0.2
(1.8)
(1) Includessharebasedcompensationasfollows:
Sellingandmarketing
Technologyandcontent,netofcapitalizedinternaluse
softwareandwebsitedevelopmentcosts
Dec.31,
2014
0.3
March31,
2015
0.2
June30,
2015
0.0
0.4
Sept.30,
2015
0.2
1.8
Dec.31,
2015
0.1
1.0
March31,
2016
0.0
0.1
Threemonthsended
Sept.30,
June30,
2016
2016
0.0
0.7
9.3
1.0
0.3
0.1
0.2
0.0
0.3
0.2
2.8
3.7
1.2
2.0
0.0
0.0
14.8
23.8
0.5
1.8
(2) Consistsprimarilyofforeignexchangegain/lossintheyearsendedDecember31,2014and2015andfortheninemonthsendedSeptember30,2015and2016andthenon
recurringreversalofa1.6millionindemnificationassetininthefourthquarterof2015relatedtothe2013acquisitionbyExpedia.
Seasonality
Weexperienceseasonalfluctuationsinthedemandforourservicesasaresultofseasonalpatternsintravel.Forexample,hotelsearches
andconsequentlyourrevenuearegenerallythehighestinthefirstthreequarters
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astravelersplanandbooktheirspring,summerandwinterholidaytravel.Ourrevenuetypicallydecreasesinthefourthquarter.We
generallyexpecttoexperiencehigherreturnonadvertisingspendinthefourthquarteroftheyearaswetypicallyexpecttoadvertiselessin
thefourthquarterduetorelativelyhighercostofadvertisingintheperiod.Seasonalfluctuationsaffectingourrevenuealsoaffectthetiming
ofourcashflows.Wetypicallyinvoiceoncepermonth,withcustomarypaymentterms.Therefore,ourcashflowvariesseasonallywitha
slightdelaytoourrevenue,andissignificantlyaffectedbythetimingofouradvertisingspending.Thecontinuedgrowthofourofferingsin
countriesandareaswhereseasonaltravelpatternsvaryfromthosedescribedabovemayinfluencethetypicaltrendofourseasonalpatterns
inthefuture.
Financialposition,liquidityandcapitalresources
Apartfromtheinitialcapitalinvestmentfromseedinvestorsof1.4millionin2006to2008,wehavefundedallofouroperationswith
operatingcashflowsthrough2014.
OnSeptember5,2014,weenteredintoanuncommittedcreditfacilitywithBankofAmericaMerrillLynchInternationalLtd.withamaximum
principalamountof10.0million.AdvancesunderthisfacilitybearinterestarateofLIBORplus1.0%perannum.Thisfacilitymaybe
terminatedatanytimebythelender.OurobligationsunderthisfacilityareguaranteedbyExpedia.OnDecember19,2014,weenteredinto
anamendmenttothisfacilitypursuanttowhichthemaximumprincipalamountwasincreasedto50.0million.Weutilized20.0millionof
our50.0millioncreditfacilitytofundcapitalrequirementsin2015.DuringtheninemonthsendedSeptember30,2016weutilizedan
additional10.0millionunderourcreditfacilityandsubsequentlyrepaidatotalof30.0millionofthisobligation.OnOctober4,2016,we
utilized10.0millionunderourcreditfacility,whichwerepaidonNovember7,2016.
OurknownmaterialliquidityneedsforperiodsbeyondthenexttwelvemonthsaredescribedinManagementsdiscussionandanalysisof
financialconditionandresultsofoperationsContractualobligationsandcommitments.Webelievethatourcashfromoperations,together
withourcreditfacilityandcashbalancearesufficienttomeetourongoingcapitalexpenditures,workingcapitalrequirementsandother
capitalneedsforatleastthenexttwelvemonths.
Cashflows
ThetablebelowsummarizesourstatementofcashflowsfortheyearsendedDecember31,2014and2015andfortheninemonthsended
September30,2015and2016.
(inmillions)
Cashprovidedby(usedin):
Operatingactivities
Investingactivities
Financingactivities
Effectofforeignexchangeratesoncash
2014
Yearended
December31,
2015
0.6
(4.6)
1.0
0.1
Ninemonths
endedSeptember30,
2015
2016
(1.0)
(6.5)
19.0
(0.0)
(11.0)
(4.8)
19.0
(0.1)
13.8
(6.4)
(20.7)
(0.2)
FortheninemonthsendedSeptember30,2016,netcashprovidedbyoperatingactivitiesincreasedby24.8million,from11.0millionof
cashusedfortheninemonthsendedSeptember30,2015to13.8millionofcashprovidedfortheninemonthsendedSeptember30,2016,
primarilyduetoanincreaseinnetincomeof28.1millionexcludinganincreaseinsharebasedcompensationof42.2million,offsetby
decreasedbenefitsfromworkingcapitalchanges.FortheninemonthsendedSeptember30,2015,primarydriversofnetcashusedfor
operationsrelatetoworkingcapitalchanges.
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FortheyearendedDecember31,2015,netcashusedinoperatingactivitiesincreasedby1.6million,from0.6millionfortheyearended
December31,2014to(1.0)millionfortheyearendedDecember31,2015,primarilyduetodecreasedbenefitsfromworkingcapital
changes.FortheyearendedDecember31,2014,primarydriversofnetcashusedforoperationsrelatetoworkingcapitalrequirements,
whichreflecttimingofcollectionsofaccountsreceivableversuspaymentsmadeonaccountspayable.
FortheninemonthsendedSeptember30,2016,cashusedininvestingactivitiesincreasedby1.6million,from4.8millionforthenine
monthsendedSeptember30,2015to6.4millionfortheninemonthsendedSeptember30,2016,primarilyduetoanincreaseincapital
expenditures,includinginternalusesoftwareandwebsitedevelopment.
FortheyearendedDecember31,2015,cashusedininvestingactivitiesincreasedby1.9million,from(4.6)millionfortheyearended
December31,2014to(6.5)millionfortheyearendedDecember31,2015,primarilyduetoacquisitionsandincreasedcapitalexpenditures
includinginternalusesoftwareandwebsitedevelopment.FortheyearendedDecember31,2014,driversofcashusedininvestingactivities
relatetocapitalexpenditures,includinginternalusesoftwareandwebsitedevelopmentcostsof3.7million.
FortheninemonthsendedSeptember30,2016,cashusedinfinancingactivitiesincreasedby39.7million,from19.0millionofcash
providedfortheninemonthsendedSeptember30,2015to20.7millionofcashusedfortheninemonthsendedSeptember30,2016.This
wasdrivenbya20.0milliondrawdownonthecreditfacilityduringtheninemonthsendedSeptember30,2015anda20.0millionnet
paymentonthecreditfacilityduringtheninemonthsendedSeptember30,2016.
FortheyearendedDecember31,2015,cashprovidedbyfinancingactivitiesincreasedby18.0million,from1.0millionfortheyearended
December31,2014to19.0millionfortheyearendedDecember31,2015andprimarilyincluded20.0millioninproceedsfromourcredit
facility,partiallyoffsetbytherepaymentofa1.0millionloanfromExpedia.
TheeffectofforeignexchangeonourcashbalancesdenominatedinforeigncurrencywasnotmaterialfortheyearsendedDecember31,
2014andDecember31,2015orfortheninemonthsendedSeptember30,2015andSeptember30,2016.
Contractualobligationsandcommitments
ThetablebelowsummarizesourcontractualobligationsatDecember31,2015.
(inmillions)
Creditfacility(1)
Operatingleaseobligations(2)
Purchaseobligations(3)
Total
Total
20.0
72.5
36.1
128.6
Less
than1
year
20.0
4.1
25.6
49.7
Paymentsduebyperiod
More
13
45
than5
years years
years

9.3 15.1 44.1

10.5
19.8 15.1 44.1
(1) VariableinterestaccruesonourcreditfacilityatarateofLIBORplus1.0%perannum,whichisnotreflectedinthetable.AsofSeptember30,2016,noamountswere
outstandingunderourcreditfacility.OnOctober4,2016,weutilized10.0millionunderourcreditfacility,whichwerepaidonNovember7,2016.
(2) Theoperatingleasesareforofficespaceandrelatedofficeequipment.Weleaseourofficeanddatacenterfacilitiesundernoncancelableleasesthatexpireatvariouspoints
through2028.SeeBusinessFacilitiesforfurtherdiscussionofourleasedpremises.Wearealsoresponsibleforcertainrealestatetaxes,utilitiesandmaintenancecostson
ourofficefacilities.Inaddition,wehavevariouscontentlicensingandtechnologyagreementsthat,ifrenewed,willcontinuetoincurcostsinfutureperiods.Thefuturecash
commitmentsasitrelatestotheleaseofournewcorporateheadquartersareincludedwithinthesefigures.Therearenoincrementalcashcommitmentsresultingfromthe
relatedconstructionfinancingobligationcurrentlypresentedasacomponentofotherlongtermliabilitiesonourbalancesheetasofDecember31,2015.
(3) Ourpurchaseobligationsrepresenttheminimumobligationswehaveunderagreementswithcertainofourvendorsandmarketingpartners.Theseminimumobligationsareless
thanourprojecteduseforthoseperiods.Paymentsmaybemorethantheminimumobligationsbasedonactualuse.
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Offbalancesheetarrangements
OtherthantheitemsdescribedaboveunderContractualobligationsandcommitments,asofDecember31,2015,wedonothaveany
offbalancesheetarrangements,asdefinedintherulesandregulationsoftheSEC.
Quantitativeandqualitativedisclosuresaboutmarketrisk
Marketriskisthepotentiallossfromadversechangesininterestrates,foreignexchangeratesandmarketprices.Ourexposuretomarket
riskincludesourcreditfacility,cash,accountsreceivable,intercompanyreceivables,investmentsandaccountspayable.Wemanageour
exposuretotheserisksthroughestablishedpoliciesandprocedures.Ourobjectiveistomitigatepotentialincomestatement,cashflowand
marketexposuresfromchangesininterestandforeignexchangerates.
Interestraterisk
Becausetheinterestrateonourcreditfacilityistiedtoamarketrate,wewillbesusceptibletofluctuationsininterestratesif,consistentwith
ourpracticetodate,wedonothedgetheinterestrateexposurearisingfromanyadvancesunderourcreditfacility.AsofDecember31,
2015,wehad20.0millionoutstandingunderourcreditfacilityandasofDecember31,2014,wehadnoamountsoutstanding.Asof
September30,2016,noamountswereoutstandingunderourcreditfacility.OnOctober4,2016,weutilized10.0millionunderourcredit
facility,whichwerepaidonNovember7,2016.Expediacurrentlyguaranteesourcreditfacility.IfExpediadoesnotcontinuetoguaranteeour
creditinthefuture,ourborrowingcostscouldincrease.
WedidnotexperienceanysignificantimpactfromchangesininterestratesfortheyearsendedDecember31,2014or2015.
Foreignexchangerisk
Weconductbusinessinmanycountriesthroughouttheworld.Becauseweoperateinmarketsglobally,wehaveexposuretodifferent
economicclimates,politicalarenas,taxsystemsandregulationsthatcouldaffectforeignexchangerates.Ourprimaryexposuretoforeign
currencyriskrelatestotransactinginforeigncurrencyandrecordingtheactivityineuros.Changesinexchangeratesbetweenthefunctional
currencyofourconsolidatedentitiesandtheseothercurrencieswillresultintransactiongainsorlosses,whichwerecognizeinour
consolidatedstatementsofoperations.OurforeignexchangeriskrelatesprimarilytotheexchangeratebetweentheU.S.dollarandthe
euro.AmeaningfulportionofourrevenueisgeneratedinU.S.dollars,whileourexpenses,otherthanouradvertisingexpenses
denominatedinU.S.dollars,areprimarilyincurredineuros.
Futurenettransactiongainsandlossesareinherentlydifficulttopredictastheyarereliantonhowthemultiplecurrenciesinwhichwe
transactfluctuateinrelationtothefunctionalcurrencyofourconsolidatedentities,therelativecompositionanddenominationofcurrent
assetsandliabilitiesforeachperiod,andoureffectivenessatforecastingandmanaging,throughbalancesheetnetting,suchexposures.As
anexample,iftheforeigncurrenciesinwhichweholdnetassetbalanceswerealltoweakenby10%againsttheeuroandothercurrencies
inwhichweholdnetliabilitybalanceswerealltostrengthenby10%againsttheeuro,wewouldrecognizeforeignexchangelossesof0.8
millionbasedonthenetassetorliabilitybalancesofourforeigndenominatedcash,accountsreceivable,andaccountspayablebalancesas
ofDecember31,2015.Asthenetcompositionofthesebalancesfluctuatefrequently,evendaily,asdoforeignexchangerates,theexample
losscouldbecompoundedorreducedsignificantlywithinagivenperiod.
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DuringtheyearsendedDecember31,2014and2015,werecordednetforeignexchangeratelossesof1.6millionand1.0million,
respectively.
Concentrationofcreditrisk
Ourbusinessissubjecttocertainrisksandconcentrationsincludingdependenceonrelationshipswithouradvertisers,dependenceonthird
partytechnologyproviders,andexposuretorisksassociatedwithonlinecommercesecurity.Ourconcentrationofcreditriskrelatesto
depositorsholdingourcashandcustomerswithsignificantaccountsreceivablebalances.
OurcustomerbaseincludesprimarilyOTAs,hotelchainsandindependenthotels.Weperformongoingcreditevaluationsofourcustomers
andmaintainallowancesforpotentialcreditlosses.Wegenerallydonotrequirecollateralorothersecurityfromourcustomers.Expediaand
affiliatesrepresent32%and39%ofourrevenuefortheyearsendedDecember31,2014and2015,respectively,and31%and55%oftotal
accountsreceivableasofDecember31,2014and2015,respectively.Priceline.comanditsaffiliatesrepresent28%ofrevenuesfortheyear
endedDecember31,2014and27%fortheyearendedDecember31,2015and27%and21%oftotalaccountsreceivableasofDecember
31,2014and2015,respectively.
Internalcontroloverfinancialreporting
Amaterialweaknessisadeficiency,oracombinationofdeficiencies,ininternalcontroloverfinancialreportingsuchthatthereisa
reasonablepossibilitythatamaterialmisstatementofourfinancialstatementswillnotbepreventedordetectedonatimelybasis.In
connectionwiththeauditofour2015financialstatements,weidentifiedamaterialweaknessinourinternalcontrolsprimarilyrelatedtothe
lackofsufficientaccountingandsupervisorypersonnelwiththeappropriateleveloftechnicalaccountingexperienceandtrainingnecessary
orprocessesandprocedures,particularlyintheareasofsharebasedcompensation,buildtosuitleaseaccountingandinternalusesoftware
andcapitalizationofwebsitedevelopmentcostsandothercomplex,judgmentalareas.
Wecannotassureyouthatwehaveidentifiedallofourexistingmaterialweaknesses,orthatwewillnotinthefuturehaveadditionalmaterial
weaknesses.Undetectedmaterialweaknessesinourinternalcontrolscouldleadtofinancialstatementrestatementsandrequireustoincur
theexpenseofremediation.
Weareworkingtoremediatethematerialweaknessdescribedabove.During2016,weappointedachieffinancialofficerwhoisresponsible
foridentifyingthestaffingandresourceneedsofourcompanyrequiredtoremediatethematerialweakness.Theseindividualswillbe
requiredtohavesufficientexperienceinmaintainingbooksandrecordsandpreparingfinancialstatementsinU.S.GAAP.Wehaveinitiated
thehiringofadditionalstaffthathavebeguntoaddresstheseneeds.Additionally,wewillexpandouraccountingpoliciesandproceduresas
wellasprovideadditionaltrainingtoouraccountingandfinancestaff.Whileweareworkingtoremediatethematerialweaknessasquickly
andefficientlyaspossibleandexpecttohaveremediatedthematerialweaknessduringtheyearendedDecember31,2017,atthistimewe
cannotprovideanestimateofcostsexpectedtobeincurredinconnectionwithimplementingthisremediationplan.SeeRiskfactorsWe
haveidentifiedamaterialweaknessinourinternalcontroloverfinancialreportingandmayidentifyadditionalmaterialweaknessesinthe
futurethatmaycauseustofailtomeetourreportingobligationsorresultinmaterialmisstatementsofourfinancialstatements.Ifwefailto
remediateourmaterialweaknessorifwefailtoestablishandmaintainaneffectivesystemofinternalcontroloverfinancialreporting,wemay
notbeabletoreportourfinancialresultsaccuratelyortopreventfraud.Anyinabilitytoreportandfileourfinancialresultsaccuratelyand
timelycouldharmourbusinessandadverselyimpactthetradingpriceofoursecurities.
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Criticalaccountingpoliciesandsignificantjudgmentsandestimates
Ourmanagementsdiscussionandanalysisoffinancialconditionandresultsofoperationsisbasedonourconsolidatedfinancialstatements
andaccompanyingnotes,whichwehavepreparedinaccordancewithU.S.GAAP.Thepreparationoftheconsolidatedfinancialstatements
andaccompanyingnotesrequiresthatwemakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesand
disclosureofcontingentassetsandliabilitiesasofthedateofourconsolidatedfinancialstatements.Theseestimatesandassumptionsalso
affectthereportedamountofnetincomeorlossduringanyperiod.Ouractualfinancialresultscoulddiffersignificantlyfromtheseestimates.
Thesignificantestimatesunderlyingourconsolidatedfinancialstatementsincluderevenuerecognitionrecoverabilityofcurrentandlong
livedassets,intangibleassetsandgoodwillincomelosscontingenciesredeemablenoncontrollinginterestsacquisitionpurchaseprice
allocationsandsharebasedcompensation.Therehavebeennomaterialadjustmentstopriorperiodestimatesforanyoftheperiods
includedinthisprospectus.
Therearecertaincriticalestimatesthatwebelieverequiresignificantjudgmentinthepreparationofourconsolidatedfinancialstatements.
Weconsideranaccountingestimatetobecriticalif:
Itrequiresustomakeanassumptionbecauseinformationwasnotavailableatthetimeoritincludedmattersthatwerehighlyuncertainat
thetimeweweremakingtheestimateand
Changesintheestimateordifferentestimatesthatwecouldhaveselectedmayhavehadamaterialimpactonourfinancialconditionor
resultsofoperations.
SeeNote2Significantaccountingpolicies,inthenotestoourconsolidatedfinancialstatementsappearingelsewhereinthisprospectusfor
adescriptionofallofoursignificantaccountingpolicies.Webelievethatthefollowingaccountingpoliciesarethemostcriticaltoaidyouin
fullyunderstandingandevaluatingourfinancialconditionandresultsofoperations.
Revenuerecognition
Werecognizerevenuefromservicesrenderedwhenthefollowingfourrevenuerecognitioncriteriaaremet:persuasiveevidenceofan
arrangementexists,serviceshavebeenrendered,thepriceisfixedordeterminableandcollectabilityisreasonablyassured.
Revenueisgeneratedeachtimeavisitortooneofourwebsitesorappsclicksonahotelofferinoursearchresultsandisreferredtooneof
ouradvertisers.Advertiserspayonaperreferralbasis,withtheaforementionedvisitorclickthroughbeingconsideredasinglereferral.
Giventhenatureoftheindustry,itisnotunusualforreferralstobegeneratedfromautomatedscriptsdesignedtobrowseandcollectdataon
ourwebsites.However,reviewprocessesareinplacetoidentifyanomaliestoensurerevenuerecognitionisappropriateforeachperiod
(1.6%ofourreferralswerefromautomatedscriptsduringthetwelvemonthsendedSeptember30,2016andwerethusnotrecordedas
referralrevenue).Thenumberofreferralsisadjustedtoremovesuchanomaliesbeforewecalculaterevenuemetricssuchasqualified
referrals,RPRandRPQR.Pricingisdeterminedthroughacompetitivebiddingprocesswherebyadvertisersbidontheirplacementpriority
foraspecifichotelofferwithineachroomlisting.Bidscanbeplacedasoftenasdaily,andchangesinbidsareappliedonaprospective
basisonthefollowingday.Additionally,aninsignificantportionofourrevenueisgeneratedthroughsubscriptionbasedservicesearned
throughmyhotelshopandtrivagoHotelManagerProapplications.Thisrevenueisrecognizedratablyoverthesubscriptionperiodwith
deferredrevenuerecognizeduponreceiptofpaymentinadvanceofrevenuerecognition.
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Leases
Weleaseofficespaceinseveralcountriesundernoncancelableleaseagreements.Wegenerallyleaseourofficefacilitiesunderoperating
leaseagreements.Werecognizerentexpenseonastraightlinebasisovertheleaseperiod.Anyleaseincentivesarerecognizedas
reductionsofrentalexpenseonastraightlinebasisoverthetermofthelease.Theleasetermbeginsonthedatewebecomelegally
obligatedfortherentpaymentsorwhenwetakepossessionoftheofficespace,whicheverisearlier.
Weestablishassetsandliabilitiesfortheestimatedconstructioncostsincurredunderleasearrangementswhereweareconsideredthe
ownerforaccountingpurposesonly,orbuildtosuitleases,totheextentthatweareinvolvedintheconstructionofstructuralimprovements
ortakeconstructionriskpriortocommencementofalease.Werecordprojectconstructioncostsduringtheconstructionperiodincurredby
thelandlordasaconstructioninprogressassetandarelatedconstructionfinancingobligationonourconsolidatedbalancesheets.The
amountsthatthecompanyhaspaidorincurredfornormaltenantimprovementsandstructuralimprovementshadalsobeenrecordedtothe
constructioninprogressasset.
Wehaveoperatingleaseagreementsthatrequireustodecommissionphysicalspaceforwhichwehavenotyetrecordedanasset
retirementobligation.Duetotheuncertaintyofspecificdecommissioningobligations,timingandrelatedcosts,wecannotreasonably
estimateanassetretirementobligationforthesepropertiesandwehavenotrecordedaliabilityatthistimeforsuchproperties.
Recoverabilityofgoodwillandindefinitelivedintangibleassets
Goodwillisassignedtooursinglereportingunit,whichisexpectedtobenefitfromthesynergiesofthebusinesscombinationsinwhichsuch
goodwillwasgeneratedasoftheacquisitiondate.Weassessgoodwillandindefinitelivedassets,neitherofwhichareamortized,for
impairmentannuallyasofOctober1,ormorefrequently,ifeventsandcircumstancesindicatethatanimpairmentmayhaveoccurred.Inthe
evaluationofgoodwillforimpairment,wetypicallyfirstperformaqualitativeassessmenttodeterminewhetheritismorelikelythannotthat
thefairvalueofthereportingunitislessthanthecarryingamount.Ifso,weperformaquantitativeassessmentandcomparethefairvalueof
thereportingunittothecarryingvalue.Ifthecarryingvalueofareportingunitexceedsitsfairvalue,thegoodwillofthatreportingunitis
potentiallyimpairedandweproceedtosteptwooftheimpairmentanalysis.Insteptwooftheanalysis,wewillrecordanimpairmentloss
equaltotheexcessofthecarryingvalueofthereportingunitsgoodwilloveritsimpliedfairvalueshouldsuchacircumstancearise.
Periodically,wemaychoosetoforgotheinitialqualitativeassessmentandperformquantitativeanalysistoassistinourannualevaluation.
Wegenerallybaseourmeasurementoffairvalueofoursinglereportingunitonablendedanalysisofthepresentvalueoffuturediscounted
cashflowsandmarketvaluationapproach.Thediscountedcashflowsmodelindicatesthefairvalueofthereportingunitbasedonthe
presentvalueofthecashflowsthatweexpectthereportingunittogenerateinthefuture.Oursignificantestimatesinthediscountedcash
flowsmodelinclude:ourweightedaveragecostofcapitalandlongtermrateofgrowthandprofitabilityofourbusiness.Themarket
valuationapproachindicatesthefairvalueofthebusinessbasedonacomparisonofthecompanytocomparablepubliclytradedfirmsin
similarlinesofbusiness.Oursignificantestimatesinthemarketapproachmodelincludeidentifyingsimilarcompanieswithcomparable
businessfactors,suchassize,growth,profitability,riskandreturnoninvestmentandassessingcomparablerevenueandoperatingincome
multiplesinestimatingthefairvalueofthereportingunit.
Webelievetheweighteduseofdiscountedcashflowsandmarketapproachisthebestmethodfordeterminingthefairvalueofourreporting
unitbecausethesearethemostcommonvaluationmethodologiesusedwithinthetravelandInternetindustriesandtheblendeduseofboth
modelscompensatesfortheinherentrisksassociatedwitheithermodelifusedonastandalonebasis.
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Inourevaluationofourindefinitelivedintangibleassets,wetypicallyfirstperformaqualitativeassessmenttodeterminewhetherthefair
valueoftheindefinitelivedintangibleassetsismorelikelythannotimpaired.Ifso,weperformaquantitativeassessmentandanimpairment
chargeisrecordedfortheexcessofthecarryingvalueoftheindefinitelivedintangibleassetsoverthefairvalue.Webaseourmeasurement
ofthefairvalueofourindefinitelivedintangibleassets,whichconsistoftradenameandtrademarks,usingtherelieffromroyalty
method.Thismethodassumesthatthetradenameandtrademarkshavevaluetotheextentthattheirownerisrelievedoftheobligationto
payroyaltiesforthebenefitsreceivedfromthem.Aswithgoodwill,periodically,wemaychoosetoforgotheinitialqualitativeassessmentand
performquantitativeanalysisinourannualevaluationofindefinitelivedintangibleassets.
Recoverabilityofintangibleassetswithdefinitelivesandotherlonglivedassets
Intangibleassetswithdefinitelivesandotherlonglivedassetsarecarriedatcostandareamortizedonastraightlinebasisovertheir
estimatedusefullivesofgenerallylessthansevenyears.Wereviewthecarryingvalueoflonglivedassetsorassetgroups,including
propertyandequipment,tobeusedinoperationswhenevereventsorchangesincircumstancesindicatethatthecarryingamountofthe
assetsmightnotberecoverable.Factorsthatwouldnecessitateanimpairmentassessmentincludeasignificantadversechangeinthe
extentormannerinwhichanassetisused,asignificantadversechangeinlegalfactorsorthebusinessclimatethatcouldaffectthevalueof
theasset,orasignificantdeclineintheobservablemarketvalueofanasset,amongothers.Ifsuchfactsindicateapotentialimpairment,we
wouldassesstherecoverabilityofanassetgroupbydeterminingifthecarryingvalueoftheassetgroupexceedsthesumoftheprojected
undiscountedcashflowsexpectedtoresultfromtheuseandeventualdispositionoftheassetsovertheremainingeconomiclifeofthe
primaryassetintheassetgroup.Iftherecoverabilitytestindicatesthatthecarryingvalueoftheassetgroupisnotrecoverable,wewill
estimatethefairvalueoftheassetgroupusingappropriatevaluationmethodologieswhichwouldtypicallyincludeanestimateofdiscounted
cashflows.Anyimpairmentwouldbemeasuredasthedifferencebetweentheassetgroupscarryingamountanditsestimatedfairvalue.
Incometaxes
Werecordincometaxesundertheliabilitymethod.Deferredtaxassetsandliabilitiesreflectourestimationofthefuturetaxconsequencesof
temporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforbookandtaxpurposes.Wedeterminedeferredincome
taxesbasedonthedifferencesinaccountingmethodsandtimingbetweenfinancialstatementandincometaxreporting.Accordingly,we
determinethedeferredtaxassetorliabilityforeachtemporarydifferencebasedontheenactedtaxratesexpectedtobeineffectwhenwe
realizetheunderlyingitemsofincomeandexpense.Weconsidermanyfactorswhenassessingthelikelihoodoffuturerealizationofour
deferredtaxassets,includingourrecentearningsexperiencebyjurisdiction,expectationsoffuturetaxableincome,andthecarryforward
periodsavailabletousfortaxreportingpurposes,aswellasotherrelevantfactors.Wemayestablishavaluationallowancetoreduce
deferredtaxassetstotheamountwebelieveismorelikelythannottoberealized.Duetoinherentcomplexitiesarisingfromthenatureof
ourbusinesses,futurechangesinincometaxlaw,taxsharingagreementsorvariancesbetweenouractualandanticipatedresultsof
operations,wemakecertainjudgmentsandestimates.Therefore,actualincometaxescouldmateriallyvaryfromtheseestimates.
Weaccountforuncertaintaxpositionsbasedonatwostepprocessofevaluatingrecognitionandmeasurementcriteria.Thefirststep
assesseswhetherthetaxpositionismorelikelythannottobesustaineduponexaminationbythetaxauthority,includingresolutionofany
appealsorlitigation,basedonthetechnicalmeritsoftheposition.Ifthetaxpositionmeetsthemorelikelythannotcriteria,theportionofthe
taxbenefitgreaterthan50%likelytoberealizeduponsettlementwiththetaxauthorityisrecognizedinthefinancialstatements.Interestand
penaltiesrelatedtouncertaintaxpositionsareclassifiedinthefinancialstatementsasacomponentofincometaxexpense.
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Advertisingexpense
Weincuradvertisingexpenseconsistingofofflinecosts,includingTVandradioadvertising,andonlineadvertisingexpensetopromoteour
brands.Asignificantportionoftrafficfromusersisdirectedtoourwebsitesthroughourparticipationindisplayadvertisingcampaignson
searchengines,advertisingnetworks,affiliatewebsitesandsocialnetworkingsites.Weconsidertrafficacquisitioncoststobeindirect
advertisingfees.Weexpensetheproductioncostsassociatedwithadvertisementsintheperiodinwhichtheadvertisementfirsttakesplace.
Weexpensethecostsofcommunicatingtheadvertisement(e.g.,TVairtime)asincurredeachtimetheadvertisementisshown.
Wemeasurethefairvalueofshareoptionsasofthegrantdateifequitytreatmentisapplied,usingtheBlackScholesoptionpricingmodel.
Thevaluationmodelincorporatesvariousassumptionsincludingexpectedvolatilityofequity,expectedtermandriskfreeinterestrates.As
wedonothaveatradinghistoryforourtrivagoGmbHClassAandtrivagoGmbHClassBunits,theexpectedsharepricevolatilityforour
trivagoGmbHClassAandtrivagoGmbHClassBunitswasestimatedbytakingtheaveragehistoricpricevolatilityforindustrypeersbased
ondailypriceobservationsoveraperiodcommensuratetotheexpectedterm.Webaseourexpectedtermassumptionsonthetermsand
conditionsoftheemployeeshareoptionagreementsscheduledexercisewindows.Additionally,thesharepriceassumptionusedinthe
modelisbaseduponavaluationoftrivagossharesasofthegrantdateutilizingablendedanalysisofthepresentvalueoffuturediscounted
cashflowsandamarketvaluationapproach.Weamortizethefairvaluetotheextenttheawardsqualifyforequitytreatment,netof
estimatedforfeitures,overthevestingtermonastraightlinebasis.Themajorityofourshareoptionsvestbetweenoneandthreeyearsand
havecontractualtermsthatalignwithprescribedliquidationwindows.
Weclassifycertainemployeeoptionawardsasliabilitieswhenwedeemitnotprobablethattheemployeesholdingtheawardswillbearthe
riskandrewardsofstockownershipforareasonableperiodoftime.Weremeasuretheseinstrumentsatfairvalueattheendofeach
reportingperiodusingaBlackScholesoptionpricingmodelwhichreliesuponanestimateofthefairvalueoftrivagossharesasofthe
reportingdatewhichisdeterminedusingablendedapproachasdiscussedabove.Uponsettlementoftheseawards,ourtotalsharebased
compensationexpenserecordedfromgrantdatetosettlementdatewillequalthesettlementamount.
TheBlackScholespricingmodelrequiresvarioushighlyjudgmentalassumptionsincludingastovolatility,expectedterm,riskfreeinterest
rates,expecteddividends,andthefairvalueofourtrivagoGmbHClassAandtrivagoGmbHClassBunits,whichareestimatedasfollows:
FairvalueofourtrivagoGmbHClassAandtrivagoGmbHClassBordinaryshares(stockprice):Becauseoursharesarenotpublicly
traded,thefairvalueoftrivagoGmbHClassAandtrivagoGmbHClassBunitsmustbeestimated,asdiscussedinFairmarket
valuationbelow.
Expectedterm:Theexpectedtermrepresentstheanticipatedtimeperiodbetweenthemeasurementdate(grantdate)andtheexpected
exercisedate(orsettlementdateinthecaseofliabilityawards).Assumptionsabouttheexpectedtermarebasedonthetermsand
conditionsoftheemployeeoptionagreements,includingscheduledexercise/liquidationwindows.
Expectedvolatility:AswedonothaveatradinghistoryforourtrivagoGmbHClassAandtrivagoGmbHClassBunits,theexpected
sharepricevolatilityforourtrivagoGmbHClassAandtrivagoGmbHClassBunitswasestimatedbytakingtheaveragehistoricprice
volatilityforindustrypeersbasedondailypriceobservationsoveraperiodcommensuratetotheexpectedterm.
Riskfreerate:Theriskfreeinterestrateisequaltotheyield,asofthemeasurementdate,ofthezerocouponU.S.Treasurybillthatis
commensuratewiththeexpectedterm.
Dividendyield:Wehavenevernordowepresentlyplantopaycashdividendsintheforeseeablefuture.Therefore,anexpected
dividendyieldofzerowasestimated.
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Ifanyoftheassumptionsusedinthemodelschangesignificantly,sharebasedcompensationexpensemaydiffermateriallyinthefuture
fromthatpreviouslyrecorded.
InconnectionwiththecontrollinginterestacquisitionoftrivagobyExpediaLodgingPartnerServicesS.r.l.,anaffiliateofExpedia,Inc.in
2013,certainthenoutstandingtrivagoemployeeoptionswerereplacedwithnewtrivagoemployeeoptions.Thereplacementoptionswere
exchangedforthethenoutstandingoptionsbaseduponacquisitiondatefairvalueandmaintainedtheoriginalservicebasedvesting
scheduleandstrikepriceof1.00.Thereplacementoptionsalsocontainedconditionswhichallowedholderstoput(orExpediaLodging
PartnerServicesS.r.l.tocall)underlyingtrivagosharestoExpediaLodgingPartnerServicesS.r.l.duringprescribedliquiditywindowsin
2016and2018(ontheconditionthatholdersheldunderlyingsharesforareasonableperiodoftimepriortoliquidationinordertoparticipate
intherisksandrewardsofequityownership).The887optionsoutstandingasofJanuary1,2014werecomprisedof858optionsthatwere
replacedin2013atthetimeoftheacquisitionofacontrollinginterestandtheremainingwereadditionaloptiongrantsin2013which
containedsimilarprovisionsasthereplacementoptions.
In2014,180employeeoptionsweregrantedfortrivagoGmbHClassAunits.In2015,77employeeoptionsweregrantedfortrivagoGmbH
ClassAunits.Additionally,62,178employeeoptionsweregrantedin2015fortrivagoGmbHClassBunitswhichhavevotingrightsthatare
1/1,000ofanoptionfortrivagoGmbHClassAunits.Theemployeeoptionsgrantedin2014and2015arealsosubjecttoservicebased
vesting.Themajorityoftheemployeeoptionsgrantedin2014and2015hadstrikepricesof1.00,andtheremainingweregrantedwith
strikepricesof17,953or17.95,respectively.Thesharessubscribedforunderlyingthegrantsin2014and2015areeligibletoparticipate
inprescribedliquidityeventsoriginallyscheduledtooccurin2016,2018and2020.Optionsgrantedwithexercisepricesinexcessof1.00
arenotexpectedtoparticipateintherisksandrewardsofownershipforareasonableperiodoftimeandarethereforeaccountedforas
liabilityawards.
Awardsgrantedin2015and2016andrelevantvaluationdatesusedtovalueliabilityawardsin2015aresummarizedbelowwiththe
associatedexercisepricesandgrantdatefairvaluesoftheunderlyingunits,whereapplicable.Theunitssubscribedforunderlyingthegrants
in2015and2016areeligibletoparticipateinprescribedliquidityeventsoriginallyscheduledtooccurin2016,2018,2020and2022.Asa
result,inconnectionwiththepreIPOcorporatereorganization,weamendedouroptionawardssothattheywillconvertintooptionsin
trivagoN.V.
GrantDate/ValueDate
May15,2015/March31,2015
May15,2015/March31,2015
May15,2015/March31,2015
May15,2015/March31,2015
July16,2015/June30,2015
December31,2015**
May2,2016/June30,2016
September23,2016/September30,2016**
September23,2016/September30,2016**
November18,2016
November18,2016
November18,2016
November18,2016
Numberof
Options
Granted
35
30
54,978
7,200
12
n/a
45,000
7,500
18,000
129
12
4,080
Class
B*
B*
A
n/a
B*
B*
B*
B*
Numberof
ClassA
Equivalent
Options
Granted
35
30
55
7.2
12
n/a
45
7.5
18
129
12
Exercise
Price
Perunit
(ClassA
Equivalent)
17,953
1,000
17,953
n/a
1,000
1,000
100,000
129,060
100,000
1,000
FairMarket
Valueper
unitat
GrantDate
(ClassA
Equivalent)
32,440
32,440
32,440
32,440
33,028
39,807
59,864
95,882
95,882
109,492
109,492
109,492
109,492
trivagoGmbHClassBshareshavevotingandeconomicvaluewhichis1/1,000ofatrivagoGmbHClassAunit.
** Valuationdateforliabilityawardsusedintherespective2015and2016FinancialStatements.
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BetweenJanuary1,2016andSeptember30,2016,wegranted70,500employeeoptionawardsexercisableintotrivagoGmbHClassB
unitswithatotalfairvalueof5.1million,whichwillbeexpensedoverathreeyearvestingperiod.BetweenJanuary1,2016andSeptember
30,2016,werecorded0.5millionexpenserelatedtotheseawards.OnNovember18,2016,wegranted146employeeoptionawards
exercisableintotrivagoGmbHClassAunitsand4,080employeeoptionawardsexercisableintotrivagoGmbHClassBunitswithatotalfair
valueintheaggregateof16.5million,whichwillbeexpensedoverathreeyearvestingperiod.Weexpecttoincur0.6millionofexpense
asitrelatestothevestingoftheseawardsinthefourthquarterof2016.
Inthethirdquarterof2015,484trivagoGmbHClassAunitequivalenttrivagoemployeeoptionswereexercisedfornominalproceedsto
trivago.Theunderlyingshareswereheldbyemployeesinordertoparticipateintheoriginallyscheduled2016liquidationevent(described
below).Uponexerciseoftheseoptions,ExpediaLodgingPartnerServicesS.r.l.advancedtoeachoptionholderemployeeinvolvedinthe
exerciseamountsequivalenttosuchemployeespersonaltaxliabilityrelatedtotheoptionexercisebyissuingloans.Suchloanswere
collateralizedbytheunderlyingsharesandwererepaidbyemployeesfrom2016liquidationeventproceeds.ExpediaLodgingPartner
ServicesS.r.l.sextensionofanonrecourseloantoemployeestriggeredanaccountingmodificationandchangedtheclassificationofthe
awardsfromequitytoliabilityaccountingtreatmentresultinginanaccountingmodificationchargeandsubsequentliabilityaccounting
treatmentrequiringremeasurementtofairvalueateachreportingperioduntilsettlementin2016.Duringthesecondquarterof2016,
ExpediaLodgingPartnerServicesS.r.l.exerciseditscallrightonthesesharesandelectedtodosoatapremiumtofairvaluewhich
resultedinincrementalsharebasedcompensationexpenseinthatperiodandanincreaseinExpediaLodgingPartnerServicesS.r.l.s
ownershipintrivagoofanominalamount.Acertainportionofthegrossproceedspaidtotheemployeeswaswithheldforpotentialwagetax
liabilitiesoftheemployeestriggeredbyExpediaspurchaseofsuchshares.Atthesametime,trivagoissuedawagetaxrulingrequesttothe
taxauthoritiestheresultofwhichisstilloutstanding.Dependingontheresultofthetaxruling,thewithheldproceedswillberemittedbackto
theemployeesortothetaxauthoritiesbyExpediaLodgingPartnerServicesS.r.l.
Thefollowingtableshowstheweightedaverageassumptionsusedtoestimatethefairvalueofoptionsgrantedduringtheperiods
presented:
Riskfreeinterestrate
Expectedvolatility
Expectedlife(inyears)
Dividendyield
YearEndedDecember31,
2014
2015
1.31%
1.31%
46%
46%
3.0
1.8
0%
0%
Fairmarketvaluation
ThevaluationsofourequityweredeterminedinaccordancewiththeStatementonStandardsforValuationServicesNo.1,Valuationofa
Business,BusinessOwnershipInterest,Security,orIntangibleAsset,orSSVS1,oftheAmericanInstituteofCertifiedPublic
Accountants.Beginningwiththefirstquarterof2015andasofeachsubsequentquarterend,multiplevaluationsofourtrivagoGmbHClass
Aunitswereperformedwiththeassistanceofathirdparty.Eachanalysisincluded,butwasnotnecessarilylimitedto,thefollowing:
InterviewswithExpediamanagementconcerningourhistorythenatureofourbusiness,ourcompetitiveposition,strengthsand
challengesouroperatingandnonoperatingassetsourhistoricalfinancialpositions
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andoperatingperformanceourhistoricaltransactionsinvolvingdebtorequitysecuritiesandourplansforthefuture,including
expectationsregardingdividends,operatingperformanceandfinancialposition.
Analysisofourhistoricalandprospectivefinancialdata.
Researchconcerning:
ourfinancialandoperatinghistory,natureofourproductsand/orservices,andourcompetitivepositioninthemarketplace
currenteconomicconditionsandoutlookfortheGermaneconomy,aswellasapplicableglobaleconomicconditions
theindustryinwhichweparticipateand
ourcompetitorsandothercompaniesengagedinthesameorsimilarlinesofbusiness.
Analysisofmarketresearchreportsregardingparticipantsinourindustry.
Consideration,selectionandapplicationofvaluationapproachesandmethods.
Withtheassistanceofthethirdpartyvaluationspecialist,thevalueofourequitywasdeterminedusingboththeincomeandmarket
approachonblendedbasis.
Thesteadyincreaseinvaluethroughout2015andmorespecificallythroughSeptember30,2016isduetoourresultsofoperations,
improvedoutlookintermsofrevenuegrowthandcashflow,aswellasincreasesunderthemarketapproachrelativetoourpeergroup.
Incomeapproach
Inapplicationoftheincomeapproach,adiscountedcashflowmethodwasutilizedtoestimatetheenterprisevaluebasedontheestimated
presentvalueoffuturenetcashflowsweareexpectedtogenerateoveraforecastedperiodandanestimateofthepresentvalueofcash
flowsbeyondthatperiod.Thepresentvaluewasestimatedusingadiscountrate,whichaccountsforthetimevalueofmoneyandthe
appropriatedegreeofrisksinherentinthebusiness.Forthisvaluation,financialprojectionswerepreparedtobeusedintheincome
approach.Thefinancialprojectionstookintoaccountourhistoricalfinancialresultsofoperations,ourbusinessexperiencesandourfuture
expectations.Theriskassociatedwithachievingourforecastwastakenintoaccountinselectingtheappropriateterminalgrowthrateand
discountrate.Thereisinherentuncertaintyintheseestimates,astheassumptionsusedwerehighlysubjectiveandsubjecttochangeasa
resultofnewoperatingdataandeconomicandotherconditionsthatimpactourbusiness.
Summaryofkeyvariablesincorporatedinthediscountedcashflowanalysisinclude:
Taxrate
Longtermgrowth
Capitalexpenditures
Depreciation
Workingcapital
Residualvalueand
Discountrate.
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Marketapproach
Intheapplicationofthemarketapproach,theguidelinepubliccompanymethodwasused.Thismethodemploysmarketmultiplesderived
frommarketpricesofstocksofcompaniesthatareengagedinthesameorsimilarlinesofbusinessandthatareactivelytradedonafree
andopenmarket.Theapplicationoftheselectedmultiplestothecorrespondingmeasureoffinancialperformanceforthesubjectcompany
producesestimatesofvalueatthemarketableminoritylevel.Inselectingcomparablepubliccompaniessimilartoourselves,highgrowth
onlinecompanies,companieswhichoperateinonlinetravel,andmetasearchproxycompanieswereconsidered.
Estimatesoffairvaluearenotintendedtopredictactualfutureeventsorthevalueultimatelyrealizedbyemployeeswhoreceivethese
awards,andsubsequenteventsarenotindicativeofthereasonablenessofouroriginalestimatesoffairvalue.Indeterminingtheestimated
forfeitureratesforsharebasedawards,weperiodicallyconductanassessmentoftheactualnumberofequityawardsthathavebeen
forfeitedtodateaswellasthoseexpectedtobeforfeitedinthefuture.Weconsidermanyfactorswhenestimatingexpectedforfeitures,
includingthetypeofaward,theemployeeclassandhistoricalexperience.Theestimateofstockawardsthatwillultimatelybeforfeited
requiressignificantjudgmentandtotheextentthatactualresultsorupdatedestimatesdifferfromourcurrentestimates,suchamountswill
berecordedasacumulativeadjustmentintheperiodsuchestimatesarerevised.
Recentaccountingpronouncements
Foradiscussionofnewaccountingstandardsandinterpretationsnotyetadoptedbyus,seeNote2Significantaccountingpoliciesinthe
notestoourconsolidatedfinancialstatements.
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Business
Overview
trivagoisaglobalhotelsearchplatform.Ourmissionistobethetravelersfirstandindependentsourceofinformationforfindingtheideal
hotelatthelowestrate.Wearefocusedonreshapingthewaytravelerssearchforandcomparehotels,whileenablinghoteladvertisersto
growtheirbusinessesbyprovidingaccesstoabroadaudienceoftravelersviaourwebsitesandapps.Ourplatformallowstravelerstomake
informeddecisionsbypersonalizingtheirhotelsearchandprovidingaccesstoadeepsupplyofhotelinformationandprices.Inthetwelve
monthsendedSeptember30,2016,wehad487millionqualifiedreferralsandofferedaccesstoapproximately1.3millionhotelsinover190
countries.
Ourbrandpositionsusasakeystartingpointfortravelerssearchingfortheiridealhotel.Ourfastandintuitivehotelsearchplatformenables
travelerstofindtheiridealhotelbymatchingindividualtravelerpreferenceswithdetailedhotelcharacteristicssuchasprice,location,
availability,amenitiesandratings,acrossavastsupplyofglobalhotels.InthetwelvemonthsendedSeptember30,2016,comparingacross
allofourlocalizedwebsitesandapps,weprovidedarangeofpricesperhotelwiththecheapestadvertiserofferingapriceonaverage19%
lowerthanthemostexpensiveadvertiser.
Webelievethatthenumberoftravelersaccessingourwebsitesandappsmakesusanimportantandscalablemarketingchannelforour
hoteladvertisers,whichincludeOTAs,hotelchainsandindependenthotels.Additionally,ourabilitytorefineuserintentthroughoursearch
functionallowsustoprovideadvertiserswithtransactionreadyreferrals.Wegeneraterevenuesprimarilyonacostperclick,orCPC,
basis,wherebyanadvertiserischargedwhenauserclicksonanadvertisedrateforahotelandisreferredtothatadvertiserswebsite
wheretheusercancompletethebooking.InthetwelvemonthsendedSeptember30,2016,anaverageoftenadvertisersperhotelacross
allourlocalizedwebsitesandappsplacedCPCbids.OurCPCbiddingfunctionenablesadvertiserstoinfluencetheirownreturnon
investmentandthevolumeofreferraltrafficwegenerateforthem.Recognizingthatadvertisersonourmarketplacehavevaryingobjectives
andvaryinglevelsofmarketingresourcesandexperience,weprovidearangeofservicestoenableadvertiserstoimprovetheirperformance
onourmarketplace.
RigorousanalysisandapplicationofdataandtechnologyarecriticalpartsofourDNA.Wecapturealargeamountofdataonhowusers
searchonandengagewithoursiteandourapps,enablingustocontinuallytestnewfeaturesandtheeffectivenessofexistingones,refine
oursearchalgorithmsandtherebyimproveourproduct.Thismakesourhotelsearchplatformmorepowerfulforusersbyimprovingthe
qualityoftheirhoteldiscoveryexperience,aswellasmorevaluabletoadvertisersbyrefiningthequalityofthereferralswegenerate.
TechnologyanddataalsodrivehowweengagewithouradvertisersviaourCPCbiddingalgorithm.Wehavebuilttoolsthatcapturedataand
calculateourreturnonmanyelementsofourbrandandperformancemarketing.Ourapplicationofdataledimprovementandinnovation
alsoinformsourmarketingstrategy,whichwebelieveenablesustobecomeincreasinglymoreeffectivewithourmarketingspend.
Ourhotelsearchplatformcanbeaccessedgloballyvia55localizedwebsitesandappsin33languages.Userscansearchourplatformon
desktopandmobiledevices,butbenefitfromafamiliaruserinterface,resultinginaconsistentuserexperience.InJune2016,ourrevenue
frommobilewebsitesandappsexceededourrevenuefromourdesktopwebsitesforthefirsttime,whichisconsistentwithanexpected
longertermshifttowardsmobile.
segments:theAmericas,DevelopedEuropeandtheRestofWorld.Thechangefromonetothreereportablesegmentsresultedinthe
companysfocusonprovidingadditionalinformationtoreflect
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uniquemarketopportunitiesandcompetitivedynamicsinherentinourbusinesswitheachofouroperatingsegments.Wedeterminedour
operatingsegmentsbasedonhowourchiefoperatingdecisionmakersmanageourbusiness,makeoperatingdecisionsandevaluate
operatingperformance.
Wehavegrownsignificantlysinceourincorporationin2005.IntheyearsendedDecember31,2014and2015andtheninemonthsended
September30,2015and2016,wegeneratedrevenueof309.3million,493.1million,393.8millionand585.0million,respectively.
Duringthesameperiods,wehadnetlossesof23.1million,39.4million,37.4millionand51.5million,respectively.Intheyearsended
December31,2014and2015andtheninemonthsendedSeptember30,2015and2016,ouradjustedEBITDAwas3.5million,(1.1)
million,(13.4)millionand16.3million,respectively.SeeSelectedconsolidatedfinancialdataforanadditionaldescriptionofadjusted
EBITDAandareconciliationofadjustedEBITDAtonetloss.
Ourindustry
Thedevelopmentofourindustryisinfluencedbyseveralkeyfactors.
Largeandgrowingtravelmarket
AccordingtoPhocuswrightData,globaltravelspendgrewtoanestimated$1.1trillionin2015,excludingCanada,LatinAmericaand
EasternEurope,representingaCAGRof4.1%since2010,outpacingaverageglobaleconomicgrowthof2.9%peryearinthesameperiod.
AccordingtoPhocuswrightData,traveldynamicsvaryacrossgeographies:inthesameperiod,theAsiaPacificregion,orAPAC,grewby
5.6%andtheMiddleEastgrewby9.7%.ThemoredevelopedmarketsoftheUnitedStatesandEuropegrewby6.1%and3.3%,
respectively.
Growthinhotelspend
AccordingtoPhocuswrightData,globalhotelspendgrewto$375billionin2015,excludingCanada,LatinAmericaandEasternEurope,
representingaCAGRof3.9%since2010,tobecome35%ofthetotaltravelspend.Ofthis$375billionglobalhotelspend,38%wasinthe
UnitedStates,29%inAPAC,27%inEuropeand6%intheMiddleEast.Hotelshaverespondedtorisingdemandbyincreasingcapacityand
investingintheoverallattractivenessandqualityoftheirhotels.Basedonourresearch,hotelsupplygloballycontainedover22.7million
roomsasofJanuary1,2016,upfrom21.8millionroomsasofJanuary1,2015.Asthesupplygrows,hotelmarketingspendfollowssuitas
hotelsneedtoincreaseconsumerreachtoimproveoccupancyrates,drivinginvestmentinefficientmarketing.
Offlinetoonlineshiftinhoteldistribution
Leisureandbusinesstravelersareincreasinglymovingtheirpurchaseactivityonline.AccordingtotheGlobalOnlineTravelOverview,in
2010,thetotalpercentageofhotelbookingsmadethroughhotelwebsitesandOTAsgloballywas22%,withtheUnitedStateshavingthe
highestpenetrationat31%,followedbyWesternEuropeat21%,APACat18%andtheMiddleEastat7%.AccordingtoPhocuswrightData,
by2015,thesefiguresgrewto33%globally,representinga12.4%CAGR,to36%,35%,29%and25%intheUnitedStates,Europe,APAC
andtheMiddleEast,respectively.Inaddition,thereisaportionofcorporatetravelbeingbookedonline,whichisnotincludedintheonline
penetrationnumbersabove.Thistrendofincreasingonlinepenetrationhasdrivengrowthintheonlinesegmentofthetravelmarket,whichis
estimatedtohavegrownby9.8%from2010to2015,comparedtototaltravelmarketgrowthof4.1%inthesameperiod,accordingto
PhocuswrightData.
Againstthisbackdrop,hotelsthathadtraditionallyusedintegratedofflinebookingplatformssuchasretailtravelagentsorcallcentersto
enablebookingsforleisureandbusinesstravelersareincreasinglymoving
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distributionandassociatedadvertisingspendtoonlinechannels.AccordingtotheGlobalOnlineTravelOverviewandPhocuswrightData,
hotelshaveincreasedtheirbookingsmadethroughtheirownrespectivehotelwebsitesandOTAsfrom$69billionin2010to$125billionin
2015,representinganincreasefrom22%to33%oftotalgrossbookings.AccordingtothePhocuswrightU.S.TravelAdvertisingMarketplace
Report,U.S.hoteladvertisingspend(onlineandoffline)grewwithaCAGRof6.9%between2011and2015,whichisahighergrowthrate
thatanyothertravelsegment.AccordingtoPhocuswrightData,onlinehotelbookingsareexpectedtogrowata10.8%CAGRbetween2015
and2017.
Independenthotelsearchplatformsasanincreasinglyimportanttoolforconsumersandadvertisers
Consumersareincreasinglylookingfortoolstoenablethemtonavigatethroughmultiplehotelbookingoptionssimultaneouslyandcompare
prices.IndependentsearchplatformsthatprovidemetasearchcapabilitiesaggregatefragmentedtraveldataacrosstheInternetintoone
place,resultingintransparencyofprice,availability,qualityandotherhotelattributes.Theseplatformscanofferadvertisersaccesstoalarge
pooloftransactionreadyconsumers,whichencouragesOTAs,hotelchainsandindependenthotelstoadvertiseontheseplatformsforthe
purposeofdrivingbookings.Basedonourresearch,inJune2014,85%ofleisuretravelersstartplanningtheirtravelundecidedonalodging
brand,suitingamultibrandhotelsearchformat.U.S.leisuretravelershaveincreasinglyfavoredmetasearchservices,withusagegrowing
from14%in2011to28%in2013.IntheUnitedStates,travelersaged18to34arealmosttwiceaslikelytousemetasearchservicesthan
those35andolder,accordingtothePhocuswrightConsumerTravelReport.Asthesearchbehaviorofuserscontinuestoshiftonline,driven
inpartbyyounger,technologicallyengagedgenerations,weexpecthotelsearchplatformstocontinuetobecomeincreasinglyimportant.
Increasingusageofmobile
Globalmobiledatatraffichasgrownsubstantiallyinrecentyears,achievinga74%growthratein2015over2014,anditisexpectedtogrow
ata53%CAGRfrom2015to2020,basedonourresearch.Thistrendhasalsoimpactedtheshareofmobiletravelbookings,whichis
expectedtoincreasefrom2015to2017from16%oftotalonlinetravelbookingsto24%intheUnitedStates,17%to24%inEuropeand
24%to37%inAPAC,accordingtotheGlobalOnlineTravelOverview.Basedonourresearch,itisestimatedthatin2016,73%ofAmerican
travelerswilluseamobiledevicetoresearchatrip,ofwhich91%willuseasmartphoneastheirmobiletoolofchoice.Theshifttowards
mobileusageisespeciallystrongamongyoungergenerations,asthisdemographictrendstowardsgreatermobilebasedtravelpurchases.
AccordingtothePhocuswrightConsumerTravelReport,43%ofmillennialsusedasmartphoneand35%usedatabletfortravelshoppingin
theUnitedStatesin2015,while24%ofU.S.travelersaged35yearsormorehaveusedasmartphoneand26%ofthemhaveusedatablet
fortravelshopping.Therisingnumberofbookingsthroughmobilewebsitesandappsallowshotelstoextendtheirservicesthroughoutevery
stageofthetravelexperience,fromprebookingresearchandcomparisontorealtimeserviceandproductsolutionswhiletravelingandafter
checkin,increasingengagementwithconsumersanddrivingadditionalrevenues.
Webelieveincreasingusageofmobiletechnologywillbenefitonlinehotelsearchbecauseofitsabilitytoquicklyandeffectivelysearchand
filterlargevolumesofinformationandcontent,whiledeliveringoutputstoasinglescreen.
Evolvingtravelerbehavior
Travelersareincreasinglyprioritizingexperiences,with71%oftravelersgloballywillingtoexceedtheirallocatedtravelbudgetifthey
discoverinterestingtravelexperiences,accordingtoa2015MillwardBrownstudy.Webelievethechoiceofaccommodationisbecoming
moremeaningfultoconsumersasameanstocustomizetravelexperiences.Travelersarealsostayingdigitallyconnectedduringtheirtrips,
with27%of
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travelersgloballysharingupdatesoftheirtravelsonlinein2015comparedto15%in2013,and40%ofthemsendingpicturescomparedto
35%in2013,accordingtoMillwardBrown.Travelersarebecomingmorespontaneous,with53%oftravelersgloballyplanningtheirholiday
onemonthinadvanceorless,comparedto41%in2013.Inaddition,barrierstotravelaredecreasingasnewinternationallowfareairline
optionshavemadeitmoreaffordabletoflyaroundtheworld.Basedonourresearch,lowcostcarrierscontrolapproximately25%ofthe
marketforairtravelandaregrowingataboveindustryaveragerates.Youngergenerationsaretakingmoretripsonaverage,withmillennials
expectedtotake7.2tripsperyear,comparedtoGenerationXandBabyBoomerseachexpectedtotake6.6tripsperyearin2016,
accordingtoa2015AARPreport.AccordingtothePhocuswrightConsumerTravelReport,millennialsnowrepresentapproximately40%of
U.S.leisuretravelers.
Ourmarketopportunity
Ashoteldiscovery,evaluationandbookingincreasinglymoveonline,travelersandadvertisersfacedistinctchallenges.
Challengesfortravelers
TheInternethasdramaticallyincreasedthequantumofinformationavailableabouthotels,includingamenities,style,reviews,locationand
pictures.Additionally,detailsonpricingandavailabilityarecontinuallyupdatedinornearrealtime.Thisinformationhasempowered
travelers,providingalevelofinsightthatwaspreviouslyunavailable.However,thisinformationisoftendeliveredviamultiple,fragmented
sources,includingOTAs,hotelchains,independenthotels,Internetsearchenginesandotherreviewsites.Also,manywebsites,including
thosethataggregatedisparateinformation,areslow,confusingtonavigate,andmaynotdisplaythebestavailablehotelorpricingfor
travelers.Furthermore,manylocalOTAsandsmallerhotelsonlydisplaytheirinformationinthelocallanguage,whichaddsanadditional
layerofcomplexityfortravelerslookingtofindtheidealhotelinaforeigndestination.Thesedevelopmentscanmakebookingahotela
frustratingexperiencefortravelers.
Challengesforhoteladvertisers
Hoteladvertisersoperateinacompetitivemarketwithdifferenttypesofadvertisershavingspecificneeds.OTAsneedtodrivehighvolumes
oftraffictotheirwebsitestogeneraterevenues,whilehotelchainsandindependenthotelswhooperatehighfixedcostmodelsfocuson
ensuringtheirinventoryisfilled.BothOTAsandhoteladvertisersaspiretoreachatargetedaudienceoftravelerswiththeirmarketing.
Traditionalofflineadvertisingmediums,includingTV,radio,printandoutdoor,focusonreachingabroadaudienceandcanbeanexpensive
mediumforreachingthefewtravelersseekinghotelsinaspecificlocationonspecificdates.
Therearechallengeswithonlineadvertisingaswell.Whilemanyadvertisersspendanincreasingamountoftheirmarketingbudgetson
onlineadvertisingwhereitispossibletoeconomicallyreachaverybroadaudiencethroughawebsite,thefragmentationoftravelersonline
makesitdifficulttoscalecosteffectively.Inaddition,OTAs,smallerhotelchainsandhotelsmaynothavetheresourcestodevelop
sophisticatedwebsitesandasaresult,providealimiteduserexperienceintermsofattractiveness,comprehensivenessofinformationand
easeofbooking.Suchwebsitesoftenonlypublishinformationinlocallanguages,limitingtheirreachtoalocalmarket.
Thetrivagohotelsearchplatform
Webelievethatwearereshapinghoteldiscoveryforourusers,whilechangingthewayhoteladvertisersidentify,engagewithandacquire
travelers.
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Oursearchplatformformsthecoreofouruserexperience.Itcapturesandseekstorefineuserintentandpreferencesand,asofSeptember
30,2016,itprovideduserswithaccesstoapproximately1.3millionhotelsworldwide.Itorganizesalargeamountofinformationfrommultiple
sourcesandgiveseachuserwhatwebelievetobetheoptimalbasistomakeadecision.Wehelpuserstoconvertinitialinterestintoaclear
andspecificbookingintention.
Weenablehoteladvertiserstoadvertiseoffersforeachindividualhotel.ByplacingbidsinourCPCbasedbiddingsystem,eachadvertiser
caninfluencethelikelihoodthattrafficisdriventoitsownplatform.Advertiserscanreachabroadglobalaudiencewhilegeneratingtargeted,
transactionreadyreferrals.
Keybenefitsforusers
Globalaggregationofrealtimehotelsupply
Weaggregatehotelavailabilityfromarangeofadvertisersglobally.Thissupplyiscontinuallyupdatedinornearrealtime,souserscanview
currentavailabilityfromabroadrangeofadvertisers.Webelievetravelersuseourhotelsearchplatformastheirentrypointforhotel
research,confidentthattheyreceivecomprehensivecoverageoftheiroptionstobookahotel.
Tailoredhotelsearchfunction
Oursearchfunctionisdesignedtoenableindividualuserstofindtheiridealhotel.Wepersonalizeresultsbasedonauserssearchterms,
selectedfiltersandotherinteractionswithoursitesandapps.Inaddition,weaggregateandanalyzemultiplesourcesofinformationtobuild
aprofileforeachindividualhotel.Oursearchalgorithms,whicharerefinedbymillionsofsearcheseachday,creatematchesamongstthe
twosetsofinformation.
Transparentpricecomparison
Ouralgorithmselectsthelowestavailablepriceforeachhotelanddisplaysroomtypeswithabroadrangeofpricingoptionsavailablefrom
ouradvertisers.Thisreducestheneedfortravelerstospendtimesearchingacrossmultiplesitesandappstoconfirmthelowestavailable
rate.InthetwelvemonthsendedSeptember30,2016,comparingacrossallofourlocalizedwebsitesandapps,weprovidedarangeof
pricesperhotelwiththecheapestadvertiserofferingapriceonaverage19%lowerthanthemostexpensiveadvertiser.
Deepcontentandeasytouseinformationonhotels
Weobtainhotelinformationfrommanysources,suchastravelbookingsites,hotelwebsites,reviewsites,directlyfromhotelsandinternal
resources.Thisinformationincludespictures,descriptions,reviews,ratings,amenitiesandroomtypes.Wesynthesizeandenrichthis
information.Forexample,ourratingscoredistillsreviewinformationfrommultiplesourcesintoasingleeasytousescoreforthetraveler.
Keybenefitsforadvertisers
Broadtravelerreach
Weofferadvertisersahighlyscalablechanneloftravelers,givenourbroadpresenceacrossmultiplegeographiesandlanguages.
Additionally,formanytravelers,webelievewearetheentrypointtotheirhotelsearch,enablingadvertiserstoengagewithpotentialnew
customers.
Deliveryoftransactionreadyreferrals
Weprovideadvertiserswithmotivatedtravelerswhohaveproactivelyexpressedtheirspecificintentviaoursearchplatform.Duetothe
breadthofhotelinformationweprovideandourpersonalizedmatchingalgorithms,
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travelersreferredbytrivagooftenalreadyhaveacomprehensiveunderstandingofthehotelanditsvaluepropositionforthem,whichwe
believemakesthemmorelikelytocompleteabookingontheadvertiserssite.
Marketdriven,referralbasedpricingstructure
Webelieveouradvertisersvaluetheflexibilitytocontrolthepricingandvolumeofreferralstheygeneratefromourmarketplace.The
transparencyofourmodelmakesiteasyforadvertiserstoevaluatetheperformanceoftheirspendandinfluencetheirownreturnon
investment.
Improveadvertiserscompetitiveness
Hoteladvertisershavevaryinglevelsofexperience,scaleandresourcestodedicatetotheirmarketingefforts.Weprovideouradvertisers
withadvice,actionabledatainsightsandadvertisertoolstohelpthemoptimizetheirinvestmentonourmarketplacebyimprovingthequality
ofavailablecontentabouttheirhotel.
Ourstrengths
Webelievethatourcompetitiveadvantagesarebasedonthefollowingkeystrengths:
Industryleadingproductanduserexperience
Webelievethatweprovidethemosteffectiveandintuitivehotelsearchplatformfortravelers.Wehaveinvestedinourproductovermany
yearsandcontinuetospendsignificanttimeandresourcesonfurtherrefiningourwebsitesandappstoprovidethebestpossibleuser
experience.Weregularlytestandrefinemultipleaspectsofourwebsitesandapps,believingthatincrementalenhancementsovertimeadd
uptoimprovementsinoveralluserexperience.Thisapproachbenefitsbothourusersandadvertisersbyenablingmoresatisfyingand
effectiveengagementwithourplatform.
Significantscale
Wehaveachievedsignificantscale,withapproximately1.3millionhotelsavailableonourplatformasofSeptember30,2016,supportedby
55localizedversionsofourwebsitesandappsservedin33languages.Additionally,webelieveweworkwithalmostallsignificant
international,regionalandlocalOTAs.Ourbusinessbenefitsfromourengagedandoftenlongestablishedrelationshipswithlocal
advertisersglobally.InthetwelvemonthsendedSeptember30,2016,wehad487millionqualifiedreferrals.Bringingtogetheradvertisers
andusersatthisscalecreatespowerfulnetworkeffects,improvingthequalityofthetrivagoexperienceforallparties.
Powerfuldataandanalytics
Wecapturelargeamountsofdataacrossourplatform,includingtravelerdata,advertiserdata,publiclyavailablecontentanddataonhow
travelersandadvertisersinteractwithourplatform.Wetakeadatadriven,testingbasedapproach,whereweuseourproprietarytoolsand
processestomeasureandoptimizeendtoendperformanceofourplatform.Ourabilitytoanalyzeandrapidlyrespondtothisdataenables
ustocontinuouslyimproveourplatform.
Highbrandrecognitionanduserloyalty
Wehavecontinuouslyinvestedinourbrandovermanyyearsandhaveachievedstrongbrandrecognitionglobally.Ourbranddrivestrafficto
oursitebyunderpinningtheconnectiontravelersmakebetweentrivagoandhotelsearch.Thisdirectlysupportsourpositionasusersentry
pointtohoteldiscovery,withmorethan50%ofourtrafficcomingfrombrandedsourcesin2015andthefirstninemonthsof2016.
Additionally,webelievethatourbrandtrafficimprovestheeffectivenessofourmarketplacetoadvertisers,asourinternaldataindicatesthat
theconversionratesofourreferralstobookingsarehigherfrombrandedthannonbrandedtrafficfortheadvertisersincludedinresearchwe
conducted.Suchresearchshowsthatouraidedbrand
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awarenessinAugust2016inItaly,Spain,Germany,theUnitedKingdom,France,AustraliaandtheUnitedStateswas92%,89%,86%,80%,
79%,77%and63%,respectively.
Scalablebusinessmodel
Wehaveascalablebusinessmodelthatenablesustogrowrapidlyandefficiently.Wecanexpandwithincurrentmarketsaswellasintonew
markets,whileincurringlimitedincrementalinvestmentininfrastructure,benefittinginpartfromourexistingscaleandacommonglobal
platform.
Employeesandculture
Webelievethatourentrepreneurialcultureandflatorganizationalstructurearekeyingredientsinoursuccess.Thesehavebeendesignedto
reflectthefastmovingtechnologyspaceinwhichweoperate,aswellasourdeterminationtoremainpioneersinourfield.Ouremployees
actasentrepreneursintheirareasofresponsibility,continuouslystrivingforinnovationandimprovement.Weencourageouremployeesto
regularlytakeonnewchallengeswithinthecompanytobroadentheirperspectives,acceleratetheirlearning,ensureahighlevelof
motivationandfostercommunication.Culturalfitisakeypartofourrecruitingprocess,asweseektohireindividualscomfortableworkingin
aflatorganizationalstructurethatrewardsthosewhotakeinitiativeandcontinuallyseektounderstandandlearn,takerisksandinnovate.
Weregardfailureasanopportunitytolearnandinformimprovedapproachesgoingforward.
Ourstrategy
Ourstrategyisshapedbyourmissiontobethetravelersfirstandindependentsourceofinformationforfindingtheidealhotelat
thelowestrate.Werunourbusinessandsetourprioritiesandstrategyaccordingtoourmission.
...travelers...
Wedesignedourhotelsearchplatformtobeusefulforeverytravelerwitheveryreasontotravel.Wefocusoncontinuingtooptimizeour
websitesandapps,ensuringtheirintuitivenavigationandhighperformance.
...first...
Wewanttobethestartingpointfortravelersseekingtodiscovertheiridealhotelatthelowestrate.Webelieveweprovideavaluableservice
totravelers,allowingthemtoquicklyandeffectivelynavigateacrowdedhotelbookingecosystem.Weintendtobeeachtravelersfirst
sourceofhotelinformationbygrowingourengagementwithtravelersthroughcontinuousinvestmentinbothonlineandofflinemarketingto
buildourbrandefficientlyanddrivestronguseracquisitionandretention.Weplantocontinueenhancingourmobileofferingsanduser
engagementonmobiledevices,therebyfurtherincreasingaccessfortravelerstoourservicesanytimeandanywhere.
...andindependent...
Webelievewehavecreatedahotelsearchplatformthatisfairandtransparentforusers,offeringthemapowerfultooltoeasilyaccess
informationinthecomplexhotelmarket.Weprovideuserstheinformationsotheycanindependentlydecidewheretostay.
...sourceofinformation...
Wefocusonprovidinginformationtoourusersratherthansellingthemproductsorservices.Wesupporttravelerssearchesbyaggregating
hotelinformationfromacrosstheInternetanddisplayingitinasimple,easytonavigateformat.Wealsointendtocontinuegrowingour
numberofdirectrelationshipswithhotels,therebyincreasingthevolumeandqualityofinformationwecanprovidetotravelers.Webelieve
thatitiscrucialtothesuccessofouruserexperiencethatweprovidecomprehensive,relevantandeasilyaccessibleinformation.
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...findingtheideal...
Webelievethereisanidealhotelforeverytraveler.Weaimtocontinuouslyoptimizeoursearchalgorithmstoconsistentlydeliverhotel
suggestionstoeachofourusersforeachspecificstaysotheycanfindtheiridealhotel.Whilewebelieveweofferabestinclasshotel
searchexperience,weacknowledgethereistheopportunityforfurtherinnovationintheareasofsearchpersonalizationandhotel
categorizationandrating.Weareinvestinginnewtechnologieslikesemanticsearchtocontinuouslyimproveourusersdiscovery
experienceandmayexploreadditionaltechnologyledacquisitionsgoingforward.
...hotel...
Wearefocusedonthehotelsector.Ourmarketplaceandalgorithmsareoptimizedtodisplayandmatchuserswithspecifichotel
characteristics.Asourtechnologyisadvancingandtravelerpreferencesareshifting,weincreasinglycomplementourtraditionalhotel
offeringswithotherformsofaccommodation,suchasvacationrentalsandprivateapartmentsthatarerelevanttoourusers.
...atthelowestrate.
Providingthelowestratetoourusersisatthecoreofwhatwedo.Ourabilitytoprovidepricingtransparencybyidentifyingthelowest
availableratesfromouradvertisersisdriveninpartbythelargenumberofadvertisersonourmarketplace.Aswecontinuebuildingoutour
advertiserbasegloballyandsupportingadvertisersinefficientlyusingourmarketplace,thisshouldhelpprovidetravelerswithconsistently
lowpricesacrossoursupplyofavailablehotels.
Ourproductsandservices
Productsfortravelers
Ourfreetouse,onlinesearchplatformisdesignedtohelptravelersfindtheiridealhotelatthelowestavailableprice.Asahotelsearch
website,usersdonotbookdirectlyonourplatform.Whentheyclickonanofferforahotelroomatacertainprice,theyarereferredtoour
advertiserswebsiteswheretheycancompletetheirbooking.Wemaintainoneofthelargestsearchabledatabasesofhotelsintheworld.As
ofSeptember30,2016,ourdatabaseincludesapproximately1.3millionhotels,gatheredthroughOTAs,hotelchainsandindependent
hotels.
Ourusersinitiallysearchviaatextbasedsearchbarfunction,whichsupportssearchesacrossabroadrangeofcriteria.Thisleadsthrough
toalistingspagethatdisplayssearchresultsandallowsforfurtherrefinementbasedonmorenuancedfilters.Additionally,weenhanceour
usersexperiencebygivingthemthechoicetodisplaytheirsearchresultsinlistingsormapformats.
Initialsearchbarparameters
Location
(City,Region,Country,PointofInterest)
Subsequentsearchfilters
Hotelstars
(1starto5stars)
Popularity
trivagoratings
(Belowaverage,Satisfactory,Good,VeryGood,Excellent)
Pricerange
Checkindate
Checkoutdate
Roomtype
(single,double,family,multiple)
Distancefromlandmarks
Hotelname
Topamenitiesoptions
(Pets,Beach,FreeWiFi,Breakfast,Pool)
Hotelnameoraddress
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Performingasearchshowsauserahotellistingpage.Thispagecontainsbroad,aggregatedinformation,including:
Hotelinformation:Wedisplayinformationsuchashotelname,pictures,amenities,starratinganddistancetoselectedlocation
trivagoratings:WeaggregatemillionsofratingsfromacrosstheInternettocomeupwithourtrivagorating,a100pointscoreanda
relatedtrivagoratingface,fromsadredforbelowaveragetoveryhappygreenforexcellent.Ourratingsprovideasingle,
aggregatedsnapshotprovidingourusersvaluableinsightwhilesavingthemtime
Reviews:Weprovidereviewsfromthirdpartiesinaclearandconciseformatand
Pricecomparison:Weprominentlydisplaythetopdealforahotel,whilealsolistingallotheravailableoffersfromouradvertisersinlist
format,includingroomtypes,amenityandpaymentoptions.
Thedataweshowforeachhotelcombinesaggregatedpubliclyavailableinformation,aswellasinformationsourceddirectlyfromhotelsina
unique,userfriendlyformat.
Ourproductsareaccessibleanytimeandanywhere,onlineandonmobiledevices.Weprovideourservicesthroughmobilewebsitesand
apps.m.trivago.comisourmobileoptimizedwebsiteaccessibleonmobiledevicebrowsers,andourfullfeaturednativemobileappis
availableoniPhone,iPad,AndroidPhoneandAndroidTablet.
Marketingtoolsandservicesforadvertisers
Weprovideadvertiserswithamarketplacethroughwhichtheycanreachalargebaseoftransactionreadytravelers.Ourabilitytocapture
userintentandourCPCbasedbiddingmodelmakeourmarketplaceaneffectivechannelforouradvertisers.Additionally,weworkwithour
advertiserstohelpdefinetheirtargetspendandobjectives,ensuringthattheseareeffectivelycapturedonourmarketplace.
Wealsoofferouradvertisersasuiteofmarketingtoolstohelppromotetheirlistingsonourplatformanddrivetraffictotheirwebsites.The
followingtoolsandservicesprovidetailoredsolutionsforOTAs,hotelchainsandindependenthotelstohelpthemmanagetheirpresenceon
ourmarketplaceandsteertheirinvestmentsaccordingtotheirbudgetandtrafficneeds.Ourtoolsinclude:
trivagoHotelManager,amarketingplatformthatgiveseachhoteliercontroloveritshotelprofile.
trivagoHotelManagerBasic,afreeadministrationtoolspecificallyforhotels,helpingthembuildandmanageauniquehotelprofileon
trivagotoenhancetheirprofile.Thisincludestheabilitytomanagevisualandstaticcontent,includingadjustingcontactdetails,pictures,
amenitiesandservicelistings,aswellasrefiningdescriptions.UsingtheHotelManagertool,eachhotelcanensurethatourmarketplace
accuratelycapturestheirofferings,helpingattractguests.
trivagoHotelManagerPro,whichissoldonaoneyearsubscriptionbasisandallowshotelstoenhancetheirprofilewithmoreadvanced
featuresandfunctionalities.WithHotelManagerPro,hotelscanincreasepromotionwithexclusivenewsabouttheirhotelandprominent
contactdetails,helpingthemstandoutanddrivemorebookings.Furthermore,weprovidehotelierswithadditionalanalyticsaboutwho
searchesforthemaswellasbenchmarkingagainsttheircompetition.
trivagoHotelManagerDirectConnect,whichenablesindependenthotelstopublishtheirwebsiteratesdirectlyontheirprofiles,helping
themtoincreasedirectbookingsandtheirprominenceinourmarketplace.
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Hotelssetamonthlybudget,andwecreateanoptimizedmarketingcampaign,automaticallycalculatingCPCbidsthatarecompetitive
withotheradvertisersandseektoincreasereferrals.Adedicatedteamofmarketingexpertsisavailableviaemailorphonetosupport
hotels.
trivagoIntelligence,amarketingplatformformultipropertymanagementthatenableshotelchainsandOTAstomanagetheirinventoryand
CPCs.
trivagoIntelligence,whichprovidesholisticcontrolforouradvertisersthatwishtocloselymanageandanalyzetheiradvertisingonour
marketplace.Itallowsthemtobidonindividualhotelswithahighdegreeofgranularityandcontrol,providesmetricsandfeedbackon
specificadvertisingcampaignsandoffersadvicetooptimizebiddingstrategyanddriveadditionalreferrals.
AutomatedBidding,whichallowsOTAs,hotelchainsandindependenthotelstobidefficientlyonlistings.Advertisersareabletodecide
thetrafficvolumesorreturnonadvertisinginvestmenttheywishtoreachandthetoolwillautomaticallysetandadjustbidsaccordingto
thetarget.Webelievethisisanespeciallyvaluabletoolforadvertisersthatarelessfamiliarwithonlinebiddingmodels,althoughitisour
beliefthatlarger,moreexperiencedadvertiserswillalsoincreasinglyvaluetheefficiencyAutomatedBiddingprovides.
ExpressBooking,whichisdevelopedtohelpouradvertisersdrivebookingsbyprovidingtheoptionofaneasycheckoutenginewithin
ourmarketplace.Althoughthebookinginformationiscompletedonoursite,theadvertiserprocessespaymentdirectly,confirmsthe
bookingandprovidesanybookingsupport.Wealsoprominentlyfeaturethebrandoftheadvertisertakingthebooking,allowingour
advertiserstocontinuetobuildtheirownbrandwithinourmarketplace.
DirectConnectforChains,whichenableshotelchainstopublishratesfromtheirwebsitedirectlyontheirinventoryusingtheirexisting
CentralReservationSystemandInternetBookingEngine.Thishelpsthemincreasedirectbookingsandtheirprominenceonour
marketplace.HotelchainsthatrundirectconnectcampaignsalsogetaccesstoAutomatedBiddingandExpressBookingtools.
Ourcustomers
Customersthatpaytoadvertiseontrivagoinclude:
OTAs,includinglargeinternationalplayers,aswellassmaller,regionalandlocalOTAs
Hotelchains,includinglargemultinationalhotelchainsandsmallerregionalchains
Independenthotelsand
Industryparticipants,includingmetasearchandcontentproviders.
WegeneratethelargemajorityofourrevenuefromOTAs.Certainbrandsaffiliatedasofthedatehereofwithourmajorityshareholder,
Expedia,includingBrandExpedia,Hotels.com,Orbitz,Travelocity,Hotwire,Wotif,ebookersandVenere,intheaggregate,accountedfor
39%and35%ofourtotalrevenuefortheninemonthsendedSeptember30,2015and2016,respectively.ThePricelineGroupandits
affiliatedbrands,Booking.comand,through2015,Agoda,accountedfor27%and43%ofourtotalrevenuefortheninemonthsended
September30,2015and2016,respectively.
Nearlyallofouragreementswithadvertisers,includingouragreementswithourthreelargestadvertisers,maybeterminatedatwillorupon
threetosevendayspriornoticebyeitherparty.AlthoughthebulkofourrevenuecomesfromthreelargeOTAs,wehavealargenumberof
advertisersonourmarketplace,whichwebelievehelpstolimitdependenceonanyoneadvertiserorgroupofadvertisers.
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Competition
Weoperateinahighlycompetitivemarket.Travelershavearangeofoptionstofindandbookhotelroomsandotheraccommodations,both
offlineandonline.Similarly,OTAs,hotelchainsandindependenthotelsadvertisetheirroomsthroughbothofflineandonlinechannels.While
wefacecompetitionfromofflineandonlinechannels,webelievethatwecompetefavorablyduetoourdifferentiateduserandadvertiser
propositions.
Competitionforusers
Wecompetetoattractuserstoourwebsitesandappstohelpthemresearchandfindhotels.Givenourpositionatthetopoftheonlinehotel
searchfunnel,manycompanieswecompetewitharealsoourcustomers.
Ourprincipalcompetitorsforusersinclude:
Onlinemetasearchandreviewwebsites,suchasKayak,QunarandTripAdvisor
SearchenginessuchasBaidu,Bing,GoogleandYahoo!
IndependenthotelsandhotelchainssuchasAccor,HiltonandMarriott
OTAs,suchasBooking.com,CtripandExpediaand
AlternativeaccommodationproviderssuchasAirbnbandHomeAway.
Competitionforadvertisers
Wecompetewithotheradvertisingchannelsforhoteladvertisersmarketingspend.Theseincludetraditionalofflinemediaandonline
marketingchannels.Intermsofusertraffic,wecompeteonthebasisofthequalityofreferrals,CPCratesandadvertisersimpliedreturnon
investment.WhilewecompetewithOTAs,hotelchainsandindependenthotelsforusertraffic,thesepartiesalsorepresentthekey
contributorstooursupply.Becauseweprimarilyreferouruserstoadvertiserswebsites,wedonotbelievethatwecompetedirectlywith
advertisersforbookings.
Ourprincipalcompetitorsforadvertisersmarketingspendinclude:
Printmedia,suchaslocalnewspapersandmagazines
Othertraditionalmedia,suchasTVandradio
Searchengines,suchasBaidu,Bing,GoogleandYahoo!
Onlinemetasearchandreviewwebsites,suchasKayak,QunarandTripAdvisor
Socialnetworkingservices,suchasFacebookandTwitter
Websitesofferingdisplayadvertising
Emailmarketingsoftwareandtools
Onlinevideochannels,suchasYouTubeand
Mobileappmarketing.
Technologyandinfrastructure
Dataandproprietaryalgorithms
Weprocessalargeamountofuserdatafrompublicsources,usertraffic,advertisersanddirectconnectionsintothedatabasesofover200
advertisersasofSeptember30,2016.Webelieveitiscentraltothesuccessof
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ourbusinessthatweeffectivelycaptureandparsethisdata.Toachievethis,wehavedevelopedproprietaryalgorithmsthatdrivekeyactions
acrossourplatform,includingsearch,listingsandbiddingtools.Wecontinuetoexplorenewwaystocapturerelevantdataandfeedthisinto
ourplatformtofurtherenhancetheexperienceforbothourusersandadvertisers.
Infrastructure
WehostourplatformatfivedifferentlocationsinGermany,theUnitedStates,HongKongandChina,whilealsoselectivelyleveragingcloud
hostedservices,whichwebelieveoffersussecureandscalablestorageatlimitedincrementalexpense.Whilemuchofthedatawereceive
andcaptureisnotsensitive,ourdatacentersarecompliantwiththehighestsecuritystandards.Itisourpolicytostoreseparatelythelimited
amountofsensitivedatathatwedocapture.Whererequired,ourdatacentersarePCIcompliant.Wehavedesignedourwebsites,appsand
infrastructuretobeabletosupporthighvolumedemand.
Software
WedevelopourownsoftwarethroughourteamsbasedinGermany,theNetherlandsandSpain,employingarigorousiterativeapproach.
Thisincludestheproprietaryalgorithmunderlyingoursearchfunction,internalmanagementtools,dataanalyticsandadvertisertools.
Marketing
Webelievethatbuildingandmaintainingthetrivagobrandandclearlyarticulatingourvaluepropositionwilldrivebothtravelersand
advertiserstoourplatform.Wefocusourmarketingteamsandspendtowardsbuildingeffectivemessagingtoabroadaudience.Wetakea
datadriven,testingbasedapproach,whereweuseourproprietarytoolsandprocessestomeasureandoptimizeperformanceendtoend,
startingwiththepretestingofthecreativeandendingwiththeoptimizationofmediaspend.Wehavebuiltinhousetoolsthatcapturedata
andcalculateourreturnoninvestmentonalmosteveryelementofourbrandandperformancemarketing.
Weinvestinbrandmarketinggloballyacrossabroadrangeofmedia,includingTVmarketing,videomarketing(suchasYouTube),radioand
outofhomeadvertising.Theamountandnatureofourmarketingspendvariesacrossourmarkets,dependingonmultiplefactorsincluding
costefficiency,localmediadynamics,sizeofmarketandourexistingbrandpresenceinthatmarket.
Weareactiveinonlineperformancemarketingchannels,continuouslyoptimizingeachadvertisementthroughdedicatedtests.Wealso
generatehotelcontentasameansofengagingwithtravelers,whichisdistributedonlineincludingviasocialmedia.
Sales
Wehavededicatedsalesteamsthatmanagetheprocessofonboardingadvertisers,maintainongoingrelationshipswithover200
advertisersasofSeptember30,2016,workwithadvertiserstoensuretheyareoptimizingtheiroutcomesfromthetrivagoplatformand
provideguidanceonadditionaltoolsandfeaturesthatcouldfurtherenhanceadvertisersexperience.Weseektoprovidetailoredadviceto
eachofouradvertisers,andthushavededicatedsalesteamsforOTAs,hotelchainsandindependenthotels.
WeaimtomaintainclosedialogueswithOTAsandsophisticatedhotelchainstobetterunderstandeachadvertisersspecificneedsand
objectivesinordertooffersolutionstooptimizetheiradvertisingthroughourmarketplace.
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Certainadvertisers,includingsomeindependenthotels,areoftenlessfamiliarwithCPCbiddingmodelsandonlineadvertisingmorebroadly,
soourprocessofrelationshipbuildingcanfollowalongersalescyclethanisthecasetypicallywithOTAs.Thestartingpointforthesesales
processescanbebuildingtheirawarenessoftherelevanceofourmarketplacetotheirbusiness,articulatingtheopportunitiesour
independentplatformoffers,onboardinghotelsbyencouragingthemtoedittheirinformationandprofilesonoursite,upsellingmore
advancedproductstofurtherenhancetheirprofiles,andencouraginghotelstostartbiddingdirectlyonourmarketplace.Thisoftenmulti
stageprocessrequiresoursalesteamtodevelopcloserelationshipswitheachhotel.AsofSeptember30,2016,over220,000hotels
engagedthroughHotelManagerdirectlywithourplatform,ofwhichover25,000subscribedtoHotelManagerPro.
Ouremployeesandculture
AsofSeptember30,2016,wehad1,103fulltimeemployees,1,010ofwhichworkedinGermany,withanaverageageof29.Includingpart
timeemployees,1,183peoplewereemployedbytrivagoasofSeptember30,2016.
Werecruitacrossmultiplecontinentsandareculturallydiverse.AsofSeptember30,2016,approximatelyonethirdofouremployeeswere
Germannationals,withtheremainingtwothirdscomprisedofover50differentnationalities.
Webelievethatourentrepreneurialcorporateculture,flexibleworkinghoursandflatorganizationalstructurearekeyingredientsinour
success.Thesehavebeendesignedtoreflectthefastmovingtechnologyspaceinwhichweoperate,aswellasourdeterminationtoremain
pioneersinourfield.Ouremployeesactasentrepreneursintheirareasofresponsibility,continuouslystrivingforinnovationand
improvement.Weencourageouremployeestotakeonnewchallengeswithinthecompanyregularlytobroadentheirperspective,accelerate
theirlearning,ensureahighlevelofmotivationandfostercommunication.Culturalfitisakeypartofourrecruitingprocess,asweseekto
hireindividualscomfortableworkinginaflatorganizationalstructurethatrewardsthosewhotakeinitiativeandcontinuallyseekto
understandandlearn,takerisksandinnovate.Weregardfailureasanopportunitytolearnandinformimprovedapproachesgoingforward.
Internally,wedistillourvaluesintosixcorequalities:
Trust:Wewanttobuildanenvironmentinwhichmutualtrustcandevelopthatgivesemployeestheconfidencetodiscussmatters
openlyandactfreely.
Authenticity:Weaimtobeauthenticandappreciateconstructiveandstraightfeedback.
Entrepreneurialpassion:Webelievethatentrepreneurialpassiondrivesusforwardtocontinuouslytryoutnewandimprovedwaysof
thinkinganddoing.
Powerofproof:Webelievethatdata,usedcorrectly,canleadtoempirical,proofbaseddecisionmakingacrosstheorganization.
Focus:Wefocusourenergyonourmissionofbeingthetravelersfirstandindependentsourceofinformationforfindingtheidealhotel
atthelowestrate.Thismissiondriveswherewespendourtimeandfocus.Webelievethatmultiplesmall,incrementalimprovements
towardsthisgoaladduptolongtermsuccess.
Learning:Weneverstandstillandchoosetoremainopenmindedandinquisitive.Wetrynewideasandcontinuetochallengereceived
wisdom.
Intellectualproperty
Ourintellectualproperty,includingtrademarks,isanimportantcomponentofourbusiness.Werelyonconfidentialityproceduresand
contractualprovisionswithsupplierstoprotectourproprietarytechnologyand
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ourbrands.Inaddition,weenterintoconfidentialityandinventionassignmentagreementswithouremployeesandconsultants.
Wehaveregistereddomainnamesforwebsitesthatweuseinourbusiness,suchaswww.trivago.com,www.trivago.deand
www.trivago.co.uk.Ourregisteredtrademarksinclude:trivago,Room5,Youchanandourtrivagologo.Thesetrademarksareregisteredin
variousjurisdictions.
Governmentregulation
trivagoprovidesdataandinformationtoitsadvertisersandusersandconductsmarketingactivitiesthataresubjecttoconsumerprotection
lawsinjurisdictionsinwhichweoperateregulatingunfairanddeceptivepractices.Forexample,theUnitedStatesandEuropeanUnionare
increasinglyregulatingcertainactivitiesontheInternetandonlinecommerce,includingtheuseofinformationretrievedfromortransmitted
overtheInternetandusergeneratedcontent,areincreasinglyfocusedonensuringuserprivacyandinformationsecurityandlimiting
behavioraltargetingandonlineadvertising,andareimposingneworadditionalrulesregardingthetaxationofInternetproductsand
services,thequalityofproductsandservicesaswellastheliabilityforthirdpartyactivities.Moreover,theapplicabilitytotheInternetof
existinglawsgoverningissuessuchasintellectualpropertyownershipandinfringementisuncertainandevolving.
Inparticular,wearesubjecttoanevolvingsetofdataprivacylaws.AsofMay25,2018,anewEUdataprotectionregimewillbecome
applicablethatprovidesforanumberofchangestotheexistingEUdataprotectionregime,includingimposingstricterrequirementson
companiesthatprocesspersonaldata,stricterinternalprocessesforthetransparencyofprocesseddata,stricterrequirementsoncomputer
safetymeasuresandcontrols,andgreaterrightsofindividualstodemand,e.g.,informationonorthedeletionofprocesseddata.Certain
breachesofthenewregimeimposefinesupto20million,or4%oftheglobalturnoveronagroupbasis,whicheverisgreater.
Manygovernmentalauthoritiesinthemarketsinwhichweoperatearealsoconsideringalternativelegislativeandregulatoryproposalsthat
wouldincreaseregulationonInternetadvertising.Itisimpossibletopredictwhethernewtaxesorregulationswillbeimposedontrivagos
services,andwhetherorhowtrivagomightbeaffected.IncreasedregulationoftheInternetcouldincreasethecostofdoingbusinessor
otherwisemateriallyadverselyaffecttrivagosbusiness,financialconditionorresultsofoperations.
Facilities
OurcorporateheadquartersarelocatedinDsseldorf,Germanywhereweleaseofficespaceof17,761squaremeters,intheaggregate,
underseparateleaseagreementsexpiringbetweenDecember2017and2019.
OnJuly23,2015,weenteredintoaleaseagreementfor25,900squaremetersofofficespaceatanotherlocationinDsseldorf,Germany
foratenyearfixedtermcommencinguponfinalizationoftheconstructionofthefacilities.Weintendtorelocateourcorporateheadquarters
tosuchfacilitiesin2018whenconstructionisexpectedtobecompleted.
Insurance
Wemaintaininsurancepolicies,coverageanddeductiblesaswebelievetobecustomaryforacompanyinourindustry,aswellasdirector
andofficerliabilityinsurance.Weperiodicallyreviewourcoverageforadequacyinlightoftheriskswefaceasabusinessandasbusiness
conditionschange.
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Legalproceedings
Fromtimetotime,weandoursubsidiariesmaybeinvolvedinvariousclaimsandlegalproceedingsrelatingtoclaimsarisingoutofour
operations.
Wearenotcurrentlyapartytoanymateriallegalproceedings(includinganysuchproceedingsthatarependingorthreatenedofwhichwe
areaware).
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Management
Belowisasummaryofrelevantinformationconcerningourmanagementboardandsupervisoryboardaswellasabriefsummaryofcertain
significantprovisionsofDutchcorporatelaw,thearticlesofassociationthatwillbeineffectuponthecompletionofthisofferingandthe
DCGC.PleaseseealsoDescriptionofsharecapitalandarticlesofassociation.
Managementboardandsupervisoryboardmembers
Thefollowingtablespresentinformationaboutourmanagementboardmembersandthepersonsexpectedtocomposeoursupervisory
boardincludingtheiragesandpositionasofthedateofcompletionofthisoffering(agesaregivenasofthedateofthisprospectus).All
managingdirectorsandcertainofthesupervisoryboardmemberswereappointedtothemanagementboardandthesupervisoryboard,
respectively,in2016,anditisexpectedthatalloftheothermembersofoursupervisoryboardlistedhereinwillbeappointedtothe
supervisoryboardsubjecttotheconsummationofthisoffering.Thecurrentbusinessaddressesforthemembersofourmanagementand
supervisoryboardsisc/otrivagoN.V.,BennigsenPlatz1,40474Dsseldorf,Germany.
Managementboard
Thefollowingpersonsarethemembersofourmanagementboard.
Name
Age
AxelHefer
39
ManagingDirectorforFinance,LegalandInternational(chieffinancialofficer)
AndrejLehnert
47
ManagingDirectorforMarketingandBusinessIntelligence
RolfSchrmgens
40
ManagingDirectorforProduct,PeopleandCulture(chiefexecutiveofficer)
MalteSiewert
43
ManagingDirectorforMarketplace
JohannesThomas
29
ManagingDirectorforAdvertiserRelationsandBusinessOperationsandStrategy
PeterVinnemeier
42
ManagingDirectorforTechnology
Position
Thefollowingparagraphssetforthbiographicalinformationregardingourmanagementboardmembers:
AxelHeferwasappointedasamanagingdirectorofthecompanyin2016,andhasservedasamanagingdirectoroftrivagoGmbHsince
2016.PriortojoiningtrivagoGmbH,Mr.HeferwasCFOandCOOofHome24AG,anonlinehomefurnitureanddecorcompany,and
managingdirectorofOneEquityPartners,thePrivateEquityDivisionofJ.P.MorganChase.Mr.Heferholdsadiplomainmanagementfrom
LeipzigGraduateSchoolofManagement(HHL)andanM.B.A.fromINSEAD.
AndrejLehnertwasappointedasamanagingdirectorofthecompanyin2016,andhasservedasamanagingdirectoroftrivagoGmbH
sinceMay2015.PriortojoiningtrivagoGmbHin2011,Mr.LehnertledhisownInternetventurefrom2008to2011,afterhavingbeenwith
theWilliamWrigleyJr.Companyfrom2001to2008,lastlyintheroleofDirector,GlobalMarketIntelligence.Mr.Lehnertholdsadegreeof
businessadministrationfromUniversityErlangenNuremberg.
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RolfSchrmgenswasappointedasamanagingdirectorofthecompanyin2016,andhasservedasamanagingdirectoroftrivagoGmbH
since2005.PriortojoiningtrivagoGmbH,Mr.SchrmgenswasfounderandVPatciao.com,aconsumerreviewwebsite,from1999to2001.
Mr.SchrmgensholdsadiplomainmanagementfromLeipzigGraduateSchoolofManagement(HHL).
MalteSiewertwasappointedasamanagingdirectorofthecompanyin2016,andhasservedasamanagingdirectoroftrivagoGmbHsince
2006.PriortojoiningtrivagoGmbH,Mr.SiewertwasaninvestmentbankeratHSBCTrinkausundBurkhardtfrom2001until2005andMerrill
Lynchin2006.Mr.SiewertholdsadiplomainmanagementfromLeipzigGraduateSchoolofManagement(HHL).
JohannesThomaswasappointedasamanagingdirectorofthecompanyin2016,andjoinedthecompanyin2011asGlobalHeadofSEM
andhasservedasamanagingdirectorsinceJune2015.BeforejoiningtrivagoGmbH,Mr.ThomasworkedasaMarketingExecutiveat
isango!(TUItoday),awebsiteforbookingtravelexperiencesfrom2009to2010.Helaterfoundedhisowncompany,whichoperatedtravel
sitesinGermany,ItalyandSpain.
PeterVinnemeierwasappointedasamanagingdirectorofthecompanyin2016,andhasservedasamanagingdirectoroftrivagoGmbH
since2005.PriortojoiningtrivagoGmbH,Mr.VinnemeierwasfounderandVPTechnologyatciao.com.Mr.Vinnemeierholdsadiplomain
managementfromLeipzigGraduateSchoolofManagement(HHL).
Supervisoryboard
Thefollowingpersonsareexpectedtobethemembersofoursupervisoryboarduponcompletionofthisoffering.
Name
MiekeS.DeSchepper
PeterM.Kern
DaraKhosrowshahi
FrdricMazzella
MarkD.Okerstrom
Niklasstberg
DavidSchneider
Age
41
49
47
40
43
36
34
ItisanticipatedthatpursuanttotheAmendedandRestatedShareholdersAgreement,Mrs.DeSchepperandMessrs.Kern,Khosrowshahi
andOkerstromwillbeselectedtoserveassupervisoryboardmembersbyExpediaandMessrs.Mazzella,stberg,andSchneiderwillbe
selectedtoserveassupervisoryboardmembersbytheFounders.
Thefollowingisabriefsummaryofthebusinessexperienceofthepersonsweanticipatewillbeoursupervisoryboardmembers.
MiekeS.DeSchepperhasservedasVicePresident,AsiaPacificMarketManagementatExpediaLodgingPartnerServices,asubsidiaryof
Expedia,Inc.since2015.PriortojoiningExpedia,Mrs.DeSchepperservedinvariousrolesatPhilipsElectronicsfrom2005to2014,
includingasCountryManager,Singapore,Brunei,MyanmarandMongoliaatPhilipsLightingfrom2012to2014asAsiaPacificHeadof
PhilipsConsumerMarketing&Sales,overseeingChina,India,ASEANandPacific,from2009to2012andasGlobalDirectorofConsumer
MarketingandProductDevelopmentwithintheHomeTheaterandDVDbusinessinSingaporefrom
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2007to2009.PriortoherserviceatPhilips,Mrs.DeSchepperwasaconsultantatMcKinsey&Companyfrom2002to2004.Mrs.De
SchepperhasanM.B.A.fromINSEADandaMastersofScienceinIndustrialDesignEngineeringfromDelftUniversityofTechnology.
PeterM.KernhasbeenadirectorofExpediasincecompletionoftheIAC/Expediaspinoff.Mr.KernisaManagingPartnerofInterMedia
Partners,LP,aprivateequityfirm.PriortojoiningInterMedia,Mr.KernwasSeniorManagingDirectorandPrincipalofAlpineCapitalLLC.
PriortoAlpineCapital,Mr.KernfoundedGeminiAssociatesin1996andservedasPresidentfromitsinceptionthroughitsmergerwith
AlpineCapitalin2001.PriortofoundingGeminiAssociates,Mr.KernwasattheHomeShoppingNetworkandWhittleCommunications.
SinceApril2013,Mr.KernhasservedasChairmanoftheBoardofDirectorsofHemisphereMediaGroup,Inc.,apubliclytradedSpanish
languagemediacompany.Mr.KernisontheBoardofDirectorsofTribuneMediaCompany.Mr.Kernalsoservesontheboardsofanumber
ofprivatecompanies,includingLuxuryRetreatsInternationalHoldings,Inc.andTVSquaredLimited.Mr.KernholdsaB.S.degreefromthe
WhartonSchoolattheUniversityofPennsylvania.
DaraKhosrowshahihasbeenadirectorandtheChiefExecutiveOfficerofExpediasincecompletionoftheIAC/Expediaspinoff.Mr.
KhosrowshahiservedasdirectorofTripAdvisor,Inc.,fromtheTripAdvisorspinoffuntilFebruary2013.Mr.Khosrowshahiservedasthe
ChiefExecutiveOfficerofIACTravel,adivisionofIAC,fromJanuary2005totheIAC/Expediaspinoffdate.PriortohistenureasChief
ExecutiveOfficerofIACTravel,Mr.KhosrowshahiservedasExecutiveVicePresidentandChiefFinancialOfficerofIACfromJanuary2002
toJanuary2005.Mr.KhosrowshahiservedasIACsExecutiveVicePresident,OperationsandStrategicPlanning,fromJuly2000toJanuary
2002andasPresident,USANetworksInteractive,adivisionofIAC,from1999to2000.Mr.KhosrowshahijoinedIACin1998asVice
PresidentofStrategicPlanningandwaspromotedtoSeniorVicePresidentin1999.Mr.KhosrowshahiworkedatAllen&CompanyLLCfrom
1991to1998,whereheservedasVicePresidentfrom1995to1998.Mr.KhosrowshahiiscurrentlyamemberoftheBoardsofDirectorsof
FanaticsInc.andTheNewYorkTimesCompany.
FrdricMazzellafoundedandhasservedastheExecutiveChairmanofComutaS.A.(BlaBlaCar)since2006andwasChiefExecutive
Officerfrom2006to2016.Mr.MazzellaholdsanM.B.A.fromINSEAD,aMastersdegreeincomputersciencefromStanfordUniversityand
aMastersdegreeinphysicsfromcoleNormaleSuprieure.
MarkD.OkerstromhasservedasExpediasChiefFinancialOfficerandExecutiveVicePresidentofOperationssinceOctober2014,andas
ChiefFinancialOfficerandExecutiveVicePresidentfromSeptember2011untilOctober2014,andSecretaryfromOctober2011untilApril
2012.HepreviouslyservedasSeniorVicePresidentofCorporateDevelopmentofExpediasinceFebruary2009.HavingjoinedExpediain
October2006,Mr.OkerstromhadalsopreviouslyservedasVicePresident,CorporateDevelopmentuntilFebruary2009andasSenior
Director,CorporateDevelopmentuntilFebruary2008.PriortojoiningExpedia,Mr.OkerstromwasaconsultantwithBain&Companyin
BostonandSanFrancisco,andworkedwithUBSInvestmentBankinLondon.Priortothat,Mr.Okerstrompracticedasanattorneywiththe
globallawfirmofFreshfieldsBruckhausDeringerinLondon.Mr.OkerstromholdsanM.B.A.fromHarvardBusinessSchoolandalaw
degreefromtheUniversityofBritishColumbia.
Niklasstberghasbeenthecofounder,ChiefExecutiveOfficerandadirectorofDeliveryHeroHoldingGmbHsinceMay2011.Mr.
stbergalsoservesasadirectorofOnlinePizzaNordenAB.Mr.stbergholdsaMastersdegreefromtheRoyalInstituteofTechnologyin
Stockholm,Sweden.
DavidSchneiderhasservedasadirectorofZalandoSEsince2008.Mr.Schneideralsoservesasadirectorandlimitedpartnerofseveral
privatecompanies,includingzLabelsGmbH,LaPlataGmbH,KiefholzstraeImmobilienGmbH&Co.KG,HamburgerPlatzImmobilien
GmbH&Co.KGandAnatwineLtd.Mr.SchneiderholdsanM.B.A.fromWHUOttoBeisheimSchoolofManagementinVallendar,Germany.
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Boardstructureafterthisoffering
Atthetimeofcompletionofthisoffering,wewillhaveatwotierboardstructureconsistingofourmanagementboard(bestuur)anda
separatesupervisoryboard(raadvancommissarissen).Eachmanagementboardandsupervisoryboardmemberwilloweadutytousto
properlyperformthedutiesassignedtohimorherandtoactinourcorporateinterest.UnderDutchlaw,thecorporateinterestextendstothe
interestsofallcorporatestakeholders,suchasshareholders,creditors,employees,customersandsuppliers.
Managementboard
Ourmanagementboardwillberesponsibleforthedaytodaymanagementofourcompany,subjecttocertainlimitationsassetoutinthe
articlesofassociationandtheinternalrulesofourmanagementboard(whichwewillrefertoastheManagementBoardRules),andforour
strategy,policyandoperationssubjecttotheAmendedandRestatedShareholdersAgreementandunderthesupervisionofoursupervisory
board.
Ourmanagementboardisrequiredtokeepoursupervisoryboardinformed,andtoconsultwithoursupervisoryboard,onimportantmatters
andtosubmitcertainimportantdecisionstooursupervisoryboardforitsapprovalassetoutbelow.Exceptas(i)agreedinourannual
businessplan,whichissubjecttotheapprovalofoursupervisoryboard,or(ii)reasonablyrequiredinordertoconsummatethisofferingonce
approvedbyourgeneralmeetingofshareholders,priortoenteringintothefollowingtransactionsormakingthefollowingdecisionswith
respecttothecompanyoranysubsidiary,ourmanagementboardshallobtainthepriorconsentofthesupervisoryboard:
1.
sale,transfer,lease(aslessororinrespectofrealproperty)orotherdispositionofassets(includingequityinterestsina
Subsidiary)otherthansuchsales,transfers,leasesorotherdispositionswithavalueforaccountingpurposes(i)lessthan
$1,000,000,or(ii)between$1,000,000and$10,000,000excepttotheextentpriornoticeisprovidedtoExpedia,Inc.andsuch
sale,transfer,leaseorotherdispositionwouldbepermittedunderExpedia,Inc.screditfacilitiesoranymergerof,orsaleofallor
substantiallyalloftheassetsof,anysubsidiary(excepttotheextentpriornoticeisprovidedtoExpedia,Inc.andsuchmergeror
saleispermittedunderExpedia,Inc.screditfacilities)
2.
liquidatingordissolvingthecompanyoranysubsidiary
3.
grantingloans,paymentguarantees(Brgschaften),indemnities,orincurringotherliabilitiestothirdpartiesoutsidetheordinary
courseofbusinessinexcessof10,000,000
4.
takingoutloans,borrowingsorotherdebt(orprovidinganyguaranteeofsuchobligationsofanyotherpersonorentity)or
grantinganyliensotherthanlienssecuringtheforegoing,whichpermitteddebtandliensatanytimeoutstandingexceed
25,000,000
5.
enteringintojointventure,partnershipand/orsimilaragreementswhichcannotbeterminatedwithoutpenaltywithin(i)three
yearsandwhichcouldresultinthecompanyoranysubsidiarybeingliablefortheobligationsofathirdparty,(ii)fiveyears,or(iii)
agreementspursuanttoSection7.1(h)oftheAmendedandRestatedShareholdersAgreement
6.
enteringintononcompeteorexclusivityagreementsorotheragreementsthatrestrictthefreedomofthebusinessandwhich
agreementsareterminablelaterthantwoyearsafterhavingbeenenteredinto
7.
enteringintoagreements(i)whichcannotbeterminatedwithoutpenaltywithin(a)threeyearsandinvolvingannualexpenditures
inexcessof10,000,000or(b)fiveyears,or(ii)forannualexpendituresinexcessof15,000,000,savethatthethresholdfor
expendituresforbrandmarketingshallbe50,000,000
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8.
enteringintoagreementsunderwhichweoranysubsidiarybindsorpurportstobindanyofourshareholdersorourshareholders
affiliates(otherthanoursubsidiaries)ortocausesuchshareholdersoraffiliatestotakeorforbearfromtakingaction
9.
enteringinto,amendingorterminatingagreementsbetweenus(oranysubsidiary)andanymanagingdirectorofthecompanyor
anysubsidiary,anycompaniesaffiliatedwithsuchmanagingdirector,orthirdpartiesrepresentedbysuchmanagingdirector
10.
enteringintooramendinganyagreementsorotherarrangementswithanythirdpartythatrestrictinanyfashiontheabilityofthe
company(oranysubsidiary),whichabilityshallbesubjecttothetermsoftheManagementBoardRules(a)topaydividendsor
otherdistributionswithrespecttoanysharesinthecapitalofthecompany(oranysubsidiary)or(b)tomakeorrepayloansor
advancesto,orguaranteedebtof,anyofthecompanysshareholdersorsuchshareholderssubsidiaries
11.
enteringinto,amendingorterminatingdominationagreements(Beherrschungsvertrge),profitandlosspoolingagreements
(Gewinnabfhrungsvertrge),businessleasingcontracts(Unternehmenspachtvertrge)ortaxunits(Organschaften)
12.
enteringintoanytransactionwithanyaffiliateorshareholderofthecompanywhichisoutsidetheordinarycourseofbusinessand
notatarmslengthterms
13.
issuingsharesinthecapitalofthecompanyoranysubsidiary(includingphantomstockandprofitparticipationrights)orgranting
options(includingphantomoptions)orsubscriptionrightsforsharesofthecompanyoranysubsidiary,exceptpursuanttothe
companys2016Plan(asdefinedbelow),anysuccessorincentiveplan,andanypredecessorphantomoptionandprofitsharing
bonusagreementsinexistenceasofthedatehereoforamendedpursuanttoformsofamendmentapprovedbythegeneral
meetingofshareholdersofthecompany,ineachcaseasamended,supplementedorotherwisemodifiedfromtimetotime,which
werefertoastheIncentivePlan
14.
sharerepurchasesbythecompanyoranysubsidiary(otherthaninconnectionwithconversionofClassBsharesintoClassA
shares)
15.
amendments,modificationsorwaiversto,ortheexerciseofanyrightsunder,anystockoption,phantomoptionorsimilarprogram
ofthecompanyoranysubsidiary,excepttotheextentprovidedintheIncentivePlan
16.
makingchangestoregulatoryortaxstatusorclassificationofthecompanyoranysubsidiary
17.
changeofmaterialaccountingstandardsnotrequiredbyapplicablelaworDutchorU.S.GAAPpolicy
18.
enteringinto,amendingorterminatingemploymentcontractswithfoundingmanagingdirectors,thechiefexecutiveofficerofthe
companyorthechieffinancialofficerofthecompany
19.
enteringintoanycollectivebargainingagreements(Tarifvertrge)and
20.
initiatingorsettlingmateriallitigationinexcessof1,000,000.
Themanagementboardshall,induecourseatleast30daysbeforetheendofeachfiscalyearofthecompany,prepareandsubmittothe
supervisoryboardanannualbusinessplanforthefollowingfiscalyear.Theannualbusinessplanshallbecomeeffectiveupontheapproval
ofthesupervisoryboard,andtheannualbusinessplanmaybeamendedbythemanagementboardbyaquarterlyplanwiththeconsentof
thesupervisoryboard.Theannualbusinessplanwilladdress,inreasonabledetail,anyanticipatedtransactionsofthetypedescribedinitem
1above.Thefiscalyearofthecompanyshallbethecalendaryear.
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Ifatthebeginningofafiscalyearnonewannualbusinessplanisineffectbecausethesupervisoryboarddidnotapprovetheannual
businessplansubmittedbythemanagementboardorthemanagementboarddidnotsubmitanannualbusinessplanasandwhenrequired
hereunder,theannualbusinessplanforthepreviousbusinessyearshallstayineffectuntilsuchtimewhenthesupervisoryboardapproves
anewannualbusinessplanfortherunningfiscalyear,providedthatthetargetfiguresforrevenueandadjustedEBITDAshallincreaseby
15%tothepreviousannualbusinessplanandexpenseitemsshallbeadjustedaccordingly.
Ourmanagementboardwillbeinitiallycomprisedofsixmembers.Ourmanagementboardmembershavebeenappointedpursuanttoour
deedofincorporation.Eachmanagementboardmembershallhaveatermofofficeofoneyear.Afterexpirationofthisterm,management
boardmembersmaybereappointed.ThecompositionofourmanagementboardwillbesubjecttotherightsoftheFoundersandExpedia
undertheAmendedandRestatedShareholdersAgreement.
Underourarticlesofassociation,thesupervisoryboardmayelectonemanagementboardmembertobethechiefexecutiveofficerand
anothermanagementboardmembertobethechieffinancialofficersubjecttothetermsoftheAmendedandRestatedShareholders
Agreement.ThesupervisoryboardmayrevokethetitlechiefexecutiveofficerorchieffinancialofficersubjecttothetermsoftheAmended
andRestatedShareholdersAgreement,providedthatsuchmanagementboardmembershallsubsequentlycontinuehistermofofficeasa
managementboardmemberwithouthavingthetitleofchiefexecutiveofficerorchieffinancialofficer,respectively.Initially,Mr.Schrmgens
willserveaschiefexecutiveofficerandMr.Heferwillserveaschieffinancialofficer.
Followingthecompletionofthisoffering,managementboardmemberswillbeappointedbyourgeneralmeetingofshareholdersuponthe
bindingnominationbythesupervisoryboard.UnderDutchlaw,amanagementboardmembermay,subjecttocompliancewithcertainDutch
statutoryprocedures,beremovedwithorwithoutcausebyaresolutionpassedbyamajorityofatleastatwothirdsofthevotescastby
thosepresentinpersonorbyproxyatameetingandwhoareentitledtovote,providedsuchmajorityrepresentsmorethanhalfoftheissued
sharecapital,unlesstheproposalwasmadebythesupervisoryboardinwhichcaseasimplemajorityofthevotescastissufficient.
Supervisoryboard
Oursupervisoryboardwillberesponsibleforsupervisingtheconductofandprovidingadvicetoourmanagementboardandforsupervising
ourbusinessgenerally,subjecttoourarticlesofassociation,theAmendedandRestatedShareholdersAgreementandtheinternalrulesof
oursupervisoryboard(whichwewillrefertoasSupervisoryBoardRules).Oursupervisoryboardwillalsohavetheauthorityto,atitsown
initiative,provideourmanagementboardwithadviceandmayrequestanyinformationfromourmanagementboardthatitdeems
appropriate.Inperformingitsduties,oursupervisoryboardwillberequiredtotakeintoaccounttheinterestsofourbusinessasawhole.
Asofthecompletionofthisoffering,oursupervisoryboardwillinitiallybecomprisedofsevenmembers,atleastfourofwhomwillnotbe
citizensorresidentsoftheUnitedStates.Oursupervisoryboardmemberswillbeappointedbyourgeneralmeetingofshareholdersin
accordancewiththearticlesofassociationpriortotheconsummationofthisoffering.PursuanttotheAmendedandRestatedShareholders
Agreement,foursupervisoryboardmemberswillbeselectedbyExpediaandthreesupervisoryboardmemberswillbeselectedbythe
FoundersExpediaandtheFounderswillconsultoneanotherontheirrespectiveselections.Eachsupervisoryboardmemberwillbe
appointedforatermofthreeyears.
Followingthecompletionofthisoffering,supervisoryboardmemberswillbeappointedbythegeneralmeetingofshareholdersuponthe
bindingnominationbyoursupervisoryboard.PursuanttotheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounders
haveagreedthatanynewsupervisoryboardmemberwill
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beproposedfornominationbyeitherExpediaortheFoundersasapplicable,dependentonwhichsupervisoryboardmemberresigns,isnot
reappointedto,orisremovedfromthesupervisoryboard.ExpediaandtheFoundershaveagreedtoconsultoneanotherontheirrespective
proposals.Asupervisoryboardmembermay,subjecttocompliancewithcertainDutchstatutoryprocedures,beremovedwithorwithout
causebyashareholderresolutionpassedbyamajorityofatleastatwothirdsofthevotescastbythosepresentinpersonorbyproxyata
meetingandwhoareentitledtovote,providedsuchmajorityrepresentsmorethanhalfoftheissuedsharecapital,unlesstheproposalwas
madebythesupervisoryboardinwhichcaseasimplemajorityofthevotescastissufficient.PursuanttotheAmendedandRestated
ShareholdersAgreement,ExpediaandtheFoundershaveagreedthatExpediamaydesignatethechairmanofthesupervisoryboard,which
chairmanwillbeentitledtocastatiebreakingvote.Initially,Mr.Khosrowshahiisexpectedtobedesignatedaschairmanuponcompletionof
thisoffering.
Supervisoryboardmemberindependence
AsaforeignprivateissuerundertheSECrules,wearenotrequiredtohaveindependentdirectorsonoursupervisoryboard,excepttothe
extentthatourAuditCommitteeisrequiredtoconsistofindependentsupervisoryboardmembers.However,uponthecompletionofthis
offering,oursupervisoryboardwillhavedeterminedthat,undercurrentNASDAQlistingstandardsregardingindependence(whichweare
notcurrentlysubjectto),andtakingintoaccountanyapplicablecommitteestandards,Messrs.Kern,Mazzella,stbergandSchneiderwould
beconsideredindependentsupervisoryboardmembers.
UndertheindependencecriteriaoftheDCGC(whichrequiresthatoursupervisoryboardbecomposedofindependentmembers,exceptfor
nomorethanonememberwhoisnotindependent),Messrs.Kern,Mazzella,stbergandSchneiderwillbeindependentsupervisoryboard
members.
ManagementBoardRulesandSupervisoryBoardRules
Ourmanagementboard,withoursupervisoryboardsapproval,willadopttheManagementBoardRules.PursuanttotheManagement
BoardRules,suchrulesmaybeamendedbyourmanagementboard,subjecttoapprovalbyoursupervisoryboardandthetermsofthe
AmendedandRestatedShareholdersAgreement.PursuanttotheAmendedandRestatedShareholdersAgreement,Expediaandthe
Founderswillagreethat,undercertaincircumstances,resolutionsofoursupervisoryboardtoapprovetheamendmentoftherulesof
proceduresofthemanagementboardthatadverselyaffecttheFoundersrequireconsentofatleastoneoftheFounders.
OursupervisoryboardisexpectedtoadopttheSupervisoryBoardRulesuponitsinstallation.PursuanttotheSupervisoryBoardRules,they
maybeamendedbyoursupervisoryboardsubjecttothetermsoftheAmendedandRestatedShareholdersAgreement.
Foreignprivateissuerstatus
Wewillbeaforeignprivateissuer.Asaresult,inaccordancewithNASDAQlistingrequirements,wewillcomplywithhomecountry
governancerequirementsandcertainexemptionsthereunderratherthancomplyingwithNASDAQcorporategovernancerequirements.In
accordancewithDutchlawandgenerallyacceptedbusinesspractices,ourarticlesofassociationdonotprovidequorumrequirements
generallyapplicabletogeneralmeetingsofshareholdersintheUnitedStates.Tothisextent,ourpracticevariesfromtherequirementof
NASDAQListingRule5620(c),whichrequiresanissuertoprovideinitsbylawsforagenerallyapplicablequorum,andthatsuchquorum
maynotbelessthanonethirdoftheoutstandingvotingstock.Althoughwemustprovideshareholderswithanagendaandotherrelevant
documentsforthegeneralmeetingofshareholders,Dutchlawdoesnothavearegulatoryregimeforthesolicitationofproxiesandthe
solicitationofproxiesisnotagenerallyacceptedbusinesspracticeintheNetherlands,thusourpracticewillvaryfromtherequirementof
NASDAQListingRule5620(b).AspermittedbythelistingrequirementsofNASDAQ,wehave
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alsooptedoutoftherequirementsofNASDAQListingRule5605(d),whichrequiresanissuertohaveacompensationcommitteethat,inter
alia,consistsentirelyofindependentdirectors,andNASDAQListingRule5605(e),whichrequiresanissuertohaveindependentdirector
oversightofdirectornominations.Inaddition,wehaveoptedoutofshareholderapprovalrequirementsfortheissuanceofsecuritiesin
connectionwithcertaineventssuchastheacquisitionofstockorassetsofanothercompany,theestablishmentoforamendmentstoequity
basedcompensationplansforemployees,achangeofcontrolofusandcertainprivateplacements.Tothisextent,ourpracticevariesfrom
therequirementsofNASDAQRule5635,whichgenerallyrequiresanissuertoobtainshareholderapprovalfortheissuanceofsecuritiesin
connectionwithsuchevents.Foranoverviewofourcorporategovernanceprinciples,seeDescriptionofsharecapitalandarticlesof
association.
Controlledcompanyexemption
Inadditiontoexemptionsonwhichwemayrelyasaforeignprivateissuer,followingthisoffering,Expediawillbeneficiallyownmorethan
50%ofthevotingpowerofourshareseligibletovoteintheelectionofdirectors,andwemaythereforebeabletorelyoncertainexemptions
asacontrolledcompanyassetforthintheNASDAQrules.Underthesecorporategovernancestandards,acompanyofwhichmorethan
50%ofthevotingpowerisheldbyanindividual,grouporanothercompanyisacontrolledcompanyandmayelecttoutilizeexemptions
fromcertaincorporategovernancestandards,includingtherequirement(1)thatamajorityoftheBoardofDirectorsconsistofindependent
directors,(2)tohaveacompensationcommitteethatiscomposedentirelyofindependentdirectorswithawrittencharteraddressingthe
committeespurposeandresponsibilitiesand(3)thatourdirectornominationsbemade,orrecommendedtothefullBoardofDirectors,by
ourindependentdirectorsorbyanominationscommitteethatiscomposedentirelyofindependentdirectorsandthatweadoptawritten
charterorboardresolutionaddressingthenominationsprocess.Wearecurrentlyutilizingtheseexemptionsandexpecttocontinuetodoso.
Intheeventthatweceasetobeacontrolledcompany,andtotheextentwemaynotrelyonsimilarexemptionsasaforeignprivateissuer,
wewillberequiredtocomplywiththeseprovisionswithintheapplicabletransitionperiodssolongasoursharescontinuetobelistedon
NASDAQ.
Supervisoryboardcommittees
Thesupervisoryboardwillestablishpriortothecompletionofthisoffering,anauditcommitteeandacompensationcommittee.
AuditCommittee
Theauditcommittee,which,uponcompletionofthisoffering,isexpectedtoconsistofMessrs.Kern,stberg,andSchneider,willassistthe
supervisoryboardinoverseeingouraccountingandfinancialreportingprocessesandtheauditsofourfinancialstatements.Pursuanttothe
AmendedandRestatedShareholdersAgreement,ExpediaandtheFoundershaveagreedthatExpediamaydesignatethechairmanofthe
auditcommittee,providedthatsuchchairmanisindependent.Uponcompletionofthisoffering,Mr.Kernwillserveinitiallyaschairmanofthe
committee.Theauditcommitteewillconsistexclusivelyofmembersofoursupervisoryboardwhoarefinanciallyliterate,andMr.Kernis
consideredanauditcommitteefinancialexpertasdefinedbytheSEC.Oursupervisoryboardhasmadeanaffirmativedeterminationthat
eachofourauditcommitteemembersisindependentunderNASDAQrulesandRule10A3oftheExchangeAct.Theauditcommitteewill
begovernedbyacharterthatcomplieswithNASDAQrules.
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Uponcompletionofthisoffering,theauditcommitteewillberesponsiblefor:
recommendingtheappointmentoftheindependentauditortothegeneralmeetingofshareholders
theappointment,compensation,retentionandoversightofanyaccountingfirmengagedforthepurposeofpreparingorissuinganaudit
reportorperformingotherauditservices
preapprovingtheauditservicesandnonauditservicestobeprovidedbyourindependentauditorbeforetheauditorisengagedtorender
suchservices
evaluatingtheindependentauditorsqualifications,performanceandindependence,andpresentingitsconclusionstothefullsupervisory
boardonatleastanannualbasis
reviewinganddiscussingwiththemanagementboardandtheindependentauditorourannualauditedfinancialstatementsandquarterly
financialstatementspriortothefilingoftherespectiveannualandquarterlyreports
reviewingourcompliancewithlawsandregulations,includingmajorlegalandregulatoryinitiativesandalsoreviewinganymajorlitigation
orinvestigationsagainstusthatmayhaveamaterialimpactonourfinancialstatementsand
approvingorratifyinganyrelatedpersontransaction(asdefinedinourrelatedpersontransactionpolicy)inaccordancewithourrelated
persontransactionpolicy.
Theauditcommitteewillmeetasoftenasoneormoremembersoftheauditcommitteedeemnecessary,butinanyeventwillmeetatleast
fourtimesperyear.Theauditcommitteewillmeetatleastonceperyearwithourindependentaccountant,withoutmembersofour
managementboardbeingpresent.
CompensationCommittee
Thecompensationcommittee,which,uponcompletionofthisoffering,isexpectedtoconsistofMrs.DeSchepperandMessrs.
KhosrowshahiandOkerstrom,willassistthesupervisoryboardindeterminingthecompensationofthemanagementboardandthe
supervisoryboard,inaccordancewiththeremunerationpolicythathasbeendeterminedbythegeneralmeetingofshareholders.Upon
completionofthisoffering,Mr.Okerstromwillserveaschairmanofthecommittee.UnderSECandNASDAQrules,thereareheightened
independencestandardsformembersofthecompensationcommittee,includingaprohibitionagainstthereceiptofanycompensationfrom
usotherthanstandardsupervisoryboardmemberfees.Pursuanttoexemptionsfromsuchindependencestandardsasaresultofbeinga
foreignprivateissuer,themembersofourcompensationcommitteemaynotbeindependentundersuchstandards.
Uponthecompletionofthisoffering,thecompensationcommitteewillberesponsiblefor:
identifying,reviewingandapprovingcorporategoalsandobjectivesrelevanttomanagementandsupervisoryboardcompensation
reviewandapproveormakerecommendationsregardingourincentivecompensationandequitybasedplansandarrangements,
reviewanddiscusswithmanagementthecompensationdisclosurestobeincludedinfilingsandsubmissionswiththeSEC.
prepareanannualcompensationcommitteereport.
reportregularlytothesupervisoryboardregardingitsactivities.
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CodeofBusinessConductandEthics
WehaveadoptedaCodeofBusinessConductandEthicswhichcoversabroadrangeofmattersincludingthehandlingofconflictsof
interest,complianceissuesandothercorporatepoliciessuchasequalopportunityandnondiscriminationstandards.
Managementboardmemberservicesagreements
Afterthecompletionofthisoffering,weintendtoenterintoservicesagreementswitheachofthemembersofourmanagementboard.These
agreementswillprovideforbenefitsuponaterminationofservice,andwillcontaincustomaryprovisionsregardingnoncompetition,
nonsolicitation,confidentialityofinformationandassignmentofinventions.
Supervisoryboardmemberservicesagreements
Atorpromptlyfollowingthecompletionofthisoffering,weintendtoenterintoservicesagreementswitheachofthemembersofour
supervisoryboardforanindefiniteperiodoftime,providedthattheagreementswillterminateupondismissal,resignationorexpiryoftermof
office(subjecttoreappointment)ofthesupervisoryboardmemberconcerned.Theseagreementswillprovideforthecompensationawarded
tothesupervisoryboardmembers.
Compensationofmanagementboardandsupervisoryboardmembers
Theaggregatecompensation,includingbenefitsinkind,accruedorpaidtoourmanagementboardmemberswithrespecttotheyearended
December31,2015,forservicesinallcapacitieswas2.2million($2.4million).AsofDecember31,2015,wehavenothingsetasideor
accruedtoprovidepension,retirementorsimilarbenefitstoourmanagementboardmembers.FortheyearendedDecember31,2015,
membersofourmanagementboardweregranted45shareoptions,15ofwhichweregrantedwithastrikepriceof17,953,theremainderof
whichhadastrikepriceof1.00.Thesharessubscribedforunderlyingthegrantsareeligibletoparticipateinprescribedliquidityevents
originallyscheduledtooccurin2016and2018.Inthethirdquarterof2016,amemberofourseniormanagementwasgranted25,500Class
Bshareoptions(25.5ClassAequivalentoptions),7,500ofwhichweregrantedwithaClassAequivalentstrikepriceof1,000.00,the
remainderofwhichhadaClassAequivalentstrikepriceof100,000.00.Thesharessubscribedforunderlyingthegrantsareeligibleto
participateintheprescribedliquidityeventtooccurin2022.SeeManagementsdiscussionandanalysisoffinancialconditionandresultsof
operationsSharebasedcompensationforadditionalinformation.
Existingoptionawards
Wehaveoutstandingstockoptionsgrantedunderarrangementsnegotiatedinconnectionwiththecontrollinginterestacquisitionoftrivago
byExpediaLodgingPartnerServicesS.r.l.,anaffiliateofExpedia,Inc.in2013.SeeManagementsdiscussionandanalysisoffinancial
conditionandresultsofoperationsSharebasedcompensationforafurtherdescriptionofsuchawards.AsofDecember31,2014and
2015,wehad1,067and722trivagoGmbHClassAunitsoutstandingforequityshareoptionissuance.AsofSeptember30,2016,wehad
753trivagoGmbHClassAunitequivalentoptionsoutstanding.AsofDecember1,2016,wehad778trivagoGmbHClassAunitequivalent
optionsoutstanding,consistingof544optionswithaweightedaverageexercisepriceof1.00,234optionswithaweightedaverage
exercisepriceof83,411.83and125.2optionswithaweightedaverageexercisepriceof16.05.WewillissuenewtrivagoN.V.shares,
whichwillberepresentedbyADSs,tosatisfytheexerciseoftheseoptions.InconjunctionwiththepreIPOcorporatereorganizationandin
connectionwiththisoffering,weintendforholdersofoutstandingstockoptionstoreceiveoptionstopurchase
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trivagoN.V.sharesorADSsandalloutstandingstockoptionsthatarevestedatthetimeoftheIPOwillbeimmediatelyexercisablefollowing
theIPOintosharesoftrivagoN.V.,whichweintendwillbedeliveredintheformofADSs.OnaproformabasisassumingthepreIPO
corporatereorganizationhadoccurred,asofDecember1,2016,wehad4,658,290optionswithaweightedaverageexercisepriceof0.06,
1,991,496optionswithaweightedaverageexercisepriceof9.80and1,056,966optionswithaweightedaverageexercisepriceof1.89.
TheseoptionswillbeexercisableforClassAsharesoftrivagoN.V.onacashlessnetexercisebasis,afterdeductingsharestocoverthe
exercisepriceandwithholdingtaxes.Noadditionalgrantswillbemadeundersuchexistingoptionarrangementsafterthecompletionofthis
offering.
EquityIncentivePlan2016
Inconjunctionwiththecompletionofthisoffering,weintendtoestablishthetrivagoN.V.2016OmnibusIncentivePlan,whichwerefertoas
the2016Plan,withthepurposeofgivingusacompetitiveadvantageinattracting,retainingandmotivatingofficers,employees,directors
and/orconsultantsbyprovidingthemincentivesdirectlylinkedtoshareholdervalue.ThemaximumnumberofClassAsharesavailablefor
issuanceunderthe2016Planshallbe34,711,009ClassAshares.ClassAsharesissuableunderthe2016Planwillberepresentedby
ADSsforsuchClassAshares.
Planadministration.The2016Planisadministeredbyacommitteeofatleasttwomembersofoursupervisoryboard,whichwerefertoas
theplancommittee.Theplancommitteemustapproveallawardstodirectors.Ourmanagementboardmayapproveawardstoeligible
recipientsotherthandirectors,subjecttoannualaggregateandindividuallimitsasmaybeagreedtowiththesupervisoryboard.Subjectto
applicablelaworthelistingstandardsoftheapplicableexchange,theplancommitteemaydelegatetootherappropriatepersonsthe
authoritytograntequityawardsunderthe2016Plantooureligibleawardrecipients.
Eligibility.Managementboardmembers,officers,employeesandconsultantsofthecompanyoranyofoursubsidiariesoraffiliates,and
anyprospectivedirectors,officers,employeesandconsultantsofthecompanywhohaveacceptedoffersofemploymentorconsultancyfrom
thecompanyoroursubsidiariesoraffiliates(excludingsupervisoryboardmembers)areeligibleforawardsunderthe2016Plan.
Awards.Awardsincludeoptions,shareappreciationrights,restrictedshareunitsandothersharebasedandcashbasedawards.Awards
maybesettledinstockorcash.Theoptionexercisepriceforoptionsunderthe2016Planshallnotbelessthanthefairmarketvalueofa
shareasdefinedinthe2016Planontherelevantgrantdate.Totheextentthatlistingstandardsoftheapplicableexchangerequirethe
companysshareholderstoapproveanyrepricingofoptions,optionsmaynotberepricedwithoutshareholderapproval.
Vestingperiod.Optionsandshareappreciationrightsshallvestandbecomeexercisableatsuchtimeandpursuanttosuchconditionsas
determinedbytheplancommitteeandasmaybespecifiedinanindividualgrantagreement.Theplancommitteemayatanytimeaccelerate
theexercisabilityofanyoptionorshareappreciationright.Restrictedsharesmayvestbasedoncontinuedservice,attainmentof
performancegoalsorbothcontinuedserviceandperformancegoals.Theplancommitteeatanytimemaywaiveanyofthesevesting
conditions.
Term.Optionsandshareappreciationrightswillhaveatermofnotmorethantenyears.The2016Planwillalsohaveatenyearterm,
althoughawardsoutstandingonthedatethe2016Planterminateswillnotbeaffectedbytheterminationofthe2016Plan.
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Insuranceandindemnification
Managementboardandsupervisoryboardmembershavethebenefitofindemnificationprovisionsinourarticlesofassociation.These
provisionsgivemanagementboardmembers,supervisoryboardmembersandcertainotherofficersofthecompanytheright,tothefullest
extentpermittedbylawandunlesscoveredbyaninsurancepolicytakenoutforsuchindemnitiestorecoverfromusamounts,includingbut
notlimitedtolitigationexpenses,andanydamagestheyareorderedtopay,inrelationtoactsoromissionsintheperformanceoftheir
duties.Inaddition,themembersofourmanagementboardandoursupervisoryboardareexpectedtoenterintoindemnificationagreements
withus,providingmateriallysimilarindemnificationasdescribedintheprecedingtwosentences.
InsofarasindemnificationofliabilitiesarisingundertheSecuritiesActmaybepermittedtomanagementboardandsupervisoryboard
membersorpersonscontrollinguspursuanttotheforegoingprovisions,wehavebeeninformedthat,intheopinionoftheSEC,such
indemnificationisagainstpublicpolicyasexpressedintheSecuritiesActandisthereforeunenforceable.
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Principalandsellingshareholders
ThefollowingtablesetsforthinformationrelatingtothebeneficialownershipofoursharesasofDecember1,2016(i)afterthepreIPO
corporatereorganizationandpriortothecompletionofthisoffering,(ii)asadjustedtoreflectthesaleofourADSsinthisofferingand
creationofClassBsharesaspartofthepreIPOcorporatereorganizationand(iii)thepostIPOmergerresultingintheissuanceofClassB
sharestotheFounders,for:
eachperson,orgroupofaffiliatedpersons,knownbyustobeneficiallyown5%ormoreofouroutstandingClassAshares
eachSellingShareholder
eachmemberofourmanagementboardandoursupervisoryboardand
eachmemberofourmanagementboardandoursupervisoryboardasagroup.
Forfurtherinformationregardingmaterialtransactionsbetweenusandprincipalshareholders,seeRelatedpartytransactions.
Thenumberofshares(orsharecapital)beneficiallyownedbyeachentity,person,managementboardmemberandsupervisoryboard
memberisdeterminedinaccordancewiththerulesoftheSEC,andtheinformationisnotnecessarilyindicativeofbeneficialownershipfor
anyotherpurpose.Undersuchrules,beneficialownershipincludesanysharesoverwhichtheindividualhassoleorsharedvotingpoweror
investmentpowerorfromwhichtheindividualhastherighttoreceivetheeconomicbenefitaswellasanysharesthattheindividualhasthe
righttoacquirewithin60daysofDecember1,2016throughtheexerciseofanyoption,warrantorotherright.Exceptasotherwiseindicated,
andsubjecttoapplicablecommunitypropertylaws,thepersonsnamedinthetablehavesolevotingandinvestmentpowerandtherightto
receivetheeconomicbenefitwithrespecttosharesheldbythatperson.
ThefollowingtableispresentedasofDecember1,2016andassumesnoexerciseoftheoptiontopurchaseadditionalADSsfromusand
theSellingShareholders.SeeCorporatestructureCorporatereorganizationforadditionalinformationregardingthecorporate
reorganization.Unlessotherwiseindicatedbelow,theaddressforeachbeneficialownerlistedisc/otrivagoGmbH,BennigsenPlatz1,
40474Dsseldorf,FederalRepublicofGermany.
Nameof
beneficialowner
Shares
5%orgreater
shareholders
Expedia,Inc.(5)
Managementboard
members
RolfSchrmgens 4,000,014
PeterVinnemeier 2,263,837
MalteSiewert
1,736,176
AxelHefer
*
AndrejLehnert
*
JohannesThomas
*
Supervisory
boardmembers
MiekeS.De
Schepper**
*
PeterM.Kern**
*
Dara
Khosrowshahi**
*
Frdric
Mazzella***
*
MarkD.
Okerstrom**
*
Niklasstberg***
*
DavidSchneider***
*
Allmanagement
boardand
supervisory
board
membersasa
group
(13persons) 8,325,265
Ordinaryshares
beneficiallyownedprior
tothisoffering(1)
ClassA
ClassB
209,008,088 65.1%
50.0%
28.3%
21.7%
Shares
%Voting
power
beforethis
% offering(2)
Ordinaryshares
Ordinaryshares
beneficiallyowned
beneficiallyowned
assumingcompletionof
afterthisoffering(1)(3) %Voting
thepostIPOmerger(4)
ClassA
ClassB
power
ClassA
ClassB
%
afterthis
Voting
Shares %
Shares
% offering(2) Shares %
Shares
% power(2)
99.6%
0.2%
0.1%
0.1%

209,008,088 100%

* *
* *
* *

98.8%
209,008,088 65.1% 64.6%
58,442,758 18.2% 18.1%

44,451,220 13.8% 13.7%
9,097,904 2.8%
2.8%
* *

* *

* *

*
*
* *
* *
* *
* *
*
*
*
100%
0.4%
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* * 111,991,882 34.9% 34.6%
* Indicatesbeneficialownershipoflessthan1%ofthetotaloutstandingClassAshares.
** Indicatesnominee.
*** AppointedDecember8,2016.
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(1) AssumesthetransactionstobecompletedinconnectionwiththepreIPOcorporatereorganizationhavebeencompleted.SeeCorporatestructureCorporatereorganization
PreIPOcorporatereorganization.
(2) PercentageoftotalvotingpowerrepresentsvotingpowerwithrespecttoallofourClassAandClassBshares,asasingleclass.TheholdersofourClassBsharesareentitled
totenvotespershare,andholdersofourClassAsharesareentitledtoonevotepershare.FormoreinformationaboutthevotingrightsofourClassAandClassBshares,see
DescriptionofsharecapitalandarticlesofassociationSpecialvotingstructureandconversion.EachClassBshareisconvertibleintooneClassAshareatanytimebythe
holderthereof,whileClassAsharesarenotconvertibleintoClassBsharesunderanycircumstances.
(3) BeforethepostIPOcorporatereorganizationhasbeenconsummated,theFounderswillholdunitsoftrivagoGmbH,representinganaggregatenoncontrollinginterestof32.3%.
IntheeventthepostIPOmergerisnotconsummated,theFounderswillholdsharesoftrivagoSE,representinganaggregatenoncontrollinginterestof32.3%.Accordingly,the
beneficialownershipofoursharesaftertheimplementationoftheSEstructurewouldbeequivalenttotheordinarysharesbeneficiallyownedafterthecompletionofthisoffering.
TheFounderswillhavetheright,pursuanttotheIPOStructuringAgreement,tocontributesharesoftrivagoSEtotrivagoN.V.inexchangeforourClassAsharesorClassB
shares,whichwouldreducetherelatednoncontrollinginterest,andcanthereaftersellsuchsharesfromtimetotime.SeeRelatedpartytransactionsAmendedandRestated
ShareholdersAgreementandIPOStructuringAgreement.
(4) AssumesthetransactionstobecompletedinconnectionwiththepostIPOmergerhavebeencompleted.SeeCorporatestructureCorporatereorganizationPostIPOcorporate
reorganization.
(5) Expedia,Inc.holdsitsinterestinthecompanythroughExpediaLodgingPartnerServicesS.r.l.,anindirectwhollyownedsubsidiaryofExpedia,Inc.TheaddressforExpedia,
Inc.is333108thAvenueNE,Bellevue,WA98004.
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Relatedpartytransactions
ThefollowingisadescriptionofrelatedpartytransactionswehaveenteredintosinceJanuary1,2014withanyofthemembersofour
managementboardorsupervisoryboardandtheholdersofmorethan5%ofourshares.
RelationshipwithExpedia
In2013,Expediacompletedthepurchaseofa63%equitypositioninthecompany,purchasingalloutstandingequitynotheldbythe
foundersoremployeesfor477million.Duringthesecondquarterof2016,Expediaexerciseditscallrightoncertainsharesheldbynon
founderemployeesofthecompany,whichwereoriginallyawardedintheformofstockoptionspursuanttothetrivagoemployeestockoption
planandsubsequentlyexercisedbysuchemployees,andelectedtodosoatapremiumtofairvalue.
ShareholdersAgreement
InconnectionwithExpediaspurchaseofsharesoftrivagoGmbHin2013,Expedia,trivagoGmbHandtheFoundersenteredintoa
shareholdersagreement,datedasofDecember21,2012,asamended,ortheShareholdersAgreement.TheShareholdersAgreement
containscertainput/callrightswherebyExpediamaycausetheFounderstoselltoit,andtheFoundersmaycauseExpediatoacquirefrom
them,upto50%and100%ofthetrivagosharesheldbythematfairvalueduringtwowindows.Thefirstwindowwouldhaveclosedduring
thefirsthalfof2016.However,duringthesecondquarterof2016,ExpediaandtheFoundersagreednottoexercisetheirrespectiveput/call
rightsduringthatwindowandinsteadtopostponethewindowwhilethepartiesexplorethefeasibilityofaninitialpublicofferingoftrivago
shares.Underthepartiesagreement,thefirstwindowwillreopenonMarch31,2017orearlierifthepartiesabandonaninitialpublicoffering
beforethen.TheShareholdersAgreementcontainsrestrictionsonExpediasaccesstoinformationrelatingtocustomersandbusiness
partnersoftrivago.ThisShareholdersAgreementwillbeamendedandrestatedasdescribedmorefullybelow.SeeAmendedand
RestatedShareholdersAgreementoftrivagoN.V.
AmendedandRestatedShareholdersAgreementoftrivagoN.V.
Priortothisoffering(butcontingentuponitscompletion),travelB.V.,trivagoGmbH,theFounders,ExpediaLodgingPartnerServicesS.r.l.
andcertainotherExpediapartieswillenterintoanamendedandrestatedshareholdersagreement,whichwerefertoastheAmendedand
RestatedShareholdersAgreement.
Agreementsregardingthesupervisoryboard
TheAmendedandRestatedShareholdersAgreementwillprovidethatuponcompletionofthisoffering,oursupervisoryboardwillbe
comprisedofsevenmemberswhowilleachserveforathreeyearterm.Subjecttoapplicablelaw,includingapplicableNASDAQstandards:
(a)forsolongastheFoundersandtheiraffiliateshold,collectively,atleast15%ofthetotalnumberoutstandingofClassAandClassB
sharesorsharesintrivagoGmbH,trivagoAGortrivagoSEconvertibleintoClassAsharesorClassBshares(calculatedasifallsecurities
convertible,exercisableorexchangeableforClassAsharesorClassBshareshadbeenconverted,exercisedorexchanged),theFounders
willbeentitledtodesignateforbindingnominationthreememberstooursupervisoryboard,allofwhommustbeindependentand
(b)Expediawillbeentitledtodesignateforbindingnominationallothermembersofoursupervisoryboard,oneofwhomwillbethe
chairpersonoftheboardwithatiebreakingvoteand,ifthenomineeisqualified,oneofwhomwillbethechairmanofourauditcommittee.
Expediawillbeentitledtoincreaseordecreasethesizeofthesupervisoryboard,providedthatthenumberofmemberswhotheFounders
areentitledtoappointisnotlessthanthreesevenths(roundedtothenearestwholenumber)ofthemembersofthesupervisoryboard.
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TheAmendedandRestatedShareholdersAgreementwillalsosetforthagreementsregardingthecommitteesofthesupervisoryboardand
therulesofprocedure.SeeManagementSupervisoryboardcommittees.
Oursupervisoryboardmemberswillbeappointedbyourshareholdersactingatageneralmeetinguponabindingnominationbythe
supervisoryboardasdescribedinManagementBoardstructureafterthisoffering.Therefore,ExpediaandeachFounderwillberequired
tovotethesharesheldbythematthegeneralmeetinginaccordancewiththevotingarrangementssetforthintheAmendedandRestated
ShareholdersAgreement.
Agreementsregardingthemanagementboard
Ourmanagementboardinitiallywillbecomprisedofsixmemberswhohavebeenappointedpursuanttoourdeedofincorporation.Pursuant
totheAmendedandRestatedShareholdersAgreement,solongascertainconditionsaremet,theFounderswhoarethenservingas
managementboardmemberswillbeentitledtodesignateforbindingnominationallsixdirectorstoourmanagementboardforsolongasthe
Foundersandtheiraffiliates,collectively,ownatleast15%ofthetotalnumberoutstandingofClassAsharesandClassBsharesorshares
intrivagoSEconvertibleintoClassAsharesorClassBshares(calculatedasifallsecuritiesconvertible,exercisableorexchangeablefor
ClassAsharesorClassBshareshadbeenconverted,exercisedorexchanged)andaFounderisservingaschiefexecutiveofficerofthe
company.Subjecttocertainconditions,solongas(i)theFoundersandtheiraffiliates,collectively,ownatleast15%ofthetotalnumber
outstandingofClassAsharesandClassBsharesorsharesintrivagoGmbH,trivagoAGortrivagoSEconvertibleintoClassAsharesor
ClassBshares(calculatedasifallsecuritiesconvertible,exercisableorexchangeableforClassAsharesorClassBshareshadbeen
converted,exercisedorexchanged)and(ii)anyFounderanditsaffiliatesholdatleast50%oftheClassAsharesandClassBsharesor
sharesintrivagoGmbH,trivagoAGortrivagoSEconvertibleintoClassAsharesorClassBshares(calculatedasifallsecurities
convertible,exercisableorexchangeableforClassAsharesorClassBshareshadbeenconverted,exercisedorexchanged),suchFounder
owneduponcompletionofthisoffering,suchFounderwillgenerallyhavearighttobedesignatedbytheFoundersforbindingnominationby
thesupervisoryboardtothemanagementboard.ForpurposesofdeterminingaFoundersrightsdescribedinclause(ii)oftheprior
sentence,certainsalesinthefirsttwoyearsfollowingtheofferingbysuchFounderofClassAshares,orsecuritiesconvertible,exercisable
orexchangeableforClassAshares,shallbetreatedashavingbeensoldbysuchFounderinthisoffering.TheFoundersshallonly
designateaformermanagementboardmemberforanewtermifthecircumstancesinitiallywarrantingtheremoval,nonreappointmentor
resignationhavechanged,andthesupervisoryboardinitssolediscretionmaychoosenottodesignatesuchformermanagementboard
memberforbindingnominationtothemanagementboard.
PursuanttotheAmendedandRestatedShareholdersAgreement,certaintransitionarrangementswillbeagreedforsuccessionofthechief
executiveofficer.FromthedatethatMr.Schrmgensceasestoserveaschiefexecutiveofficer,foraperiodofthreeyears,whichwereferto
astheTransitionPeriod,solongasaFounderisservingaschiefexecutiveofficerandthereisnosetofcircumstancesthatwouldconstitute
areasonablecause,suchFounderhastherighttonominateasuccessor,subjecttotheapprovalofExpedia,andthereafter,thesupervisory
board.DuringtheTransitionPeriod,attherequestofeithertheFoundersorExpedia,(1)thesupervisoryboardwillbeexpandedbytwo
seats,oneofwhichwillbefilledbytheFoundersandoneofwhichwillbefilledbyExpedia,and(2)athreepersoncommitteeofthe
supervisoryboardwillbeformedwhichshallbeentitledtonominateachiefexecutiveofficer,subjecttotheapprovalofExpedia,and
thereafter,thesupervisoryboard,intheeventthatachiefexecutiveofficerhasnotbeennominatedbeforetheFounderservingaschief
executiveofficerhasceasedtoserveassuch.DuringthefirsteighteenmonthsoftheTransitionPeriod,iftheCEOisnotaFounder,Expedia
willhavetherighttodesignateforbindingnominationtwomanagementboardmembersandthechiefexecutiveofficerwillhavetherightto
designateallothermanagementboardmembers,subjecttoapprovalbythesupervisoryboard.
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Registrationandotherrights
PursuanttotheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounderswillhavecertaindemandregistrationrights,
shortformregistrationrightsandpiggybackregistrationrightsinrespectofanyClassAsharesandClassBshares,andrelated
indemnificationrightsfromthecompany,subjecttocustomaryrestrictionsandexceptions.Allfees,costsandexpensesofregistrations,
otherthanunderwritingdiscountsandcommissions,areexpectedtobebornebyus.
TheAmendedandRestatedShareholdersAgreementwillalsograntappropriateinformationrightstoExpediaandtheFounders.
ExpediaandtheFounderswillalsoagreeintheAmendedandRestatedShareholdersAgreementthatcertainresolutionsofthegeneral
meetingofshareholderswillrequiretheconsentofoneFounder.
Sharetransferrestrictions
TheAmendedandRestatedShareholdersAgreementwillprovidecertainrestrictionsonthetransferabilityoftheClassAsharesandClass
BsharesheldbyExpediaandtheFounders,includingprohibitionsontransfersbytheFounderstoourcompetitors.TheFoundershavetag
alongrightsontransfersofClassBsharestocertainspecifiedparties,andbasedoncertainconditionsExpediahastherighttodragthe
FoundersinconnectionwithasaleofallofitsClassAsharesandClassBshares.ExpediaandtheFounderswillagreetogranteachother
arightoffirstofferonanytransfersofClassAsharesorClassBsharestoathirdparty.
Callandputrights
PursuanttotheAmendedandRestatedShareholdersAgreement,ifaFounderisremovedforreasonablecause,Expediawillhavetheright
topurchase,andtheFounderwillbeobligatedtosell,all,butnotlessthanall,oftheClassAsharesandClassBsharesaswellasany
sharesheldintrivagoGmbH/AG/SEownedbysuchFounder,atapricebasedonavolumeweightedaverageofthetradingpriceofour
ClassAshares.
IfthegeneralmeetingofshareholdersresolvestoremoveaFounderasamanagementboardmemberwithoutreasonablecauseorifthe
supervisoryboardrevokesthetitleofchiefexecutiveofficerfromaFounderthenservingaschiefexecutiveofficerwithouteither(i)
reasonablecauseor(ii)theconsentofanotherFounder,andtheFounderterminateshisservicesasmanagementboardmemberwithin30
daysthereof,then,theFounderwillhavetherighttosell,andExpediawillbeobligatedtobuy,all,butnotlessthanall,ofsuchFounders
shares,atapricebasedonavolumeweightedaverageofthetradingpriceofourClassAshares,unlessafactorcircumstanceexistswhich
wouldbereasonablylikelytoresultintheoccurrenceofanyoftheeventsinclauses(a)through(g)inthedefinitionofreasonablecauseset
forthbelow.Insuchacase,norighttosellwillbetriggeredbytheremovalofsuchmanagementboardmember.
ReasonablecauseforpurposesoftheAmendedandRestatedShareholdersAgreementmeans,withrespecttoamanagementboard
member,theoccurrenceofanyofthefollowing:(a)thewillfulorgrossneglectbythemanagementboardmemberofhisorherfiduciary
dutiesowedtothecompanyoritssubsidiaries(b)thepleaofguiltyornolocontendereto,orconvictionfor,thecommissionofafelony(or
equivalent)offensebythemanagementboardmemberprovided,thatforpurposesofthisclause(b)ifamanagementboardmemberis
removedfollowingbeingformallyaccusedorchargedwiththecommissionofsuchanoffense,andsuchmanagementboardmember
subsequentlyisconvictedof(orpleadsguiltyornolocontendereto)suchoffense,therewillbedeemedtohavebeenreasonablecauseat
thetimeoftheremoval(c)amaterialbreach(orbreacheswhich,whenaggregatedwithanypriorbreachorbreaches,arematerial)bythe
managementboardmemberofhisorherfiduciarydutiesowedtothecompanyoranyofitssubsidiaries,orofthecompanyorganizational
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documents(d)amaterialbreachbythemanagementboardmemberofanynondisclosure,nonsolicitation,ornoncompetitionobligation
owedtothecompanyoranyofitssubsidiaries(e)amaterialfailure(orfailureswhich,whenaggregatedwithanypriorfailureorfailures,are
material)tomeetreasonableindividualexpectationsinrespectofhisindividualmanagementdutiesinrespectoftheexecutionofhisorher
employmentordutiesasamanagementboardmember(f)amaterialfailure(orfailureswhich,whenaggregatedwithanypriorfailureor
failures,arematerial)bythecompanytoperformpursuanttotheannualbusinessplan,excepttotheextentthatthefailureresultsfrom
unforeseencircumstancesandisrespondedtoreasonablyandappropriatelybysuchmanagementboardmember,and(g)anyotherfactor
circumstanceoractionorinactionbysuchmanagementboardmember,ineachcaseconstitutinggoodcauseunderGermanlawas
interpretedbyGermancourts.
IftheFoundershavetosellordinarysharestopaytaxesrealizedinconnectionwiththepostIPOmergerortorepayaloanobtainedbythe
Founderstopaysuchtaxes,theownershiplevelsatwhichtheylosecertainrightsintheAmendedandRestatedShareholdersAgreement
shallbeequitablyadjustedsuchthat,ineffect,alloraportionofthesharessosoldaretreatedashavingbeenretainedbytheFounders.
IPOStructuringAgreement
PriortotheofferingtravelB.V.,theFounders,ExpediaLodgingPartnerServicesS.r.l.,trivagoGmbH,andcertainotherExpediapartieswill
enterintoanIPOstructuringagreement,whichwerefertoastheIPOStructuringAgreement.
UndertheIPOStructuringAgreement,thecompanyandeachoftheFounderswillagreeto,aspromptlyaspracticablebutinanyevent
withinthreemonthsofthedatethereof,submitrequestsforataxrulingfromtheGermantaxauthoritiesinconnectionwithaplantosimplify
ourcorporatestructureuponcompletionofthisoffering.ThetaxrulingrequestoftheCompanywillrequestadecisionfromtheGermantax
authoritieswithrespectto,interalia,the:(i)applicationoftheGermanReorganizationTaxAct(RTAUmwandlungssteuergesetz)tothe
postIPOmergerand(ii)fulfilmentofthespecificrequirementsundersec.11par.2RTA,inparticular,thatthetransferredassetswillstillbe
subjecttoGermancorporateincometaxandthatGermanyisnotprecludedorlimitedinexercisingitsrightstotaxanycapitalgainsfromthe
disposalofthoseassetsattheleveloftrivagoN.V.asaresultofthepostIPOmerger.ThetaxrulingoftheFounderswillrequestadecision
fromtheGermantaxauthoritieswithrespectto,interalia,the:(i)applicationoftheRTAtothepostIPOmerger(asdefinedbelow)and(ii)
thefulfillmentofthespecificrequirementsundersec.13par.2RTAforataxfreeexchangebytheFoundersoftheirshares.
Further,thepartiestotheIPOStructuringAgreementwillagreetodeterminehowtoproceedwiththepostIPOcorporatereorganization
withintwelvemonthsofthecompletionofthisoffering,anditisexpectedthatanydecisionwillbeimplementednolaterthanfourmonths
thereafter.WhetherweareabletoimplementthepostIPOcorporatereorganizationwithinfourmonthsaftersuchdeterminationdependson
howquicklyweareabletosubmitnecessaryfilingstogovernmentauthorities,havesuchfilingsregisteredbysuchauthoritiesand,if
applicable,concludediscussionswithemployeesregardingtheirsupervisoryboardparticipationrightsinourGermansubsidiaryunder
Germanlaw.SeeCorporatestructurePreIPOcorporatereorganizationandCorporatestructurePostIPOcorporatereorganization.
Eveniffavorabletaxrulingsarereceived,ExpediaandtheFoundersmaychoosetoconsummatetheSEstructureratherthanthepostIPO
merger.
UndertheIPOStructuringAgreement,thespecificnatureofthepostIPOcorporatereorganizationwillgenerallydependonwhethercertain
conditionsprecedentaresatisfied.Specifically,thepartieswillagreethattheconsummationofthepostIPOmergerwillbecontingentupona
RulingEventhavingoccurred.Forthispurpose,aRulingEventgenerallymeans(i)thereceiptofafavorableruling(whichcontinuestobe
validandbindingontheGermantaxauthorities)bythecompanyandeachoftheFoundersnolaterthanthefirstanniversaryofthe
completionofthisofferingor(ii)evenifsuchrulingsarenotreceived,ifExpediadeterminesthatthepostIPOmergershouldbe
consummatedandthecompany,theFoundersandExpediaLodgingPartnerServicesS.r.l.
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reachanagreementunderwhichExpediaLodgingPartnerServicesS.r.l.makesthecompanywholeforanyadditionaltaxesresultingfrom
thepostIPOmerger.NotwithstandingtheoccurrenceofaRulingEvent,ifthepostIPOmergercouldreasonablybeexpectedtoresultin
materialadversetaxconsequencestothecompany,eachofthecompany,theFoundersandExpediaLodgingPartnerServicesS.r.l.will
reasonablycooperatetorestructureoralterthepostIPOmergertoavoidsuchconsequences,ortoabandonthepostIPOmergerifsuch
restructuringoralterationisnotpossible.
IfafavorablerulinghasnotbeenreceivedbyeachofthecompanyandtheFoundersbythefirstanniversaryofthecompletionofthis
offeringoranotherAdverseRulingDeterminationoccurs,andthepartiesdonotreachtheagreementdescribedabove,thentheparties
agreetoimplementtheSEstructure.Forthispurpose,inadditiontoallfavorablerulingsnothavingbeenreceivedbythefirstanniversaryof
thecompletionofthisoffering,anAdverseRulingDeterminationgenerallymeans,withrespecttothecompanyoranyoftheFounders,an
issuanceofanadverseruling(orapreviouslyissuedrulingceasingtobevalidandbindingontheGermantaxauthorities),adetermination
bytheapplicableGermantaxauthoritynottoissueafavorableruling,orarequestbytheapplicableGermanytaxauthoritythattherelevant
rulingrequestbewithdrawn,ineachcase,onthebasisthatthepostIPOmergerwillnotqualifyforthedesiredtaxtreatment(butonlyifsuch
issuance,determinationorrequestisfinalandthepostIPOmergercannotbesatisfactorilyrestructuredtoqualifyfortheintendedtax
treatmentandreceivetherelevantruling).
UnderthetermsoftheIPOStructuringAgreement,if(i)anAdverseRulingDeterminationoccurs,andthepartiesdonotreachthe
agreementdescribedabovebythefirstanniversaryofthecompletionoftheoffering,or(ii)aRulingEventhasoccurredandthepostIPO
mergerhasnotbeenconsummatedasofthefirstanniversaryofthecompletionoftheoffering,theFoundersmay,attheirelection,
contributesharesoftrivagoGmbHor,iftheSEstructurehasbeenimplemented,trivagoAGortrivagoSE,heldbysuchFoundertotrivago
N.V.inexchangeforanumberofClassASharesorClassBShares(oracombinationthereof)atthediscretionoftheFounderequaltothe
numberofcontributedsharesmultipliedbyanexchangeratio.Ourarticlesofassociationandcorporategovernancemayonlybeamended
byagreementofallpartiestotheIPOStructuringAgreementuntilsuchtimeasthepostIPOcorporatereorganizationhasbeencompleted.
Afterthecompletionofthisoffering,butpriortotheconsummationofthepostIPOmerger,theFoundersandExpediahaveagreed,pursuant
totheIPOStructuringAgreement,toeffectaonetimedividendpaymentinrespectoffiscalyear2016intheamountof0.5million,which
shallbepaidtotheunitholdersofrecordoftrivagoGmbHpriortotheconsummationofthepostIPOmerger.
CreditfacilityGuarantee
OnSeptember5,2014,weenteredintoanuncommittedcreditfacilitywithBankofAmericaMerrillLynchInternationalLtd.,oneofthe
underwritersofthisoffering,withamaximumprincipalamountof10.0million.AdvancesunderthisfacilitybearinterestarateofLIBORplus
1.0%perannum.Thisfacilitymaybeterminatedatanytimebythelender.OurobligationsunderthisfacilityareguaranteedbyExpedia.On
December19,2014,weenteredintoanamendmenttothisfacilitypursuanttowhichthemaximumprincipalamountwasincreasedto50.0
million.AsofDecember31,2015andasofSeptember30,2016,wehad20.0millionand0.0million,respectively,outstandingunderthis
facility.OnOctober4,2016,wedrewdown10.0millionunderthisfacility,whichwerepaidonNovember7,2016.
LeaseGuarantee
OnJuly23,2015,weenteredintoaLeaseAgreementwithJupiterEINHUNDERTVIERUNDFNFZIGGmbHforofficespaceintheMedia
HarbourareainDsseldorfwithamonthlyrentof566,560.Theinitialleasetermis
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fortenyears,andwehavetheoptiontoextendtheleasetermforanothertenyears.ExpediahasagreedtoguaranteetheLeaseAgreement
beginningonMay31,2017andterminatingimmediatelyuponthereceiptofthebankguarantydescribedintheLeaseAgreement,andin
anycasenotlaterthanDecember31,2018.
LoansfromExpedia
In2014,Expediagrantedaloanof1.0milliontothecompanyinconjunctionwithouracquisitionofRheinfabrikin2014.Werepaidtheloan
during2015.
Inconnectionwiththeexerciseofcertainemployeeoptions,wepaidemployeespersonaltaxliabilityrelatedtotheoptionexercise
collateralizedbytheunderlyingsharesandtoberepaidbyemployeesfrom2016liquidationproceeds.Astheproceedsof7.1millionwere
fundedbyExpedia,werecognizedarelatedpartypayableforthisamountasofDecember31,2015,whichwillberepaidtoExpediain2016
atthetimeoftheliquidation.SeeNote9Sharebasedawardsandotherequityinstrumentsinthenotestoourconsolidatedfinancial
statements.
ServicesAgreement
OnMay1,2013,weenteredintoanAssetPurchaseAgreement,pursuanttowhichExpediapurchasedcertaincomputerhardwareand
softwarefromus,andaDataHostingServicesAgreement,pursuanttowhichExpediaprovidesuswithcertaindatahostingservicesrelating
toalloftheserversweusethatarelocatedwithintheUnitedStates.EitherpartymayterminatetheDataHostingServicesAgreementupon
30dayspriorwrittennotice.Wehavenotincurredmaterialexpensesunderthisagreement.
ServicesandSupportAgreement
OnSeptember1,2016,weenteredintoaServicesandSupportAgreement,pursuanttowhichExpediaagreedtoprovideuswithcertain
servicesinconnectionwithlocalizingcontentonourwebsites,suchastranslationservices.EitherpartymayterminatetheServicesand
SupportAgreementupon90dayspriornotice.Wehavenotincurredmaterialexpensesunderthisagreement.
Commercialrelationships
WecurrentlyhavecommercialrelationshipswithmanyExpediaaffiliatedbrands,includingBrandExpedia,Hotels.com,Orbitz,Travelocity,
WotifandVenere.Theseareoralarrangementsorarrangementsterminableatwilloruponthreetosevendayspriornoticebyeitherparty
andoncustomarycommercialtermsthatenableExpediasbrandstoadvertiseonourplatform,andwereceivepaymentforuserswereferto
them.WearealsopartytoaletteragreementpursuanttowhichExpediareferstraffictouswhenaparticularhotelorregionisunavailable
ontheapplicableExpediawebsite.FortheyearendedDecember31,2015,Expediaanditsbrandsaccountedfor39%ofourtotalrevenues.
SeeManagementsdiscussionandanalysisoffinancialconditionandresultsofoperationsforadditionalinformation.
Sharedservicesarrangements
Pursuanttocertaininformalsharedservicesarrangements,wehaverecordedexpensesincurredbyExpediaonbehalfofusasanoncash
chargeandtreatedasacontributionfromparentinequity.Thissharedservicesfee,whichiscomprisedofallocationsfromExpediaforlegal,
tax,treasury,auditandcorporatedevelopmentcostsandalsoincludesanallocationofemployeecompensationwithinthesefunctionsin
certaininstances.TheseallocationsweredeterminedonabasisthatweandExpediaconsideredtobeareasonable,includingnumberof
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factorssuchasheadcount,estimatedtimespent,andoperatingexpensesandisareflectionofthecostofservicesprovidedorthebenefit
receivedbyus.Itisnotpracticabletodeterminetheamountsoftheseexpensesthatwouldhavebeenincurredhadweoperatedasan
unaffiliatedentity,andintheopinionofourmanagement,theallocationmethodisreasonable.FortheyearsendedDecember31,2014and
2015,thesharedservicefeewas1.5millionand2.8million,respectively.
FutureagreementswithExpedia
Pursuanttoourarticlesofassociation,resolutionsofthemanagementboardtoenterintoorcompletefutureagreementswithExpedia
requireapprovalbythegeneralmeetingofshareholders.PursuanttotheAmendedandRestatedShareholdersAgreement,Expediaand
theFoundershaveagreedthatsuchresolutionsofthegeneralmeetingofshareholdersrequireconsentofatleastoneoftheFounders.
Intragrouploanagreement
Inconnectionwiththisoffering,trivagoGmbHandtravelB.V.willenterintoanIntragroupLoanAgreementpursuanttowhichtrivagoGmbH
willlendtravelB.V.amaximumof3.5milliontocovercertainexpensesincurredinthepreparationofthisoffering.Expediahasagreedto
guaranteetheIntragroupLoanAgreement.Unlessotherwiseagreedbytheparties,theloanwillmatureontheearlierof(i)onemonthafter
theclosingofthisofferingor(ii)December31,2017.trivagoGmbHmayterminatetheloanforgoodcauseatanytime.
Employeeloans
Inthethirdquarterof2015,certainemployeesexercisedstockoptions,andExpediaLodgingPartnerServicesS.r.l.advancedtoeach
optionholderemployeeinvolvedintheexerciseamountsequivalenttosuchemployeespersonaltaxliabilityrelatedtotheoptionexerciseby
issuingloans.Suchloanswerecollateralizedbytheunderlyingsharesandwererepaidbyemployeesfrom2016liquidationeventproceeds.
SeeNote9Sharebasedawardsandotherequityinstrumentsinthenotestoourconsolidatedfinancialstatements.
Agreementswithmanagementboardorsupervisoryboardmembers
Foradescriptionofouragreementswithourmanagementboardandsupervisoryboardmembers,pleaseseeManagementboardmember
servicesagreementsandSupervisoryboardmemberservicesagreements.
Indemnificationagreements
Weintendtoenterintoindemnificationagreementswithmembersofourmanagementboardandoursupervisoryboard.Ourarticlesof
associationrequireustoindemnifyourmanagementboardmembersandsupervisoryboardmemberstothefullestextentpermittedbylaw.
SeeManagementInsuranceandindemnificationforadescriptionoftheseindemnificationagreements.
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Descriptionofsharecapitalandarticlesofassociation
Setforthbelowisasummaryofrelevantinformationconcerningoursharecapitalandmaterialprovisionsofourarticlesofassociationand
applicableDutchlaw.Thissummarydoesnotconstitutelegaladviceregardingthosemattersandshouldnotberegardedassuch.
General
WewereincorporatedonNovember7,2016asaprivatecompanywithlimitedliability(beslotenvennootschapmetbeperkte
aansprakelijkheid)underDutchlaw.Priortocompletionofthisoffering,weintendtoconvertintoapubliccompanywithlimitedliability
(naamlozevennootschap)underDutchlawpursuanttoadeedofamendmentandconversion,whichwerefertoastheDeedofAmendment
andConversion,andourlegalnamewillbetrivagoN.V.
WeareregisteredwiththeTradeRegisteroftheChamberofCommerceintheNetherlands(KamervanKoophandel)undernumber
67222927.OurcorporateseatisinAmsterdam,theNetherlands,andourregisteredofficeisatBennigsenPlatz1,40474Dsseldorf,
Germany.
WerefertoourarticlesofassociationasofthedateofthisprospectusasourCurrentArticles.Whenwerefertoourarticlesofassociation
inthisprospectus,werefertoourarticlesofassociationastheywillbeinforceaftertheexecutionoftheDeedofAmendmentand
Conversionwhichisexpectedtotakeplacepriortothecompletionofthisoffering.
WeshallamendourCurrentArticlesandconvertourcompanyintoapubliccompanywithlimitedliability(naamlozevennootschap),effective
priortothecompletionofthisoffering.
Authorizedsharecapital
UnderDutchlaw,ourauthorizedsharecapitalisthemaximumcapitalthatwemayissuewithoutamendingourarticlesofassociation.An
amendmentofourarticlesofassociationwouldrequirearesolutionofthegeneralmeetingofshareholdersthatmustfirstbeproposedbyour
managementboardandapprovedbyoursupervisoryboard.Ourauthorizedsharecapitaluponcompletionofthisofferingwillamountto
234million,dividedinto700,000,000ClassAshares,withanominalvalueof0.06pershare,and320,000,000ClassBshares,witha
nominalvalueof0.60pershare.
InitialsettlementoftheADSsissuedinthisofferingwilltakeplaceontheconsummationdateofthisofferingthroughTheDepositoryTrust
Company,orDTC,inaccordancewithitscustomarysettlementproceduresforequitysecurities.EachpersonowningADSsheldthrough
DTCmustrelyontheproceduresthereofandoninstitutionsthathaveaccountstherewithtoexerciseanyrightsattachedtohisunderlying
ClassAshares.
Specialvotingstructureandconversion
Followingthecompletionofthisoffering,wewillhaveissued209,008,088ClassBshares,withanominalvalueof0.60pershareto
Expedia.TheClassBsharescarrythesameeconomicrightsentitlementsastheClassAshares.TheClassBsharescarrydifferentvoting
rightsthantheClassAshares,proportionatetotherespectivenominalvalue:foreachClassBshare,tenvotescanbeexercisedinthe
generalmeetingofshareholders,whereasforeachClassAshareonevotecanbeexercisedinthegeneralmeetingofshareholders.Asa
matterofDutchlaw,preemptionfortheholdersofourClassAsharesandourClassBsharesarelinkedtothetotalnominalvalueoftheir
shares,whichimpliesthateachClassBsharecarriesapreemptionrightwhichistenfoldofthepreemptionrightattachedtoeachClassA
share.Pursuanttoourarticlesofassociation,each
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shareholderofClassBsharescanconvertanynumberofClassBsharesheldbysuchshareholderintoClassAsharesasdescribedbelow.
AholderofClassAsharescannotconvertitsClassAsharesintoClassBshares.
UponreceiptofarequestforconversionofClassBsharesintoClassAshares,themanagementboardshallresolvetoconverttherelevant
numberofClassBsharesintoClassAsharesina1:10ratio.Promptlyfollowingsuchconversion,theholderofClassBshareswhomade
theconversionrequestshallbeobligatedtotransfernineoutofeverytenClassAsharessoreceivedtothecompanyfornoconsideration,
whichwillbecanceledafterwardsreplicatingtheeffectofa1:1conversionratio.Theconversionmechanismisstructuredinthismannerin
ordertoavoidatwomonthwaitingperiodwhichwouldberequiredunderDutchlawifClassBshareswouldbeconvertedintoClassA
sharesinanactual1:1ratio.NeitherthemanagementboardnorthecompanyisrequiredtoeffectaconversionofClassBshares(a)ifthe
conversionrequestdoescomplywiththespecificationsandrequirementssetoutinourarticlesofassociationorifthemanagementboard
reasonablybelievesthattheinformationincludedinsuchrequestisuntrueorincorrector(b)totheextentthatthecompanywouldnotbe
permittedundermandatoryDutchlawtoacquiretherelevantnumberofClassAsharesinconnectionwithsuchconversion.
Issuanceofsharesandpreemptiverights
UnderDutchlaw,sharesareissuedandrightstosubscribeforsharesaregrantedpursuanttoaresolutionofthegeneralmeetingof
shareholders.Ourgeneralmeetingofshareholdersmayauthorizeourmanagementboardtoissuenewsharesorgrantrightstosubscribe
forshares.Theauthorizationcanbegrantedandextended,ineachcaseforaperiodnotexceedingfiveyears.Foraslongassuch
authorizationiseffective,ourgeneralmeetingofshareholderswillnothavethepowertoissuesharesandrightstosubscribeforshares
unlessthegeneralmeetingofshareholdersdecidesotherwiseinconnectionwiththeauthorization.Ourgeneralmeetingofshareholdersis
expectedtoadoptaresolutionpursuanttowhichourmanagementboardwillbeauthorizedtoissue,subjecttooursupervisoryboards
approval,ClassAsharesandClassBshares(orrightstosubscribeforsuchshares)witheffectfromthedateofcompletionofthisoffering
foraperiodoffiveyearsfromthatdate.ThisauthorizationwillberevocableforsolongasExpediaholdsatleast5%ofourshares.
UnderDutchlaw,intheeventofanissuanceofClassAsharesorgrantingofrightstosubscribeforClassAshares,eachshareholderwill
haveaproratapreemptiverightinproportiontotheaggregatenominalvalueoftheClassAsharesheldbysuchholder.AholderofClassA
sharesdoesnothaveapreemptiverightwithrespecttotheissuanceoforgrantingofrightstosubscribefor(i)ClassAsharesfor
considerationotherthancash,or(ii)ClassAsharestoouremployeesoremployeesofoneofourgroupcompaniesor(iii)ClassAsharesto
personsexercisingapreviouslygrantedrighttosubscribeforsuchshares.
ThepreemptiverightsinrespectofnewlyissuedClassAsharesmayberestrictedorexcludedbyaresolutionofthegeneralmeetingof
shareholders.Ourgeneralmeetingofshareholdersisexpectedtoadoptaresolutionpursuanttowhichourmanagementboard,subjectto
oursupervisoryboardsapproval,willbeauthorizedtolimitorexcludethepreemptiverightsofholdersofClassAsharesandtheholdersof
ClassBshareswitheffectfromthedateofcompletionofthisofferingforaperiodoffiveyearsfromthatdate.Thisauthorizationwillbe
revocableforsolongasExpediaholdsatleast5%ofourshares.
Wealsoexpecttorequestourshareholders,ateachannualshareholdersmeetingheldafterthisoffering,toadoptaresolutionfurther
delegatingthepowertoissueshares,tograntrightstosubscribeforshares,andtolimitorexcludepreemptiverightstoourmanagement
boardforaperiodoffiveyearsfollowingthedateofeachsuchannualmeeting.
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PursuanttotheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounderswillagreethatresolutionsrelatingtoan
increaseofoursharecapital,includingresolutionstolimitorexcludepreemptiverightsofexistingshareholders,requireconsentofatleast
oneoftheFounders.
Formandtransferofshares
Ourshareswillbeissuedinregisteredform,providedthatourmanagementboardmayresolvethatoneormoresharesarebearershares,
representedbyphysicalsharecertificates.Aregisterofshareholderswillbemaintainedbyusorbythirdpartiesuponourinstruction.
Transferofrecordownershipofsharesiseffectedbyawrittendeedoftransferacknowledgedbyus,orbyourtransferagentandregistrar
actingasouragentonourbehalf,unlessthepropertylawaspectsofsuchsharesaregovernedbythelawsofthestateofNewYorkasset
outbelow.
IfandwhenanyofourClassAsharesbecomelistedonNASDAQoronanyotherstockexchangeoperatingintheUnitedStatesofAmerica,
thelawsoftheStateofNewYorkshallapplytothepropertylawaspectsoftheClassAsharesreflectedintheregisteradministeredbyour
transferagent.
Repurchaseofourshares
UnderDutchlaw,wemayrepurchaseourownfullypaidsharesatanytimefornoconsideration(omniet).Subjecttocertainexceptions
specifiedbyDutchlaw,weonlymayacquirefullypaidsharesforconsiderationtotheextentthat(i)ourshareholdersequity,lessthe
paymentrequiredtomaketheacquisitionandcertainamountsspecifiedbyDutchlaw,doesnotfallbelowthesumofpaidinandcalledup
sharecapitalandanystatutoryreserves,(ii)weandoursubsidiarieswouldthereafternotholdsharesorholdapledgeoverourshareswith
anaggregatenominalvalueexceeding50%ofourissuedsharecapitaland(iii)themanagementboardhasbeenauthorizedbythegeneral
meetingofshareholders.
Authorizationfromthegeneralmeetingtoacquireoursharesmustspecifythenumberandclassofsharesthatmaybeacquired,themanner
inwhichsharesmaybeacquiredandthepricerangewithinwhichsharesmaybeacquired.Suchauthorizationwillbevalidfornomorethan
18months.
Ourgeneralmeetingofshareholdersisexpectedtoadoptaresolutiongivingourmanagementboardtheauthority,whichmayonlybe
exercisedwiththeapprovalofoursupervisoryboard,torepurchaseshares(ordepositoryreceiptsforshares,includingADSs)upto50%of
ourissuedsharecapital(determinedasatthecloseofbusinessonthedateofsettlementofthisoffering)foraperiodof18monthsfollowing
thedateofcompletionofthisoffering,forapricepershareordepositoryreceipt(includingADSs)nottoexceed110%oftheaveragemarket
priceoftheADS(s)onNASDAQ(suchaveragemarketpricebeingtheaverageoftheclosingpricesoneachofthefiveconsecutivetrading
daysprecedingthedatetheacquisitionisagreeduponbythecompany).Weexpectthatasimilarresolutionwillbepresentedtoour
shareholdersforapprovalateachannualmeetingofshareholdersheldaftercompletionofthisoffering.
Novotesmaybecastbyusoroursubsidiaries,asapplicable,atageneralmeetingofshareholdersonthesharesheldbyusorour
subsidiaries.Noneofourissuedsharesisheldbyusoranyofoursubsidiaries.
Capitalreduction
Atageneralmeeting,ourshareholdersmayresolvetoreduceourissuedsharecapitalby(i)cancelingsharesor(ii)reducingthenominal
valueofthesharesbyvirtueofanamendmenttoourarticlesofassociation.Ineithercase,thisreductionwouldbesubjecttoapplicable
statutoryprovisionsandmustbeproposedbyourmanagementboardandapprovedbyoursupervisoryboard.Aresolutiontocancelshares
mayonlyrelatetosharesheldbythecompanyitselforinrespectofwhichthecompanyholdsthedepositoryreceipts.
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Areductionofthenominalvalueofshareswithoutrepaymentandwithoutreleasefromtheobligationtopayupthesharesmustbe
effectuatedproportionallyonsharesofthesameclass(unlessallshareholdersconcernedagreetoadisproportionalreduction).Aresolution
thatwouldresultinareductionofcapitalrequiresapprovalofthemeetingofeachgroupofholdersofsharesofthesameclasswhoserights
areprejudicedbythereduction.Inaddition,areductionofcapitalinvolvesatwomonthwaitingperiodduringwhichcreditorshavetherightto
objecttoareductionofcapitalunderspecifiedcircumstances.
Aresolutiontoreduceoursharecapitalrequirestheapprovalofatleastanabsolutemajorityofthevotescastor,iftheholdersoflessthan
50%ofourissuedsharecapitalarepresentorrepresentedatthemeetingatwhichavoteonaresolutiontoreduceoursharecapitalis
taken,theapprovalofatleasttwothirdsofthevotescast.PursuanttotheAmendedandRestatedShareholdersAgreement,Expediaand
theFounderswillagreethataresolutiontodecreaseoursharecapitalalsorequiresconsentofatleastoneoftheFounders.
Amendmentofarticlesofassociation
Thegeneralmeetingofshareholdersmayresolvetoamendthearticlesofassociation,uponaproposalbyourmanagementboardthathas
beenapprovedbyoursupervisoryboard.Aresolutionbythegeneralmeetingofshareholderstoamendthearticlesofassociationrequiresa
simplemajorityofthevotescast.PursuanttotheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounderswillagree
thatamendmentsofthearticlesofassociationthatadverselyaffecttheFoundersrequireconsentofatleastoneoftheFounders.
Companysshareholdersregister
SubjecttoDutchlawandthearticlesofassociation,wemustkeepourshareholdersregisteraccurateanduptodate.Themanagement
boardkeepsourshareholdersregisterandrecordsnamesandaddressesofallholdersofshares,showingthedateonwhichtheshares
wereacquired,thedateoftheacknowledgementbyornotificationofusaswellastheamountpaidoneachshare.Theregisteralsoincludes
thenamesandaddressesofthosewitharightofuseandusufruct(vruchtgebruik)insharesbelongingtoanotherorapledgeinrespectof
suchshares.TheClassAsharesofferedinthisofferingwillbeheldbyourdepositary,whowillbeappointedpriortothecompletionofthis
offering.Thereforeourdepositarywillberecordedintheshareholdersregisterasshareholder.
Limitationonliabilityandindemnificationmatters
UnderDutchlaw,managementboardandsupervisoryboardmembersmaybeheldliablefordamagesintheeventofimproperornegligent
performanceoftheirduties.Theymaybeheldjointlyandseverallyliablefordamagestothecompanyforinfringementofthearticlesof
associationorofcertainprovisionsoftheDutchCivilCode(BurgerlijkWetboek).Incertaincircumstances,theymayalsoincuradditional
specificcivilandcriminalliabilities.Managementboardandsupervisoryboardmembersareinsuredunderaninsurancepolicytakenoutby
usagainstdamagesresultingfromtheirconductwhenactinginthecapacitiesassuchmanagementboardorsupervisoryboardmember,as
applicable.Inaddition,ourarticlesofassociationprovideforindemnificationofourmanagementboardandsupervisoryboardmembers,
includingreimbursementforreasonablelegalfeesanddamagesorfinesbasedonactsorfailurestoactintheirduties.Noindemnification
shallbegiventoamemberofthemanagementboardorsupervisoryboardifaDutchcourthasestablished,withoutpossibilityforappeal,
thattheactsoromissionsofsuchindemnifiedofficerthatledtothefinanciallosses,damages,suit,claim,actionorlegalproceedings
resultedfromeitheranimproperperformanceofhisorherdutiesasamanagementboardorsupervisoryboardmemberofthecompanyor
anunlawfulorillegalact,andonlyunlesstotheextentthathisorherfinanciallosses,damagesandexpensesarecoveredbyaninsurance
andtheinsurerhassettledthesefinanciallosses,damagesandexpenses(orhasindicatedthatit
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woulddoso).Furthermore,suchindemnificationwillgenerallynotbeavailableininstancesofwillful(opzettelijk),intentionallyreckless
(bewustroekeloos)orseriouslyculpable(ernstigverwijtbaar)conduct.SeeManagementInsuranceandindemnificationforadditional
information.
Liquidationrightsanddissolution
Underourarticlesofassociation,wemaybedissolvedbyaresolutionofthegeneralmeetingofshareholders,subjecttoaproposalbythe
managementboardandtheapprovalofoursupervisoryboard.PursuanttotheAmendedandRestatedShareholdersAgreement,Expedia
andtheFounderswillagreethataresolutiontodissolveusrequiresconsentofatleastoneoftheFounders.
Intheeventofadissolutionandliquidation,theassetsremainingafterpaymentofalldebtsandliquidationexpensesaretobedistributedto
shareholdersinproportiontothenumberofsharesheldbyeachshareholder.Alldistributionsreferredtointhisparagraphwillbemadein
accordancewiththerelevantprovisionsofthelawsoftheNetherlands.
Generalmeetingofshareholdersandconsents
Generalmeetingofshareholders
GeneralmeetingsofshareholdersareheldintheNetherlands,atlocationsspecifiedinourarticlesofassociation.Theannualgeneral
meetingofshareholdersmustbeheldwithinsixmonthsoftheendofeachfiscalyear.Additionalextraordinarygeneralmeetingsof
shareholdersmayalsobeheld,wheneverconsideredappropriatebythemanagementboardorthesupervisoryboard.PursuanttoDutch
law,oneormoreshareholdersorothersentitledtoattendageneralmeeting,whojointlyrepresentatleastonetenthoftheissuedshare
capitalmayrequestthemanagementboardorthesupervisoryboardtoconveneanextraordinarygeneralmeetingwithanagendaas
requestedbythem.Ifourmanagementboardorsupervisoryboarddoesnotinresponsetosucharequestcallanextraordinarygeneral
meetingtobeheldwithinsixweeksfromthedateofourreceiptoftherequest,thepersonsrequestingthemeetingmaybeauthorizedupon
theirrequestbyaDutchcourtinsummaryproceedingstoconveneanextraordinarygeneralmeetingwiththeagendarequestedbythem.
TheDCGCrecommendsthat,beforeexercisingtherightsdescribedabove,themanagementboardshouldfirstbeconsulted.Ifthe
envisagedexerciseofsuchrightsmightresultinachangetothecompanysstrategy,suchasbydismissingoneormoremanagementboard
membersorsupervisoryboardmembers,themanagementboardshouldbegiventheopportunitytoinvokeareasonableperiod,notto
exceed180daysfromthemomentthemanagementboardreceivesnoticeoftheintentiontoexercisetherightsasdescribedabove,to
respondtosuchintention.Ifinvoked,themanagementboardshouldusetheresponseperiodforfurtherdeliberationandconstructive
consultation.Thisshallbemonitoredbythesupervisoryboard.Shareholdersandothersentitledtoattendageneralmeetingofshareholders
areexpectedtoobservetheresponseperiod,ifinvokedbythemanagementboard.Theresponseperiodmaybeinvokedonlyonceforany
givengeneralmeetingofshareholdersandshallnotapply(a)inrespectofamatterforwhicharesponseperiodhasbeenpreviously
invokedor(b)ifashareholderholdsatleastseventyfivepercent(75%)ofourissuedsharecapitalasaconsequenceofasuccessfulpublic
bid.
Generalmeetingsofshareholdersshallbeconvenedbyanotice,whichshallincludeanagendastatingtheitemstobediscussed,including
fortheannualgeneralmeetingofshareholders,amongotherthings,theadoptionoftheannualaccounts,appropriationofourprofitsand
proposalsrelatingtothecompositionofthemanagementboardandsupervisoryboard,includingthefillingofanyvacanciesinthe
managementboardorsupervisoryboard.Inaddition,theagendashallincludesuchitemsashavebeenincludedthereinbythe
managementboard.Theagendashallalsoincludesuchitemsrequestedbyoneormoreshareholders,and
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othersentitledtoattendgeneralmeetingsofshareholders,representingatleast3%oftheissuedsharecapital.Requestsmustbemadein
writingorelectronicallyandreceivedbythemanagementboardatleast60daysbeforethedayofthemeeting.Theprovisionsunderthe
DCGCrelatingtotheresponseperiod,asdescribedabove,alsoapplyinrelationtoshareholders(orotherentitledtoattendthegeneral
meetingofshareholders)puttingmattersontheagenda.
Allshareholdersandothersentitledtoattendgeneralmeetingsofshareholdersareauthorizedtoattendthegeneralmeetingof
shareholders,toaddressthemeetingand,insofarastheyhavesuchright,tovote.Managementboardandsupervisoryboardmembers
mayattendageneralmeetingofshareholders.Inthesemeetings,theyhaveanadvisoryvote.Thechairmanofthemeetingmaydecideat
itsdiscretiontoadmitotherpersonstothemeeting.
UnderDutchlaw,approvalbythegeneralmeetingofshareholdersisrequiredforresolutionsofthemanagementboardrelatingtoa
significantchangeintheidentityorthecharacterofthecompanyorthebusinessofthecompany,whichincludes:
atransferofthebusinessorvirtuallytheentirebusinesstoathirdparty
theentryintoorterminationofalongtermcooperationofthecompanyorasubsidiarywithanotherlegalentityorcompanyorasafully
liablepartnerinalimitedpartnershiporgeneralpartnership,ifsuchcooperationorterminationisofafarreachingsignificanceforthe
companyand
theacquisitionordivestmentbythecompanyorasubsidiaryofaparticipatinginterestinthecapitalofacompanyhavingavalueofat
leastonethirdoftheamountofitsassetsaccordingtoitsbalancesheetandexplanatorynotesor,ifthecompanypreparesaconsolidated
balancesheet,accordingtoitsconsolidatedbalancesheetandexplanatorynotesinthelastadoptedannualaccountsofthecompany.
Quorumandvotingrequirements
EachClassAshareconferstherightontheholdertocastonevoteatthegeneralmeetingofshareholders.EachClassBshareconfersthe
rightontheholdertocasttenvotesatthegeneralmeetingofshareholders.Shareholdersmayvotebyproxy.Thevotingrightsattachedto
anysharesheldbyusoroursubsidiariescannotbevotedbyusoroursubsidiariesaslongastheyareheldintreasury.Shareswhichcannot
bevotedpursuanttoDutchlawwillnotbetakenintoaccountforthepurposeofdeterminingthenumberofshareholdersthatvoteandthat
arepresentorrepresented,ortheamountofthesharecapitalthatisprovidedorthatisrepresentedatageneralmeetingofshareholders.
Managementboardandsupervisoryboardmembers
Appointmentofmanagementboardmembers
Underourarticlesofassociation,managementboardmembersareappointedbythegeneralmeetingofshareholdersuponbinding
nominationbyoursupervisoryboard.However,thegeneralmeetingofshareholdersmayatalltimesoverrulethebindingnominationbya
resolutionadoptedbyatleastatwothirdsmajorityofthevotescast,providedsuchmajorityrepresentsmorethanhalfoftheissuedshare
capital.Ifthegeneralmeetingofshareholdersoverrulesthebindingnomination,thesupervisoryboardshallmakeanewnomination.
Appointmentofsupervisoryboardmembers
Underourarticlesofassociation,supervisoryboardmembersareappointedbythegeneralmeetingofshareholdersuponbinding
nominationbyoursupervisoryboard.However,thegeneralmeetingofshareholders
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mayatalltimesoverrulethebindingnominationbyaresolutionadoptedbyatleastatwothirdsmajorityofthevotescast,providedsuch
majorityrepresentsmorethanhalfoftheissuedsharecapital.Ifthegeneralmeetingofshareholdersoverrulesthebindingnomination,the
supervisoryboardshallmakeanewnomination.PursuanttotheAmendedandRestatedShareholdersAgreement,Expediaandthe
FounderswillagreethatanynewsupervisoryboardmemberwillbeproposedfornominationbyeitherExpediaortheFoundersas
applicable,dependentonwhichsupervisoryboardmemberresigns,isnotreappointedto,orisremovedfromthesupervisoryboard.Expedia
andtheFounderswillagreetoconsultoneanotherontheirrespectiveproposal.
Dutiesandliabilitiesofboardmembers
Eachmanagementboardandsupervisoryboardmemberhasadutytoactinthecorporateinterestofthecompany.UnderDutchlaw,the
corporateinterestextendstotheinterestsofallcorporatestakeholders,suchasshareholders,creditors,employees,customersand
suppliers.Thedutytoactinthecorporateinterestofthecompanyalsoappliesintheeventofaproposedsaleorbreakupofthecompany,
wherebythecircumstancesgenerallydictatehowsuchdutyistobeapplied.
Dividendsandotherdistributions
Amountavailablefordistribution
Wemayonlymakedistributionstoourshareholderstotheextentthatourshareholdersequityexceedsthesumofthepaidinandcalledup
sharecapitalplusthereservesasrequiredtobemaintainedbyDutchlaworbythearticlesofassociation.Weonlymakeadistributionof
profitstoourshareholdersaftertheadoptionbyourgeneralmeetingofshareholdersofourannualaccountsdemonstratingthatsuch
distributionislegallypermitted.However,ourmanagementboardmay,subjecttoapprovalofthesupervisoryboardbutwithoutany
shareholdervote,makeinterimdistributionsatanytimefromreservesthatarenotrequiredtobemaintainedbylaworourarticlesof
association,suchasourprofitreserve(consistingofprofitsfromprioryearsthathavenotbeenpaidoutasdividendsinrespectoftheyear
duringwhichsuchprofitswereearned)andoursharepremiumreserve(consistingofamountsreceiveduponissuanceofourequityin
excessofthenominalvalueofourshares),ineachcasesubjecttoourshareholdersequityexceedingthesumofthepaidinandcalledup
sharecapitalplusthereservesasrequiredtobemaintainedbyDutchlaworbythearticlesofassociation.
Inaddition,ourmanagementboardmay,subjecttoapprovalofthesupervisoryboardbutwithoutanyshareholdervote,declareandpay
interimdividendstoourshareholdersoutofanticipatedprofitsforthecurrentyear,subjecttoourshareholdersequityexceedingthesumof
thepaidinandcalledupsharecapitalplusthereservesasrequiredtobemaintainedbyDutchlaworbythearticlesofassociation.Ifthe
annualaccountsofsuchyearprovidethatthecompanyhasmadelessprofitthandistributedtotheshareholdersbywayofinterimdividend
thecompanymustrequestrepaymentoftheamountbywhichtheinterimdividendexceedstheprofitfromthoseshareholderswhichknewor
whichshouldhaveknownthatthepaymentoftheinterimdividendwasnotpermitted.
PursuanttotheAmendedandRestatedShareholdersAgreement,ExpediaandtheFounderswillagreethataresolutionofthegeneral
meetingofshareholderstodistributedividendsinexcessof50%ofourprofitsforacertainyearrequiresconsentofatleastoneofthe
Founders.
Wedonotanticipatepayinganycashdividendsfortheforeseeablefuture.
Exchangecontrols
UnderexistinglawsoftheNetherlands,therearenoexchangecontrolsapplicabletothetransfertopersonsoutsideoftheNetherlandsof
dividendsorotherdistributionswithrespectto,oroftheproceedsfromthesaleof,sharesofaDutchcompany.
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Squeezeoutprocedures
PursuanttoSection2:92aoftheDutchCivilCode,ashareholderwho(aloneortogetherwithhisgroupcompanies)forhisownaccount
holdsatleast95%ofourissuedsharecapitalmayinitiateproceedingsagainstallofacompanysothershareholdersjointlyforthetransferof
theirsharestotheclaimant.TheproceedingsareheldbeforetheEnterpriseChamberoftheAmsterdamCourtofAppeal
(Ondernemingskamer)andcanbeinstitutedbymeansofawritofsummonsserveduponeachoftheminorityshareholdersinaccordance
withtheprovisionsoftheDutchCodeofCivilProcedure(WetboekvanBurgerlijkeRechtsvordering).TheEnterpriseChambermaygrantthe
claimforsqueezeoutinrelationtoallminorityshareholdersandwilldeterminethepricetobepaidfortheshares,ifnecessaryafter
appointmentofoneorthreeexpertswhowillofferanopiniontotheEnterpriseChamberonthevaluetobepaidforthesharesoftheminority
shareholders.OncetheordertotransferbecomesfinalbeforetheEnterpriseChamber,thepersonacquiringthesharesshallgivewritten
noticeofthedateandplaceofpaymentandthepricetotheholdersofthesharestobeacquiredwhoseaddressesareknowntohim.Unless
theaddressesofallofthemareknowntotheacquiringperson,suchpersonisrequiredtopublishthesameinadailynewspaperwitha
nationalcirculation.
Ashareholderthatholdsamajorityofourissuedsharecapital,butlessthanthe95%requiredtoinstitutethesqueezeoutproceedings
describedabove,mayseektoproposeandimplementoneormorerestructuringtransactionswiththeobjectivetoobtainatleast95%ofour
issuedsharecapitalandthustobeallowedtoinitiatesqueezeoutproceedings.Thoserestructuringtransactionscould,amongstother
things,includeanassetsaletransaction,alegalmergerordemergerinvolvingourcompany,acontributionofcashand/orassetsagainst
issuanceofsharesinvolvingourcompany,theissueofnewsharestothemajorityshareholderwhileexcludinganypreemptionrightsof
minorityshareholdersinrelationtosuchissuanceorliquidation.
Adoptionofannualaccountsanddischargeofourmanagementboardandsupervisoryboard
NolaterthanMay31ofeachyear(subjecttoanextensionoffivemonthsbyourgeneralmeetingofshareholdersinextraordinary
circumstances),ourmanagementboardmustprepareourDutchstatutoryaccountsfortheprecedingfiscalyear.OurDutchstatutory
accountsarepreparedinaccordancewithInternationalFinancialReportingStandards.AfterapprovalofourDutchstatutoryaccountsbyour
supervisoryboard,thesefinancialstatementsmustbemadeavailableforinspectionbyourshareholdersandothersentitledtoattend
generalmeetingsduringtheperiodfromthetimewhenourannualshareholdersmeetingiscalleduntilthedatewhenthemeetingisheld.
TheDutchstatutoryaccounts,includinganyproposeddistributiontoourshareholdersofprofitsreceivedduringtherelevantyear,mustthen
beadoptedbyourshareholdersattheannualshareholdersmeeting.
Ourmanagementboardwill,ateachannualshareholdersmeetingadoptingtheannualfinancialstatementsfortheprecedingfiscalyear,
proposethatourshareholdersadoptaresolutiongrantingdischargefromliabilitytothemembersofourmanagementboardfortheir
managementofthecompanyandtothemembersofoursupervisoryboardfortheirsupervisorydutiesduringthepriorfiscalyear.Under
Dutchlawthisdischargewillonlyapplytomattersthatareapparentfromthefaceoftheannualfinancialstatementsorthathaveotherwise
beendisclosed(forexample,inapressreleaseorotherpublicfiling)tothegeneralmeetingofshareholders.
OurfinancialreportingwillbesubjecttothesupervisionoftheDutchAuthorityfortheFinancialMarkets(StichtingAutoriteitFinancile
Markten),orAFM.TheAFMwillreviewthecontentofthefinancialreportsandhastheauthoritytoapproachuswithrequestsforinformation
ifithasreasonabledoubtsastotheintegrityofourfinancialreporting.Foramoredetaileddescriptionwerefertothedescriptionbelow
undertheheadingDutchFinancialReportingSupervisionAct.
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ComparisonofDutchcorporatelawandourarticlesofassociationandU.S.corporatelaw
WeareincorporatedunderthelawsoftheNetherlands.Thefollowingdiscussionsummarizesmaterialdifferencesbetweentherightsof
holdersofourClassAsharesandtherightsofholdersofthecommonstockofatypicalcorporationincorporatedunderthelawsofthestate
ofDelaware,whichresultfromdifferencesingoverningdocumentsandthelawsoftheNetherlandsandDelaware.
ThisdiscussiondoesnotpurporttobeacompletestatementoftherightsofholdersofourClassAsharesorClassBsharesunder
applicableDutchlawandourarticlesofassociationortherightsofholdersofthecommonstockofatypicalcorporationunderapplicable
Delawarelawandatypicalcertificateofincorporationandbylaws.
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TheNetherlands
Delaware
Dutiesofboardmembers
UnderDutchlawthemanagementboardiscollectivelyresponsiblefor
thepolicyanddaytodaymanagementofthecompany.The
supervisoryboardis,interalia,assignedthetaskofsupervisingthe
managementboard.Eachmanagementboardandsupervisoryboard
memberhasadutytowardsthecompanytoproperlyperformtheduties
assignedtohim.Furthermore,eachmanagementboardand
supervisoryboardmemberhasadutytoactinthecorporateinterestof
thecompany.
UnlikeunderDelawarelaw,underDutchlawthecorporateinterest
extendstotheinterestsofallcorporatestakeholders,suchas
shareholders,creditors,employees,customersandsuppliers.Theduty
toactinthecorporateinterestofallstakeholdersinthecompanyalso
appliesintheeventofaproposedsaleorbreakupofthecompany.The
managementboardisthereforenotunderanyobligationunderDutch
lawtoseekthehighestvalueforthesharesofthecompanyintheevent
ofaproposedsaleorbreakupofthecompany,ifintheopinionofthe
managementboardsaletothepersonofferingthehighestvalueforthe
companywouldnotbeinthebestinterestofthecompany,takinginto
accounttheinterestsofallstakeholders.
Boardmemberterms
Theboardofdirectorsbearstheultimateresponsibilityfor
managingthebusinessandaffairsofacorporation.Indischarging
thisfunction,directorsofaDelawarecorporationowefiduciary
dutiesofcareandloyaltytothecorporationandtoits
shareholders.Delawarecourtshavedecidedthatthedirectorsof
aDelawarecorporationarerequiredtoexerciseinformed
businessjudgmentintheperformanceoftheirduties.Informed
businessjudgmentmeansthatthedirectorshaveinformed
themselvesofallmaterialinformationreasonablyavailableto
them.Delawarecourtshavealsoimposedaheightenedstandard
ofconductupondirectorsofaDelawarecorporationwhotakeany
actiondesignedtodefeatathreatenedchangeincontrolofthe
corporation.Inaddition,underDelawarelaw,whentheboardof
directorsofaDelawarecorporationapprovesthesaleorbreakup
ofacorporation,theboardofdirectorsmay,incertain
circumstances,haveadutytoobtainthehighestvalue
reasonablyavailabletotheshareholders.
UndertheDutchCorporateGovernanceCode,managementboardand
supervisoryboardmembersofalistedcompanyaregenerally
appointedforanindividualtermofamaximumoffouryears.Pursuant
totheDutchCorporateGovernanceCodesupervisoryboardmembers
maynotbeelectedformorethanthreefouryearterms.Thereisno
suchlimitapplicabletomanagementboardmembers.Ourmanagement
boardmemberswillbeappointedforatermofoneyear.Underour
ManagementBoardRules,managementboardmemberswillretireno
laterthanthedayonwhichtheannualgeneralmeetingofshareholders
isheld,inthefirstcalendaryearaftertheyearinwhichsuchmember
wasappointed.Suchmanagementboardmemberisthenimmediately
availableforreappointment.Despitebeingelectedfora
TheDelawareGeneralCorporationLawgenerallyprovidesfora
oneyeartermfordirectors,butpermitsdirectorshipstobedivided
intouptothreeclasseswithuptothreeyearterms,withtheyears
foreachclassexpiringindifferentyears,ifpermittedbythe
certificateofincorporation,aninitialbylaworabylawadoptedby
theshareholders.Adirectorelectedtoserveatermona
classifiedboardmaynotberemovedbyshareholderswithout
cause.Thereisnolimitinthenumberoftermsadirectormay
serve.
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specifiedterm,amanagementboardorsupervisoryboardmembermay
besuspendedorremovedatanytimebythegeneralmeetingof
shareholders.Oursupervisoryboardmembersmayalsosuspend
managementboardmembers.Asuspensionbyoursupervisoryboard
membersmayatalltimesbediscontinuedbythegeneralmeetingof
shareholders.
Boardmembervacancies
Delaware
UnderDutchlaw,newmembersofthemanagementboardand
supervisoryboardsareappointedbythegeneralmeetingof
shareholders.Underourarticlesofassociation,themembersofour
managementboardandsupervisoryboardareappointedbythe
generalmeetingofshareholdersuponbindingnominationbyour
supervisoryboard.However,thegeneralmeetingofshareholdersmay
atalltimesoverrulethebindingnominationbyaresolutionadoptedby
atleastatwothirdsmajorityofthevotescast,providedsuchmajority
representsmorethanhalfoftheissuedsharecapital.Ifthegeneral
meetingofshareholdersoverrulesthebindingnomination,the
supervisoryboardshallmakeanewnomination.
TheDelawareGeneralCorporationLawprovidesthatvacancies
andnewlycreateddirectorshipsmaybefilledbyamajorityofthe
directorstheninoffice(eventhoughlessthanaquorum)unless
(i)otherwiseprovidedinthecertificateofincorporationorbylaws
ofthecorporationor(ii)thecertificateofincorporationdirectsthat
aparticularclassofstockistoelectsuchdirector,inwhichcase
anyotherdirectorselectedbysuchclass,orasoleremaining
directorelectedbysuchclass,willfillsuchvacancy.
Conflictofinteresttransactions
UnderDutchlaw,amanagementboardorsupervisoryboardmember
withaconflictofinterestmustabstainfromparticipatinginthedecision
makingprocesswithrespecttotherelevantmatter.Ifallmanagement
boardmembershaveaconflictofinterestandhencenomanagement
boardresolutioncanbeadopted,thentheresolutionmaybeadopted
bythesupervisoryboard.Ifallsupervisoryboardmembershavea
conflictofinterestandhencenosupervisoryboardresolutioncanbe
adopted,thentheresolutionmayneverthelessbeadoptedbythe
supervisoryboardasifnoneofthemhadaconflictofinterest.Our
articlesofassociation,ManagementBoardRulesandSupervisory
BoardRuleswillprovidethatamanagementboardorsupervisory
boardmemberwillnotbedeemedtohaveaconflictofinterestby
reasononlyofhisorheraffiliationwithadirectorindirectshareholder
ofthecompany.
TheDelawareGeneralCorporationLawgenerallypermits
transactionsinvolvingaDelawarecorporationandaninterested
directorofthatcorporationif:
thematerialfactsastothedirectorsrelationshiporinterestare
disclosedandamajorityofdisinteresteddirectorsconsent
thematerialfactsaredisclosedastothedirectorsrelationship
orinterestandamajorityofsharesentitledtovotethereon
consentor
thetransactionisfairtothecorporationatthetimeitis
authorizedbytheboardofdirectors,acommitteeoftheboard
ofdirectorsorthestockholders.
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Proxyvotingbyboardmembers
Delaware
Anabsentmanagementboardorsupervisoryboardmembermaygrant
AdirectorofaDelawarecorporationmaynotissueaproxy
aproxybutonlyinwritingtoanothermanagementboardorsupervisory
representingthedirectorsvotingrightsasadirector.
boardmember,respectively.
Votingrights
InaccordancewithDutchlawandourarticlesofassociation,each
issuedClassAshareconferstherighttocastonevoteandeachClass
Bshareconferstherighttocasttenvotesatthegeneralmeetingof
shareholders.Sharesthatareheldbyusorourdirectorindirect
subsidiariesdonotconfertherighttovotebyusoroursubsidiaries,
respectively.
UndertheDelawareGeneralCorporationLaw,eachshareholder
isentitledtoonevotepershareofstock,unlessthecertificateof
incorporationprovidesotherwise.Inaddition,thecertificateof
incorporationmayprovideforcumulativevotingatallelectionsof
directorsofthecorporation,oratelectionsheldunderspecified
circumstances.Eitherthecertificateofincorporationorthebylaws
mayspecifythenumberofsharesand/ortheamountofother
securitiesthatmustberepresentedatameetinginorderto
constituteaquorum,butinnoeventwillaquorumconsistofless
thanonethirdofthesharesentitledtovoteatameeting.
Foreachgeneralmeetingofshareholders,arecorddatemaybe
appliedwithrespecttoClassAsharesandClassBsharesinorderto
establishwhichshareholdersareentitledtoattendandvoteatthe
generalmeetingofshareholders,whichdateissetbythemanagement
board.Therecorddatewillbe28calendardayspriortothedateofthe
generalmeetingofshareholders.Therecorddateandthemannerin
whichshareholderscanregisterandexercisetheirrightswillbesetout
inthenoticeofthemeetingandthearticlesofassociation.
Shareholderproposals
Shareholdersasoftherecorddateforthemeetingareentitledto
voteatthemeeting,andtheboardofdirectorsmayfixarecord
datethatisnomorethan60norlessthan10daysbeforethe
dateofthemeeting,andifnorecorddateissetthentherecord
dateisthecloseofbusinessonthedaynextprecedingtheday
onwhichnoticeisgiven,orifnoticeiswaivedthentherecord
dateisthecloseofbusinessonthedaynextprecedingtheday
onwhichthemeetingisheld.Thedeterminationofthe
shareholdersofrecordentitledtonoticeortovoteatameetingof
shareholdersshallapplytoanyadjournmentofthemeeting,but
theboardofdirectorsmayfixanewrecorddatefortheadjourned
meeting.
Pursuanttoourarticlesofassociation,extraordinarygeneralmeetings
ofshareholderswillbeheldwheneverourmanagementboardor
supervisoryboarddeemssuchtobenecessary.
Delawarelawdoesnotspecificallygrantshareholderstherightto
bringbusinessbeforeanannualorspecialmeeting.However,ifa
DelawarecorporationissubjecttotheSECsproxyrules,a
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PursuanttoDutchlaw,oneormoreshareholdersorothersentitledto
attendgeneralmeetings,whojointlyrepresentatleastonetenthofthe
issuedsharecapitalmayrequestconvocationofanextraordinary
generalmeetingwithanagendaasrequestedbythem.Ifour
managementboardoroursupervisoryboarddoesnotinresponseto
sucharequestcallanextraordinarygeneralmeetingtobeheldwithin
sixweeksfromthedateofourreceiptoftherequest,thepersons
requestingthemeetingmaybeauthorizedupontheirrequestbya
Dutchcourtinsummaryproceedingstoconveneanextraordinary
generalmeetingwiththeagendarequestedbythem.Theagendashall
alsoincludesuchitemsrequestedbyoneormoreshareholders,and
othersentitledtoattendgeneralmeetingsofshareholders,representing
atleast3%oftheissuedsharecapital.Requestsmustbemadein
writingorelectronicallyandreceivedbythemanagementboardatleast
60daysbeforethedayofthemeeting.
Delaware
shareholderwhoownsatleast$2,000inmarketvalue,or1%of
thecorporationssecuritiesentitled
tovote,mayproposeamatterforavoteatanannualorspecial
meetinginaccordancewiththoserules.
TheDCGCrecommendsthat,beforeexercisingtherightsdescribed
above,themanagementboardshouldfirstbeconsulted.Ifthe
envisagedexerciseofsuchrightsmightresultinachangetothe
companysstrategy,suchasbydismissingoneormoremanagement
boardmembersorsupervisoryboardmembers,themanagementboard
shouldbegiventheopportunitytoinvokeareasonableperiod,notto
exceed180daysfromthemomentthemanagementboardreceives
noticeoftheintentiontoexercisetherightsasdescribedabove,to
respondtosuchintention.Ifinvoked,themanagementboardshould
usetheresponseperiodforfurtherdeliberationandconstructive
consultationandshouldexploreavailablealternatives.Shareholders
andothersentitledtoattendageneralmeetingofshareholdersare
expectedtoobservetheresponseperiod,ifinvokedbythe
managementboard.Theresponseperiodmaybeinvokedonlyoncefor
anygivengeneralmeetingofshareholdersandshallnotapply(a)in
respectofamatterforwhicharesponseperiodhasbeenpreviously
invokedor(b)ifashareholderholdsatleastseventyfivepercent
(75%)ofourissuedsharecapitalasaconsequenceofasuccessful
publicbid.
Actionbywrittenconsent
UnderDutchlaw,shareholdersresolutionsmaybeadoptedinwriting
withoutholdingameetingofshareholders,provided(a)thearticlesof
association
AlthoughpermittedbyDelawarelaw,publiclylistedcompaniesdo
nottypicallypermitshareholdersofacorporationtotakeactionby
writtenconsent.
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expresslysoallow,(b)nobearersharesor(withthecompanys
cooperation)depositoryreceiptsareissued,(c)therearenopersons
entitledtothesamerightsasholdersofdepositoryreceiptsissuedwith
thecompanyscooperation,(d)themanagementboardandsupervisory
boardmembershavebeengiventheopportunitytogivetheiradviceon
theresolution,and(e)theresolutionisadoptedunanimouslybyall
shareholdersthatareentitledtovote.Therequirementof
unanimityrenderstheadoptionofshareholderresolutionswithouta
meetingnotfeasibleforpubliclytradedcompanies.
Delaware
Appraisalrights
Subjecttocertainexceptions,Dutchlawdoesnotrecognizethe
conceptofappraisalordissentersrights.
TheDelawareGeneralCorporationLawprovidesforshareholder
appraisalrights,ortherighttodemandpaymentincashofthe
judiciallydeterminedfairvalueoftheshareholdersshares,in
connectionwithcertainmergersandconsolidations.
TheconceptofappraisalrightsdoesnotexistunderDutchlaw.
However,pursuanttoDutchlaw,ashareholderwhoforitsownaccount
(ortogetherwithitsgroupcompanies)providesatleast95%ofthe
companysissuedcapitalmayinstituteproceedingsagainstthe
companysothershareholdersjointlyforthetransferoftheirsharesto
thatshareholder.TheproceedingsareheldbeforetheEnterprise
ChamberoftheAmsterdamCourtofAppeal(Ondernemingskamer),
whichmaygranttheclaimforsqueezeoutinrelationtoallminority
shareholdersandwilldeterminethepricetobepaidfortheshares,if
necessaryafterappointmentofoneorthreeexpertswhowillofferan
opiniontotheEnterpriseChamberonthevalueofthesharestobe
transferred.
Furthermore,Dutchlawprovidesthat,totheextenttheacquiring
companyinacrossbordermergerisorganizedunderthelawsof
anotherEUmemberstate,ashareholderofaDutchdisappearing
companywhohasvotedagainstthecrossbordermergermayfilea
claimwiththeDutchcompanyforcompensation.Thecompensationis
tobedeterminedbyoneormoreindependentexperts.
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Shareholdersuits
IntheeventathirdpartyisliabletoaDutchcompany,onlythe
companyitselfcanbringacivilactionagainstthatparty.
Theindividualshareholdersdonothavetherighttobringanactionon
behalfofthecompany.Onlyintheeventthatthecausefortheliability
ofathirdpartytothecompanyalsoconstitutesatortiousactdirectly
againstashareholderdoesthatshareholderhaveanindividualrightof
actionagainstsuchthirdpartyinitsownname.TheDutchCivilCode
providesforthepossibilitytoinitiatesuchactionscollectively.A
foundationoranassociationwhoseobjectiveistoprotecttherightsofa
groupofpersonshavingsimilarinterestscaninstituteacollective
action.Thecollectiveactionitselfcannotresultinanorderforpayment
ofmonetarydamagesbutmayonlyresultinadeclaratoryjudgment
(verklaringvoorrecht).Inordertoobtaincompensationfordamages,
thefoundationorassociationandthedefendantmayreachoftenon
thebasisofsuchdeclaratoryjudgmentasettlement.ADutchcourt
maydeclarethesettlementagreementbindinguponalltheinjured
partieswithanoptoutchoiceforanindividualinjuredparty.An
individualinjuredpartymayalsoitselfinstituteacivilclaimfordamages.
Repurchaseofshares
Delaware
UndertheDelawareGeneralCorporationLaw,ashareholdermay
bringaderivativeactiononbehalfofthecorporationtoenforce
therightsofthecorporation.Anindividualalsomaycommencea
classactionsuitonbehalfofhimselfandothersimilarlysituated
shareholderswheretherequirementsformaintainingaclass
actionunderDelawarelawhavebeenmet.Apersonmayinstitute
andmaintainsuchasuitonlyifthatpersonwasashareholderat
thetimeofthetransactionwhichisthesubjectofthesuit.In
addition,underDelawarecaselaw,theplaintiffnormallymustbe
ashareholderatthetimeofthetransactionthatisthesubjectof
thesuitandthroughoutthedurationofthederivativesuit.
Delawarelawalsorequiresthatthederivativeplaintiffmakea
demandonthedirectorsofthecorporationtoassertthecorporate
claimbeforethesuitmaybeprosecutedbythederivativeplaintiff
incourt,unlesssuchademandwouldbefutile.
UnderDutchlaw,wemayrepurchaseourownfullypaidsharesatany
timefornoconsideration(omniet).Exceptforcertainstatutory
exceptions,weonlymayacquirefullypaidsharesforconsiderationto
theextentthat(i)ourshareholdersequity,lessthepaymentrequiredto
maketheacquisitionandcertainotheramountsspecifiedbyDutchlaw,
doesnotfallbelowthesumofpaidinandcalledupsharecapitaland
anystatutoryreserves,(ii)weandoursubsidiarieswouldthereafternot
holdsharesorholdapledgeoverourshareswithanaggregate
nominalvalueexceeding50%ofourissuedsharecapital,and(iii)the
managementboardhasbeenauthorizedbythegeneralmeetingof
shareholders.
UndertheDelawareGeneralCorporationLaw,acorporationmay
purchaseorredeemitsownsharesunlessthecapitalofthe
corporationisimpairedorthepurchaseorredemptionwould
causeanimpairmentofthecapitalofthecorporation.ADelaware
corporationmay,however,purchaseorredeemoutofcapitalany
ofitspreferredsharesor,ifnopreferredsharesareoutstanding,
anyofitsownsharesifsuchshareswillberetiredupon
acquisitionandthecapitalofthecorporationwillbereducedin
accordancewithspecifiedlimitations.
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Delaware
AuthorizationfromtheGeneralMeetingtoacquireoursharesmust
specifythenumberandclassofsharesthatmaybeacquired,the
mannerinwhichsharesmaybeacquiredandthepricerangewithin
whichsharesmaybeacquired.Suchauthorizationwillbevalidforno
morethan18months.Anysharesweholdmaynotbevotedorcounted
forvotingquorumpurposes.
Noauthorizationofthegeneralmeetingofshareholdersisrequiredif
ClassAsharesareacquiredbyuswiththeintentionoftransferringsuch
ClassAsharesbyustoouremployeesunderanapplicableemployee
stockpurchaseplan,providedthatsuchClassAsharesarelistedona
stockexchange.
Antitakeoverprovisions
UnderDutchlaw,variousprotectivemeasuresarepossibleand
permissiblewithintheboundariessetbyDutchlawandDutchcaselaw.
Dutchlawdoesnotcontainantitakeovermeasuresthatareapplicable
by
operationoflaw.Ourdualclasssharestructurethatgivesgreater
votingpowertotheClassBsharesbeneficiallyownedbyExpediaand
ourFounders,thebindingnominationstructurefortheappointmentof
ourmanagementboardmembersandsupervisoryboardmembers,and
theprovisionsinourarticlesofassociationwhichprovidethatcertain
shareholderdecisionscanonlybepassedifproposedbyour
managementboardandapprovedbyoursupervisoryboardmaybe
perceivedasanantitakeoverprovision.Otherthanthis,wehavenot
incorporatedanyantitakeovermeasuresinourarticlesofassociation.
InadditiontootheraspectsofDelawarelawgoverningfiduciary
dutiesofdirectorsduringapotentialtakeover,theDelaware
GeneralCorporationLawalsocontainsabusinesscombination
statutethatprotectsDelawarecompaniesfromhostiletakeovers
andfromactionsfollowingthetakeoverbyprohibitingsome
transactionsonceanacquirerhasgainedasignificantholdingin
thecorporation.
Section203oftheDelawareGeneralCorporationLawprohibits
businesscombinations,includingmergers,salesandleasesof
assets,issuancesofsecuritiesandsimilartransactionsbya
corporationorasubsidiarywithaninterestedshareholderthat
beneficiallyowns15%ormoreofacorporationsvotingstock,
withinthreeyearsafterthepersonbecomesaninterested
shareholder,unless:
thetransactionthatwillcausethepersontobecomean
interestedshareholderisapprovedbytheboardofdirectorsof
thetargetpriortothetransactions
afterthecompletionofthetransactioninwhichtheperson
becomesaninterestedshareholder,theinterestedshareholder
holdsatleast85%ofthevotingstockofthecorporationnot
includingsharesownedbypersonswhoaredirectorsand
officersofinterestedshareholdersandsharesownedby
specifiedemployeebenefitplansor
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Delaware
afterthepersonbecomesaninterestedshareholder,the
businesscombinationisapprovedbytheboardofdirectorsof
thecorporationandholdersofatleast66.67%ofthe
outstandingvotingstock,excludingsharesheldbythe
interestedshareholder.
ADelawarecorporationmayelectnottobegovernedby
Section203byaprovisioncontainedintheoriginalcertificateof
incorporationofthecorporationoranamendmenttotheoriginal
certificateofincorporationortothebylawsofthecompany,which
amendmentmustbeapprovedbyamajorityofthesharesentitled
tovoteandmaynotbefurtheramendedbytheboardofdirectors
ofthecorporation.Suchanamendmentisnoteffectiveuntil
twelvemonthsfollowingitsadoption.
Inspectionofbooksandrecords
Themanagementboardprovidesthegeneralmeetingofshareholders
ingoodtimewithallinformationthatashareholderrequiresduringa
generalmeeting,unlessthiswouldbecontrarytoanoverridinginterest
ofus.Ifthemanagementboardinvokesanoverridinginterest,itmust
givereasons.
UndertheDelawareGeneralCorporationLaw,anyshareholder
mayinspectforanyproperpurposecertainofthecorporations
booksandrecordsduringthecorporationsusualhoursof
business.
UndertheAmendedandRestatedShareholdersAgreement,Expedia
andtheFoundersshallbeentitledtoreceivecertaininformationfrom
us,subjectalwaystotherestrictionsimposedonusbymandatorylaw.
Ourshareholdersregisterisavailableforinspectionbythe
shareholdersandusufructurariesandpledgeeswhoseparticularsmust
beregisteredtherein.
Removalofboardmember
Underourarticlesofassociation,thegeneralmeetingofshareholders
shallatalltimesbeentitledtosuspendordismissamanagementboard
orsupervisoryboardmember.Thegeneralmeetingofshareholders
mayonlyadoptaresolutiontosuspendordismissamanagement
boardmemberorsupervisoryboardmemberbyatleastatwothirds
majorityofthevotescast,providedsuchmajorityrepresentsmorethan
halfoftheissuedsharecapital,unlesstheproposalwasmadebythe
supervisoryboardinwhichcaseasimplemajorityofthevotescastis
sufficient.
UndertheDelawareGeneralCorporationLaw,anydirectororthe
entireboardofdirectorsmayberemoved,withorwithoutcause,
bytheholdersofamajorityofthesharesthenentitledtovoteat
anelectionofdirectors,except(i)unlessthecertificateof
incorporationprovidesotherwise,inthecaseofacorporation
whoseboardisclassified,shareholdersmayeffectsuchremoval
onlyforcause,or(ii)inthecaseofacorporationhaving
cumulativevoting,iflessthantheentireboardistoberemoved,
nodirectormayberemovedwithoutcauseifthevotes
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Delaware
castagainsthisremovalwouldbesufficienttoelecthimifthen
cumulativelyvotedatanelectionoftheentireboardofdirectors,
or,ifthereareclassesofdirectors,atanelectionoftheclassof
directorsofwhichheisapart.
Preemptiverights
UnderDutchlaw,intheeventofanissuanceofshares,each
shareholderwillhaveaproratapreemptiverightinproportiontothe
aggregatenominalvalueofthesharesheldbysuchholder(withthe
exceptionofsharestobeissuedtogroupemployeesorsharesissued
againstacontributionotherthanincashorpursuanttotheexerciseofa
previouslyacquiredrighttosubscribeforshares).Underourarticlesof
association,thepreemptiverightsinrespectofnewlyissuedshares
mayberestrictedorexcludedbyaresolutionofthegeneralmeetingof
shareholdersthatmustfirstbeproposedbyourmanagementboard
andapprovedbyoursupervisoryboard.
UndertheDelawareGeneralCorporationLaw,shareholdershave
nopreemptiverightstosubscribeforadditionalissuesofstockor
toanysecurityconvertibleintosuchstockunless,andtothe
extentthat,suchrightsareexpresslyprovidedforinthecertificate
ofincorporation.
Themanagementboardmayrestrictorexcludethepreemptiverightsin
respectofnewlyissuedsharesifithasbeendesignatedasthe
authorizedbodytodosobythegeneralmeetingofshareholders.Such
designationcanbegrantedforaperiodnotexceedingfiveyears.A
resolutionofthegeneralmeetingofshareholderstorestrictorexclude
thepreemptiverightsortodesignatethemanagementboardasthe
authorizedbodytodosorequiresatwothirdsmajorityofthevotes
cast,iflessthanonehalfofourissuedsharecapitalisrepresentedat
themeeting.
PursuanttotheAmendedandRestatedShareholdersAgreement,
ExpediaandtheFounderswillagreethatresolutionsrelatingtoan
increaseofoursharecapital,includingresolutionstolimitorexclude
preemptiverightsofexistingshareholders,requireconsentofatleast
oneoftheFounders.
Dividends
Wemayonlymakedistributionstoourshareholderstotheextentthat
ourshareholdersequityexceedsthesumofthepaidinandcalledup
sharecapitalplusthe
UndertheDelawareGeneralCorporationLaw,aDelaware
corporationmaypaydividendsoutofitssurplus(theexcessof
netassetsovercapital),orin
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reservesasrequiredtobemaintainedbyDutchlaworbythearticlesof
association.Wemayonlymakeadistributionofprofitstoour
shareholdersaftertheadoptionbyourgeneralmeetingofshareholders
ofourannualaccountsdemonstratingthatsuchdistributionislegally
permitted.However,ourmanagementboardmay,subjecttoapprovalof
oursupervisoryboardandtheaboverestrictionsinrelationtoour
shareholdersequitybutwithoutanyshareholdervote,make
distributionsatanytimefromreservesthatarenotrequiredtobe
maintainedbylaworourarticlesofassociation,suchasourprofit
reserve(consistingofprofitsfromprioryearsthathavenotbeenpaid
outasdividendsinrespectoftheyearduringwhichsuchprofitswere
earned)andoursharepremiumreserve(consistingofamounts
receiveduponissuanceofourequityinexcessofthenominalvalueof
ourshares).
Delaware
casethereisnosurplus,outofitsnetprofitsforthefiscalyearin
whichthedividendisdeclaredand/ortheprecedingfiscalyear
(providedthattheamountofthecapitalofthecorporationisnot
lessthantheaggregateamountofthecapitalrepresentedbythe
issuedandoutstandingstockofallclasseshavingapreference
uponthedistributionofassets).Indeterminingtheamountof
surplusofaDelawarecorporation,theassetsofthecorporation,
includingstockofsubsidiariesownedbythecorporation,mustbe
valuedattheirfairmarketvalueasdeterminedbytheboardof
directors,withoutregardtotheirhistoricalbookvalue.Dividends
maybepaidintheformofClassAshares,propertyorcash.
Inaddition,ourmanagementboardmay,subjecttoapprovalofour
supervisoryboardandtheaboverestrictionsinrelationtoour
shareholdersequitybutwithoutanyshareholdervote,declareandpay
interimdividendstoourshareholdersoutofanticipatedprofitsforthe
currentyear.Iftheannualaccountsofsuchyearprovidethatthe
companyhasmadelessprofitthandistributedtotheshareholdersby
wayofinterimdividendthecompanymustrequestrepaymentofthe
amountbywhichtheinterimdividendexceedstheprofitfromthose
shareholderswhichkneworwhichshouldhaveknownthatthepayment
oftheinterimdividendwasnotpermitted.PursuanttotheAmendedand
RestatedShareholdersAgreement,ExpediaandtheFounderswill
agreethataresolutionofthegeneralmeetingofshareholdersto
distributedividendsinexcessof50%ofourprofitsforacertainyear
requiresconsentofatleastoneoftheFounders.
Shareholdervoteoncertainreorganizations
UnderDutchlaw,approvalbythegeneralmeetingofshareholdersis
requiredforresolutionsofthemanagementboardrelatingtoa
significantchangeintheidentityorthecharacterofthecompanyorthe
businessofthecompany,whichincludes:
atransferofthebusinessorvirtuallytheentirebusinesstoathird
party
UndertheDelawareGeneralCorporationLaw,thevoteofa
majorityoftheoutstandingsharesofcapitalstockentitledtovote
thereongenerallyisnecessarytoapproveamergeror
consolidationorthesaleofallorsubstantiallyalloftheassetsof
acorporation.TheDelawareGeneralCorporationLawpermitsa
corporationtoincludeinitscertificateofincorporationaprovision
requiringforany
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theentryintoorterminationofalongtermcooperationofthe
companyorasubsidiarywithanotherlegalentityorcompanyorasa
fullyliablepartnerinalimitedpartnershiporgeneralpartnership,if
suchcooperationorterminationisofafarreachingsignificancefor
thecompanyand
theacquisitionordivestmentbythecompanyorasubsidiaryofa
participatinginterestinthecapitalofacompanyhavingavalueofat
leastonethirdoftheamountofitsassetsaccordingtoitsbalance
sheetandexplanatorynotesor,ifthecompanypreparesa
consolidatedbalancesheet,accordingtoitsconsolidatedbalance
sheetandexplanatorynotesinthelastadoptedannualaccountsof
thecompany.
Delaware
corporateactionthevoteofalargerportionofthestockorofany
classorseriesofstockthanwouldotherwiseberequired.
UndertheDelawareGeneralCorporationLaw,novoteofthe
shareholdersofasurvivingcorporationtoamergerisneeded,
however,unlessrequiredbythecertificateofincorporation,if
(i)theagreementofmergerdoesnotamendinanyrespectthe
certificateofincorporationofthesurvivingcorporation,(ii)the
sharesofstockofthesurvivingcorporationarenotchangedin
themergerand(iii)thenumberofsharesofcommonstockofthe
survivingcorporationintowhichanyothershares,securitiesor
obligationstobeissuedinthemergermaybeconverteddoesnot
exceed20%ofthesurvivingcorporationscommonstock
outstandingimmediatelypriortotheeffectivedateofthemerger.
Inaddition,shareholdersmaynotbeentitledtovoteincertain
mergerswithothercorporationsthatown90%ormoreofthe
outstandingsharesofeachclassofstockofsuchcorporation,but
theshareholderswillbeentitledtoappraisalrights.
Remunerationofboardmembers
IncontrasttoDelawarelaw,underDutchlawthegeneralmeetingmust
adopttheremunerationpolicyforthemanagementboard,which
includestheoutlinesofthecompensationofanymanagementboard
members.
Pursuanttoourarticlesofassociation,thegeneralmeetingwill
determinetheremunerationofsupervisoryboardmembers.The
supervisoryboardmemberswilldeterminethelevelandstructureofthe
remunerationofthemanagementboardmembers.
UndertheDelawareGeneralCorporationLaw,theshareholders
donotgenerallyhavetherighttoapprovethecompensation
policyfordirectorsortheseniormanagementofthecorporation,
althoughcertainaspectsofexecutivecompensationmaybe
subjecttoshareholdervoteduetotheprovisionsofU.S.federal
securitiesandtaxlaw,aswellasexchangerequirements.
Aproposalwithrespecttomanagementboardcompensationschemes
intheformofsharesorrightstosharesmustbesubmittedforapproval
tothegeneralmeetingofshareholders.Suchproposalmustsetoutat
leastthemaximumnumberofsharesorrightstosharestobegranted
tomembersofthemanagementboardandthecriteriaforgrantingsuch
shares.
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DutchCorporateGovernanceCode
TheDCGCcontainsbothprinciplesandbestpracticeprovisionsformanagementboards,supervisoryboards,shareholdersandgeneral
meetingsofshareholders,financialreporting,auditors,disclosure,complianceandenforcementstandards.AsaDutchcompany,weare
subjecttotheDCGCandarerequiredtodiscloseinourannualreport,filedintheNetherlands,whetherwecomplywiththeprovisionsofthe
DCGC.IfwedonotcomplywiththeprovisionsoftheDCGC(forexample,becauseofaconflictingNASDAQrequirementorotherwise),we
mustlistthereasonsforanydeviationfromtheDCGCinourannualreport.
Weacknowledgetheimportanceofgoodcorporategovernance.However,atthisstage,wedonotcomplywithalltheprovisionsofthe
DCGC,toalargeextentbecausesuchprovisionsconflictwithorareinconsistentwiththecorporategovernancerulesofNASDAQandU.S.
securitieslawsthatapplytous,orbecausesuchprovisionsdonotreflectbestpracticesofinternationalcompanieslistedonNASDAQ.
Thebestpracticeprovisionswedonotapplyincludethefollowing.Wemaydeviatefromadditionalbestpracticeprovisionsinthefuture.
Suchdeviationswillbedisclosedinourannualreport.
TheDCGCrecommendsthatallsupervisoryboardmembersexceptoneareindependentwithinthemeaningoftheDCGC.Weexpectthata
majorityofoursupervisoryboardmemberswillbeindependent.Itisourviewthatgiventhenatureofourbusinessandthepracticeinour
industryandconsideringourshareholderstructure,itisjustifiedthatonlysupervisoryboardmemberswillbeindependent.Wemayneedto
deviatefromtheDCGCsindependencedefinitionforsupervisoryboardmemberseitherbecausesuchprovisionsconflictwithorare
inconsistentwiththecorporategovernancerulesofNASDAQandU.S.securitieslawsthatapplytous,orbecausesuchprovisionsdonot
reflectbestpracticesofglobalcompanieslistedonNASDAQ.WemayneedtofurtherdeviatefromtheDCGCsindependencedefinitionfor
supervisoryboardmemberswhenlookingforthemostsuitablecandidates.Forexample,afuturesupervisoryboardcandidatemayhave
particularknowledgeof,orexperienceinourindustry,butmaynotmeetthedefinitionofindependenceintheDCGC.Assuchbackgroundis
veryimportanttotheefficacyofoursupervisoryboard,oursupervisoryboardmaydecidetonominatecandidatesforappointmentwhodo
notfullycomplywiththecriteriaaslistedunderbestpracticeprovisionIII.2.2oftheDCGC.
TheDCGCrecommendsthatoursupervisoryboardestablishaselectionandappointmentcommittee.Becausewewillbeacontrolled
companywithinthemeaningofthecorporategovernancestandardsoftheNASDAQGlobalSelectMarket,wedonotbelievethata
selectionandappointmentcommitteewillbebeneficialforourgovernancestructure.Wewillnotestablishaselectionandappointment
committee.
Underourarticlesofassociation,membersofthemanagementboardandthesupervisoryboardshallbeappointedonthebasisofabinding
nominationpreparedbythesupervisoryboard.Thismeansthatthenomineeshallbeappointedtothemanagementboardorsupervisory
board,asthecasemaybe,unlessthegeneralmeetingofshareholdersstripsthebindingnatureofthenomination(inwhichcaseanew
nominationshallbepreparedforasubsequentgeneralmeetingofshareholders).Ourarticlesofassociationwillprovidethatthegeneral
meetingofshareholderscanonlypasssuchresolutionbyatwothirdsmajorityrepresentingatleasthalfoftheissuedsharecapital.
However,theDCGCrecommendsthatthegeneralmeetingcanpasssuchresolutionbysimplemajority,representingnomorethanonethird
oftheissuedsharecapital.
Underourarticlesofassociation,membersofthemanagementboardandthesupervisoryboardcanonlybedismissedbythegeneral
meetingofshareholdersbysimplemajority,providedthatthesupervisoryboardproposesthedismissal.Inothercases,thegeneralmeeting
canonlypasssuchresolutionbyatwothirdsmajorityrepresentingatleasthalfoftheissuedsharecapital.Similartowhathasbeen
describedabove,theDCGCrecommendsthatthegeneralmeetingofshareholderscanpassaresolutiontodismissamemberofthe
managementboardorsupervisoryboardbysimplemajority,representingnomorethanonethirdoftheissuedsharecapital.
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TheDCGCrecommendsagainstprovidingequityawardsaspartofthecompensationofasupervisoryboardmember.However,the
companymaywishtodeviatefromthisrecommendationandgrantequityawardstoitssupervisoryboardmembers.
ThecompanyispresentlynotintendinganyothermaterialdeviationsfromtheDCGC.
DutchFinancialReportingSupervisionAct
OnthebasisoftheDutchFinancialReportingSupervisionAct(Wettoezichtfinancileverslaggeving),ortheFRSA,theAFMsupervisesthe
applicationoffinancialreportingstandardsbyDutchcompanieswhosesecuritiesarelistedonaDutchorforeignstockexchange.
PursuanttotheFRSA,theAFMhasanindependentrightto(i)requestanexplanationfromusregardingourapplicationoftheapplicable
financialreportingstandardsand(ii)recommendtousthemakingavailableoffurtherexplanations.Ifwedonotcomplywithsucharequest
orrecommendation,theAFMmayrequestthattheEnterpriseChamberoftheCourtofAppealofAmsterdamorderusto(i)makeavailable
furtherexplanationsasrecommendedbytheAFM(ii)provideanexplanationofthewaywehaveappliedtheapplicablefinancialreporting
standardstoourfinancialreportsor(iii)prepareourfinancialreportsinaccordancewiththeEnterpriseChambersorders.
Listing
OurADSshavebeenapprovedforlistingonNASDAQunderthesymbolTRVG.
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SharesandADSseligibleforfuturesale
Priortothisoffering,therehasbeennomarketforourClassAsharesorADSs.FuturesalesofsubstantialamountsofourADSsinthe
publicmarketcouldadverselyaffectmarketpricesprevailingfromtimetotime.Furthermore,becauseonlyalimitednumberofADSswillbe
availableforsaleshortlyafterthisofferingduetoexistingcontractualandlegalrestrictionsonresaleasdescribedbelow,theremaybesales
ofsubstantialamountsofourADSsinthepublicmarketaftersuchrestrictionslapse.Thismayadverselyaffecttheprevailingmarketpriceof
ourADSsandourabilitytoraiseequitycapitalinthefuture.
Uponcompletionofthisoffering,wewillhave26,110,118ADSsoutstanding,representingapproximately100%ofouroutstandingClassA
shares,or30,026,635ClassAsharesoutstandingiftheunderwritersexercisetheiroptioninfulltopurchaseadditionalADSs.Allofthe
ADSssoldinthisofferingwillbefreelytransferablewithoutrestrictionorregistrationundertheSecuritiesAct,exceptforanyADSs
purchasedbyoneofourexistingaffiliates,asthattermisdefinedinRule144undertheSecuritiesAct,orRule144.TheremainingADSs
arerestrictedsharesasdefinedinRule144.Restrictedsharesmaybesoldinthepublicmarketonlyifregisteredoriftheyqualifyforan
exemptionfromregistrationunderRules144or701oftheSecuritiesAct.Asaresultofthecontractual180daylockupperioddescribed
belowandtheprovisionsofRules144and701,theseshareswillbeavailableforsaleinthepublicmarketasfollows:
NumberofClassAshares
Date
26,110,118
Onthedateofthisprospectus.
347,110,088*
*
After180daysfromthedateofthisprospectus(subject,insome
cases,toholdingperiodandvolumelimitations).
Includes209,008,088ClassBsharesownedbyExpediathatareexchangeableintoClassAsharesand111,991,882ClassAorClassBsharesthattheFounderswillhavethe
righttoobtainthroughtheexchangeoftheirtrivagoGmbHunitsinconnectionwiththepostIPOcorporatereorganization.
Rule144
Ingeneral,apersonwhohasbeneficiallyownedourADSsthatarerestrictedsharesforatleastsixmonthswouldbeentitledtosellsuch
securities,providedthat(i)suchpersonisnotdeemedtohavebeenoneofouraffiliatesatthetimeof,oratanytimeduringthe90days
preceding,asaleand(ii)wearesubjecttotheExchangeActperiodicreportingrequirementsforatleast90daysbeforethesale.Persons
whohavebeneficiallyownedourADSsthatarerestrictedsharesforatleastsixmonthsbutwhoareouraffiliatesatthetimeof,oranytime
duringthe90dayspreceding,asale,wouldbesubjecttoadditionalrestrictions,bywhichsuchpersonwouldbeentitledtosellwithinany
threemonthperiodonlyanumberofsecuritiesthatdoesnotexceedthegreaterofeitherofthefollowing:
ADSsrepresenting1%ofthenumberofourClassAsharesthenoutstanding,whichwillequalapproximately285,271ClassAshares
immediatelyafterthisoffering,assumingnoexerciseoftheunderwritersoptiontopurchaseadditionalADSsor
theaverageweeklytradingvolumeofourADSsonNASDAQduringthefourcalendarweeksprecedingthefilingofanoticeonForm144
withrespecttothesale
provided,ineachcase,thatwearesubjecttotheExchangeActperiodicreportingrequirementsforatleast90daysbeforethesale.Such
salesbothbyaffiliatesandbynonaffiliatesmustalsocomplywiththemannerofsale,currentpublicinformationandnoticeprovisionsof
Rule144totheextentapplicable.
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Rule701
Ingeneral,underRule701undertheSecuritiesAct,orRule701,anyofouremployees,boardmembers,officers,consultantsoradvisors
whopurchasesADSsfromusinconnectionwithacompensatoryshareoroptionplanorotherwrittenagreementbeforetheeffectivedateof
thisofferingisentitledtoresellsuchADSs90daysaftertheeffectivedateofthisofferinginrelianceonRule144,withouthavingtocomply
withtheholdingperiodrequirementsorotherrestrictionscontainedinRule701.
TheSEChasindicatedthatRule701willapplytotypicalshareoptionsgrantedbyanissuerbeforeitbecomessubjecttothereporting
requirementsoftheExchangeAct,alongwiththesharesacquireduponexerciseofsuchoptions,includingexercisesafterthedateofthis
prospectus.SecuritiesissuedinrelianceonRule701arerestrictedsecuritiesand,subjecttothecontractualrestrictionsdescribedbelow,
beginning90daysafterthedateofthisprospectus,maybesoldbypersonsotherthanaffiliates,asdefinedinRule144,subjectonlytothe
mannerofsaleprovisionsofRule144andbyaffiliatesunderRule144withoutcompliancewithitsoneyearminimumholdingperiod
requirement.
RegulationS
RegulationSprovidesgenerallythatsalesmadeinoffshoretransactionsarenotsubjecttotheregistrationorprospectusdelivery
requirementsoftheSecuritiesAct.
Registrationrights
Uponcompletionofthisoffering,wewillagreeundercertaincircumstancestofilearegistrationstatementtoregistertheresaleoftheADSs
heldbycertainofourexistingshareholders,aswellastocooperateincertainpublicofferingsofsuchADSs.RegistrationoftheseADSs
undertheSecuritiesActwouldresultintheseADSsbecomingfreelytradablewithoutrestrictionundertheSecuritiesActimmediatelyupon
theeffectivenessoftheregistration.SeeRelatedpartytransactionsAmendedandRestatedShareholdersAgreement.
Lockupagreements
We,theSellingShareholders,ourcontrollingshareholder,membersofoursupervisoryboard,membersofourmanagementboardand
certainemployeeshaveagreed,subjecttocertainexceptions,nottooffer,pledge,announcetheintentiontosell,sell,contracttosell,sell
anyoptionorcontracttopurchase,purchaseanyoptionorcontracttosell,grantanyoption,rightorwarranttopurchaseorotherwise
disposeof,directlyorindirectly,orenterintoanyswaporotheragreementthattransfers,inwholeorinpart,anyoftheeconomic
consequencesofownershipofthecapitalorADSsorsuchothersecuritiesforaperiodof180daysafterthedateofthisprospectus,subject
tocertainexceptions,withoutthepriorwrittenconsentofJ.P.MorganSecuritiesLLC.SeeUnderwriting.
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DescriptionofAmericandepositaryshares
DeutscheBankTrustCompanyAmericas,asdepositary,willregisteranddelivertheADSs.EachADSwillrepresentownershipofoneClass
Ashare,depositedwithDeutscheBankAG,ascustodianforthedepositary.EachADSwillalsorepresentownershipofanyothersecurities,
cashorotherpropertywhichmaybeheldbythedepositary.ThedepositaryscorporatetrustofficeatwhichtheADSswillbeadministered
andthedepositarysprincipalexecutiveofficeislocatedat60WallStreet,NewYork,NewYork10005.
TheDirectRegistrationSystem,orDRS,isasystemadministeredbyTheDepositoryTrustCompany,orDTC,pursuanttowhichthe
depositarymayregistertheownershipofuncertificatedADSs,whichownershipshallbeevidencedbyperiodicstatementsissuedbythe
depositarytotheADSholdersentitledthereto.
WewillnottreatADSholdersasourshareholdersandaccordingly,you,asanADSholder,willnothaveshareholderrights.Netherlandslaw
governsshareholderrights.ThedepositarywillbetheholderoftheClassAsharesunderlyingyourADSs.AsaholderofADSs,youwillhave
ADSholderrights.Adepositagreementamongus,thedepositaryandyou,asanADSholder,andthebeneficialownersofADSssetsout
ADSholderrightsaswellastherightsandobligationsofthedepositary.ThelawsoftheStateofNewYorkgovernthedepositagreement
andtheADSs.
Thefollowingisasummaryofthematerialprovisionsofthedepositagreement.Formorecompleteinformation,youshouldreadtheentire
depositagreementandtheformofAmericanDepositaryReceipt.Fordirectionsonhowtoobtaincopiesofthosedocuments,seeWhere
youcanfindmoreinformation.
HoldingtheADSs
HowwillyouholdyourADSs?
YoumayholdADSseither(1)directly(a)byhavinganAmericanDepositaryReceipt,orADR,whichisacertificateevidencingaspecific
numberofADSs,registeredinyourname,or(b)byholdingADSsinDRS,or(2)indirectlythroughyourbrokerorotherfinancialinstitution.If
youholdADSsdirectly,youareanADSholder.ThisdescriptionassumesyouholdyourADSsdirectly.IfyouholdtheADSsindirectly,you
mustrelyontheproceduresofyourbrokerorotherfinancialinstitutiontoasserttherightsofADSholdersdescribedinthissection.You
shouldconsultwithyourbrokerorfinancialinstitutiontofindoutwhatthoseproceduresare.
Dividendsandotherdistributions
Howwillyoureceivedividendsandotherdistributionsontheshares?
ThedepositaryhasagreedtopaytoyouthecashdividendsorotherdistributionsitorthecustodianreceivesonClassAsharesorother
depositedsecurities,afterdeductingitsfeesandexpenses.YouwillreceivethesedistributionsinproportiontothenumberofClassAshares
yourADSsrepresentasoftherecorddate(whichwillbeascloseaspracticabletotherecorddateforourClassAshares)setbythe
depositarywithrespecttotheADSs.
Cash.ThedepositarywillconvertorcausetobeconvertedanycashdividendorothercashdistributionwepayontheClassAsharesor
anynetproceedsfromthesaleofanyClassAshares,rights,securitiesorotherentitlementsunderthetermsofthedepositagreement
intoU.S.dollarsifitcandosoonapracticablebasis,andcantransfertheU.S.dollarstotheUnitedStatesandwilldistributepromptlythe
amountthusreceived.Ifthedepositaryshalldetermineinitsjudgmentthatsuchconversionsortransfersarenotpossibleorlawful
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orifanygovernmentapprovalorlicenseisneededandcannotbeobtainedatareasonablecostwithinareasonableperiodorotherwise
sought,thedepositagreementallowsthedepositarytodistributetheforeigncurrencyonlytothoseADSholderstowhomitispossibleto
doso.ItwillholdorcausethecustodiantoholdtheforeigncurrencyitcannotconvertfortheaccountoftheADSholderswhohavenot
beenpaidandsuchfundswillbeheldortherespectiveaccountsoftheADSholders.Itwillnotinvesttheforeigncurrencyanditwillnot
beliableforanyinterestfortherespectiveaccountsoftheADSholders.
Beforemakingadistribution,anytaxesorothergovernmentalcharges,togetherwithfeesandexpensesofthedepositary,thatmustbe
paid,willbededucted.SeeMaterialtaxconsiderations.ItwilldistributeonlywholeU.S.dollarsandcentsandwillroundfractionalcents
tothenearestwholecent.Iftheexchangeratesfluctuateduringatimewhenthedepositarycannotconverttheforeigncurrency,youmay
losesomeorallofthevalueofthedistribution.
Shares.ForanyClassAshareswedistributeasadividendorfreedistribution,either(1)thedepositarywilldistributeadditionalADSs
representingsuchClassAsharesor(2)existingADSsasoftheapplicablerecorddatewillrepresentrightsandinterestsintheadditional
ClassAsharesdistributed,totheextentreasonablypracticableandpermissibleunderlaw,ineithercase,netofapplicablefees,charges
andexpensesincurredbythedepositaryandtaxesand/orothergovernmentalcharges.ThedepositarywillonlydistributewholeADSs.It
willtrytosellClassAshareswhichwouldrequireittodeliverafractionalADSanddistributethenetproceedsinthesamewayasitdoes
withcash.ThedepositarymaysellaportionofthedistributedClassAsharessufficienttopayitsfeesandexpensesinconnectionwith
thatdistribution.
Electivedistributionsincashorshares.IfweofferholdersofourClassAsharestheoptiontoreceivedividendsineithercashor
shares,thedepositary,afterconsultationwithusandhavingreceivedtimelynoticeasdescribedinthedepositagreementofsuchelective
distributionbyus,hasdiscretiontodeterminetowhatextentsuchelectivedistributionwillbemadeavailabletoyouasaholderofthe
ADSs.Wemusttimelyfirstinstructthedepositarytomakesuchelectivedistributionavailabletoyouandfurnishitwithsatisfactory
evidencethatitislegaltodoso.Thedepositarycoulddecideitisnotlegalorreasonablypracticabletomakesuchelectivedistribution
availabletoyou.Insuchcase,thedepositaryshall,onthebasisofthesamedeterminationasismadeinrespectoftheClassAsharesfor
whichnoelectionismade,distributeeithercashinthesamewayasitdoesinacashdistribution,oradditionalADSsrepresentingClassA
sharesinthesamewayasitdoesinasharedistribution.Thedepositaryisnotobligatedtomakeavailabletoyouamethodtoreceivethe
electivedividendinsharesratherthaninADSs.Therecanbenoassurancethatyouwillbegiventheopportunitytoreceiveelective
distributionsonthesametermsandconditionsastheholdersofClassAshares.
Rightstopurchaseadditionalshares.IfweofferholdersofourClassAsharesanyrightstosubscribeforadditionalshares,the
depositaryshallhavingreceivedtimelynoticeasdescribedinthedepositagreementofsuchdistributionbyus,consultwithus,andwe
mustdeterminewhetheritislawfulandreasonablypracticabletomaketheserightsavailabletoyou.Wemustfirstinstructthedepositary
tomakesuchrightsavailabletoyouandfurnishthedepositarywithsatisfactoryevidencethatitislegaltodoso.Ifthedepositarydecides
itisnotlegalorreasonablypracticabletomaketherightsavailablebutthatitislawfulandreasonablypracticabletoselltherights,the
depositarywillendeavortoselltherightsandinarisklessprincipalcapacityorotherwise,atsuchplaceanduponsuchterms(including
publicorprivatesale)asitmaydeemproperdistributethenetproceedsinthesamewayasitdoeswithcash.Thedepositarywillallow
rightsthatarenotdistributedorsoldtolapse.Inthatcase,youwillreceivenovalueforthem.
Ifthedepositarymakesrightsavailabletoyou,itwillestablishprocedurestodistributesuchrightsandenableyoutoexercisetherights
uponyourpaymentofapplicablefees,chargesandexpensesincurredbythedepositaryandtaxesand/orothergovernmentalcharges.
TheDepositaryshallnotbeobligedtomakeavailabletoyouamethodtoexercisesuchrightstosubscribeforClassAshares(ratherthan
ADSs).
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U.S.securitieslawsmayrestricttransfersandcancellationoftheADSsrepresentedbysharespurchaseduponexerciseofrights.For
example,youmaynotbeabletotradetheseADSsfreelyintheUnitedStates.Inthiscase,thedepositarymaydeliverrestricted
depositarysharesthathavethesametermsastheADSsdescribedinthissectionexceptforchangesneededtoputthenecessary
restrictionsinplace.
Therecanbenoassurancethatyouwillbegiventheopportunitytoexerciserightsonthesametermsandconditionsastheholdersof
ClassAsharesorbeabletoexercisesuchrights.
Otherdistributions.Subjecttoreceiptoftimelynotice,asdescribedinthedepositagreement,fromuswiththerequesttomakeany
suchdistributionavailabletoyou,andprovidedthedepositaryhasdeterminedsuchdistributionislawfulandreasonablypracticableand
feasibleandinaccordancewiththetermsofthedepositagreement,thedepositarywilldistributetoyouanythingelsewedistributeon
depositedsecuritiesbyanymeansitmaydeempracticable,uponyourpaymentofapplicablefees,chargesandexpensesincurredbythe
depositaryandtaxesand/orothergovernmentalcharges.Ifanyoftheconditionsabovearenotmet,thedepositarywillendeavortosell,
orcausetobesold,whatwedistributedanddistributethenetproceedsinthesamewayasitdoeswithcashor,ifitisunabletosellsuch
property,thedepositarymaydisposeofsuchpropertyinanywayitdeemsreasonablypracticableunderthecircumstancesfornominalor
noconsideration,suchthatyoumayhavenorightstoorarisingfromsuchproperty.
ThedepositaryisnotresponsibleifitdecidesthatitisunlawfulorimpracticaltomakeadistributionavailabletoanyADSholders.Wehave
noobligationtoregisterADSs,shares,rightsorothersecuritiesundertheSecuritiesAct.Wealsohavenoobligationtotakeanyotheraction
topermitthedistributionofADSs,shares,rightsoranythingelsetoADSholders.Thismeansthatyoumaynotreceivethedistributionswe
makeonoursharesoranyvalueforthemifweand/orthedepositarydeterminesthatitisillegalornotpracticableforusorthedepositaryto
makethemavailabletoyou.
Deposit,withdrawalandcancellation
HowareADSsissued?
ThedepositarywilldeliverADSsifyouoryourbrokerdepositClassAsharesorevidenceofrightstoreceiveClassAshareswiththe
custodian.Uponpaymentofitsfeesandexpensesandofanytaxesorcharges,suchasstamptaxesorstocktransfertaxesorfees,the
depositarywillregistertheappropriatenumberofADSsinthenamesyourequestandwilldelivertheADSstoorupontheorderofthe
personorpersonsentitledthereto.
Exceptfor(i)ClassAsharesdepositedbyusinconnectionwiththisoffering,(ii)ClassAsharesissuedunderourRegistrationStatementon
FormS8or(iii)asmaybespecifiedinwritingbyustotheDepositary,noshareswillbeacceptedfordepositduringaperiodof180days
afterthedateofthisprospectus.The180daylockupperiodissubjecttoadjustmentundercertaincircumstancesasdescribedinthesection
entitledSharesandADSseligibleforfuturesaleLockupagreements.
HowdoADSholderscancelanAmericanDepositaryShare?
YoumayturninyourADSsatthedepositaryscorporatetrustofficeorbyprovidingappropriateinstructionstoyourbroker.Uponpaymentof
itsfeesandexpensesandofanytaxesorcharges,suchasstamptaxesorstocktransfertaxesorfees,thedepositarywilldeliverthe
ClassAsharesandanyotherdepositedsecuritiesunderlyingtheADSstoyouorapersonyoudesignateattheofficeofthecustodian.Or,at
yourrequest,riskandexpense,thedepositarywilldeliverthedepositedsecuritiesatitscorporatetrustoffice,totheextentpermittedbylaw.
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HowdoADSholdersinterchangebetweenCertificatedADSsandUncertificatedADSs?
YoumaysurrenderyourADRtothedepositaryforthepurposeofexchangingyourADRforuncertificatedADSs.Thedepositarywillcancel
thatADRandwillsendyouastatementconfirmingthatyouaretheownerofuncertificatedADSs.Alternatively,uponreceiptbythe
depositaryofaproperinstructionfromaholderofuncertificatedADSsrequestingtheexchangeofuncertificatedADSsforcertificatedADSs,
thedepositarywillexecuteanddelivertoyouanADRevidencingthoseADSs.
Votingrights
Howdoyouvote?
YoumayinstructthedepositarytovotetheClassAsharesorotherdepositedsecuritiesunderlyingyourADSsatanymeetingatwhichyou
areentitledtovotepursuanttoanyapplicablelaw,theprovisionsofourmemorandumandarticlesofassociation,andtheprovisionsofor
governingthedepositedsecurities.Otherwise,youcouldexerciseyourrighttovotedirectlyifyouwithdrawtheClassAshares.However,
youmaynotknowaboutthemeetingsufficientlyenoughinadvancetowithdrawtheClassAshares.
Ifweaskforyourinstructionsandupontimelynoticefromusbyregular,ordinarymaildelivery,orbyelectronictransmission,asdescribedin
thedepositagreement,thedepositarywillnotifyyouoftheupcomingmeetingatwhichyouareentitledtovotepursuanttoanyapplicable
law,theprovisionsofourmemorandumandarticlesofassociation,andtheprovisionsoforgoverningthedepositedsecurities,andarrange
todeliverourvotingmaterialstoyou.Thematerialswillincludeorreproduce(a)suchnoticeofmeetingorsolicitationofconsentsorproxies
(b)astatementthattheADSholdersatthecloseofbusinessontheADSrecorddatewillbeentitled,subjecttoanyapplicablelaw,the
provisionsofourmemorandumandarticlesofassociation,andtheprovisionsoforgoverningthedepositedsecurities,toinstructthe
depositaryastotheexerciseofthevotingrights,ifany,pertainingtotheClassAsharesorotherdepositedsecuritiesrepresentedbysuch
holdersADSsand(c)abriefstatementastothemannerinwhichsuchinstructionsmaybegivenordeemedgiveninaccordancewiththe
secondtolastsentenceofthisparagraphifnoinstructionisreceived,tothedepositarytocausetheretobegrantedadiscretionaryproxyto
apersondesignatedbyus.VotinginstructionsmaybegivenonlyinrespectofanumberofADSsrepresentinganintegralnumberofClassA
sharesorotherdepositedsecurities.Forinstructionstobevalid,thedepositarymustreceivetheminwritingonorbeforethedatespecified.
Thedepositarywilltry,asfaraspractical,subjecttoapplicablelawandtheprovisionsofourmemorandumandarticlesofassociation,to
voteortohaveitsagentsvotetheClassAsharesorotherdepositedsecurities(inpersonorbyproxy)asyouinstruct.Thedepositarywill
onlyvoteorattempttovoteasyouinstruct.Ifwetimelyrequestedthedepositarytosolicityourinstructionsbutnoinstructionsarereceived
bythedepositaryfromanownerwithrespecttoanyofthedepositedsecuritiesrepresentedbytheADSsofthatowneronorbeforethedate
establishedbythedepositaryforsuchpurpose,thedepositaryshalldeemthatownertohaveinstructedthedepositarytocausetheretobe
grantedadiscretionaryproxytoapersondesignatedbyuswithrespecttosuchdepositedsecurities,andthedepositaryshallcausethereto
begrantedadiscretionaryproxytoapersondesignatedbyustovotesuchdepositedsecurities.However,nosuchinstructionshallbe
deemedgivenandnosuchdiscretionaryproxyshallbegrantedwithrespecttoanymatterifweinformthedepositarywedonotwishsuch
proxygranted,substantialoppositionexistsorthemattermateriallyandadverselyaffectstherightsofholdersoftheClassAshares.
WecannotassureyouthatyouwillreceivethevotingmaterialsintimetoensurethatyoucaninstructthedepositarytovotetheClassA
sharesunderlyingyourADSs.Inaddition,therecanbenoassurancethatADSholdersandbeneficialownersgenerally,oranyholderor
beneficialownerinparticular,willbegiventheopportunitytovoteorcausethecustodiantovoteonthesametermsandconditionsasthe
holdersofourClassAshares.
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Thedepositaryanditsagentsarenotresponsibleforfailingtocarryoutvotinginstructionsorforthemannerofcarryingoutvoting
instructions.ThismeansthatyoumaynotbeabletoexerciseyourrighttovoteandyoumayhavenorecourseiftheClassAshares
underlyingyourADSsarenotvotedasyourequested.
Inordertogiveyouareasonableopportunitytoinstructthedepositaryastotheexerciseofvotingrightsrelatingtodepositedsecurities,if
werequestthedepositarytoact,wewillgivethedepositarynoticeofanysuchmeetinganddetailsconcerningthematterstobevotedat
least30businessdaysinadvanceofthemeetingdate.
Compliancewithregulations
Informationrequests
EachADSholderandbeneficialownershall(a)providesuchinformationasweorthedepositarymayrequestpursuanttolaw,including,
withoutlimitation,relevantNetherlandslaw,anyapplicablelawoftheUnitedStatesofAmerica,ourmemorandumandarticlesofassociation,
anyresolutionsofourBoardofDirectorsadoptedpursuanttosuchmemorandumandarticlesofassociation,therequirementsofany
marketsorexchangesuponwhichtheClassAshares,ADSsorADRsarelistedortraded,ortoanyrequirementsofanyelectronicbook
entrysystembywhichtheADSsorADRsmaybetransferred,regardingthecapacityinwhichtheyownorownedADRs,theidentityofany
otherpersonsthenorpreviouslyinterestedinsuchADRsandthenatureofsuchinterest,andanyotherapplicablematters,and(b)be
boundbyandsubjecttoapplicableprovisionsofthelawsoftheNetherlands,ourmemorandumandarticlesofassociation,andthe
requirementsofanymarketsorexchangesuponwhichtheADSs,ADRsorClassAsharesarelistedortraded,orpursuanttoany
requirementsofanyelectronicbookentrysystembywhichtheADSs,ADRsorClassAsharesmaybetransferred,tothesameextentasif
suchADSholderorbeneficialownerheldClassAsharesdirectly,ineachcaseirrespectiveofwhetherornottheyareADSholdersor
beneficialownersatthetimesuchrequestismade.
Disclosureofinterests
EachADSholderandbeneficialownershallcomplywithourrequestspursuanttoNetherlandslaw,therulesandrequirementsofthe
NASDAQGlobalSelectMarketandanyotherstockexchangeonwhichtheClassAsharesare,orwillbe,registered,tradedorlistedorour
memorandumandarticlesofassociation,whichrequestsaremadetoprovideinformation,interalia,astothecapacityinwhichsuchADS
holderorbeneficialownerownsADSandregardingtheidentityofanyotherpersoninterestedinsuchADSandthenatureofsuchinterest
andvariousothermatters,whetherornottheyareADSholdersorbeneficialownersatthetimeofsuchrequests.
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Feesandexpenses
AsanADSholder,youwillberequiredtopaythefollowingservicefeestothedepositarybankandcertaintaxesandgovernmentalcharges
(inadditiontoanyapplicablefees,expenses,taxesandothergovernmentalchargespayableonthedepositedsecuritiesrepresentedbyany
ofyourADSs):
Service
ToanypersontowhichADSsareissuedortoanypersontowhichadistributionismadein
respectofADSdistributionspursuanttostockdividendsorotherfreedistributionsofstock,
bonusdistributions,stocksplitsorotherdistributions(exceptwhereconvertedtocash)
Fees
UptoUS$0.05perADSissued
CancellationofADSs,includingthecaseofterminationofthedepositagreement
UptoUS$0.05perADScancelled
Distributionofcashdividends
UptoUS$0.02perADSheld
Distributionofcashentitlements(otherthancashdividends)and/orcashproceedsfromthe
saleofrights,securitiesandotherentitlements
DistributionofADSspursuanttoexerciseofrights.
DistributionofsecuritiesotherthanADSsorrightstopurchaseadditionalADSs
UptoUS$0.02perADSheldonthe
applicablerecorddate(s)establishedby
thedepositarybank
Depositaryservices
AsanADSholder,youwillalsoberesponsibletopaycertainfeesandexpensesincurredbythedepositarybankandcertaintaxesand
governmentalcharges(inadditiontoanyapplicablefees,expenses,taxesandothergovernmentalchargespayableonthedeposited
securitiesrepresentedbyanyofyourADSs)suchas:
FeesforthetransferandregistrationofClassAshareschargedbytheregistrarandtransferagentfortheClassAsharesinthe
Netherlands(i.e.,upondepositandwithdrawalofClassAshares).
ExpensesincurredforconvertingforeigncurrencyintoU.S.dollars.
Expensesforcable,telexandfaxtransmissionsandfordeliveryofsecurities.
Taxesanddutiesuponthetransferofsecurities,includinganyapplicablestampduties,anystocktransferchargesorwithholdingtaxes
(i.e.,whenClassAsharesaredepositedorwithdrawnfromdeposit).
FeesandexpensesincurredinconnectionwiththedeliveryorservicingofClassAsharesondeposit.
Feesandexpensesincurredinconnectionwithcomplyingwithexchangecontrolregulationsandotherregulatoryrequirementsapplicable
toClassAshares,depositedsecurities,ADSsandADRs.
Anyapplicablefeesandpenaltiesthereon.
ThedepositaryfeespayableupontheissuanceandcancellationofADSsaretypicallypaidtothedepositarybankbythebrokers(onbehalf
oftheirclients)receivingthenewlyissuedADSsfromthedepositarybankandbythebrokers(onbehalfoftheirclients)deliveringtheADSs
tothedepositarybankforcancellation.Thebrokersinturnchargethesefeestotheirclients.Depositaryfeespayableinconnectionwith
distributionsof
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cashorsecuritiestoADSholdersandthedepositaryservicesfeearechargedbythedepositarybanktotheholdersofrecordofADSsasof
theapplicableADSrecorddate.
Thedepositaryfeespayableforcashdistributionsaregenerallydeductedfromthecashbeingdistributedorbysellingaportionof
distributablepropertytopaythefees.Inthecaseofdistributionsotherthancash(i.e.,sharedividends,rights),thedepositarybankcharges
theapplicablefeetotheADSrecorddateholdersconcurrentwiththedistribution.InthecaseofADSsregisteredinthenameoftheinvestor
(whethercertificatedoruncertificatedindirectregistration),thedepositarybanksendsinvoicestotheapplicablerecorddateADSholders.In
thecaseofADSsheldinbrokerageandcustodianaccounts(viaDTC),thedepositarybankgenerallycollectsitsfeesthroughthesystems
providedbyDTC(whosenomineeistheregisteredholderoftheADSsheldinDTC)fromthebrokersandcustodiansholdingADSsintheir
DTCaccounts.ThebrokersandcustodianswhoholdtheirclientsADSsinDTCaccountsinturnchargetheirclientsaccountstheamountof
thefeespaidtothedepositarybanks.
Intheeventofrefusaltopaythedepositaryfees,thedepositarybankmay,underthetermsofthedepositagreement,refusetherequested
serviceuntilpaymentisreceivedormaysetofftheamountofthedepositaryfeesfromanydistributiontobemadetotheADSholder.
Thedepositaryhasagreedtopaycertainamountstousinexchangeforitsappointmentasdepositary.Wemayusethesefundstowardsour
expensesrelatingtotheestablishmentandmaintenanceoftheADRprogram,includinginvestorrelationsexpenses,orotherwiseaswesee
fit.Thedepositarymaypayusafixedamount,itmaypayusaportionofthefeescollectedbythedepositaryfromholdersofADSs,andit
maypayspecificexpensesincurredbyusinconnectionwiththeADRprogram.Neitherthedepositarynorwemaybeabletodeterminethe
aggregateamounttobepaidtousbecause(i)thenumberofADSsthatwillbeissuedandoutstandingandthelevelofdividendand/or
servicingfeestobechargedmayvary,and(ii)ourexpensesrelatedtotheprogrammaynotbeknownatthistime.
Paymentoftaxes
Youwillberesponsibleforanytaxesorothergovernmentalchargespayable,orwhichbecomepayable,onyourADSsoronthedeposited
securitiesrepresentedbyanyofyourADSs.ThedepositarymayrefusetoregisterortransferyourADSsorallowyoutowithdrawthe
depositedsecuritiesrepresentedbyyourADSsuntilsuchtaxesorotherchargesarepaid.Itmayapplypaymentsowedtoyouorsell
depositedsecuritiesrepresentedbyyourADSstopayanytaxesowedandyouwillremainliableforanydeficiency.Ifthedepositarysells
depositedsecurities,itwill,ifappropriate,reducethenumberofADSstoreflectthesaleandpaytoyouanynetproceeds,orsendtoyou
anyproperty,remainingafterithaspaidthetaxes.Youagreetoindemnifyus,thedepositary,thecustodianandeachofourandtheir
respectiveagents,directors,employeesandaffiliatesfor,andholdeachofthemharmlessfrom,anyclaimswithrespecttotaxes(including
applicableinterestandpenaltiesthereon)arisingfromanyrefundoftaxes,reducedrateofwithholdingatsourceorothertaxbenefitobtained
foryou.YourobligationsunderthisparagraphshallsurviveanytransferofADRs,anysurrenderofADRsandwithdrawalofdeposited
securitiesortheterminationofthedepositagreement.
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Reclassifications,recapitalizationsandmergers
Ifwe:
Then:
Thecash,sharesorothersecuritiesreceivedbythedepositary
willbecomedepositedsecurities.
EachADSwillautomaticallyrepresentitsequalshareofthenew
depositedsecurities.
ChangethenominalorparvalueofourClassAshares
Reclassify,splituporconsolidateanyofthedepositedsecurities
DistributesecuritiesontheClassAsharesthatarenotdistributedto
you,or
Recapitalize,reorganize,merge,liquidate,sellallorsubstantiallyallof
ourassets,ortakeanysimilaraction
Thedepositarymaydistributesomeorallofthecash,sharesor
othersecuritiesitreceived.ItmayalsodelivernewADSsorask
youtosurrenderyouroutstandingADRsinexchangefornew
ADRsidentifyingthenewdepositedsecurities.
Amendmentandtermination
Howmaythedepositagreementbeamended?
WemayagreewiththedepositarytoamendthedepositagreementandtheformofADRwithoutyourconsentforanyreason.Ifan
amendmentaddsorincreasesfeesorcharges,exceptfortaxesandothergovernmentalchargesorexpensesofthedepositaryfor
registrationfees,facsimilecosts,deliverychargesorsimilaritems,includingexpensesincurredinconnectionwithforeignexchangecontrol
regulationsandotherchargesspecificallypayablebyADSholdersunderthedepositagreement,ormateriallyprejudicesasubstantial
existingrightofADSholders,itwillnotbecomeeffectiveforoutstandingADSsuntil30daysafterthedepositarynotifiesADSholdersofthe
amendment.Atthetimeanamendmentbecomeseffective,youareconsidered,bycontinuingtoholdyourADSs,toagreetotheamendment
andtobeboundbytheADRsandthedepositagreementasamended.Ifanynewlawsareadoptedwhichwouldrequirethedeposit
agreementtobeamendedinordertocomplytherewith,weandthedepositarymayamendthedepositagreementinaccordancewithsuch
lawsandsuchamendmentmaybecomeeffectivebeforenoticethereofisgiventoADSholders.
Howmaythedepositagreementbeterminated?
Thedepositarywillterminatethedepositagreementifweaskittodoso,inwhichcasethedepositarywillgivenoticetoyouatleast90days
priortotermination.Thedepositarymayalsoterminatethedepositagreementifthedepositaryhastoldusthatitwouldliketoresign,orifwe
haveremovedthedepositary,andineithercasewehavenotappointedanewdepositarywithin90days.Ineithersuchcase,thedepositary
mustnotifyyouatleast30daysbeforetermination.
Aftertermination,thedepositaryanditsagentswilldothefollowingunderthedepositagreementbutnothingelse:collectdistributionsonthe
depositedsecurities,sellrightsandotherpropertyanddeliverClassAsharesandotherdepositedsecuritiesuponcancellationofADSsafter
paymentofanyfees,charges,taxesorothergovernmentalcharges.Sixmonthsormoreafterthedateoftermination,thedepositarymay
sellanyremainingdepositedsecuritiesbypublicorprivatesale.Afterthat,thedepositarywillholdthemoneyitreceivedonthesale,aswell
asanyothercashitisholdingunderthedepositagreement,fortheproratabenefitoftheADSholdersthathavenotsurrenderedtheir
ADSs.Itwillnotinvestthemoneyandhasnoliabilityforinterest.Aftersuchsale,thedepositarysonlyobligationswillbetoaccountforthe
moneyandothercash.Aftertermination,weshallbedischargedfromallobligationsunderthedepositagreementexceptforourobligations
tothedepositarythereunder.
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Booksofdepositary
ThedepositarywillmaintainADSholderrecordsatitsdepositaryoffice.Youmayinspectsuchrecordsatsuchofficeduringregularbusiness
hoursbutsolelyforthepurposeofcommunicatingwithotherholdersintheinterestofbusinessmattersrelatingtothecompany,theADRs
andthedepositagreement.
ThedepositarywillmaintainfacilitiesintheBoroughofManhattan,TheCityofNewYorktorecordandprocesstheissuance,cancellation,
combination,splitupandtransferofADRs.
Thesefacilitiesmaybeclosedatanytimeorfromtimetotimewhensuchactionisdeemednecessaryoradvisablebythedepositaryin
connectionwiththeperformanceofitsdutiesunderthedepositagreementoratourreasonablewrittenrequest.
Limitationsonobligationsandliability
LimitsonourobligationsandtheobligationsofthedepositaryandthecustodianlimitsonliabilitytoholdersofADSs
Thedepositagreementexpresslylimitsourobligationsandtheobligationsofthedepositaryandthecustodian.Italsolimitsourliabilityand
theliabilityofthedepositary.Thedepositaryandthecustodian:
areonlyobligatedtotaketheactionsspecificallysetforthinthedepositagreementwithoutgrossnegligenceorwillfulmisconduct
arenotliableifanyofusorourrespectivecontrollingpersonsoragentsarepreventedorforbiddenfrom,orsubjectedtoanycivilor
criminalpenaltyorrestraintonaccountof,ordelayedin,doingorperforminganyactorthingrequiredbythetermsofthedeposit
agreementandanyADR,byreasonofanyprovisionofanypresentorfuturelaworregulationoftheUnitedStatesoranystatethereof,
theNetherlandsoranyothercountry,orofanyothergovernmentalauthorityorregulatoryauthorityorstockexchange,oronaccountof
thepossiblecriminalorcivilpenaltiesorrestraint,orbyreasonofanyprovision,presentorfuture,ofourmemorandumandarticlesof
associationoranyprovisionoforgoverninganydepositedsecurities,orbyreasonofanyactofGodorwarorothercircumstances
beyonditscontrol(including,withoutlimitation,nationalization,expropriation,currencyrestrictions,workstoppage,strikes,civilunrest,
revolutions,rebellions,explosionsandcomputerfailure)
arenotliablebyreasonofanyexerciseof,orfailuretoexercise,anydiscretionprovidedforinthedepositagreementorinour
memorandumandarticlesofassociationorprovisionsoforgoverningdepositedsecurities
arenotliableforanyactionorinactionofthedepositary,thecustodianorusortheirorourrespectivecontrollingpersonsoragentsin
relianceupontheadviceoforinformationfromlegalcounsel,anypersonpresentingClassAsharesfordepositoranyotherperson
believedbyitingoodfaithtobecompetenttogivesuchadviceorinformation
arenotliablefortheinabilityofanyholderofADSstobenefitfromanydistributionondepositedsecuritiesthatisnotmadeavailableto
holdersofADSsunderthetermsofthedepositagreement
arenotliableforanyspecial,consequential,indirectorpunitivedamagesforanybreachofthetermsofthedepositagreement,or
otherwise
mayrelyuponanydocumentswebelieveingoodfaithtobegenuineandtohavebeensignedorpresentedbytheproperparty
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disclaimanyliabilityforanyactionorinactionorinactionofanyofusorourrespectivecontrollingpersonsoragentsinrelianceuponthe
adviceoforinformationfromlegalcounsel,accountants,anypersonpresentingClassAsharesfordeposit,holdersandbeneficialowners
(orauthorizedrepresentatives)ofADSs,oranypersonbelievedingoodfaithtobecompetenttogivesuchadviceorinformationand
disclaimanyliabilityforinabilityofanyholdertobenefitfromanydistribution,offering,rightorotherbenefitmadeavailabletoholdersof
depositedsecuritiesbutnotmadeavailabletoholdersofADS.
Thedepositaryandanyofitsagentsalsodisclaimanyliability(i)foranyfailuretocarryoutanyinstructionstovote,themannerinwhichany
voteiscastortheeffectofanyvoteorfailuretodeterminethatanydistributionoractionmaybelawfulorreasonablypracticableorfor
allowinganyrightstolapseinaccordancewiththeprovisionsofthedepositagreement,(ii)thefailureortimelinessofanynoticefromus,the
contentofanyinformationsubmittedtoitbyusfordistributiontoyouorforanyinaccuracyofanytranslationthereof,(iii)anyinvestmentrisk
associatedwiththeacquisitionofaninterestinthedepositedsecurities,thevalidityorworthofthedepositedsecurities,thecreditworthiness
ofanythirdparty,(iv)foranytaxconsequencesthatmayresultfromownershipofADSs,ClassAsharesordepositedsecurities,or(vi)for
anyactsoromissionsmadebyasuccessordepositarywhetherinconnectionwithapreviousactoromissionofthedepositaryorin
connectionwithanymatterarisingwhollyaftertheremovalorresignationofthedepositary,providedthatinconnectionwiththeissueoutof
whichsuchpotentialliabilityarisesthedepositaryperformeditsobligationswithoutgrossnegligenceorwillfulmisconductwhileitactedas
depositary.
Inaddition,thedepositagreementprovidesthateachpartytothedepositagreement(includingeachholder,beneficialownerandholderof
interestsintheADRs)irrevocablywaives,tothefullestextentpermittedbyapplicablelaw,anyrightitmayhavetoatrialbyjuryinany
lawsuitorproceedingagainstthedepositaryorourcompanyrelatedtoourshares,theADSsorthedepositagreement.
Inthedepositagreement,weandthedepositaryagreetoindemnifyeachotherundercertaincircumstances.
Requirementsfordepositaryactions
Beforethedepositarywillissue,deliverorregisteratransferofanADS,splitup,subdivideorcombineADSs,makeadistributiononan
ADS,orpermitwithdrawalofClassAshares,thedepositarymayrequire:
paymentofstocktransferorothertaxesorothergovernmentalchargesandtransferorregistrationfeeschargedbythirdpartiesforthe
transferofanyClassAsharesorotherdepositedsecuritiesandpaymentoftheapplicablefees,expensesandchargesofthedepositary
satisfactoryproofoftheidentityandgenuinenessofanysignatureoranyothermatterscontemplatedinthedepositagreementand
compliancewith(A)anylawsorgovernmentalregulationsrelatingtotheexecutionanddeliveryofADRsorADSsortothewithdrawalor
deliveryofdepositedsecuritiesand(B)suchreasonableregulationsandproceduresasthedepositarymayestablish,fromtimetotime,
consistentwiththedepositagreementandapplicablelaws,includingpresentationoftransferdocuments.
ThedepositarymayrefusetoissueanddeliverADSsorregistertransfersofADSsgenerallywhentheregisterofthedepositaryorour
transferbooksareclosedoratanytimeifthedepositaryorwedeterminethatitisnecessaryoradvisabletodoso.
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YourrighttoreceivethesharesunderlyingyourADSs
YouhavetherighttocancelyourADSsandwithdrawtheunderlyingClassAsharesatanytimeexcept:
whentemporarydelaysarisebecause:(1)thedepositaryhascloseditstransferbooksorwehaveclosedourtransferbooks(2)the
transferofClassAsharesisblockedtopermitvotingatashareholdersmeetingor(3)wearepayingadividendonourClassAshares
whenyouowemoneytopayfees,taxesandsimilarcharges
whenitisnecessarytoprohibitwithdrawalsinordertocomplywithanylawsorgovernmentalregulationsthatapplytoADSsortothe
withdrawalofClassAsharesorotherdepositedsecurities,or
othercircumstancesspecificallycontemplatedbySectionI.A.(l)oftheGeneralInstructionstoFormF6(assuchGeneralInstructionsmay
beamendedfromtimetotime)or
foranyotherreasonifthedepositaryorwedetermine,ingoodfaith,thatitisnecessaryoradvisabletoprohibitwithdrawals.
ThedepositaryshallnotknowinglyacceptfordepositunderthedepositagreementanyClassAsharesorotherdepositedsecuritiesrequired
toberegisteredundertheprovisionsoftheSecuritiesAct,unlessaregistrationstatementisineffectastosuchClassAshares.
Thisrightofwithdrawalmaynotbelimitedbyanyotherprovisionofthedepositagreement.
Directregistrationsystem
Inthedepositagreement,allpartiestothedepositagreementacknowledgethattheDRSandProfileModificationSystem,orProfile,will
applytouncertificatedADSsuponacceptancethereoftoDRSbyDTC.DRSisthesystemadministeredbyDTCpursuanttowhichthe
depositarymayregistertheownershipofuncertificatedADSs,whichownershipshallbeevidencedbyperiodicstatementsissuedbythe
depositarytotheADSholdersentitledthereto.ProfileisarequiredfeatureofDRSwhichallowsaDTCparticipant,claimingtoactonbehalf
ofanADSholder,todirectthedepositarytoregisteratransferofthoseADSstoDTCoritsnomineeandtodeliverthoseADSstotheDTC
accountofthatDTCparticipantwithoutreceiptbythedepositaryofpriorauthorizationfromtheADSholdertoregistersuchtransfer.
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Materialtaxconsiderations
ThefollowingsummarycontainsadescriptionofmaterialGerman,DutchandU.S.federalincometaxconsequencesoftheacquisition,
ownershipanddispositionofADSs,butitdoesnotpurporttobeacomprehensivedescriptionofallthetaxconsiderationsthatmaybe
relevanttoadecisiontopurchaseADSs.ThesummaryisbasedonthetaxlawsofGermanyandtheregulationsthereunder,onthetaxlaws
oftheNetherlandsandregulationsthereunderandonthetaxlawsoftheUnitedStatesandregulationsthereunderasofthedatehereof,
whicharesubjecttochange.
Germantaxation
ThefollowingsectionpresentsanumberofkeyGermantaxationprincipleswhichareorcanberelevanttotheacquisition,holdingor
transferofADSsbothbyanADSholder(anindividual,apartnershiporcorporation)thathasataxdomicileinGermany(thatis,whoseplace
ofresidence,habitualabode,registeredofficeorplaceofmanagementisinGermany)notbeingsubjecttoaspecificorspecialGermantax
regimeandbyanADSholderwithoutataxdomicileinGermany.Theinformationisnotexhaustiveanddoesnotconstituteadefinitive
explanationofallpossibleaspectsoftaxationthatcouldberelevantforADSholders.Theinformationisbasedonthetaxlawinforcein
Germanyasofthedateofthisprospectus(anditsinterpretationbyadministrativedirectivesandcourts)aswellastypicalprovisionsof
doubletaxationtreatiesthatGermanyhasconcludedwithothercountries.Taxlawcanchange,sometimesretrospectively.Moreover,it
cannotberuledoutthattheGermantaxauthoritiesorcourtsmayconsideranalternativeassessmenttobecorrectthatdiffersfromtheone
describedinthissection.
TotheextentthissectionrelatestolegalconclusionsundercurrentGermanincometaxlaw,andsubjecttothequalificationsitcontains,it
representstheopinionofNoerrLLP,ourspecialGermantaxcounsel.Thissectioncannotserveasasubstitutefortailoredtaxadviceto
individualADSholders.ADSholdersarethereforeadvisedtoconsulttheirtaxadvisersregardingthetaximplicationsoftheacquisition,
holdingortransferofADSsandregardingtheprocedurestobefollowedtoachieveapossiblereimbursementofGermanwithholdingtax
(Kapitalertragsteuer).OnlysuchadvisorsareinapositiontotakethespecifictaxrelevantcircumstancesofindividualADSholdersintodue
account.
Taxationofthecompany(trivagoN.V.)
General
Thecompany,travelB.V.,hassixGermantaxresidentindividualsservingasmanagingdirectorsandintendstooperateitsbusinessfrom
Germany.ItisthereforeourGermantaxcounselsunderstandingthattheeffectiveplaceofmanagementoftravelB.V.,andafterconversion
intotrivagoN.V.,alsooftrivagoN.V.,isinGermany,andthattravelB.V.issubjecttounlimitedtaxliabilityforGermancorporateincometax
(Krperschaftsteuer)andtradetax(Gewerbesteuer)notwithstandingthefactthatitisincorporatedintheNetherlandsasdescribedinTax
treatmentofcorporatereorganization.Nevertheless,theeffectiveplaceofmanagementtestdependsuponfactsandcircumstances.The
organizationalrulesprovidethat(a)managementdecisionsaretakeninGermanyand(b)supervisoryboardmeetingsareheldinGermany.
Onthisbasis,andprovidedthatthecompanyrepresentativescomplywithorganizationalrules,ourGermantaxcounselisoftheopinionthat
theeffectiveplaceofmanagementshouldbeinGermany.
Therateofthecorporateincometaxisastandard15%forbothdistributedandretainedearnings,plusasolidaritysurcharge
(Solidarittszuschlag)amountingto5.5%onthecorporateincometaxliability(i.e.,15.825%intotal).
Unlessthereisaspecificexception,dividends(Dividenden)orotherprofitsharesthatthecompanyderivedfromdomesticorforeign
corporationsareeffectively95%exemptfromcorporateincometax,as5%ofsuch
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receiptsaretreatedasnondeductiblebusinessexpenses,andarethereforesubjecttocorporateincometax(andsolidaritysurcharge).One
oftheexceptionsappliestodividendsthatthecompanyreceivesorreceivedfromdomesticorforeigncorporations(sinceFebruary28,
2013),beingsubjecttocorporateincometax(includingsolidaritysurchargethereon),ifthecompanyholdsadirectparticipationoflessthan
10%inthesharecapitalofsuchcorporationatthebeginningofthecalendaryear(hereinafterinallcases,aPortfolioParticipation
Streubesitzbeteiligung).Participationsofatleast10%acquiredduringacalendaryeararedeemedtohavebeenacquiredatthebeginning
ofthecalendaryear.Participationsinthesharecapitalofothercorporationswhichthecompanyholdsthroughapartnership(includingthose
thatarecoentrepreneurships(Mitunternehmerschaften))areattributabletothecompanyonlyonaproratabasisattheratiooftheinterest
shareofthecompanyintheassetsofrelevantpartnership.
Thecompanysgainsfromthedisposalofsharesinadomesticorforeigncorporationareeffectively95%exemptfromcorporateincometax
(includingsolidaritysurchargethereon),regardlessofthesizeoftheparticipationandtheholdingperiod.5%ofthegainsaretreatedasnon
deductiblebusinessexpensesandarethereforesubjecttocorporateincometax(plussolidaritysurchargethereon)atarateof15.825%.
Conversely,lossesincurredfromthedisposalofsuchsharesarenotdeductibleforcorporateincometaxpurposes.Currently,thereareno
specificrulesforthetaxationofgainsarisingfromthedisposalofPortfolioParticipations.
ThecompanyissubjecttoGermantradetax(Gewerbesteuer)withrespecttoitstaxabletradeprofit(Gewerbeertrag)generatedatits
permanentestablishmentsmaintainedinGermany(inlndischeBetriebsttte).Dependingonthemunicipaltradetaxmultiplierappliedbythe
relevantmunicipalauthority(Hebesatz),inmostcasestradetaxrangesfromapproximately7%to18.2%ofthetaxabletradeprofit.When
determiningtheincomeofthecorporationthatissubjecttocorporateincometax,tradetaxmustnotbedeductedasabusinessexpense.In
principle,profitsderivedfromthesaleofsharesinanotherdomesticandforeigncorporationaretreatedinthesamewayfortradetax
purposesasforcorporateincometax.Contrarytothis,profitsharesderivedfromdomesticandforeigncorporationsareonlyeffectively95%
exemptfromtradetax,ifthecompanyeitherheldaninterestofatleast15%inthesharecapitalofthecompanymakingthedistributionat
thebeginningoftherelevantassessmentperiod(Erhebungszeitraum)orinthecaseofforeigncorporationsifthecompanyhashelda
stakeofthissizesincethebeginningofsuchperiodandprovidedthatcertainfurtherrequirementsarefulfilled(tradetaxparticipation
exemptionprivilegegewerbesteuerlichesSchachtelprivileg).IftheparticipationisheldinaforeigncorporationasperArticle2ofCouncil
Directive2011/96/EUofNovember30,2011,ortheParentSubsidiaryDirective,withitsregisteredofficeinanothermemberstateofthe
EuropeanUnion,thetradetaxparticipationexemptionprivilegebecomesapplicablefromaninterestof10%inthesharecapitalofthe
foreigncorporationatthebeginningoftherelevantassessmentperiod(Erhebungszeitraum).Otherwise,theprofitshareswillbesubjectto
tradetaxinfull.AdditionalrestrictionsapplyforprofitsharesoriginatingfromforeigncorporationswhichdonotfallunderArticle2ofthe
ParentSubsidiaryDirective.
Theprovisionsofthesocalledinterestbarrier(Zinsschranke)limitthedegreetowhichinterestexpensesaredeductiblefromthetaxbase.
Asarule,interestexpensesexceedinginterestincomearedeductibleinanamountofupto30%oftheEBITDAasdeterminedfortax
purposesinagivenfinancialyear,althoughthereareexceptionstothisrule.Nondeductibleinterestexpensesmustbecarriedforwardto
subsequentfinancialyears.EBITDAthathasnotbeenfullyutilizedcanundercertaincircumstancesbecarriedforwardandmaybe
consideredwithinthelimitationsassetoutaboveoverthefollowingfiveyears.Fortradetaxpurposes,inprinciple25%oftheinterest
expensesdeductibleafterapplyingtheinterestbarrierareaddedbackwhencalculatingthetaxabletradeprofit.Therefore,fortradetax
purposes,theamountofdeductibleinterestexpensesisinprincipleonly75%oftheinterestexpensesdeductibleforpurposesofcorporate
incometax.
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Undercertainconditions,negativeincomeofthecompanythathasnotbeenoffsetagainstcurrentyearpositiveincomecanbecarried
forwardorbackintootherassessmentperiods.Losscarrybackstotheimmediatelyprecedingassessmentperiodareonlypermissibleupto
1,000,000(511,500until2012)forcorporateincometaxbutnotatallfortradetaxpurposes.Negativeincomenotoffsetagainstpositive
incomeforcorporateincomeandtradetaxpurposescanbecarriedforwardtofollowingtaxationperiods(taxlosscarryforward).Ifinsuch
followingtaxationperiodthetaxableincomeorthetaxabletradeprofitexceedsthe1,000,000threshold(uptowhichsuchincomecanbe
offsetwiththetaxlosscarryforwardinfull),only60%oftheexcessamountcanbeoffsetbytaxlosscarryforwards.Theremaining40%of
thetaxableincomeissubjecttotaxinanycase(minimumtaxationMindestbesteuerung).Unusedtaxlosscarryforwardscan,asarule,be
carriedforwardindefinitelyanddeductedpursuanttotherulessetoutregardingfuturetaxableincomeortradeincome.However,ifmore
than25%ormorethan50%ofthecompanyssharecapitalorvotingrightsrespectivelyis/aretransferredtoapurchaserorgroupof
purchaserswithinfiveyears,directlyorindirectly,orifasimilarsituationarises(harmfulshareacquisitionschdlicherBeteiligungserwerb),
thecompanysunutilizedlossesandinterestcarryforwards(possiblyalsoEBITDAcarryforwards)willbeforfeitedinpart(incaseofthe
transferofaparticipationofmorethan25%butnomorethan50%)orinfull(incaseofthetransferofaparticipationofmorethan50%)and
cannotbeoffsetagainstfutureprofitsunlessoneofthespecificexceptionsundersection8coftheGermanCorporateIncomeTaxAct
applies.
Taxtreatmentofcorporatereorganization
AspartofthepreIPOcorporatereorganization,ExpediawillcontributeallofitssharesoftrivagoGmbHtotravelB.V.,andtheFounderswill
contributeacertainportionoftheirsharesoftrivagoGmbHtotravelB.V.,inacapitalincreaseinexchangefornewlyissuedsharesoftravel
B.V.,whichwerefertoastheContribution.AccordingtoourGermantaxcounselsopinion,thecontemplatedcontributionsbyExpediaand
bytheFounderstotravelB.V.shouldbetaxfreefortravelB.V.travelB.V.willsubsequentlychangeitslegalformintoaDutchN.V.under
Dutchcorporatelawwithoutchangingitsplaceofmanagement.ThelegaleffectoftheconversionunderDutchlawontravelB.V.willbe
limitedtothechangeinthelegalform.travelB.V.shouldfullycontinueitsexistenceasthesamelegalentity,andsincetheeffectiveplaceof
managementshallnotchange,accordingtoourGermantaxcounselsopinionsuchconversionisnottriggeringtaxconsequencesfortrivago
N.V.ortrivagoGmbH.TheContributionwillcauseachangeofcontrolfromataxperspectiveandmighthavetaximpactsatasubsidiary
level,e.g.thepreservationoflosscarryforwardsatGermansubsidiaryleveloftrivagoGmbH.
SeeCorporatestructureCorporatereorganizationPreIPOcorporatereorganization.
ThepostIPOmergershouldqualifyasataxfreetransactionunderthecurrentlyapplicableprovisionsoftheGermanReorganizationTaxAct
(RTAUmwandlungssteuergesetz)aswellasunderGermanValueAddedTaxAct(VATAUmsatzsteuergesetz)asaresultofatransferof
abusinessasagoingconcern.ToconfirmthetaxneutralityofthepostIPOmergerfromacorporateincometaxperspectivetrivagoGmbH
willrequestataxrulingfromtheGermantaxauthorities.IfsuchrulingwouldnotconfirmthetaxneutralitytotrivagoGmbH,thepostIPO
mergerwillmostlikelynotbeconsummated.
IfthepostIPOmergerwillnotbecarriedout,atwotiercorporatestructurewouldremaininplacewiththeFoundersholding31.6%ofthe
unitsoftrivagoGmbH.Inthisevent,itisplannedundertheprovisionsoftheIPOStructuringAgreementtoconverttrivagoGmbHfirstintoa
stockcorporation(AGAktiengesellschaft)underGermanlawandsubsequentlyintoaEuropeanpubliclimitedliabilitycompany(Societas
Europaea)underGermanlaw,ineachcasebywayofchangeoflegalformwithoutdissolutionandwindingupunderGermancorporatelaw.
Theseconversionswill,accordingtoourGermantaxcounselsopinion,nottriggeranytaxconsequencesattheleveloftrivagoGmbHnordo
theyleadtoadverseretroactivetaxconsequencesfortrivagoN.V.SeeCorporatestructureCorporatereorganizationPostIPOcorporate
reorganization.
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ThetwotiercorporatestructurewillleadtoanadditionaltaxondividendspaidbytrivagoGmbH/AG/SEtotrivagoN.V.attheleveloftrivago
N.V.DividendsdistributedbytrivagoGmbH/AG/SEtotrivagoN.V.(andtotheFounders)wouldbesubjecttoGermanwithholdingtaxof
26.375%(includingsolidaritysurcharge)attheleveloftrivagoGmbH/AG/SE.AttheleveloftheGermantaxresidenttrivagoN.V.,only5%of
thedividendsdistributedbyandreceivedfromtrivagoGmbH/AG/SEafterJanuary2017wouldbeincludedastaxableincomesubjectto
corporateincometaxatataxrateofcurrently15.825%(includingsolidaritysurcharge)andtradetaxattheapplicablelocaltaxrateof
currentlyaround16%.However,thewithholdingtaxdeductedbytrivagoGmbH/AG/SEwouldbecreditedagainstthecorporateincometax
liabilityoftrivagoN.V.and,totheextentthewithholdingtax(26.375%)exceedsthecorporateincometaxliabilityoftrivagoN.V.,refunded
withapotentialtimelagofupto2years.TheeffectivetaxrateondividendsreceivedbytrivagoN.V.fromtrivagoGmbH/AG/SEwouldthus
amounttoapproximately1.6%asaresultofthetwotiercorporatestructure.Thisadditionaltaxofapproximately1.6%alsoapplieson
constructivedividendsincaseofanytransactionsthatarenotatarmslengthbetweentrivagoGmbH/AG/SEandtrivagoN.V.Intheopposite
direction,thereisariskthatanynonarmslengthtransactionsinthetwotiercorporatestructurewouldbesubjecttoGermangifttax.
Thecompany,trivagoN.V.,intendstoprovidemanagementandlegaladvicetoitssubsidiariesinreturnforpayment.Thecompanyshould,
accordingtoourGermantaxcounselsopinion,beseenasanentrepreneurundertheGermanValueAddedTaxAct(Umsatzsteuergesetz).
Ifthecompanywillnotqualifyasanentrepreneuritcannotreclaimanyinputvalueaddedtax.
IntheeventthatthepostIPOmergerwillnotbecarriedoutandtheFoundersarenotabletoplacealltheirsharesoftrivagoN.V.receivedin
returnforthecontributionoftheirsharesoftrivagoGmbHintotrivagoN.V.inthesecondaryoffering,aportionofthesharesintrivagoGmbH
receivedbytrivagoN.V.asbeneficialownerwouldbesubjecttoasevenyearreviewperiod,duringwhichtheFounderswouldhaveto
complywithcertainnotificationobligationsundertheRTA.Besidesothers,thesenotificationobligationsincludeannualfilingsevidencingthe
ownerofthecontributedsharesoneachofthefirstsevenanniversariesofthecontribution.Notificationobligationsendattheearlierof(i)the
endofthesevenyearstermand(ii)thattimetheFoundershavesoldalltheirremainingsharesoftrivagoN.V.FailurebytheFoundersto
complywiththesenotificationobligationsmayresultinataxablegainfortrivagoN.V.5%ofsuchcapitalgainwouldbesubjecttocorporate
incometaxatataxrateofcurrently15.825%(includingsolidaritysurcharge)andtradetaxattheapplicablelocaltaxrateofcurrentlyaround
16%ontheleveloftrivagoN.V.
Also,incaseaFounderexercisesitsputoptiongrantedundertheIPOStructuringAgreementtowardstrivagoN.V.toexchangeallorparts
ofthesharesoftrivagoGmbH/AG/SEfornewsharesoftrivagoN.V.atbookvalue,thesharesreceivedbytrivagoN.V.aslegaland/or
beneficialownerinsuchshareexchangebytherespectiveFounderwouldbesubjecttoasevenyearreviewperiod,duringwhichthe
respectiveFounderwillhavetocomplywiththesamenotificationobligationsasdescribedabove.Accordingly,failurebytherespective
FoundertocomplywiththesenotificationobligationsmayalsoresultinataxablegainfortrivagoN.V.5%ofsuchcapitalgainwouldbe
subjecttocorporateincometaxatataxrateof15.825%(includingsolidaritysurcharge)currentlyandtradetaxattheapplicablelocaltax
rateofaround16%currentlyontheleveloftrivagoN.V.However,nonotificationobligationneedstobefulfilled(andnorelatedtaxriskfor
trivagoN.V.arises)incasetherespectiveFounderimmediatelysellsallitsshares,respectivelytheADSs,intrivagoN.V.receivedinthe
shareexchangeimmediately.
Furthermore,expensesincurredbytrivagoGmbHandtrivagoN.V.relatingtothemeasuresdescribedhereinmayberegardedasincurred
forthebenefitsoftheshareholders.Insuchcase,taxauthoritiesmaytaketheviewtotreatsuchexpensesasnotdeductiblefortax
purposesandassesswithholdingtaxatarateofupto26.375%onrespectiveamounts.
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GermantaxationofADSholders
General
Basedontheinterpretationcircular(BesteuerungvonAmericanDepositoryReceipts(ADR)aufinlndischeAktien)issuedbytheGerman
FederalMinistryofFinance(BundesministeriumderFinanzen)datedMay24,2013(referencenumberIVC1S2204/12/10003),ortheADR
TaxCircular,forGermantaxpurposes,ADRsreferringtosharesissuedbyaGermanstockcorporation(Aktiengesellschaft)representa
beneficialownershipinterestintheunderlyingordinaryshares.
TheADSsshouldqualifyasADRsundertheADRTaxCircular,anddividendswouldaccordinglybeattributabletotheholdersoftheADSs
forGermantaxpurposesasiftheywouldholdClassAshares,andnottothelegalowneroftheunderlyingClassAshares(whichisthe
depositaryholdingtheClassAsharesfortheADSholders).Therefore,theADSholdersshould,forGermantaxpurposes,betreatedas
directlyholdinganinterestinthecompanysClassAshares.WithrespecttoGermantaxriskswithrespecttotheADSspleaserefertoRisk
factorsabove.
Incometaximplicationsoftheholding,saleandtransferofADSs
IntermsoftheincometaxationofADSholders,adistinctionmustbemadebetweentaxationinconnectionwiththeholdingofADSs
(GermantaxationofthedistributionsfromADSs)andtaxationinconnectionwiththesaleofADSs(Germantaxationofcapitalgainsfrom
ADSs).
GermantaxationofthedistributionsfromADSs
WithholdingtaxGeneral
ThefullamountofadividenddistributedbythecompanyissubjecttoGermanwithholdingtax(Kapitalertragsteuer)atarateof25%plusa
solidaritysurchargeof5.5%onthewithholdingtax,resultinginanaggregatetaxrateof26.375%.This,however,willnotapplyifandtothe
extentthatdividendpaymentsarefundedfromthecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27
oftheGermanCorporateIncomeTaxAct(Krperschaftsteuergesetz,orKStG))inthiscase,nowithholdingtaxwillbewithheld.Thebasis
forthewithholdingtaxisthedividendapprovedfordistributionbythecompanysshareholdersmeeting.Theamountoftherelevanttaxable
incomeisbasedonthegrossamountineuroanycurrencydifferencesshouldbeirrelevant.
Ingeneral,withholdingtaxondividendsdistributedbyacompanytoitsshareholdersiswithheldanddischargedfortheaccountofthe
shareholdersbythecompany.However,ifandwhensharesareadmittedforcollectivecustodybyasecuritiescustodianbank
(Wertpapiersammelbank)pursuanttoSection5oftheGermanActonSecuritiesAccounts(Depotgesetz)andareentrustedtosuchbankfor
collectivecustody(Sammelverwahrung)inGermany,thewithholdingtaxiswithheldandpassedonfortheaccountoftheshareholdersby
thedomesticcreditorfinancialservicesinstitution(inlndischesKreditoderFinanzdienstleistungsinstitut)(includingdomesticbranchesof
suchforeignenterprises),bythedomesticsecuritiestradingcompany(inlndischesWertpapierhandelsunternehmen)orthedomestic
securitiestradingbank(inlndischeWertpapierhandelsbank)whichkeepsoradministersthesharesanddisbursesorcreditsthedividendsor
disbursesthedividendstoaforeignagentorbythecentralsecuritiesdepositorytowhichtheshareswereentrustedforcollectivecustodyif
thedividendsaredisbursedtoaforeignagentbysuchcentralsecuritiesdepository,eachaPayingAgent.Thecompanyinwhichsharesare
helddoesnotassumeanyresponsibilityforthewithholdingofthewithholdingtax.Ingeneral,thewithholdingtaxmustbewithheld
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regardlessofwhetherandtowhichextentthedistributionisexemptfromtaxatthelevelofashareholderandwhethertheshareholderis
domiciledinGermanyorabroad.
AstheADSholdersshould,forGermantaxpurposes,betreatedasdirectlyholdinganinterestinthecompanysClassAshares,the
descriptionintheparagraphaboveshouldapplyaccordingly.
MorespecificallyasregardstothedistributionsfromADSs,theGermanwithholdingtaxwillbewithheldeitherby(i)theGermanfinancial
institutionthatholdsoradministerstheunderlyingClassAsharesincustodyanddisbursesorcreditsthedividendincomefromthe
underlyingClassAsharesor(ii)theGermancollectivesecuritiescustodian,i.e.,onthepaymentmadetothedepositary(inbothcases(i)or
(ii),aPayingAgent).Further,awithholdingtaxcertificateshouldbeissuedwhichentitlestheaddresseeofsuchcertificatetoarefundortax
creditoftheGermantaxeswithheld.TheADSholdershouldbeentitledtotherefundortaxcredit(andnotthelegalownerwhichisthe
depositary)asitistreatedforGermantaxpurposesasthebeneficialowneroftheClassAshares.Consequently,theGermantaxeslevied
onthepaymentsundertheADSsshouldbethesameasiftheADSholderinvesteddirectlyintheClassAsharesbecausetheADSholderis
eitherentitledtoarefundorataxcredit.TheADSholderswouldbetreatedasiftheyholdClassAsharesdirectlyandwithholdingtaxwould
bechargedonlyonce.
TaxationofthedistributionsfromADSsforinvestorsnotdomiciledinGermany
ADSholderswithoutataxdomicileinGermanywhoseADSsareattributabletoaGermanpermanentestablishmentorfixedplaceof
businessorarepartofbusinessassetsforwhichapermanentrepresentativeinGermanyhasbeenappointed,arealsosubjecttotaxin
Germanyontheirdividendincome.Inthisrespect,theprovisionsoutlinedbelowforADSholderswithataxdomicileinGermanywhoseADS
areheldasbusinessassetsapplyaccordingly(TaxationofthedistributionsfromADSsforinvestorsdomiciledinGermanyADSsheldas
businessassets).Thewithholdingtax(includingthesolidaritysurchargethereon)withheldandpassedonwillbecreditedagainstthe
incomeorcorporateincometaxliabilityorrefundedintheamountofanyexcess.
Inallothercases,ADSholdersareonlysubjecttoGermantaxationwithrespecttospecificGermansourceincome(beschrnkte
Steuerpflicht),inparticular,dividendsdistributedbyaGermantaxresidentcorporation.Dividendpaymentsthatarefundedfromthe
companyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27KStG)arenottaxableinGermany(providedthe
respectivecertificationrequirementsareproperlyfulfilled).AccordingtotheADRTaxCircular,dividendincomefromtheunderlyingshares
shouldbeattributedtotheholderoftheADSsforGermantaxpurposesandnottothelegalowneroftheshares.Asaconsequencethereof,
dividendincomederivedfromADSsshouldbetreatedasGermansourceincome(beschrnkteSteuerpflicht).
AnyGermanlimitedtaxliabilityondividendsisdischargedbywithholdingtax.Withholdingtaxisonlyreimbursedinthecasesandtothe
extentdescribedbelow.
However,withholdingtaxondividendsdistributedtoanADSholderbeingacompanydomiciledinanotherEUMemberStatewithinthe
meaningofArticle2oftheParentSubsidiaryDirectivemayberefundedorexempteduponapplicationandsubjecttofurtherconditions.This
alsoappliestodividendsdistributedtoapermanentestablishmentofsuchaparentcompanyresidentinanotherEUMemberStateortoa
parentcompanythatissubjecttounlimitedtaxliabilityinGermany,providedthattheparticipationinthecompanyactuallyformspartofsuch
permanentestablishmentsbusinessassets.AsfurtherrequirementsforarefundorexemptionofwithholdingtaxundertheParent
SubsidiaryDirective,theADSholderneedstoholdADSsthatrepresentatleasta10%directstakeinthecompanysregisteredcapitalfor
oneyearandtofilearespectiveapplicationwiththeGermanFederalCentralTaxOffice(BundeszentralamtfrSteuern,Hauptdienstsitz
BonnBeuel,AnderKppe1,53225Bonn)usinganofficialform.
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BasedonthedoubletaxationtreatyconcludedbetweenGermanyandthejurisdictionwhereaninvestoristaxresidentforpurposesofthe
respectivedoubletaxationtreaty,whichwerefertointhefollowingastheTreaty,Germanwithholdingtaxmaybereducedtoalowertaxrate
usuallyamountingto15%ofthegrossdividendonthebasisofanapplicableTreaty.Inthisevent,theexcessofthetotalwithholdingtax,
includingthesolidaritysurcharge,overthemaximumrateofwithholdingtaxpermittedbytheTreatyshouldberefundedtotheinvestorsupon
application.AU.S.investorforexampleinitiallyshouldreceiveanetpaymentof73.625fromagrossdividendamountingto100(i.e.,100
minusthe26.375%withholdingtax).SuchU.S.investormay,subjecttofulfillingproceduralrequirements,beentitledtoapartialrefundfrom
theGermantaxauthoritiesintheamountof11.375%ofthegrossdividend.Asaresult,theU.S.investormayultimatelyreceiveapayment
of85intotal(85%ofthegrossdividendamount)providedthatitisentitledtoTreatybenefits.
OnDecember1,2016,theGermanFederalParliament(Bundestag)approvedanewprovisiontolimittheentitlementofnonresident
shareholderstoarefundorareductionofGermandividendwithholdingtaxunderadoubletaxationtreatyundercertaincircumstances.We
expectthenewrulewillenterintoforceforassessmentperiodsstartingJanuary1,2017.Underthenewrule,arefundorareductionof
Germandividendwithholdingtaxunderadoubletaxationtreatywill,inprinciple,onlybegranted,if(i)thenonresidentADSholderisnot
obligedtoforwardthedividendproceedsreceivedfromthecompanytoanyotherperson,thenonresidentshareholderhascontinuously
heldbeneficialownershipinthesharesofthecompanyduringthe45dayperiodpriortotheduedateofthedistribution(PreHoldingPeriod),
thenonresidentshareholdercontinuouslyholdsbeneficialownershipinthesharesofthecompanyduringthe45dayperiodafterthedue
dateofthedistribution(PostHoldingPeriod),andthenonresidentshareholderhascontinuouslybornethemarketriskexposureduringboth
thePreHoldingPeriodandthePostHoldingPeriod,takinghedgingorcomparabletransactionintoaccount.Ontheotherhand,thenewrule
shallnotapply(andtheentitlementofanonresidentADSholdertoarefundorareductionofGermandividendwithholdingtaxisnotlimited
bythisrule),if(i)theapplicabledoubletaxationtreatyofthenonresidentshareholderprovidesforawithholdingtaxrateofatleast15%,or
(ii)thenonresidentADSholderissubjecttoincometaxationinitsstateofresidency(withoutbeingtaxexempt)andholdsdirectlyatleast
10%inthesharecapitalofthecompanypayingthedividendor(iii)thenonresidentADSholderhascontinuouslybeenholdingthebeneficial
ownershipinthesharesofthecompanyforaperiodofatleasttwelvemonthspriortothedateonwhichtheincomeaccrued(Zufluss).
InvestorsshouldnotethattheaforementionedrefundorreductionofGermanwithholdingtaxunderaTreatyrequirestheinvestortomake
taxfilingswiththecompetentGermantaxofficeusingawithholdingtaxcertificateissuedunderGermanlawbytheagent,whohaswithheld
andremittedthewithholdingtax(thePayingAgent).IfthedepositaryoperatesaninterfacewithDTC,itshouldhaveunderregular
circumstancessufficientinformationabouttheidentityoftheADSholdersothatataxreclaimprocesscanbefiledwiththecompetent
GermantaxofficeandawithholdingtaxcertificatecanbeissuedtotheADSholder.Intheabsenceofsuchwithholdingtaxcertificate,an
ADSholderwillnotbeentitledtoreceiveataxrefundfromtheGermantaxauthoritiesandmaynotcredittheGermanwithholdingtax
againstitstaxliability.
Claimsforrefundsmaybemadeonaseparateform,whichmustbefiledwiththeGermanFederalCentralTaxOffice(Bundeszentralamtfr
Steuern,AnderKppe1,53225Bonn,Germany).Theformisavailableatthesameaddress,ontheGermanFederalCentralTaxOffices
website(www.bzst.de)orfromembassiesoftheFederalRepublicofGermany.Therefundclaimbecomestimebarredafterfouryears
followingthecalendaryearinwhichthedividendisreceivedunlessthecommencementstartslater,theperiodisinterruptedorsuspended.
Asdescribedabove,aninvestormustsubmittotheGermantaxauthoritiestheoriginalwithholdingtaxcertificate(oracertifiedcopythereof)
issuedbythePayingAgentanddocumentingthetaxwithheld.Furthermore,anofficialcertificationoftaxresidencymustbesubmitted.
Underasimplifiedrefundprocedurebasedonelectronicdataexchange(Datentrgerverfahren),apayingordisbursingagentthatis
registeredasaparticipantintheelectronicdataexchangeprocedurewiththeGerman
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FederalCentralTaxOffice(BundeszentralamtfrSteuern)mayfileanelectroniccollectiverefundclaimonbehalfofalloftheADSholders
forwhomitholdsthecompanysADSsincustody.However,thesimplifiedrefundprocedureonlyallowsforarefunduptotheregulartaxrate
providedintheTreaty.Itisnotpossibletousethesimplifiedrefundproceduretoclaimafurtherrefund,forexamplebasedonspecial
privilegesunderaTreaty.
IfdividendsaredistributedtocorporationssubjecttoalimitedtaxliabilityinGermany,i.e.corporationswithnostatutoryseatorplaceof
managementinGermany,andifthesharesneitherbelongtotheassetsofapermanentestablishmentorfixedplaceofbusinessinGermany
norformpartofbusinessassetsforwhichapermanentrepresentativeinGermanyhasbeenappointed,twofifthsofthetaxwithheldatthe
sourcecanbe,subjecttonationalantitreatyshoppingprovisions,refundedeveniftheprerequisitesforarefundundertheParentSubsidiary
DirectiveortherelevantTreatyarenotfulfilled.TherelevantapplicationformsareavailableattheGermanFederalCentralTaxOfficeatthe
addressspecifiedabove.
TheexemptionfromwithholdingtaxundertheParentSubsidiaryDirectiveaswellastheaforementionedpossibilitiesforarefundof
withholdingtaxdependoncertainotherconditionsbeingmet(particularlythefulfillmentofsocalledsubstancerequirements
Substanzerfordernisse).
TaxationofthedistributionsfromADSsforinvestorsdomiciledinGermany
BasedontheassumptionthattheADSholdershouldbetreated,inlinewiththeADRTaxCircular,asthebeneficialowneroftheClassA
sharesforGermantaxpurposes,GermanADSholdersshouldbesubjecttoGermantaxationasiftheyownedtheClassAsharesdirectly.
ADSsheldasnonbusinessassets
DividendsdistributedtoADSholderswithataxdomicileinGermanywhoseADSsareheldasnonbusinessassetsformpartoftheirtaxable
capitalinvestmentincome,whichissubjecttoaflattaxatarateof25%plussolidaritysurchargeof5.5%thereon(i.e.26.375%intotalplus
churchtax,ifapplicable).Theincometaxowedforthisdividendincomeisingeneraldischargedbythewithholdingtaxleviedbythe
company(flattaxAbgeltungsteuer)unlesstheADSholderappliesfortheregular,progressivetaxrate.Incomerelatedexpensescannotbe
deductedfromthecapitalinvestmentincome,exceptforanannuallumpsumdeduction(SparerPauschbetrag)of801(1,602formarried
couplesandforpartnersinaccordancewiththeregisteredpartnershiplaw(GesetzberdieEingetrageneLebenspartnerschaft)filingjointly).
However,theADSholdermayrequestthatitscapitalinvestmentincome(includingdividends)alongwithitsothertaxableincomeistaxedat
theprogressiveincometaxrate(insteadoftheflattaxoncapitalinvestmentincome)ifthisresultsinalowertaxburden(Gnstigerprfung).
Inthiscase,thewithholdingtaxwillbecreditedagainsttheprogressiveincometaxandanyexcessamountwillberefunded.Pursuanttothe
viewoftheGermantaxauthorities(whichhasbeenconfirmedbyadecisionbytheGermanFederalTaxCourt(Bundesfinanzhof)),inthis
caseaswell,incomerelatedexpensescannotbedeductedfromthecapitalinvestmentincome,exceptfortheaforementionedannuallump
sumdeduction.
ExceptionsfromtheflattaxapplyuponapplicationforADSholderswithunderlyingsharesofatleast25%inthecompanyandforADS
holderswithunderlyingsharesofatleast1%inthecompanyandwhoworkforthecompanyinaprofessionalcapacity.
WithregardtodividendsreceivedafterDecember31,2014,anautomaticprocedurefordeductingchurchtaxappliesunlesstheADSholder
hasfiledablockingnotice(Sperrvermerk)withtheGermanFederalCentralTaxOffice.Thechurchtaxpayableonthedividendiswithheld
andpassedonbythePayingAgent.Inthiscase,thechurchtaxfordividendsissatisfiedbythePayingAgentwithholdingsuchtax.Church
taxwithheldatsource
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maynotbedeductedasaspecialexpense(Sonderausgabe)inthecourseofthetaxassessment,butthePayingAgentmayreducethe
withholdingtax(includingthesolidaritysurcharge)by26.375%ofthechurchtaxtobewithheldonthedividends.IftheADSholderhasfiled
ablockingnoticeandnochurchtaxiswithheldbyaPayingAgent,anADSholdersubjecttochurchtaxisobligedtodeclarethedividendsin
hisincometaxreturn.Thechurchtaxonthedividendsisthenleviedbywayofataxassessment.
Asanexemption,dividendpaymentsthatarefundedfromthecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekonto
Section27KStG)andarepaidtoADSholderswithataxdomicileinGermanywithADSsheldasnonbusinessassets,do,contrarytothe
above,notformpartoftheADSholderstaxableincome(providedtherespectivecertificationrequirementsareproperlyfulfilled).Ifthe
dividendpaymentfundedfromthecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27KStG)exceeds
theADSholdersacquisitioncosts,negativeacquisitioncostswillarisewhichcanresultinahighercapitalgainincaseoftheADSsor
sharesdisposal.Thiswillnotapplyif(i)theADSholderor,intheeventofagratuitoustransfer,itslegalpredecessor,or,iftheADSshave
beengratuitouslytransferredseveraltimesinsuccession,oneofhislegalpredecessorsatanypointduringthefiveyearsprecedingthe
(deemed,asthecasemaybe)disposal,directlyorindirectlyheldADSs(and/orshares)thatrepresentatleast1%oftheunderlyingshare
capitalofthecompany,oraQualifiedHolding,and(ii)thedividendpaymentfundedfromthecompanyscontributionaccountfortax
purposes(steuerlichesEinlagekontoSection27KStG)exceedstheacquisitioncostsoftheADSs.InsuchacaseofaQualifiedHolding,a
dividendpaymentfundedfromthecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27KStG)isdeemed
asaleoftheADSsandistaxableasacapitalgainifandtotheextentthedividendpaymentfundedfromthecompanyscontributionaccount
fortaxpurposes(steuerlichesEinlagekontoSection27KStG)exceedstheacquisitioncostsoftheADSs.Inthiscase,thetaxation
correspondswiththedescriptioninGermantaxationofcapitalgainsfromADSsADSholderwithadomicileinGermanymadewith
regardtoADSholdersmaintainingaQualifiedHolding.
ThePayingAgentwhichkeepsoradministerstheADSsandpaysorcreditsthecapitalincomeisrequiredtocreatesocalledpotsforthe
losssetoff(Verlustverrechnungstpfe)toallowforsettingoffofnegativecapitalincomewithcurrentandfuturepositivecapitalincome.Aset
offofnegativecapitalincomeadministratedbyonePayingAgentwithpositivecapitalincomeadministratedbyanotherPayingAgentisnot
possibleandcanonlybeachievedinthecourseoftheincometaxassessmentattheleveloftherespectiveinvestor.Inthiscase,the
taxpayerhastoapplyforacertificateconfirmingtheamountoflossesnotoffsetwiththePayingAgentwherethepotsforthelosssetoff
exist.TheapplicationisirrevocableandhastoreachthePayingAgentbeforeDecember15thoftherespectiveyearotherwisethelosses
willbecarriedforwardtothefollowingyearbythePayingAgent.
WithholdingtaxwillnotbewithheldbyaPayingAgentifthetaxpayerprovidesthePayingAgentwithanapplicationforexemption
(Freistellungsauftrag)totheextentthatthecapitalincomedoesnotexceedtheannuallumpsumallowance(Sparerpauschbetrag)of801
(1,602formarriedcouplesandforpartnersinaccordancewiththeregisteredpartnershiplaw(GesetzberdieEingetragene
Lebenspartnerschaft)filingjointly)asoutlinedontheapplicationforexemption.Furthermore,nowithholdingtaxwillbeleviedifthetaxpayer
providesthePayingAgentwithanonassessmentcertificate(Nichtveranlagungsbescheinigung)tobeappliedforwiththecompetenttax
officeoftheinvestor.
ADSsheldasbusinessassets
DividendsfromADSsheldasbusinessassetsbyanADSholderwithataxdomicileinGermanyarenotsubjecttotheflattax.Thetaxation
dependsonwhethertheADSholderisacorporation,asoleproprietororapartnership(coentrepreneurship).Thewithholdingtax(including
thesolidaritysurchargethereonandchurchtax,ifapplicable)withheldandpaidwillbecreditedagainsttheADSholdersincometaxor
corporateincome
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taxliability(includingthesolidaritysurchargethereonandchurchtax,ifapplicable)orrefundedintheamountofanyexcess.
Dividendpaymentsthatarefundedfromthecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27KStG)
andarepaidtoADSholderswithataxdomicileinGermanywhoseADSsareheldasbusinessassetsarefullytaxexemptinthehandsof
suchADSholder(providedtherespectivecertificationrequirementsareproperlyfulfilled).Totheextentthedividendpaymentsfundedfrom
thecompanyscontributionaccountfortaxpurposesexceedtheacquisitioncostsoftheADS,ataxablecapitalgainshouldoccur.The
taxationofsuchgaincorrespondswiththedescriptioninGermantaxationofcapitalgainsfromADSsmadewithregardtoADSholders
whoseADSsareheldasbusinessassets(however,asregardstheapplicationofthe95%exemptionincaseofacorporationthisisnot
undisputed).
Corporations
IftheADSholderisacorporationwithataxdomicileinGermany,thedividendsareeffectively95%exemptfromcorporateincometaxand
thesolidaritysurchargeunlessanexceptionisapplicablethereto.5%ofthedividendsaretreatedasnondeductiblebusinessexpensesand
arethereforesubjecttocorporateincometax(plusthesolidaritysurchargethereon)atatotaltaxrateof15.825%.Inotherrespects,
businessexpensesactuallyincurredindirectrelationtothedividendsmaybededucted.However,pursuanttotheActfortheimplementation
oftheECJsrulingdatedOctober20,2011(GesetzzurUmsetzungdesEuGHUrteilsvom20.Oktober2011inderRechtssacheC284/09),
dividendsthatanADSholderreceivedarenotexemptfromcorporateincometax(includingsolidaritysurchargethereon),iftheADSholder
onlyheld(orholds)adirectparticipationoflessthan10%intheunderlyingsharecapitalofthedistributingcorporationatthebeginningof
thecalendaryear(hereinafterinallcases,aPortfolioParticipation(Streubesitzbeteiligung)).Underlyingparticipationsofatleast10%
acquiredduringacalendaryeararedeemedtohavebeenacquiredatthebeginningofthecalendaryear.Underlyingparticipationsthatan
ADSholderholdsthroughapartnership(includingthosethatarecoentrepreneurships(Mitunternehmerschaften))areattributabletothe
ADSholderonlyonaproratabasisattheratiooftheinterestshareoftheADSholderintheassetsoftherelevantpartnership.
However,thedividends(afterdeductingbusinessexpenseseconomicallyrelatedtothedividends)aresubjecttotradetaxinthefullamount,
unlesstherequirementsofthetradetaxparticipationexemptionprivilegearefulfilled.Inthislattercase,thedividendsarenotsubjectto
tradetaxhowever,tradetaxisleviedonamountsconsideredtobenondeductiblebusinessexpenses(amountingto5%ofthedividend).
Dependingonthemunicipaltradetaxmultiplierappliedbytherelevantmunicipalauthority,inmostcasestradetaxrangesfrom7%to
approximately18%.
Soleproprietors
IftheADSsareheldasbusinessassetsbyasoleproprietorwithataxdomicileinGermany,only60%ofthedividendsaresubjectto
progressiveincometax(plusthesolidaritysurchargethereon)atatotaltaxrateofuptoapproximately47.5%(pluschurchtax,ifapplicable),
underthesocalledpartialincomemethod(Teileinknfteverfahren).Only60%ofthebusinessexpenseseconomicallyrelatedtothe
dividendsaretaxdeductible.IftheADSsbelongtoadomesticpermanentestablishmentinGermanyofabusinessoperationofanADS
holder,thedividendincome(afterdeductingbusinessexpenseseconomicallyrelatedthereto)isfullysubjecttotradetax,unlessthe
prerequisitesofthetradetaxparticipationexemptionprivilegearefulfilled.Inthislattercasethenetamountofdividends,i.e.afterdeducting
directlyrelatedexpenses,isexemptfromtradetax.Asarule,tradetaxcanbecreditedagainsttheADSholderspersonalincometax,either
infullorinpart,bymeansofalumpsumtaxcreditmethod,dependingonthelevelofthemunicipaltradetaxmultiplierandcertainindividual
taxrelevantcircumstancesofthetaxpayer.
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Partnerships
IftheADSholderisagenuinebusinesspartnershiporadeemedbusinesspartnership(coentrepreneurship)withapermanent
establishmentinGermany,theincometaxorcorporateincometaxisnotleviedatthelevelofthepartnershipbutatthelevelofthe
respectivepartner.Thetaxationofeverypartnerdependsonwhetherthepartnerisacorporationoranindividual.Ifthepartnerisa
corporation,thedividendscontainedintheprofitshareofthepartnerwillbetaxedinaccordancewiththerulesapplicableforcorporations
(seeCorporationsabove).Ifthepartnerisanindividual,thetaxationfollowstherulesdescribedforsoleproprietors,(seeSoleproprietors
above).Uponapplicationandsubjecttofurtherconditions,anindividualasapartnercanhavehispersonalincometaxratereducedfor
earningsretainedatthelevelofthepartnership.
Inaddition,thedividendsaresubjecttotradetaxinthefullamountatthepartnershipleveliftheADSsareattributedtoaGermanpermanent
establishmentofthepartnership,unlesstherequirementsofthetradetaxparticipationexemptionprivilegearefulfilled.Ifapartnerofthe
partnershipisanindividual,theportionofthetradetaxpaidbythepartnershippertainingtohisprofitsharewillbecredited,eitherinfullorin
part,againsthispersonalincometaxbymeansofalumpsummethod,dependingonthelevelofthemunicipaltradetaxmultiplierand
certainindividualtaxrelevantcircumstancesofthetaxpayer.Duetoalackofcaselawandadministrativeguidance,itiscurrentlyunclear
howtherulesforthetaxationofdividendsfromPortfolioParticipations(seeCorporationsabove)mightimpactthetradetaxtreatmentatthe
levelofthepartnership.ADSholdersarestronglyrecommendedtoconsulttheirtaxadvisors.Underaliteralreadingofthelaw,ifthe
partnershipqualifiesforthetradetaxexemptionprivilegeatthebeginningoftherelevantassessmentperiod,thedividendsshouldnotbe
subjecttotradetax.However,inthiscase,tradetaxshouldbeleviedon5%ofthedividendstotheextenttheyareattributabletotheprofit
shareofsuchcorporatepartnerstowhomatleast10%oftheunderlyingsharesinthecompanyareattributableonalookthroughbasis,
sincesuchportionofthedividendsshouldbedeemedtobenondeductiblebusinessexpenses.Theremainingportionofthedividend
incomeattributabletootherthansuchspecificcorporatepartners(whichincludesindividualpartnersandshould,underaliteralreadingof
thelaw,alsoincludecorporatepartnerstowhom,onalookthroughbasis,onlyPortfolioParticipationsareattributable)should(afterthe
deductionofbusinessexpenseseconomicallyrelatedthereto)notbesubjecttotradetax.
Specialtreatmentofcompaniesinthefinancialandinsurancesectorsandpensionfunds
IffinancialinstitutionsorfinancialservicesprovidersholdADSsthatareallocabletotheirtradingbookpursuanttoSection1aoftheGerman
BankingAct(GesetzberdasKreditwesen),theywillneitherbeabletousethepartialincomemethodnorhave60%oftheirdividend
incomeexemptfromtaxationnorbeentitledtotheeffective95%exemptionfromcorporateincometaxplusthesolidaritysurchargeandany
applicabletradetax.Thus,dividendincomeisfullytaxable.ThesameappliestoADSsacquiredbyfinancialinstitutionsinthemeaningofthe
GermanBankingActforthepurposeofgeneratingprofitsfromshorttermproprietarytrading.Theprecedingsentencesapplyaccordinglyfor
ADSsheldinapermanentestablishmentinGermanybyfinancialinstitutions,financialserviceproviders,andfinancecompaniestaxresident
inanothermemberstateoftheEuropeanUnionorinothersignatorystatesoftheEEAAgreement.Likewise,thetaxexemptiondescribed
earlieraffordedtocorporationsfromADSsdoesnotapplytoADSsthatqualifyasacapitalinvestmentinthecaseoflifeinsuranceand
healthinsurancecompanies,orthosewhichareheldbypensionfunds.However,anexemptiontotheforegoing,andthusa95%effective
taxexemption,appliestodividendsobtainedbytheaforementionedcompanies,towhichtheParentSubsidiaryDirectiveapplies.
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WithholdingtaxADSsheldinaGermancustodyaccount
IfandwhentheADSsareheldinaGermancustodyaccountwithholdingtaxmayapplyatdifferentlevels:
atafirstlevel,therewillbeGermanwithholdingtaxof26.375%(includingsolidaritysurcharge)ontrivagoN.V.sdividendpaymentmade
totheADSAgentthiswithholdingtaxmaybereducedto15%ortoalowertaxrate
atasecondlevel,theGermanpayingagentthatholdstheADSsincustodyfortheinvestor,ortheGermanDistributionPayingAgent,is
requiredtowithholdagainGermanwithholdingtaxof26.375%(includingsolidaritysurcharge)pluschurchtax,ifany.TheGerman
DistributionPayingAgentistheGermandomesticcreditorfinancialservicesinstitution(inlndischesKreditoder
Finanzdienstleistungsinstitut)(includingGermandomesticbranchesofsuchforeignenterprises),theGermandomesticsecuritiestrading
company(inlndischesWertpapierhandelsunternehmen)ortheGermandomesticsecuritiestradingbank(inlndische
Wertpapierhandelsbank)whichkeepsoradministerstheADSsanddisbursesorcreditstheADSdistributions.
Consequently,ahighertaxburdenmayariseiftherespectivewithholdingtaxcertificatecannotbeissuedandthereforeneithertheGerman
investornortheADSagentareabletousethewithholdingtaxwithheldatthefirstlevelorthesecondlevelasataxcreditorapplyfora
respectivetaxrefund.TheGermanFederalMinistryofFinance(BundesministeriumderFinanzen)hassuggestedanddescribeda
proceduralsolutiontoavoidsuchpotentialdoubletaxationinaninterpretationcirculardatedOctober26,2011(BMFIVC1S
2400/11/10002:003).However,fromaproceduralperspective,itisnotentirelyclearwhetherthiscircularalsoappliestoADSs.Accordingto
ourGermantaxcounselsopinion,thisshouldbethecasesinceADSsarerepresentingtheunderlyingClassAshares(seeabove).
EspeciallyiftheADSarenotheldwithaGermanDistributionPayingAgent,aGermaninvestorshouldberequiredtoincludeanypayment
fromtheADSsinitsGermantaxreturnandmaynotbeentitledtocredittaxeswithheldatthefirstorsecondlevelagainstitsGermantax
liabilityforthereasonthattherequiredwithholdingtaxcertificatehasnotbeenissued.
Further,therefundorcreditofthewithholdingtaxmaybedeniedinaportionofthreefifthsundercertaincircumstancesasfurtherdescribed
inmoredetailinSection36aGermanIncomeTaxAct(Einkommensteuergesetz),interalia,ifandwhentheADSholderisnotthebeneficial
owneroftheADSswithinatimeframeof45daysaroundtheexdateoftheunderlyingClassAshares.
GermantaxationofcapitalgainsfromADS
TaxationofcapitalgainsfromADSsADSholdernottaxresidentinGermany
ThecapitalgainsfromthedispositionofADSsrealizedbyanADSholderwhoisnotaGermantaxresidentshouldbesubjecttoGermantax
onlyifsuchinvestorheldADSsthatdirectlyorindirectlyrepresent1%ormoreintheunderlyingcompanysordinaryshares(i.e.,aQualified
HoldingasdefinedinTaxationofthedistributionsfromADSforinvestorsdomiciledinGermanyADSsheldasnonbusinessassets)at
anytimeduringafiveyearperiodprecedingthedispositionoriftheADSsorunderlyingsharesbelongtoadomesticpermanent
establishmentorfixedplaceofbusinessorarepartofbusinessassetsforwhichapermanentrepresentativeinGermanyhasbeen
appointed.IfsuchholderhadacquiredtheADSswithoutconsideration,thepreviousownersholdingperiodandamountoftheholdingwould
alsobetakenintoaccount.
IncaseofaQualifiedHolding,5%ofthegainsfromthedisposaloftheADSsshouldunderGermandomestictaxlawcurrentlybesubjectto
corporateincometaxplusthesolidaritysurchargethereoniftheADSholderisacorporation.IftheADSholderisaprivateindividual,only
60%ofthegainsfromthedisposaloftheADSsare
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subjecttoprogressiveincometaxplusthesolidaritysurchargethereon(partialincomemethod).However,mostTreatiesprovideforan
exemptionfromGermantaxationandattributetherightoftaxationtotheADSholdersstateofresidence.AccordingtoGermantax
authoritiesthereisnoobligationtolevywithholdingtaxatsourceinthecaseofaQualifiedHoldingiftheADSholdersubmitstothePaying
Agentacertificateofresidenceissuedbythecompetentforeigntaxauthority.
IncaseofaQualifiedHolding,therelevantADSholderhastofileaGermantaxreturn.Pleasenotethatataxreturnisalsorequiredif
GermanydoesnothavetherighttotaxsuchcapitalgainspursuanttotheindividualapplicableTreaty.
WithregardtocapitalgainsorlossesfromADSsattributabletoadomesticpermanentestablishmentorfixedplaceofbusinessorwhichform
partofbusinessassetsforwhichapermanentrepresentativeinGermanyhasbeenappointed,theabovementionedprovisionspertainingto
ADSholderswithataxdomicileinGermanywhoseADSsarebusinessassetsapplymutatismutandis(seeTaxationofcapitalgainsfrom
ADSsADSholderwithadomicileinGermanyADSsheldasbusinessassets).ThePayingAgentcanrefrainfromdeductingthe
withholdingtaxiftheADSholderdeclarestothePayingAgentonanofficialformthattheADSsformpartofdomesticbusinessassetsand
certainotherrequirementsaremet.
Germanstatutorylawrequiresthedisbursingagenttolevywithholdingtaxoncapitalgainsfromthesaleofordinarysharesorother
securities,includingADSs,heldinacustodialaccountinGermany.WithregardtotheGermantaxationofcapitalgains,disbursingagent
meansabank,afinancialservicesinstitution,asecuritiestradingenterpriseorasecuritiestradingbank(eachasdefinedintheGerman
BankingAct(Kreditwesengesetz)and,ineachcaseincludingaGermanbranchofaforeignenterprise,butexcludingaforeignbranchofa
Germanenterprise)thatholdstheADSsincustodyoradministerstheADSsfortheinvestororconductssalesorotherdispositionsand
disbursesorcreditstheincomefromtheADSstotheholderoftheADSs.TheGermanstatutorylawwiththeexceptionofADSsheldbyan
ADSholderholdingdirectlyorindirectlythroughADSsandsharesatleast1%inthecompanysordinarysharecapital,doesnotcreatea
limitedtaxliabilityinGermanysothatthereshouldbenoobligationtowithholdtaxesonsuchcapitalgains.Further,itisnotentirelyclearby
theGermanstatutorylawwhetherawithholdingshouldbemadeifandwhenthe(share)ADSholdercreatesalimitedtaxliabilityinGermany
withitsholding.However,aninterpretationcircular(EinzelfragenzurAbgeltungsteuer)issuedbytheGermanFederalMinistryofFinance
(BundesministeriumderFinanzen)datedJanuary18,2016(referencenumberIVC1S2252/08/10004:017)providesthattaxesneednotto
bewithheldwhentheholderofthecustodyaccountisnotaresidentofGermanyforGermantaxpurposesandtheincomeisnotsubjectto
Germantaxation.Theinterpretationcircularfurtherstatesthatthereisnoobligationtowithholdsuchtaxevenifthenonresidentholder
holds1%ormoreofthesharecapitalofaGermancompanythroughADSsandshares.Asaresult,undernocircumstancesshouldtherebe
anobligationtowithholdtaxesoncapitalgainsrealizedbyADSholdersnottaxresidentinGermany.Althoughthiscircularisnotbindingon
Germantaxcourts,inpractice,thedisbursingagentsarerequiredtofollowtheguidancecontainedinsuchinterpretationcirculars.Buteven
ifthereisnowithholdinginGermany,theADSholderisrequiredtomakeataxfilingwiththeGermantaxauthoritiesifandwhenitissubject
toalimitedtaxliabilityinGermanywithitscapitalgainsunderGermandomestictaxlaw.
TaxationofcapitalgainsfromADSsADSholderwithadomicileinGermany
ThecapitalgainfromthedispositionofADSsrealizedbyanADSholderwhoistaxresidentinGermanyshouldbesubjecttoGermantaxas
iftheADSholderownedtheunderlyingClassAsharesdirectly.Thisissupportedbyaninterpretationcircular(Einzelfragenzur
Abgeltungsteuer)issuedbytheGermanFederalMinistryofFinance(BundesministeriumderFinanzen)datedJanuary18,2016(reference
numberIVC1S2252/08/10004:017)withrespecttothelimitationontheoffsettingofcapitallossfromADRswithcapitalgainsfromshares
and/orADRsandtheexchangeoftheADRsintotherespective(represented)shares.
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ADSsheldasnonbusinessassets
GainsfromthedisposalofADSsbyanADSholderwithataxdomicileinGermanyandheldasnonbusinessassetsare,regardlessofthe
holdingperiod,subjecttoaflattaxoncapitalinvestmentincomeatarateof25%(plusthesolidaritysurchargeof5.5%thereon,i.e.26.375%
intotalplusanychurchtaxifapplicable)unlesstheADSholderappliesfortheregular,progressivetaxrateregime.
Thetaxablecapitalgainiscomputedasthedifferencebetween(a)thesaleproceedsand(b)theacquisitioncostsoftheADSandthe
expensesrelateddirectlyandeconomicallytothedisposal.Dividendpaymentsthatarefundedfromthecompanyscontributionaccountfor
taxpurposes(steuerlichesEinlagekontoSection27KStG)reducetheoriginalacquisitioncostsifdividendpaymentsthatarefundedfrom
thecompanyscontributionaccountfortaxpurposes(steuerlichesEinlagekontoSection27KStG)exceedtheacquisitioncosts,negative
acquisitioncosts,whichcanincreaseacapitalgain,canariseincaseofADSholders,whoseADSareheldasnonbusinessassetsanddo
notqualifyasQualifiedHolding.
Onlyanannuallumpsumdeductionof801(1,602formarriedcouplesfilingjointly)maybedeductedfromtheentirecapitalinvestments
income.Itisnotpossibletodeductincomerelatedexpensesinconnectionwithcapitalgains,exceptfortheexpensesdirectlyrelatedin
substancetothedisposalwhichcanbedeductedwhencalculatingthecapitalgains.LossesfromdisposalsofADSsorsharesmayonlybe
offsetagainstcapitalgainsfromthedisposalofADSsorshares.
IfthedisposaloftheADSsisexecutedbyadomesticcreditinstitution,domesticfinancialservicesinstitution(inlndischesKreditoder
Finanzdienstleistungsinstitut)(includingdomesticbranchesofforeigncreditandfinancialservicesinstitutions),domesticsecuritiestrading
company(inlndischesWertpapierhandelsunternehmen)oradomesticsecuritiestradingbank(inlndischeWertpapierhandelsbank),and
suchofficepaysoutorcreditsthecapitalgains(aPayingAgent),thetaxonthecapitalgainswillunderregularcircumstancesbedischarged
fortheaccountofthesellerbythePayingAgentimposingthewithholdingtaxoninvestmentincomeattherateof26.375%(includingthe
solidaritysurchargethereon)onthecapitalgain.
However,theADSholdercanapplyforhistotalcapitalinvestmentincometogetherwithhisothertaxableincometobesubjecttohis
progressiveincometaxrateasopposedtotheflattaxoninvestmentincome,ifthisresultsinalowertaxliability.Inthiscase,thewithholding
taxiscreditedagainsttheprogressiveincometaxandanyresultingexcessamountwillberefunded.Pursuanttothecurrentviewofthe
Germantaxauthorities(whichhasbeenconfirmedbyadecisionbytheGermanFederalTaxCourt(Bundesfinanzhof)),inthiscaseaswell,
incomerelatedexpensescannotbedeductedfromthecapitalinvestmentincome,exceptfortheaforementionedannuallumpsum
deduction.Further,thelimitationsonoffsettinglossesarealsoapplicableundertheincometaxassessment.
Ifthewithholdingtaxor,ifapplicable,thechurchtaxoncapitalgainsisnotwithheldbyaPayingAgent,theADSholderisrequiredtodeclare
thecapitalgainsinhisincometaxreturn.Theincometaxandanyapplicablechurchtaxonthecapitalgainswillthenbecollectedbywayof
assessment.
AnautomaticprocedurefordeductingchurchtaxappliesunlesstheADSholderhasfiledablockingnotice(Sperrvermerk)withtheGerman
FederalCentralTaxOfficechurchtaxoncapitalgainsisthenwithheldbythePayingAgentandisdeemedtohavebeenpaidwhenthetax
isdeducted.Adeductionofthewithheldchurchtaxasaspecialexpenseisnotpermissible,butthewithholdingtaxtobewithheld(including
thesolidaritysurcharge)isreducedby26.375%ofthechurchtaxtobewithheldonthecapitalgains.
Regardlessoftheholdingperiodandthetimeofacquisition,gainsfromthedisposalofADSsarenotsubjecttotheflattaxbuttoprogressive
incometaxifanADSholderdomiciledinGermany,or,intheeventofa
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munificenttransfer,theirlegalpredecessor,or,iftheADSshavebeenmunificentlytransferredseveraltimesinsuccession,oneofhislegal
predecessorsatanypointduringthefiveyearsprecedingthedisposal,directlyorindirectlyheldADSs(and/orshares)thatrepresentatleast
1%oftheunderlyingsharecapitalofthecompany(i.e.,aQualifiedHolding).Inthiscasethepartialincomemethodappliestogainsfromthe
disposalofADSs,whichmeansthatonly60%ofthecapitalgainsaresubjecttotaxandonly60%ofthelossesonthedisposaland
expenseseconomicallyrelatedtheretoaretaxdeductible.EventhoughwithholdingtaxhastobewithheldbyaPayingAgentinthecaseofa
QualifiedHolding,thisdoesnotdischargethetaxliabilityoftheADSholder.Consequently,anADSholdermustdeclarehiscapitalgainsin
hisincometaxreturn.Thewithholdingtax(includingthesolidaritysurchargethereonandchurchtax,ifapplicable)leviedandpaidwillbe
creditedagainsttheADSholdersincometaxliabilityasassessed(includingthesolidaritysurchargethereonandanychurchtaxif
applicable)orrefundedintheamountofanyexcess.
ADSsheldasbusinessassets
GainsfromthesaleofADSsheldasbusinessassetsofanADSholderwithataxdomicileinGermanyarenotsubjecttotheflattax.The
taxationofthecapitalgainsdependsonwhethertheADSholderisacorporation,asoleproprietororapartnership(coentrepreneurship).
Corporations
IftheADSholderisacorporationwithataxdomicileinGermany,thegainsfromthedisposalofADSsare,effectively95%exemptfrom
corporateincometax(includingthesolidaritysurchargethereon)andtradetax,regardlessofthesizeoftheparticipationandtheholding
periodunlessanexceptionisapplicablethereto.5%ofthegainsaretreatedasnondeductiblebusinessexpensesandarethereforesubject
tocorporateincometax(plusthesolidaritysurchargethereon)atarateof15.825%andtradetax(dependingonthemunicipaltradetax
multiplierappliedbythemunicipalauthority,inmostcasesbetween7%andapproximately18%).Asarule,capitallossesandotherprofit
reductionsinconnectionwithADSs(e.g.fromawritedown)cannotbedeductedfortaxpurposes.Currently,therearenospecificrulesfor
thetaxationofgainsarisingfromthedisposalofPortfolioParticipations.
Soleproprietors
IftheADSsareheldasbusinessassetsbyasoleproprietorwithataxdomicileinGermany,only60%ofthegainsfromthedisposalofthe
ADSsaresubjecttoprogressiveincometax(plusthesolidaritysurchargethereon)atatotaltaxrateofuptoapproximately47.5%,and,if
applicable,churchtax(partialincomemethod).Only60%ofthelossesonthedisposalandexpenseseconomicallyrelatedtheretoaretax
deductible.IftheADSsbelongtoaGermanpermanentestablishmentofabusinessoperationofthesoleproprietor,60%ofthegainsofthe
disposaloftheADSsare,inaddition,subjecttotradetax.
Tradetax
TradetaxcanbecreditedagainsttheADSholderspersonalincometaxliability,eitherinfullorinpart,bymeansofalumpsumtaxcredit
methoddependingonthelevelofthemunicipaltradetaxmultiplierandcertainindividualtaxrelevantcircumstancesofthetaxpayer.
Partnerships
IftheADSholderisagenuinebusinesspartnershiporadeemedbusinesspartnership(coentrepreneurship)withapermanent
establishmentinGermany,theincomeorcorporateincometaxisnotleviedatthelevelof
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thepartnershipbutattheleveloftherespectivepartner.Thetaxationdependsonwhetherthepartnerisacorporationoranindividual.Ifthe
partnerisacorporation,thecapitalgainsfromtheADSsascontainedintheprofitshareofthepartnerwillbetaxedinaccordancewiththe
rulesapplicabletocorporations(seeCorporationsabove).Forcapitalgainsintheprofitshareofapartnerthatisanindividual,the
principlesoutlinedaboveforsoleproprietorsapplyaccordingly(partialincomemethod,seeaboveunderSoleproprietors).Upon
applicationandsubjecttofurtherconditions,anindividualasapartnercanobtainareductionofhispersonalincometaxrateforearnings
retainedatthelevelofthepartnership.
Inaddition,capitalgainsfromtheADSsaresubjecttotradetaxatthelevelofthepartnershipiftheADSsareattributedtoadomestic
permanentestablishmentofabusinessoperationofthepartnership,(i)at60%asfarastheyareattributabletotheprofitshareofan
individualasthepartnerofthepartnership,and,(ii)currently,at5%asfarastheyareattributabletotheprofitshareofacorporationasthe
partnerofthepartnership.CapitallossesandotherprofitreductionsinconnectionwiththeADSsarecurrentlynotdeductiblefortradetax
purposesiftheyareattributabletotheprofitshareofacorporationhowever,60%ofthecapitallossesaredeductiblesubjecttogeneral
limitationstotheextentsuchlossesareattributabletotheprofitshareofanindividual.
Ifthepartnerofthepartnershipisanindividual,theportionofthetradetaxpaidbythepartnershipattributabletohisprofitsharewillbe
credited,eitherinfullorinpart,againsthispersonalincometaxbymeansofalumpsummethod,dependingonthelevelofthemunicipal
tradetaxmultiplierandcertainindividualtaxrelevantcircumstancesofthetaxpayer.
Specialtreatmentofcompaniesinthefinancialandinsurancesectorsandpensionfunds
IffinancialinstitutionsorfinancialservicesproviderssellADSsthatareallocabletotheirtradingbookpursuanttoSection1aoftheGerman
BankingAct(GesetzberdasKreditwesen),theywillneitherbeabletousethepartialincomemethodnorhave60%oftheirgains
exemptedfromtaxationnorbeentitledtotheeffective95%exemptionfromcorporateincometaxplusthesolidaritysurchargeandany
applicabletradetax.Thus,capitalgainsarefullytaxable.ThesameappliestoADSsacquiredbyfinancialinstitutionsinthemeaningofthe
GermanBankingActforthepurposeofgeneratingprofitsfromshorttermproprietarytrading.Theprecedingsentencesapplyaccordinglyfor
ADSsheldinapermanentestablishmentinGermanybyfinancialinstitutions,financialserviceproviders,andfinancecompaniestaxresident
inanothermemberstateoftheEuropeanUnionorinothersignatorystatesoftheEEAAgreementortheADSsreflectatleast1%ofthe
sharecapitalofthecompany.Likewise,thetaxexemptiondescribedearlieraffordedtocorporationsfordividendincomeandcapitalgains
fromthesaleofADSsdoesnotapplytoADSsthatqualifyasacapitalinvestmentinthecaseoflifeinsuranceandhealthinsurance
companies,orthosewhichareheldbypensionfunds.
Withholdingtax
IfthedisposaloftheADSsisexecutedbyadomesticcreditinstitution,ordomesticfinancialservicesinstitution(inlndischesKreditoder
Finanzdienstleistungsinstitut)(includingdomesticbranchesofforeigncreditandfinancialservicesinstitutions),domesticsecuritiestrading
company(inlndischesWertpapierhandelsunternehmen)oradomesticsecuritiestradingbank(inlndischeWertpapierhandelsbank),and
suchofficepaysoutorcreditsthecapitalgains(aPayingAgent),awithholdingtax,ifapplicable,attherateof26.375%(includingthe
solidaritysurcharge)pluschurchtax,ifany,onthecapitalgainsfortheaccountofthesellerwillbewithheldbythePayingAgent.No
withholdingtaxshouldbecomedue,however,iftheinvestorhelddirectlyorindirectly1%ormoreinthesharecapitalofthecompany
throughADSsandsharesatanytimeduringafiveyearperiodprecedingthedisposition.Inthisevent,therelevantinvestorhastofilea
Germantaxreturn.
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IncaseofaPayingAgent,capitalgainsfromADSsheldasbusinessassetsarenotsubjecttowithholdingtaxinthesamewayasADSsheld
asnonbusinessassetsbyanADSholder(seeTaxationofcapitalgainsfromADSsADSholderwithadomicileinGermanyADSs
heldasnonbusinessassets).Instead,thePayingAgentwillnotlevythewithholdingtax,providedthat(i)theADSholderisacorporation,
associationofpersonsorestatewithataxdomicileinGermany,or(ii)theADSsbelongtothedomesticbusinessassetsofanADSholder,
andtheADSholderdeclaressotothePayingAgentusingthedesignatedofficialformandcertainotherrequirementsaremet.Ifwithholding
taxisimposedbyaPayingAgent,thewithholdingtax(includingthesolidaritysurchargethereonandchurchtax,ifapplicable)imposedand
dischargedwillbecreditedagainsttheincometaxorcorporateincometaxliability(includingthesolidaritysurchargethereonandchurchtax,
ifapplicable)orwillberefundedintheamountofanyexcess.
TaxationofcapitalgainsfromADSsClassAsharesinexchangeoftheADSs
AnADSholdermayrequestfromtheissueroftheADSstoreceivetheClassAsharesinexchangefortheADSs.Thiskindofexchange
shouldnotbequalifiedasasaleoftheADSsfollowedbyanacquisitionoftheClassAshares,becauseADSsshouldrepresentabeneficial
ownershipinterestintheunderlyingsharesandtheholdersofADSsshouldforGermantaxpurposesbetreatedasiftheyheldtheshares
directly(pleaserefertoRiskfactorsabove).Thistreatmentissupportedbyaninterpretationcircular(EinzelfragenzurAbgeltungsteuer)
issuedbytheGermanFederalMinistryofFinance(BundesministeriumderFinanzen)datedJanuary18,2016(referencenumberIVC1
S2252/08/10004:017).TheincometaxationofClassAsharesfollowsthesamebasicprinciplesasdescribedfortheADSs.
Germaninheritanceandgifttax
ItisunclearwhethertheGermaninheritanceorgifttaxappliestothetransferofADSs,astheADRTaxCirculardoesnotreferexplicitlyto
theGermanInheritanceandGiftTaxAct(ErbschaftsteuerundSchenkungsteuergesetz).However,ifGermaninheritanceorgifttaxis
applicabletoADSs,thenunderGermanlaw,thistransferwouldbesubjecttoGermangiftorinheritancetaxif:
(a)thedecedentordonororheir,beneficiaryorothertransferee(i)maintainedhisorherresidenceorahabitualabodeinGermanyorhad
itsplaceofmanagementorregisteredofficeinGermanyatthetimeofthetransfer,or(ii)isaGermancitizenwhohasspentnomorethan
fiveconsecutiveyearsoutsideGermanywithoutmaintainingaresidenceinGermanyor(iii)isaGermancitizenwhoservesforaGerman
entityestablishedunderpubliclawandisremuneratedforhisorherservicefromGermanpublicfunds(includingfamilymemberswhoform
partofsuchpersonshousehold,iftheyareGermancitizens)andisonlysubjecttoestateorinheritancetaxinhisorhercountryofresidence
orhabitualabodewithrespecttoassetslocatedinsuchcountry(specialrulesapplytocertainformerGermancitizenswhoneithermaintain
aresidencenorhavetheirhabitualabodeinGermany),or
(b)atthetimeofthetransfer,theADSsareheldbythedecedentordonorasbusinessassetsformingpartofapermanentestablishmentin
GermanyorforwhichapermanentrepresentativeinGermanyhasbeenappointed,or
(c)theADSssubjecttosuchtransferformpartofaportfoliothatrepresentsatthetimeofthetransfer10%ormoreoftheregisteredshare
capitalofthecompanyandthathasbeenhelddirectlyorindirectlybythedecedentordonor,eitheraloneortogetherwithrelatedpersons.
Generally,thetransfereemaybesubjecttoinheritanceorgifttaxinGermanyandinthejurisdictionwhereheorsheistaxresidentifsuch
jurisdictionhassuchatax.Thereareonlylimitedtreatiesthatintendtoavoidthepotentialdoubletaxation.Underthetreatybetweenthe
FederalRepublicofGermanyandtheUnitedStatesof
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Americafortheavoidanceofdoubletaxationwithrespecttotaxesoninheritancesandgifts(AbkommenzwischenderBundesrepublik
DeutschlandunddenVereinigtenStaatenvonAmerikazurVermeidungderDoppelbesteuerungaufdemGebietderNachlass,Erbschaft
undSchenkungsteuerninderFassungvom21.Dezember2000),ortheUnitedStatesGermanyInheritanceandGiftsTaxTreaty,and
assumingthatthistreatyappliestoADSs,atransferofADSsbygiftorupondeathisnotsubjecttoGermaninheritanceorgifttaxifthedonor
orthetransferorisdomiciledintheUnitedStateswithinthemeaningoftheUnitedStatesGermanyInheritanceandGiftTaxTreatyandis
neitheracitizenofGermanynoraformercitizenofGermanyand,atthetimeofthetransfer,theADSsarenotheldbythedecedentordonor
asbusinessassetsformingpartofapermanentestablishmentinGermanyorforwhichapermanentrepresentativeinGermanyhasbeen
appointed.Notwithstandingtheforegoing,incasetheheir,transfereeorotherbeneficiary(i)has,atthetimeofthetransfer,hisorher
residenceorhabitualabodeinGermany,or(ii)isaGermancitizenwhohasspentnomorethanfive(or,incertaincircumstances,ten)
consecutiveyearsoutsideGermanywithoutmaintainingaresidenceinGermanyor(iii)isaGermancitizenwhoservesforaGermanentity
establishedunderpubliclawandisremuneratedforhisorherservicefromGermanpublicfunds(includingfamilymemberswhoformpartof
suchpersonshousehold,iftheyareGermancitizens)andisonlysubjecttoestateorinheritancetaxinhisorhercountryofresidenceor
habitualabodewithrespecttoassetslocatedinsuchcountry(orspecialrulesapplytocertainformerGermancitizenswhoneithermaintain
aresidencenorhavetheirhabitualabodeinGermany),thetransferredADSsaresubjecttoGermaninheritanceorgifttax.
If,inthiscase,GermanyleviesinheritanceorgifttaxontheADSswithreferencetotheheirs,transfereesorotherbeneficiarysresidencein
GermanyorhisorherGermancitizenship,andtheUnitedStatesalsoleviesfederalestatetaxorfederalgifttaxwithreferencetothe
decedentsordonorsresidence(butnotwithreferencetothedecedentsordonorscitizenship),theamountoftheU.S.federalestatetaxor
theU.S.federalgifttax,respectively,paidintheUnitedStateswithrespecttothetransferredADSsiscreditedagainsttheGerman
inheritanceorgifttaxliability,providedtheU.S.federalestatetaxortheU.S.federalgifttax,asthecasemaybe,doesnotexceedthepartof
theGermaninheritanceorgifttax,ascomputedbeforethecreditisgiven,whichisattributabletothetransferredADSs.Aclaimforcreditof
theU.S.federalestatetaxortheU.S.federalgifttax,asthecasemaybe,maybemadewithinoneyearofthefinaldetermination
(administrativeorjudicial)andpaymentoftheU.S.federalestatetaxortheU.S.federalgifttax,asthecasemaybe,providedthatthe
determinationandpaymentaremadewithintenyearsofthedateofdeathofthedecedentorofthedateofthemakingofthegiftbythe
donor.Similarly,U.S.statelevelestateorgifttaxisalsocreditableagainsttheGermaninheritanceorgifttaxliabilitytotheextentthatU.S.
federalestateorgifttaxiscreditable.
OtherGermantaxes
Therearenotransfer,stamporsimilartaxeswhichwouldapplytothepurchase,saleorotherdispositionofADSsinGermany.Further,no
valueaddedtaxiscurrentlyleviedonthepurchaseordisposalorotherformsoftransferoftheADSshowever,anentrepreneurmayoptto
subjectdisposalsofADSs,whichareinprincipleexemptfromvalueaddedtax,tovalueaddedtaxifthesaleismadetoanother
entrepreneurfortheentrepreneursbusiness.Networthtax(Vermgensteuer)iscurrentlynotleviedinGermany.Itisstillunclearandnotyet
decidedwhetherGermany,basedonapotentialEUDirective,willintroduceaFinancialTransactionTax.
MaterialNetherlandstaxconsiderations
General
ThefollowingisasummaryofmaterialNetherlandstaxconsequencesoftheacquisition,ownershipanddisposalofourADSsorClassA
shares.Thissummarydoesnotpurporttodescribeallpossibletax
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considerationsorconsequencesthatmayberelevanttoallcategoriesofinvestors,someofwhichmaybesubjecttospecialtreatmentunder
applicablelaw(suchastrustsorothersimilararrangements),andinviewofitsgeneralnature,itshouldbetreatedwithcorresponding
caution.TotheextentthissummaryrelatestolegalconclusionsundercurrentNetherlandstaxlaw,andsubjecttothequalificationsit
contains,itrepresentstheopinionofNautaDutilhN.V.,ourspecialDutchcounsel.Holdersshouldconsultwiththeirtaxadvisorswithregard
tothetaxconsequencesofinvestingintheADSsorClassAsharesintheirparticularcircumstances.Thediscussionbelowisincludedfor
generalinformationpurposesonly.Ingeneral,forDutchtaxpurposes,beneficialownersofADSsshouldbetreatedasthebeneficialowners
oftheClassAsharesrepresentedbysuchADSs.
Pleasenotethatthissummarydoesnotdescribethetaxconsiderationsfor:
(i)holdersofADSsorClassAsharesifsuchholders,andinthecaseofindividuals,his/herpartnerorcertainoftheirrelativesbybloodor
marriageinthedirectline(includingfosterchildren),haveasubstantialinterestordeemedsubstantialinterestinusundertheNetherlands
IncomeTaxAct2001(Wetinkomstenbelasting2001).Aholderofsecuritiesinacompanyisconsideredtoholdasubstantialinterestinsuch
companyifsuchholderaloneor,inthecaseofindividuals,togetherwithhis/herpartner(statutorilydefinedterm),directlyorindirectlyholds
(i)aninterestof5%ormoreofthetotalissuedandoutstandingcapitalofthatcompanyorof5%ormoreoftheissuedandoutstanding
capitalofacertainclassofsharesofthatcompanyor(ii)rightstoacquire,directlyorindirectly,suchinterestor(iii)certainprofitsharing
rightsinthatcompanythatrelateto5%ormoreofthecompanysannualprofitsand/orto5%ormoreofthecompanysliquidationproceeds.
Adeemedsubstantialinterestmayariseifasubstantialinterest(orpartthereof)inacompanyhasbeendisposedof,orisdeemedtohave
beendisposedof,onanonrecognitionbasis
(ii)aholderofADSsorClassAsharesthatisnotanindividualforwhichitsshareholdingsqualifyorqualifiedasaparticipationforpurposes
oftheNetherlandsCorporateIncomeTaxAct1969(Wetopdevennootschapsbelasting1969).Ataxpayersshareholdingof5%ormoreina
companysnominalpaidupsharecapitalqualifiesasaparticipation.Aholdermayalsohaveaparticipationifsuchholderdoesnothavea
5%shareholdingbutarelatedentity(statutorilydefinedterm)hasaparticipationorifthecompanyinwhichthesharesareheldisarelated
entity(statutorilydefinedterm)
(iii)holdersofADSsorClassAshareswhoareindividualsforwhomtheADSsorClassAsharesoranybenefitderivedfromtheADSsor
ClassAsharesarearemunerationordeemedtobearemunerationfor(employment)activitiesperformedbysuchholdersorcertain
individualsrelatedtosuchholders(asdefinedintheNetherlandsIncomeTaxAct2001)and
(iv)pensionfunds,investmentinstitutions(fiscalebeleggingsinstellingen),exemptinvestmentinstitutions(vrijgesteldebeleggingsinstellingen)
andotherentitiesthatare,inwholeorinpart,notsubjecttoorexemptfromcorporateincometaxintheNetherlands,aswellasentitiesthat
areexemptfromcorporateincometaxintheircountryofresidence,suchcountryofresidencebeinganotherstateoftheEuropeanUnion,
Norway,Liechtenstein,IcelandoranyotherstatewithwhichtheNetherlandshaveagreedtoexchangeinformationinlinewithinternational
standards.
Exceptasotherwiseindicated,thissummaryonlyaddressesNetherlandsnationaltaxlegislationandpublishedregulations,wherebythe
NetherlandsandNetherlandslawmeansthepartoftheKingdomoftheNetherlandslocatedinEuropeanditslawrespectively,asineffect
onthedatehereofandasinterpretedinpublishedcaselawuntilthisdateasavailableinprintedform,withoutprejudicetoanyamendment
introduced(ortobecomeeffective)atalaterdateand/orimplementedwithorwithoutretroactiveeffect.Theapplicabletaxlawsor
interpretationsthereofmaychange,ortherelevantfactsandcircumstancesmaychange,andsuchchangesmayaffectthecontentsofthis
section,whichwillnotbeupdatedtoreflectanysuchchanges.
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Dividendwithholdingtax
WearerequiredtowithholdDutchdividendwithholdingtaxatarateof15%fromdividendsdistributedbyus(whichwithholdingtaxwillnot
bebornebyus,butwillbewithheldbyusfromthegrossdividendspaidontheClassAshares).However,aslongaswecontinuetohave
ourplaceofmanagementinGermany,andnotintheNetherlands,undertheConventionbetweentheFederalRepublicofGermanyandthe
Netherlandsfortheavoidanceofdoubletaxationwithrespecttotaxesonincomeof2012,wewillbeconsideredtobeexclusivelytax
residentinGermanyandweshouldnotberequiredtowithholdDutchdividendwithholdingtax.Thisexemptionfromwithholdingdoesnot
applytodividendsdistributedbyustoaholderwhoisresidentordeemedtoberesidentintheNetherlandsforDutchincometaxpurposes
orDutchcorporationtaxpurposesortoholdersofADSsorClassAsharesthatareneitherresidentnordeemedtoberesidentofthe
NetherlandsiftheADSsorClassAsharesareattributabletoaNetherlandspermanentestablishmentofsuchnonresidentholder,inwhich
eventsthefollowingapplies.SeeRiskfactorsIfwepaydividends,wemayneedtowithholdtaxonsuchdividendsinbothGermanyand
theNetherlands.
DividendsdistributedbyustoindividualsandcorporatelegalentitieswhoareresidentordeemedtoberesidentintheNetherlandsfor
Netherlandstaxpurposes(NetherlandsResidentIndividualsandNetherlandsResidentEntitiesasthecasemaybe)ortoholdersof
ADSsorClassAsharesthatareneitherresidentnordeemedtoberesidentoftheNetherlandsiftheADSsorClassAsharesare
attributabletoaNetherlandspermanentestablishmentofsuchnonresidentholderaresubjecttoNetherlandsdividendwithholdingtaxata
rateof15%.Theexpressiondividendsdistributedincludes,amongotherthings:
distributionsincashorinkind,deemedandconstructivedistributionsandrepaymentsofpaidincapitalnotrecognizedforNetherlands
dividendwithholdingtaxpurposes
liquidationproceeds,proceedsofredemptionofClassAshares,orproceedsoftherepurchaseofClassAsharesbyusoroneofour
subsidiariesorotheraffiliatedentitiestotheextentsuchproceedsexceedtheaveragepaidincapitalofthoseClassAsharesas
recognizedforpurposesofNetherlandsdividendwithholdingtax,unless,incaseofarepurchase,aparticularstatutoryexemptionapplies
anamountequaltotheparvalueofClassAsharesissuedoranincreaseoftheparvalueofClassAshares,totheextentthatitdoesnot
appearthatacontribution,recognizedforpurposesofNetherlandsdividendwithholdingtax,hasbeenmadeorwillbemadeand
partialrepaymentofthepaidincapital,recognizedforpurposesofNetherlandsdividendwithholdingtax,ifandtotheextentthatwehave
netprofits(zuiverewinst),unlesstheholdersofClassAshareshaveresolvedinadvanceatageneralmeetingtomakesuchrepayment
andtheparvalueoftheClassAsharesconcernedhasbeenreducedbyanequalamountbywayofanamendmentofourarticlesof
association.
NetherlandsResidentIndividualsandNetherlandsResidentEntitiescangenerallycredittheNetherlandsdividendwithholdingtaxagainst
theirincometaxorcorporateincometaxliability.ThesameappliestoholdersofADSsorClassAsharesthatareneitherresidentnor
deemedtoberesidentoftheNetherlandsiftheADSsorClassAsharesareattributabletoaNetherlandspermanentestablishmentofsuch
nonresidentholder.
Pursuanttolegislationtocounteractdividendstripping,areduction,exemption,creditorrefundofNetherlandsdividendwithholdingtaxis
deniediftherecipientofthedividendisnotthebeneficialownerasdescribedintheNetherlandsDividendWithholdingTaxAct1965.This
legislationtargetssituationsinwhichashareholderretainsitseconomicinterestinsharesbutreducesthewithholdingtaxcostsondividends
byatransactionwithanotherparty.Itisnotrequiredfortheserulestoapplythattherecipientofthedividendsisawarethatadividend
strippingtransactiontookplace.TheNetherlandsStateSecretaryofFinancetakesthepositionthatthedefinitionofbeneficialownership
introducedbythislegislationwillalsoapplyinthecontextofadoubletaxationconvention.
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Taxesonincomeandcapitalgains
NetherlandsResidentIndividuals
IfaholderofADSsorClassAsharesisaNetherlandsResidentIndividual,anybenefitderivedordeemedtobederivedfromtheADSsor
ClassAsharesistaxableattheprogressiveincometaxrates(withamaximumof52%,ratefor2016),if:
(a)
theADSsorClassAsharesareattributabletoanenterprisefromwhichtheNetherlandsResidentIndividualderivesashareofthe
profit,whetherasanentrepreneurorasapersonwhohasacoentitlementtothenetworth(medegerechtigdtothetvermogen)ofsuch
enterprise,withoutbeinganentrepreneurorashareholderinsuchenterprise,asdefinedintheNetherlandsIncomeTaxAct2001or
theholderoftheADSsorClassAsharesisconsideredtoperformactivitieswithrespecttotheADSsorClassAsharesthatgobeyond
ordinaryassetmanagement(normaal,actiefvermogensbeheer)orderivesbenefitsfromtheADSsorClassAsharesthataretaxable
asbenefitsfromotheractivities(resultaatuitoverigewerkzaamheden).
(b)
Iftheabovementionedconditions(a)and(b)donotapplytotheindividualholderofADSsorClassAshares,theADSsorClassAshares
arerecognizedasinvestmentassetsandincludedassuchinsuchholdersnetinvestmentassetbase(rendementsgrondslag).Suchholder
willbetaxedannuallyonadeemedincomeof4%ofhisorhernetinvestmentassetsfortheyearatanincometaxrateof30%.Thenet
investmentassetsfortheyeararethefairmarketvalueoftheinvestmentassetslesstheallowableliabilitieson1Januaryoftherelevant
calendaryear.Ataxfreeallowancemaybeavailable.ActualbenefitsderivedfromtheADSsorClassAsharesareassuchnotsubjectto
Netherlandsincometax.
AlawhasbeenenactedintheNetherlands,pursuanttowhich,beginningon1January2017,thetaxationofincomefromsavingsand
investmentswillbeamendedandthedeemedreturnwillnolongerbefixedat4%,butinsteadavariablereturnbetween2.87%and5.39%
(dependingontheamountofsuchholdersnetinvestmentassetsfortheyear)willbeapplied.Following2017,thedeemedreturnwillbe
adjustedannually.However,attherequestoftheNetherlandsParliament,theNetherlandsMinistryofFinanceisalsoreviewingwhetherthe
taxationofincomefromsavingsandinvestmentscanbebasedontheactualincomeand/orgainsrealizedinrespectofinvestmentassets
(whichwouldincludetheADSsorClassAshares)insteadofadeemedreturn.
NetherlandsResidentEntities
AnybenefitderivedordeemedtobederivedfromtheADSsorClassAsharesheldbyNetherlandsResidentEntities,includinganycapital
gainsrealizedonthedisposalthereof,willbesubjecttoNetherlandscorporateincometaxatarateof25%(acorporateincometaxrateof
20%applieswithrespecttotaxableprofitsupto200,000,ratesfor2016).
NonresidentsoftheNetherlands
AholderofADSsorClassAshareswillnotbesubjecttoNetherlandstaxesonincomeoroncapitalgainsinrespectofanypaymentunder
ADSsortheClassAsharesoranygainrealizedonthedisposalordeemeddisposaloftheADSsorClassAshares,providedthat:
(i)
suchholderisneitheraresidentnordeemedtoberesidentintheNetherlandsforNetherlandstaxpurposes
suchholderdoesnothaveaninterestinanenterpriseoradeemedenterprise(statutorilydefinedterm)which,inwholeorinpart,is
eithereffectivelymanagedintheNetherlandsoriscarriedoutthrougha
(ii)
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permanentestablishment,adeemedpermanentestablishmentorapermanentrepresentativeintheNetherlandsandtowhich
enterpriseorpartofanenterprisetheADSsorClassAsharesareattributableand
(iii)
intheeventsuchholderisanindividual,suchholderdoesnotcarryoutanyactivitiesintheNetherlandswithrespecttotheADSsor
ClassAsharesthatgobeyondordinaryassetmanagementanddoesnotderivebenefitsfromtheADSsorClassAsharesthatare
taxableasbenefitsfromotheractivitiesintheNetherlands.
Giftandinheritancetaxes
ResidentsoftheNetherlands
GiftandinheritancetaxeswillariseintheNetherlandswithrespecttoatransferoftheADSsorClassAsharesbywayofagiftby,oronthe
deathof,aholderofADSsorClassAshareswhoisresidentordeemedtoberesidentintheNetherlandsatthetimeofthegiftorhis/her
death.
NonresidentsoftheNetherlands
NoNetherlandsgiftorinheritancetaxeswillariseonthetransferoftheADSsorClassAsharesbywayofgiftby,oronthedeathof,aholder
ofADSsorClassAshareswhoisneitherresidentnordeemedtoberesidentintheNetherlands,unless:
(i)
inthecaseofagiftofADSsorClassAsharesbyanindividualwhoatthedateofthegiftwasneitherresidentnordeemedtobe
residentintheNetherlands,suchindividualdieswithin180daysafterthedateofthegift,whilebeingresidentordeemedtoberesident
intheNetherlandsor
thetransferisotherwiseconstruedasagiftorinheritancemadeby,oronbehalfof,apersonwho,atthetimeofthegiftordeath,isor
isdeemedtoberesidentintheNetherlands.
(ii)
ForpurposesofNetherlandsgiftandinheritancetaxes,amongstothers,apersonthatholdstheNetherlandsnationalitywillbedeemedtobe
residentintheNetherlandsifsuchpersonhasbeenresidentintheNetherlandsatanytimeduringthetenyearsprecedingthedateofthe
giftorhis/herdeath.Additionally,forpurposesofNetherlandsgifttax,amongstothers,apersonnotholdingtheNetherlandsnationalitywill
bedeemedtoberesidentintheNetherlandsifsuchpersonhasbeenresidentintheNetherlandsatanytimeduringthetwelvemonths
precedingthedateofthegift.Applicabletaxtreatiesmayoverridedeemedresidency.
Othertaxesandduties
NoNetherlandsvalueaddedtax(omzetbelasting)andnoNetherlandsregistrationtax,stampdutyoranyothersimilardocumentarytaxor
dutywillbepayablebyaholderofADSsorClassAsharesonanypaymentinconsiderationfortheacquisition,ownershipordisposalofthe
ADSsorClassAshares(otherthanapaymentforfinancialservicesthatarenotexemptfromNetherlandsvalueaddedtaxandthatare
renderedtotheholderofADSsorClassAsharesthatisresidentinNetherlandsforNetherlandstaxpurposes).
MaterialU.S.federalincometaxconsiderations
ThefollowingisadiscussionofthematerialU.S.federalincometaxconsequencestoU.S.Holders(asdefinedbelow)underpresentlawof
theownershipanddispositionofourADSs.OtherthanthediscussionrelatingtowhetherwequalifyasaPFIC,andsubjecttothe
qualificationscontainedherein,thediscussionbelowofU.S.federalincometaxlawsandthelegalconclusionswithrespectthereto
representstheopinionofLatham&
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WatkinsLLP,ourspecialU.S.counsel.ThisdiscussionappliesonlytoU.S.HoldersthatacquireADSsinthisoffering,holdsuchADSsas
capitalassets(withinthemeaningofSection1221oftheCode)andthathavetheU.S.dollarastheirfunctionalcurrency.Thisdiscussionis
basedontheInternalRevenueCodeof1986,asamended,theCode,theU.S.Treasuryregulationspromulgatedthereunder,administrative
rulingsoftheIRSandjudicialdecisions,eachasineffectasofthedatehereof.Alloftheforegoingauthoritiesaresubjecttochangeor
differinginterpretations,possiblywithretroactiveeffect,andanysuchchangeordifferinginterpretationcouldaffectthetaxconsequences
describedbelow.ThisdiscussiondoesnotpurporttobeacompleteanalysisorlistingofallpotentialU.S.federalincometaxconsiderations
thatmayberelevanttoholderswithrespecttotheirownershipanddispositionofADSs.Accordingly,itisnotintendedtobe,andshouldnot
beconstruedas,taxadvice.ThissummarydoesnotaddressanyconsequencesunderanyU.S.federaltaxlawsotherthanthosepertaining
totheincometax(e.g.,estateorgifttaxes),anyalternativeminimumtaxconsequences,anyconsequencesundertheMedicaretaximposed
at3.8%oncertaininvestmentincome,anywithholdingrequiredpursuanttotheForeignAccountTaxComplianceActof2010(includingthe
U.S.Treasuryregulationspromulgatedthereunderandintergovernmentalagreementsenteredintoinconnectiontherewith)oranystate,
localornonU.S.taxconsequences.
ThefollowingdiscussionalsodoesnotaddressU.S.federalincometaxconsequencesthatmayberelevanttoaU.S.Holderinlightofsuch
holdersparticularcircumstancesortoU.S.HolderssubjecttospecialrulesundertheU.S.federalincometaxlawssuchas:
banksandotherfinancialinstitutions
regulatedinvestmentcompanies,realestateinvestmenttrustsandgrantortrusts
insurancecompanies
brokerdealers
tradersinsecuritiesthatelecttomarktomarket
taxexemptentitiesoranyindividualretirementaccountorRothIRAasdefinedinSections408and408AoftheCode,respectively
U.S.expatriates
personsholdingourADSsaspartofastraddle,hedging,constructivesale,conversionorotherintegratedtransaction
personsthatactuallyorconstructivelyown10%ormoreofthevotingpowerorvalueofourstock
personsthatareresidentorordinarilyresidentinorhaveapermanentestablishmentinajurisdictionoutsidetheUnitedStatesorpersons
thatarenotU.S.Holders(asdefinedbelow)
personswhoacquiredourADSspursuanttotheexerciseofanyemployeeshareoptionorotherwiseascompensationor
partnershipsorotherpassthroughentitiesorarrangementstreatedassuch(orpersonsholdingourADSsthroughpartnershipsorother
passthroughentitiesorarrangementstreatedassuch).
PROSPECTIVEPURCHASERSAREURGEDTOCONSULTTHEIRTAXADVISORSABOUTTHEAPPLICATIONOFTHEU.S.
FEDERALTAXRULESTOTHEIRPARTICULARCIRCUMSTANCESASWELLASTHESTATE,LOCALANDNONU.S.TAX
CONSEQUENCESTOTHEMOFTHEPURCHASE,OWNERSHIPANDDISPOSITIONOFOURADSS.
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Forpurposesofthisdiscussion,aU.S.HolderisabeneficialownerofanADSthatis,forU.S.federalincometaxpurposes:
anindividualwhoisacitizenorresidentoftheUnitedStates
acorporation(orotherentitytaxableasacorporation)createdororganizedunderthelawsoftheUnitedStates,anystatethereoforthe
DistrictofColumbia
anestatewhoseincomeissubjecttoU.S.federalincometaxationregardlessofitssourceor
atrustif(1)theadministrationofthetrustissubjecttotheprimarysupervisionofacourtwithintheUnitedStatesandoneormoreU.S.
personshaveauthoritytocontrolallsubstantialdecisionsofthetrust,or(2)avalidelectionisineffectunderapplicableU.S.Treasury
regulationstotreatthetrustasaU.S.person.
ThetaxtreatmentofapartnerinapartnershiporotherentityorarrangementtaxableasapartnershipforU.S.federalincometaxpurposes
thatholdsourADSswilldependonsuchpartnersstatusandtheactivitiesofthepartnership.
Thediscussionbelowassumestherepresentationscontainedinthedepositagreementaretrueandthattheobligationsinthedeposit
agreementandanyrelatedagreementhavebeenandwillbecompliedwithinaccordancewiththeirterms.ForU.S.federalincometax
purposes,aU.S.HolderofADSsshouldbetreatedasthebeneficialowneroftheunderlyingClassAsharesrepresentedbytheADSs.
Accordingly,nogainorlossshouldberecognizedifaU.S.HolderexchangesADSsfortheunderlyingsharesrepresentedbythoseADSs.
TheU.S.TreasuryhasexpressedconcernsthatintermediariesinthechainofownershipbetweentheholderofanADSandtheissuerofthe
securityunderlyingtheADSmaybetakingactionsthatareinconsistentwiththebeneficialownershipoftheunderlyingsecurity.Accordingly,
thecreditabilityofanyforeigntaxespaidandtheavailabilityofthereducedtaxratefordividendsreceivedbycertainnoncorporateU.S.
Holders,includingindividualU.S.Holders(asdiscussedbelow),couldbeaffectedbyactionstakenbyintermediariesinthechainof
ownershipbetweentheholdersofADSsandusifasaresultofsuchactionstheholdersofADSsarenotproperlytreatedasbeneficial
ownersofunderlyingClassAshares.
Distributions
Subjecttothepassiveforeigninvestmentcompany,orPFIC,rulesdiscussedbelow,thegrossamountofdistributionsmadewithrespectto
ourADSs(includingtheamountofanyforeigntaxeswithheldtherefrom,ifany,andexcludingcertainproratadistributionsofourClassA
Sharesorothersimilarequityinterests)willbeincludableinaU.S.Holdersgrossincome,inaccordancewithsuchU.S.Holdersmethodof
accountingforU.S.federalincometaxpurposes,asdividendincome,totheextentthatsuchdistributionsarepaidoutofourcurrentor
accumulatedearningsandprofitsasdeterminedunderU.S.federalincometaxprinciples.Solongaswedonotcomputeearningsand
profitsunderU.S.federalincometaxprinciples,allsuchdistributionsmadewithrespecttoourADSsshouldbetreatedasdividends.
DividendsonourADSswillnotbeeligibleforthedividendsreceiveddeductionallowedundertheCodetoU.S.Holdersthatare
corporations.
WithrespecttononcorporateU.S.Holders,dividendsonourADSsmayqualifyasqualifieddividendincome,whichiseligibleforreduced
ratesoftaxationprovidedthat(1)weareeligibleforthebenefitsoftheincometaxtreatybetweentheUnitedStatesandthefederalrepublic
ofGermanyorwithrespecttoanydividendpaidonADSswhicharereadilytradableonanestablishedsecuritiesmarketintheUnited
States,(2)wearenotaPFIC(asdiscussedbelow)foreitherthetaxableyearinwhichthedividendwaspaidortheprecedingtaxableyear,
(3)theU.S.Holdersatisfiescertainholdingperiodrequirements,and(4)theU.S.Holderisnotunderanobligationtomakerelatedpayments
withrespecttopositionsinsubstantiallysimilarorrelatedproperty.U.S.
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HoldersshouldconsulttheirtaxadvisorsregardingtheavailabilityofthelowerratefordividendspaidwithrespecttoourADSs.OurADSs
havebeenapprovedforlistingonNASDAQ,whichisanestablishedsecuritiesmarketintheUnitedStates.Oncelisted,theADSsshouldbe
consideredreadilytradableonNASDAQ.However,therecanbenoassurancethattheADSswillbeconsideredreadilytradableonan
establishedsecuritiesmarketintheUnitedStatesinlateryears.
TheamountofanydistributiononourADSspaidinforeigncurrencywillbeequaltotheU.S.dollarvalueofsuchcurrencyonthedatesuch
distributionisincludibleinincomebytherecipient,regardlessofwhetherthepaymentisinfactconvertedintoU.S.dollarsatthattime.The
amountofanydistributionofpropertyotherthancashwillbethefairmarketvalueofsuchpropertyonthedateofdistribution.
SaleorothertaxabledispositionofourADSs
SubjecttothePFICrulesdiscussedbelow,uponasaleorothertaxabledispositionofADSs,aU.S.Holderwillrecognizeacapitalgainor
lossforU.S.federalincometaxpurposesinanamountequaltothedifferencebetweentheamountrealizedonsuchdispositionandsuch
U.S.HoldersadjustedtaxbasisinsuchADSs.AnysuchgainorlosswillbetreatedaslongtermcapitalgainorlossiftheU.S.Holders
holdingperiodforsuchADSsexceedsoneyear.NoncorporateU.S.Holders(includingindividuals)arecurrentlysubjecttoU.S.federal
incometaxonlongtermcapitalgainatpreferentialrates.Thedeductibilityofcapitallossesissubjecttosignificantlimitations.
IftheconsiderationreceivedforourADSsispaidinforeigncurrency,theamountrealizedwillbetheU.S.dollarvalueofthepayment
receivedtranslatedatthespotrateofexchangeonthedateofdisposition.IfourADSsaretreatedastradedonanestablishedsecurities
marketandtherelevantU.S.Holderiseitheracashbasistaxpayeroranaccrualbasistaxpayerwhohasmadeaspecialelection(which
mustbeappliedconsistentlyfromyeartoyearandcannotbechangedwithouttheconsentoftheInternalRevenueService),suchholderwill
determinetheU.S.dollarvalueoftheamountrealizedinaforeigncurrencybytranslatingtheamountreceivedatthespotrateofexchange
onthesettlementdateofthesale.IfourADSsarenottreatedastradedonanestablishedsecuritiesmarket,ortherelevantU.S.Holderis
anaccrualbasistaxpayerthatisnoteligibletoordoesnotelecttodeterminetheamountrealizedusingthespotrateonthesettlementdate,
suchU.S.HolderwillrecognizeforeigncurrencygainorlosstotheextentofanydifferencebetweentheU.S.dollaramountrealizedonthe
dateofdisposition(asdeterminedabove)andtheU.S.dollarvalueofthecurrencyreceivedatthespotrateonthesettlementdate.AU.S.
HoldersinitialtaxbasisinourADSswillequalthecostofsuchADSs.IfaU.S.HolderusedforeigncurrencytopurchaseourADSs,thecost
ofourADSswillbetheU.S.dollarvalueoftheforeigncurrencypurchasepriceonthedateofpurchase.IfourADSsaretreatedastradedon
anestablishedsecuritiesmarketandtherelevantU.S.Holderiseitheracashbasistaxpayeroranaccrualbasistaxpayerwhohasmadethe
specialelectiondescribedabove,suchholderwilldeterminetheU.S.dollarvalueofthecostofsuchADSsbytranslatingtheamountpaidat
thespotrateofexchangeonthesettlementdateofthepurchase.
Foreigntaxes
Foreigntaxes(ifany)withheldorpaidondividendson,oruponthesaleorothertaxabledispositionof,ourADSsmay,subjecttolimitations
andconditions,betreatedasforeignincometaxeligibleforcreditagainstsuchU.S.HoldersU.S.federalincometaxliabilityundertheU.S.
foreigntaxcreditrulesor,atsuchholderselection,eligiblefordeductionincomputingsuchholdersU.S.federaltaxableincome.Ifarefund
ofanysuchforeigntaxisavailabletoaU.S.Holderunderthelawsofthecountryimposingsuchtaxorunderanapplicableincometax
treaty,theamountofsuchtaxthatisrefundablewillnotbeeligibleforthecreditordeductionagainsttheU.S.HoldersU.S.federalincome
taxliability.Subjecttothefollowingsentence,dividendspaidonourADSswill
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constituteforeignsourceincomeandwillbeconsideredpassivecategoryincomeor,inthecaseofcertainU.S.Holders,generalcategory
income,incomputingtheforeigntaxcreditallowabletoU.S.HoldersunderU.S.federalincometaxlaws.However,ifweareaUnited
Statesownedforeigncorporation,solelyforforeigntaxcreditpurposes,aportionofthedividendsallocabletoourU.S.sourceearningsand
profitsmayberecharacterizedasU.S.source.AUnitedStatesownedforeigncorporationisanyforeigncorporationinwhichU.S.persons
own,directlyorindirectly,50%ormore(byvoteorbyvalue)ofthestock.UnitedStatesownedforeigncorporationswithlessthan10%of
earningsandprofitsattributabletosourceswithintheUnitedStatesareexceptedfromtheserules.WearecurrentlyaUnitedStatesowned
foreigncorporation.Asaresult,solongas10%ormoreofourearningsandprofitsareattributabletosourceswithintheUnitedStates,a
portionofthedividendsallocabletoourU.S.sourceearningsandprofitswillbetreatedasU.S.source.Inaddition,anygainfromthesaleor
othertaxabledispositionofADSsbyaU.S.HolderwillconstituteU.S.sourceincome.AU.S.Holdermaynotbeabletooffsetanyforeigntax
withheldorpaidasacreditagainstU.S.federalincometaximposedonthatportionofanydividendsorgainthatisU.S.sourceunlessthe
U.S.Holderhasforeignsourceincomeorgaininthesamecategoryfromothersources.Therulesgoverningthetreatmentofforeigntaxes
imposedonaU.S.Holderandforeigntaxcreditsarecomplex,andU.S.Holdersshouldconsulttheirtaxadvisorsabouttheimpactofthese
rulesintheirparticularsituations.
PassiveForeignInvestmentCompany
Notwithstandingtheforegoing,certainadverseU.S.federalincometaxconsequencescouldapplytoaU.S.Holderifwearetreatedasa
PFICforanytaxableyearduringwhichsuchU.S.HolderholdsADSs.WewouldbeclassifiedasaPFICforanytaxableyearif,afterthe
applicationofcertainlookthroughrules,either:(1)75%ormoreofourgrossincomeforsuchyearispassiveincome(asdefinedinthe
relevantprovisionsoftheCode),or(2)50%ormoreofthevalueofourassets(determinedonthebasisofaquarterlyaverage)duringsuch
yearisattributabletoassetsthatproduceorareheldfortheproductionofpassiveincome.Forthispurpose,passiveincomeincludes,
subjecttocertainexceptions,dividends,interest,royalties,rents,annuities,gainsfromcommoditiesandsecuritiestransactions,netgains
fromthesaleorexchangeofpropertyproducingsuchpassiveincome,netforeigncurrencygainsandamountsderivedbyreasonofthe
temporaryinvestmentoffundsraisedinthisofferingofADSs.EvenifweotherwisemeetthePFICtestdescribedabove,wemay
neverthelessnotbeconsideredaPFICforourstartupyearifcertainconditionsaremet.
Basedonthebasesofourassets,theanticipatedmarketpriceofourADSsinthisoffering,theexpectedmarketpriceofourADSsfollowing
thisofferingandthecompositionofourincome,assetsandoperations,wedonotexpecttobetreatedasaPFICforU.S.federalincometax
purposesforthecurrenttaxableyearorintheforeseeablefuture.However,theapplicationofthePFICrulestousmaybesubjectto
ambiguity.Inaddition,thisisafactualdeterminationthatmustbemadeannuallyafterthecloseofeachtaxableyear.Therefore,therecanbe
noassurancethatwewillnotbeclassifiedasaPFICforthecurrenttaxableyearorforanyfuturetaxableyear.Furthermore,becausePFIC
statusisafactualdeterminationbasedonactualresultsfortheentiretaxableyear,ourU.S.counselexpressesnoopinionwithrespectto
ourPFICstatusandexpressesnoopinionwithrespecttoourexpectationscontainedinthisparagraph.
IfwewereclassifiedasaPFICforanytaxableyearduringwhichaU.S.HolderheldADSs,suchholderwouldbesubjecttospecialtaxrules
withrespecttoanyexcessdistributionthatitreceivesinrespectofourADSsandanygainitrealizesfromasaleorotherdisposition
(includingapledge)ofourADSs,unlesssuchholdermakesamarktomarketelectionasdiscussedbelow.Underthesespecialtaxrules:
theexcessdistributionorgainwillbeallocatedratablyovertheU.S.HoldersholdingperiodforourADSs
theamountallocatedtothecurrenttaxableyear,andanytaxableyearinsuchholdersholdingperiodpriortothefirsttaxableyearin
whichwebecameaPFIC,willbetreatedasordinaryincomeand
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theamountallocatedtoeachotheryearwillbesubjecttothehighesttaxrateineffectforthatyearandtheinterestchargeapplicableto
underpaymentsoftaxwillbeimposedontheresultingtaxattributabletoeachsuchyear.
Inaddition,dividenddistributionsmadetosuchholderwillnotqualifyforthelowerratesoftaxationapplicabletolongtermcapitalgains
discussedaboveunderDistributions.
AU.S.HolderwillberequiredtomakeanannualfilingwiththeInternalRevenueServiceifsuchholderholdsourADSsinanyyearinwhich
weareclassifiedasaPFIC.
IfweareaPFICforanyyearduringwhichaU.S.HolderholdsourADSs,wewillcontinuetobetreatedasaPFICwithrespecttosuch
holderforallsucceedingyearsduringwhichtheholderholdsourADSs.IfweceasetobeaPFIC,suchaU.S.Holdermaybeabletoavoid
someoftheadverseeffectsofthePFICregimebymakingadeemedsaleelectionwithrespecttoourADSs.Ifsuchelectionismade,the
U.S.HolderwillbedeemedtohavesoldtheADSsitholdsattheirfairmarketvalueonthelastdayofthelasttaxableyearinwhichwe
qualifiedasaPFIC,andanygainfromsuchdeemedsalewouldbesubjecttotheconsequencesdescribedabove.Afterthedeemedsale
election,theU.S.HoldersADSswithrespecttowhichthedeemedsaleelectionwasmadewillnotbetreatedasADSsinaPFICunlesswe
subsequentlybecomeaPFIC.
IfaU.S.Holderiseligibletoanddoesmakeamarktomarketelection,suchholderwillincludeasordinaryincometheexcess,ifany,ofthe
fairmarketvalueofourADSsattheendofeachtaxableyearovertheiradjustedbasis,andwillbepermittedanordinarylossinrespectof
theexcess,ifany,oftheadjustedbasisofourADSsovertheirfairmarketvalueattheendofthetaxableyear(butonlytotheextentofthe
netamountofpreviouslyincludedincomeasaresultofthemarktomarketelection).Anygainrecognizedonthesaleorotherdispositionof
ourADSswillbetreatedasordinaryincome.Themarktomarketelectionisavailableonlyformarketablestock,whichisstockthatis
tradedinotherthandeminimisquantitiesonatleast15daysduringeachcalendarquarteronaqualifiedexchangeorothermarket,as
definedintheapplicableU.S.Treasuryregulations.U.S.Holdersshouldconsulttheirowntaxadvisorsregardingthepotentialapplicationof
thePFICrulestotheirownershipofourADSs.
AtimelyelectiontotreatusasaqualifiedelectingfundundertheCodewouldresultinanalternativetreatment.However,wedonotintendto
prepareorprovidetheinformationthatwouldenableU.S.Holderstomakeaqualifiedelectingfundelection.
TheU.S.federalincometaxrulesrelatingtoPFICsarecomplex.ProspectiveU.S.investorsareurgedtoconsulttheirowntaxadviserswith
respecttotheapplicationofthePFICrulestotheirinvestmentintheADSs.
U.S.informationreportingandbackupwithholding
DividendpaymentswithrespecttoourADSsandproceedsfromthesale,exchangeorredemptionofourADSsmaybesubjectto
informationreportingtotheInternalRevenueServiceandpossibleU.S.backupwithholding.Backupwithholdingwillnotapply,however,toa
U.S.HolderwhofurnishesacorrecttaxpayeridentificationnumberonaproperlycompletedInternalRevenueServiceFormW9or
otherwiseproperlyestablishesanexemptionfrombackupwithholding.U.S.Holderswhoarerequiredtoestablishtheirexemptstatusmay
berequiredtoprovidesuchcertificationonInternalRevenueServiceFormW9.U.S.Holdersshouldconsulttheirtaxadvisorsregardingthe
applicationoftheU.S.informationreportingandbackupwithholdingrules.
Backupwithholdingisnotanadditionaltax.AmountswithheldasbackupwithholdingmaybecreditedagainstaU.S.HoldersU.S.federal
incometaxliability,ifany,andsuchholdermayobtainarefundofanyexcessamountswithheldunderthebackupwithholdingrulesbytimely
filingtheappropriateclaimforrefundandfurnishinganyrequiredinformationtotheInternalRevenueService.
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Foreignfinancialassetreporting
Individualsthatownspecifiedforeignfinancialassetswithanaggregatevalueinexcessofcertainthresholdamountsarerequiredtofilean
informationreportwithrespecttosuchassetswiththeirtaxreturns.Specifiedforeignfinancialassetsincludeanyfinancialaccounts
maintainedbyforeignfinancialinstitutions,aswellasanyofthefollowing,butonlyiftheyarenotheldinaccountsmaintainedbyfinancial
institutions:(1)stocksandsecuritiesissuedbynonU.S.persons,(2)financialinstrumentsandcontractsheldforinvestmentthathavenon
U.S.issuersorcounterparties,and(3)interestsinforeignentities.OurADSsmaybesubjecttotheserules.Additionally,undercertain
circumstances,anentitymaybetreatedasanindividualforpurposesoftheserules.U.S.Holdersareurgedtoconsulttheirtaxadvisors
regardingtheapplicationofthisrequirementtotheirownershipofourADSs.
Transferreportingrequirements
AU.S.Holder(includingaU.S.taxexemptentity)thatacquiresequityofanewlycreatednonU.S.corporationmayberequiredtofilea
Form926orasimilarformwiththeIRSif(i)suchpersonowned,directlyorbyattribution,immediatelyafterthetransferatleast10.0%by
voteorvalueofthecorporationor(ii)ifthetransfer,whenaggregatedwithalltransfersmadebysuchperson(oranyrelatedperson)within
thepreceding12monthperiod,exceeds$100,000.U.S.Holdersshouldconsulttheirtaxadvisersregardingtheapplicabilityofthis
requirementtotheiracquisitionofADSs.
THEDISCUSSIONABOVEDOESNOTCOVERALLTAXMATTERSTHATMAYBEIMPORTANTTOYOU.EACHPROSPECTIVE
PURCHASERSHOULDCONSULTITSTAXADVISORABOUTTHETAXCONSEQUENCESOFANINVESTMENTINOURADSS
UNDERTHEINVESTORSCIRCUMSTANCES.
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Underwriting
WeareofferingtheADSsdescribedinthisprospectusthroughanumberofunderwriters.J.P.MorganSecuritiesLLC,Goldman,Sachs&
Co.andMorganStanley&Co.LLCareactingasrepresentativesoftheunderwriters.Wehaveenteredintoanunderwritingagreementwith
theunderwriters.Subjecttothetermsandconditionsoftheunderwritingagreement,wehaveagreedtoselltotheunderwriters,andeach
underwriterhasseverallyagreedtopurchase,atthepublicofferingpricelesstheunderwritingdiscountsandcommissionssetforthonthe
coverpageofthisprospectus,thenumberofADSslistednexttoitsnameinthefollowingtable:
Name
NumberofADSs
J.P.MorganSecuritiesLLC
7,833,034
Goldman,Sachs&Co.
5,222,024
MorganStanley&Co.LLC
5,222,024
Allen&CompanyLLC
1,697,158
MerrillLynch,Pierce,Fenner&Smith
Incorporated
1,697,158
CitigroupGlobalMarketsInc.
1,697,158
DeutscheBankSecuritiesInc.
1,697,158
CowenandCompany,LLC
522,202
GuggenheimSecurities,LLC
Total
522,202
26,110,118
TheunderwritersarecommittedtopurchasealltheADSsofferedbyusiftheypurchaseanyshares.Theunderwritingagreementalso
providesthatifanunderwriterdefaults,thepurchasecommitmentsofnondefaultingunderwritersmayalsobeincreasedorthisofferingmay
beterminated.
TheunderwritersproposetooffertheADSsdirectlytothepublicattheinitialpublicofferingpricesetforthonthecoverpageofthis
prospectusandtocertaindealersatthatpricelessaconcessionnotinexcessof$0.33perADS.AnysuchdealersmayresellADSsto
certainotherbrokersordealersatadiscountofupto$0.11perADSfromtheinitialpublicofferingprice.AftertheinitialofferingoftheADSs
tothepublic,theofferingpriceandothersellingtermsmaybechangedbytheunderwriters.SalesofsharesmadeoutsideoftheUnited
Statesmaybemadebyaffiliatesoftheunderwriters.
Theunderwritershaveanoptiontobuyupto3,916,517additionalADSsfromusandtheSellingShareholderstocoversalesofADSsbythe
underwriterswhichexceedthenumberofADSsspecifiedinthetableabove.Theunderwritershave30daysfromthedateofthisprospectus
toexercisethisoptiontopurchaseadditionalADSs.IfanyADSsarepurchasedwiththisoptiontopurchaseadditionalADSs,the
underwriterswillpurchaseADSsinapproximatelythesameproportionasshowninthetableabove.IfanyadditionalADSsarepurchased,
theunderwriterswilloffertheadditionalADSsonthesametermsasthoseonwhichtheADSsarebeingoffered.
TheunderwritingfeeisequaltothepublicofferingpriceperADSlesstheamountpaidbytheunderwriterstousperADS.Theunderwriting
feeis$0.5775perADS.ThefollowingtableshowstheperADSandtotalunderwritingdiscountsandcommissionstobepaidtothe
underwritersassumingbothnoexerciseandfullexerciseoftheunderwritersoptiontopurchaseadditionalADSs.
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PerADS
Total
Without
optionto
purchase
additionalADSs
exercise
$
0.5775
$
15,078,593
Withfull
optionto
purchase
additionalADSs
exercise
$
0.5775
$
17,340,382
Weestimatethatthetotalexpensesofthisoffering,includingregistration,filingandlistingfees,printingfeesandlegalandaccounting
expenses,andadvisoryfees,butexcludingtheunderwritingdiscountsandcommissions,willbeapproximately$5.5million,whichincludes
nomorethan$30,000thatwehaveagreedtoreimbursetheunderwritersforcertainFINRArelatedexpensesincurredbytheminconnection
withthisoffering.
Aprospectusinelectronicformatmaybemadeavailableonthewebsitesmaintainedbyoneormoreunderwriters,orsellinggroup
members,ifany,participatinginthisoffering.TheunderwritersmayagreetoallocateanumberofClassAsharestounderwritersandselling
groupmembersforsaletotheironlinebrokerageaccountholders.Internetdistributionswillbeallocatedbytherepresentativesto
underwritersandsellinggroupmembersthatmaymakeInternetdistributionsonthesamebasisasotherallocations.
Wehaveagreedthatwewillnot(i)offer,pledge,announcetheintentiontosell,sell,contracttosell,sellanyoptionorcontracttopurchase,
purchaseanyoptionorcontracttosell,grantanyoption,rightorwarranttopurchaseorotherwisedisposeof,directlyorindirectly,orfilewith
theSecuritiesandExchangeCommissionaregistrationstatementundertheSecuritiesActrelatingto,anyofourADSsorsecurities
convertibleintoorexchangeableorexercisableforanyofourClassAsharesorADSs,orpubliclydisclosetheintentiontomakeanyoffer,
sale,pledge,dispositionorfiling,or(ii)enterintoanyswaporotherarrangementthattransfersalloraportionoftheeconomic
consequencesassociatedwiththeownershipofanyADSsorClassAsharesoranysuchothersecurities(regardlessofwhetheranyof
thesetransactionsaretobesettledbythedeliveryofADSsorClassAsharesorsuchothersecurities,incashorotherwise),ineachcase
withoutthepriorwrittenconsentofJ.P.MorganSecuritiesLLCforaperiodof180daysafterthedateofthisprospectus.
OurSellingShareholders,ourcontrollingshareholder,ourmanagementboardmembers,oursupervisoryboardmembersandcertain
employeeswillhaveenteredintolockupagreementswiththeunderwriterspriortothecommencementofthisofferingpursuanttowhich
eachofthesepersonsorentities,withcertainexceptions,foraperiodof180daysafterthedateofthisprospectus,maynot,withouttheprior
writtenconsentofJ.P.MorganSecuritiesLLC,(1)offer,pledge,announcetheintentiontosell,sell,contracttosell,sellanyoptionorcontract
topurchase,purchaseanyoptionorcontracttosell,grantanyoption,rightorwarranttopurchase,orotherwisetransferordisposeof,
directlyorindirectly,anyofourADSs,sharecapitaloranysecuritiesconvertibleintoorexercisableorexchangeableforoursharecapital
(including,withoutlimitation,ADSs,sharecapitalorsuchothersecuritieswhichmaybedeemedtobebeneficiallyownedbysuch
managementboardmembers,executiveofficers,managersandmembersinaccordancewiththerulesandregulationsoftheSECand
securitieswhichmaybeissueduponexerciseofastockoptionorwarrant)or(2)enterintoanyswaporotheragreementthattransfers,in
wholeorinpart,anyoftheeconomicconsequencesofownershipoftheADSs,sharecapitalorsuchothersecurities,whetheranysuch
transactiondescribedinclause(1)or(2)aboveistobesettledbydeliveryofADSs,sharecapitalorsuchothersecurities,incashor
otherwise,or(3)makeanydemandfororexerciseanyrightwithrespecttotheregistrationofanyofourADSs,sharecapitaloranysecurity
convertibleintoorexercisableorexchangeableforoursharecapitalorADSs.
Wehaveagreedtoindemnifytheunderwritersagainstcertainliabilities,includingliabilitiesundertheSecuritiesAct.
OurADSshavebeenapprovedforlistingonNASDAQunderthesymbolTRVG.
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Inconnectionwiththisoffering,theunderwritersmayengageinstabilizingtransactions,whichinvolvesmakingbidsfor,purchasingand
sellingADSsintheopenmarketforthepurposeofpreventingorretardingadeclineinthemarketpriceoftheADSswhilethisofferingisin
progress.ThesestabilizingtransactionsmayincludemakingshortsalesoftheADSs,whichinvolvesthesalebytheunderwritersofagreater
numberofADSsthantheyarerequiredtopurchaseinthisoffering,andpurchasingADSsontheopenmarkettocoverpositionscreatedby
shortsales.Shortsalesmaybecoveredshorts,whichareshortpositionsinanamountnotgreaterthantheunderwritersoptionto
purchaseadditionalADSsreferredtoabove,ormaybenakedshorts,whichareshortpositionsinexcessofthatamount.Theunderwriters
maycloseoutanycoveredshortpositioneitherbyexercisingtheiroptiontopurchaseadditionalADSs,inwholeorinpart,orbypurchasing
ADSsintheopenmarket.Inmakingthisdetermination,theunderwriterswillconsider,amongotherthings,thepriceofADSsavailablefor
purchaseintheopenmarketcomparedtothepriceatwhichtheunderwritersmaypurchaseADSsthroughtheoptiontopurchaseadditional
ADSs.Anakedshortpositionismorelikelytobecreatediftheunderwritersareconcernedthattheremaybedownwardpressureonthe
priceoftheADSsintheopenmarketthatcouldadverselyaffectinvestorswhopurchaseinthisoffering.Totheextentthattheunderwriters
createanakedshortposition,theywillpurchaseADSsintheopenmarkettocovertheposition.
Theunderwritershaveadvisedusthat,pursuanttoRegulationMoftheSecuritiesAct,theymayalsoengageinotheractivitiesthatstabilize,
maintainorotherwiseaffectthepriceoftheADSs,includingtheimpositionofpenaltybids.Thismeansthatiftherepresentativesofthe
underwriterspurchaseADSsintheopenmarketinstabilizingtransactionsortocovershortsales,therepresentativescanrequirethe
underwritersthatsoldthoseADSsaspartofthisofferingtorepaytheunderwritingdiscountreceivedbythem.
TheseactivitiesmayhavetheeffectofraisingormaintainingthemarketpriceoftheADSsorpreventingorretardingadeclineinthemarket
priceoftheADSs,and,asaresult,thepriceoftheADSsmaybehigherthanthepricethatotherwisemightexistintheopenmarket.Ifthe
underwriterscommencetheseactivities,theymaydiscontinuethematanytime.Theunderwritersmaycarryoutthesetransactionsonthe
NASDAQGlobalSelectMarket,intheoverthecountermarketorotherwise.
Priortothisoffering,therehasbeennopublicmarketforourADSs.Theinitialpublicofferingpricewillbedeterminedbynegotiations
betweenusandtherepresentativesoftheunderwriters.Indeterminingtheinitialpublicofferingprice,weandtherepresentativesofthe
underwritersexpecttoconsideranumberoffactorsincluding:
theinformationsetforthinthisprospectusandotherwiseavailabletotherepresentatives
ourprospectsandthehistoryandprospectsfortheindustryinwhichwecompete
anassessmentofourmanagement
ourprospectsforfutureearnings
thegeneralconditionofthesecuritiesmarketsatthetimeofthisoffering
therecentmarketpricesof,anddemandfor,publiclytradedstockofgenerallycomparablecompaniesand
otherfactorsdeemedrelevantbytheunderwritersandus.
NeitherwenortheunderwriterscanassureinvestorsthatanactivetradingmarketwilldevelopforourADSs,orthattheADSswilltradein
thepublicmarketatorabovetheinitialpublicofferingprice.
OtherthanintheUnitedStates,noactionhasbeentakenbyusortheunderwritersthatwouldpermitapublicofferingofthesecurities
offeredbythisprospectusinanyjurisdictionwhereactionforthatpurposeisrequired.Thesecuritiesofferedbythisprospectusmaynotbe
offeredorsold,directlyorindirectly,normay
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thisprospectusoranyotherofferingmaterialoradvertisementsinconnectionwiththeofferandsaleofanysuchsecuritiesbedistributedor
publishedinanyjurisdiction,exceptundercircumstancesthatwillresultincompliancewiththeapplicablerulesandregulationsofthat
jurisdiction.Personsintowhosepossessionthisprospectuscomesareadvisedtoinformthemselvesaboutandtoobserveanyrestrictions
relatingtothisofferingandthedistributionofthisprospectus.Thisprospectusdoesnotconstituteanoffertosellorasolicitationofanofferto
buyanysecuritiesofferedbythisprospectusinanyjurisdictioninwhichsuchanofferorasolicitationisunlawful.
EuropeanEconomicArea
InrelationtoeachMemberStateoftheEuropeanEconomicArea,eachaRelevantMemberState,noofferofADSsmaybemadetothe
publicinthatRelevantMemberStateotherthan:
A.
toanylegalentitywhichisaqualifiedinvestorasdefinedintheProspectusDirective
tofewerthan150or,iftheRelevantMemberStatehasnotimplementedtherelevantprovisionofthe2010PDAmendingDirective,
100,naturalorlegalpersons(otherthanqualifiedinvestorsasdefinedintheProspectusDirective),aspermittedundertheProspectus
Directive,subjecttoobtainingthepriorconsentoftherepresentativesor
inanyothercircumstancesfallingwithinArticle3(2)oftheProspectusDirective,providedthatnosuchofferofADSsshallrequirethe
companyortherepresentativestopublishaprospectuspursuanttoArticle3oftheProspectusDirectiveorsupplementaprospectus
pursuanttoArticle16oftheProspectusDirective.
B.
C.
EachpersoninaRelevantMemberStatewhoinitiallyacquiresanyClassAsharesortowhomanyofferismadewillbedeemedtohave
represented,acknowledgedandagreedthatitisaqualifiedinvestorwithinthemeaningofthelawinthatRelevantMemberState
implementingArticle2(1)(e)oftheProspectusDirective.InthecaseofanyClassAsharesbeingofferedtoafinancialintermediaryasthat
termisusedinArticle3(2)oftheProspectusDirective,eachsuchfinancialintermediarywillbedeemedtohaverepresented,acknowledged
andagreedthattheClassAsharesacquiredbyitintheofferhavenotbeenacquiredonanondiscretionarybasisonbehalfof,norhave
theybeenacquiredwithaviewtotheirofferorresaleto,personsincircumstanceswhichmaygiverisetoanofferofanyClassAsharesto
thepublicotherthantheirofferorresaleinaRelevantMemberStatetoqualifiedinvestorsassodefinedorincircumstancesinwhichthe
priorconsentoftherepresentativeshasbeenobtainedtoeachsuchproposedofferorresale.
Thecompany,therepresentativesandtheiraffiliateswillrelyuponthetruthandaccuracyoftheforegoingrepresentations,
acknowledgementsandagreements.
ThisprospectushasbeenpreparedonthebasisthatanyofferofADSsinanyRelevantMemberStatewillbemadepursuanttoan
exemptionundertheProspectusDirectivefromtherequirementtopublishaprospectusforoffersofClassAshares.Accordinglyanyperson
makingorintendingtomakeanofferinthatRelevantMemberStateofClassAshareswhicharethesubjectoftheofferingcontemplatedin
thisprospectusmayonlydosoincircumstancesinwhichnoobligationarisesforthecompanyoranyoftheunderwriterstopublisha
prospectuspursuanttoArticle3oftheProspectusDirectiveinrelationtosuchoffer.Neitherthecompanynortheunderwritershave
authorized,nordotheyauthorize,themakingofanyofferofADSsincircumstancesinwhichanobligationarisesforthecompanyorthe
underwriterstopublishaprospectusforsuchoffer.
Forthepurposeoftheaboveprovisions,theexpressionanoffertothepublicinrelationtoanyClassAsharesinanyRelevantMember
StatemeansthecommunicationinanyformandbyanymeansofsufficientinformationonthetermsoftheofferandtheClassAsharesto
beofferedsoastoenableaninvestortodecide
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topurchaseorsubscribefortheClassAshares,asthesamemaybevariedintheRelevantMemberStatebyanymeasureimplementing
theProspectusDirectiveintheRelevantMemberStateandtheexpressionProspectusDirectivemeansDirective2003/71/EC(including
the2010PDAmendingDirective,totheextentimplementedintheRelevantMemberStates)andincludesanyrelevantimplementing
measureintheRelevantMemberStateandtheexpression2010PDAmendingDirectivemeansDirective2010/73/EU.
NoticetoprospectiveinvestorsintheUnitedKingdom
Inaddition,intheUnitedKingdom,thisdocumentisbeingdistributedonlyto,andisdirectedonlyat,andanyoffersubsequentlymademay
onlybedirectedatpersonswhoarequalifiedinvestors(asdefinedintheProspectusDirective)(i)whohaveprofessionalexperiencein
mattersrelatingtoinvestmentsfallingwithinArticle19(5)oftheFinancialServicesandMarketsAct2000(FinancialPromotion)Order2005,
asamended,theOrder,and/or(ii)whoarehighnetworthcompanies(orpersonstowhomitmayotherwisebelawfullycommunicated)
fallingwithinArticle49(2)(a)to(d)oftheOrder(allsuchpersonstogetherbeingreferredtoasrelevantpersons).
AnypersonintheUnitedKingdomthatisnotarelevantpersonshouldnotactorrelyontheinformationincludedinthisdocumentoruseit
asabasisfortakinganyaction.IntheUnitedKingdom,anyinvestmentorinvestmentactivitythatthisdocumentrelatestomaybemadeor
takenexclusivelybyrelevantpersons.AnypersonintheUnitedKingdomthatisnotarelevantpersonshouldnotactorrelyonthis
documentoranyofitscontents.
NoticetoprospectiveinvestorsinCanada
TheADSsmaybesoldonlytopurchaserspurchasing,ordeemedtobepurchasing,asprincipalthatareaccreditedinvestors,asdefinedin
NationalInstrument45106ProspectusExemptionsorsubsection73.3(1)oftheSecuritiesAct(Ontario),andarepermittedclients,as
definedinNationalInstrument31103RegistrationRequirements,ExemptionsandOngoingRegistrantObligations.AnyresaleoftheADSs
mustbemadeinaccordancewithanexemptionfrom,orinatransactionnotsubjectto,theprospectusrequirementsofapplicablesecurities
laws.
SecuritieslegislationincertainprovincesorterritoriesofCanadamayprovideapurchaserwithremediesforrescissionordamagesifthis
prospectus(includinganyamendmentthereto)containsamisrepresentation,providedthattheremediesforrescissionordamagesare
exercisedbythepurchaserwithinthetimelimitprescribedbythesecuritieslegislationofthepurchasersprovinceorterritory.Thepurchaser
shouldrefertoanyapplicableprovisionsofthesecuritieslegislationofthepurchasersprovinceorterritoryforparticularsoftheserightsor
consultwithalegaladvisor.
Pursuanttosection3A.3(or,inthecaseofsecuritiesissuedorguaranteedbythegovernmentofanonCanadianjurisdiction,section3A.4)
ofNationalInstrument33105UnderwritingConflicts(NI33105),theunderwritersarenotrequiredtocomplywiththedisclosure
requirementsofNI33105regardingunderwriterconflictsofinterestinconnectionwiththisoffering.
NoticetoprospectiveinvestorsinSwitzerland
TheADSsmaynotbepubliclyofferedinSwitzerlandandwillnotbelistedontheSIXSwissExchange,orSIX,oronanyotherstock
exchangeorregulatedtradingfacilityinSwitzerland.Thisdocumentdoesnotconstituteaprospectuswithinthemeaningof,andhasbeen
preparedwithoutregardtothedisclosurestandardsforissuanceprospectusesunderart.652aorart.1156oftheSwissCodeofObligations
orthedisclosurestandardsforlistingprospectusesunderart.27ff.oftheSIXListingRulesorthelistingrulesofanyotherstockexchange
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orregulatedtradingfacilityinSwitzerland.NeitherthisdocumentnoranyotherofferingormarketingmaterialrelatingtotheADSsorthis
offeringmaybepubliclydistributedorotherwisemadepubliclyavailableinSwitzerland.
Neitherthisdocumentnoranyotherofferingormarketingmaterialrelatingtothisoffering,thecompany,theADSshavebeenorwillbefiled
withorapprovedbyanySwissregulatoryauthority.Inparticular,thisdocumentwillnotbefiledwith,andtheofferofADSswillnotbe
supervisedby,theSwissFinancialMarketSupervisoryAuthorityFINMA,orFINMA,andtheofferofADSshasnotbeenandwillnotbe
authorizedundertheSwissFederalActonCollectiveInvestmentSchemes,orCISA.Theinvestorprotectionaffordedtoacquirersof
interestsincollectiveinvestmentschemesundertheCISAdoesnotextendtoacquirersofADSs.
NoticetoprospectiveinvestorsinJapan
TheADSshavenotbeenandwillnotberegisteredundertheJapaneseFinancialInstrumentsandExchangeAct.Accordingly,theADSs
maynotbeofferedorsold,directlyorindirectly,inJapanorto,orforthebenefitof,anyresidentofJapan(whichtermasusedhereinmeans
anypersonresidentinJapan,includinganycorporationorotherentityorganizedunderthelawsofJapan),ortoothersforreofferingor
resale,directlyorindirectly,inJapanortoorforthebenefitofaresidentofJapan,exceptpursuanttoanexemptionfromtheregistration
requirementsof,andotherwiseincompliancewith,theFinancialInstrumentsandExchangeActandanyotherapplicablelaws,regulations
andministerialguidelinesofJapan.
NoticetoprospectiveinvestorsinHongKong
TheADSshavenotbeenofferedorsoldandwillnotbeofferedorsoldinHongKong,bymeansofanydocument,otherthan(a)to
professionalinvestorsasdefinedintheSecuritiesandFuturesOrdinance(Cap.571)ofHongKongandanyrulesmadeunderthat
Ordinanceor(b)inothercircumstanceswhichdonotresultinthedocumentbeingaprospectusasdefinedintheCompaniesOrdinance
(Cap.32)ofHongKongorwhichdonotconstituteanoffertothepublicwithinthemeaningofthatOrdinance.Noadvertisement,invitationor
documentrelatingtotheADSshasbeenormaybeissuedorhasbeenormaybeinthepossessionofanypersonforthepurposesofissue,
whetherinHongKongorelsewhere,whichisdirectedat,orthecontentsofwhicharelikelytobeaccessedorreadby,thepublicofHong
Kong(exceptifpermittedtodosounderthesecuritieslawsofHongKong)otherthanwithrespecttoADSswhichareorareintendedtobe
disposedofonlytopersonsoutsideHongKongoronlytoprofessionalinvestorsasdefinedintheSecuritiesandFuturesOrdinanceand
anyrulesmadeunderthatOrdinance.
NoticetoprospectiveinvestorsinSingapore
ThisprospectushasnotbeenregisteredasaprospectuswiththeMonetaryAuthorityofSingapore.Accordingly,thisprospectusandany
otherdocumentormaterialinconnectionwiththeofferorsale,orinvitationforsubscriptionorpurchase,ofADSsmaynotbecirculatedor
distributed,normaytheADSsbeofferedorsold,orbemadethesubjectofaninvitationforsubscriptionorpurchase,whetherdirectlyor
indirectly,topersonsinSingaporeotherthan(i)toaninstitutionalinvestorunderSection274oftheSecuritiesandFuturesAct,Chapter289
ofSingapore,ortheSFA,(ii)toarelevantpersonpursuanttoSection275(1),oranypersonpursuanttoSection275(1A),andinaccordance
withtheconditionsspecifiedinSection275,oftheSFA,or(iii)otherwisepursuantto,andinaccordancewiththeconditionsof,anyother
applicableprovisionoftheSFA.
WheretheADSsaresubscribedfororpurchasedunderSection275oftheSFAbyarelevantpersonwhichis:
A.
acorporation(whichisnotanaccreditedinvestor(asdefinedinSection4AoftheSFA))thesolebusinessofwhichistohold
investmentsandtheentiresharecapitalofwhichisownedbyoneormoreindividuals,eachofwhomisanaccreditedinvestoror
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B.
atrust(wherethetrusteeisnotanaccreditedinvestor)whosesolepurposeistoholdinvestmentsandeachbeneficiaryofthetrustis
anindividualwhoisanaccreditedinvestor,
securities(asdefinedinSection239(1)oftheSFA)ofthatcorporationorthebeneficiariesrightsandinterest(howsoeverdescribed)inthat
trustshallnotbetransferredwithinsixmonthsafterthatcorporationorthattrusthasacquiredtheADSspursuanttoanoffermadeunder
Section275oftheSFAexcept:
A.
toaninstitutionalinvestorortoarelevantpersondefinedinSection275(2)oftheSFA,ortoanypersonarisingfromanofferreferredto
inSection275(1A)orSection276(4)(i)(B)oftheSFA
wherenoconsiderationisorwillbegivenforthetransfer
wherethetransferisbyoperationoflaw
asspecifiedinSection276(7)oftheSFAor
asspecifiedinRegulation32oftheSecuritiesandFutures(OffersofInvestments)(SharesandDebentures)Regulations2005of
Singapore.
B.
C.
D.
E.
NoticetoprospectiveinvestorsintheNetherlands
Noofferofordinaryshares,whicharethesubjectoftheofferingcontemplatedbythisprospectus,includingClassAsharesandADSs,has
beenmadeorwillbemadeintheNetherlands,unlessinrelianceonArticle3(2)oftheProspectusDirectiveandprovided:
A.
suchofferismadeexclusivelytolegalentitieswhicharequalifiedinvestors(asdefinedintheProspectusDirective)intheNetherlands
or
standardexemptionlogoandwordingaredisclosedasrequiredbyarticle5:20(5)oftheDutchFinancialSupervisionAct(Wetophet
financieeltoezicht,ortheFSA)or
suchofferisotherwisemadeincircumstancesinwhicharticle5:20(5)oftheFSAisnotapplicable.
B.
C.
Otherrelationships
Certainoftheunderwritersandtheiraffiliateshaveprovidedinthepasttousandouraffiliatesandmayprovidefromtimetotimeinthe
futurecertaincommercialbanking,financialadvisory,investmentbanking,lendingandotherservicesforusandsuchaffiliatesintheordinary
courseoftheirbusiness,forwhichtheyhavereceivedandmaycontinuetoreceivecustomaryfeesandcommissions.Inaddition,fromtime
totime,certainoftheunderwritersandtheiraffiliatesmayeffecttransactionsfortheirownaccountortheaccountofcustomers,andholdon
behalfofthemselvesortheircustomers,longorshortpositionsinourdebtorequitysecuritiesorloans,andmaydosointhefuture.
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Expensesoftheoffering
Thefollowingtablesetsforththecostsandexpenses,otherthanunderwritingcommission,thatweandtheSellingShareholdersexpectto
incurinconnectionwiththesaleoftheADSsbeingregistered.AllamountsareestimatesexceptfortheU.S.SecuritiesandExchange
Commission,orSEC,registrationfee,theFinancialIndustryRegulatoryAuthorityorFINRA,filingfeeandtheNASDAQGlobalSelectMarket
listingfee.
SECregistrationfee
FINRAfilingfee
NASDAQGlobalSelectMarketlistingfee
Printingandengravingexpenses
Legalfeesandexpenses
Accountingfeesandexpenses
Miscellaneouscosts
Total
Amount
$ 59,193
74,314
125,000
225,000
3,680,000
1,045,000
250,000
$5,458,507
Allofthecostsandexpensesforthisofferingwillbepaidbyus.
AllamountsinthetableareestimatesexceptfortheU.S.SecuritiesandExchangeCommissionregistrationfee,theNASDAQGlobalSelect
MarketlistingfeeandtheFINRAfilingfee.Wewillpayalloftheexpensesofthisoffering.
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Legalmatters
ThevalidityofourClassAsharesandcertainothermattersofDutchlawwillbepasseduponforusbyNautaDutilhN.V.Certainmattersof
GermanlawwillbepasseduponforusbyNoerrLLP.CertainmattersofU.S.federallawwillbepasseduponforusbyLatham&Watkins
LLP.CertainmattersofU.S.federallawrelatingtothisofferingwillbepasseduponfortheunderwritersbyGoodwinProcterLLP.Certain
mattersofDutchlawandGermanlawwillbepasseduponfortheunderwritersbyLinklatersLLP.
Experts
TheconsolidatedfinancialstatementsoftrivagoGmbHasofDecember31,2014and2015andforeachofthetwoyearsintheperiodended
December31,2015appearinginthisprospectusandregistrationstatementhavebeenauditedbyErnst&YoungGmbH
Wirtschaftsprfungsgesellschaft,anindependentregisteredpublicaccountingfirm,assetforthintheirreportthereonappearingelsewhere
herein,andareincludedinrelianceonsuchreportgivenontheauthorityofsuchfirmasexpertsinaccountingandauditing.
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Enforcementofcivilliabilities
Weareaprivatecompanywithlimitedliability(beslotenvennootschapmetbeperkteaansprakelijkheid)incorporatedunderthelawsofthe
Netherlands,andweareataxresidentofGermanywithourplaceofeffectivemanagementinGermany.Themembersofourmanagement
boardandamajorityofoursupervisoryboardmembersarenonresidentsoftheUnitedStates.Themajorityofourassetsandtheassetsof
thesepersonsarelocatedoutsidetheUnitedStates.Asaresult,itmaynotbepossibleforinvestorstoeffectserviceofprocesswithinthe
UnitedStatesuponsuchpersonsortoenforceagainstthemorusinU.S.courts,includingjudgmentspredicateduponthecivilliability
provisionsofthefederalsecuritieslawsoftheUnitedStates.
TheUnitedStatesandtheNetherlandscurrentlydonothaveatreatyprovidingforthereciprocalrecognitionandenforcementofjudgments,
otherthanarbitrationawards,incivilandcommercialmatters.Consequently,afinaljudgmentforpaymentgivenbyacourtintheUnited
States,whetherornotpredicatedsolelyuponU.S.securitieslaws,wouldnotautomaticallyberecognizedorenforceableintheNetherlands.
InordertoobtainajudgmentwhichisenforceableintheNetherlands,thepartyinwhosefavorafinalandconclusivejudgmentoftheU.S.
courthasbeenrenderedwillberequiredtofileitsclaimwithacourtofcompetentjurisdictionintheNetherlands.
Undercurrentpractice,thecourtsoftheNetherlandsmaybeexpectedtorenderajudgmentinaccordancewiththejudgmentoftherelevant
foreigncourt,providedthatsuchjudgment(i)isafinaljudgmentandhasbeenrenderedbyacourtwhichhasestablisheditsjurisdictionvis
vistherelevantDutchCompaniesorDutchCompany,asthecasemaybe,onthebasisofinternationallyacceptedgroundsofjurisdiction,
(ii)hasnotbeenrenderedinviolationofelementaryprinciplesoffairtrial,(iii)isnotcontrarytothepublicpolicyoftheNetherlands,and(iv)is
notincompatiblewith(a)apriorjudgmentofaNetherlandscourtrenderedinadisputebetweenthesameparties,or(b)apriorjudgmentofa
foreigncourtrenderedinadisputebetweenthesameparties,concerningthesamesubjectmatterandbasedonthesamecauseofaction,
providedthatsuchpriorjudgmentiscapableofbeingrecognizedintheNetherlands.
Dutchcourtsmaydenytherecognitionandenforcementofpunitivedamagesorotherawards.Moreover,aDutchcourtmayreducethe
amountofdamagesgrantedbyaU.S.courtandrecognizedamagesonlytotheextentthattheyarenecessarytocompensateactuallosses
ordamages.EnforcementandrecognitionofjudgmentsofU.S.courtsintheNetherlandsaresolelygovernedbytheprovisionsoftheDutch
CivilProcedureCode.Ifnoleavetoenforceisgranted,claimantsmustlitigatetheclaimagainbeforeaDutchcompetentcourt.
Inaddition,awardsofpunitivedamagesinactionsbroughtintheUnitedStatesorelsewherearegenerallynotenforceableinGermany.
ActionsbroughtinaGermancourtagainstusorthemembersofourmanagementboardandsupervisoryboard,ourexecutiveofficersand
theexpertsnamedhereintoenforceliabilitiesbasedonU.S.federalsecuritieslawsmaybesubjecttocertainrestrictions.Inparticular,
Germancourtsgenerallydonotawardpunitivedamages.LitigationinGermanyisalsosubjecttorulesofprocedurethatdifferfromtheU.S.
rules,includingwithrespecttothetakingandadmissibilityofevidence,theconductoftheproceedingsandtheallocationofcosts.
ProceedingsinGermanywouldgenerallyhavetobeconductedintheGermanlanguage,andalldocumentssubmittedtothecourtwould,in
principle,havetobetranslatedintoGerman.Forthesereasons,itmaybedifficultforaU.S.investortobringanoriginalactioninaGerman
courtpredicateduponthecivilliabilityprovisionsoftheU.S.federalsecuritieslawsagainstus,themembersofourmanagementboard,
supervisoryboardandexecutiveofficersandtheexpertsnamedinthisprospectus.Inaddition,evenifajudgmentagainstourcompany,the
nonU.S.membersofourmanagementboard,supervisoryboard,executiveofficersortheexpertsnamedinthisprospectusbasedonthe
civilliabilityprovisionsoftheU.S.federalsecuritieslawsisobtained,aU.S.investormaynotbeabletoenforceitinU.S.orGermancourts.
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Whereyoucanfindmoreinformation
WehavefiledwiththeU.S.SecuritiesandExchangeCommissionaregistrationstatement(includingamendmentsandexhibitstothe
registrationstatement)onFormF1undertheSecuritiesAct.Thisprospectus,whichispartoftheregistrationstatement,doesnotcontainall
oftheinformationsetforthintheregistrationstatementandtheexhibitsandschedulestotheregistrationstatement.Forfurtherinformation,
wereferyoutotheregistrationstatementandtheexhibitsandschedulesfiledaspartoftheregistrationstatement.Ifadocumenthasbeen
filedasanexhibittotheregistrationstatement,wereferyoutothecopyofthedocumentthathasbeenfiled.Eachstatementinthis
prospectusrelatingtoadocumentfiledasanexhibitisqualifiedinallrespectsbythefiledexhibit.
Uponcompletionofthisoffering,wewillbecomesubjecttotheinformationalrequirementsoftheExchangeAct.Accordingly,wewillbe
requiredtofilereportsandotherinformationwiththeSEC,includingannualreportsonForm20FandreportsonForm6K.Youmayinspect
andcopyreportsandotherinformationfiledwiththeSECatthePublicReferenceRoomat100FStreet,N.E.,Washington,D.C.20549.
InformationontheoperationofthePublicReferenceRoommaybeobtainedbycallingtheSECat1800SEC0330.Inaddition,theSEC
maintainsanInternetwebsitethatcontainsreportsandotherinformationaboutissuers,likeus,thatfileelectronicallywiththeSEC.The
addressofthatwebsiteiswww.sec.gov.
Asaforeignprivateissuer,weareexemptundertheExchangeActfrom,amongotherthings,therulesprescribingthefurnishingand
contentofproxystatements,andourmanagementboardandsupervisoryboardmembersandprincipalshareholdersareexemptfromthe
reportingandshortswingprofitrecoveryprovisionscontainedinSection16oftheExchangeAct.Inaddition,wewillnotberequiredunder
theExchangeActtofileperiodicreportsandfinancialstatementswiththeSECasfrequentlyoraspromptlyasU.S.companieswhose
securitiesareregisteredundertheExchangeAct.
Wewillsendourtransferagentacopyofallnoticesofshareholdersmeetingsandotherreports,communicationsandinformationthatare
madegenerallyavailabletoshareholders.Thetransferagenthasagreedtomailtoallshareholdersanoticecontainingtheinformation(ora
summaryoftheinformation)containedinanynoticeofameetingofourshareholdersreceivedbythetransferagentandwillmakeavailable
toallshareholderssuchnoticesandallsuchotherreportsandcommunicationsreceivedbythetransferagent.
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Indextofinancialstatements
trivagoGmbH
Page
Unauditedcondensedconsolidatedfinancialstatements
UnauditedcondensedconsolidatedstatementsofoperationsfortheninemonthsendedSeptember30,2015and2016
Unauditedcondensedconsolidatedstatementsofcomprehensiveincome(loss)fortheninemonthsendedSeptember30,2015
and2016
UnauditedcondensedconsolidatedbalancesheetsasofDecember31,2015andSeptember30,2016
UnauditedcondensedconsolidatedstatementsofmembersequityfortheninemonthsendedSeptember30,2016
UnauditedcondensedconsolidatedstatementsofcashflowsfortheninemonthsendedSeptember30,2015and2016
Notestounauditedcondensedconsolidatedfinancialstatements
Consolidatedfinancialstatements
ReportofindependentregisteredpublicaccountingFirm
ConsolidatedstatementsofoperationsfortheyearsendedDecember31,2014and2015
Consolidatedstatementsofcomprehensiveincome(loss)fortheyearsendedDecember31,2014and2015
ConsolidatedbalancesheetsasofDecember31,2014and2015
ConsolidatedstatementsofmembersequityfortheyearsendedDecember31,2014and2015
ConsolidatedstatementsofcashflowsfortheyearsendedDecember31,2014and2015
Notestoconsolidatedfinancialstatements
F3
F4
F5
F6
F7
F8
F20
F21
F22
F23
F24
F25
F26
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trivagoGmbH
UnauditedCondensedConsolidatedFinancialStatements
FortheninemonthsendedSeptember30,2015and2016andasof
December31,2015andSeptember30,2016
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trivagoGmbH
Condensedconsolidatedstatementsofoperations
(inthousands)
(unaudited)
Revenue
Totalrevenue
Costsandexpenses:
Costofrevenue,includingrelatedparty,excludingamortization(1)(2)
Operatingloss
Otherincome(expense)
Interestexpense
Other,net(Note10)
Lossbeforeincometaxes
Incometax(benefit)expense
Netloss
(1)Includessharebasedcompensationasfollows:
Costofrevenue
Sellingandmarketing
Technologyandcontent,netofcapitalizedinternalusesoftwareandwebsite
developmentcosts
(2)AmortizationofacquiredtechnologyincludedinAmortizationofintangibleassetsisas
follows:
Amortizationofinternalusesoftwareandwebsitedevelopmentcostsincludedin
Technologyandcontentisasfollows:
1,965
383,423
20,939
12,412
22,521
(47,440)
3,118
538,050
40,608
42,220
11,330
(50,324)
(127)
533
406
(49,918)
1,580
(51,498)
524
(50,974)
(78)
(761)
(839)
(48,279)
(10,841)
(37,438)
93
(37,345)
171
2,400
724
10,396
3,300
3,972
15,278
25,612
14,945
3,750
315
15,260
732
4,482
2,892
(3)Includesrelatedpartysharedservicefeeasfollows:
2015
2016
239,380
378,689
154,440
206,313
393,820
585,002
2,296
SeenotestotrivagoGmbHunauditedcondensedconsolidatedfinancialstatements
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trivagoGmbH
Condensedconsolidatedstatementsofcomprehensiveincome(loss)
(inthousands)
(unaudited)
2015
2016
(37,438)
(51,498)
Netloss
Othercomprehensiveincome(loss)
Currencytranslationadjustments
Totalothercomprehensiveincome(loss)
Comprehensiveloss
Less:Comprehensivelossattributabletononcontrollinginterests
ComprehensivelossattributabletotrivagoGmbH
(167)
(167)
(37,605)
251
(37,354)
4
4
(51,494)
522
(50,972)
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trivagoGmbH
Condensedconsolidatedbalancesheets
(inthousands)
(unaudited)
ASSETS
Currentassets:
Cash
Restrictedcash
Accountsreceivable,lessallowanceof251and159atDecember31,2015and
September30,2016,respectively
Accountsreceivable,relatedparty
Prepaidexpensesandothercurrentassets
Totalcurrentassets
Propertyandequipment,net
Otherlongtermassets
Intangibleassets,net
Goodwill
TOTALASSETS
LIABILITIESANDMEMBERSEQUITY
Currentliabilities:
Accountspayable
Incometaxespayable
Shorttermdebt
Membersliability
Relatedpartypayable(Note12)
Accruedexpensesandothercurrentliabilities
Deferredincometaxes
Otherlongtermliabilities
Commitmentsandcontingencies(Note11)
Redeemablenoncontrollinginterests
Membersequity:
Subscribedcapital
Reserves
Retainedearnings(Accumulateddeficit)
Totalmembersequity
TOTALLIABILITIESANDMEMBERSEQUITY
December31,
2015
September30,
2016
17,556
685
4,155
780
19,748
23,605
4,603
66,197
44,396
43,685
5,587
98,603
12,853
936
189,909
490,360
760,255
38,315
2,492
178,579
490,364
808,353
26,263
256
20,000
13,377
7,129
4,984
72,009
58,902
4,689
8,805
12,179
84,575
57,994
5,896
54,604
29,425
2,076
2,078
48
695,871
55,529
(12)
(129,156)
622,280
760,255
49
696,854
120,908
(10)
(180,130)
637,671
808,353
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trivagoGmbH
Condensedconsolidatedstatementsofmembersequity
(inthousands)
(unaudited)
Description
BalanceatJanuary1,
2015
Netloss(excludes239
ofnetloss
attributableto
redeemable
noncontrolling
interest)
Othercomprehensive
loss(netoftax)
Adjustmenttothefair
valueofredeemable
noncontrolling
interests
Issueofsubscribed
capital,options
granted
Sharebased
compensation
expense
BalanceatDecember
31,2015
Netloss(excludes524
ofnetloss
attributableto
redeemable
noncontrolling
interest)
Othercomprehensive
income(netoftax)
Adjustmenttothefair
valueofredeemable
noncontrolling
interests
Sharebased
compensation
expenseand
settlementof
employeeawards
Issueofsubscribed
capital,options
exercised
BalanceatSeptember
30,2016
Subscribed
capital
Reserves
38 701,856
Totalmembers
equity
52,703
664,568
(39,127)
(12)
(12)
(239)

2,826
10
2,826
(5,746)
(5,746)
(239)
Contributionfrom
parent
10
(39,127)
Accumulatedother
comprehensive
income(loss)
(90,029)
Retainedearnings
(accumulated
deficit)
48 695,871
(129,156)
(12)
55,529
622,280
(50,974)
(50,974)

2,893
(524)
2,893
62,486
63,993
(524)
1,507
49 696,854
(180,130)
(10)

120,908
1
637,671
SeenotestotrivagoGmbHunauditedcondensedconsolidatedfinancialstatements.
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trivagoGmbH
Condensedconsolidatedstatementsofcashflows
(inthousands)
(unaudited)
Ninemonthsended
September30,
2015
2016
Operatingactivities:
Netloss
(37,438)
Adjustmentstoreconcilenetlosstonetcashused:
Depreciation(propertyandequipmentandinternalusesoftwareandwebsitedevelopment)
Sharebasedcompensation(SeeNote6)
Deferredincometaxes
Foreignexchange(gain)loss
Baddebt(recovery)expense
Noncashcharge,contributionfromparent
1,829
22,521
Changesinoperatingassetsandliabilities,netofeffectsfromofbusinessesacquired:
Accountsreceivable
Prepaidexpenseandotherassets
Accountspayable
Accruedexpensesandotherliabilities
Taxespayable/receivable,net
Netcashprovidedby(usedin)operatingactivities
Investingactivities:
Acquisitionofabusiness,netofcashacquired
Capitalexpenditures,includinginternalusesoftwareandwebsitedevelopment
Netcashusedininvestingactivities
Financingactivities:
Paymentsofinitialpublicofferingcosts
Paymentofloantoshareholder
Paymentofloantorelatedparty
Proceedsfromissuanceofloanfromrelatedparty
Paymentoncreditfacility
Proceedsfromissuanceofcreditfacility
Proceedsfromexerciseofmembersequityawards
Netcashprovidedby(usedin)financingactivities
Effectofexchangeratechangesoncash
Netincrease(decrease)incash
Cashatbeginningoftheperiod
Cashatendoftheperiod
9,844
(10,842)
745
(451)
2,296
(286)
(4,540)
(4,826)

(7,129)
(1,039)
7,129

20,000
10
(6,363)
(6,363)
(683)
(30,000)
10,000
18,971
(115)
3,076
6,142
9,218
(42,154)
(1,186)
32,594
7,811
4,433
13,821
3,331
11,330
52,010
(3,390)
(573)
(1,780)
2,893
(30,733)
1,777
26,672
3,616
(790)
(10,954)
(51,498)
(20,682)
(177)
(13,401)
17,556
4,155
Supplementalcashflowinformation:
Cashpaidforinterest
Cashpaidfortaxes
Noncashinvestingandfinancingactivities:
Deferredofferingcostsincludedinaccruedexpenses
Fixedassetsrelatedpayable
Capitalizationofconstructioninprocessrelatedtobuildtosuitlease
Extinguishmentofloantomembersthroughcontributionfromparentinmembersequity
Extinguishmentofloanfromrelatedpartythroughmembersliability
68
682

60
1

151
587
766
360
22,147
7,129
7,129
SeenotestotrivagoGmbHunauditedcondensedconsolidatedfinancialstatements.
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trivagoGmbH
Notestocondensedconsolidatedfinancialstatements
(unaudited)
1.Organizationandbasisofpresentation
Descriptionofbusiness
trivagoGmbH(trivagotheCompany,us,weandour)anditssubsidiariesofferonlinemetasearchforhotelsbyfacilitating
consumerssearchforhotelaccommodation,throughonlinetravelagents(OTAs),hotelchainsandindependenthotels.Oursearchdriven
marketplace,deliveredonwebsitesandapps,providesuserswithatailoredsearchexperienceviaourproprietarymatchingalgorithms.We
employacostperclick(orCPC)pricingstructure,allowingadvertiserstocontroltheirownreturnoninvestmentandthevolumeoflead
trafficwegenerateforthem.
Basisofpresentation
During2013,Expedia,Inc.(theParentExpedia)completedthepurchaseofa63%sharecapitalintheCompany.Inaddition,the
purchaseagreementcontainscertainput/callrightswherebyExpediamayacquireandtheminorityshareholdersoftheCompanymaysellto
Expediaupto50%and100%oftheminoritysharesoftheCompanyatfairvalueduringtwowindows,thefirstofwhichopenedinthefirst
quarterof2016andthesecondopensin2018(seeNote6Sharebasedawardsandotherequityinstruments).Thesefinancialstatements
reflectExpediasbasisofaccountingduetothechangeincontrolin2013whenExpediaacquiredamajorityownershipintrivago,aswe
electedtheoptiontoapplypushdownaccountingintheperiodinwhichthechangeincontroleventoccurred.
Expediaincurscertaincostsonbehalfoftrivago.Thecondensedconsolidatedfinancialstatementsoftrivagoreflecttheallocationtotrivago
ofcertainExpediacorporateexpenses(seeNote12Relatedpartytransactionsforfurtherinformation).Werecordedallcorporate
allocationchargesfromExpediawithinourcondensedconsolidatedstatementofincomeoperationsandasacontributionfromparentwithin
thecondensedconsolidatedstatementofmembersequity.Ourmanagementbelievesthattheassumptionsunderlyingthecondensed
consolidatedfinancialstatementsarereasonable.However,thisfinancialinformationdoesnotnecessarilyreflectthefuturefinancialposition,
resultsofoperationsandcashflowsoftrivago,nordoesitreflectwhatthehistoricalfinancialposition,resultsofoperationsandcashflowsof
trivagowouldhavebeenhadwebeenastandalonecompanyduringtheperiodspresented.
Reclassifications
Wehavereclassifiedcertainamountsrelatedtoourpriorperiodresultstoconformtoourcurrentperiodpresentation.
Seasonality
Weexperienceseasonalfluctuationsinthedemandforourservicesasaresultofseasonalpatternsintravel.Forexample,ourrevenueis
generallyhighestinthesecondandthirdquartersofeachyear.Ourrevenuetypicallydecreasesinthefourthquarter.Wegenerallyexpectto
experiencehigherprofitsinthesecondhalfoftheyearaswetypicallyhavehighermarketingexpensesinthefirsthalfoftheyearinadvance
ofhightravelseasons.Seasonalfluctuationsaffectingourrevenuealsoaffectthetimingofourcashflows.Wetypically
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receivepaymentforreferralswithin30daysofthereferral.Therefore,ourcashflowvariesseasonallywithaslightlagtoourrevenue,andis
significantlyaffectedbythetimingofouradvertisingspending.Thecontinuedgrowthofourofferingsincountriesandareaswhereseasonal
travelpatternsvarymayinfluencethetypicaltrendofourseasonalpatternsinthefuture.
2.Significantaccountingpolicies
Consolidation
OurcondensedconsolidatedfinancialstatementshavebeenpreparedinEuros,ourfunctionalcurrency.Ourcondensedconsolidated
financialstatementsincludetheaccountsoftrivago,ourwhollyownedsubsidiaries,andentitieswecontrol.Werecordnoncontrollinginterest
inourcondensedconsolidatedfinancialstatementstorecognizetheminorityownershipinterestinourconsolidatedsubsidiaries.
Noncontrollinginterestintheearningsandlossesofconsolidatedsubsidiariesrepresenttheshareofnetincomeorlossallocatedto
membersorpartnersinourconsolidatedentities,whichincludesthenoncontrollinginterestshareofnetincomeorlossfromourredeemable
noncontrollinginterestentities.
Noncontrollinginterestswithsharesredeemableattheoptionoftheminorityholdersinmyhotelshopandbase7havebeenincludedin
redeemablenoncontrollinginterests.Weclassifytheredeemablenoncontrollinginterestasamezzanineequitybelownoncurrentliabilities
inourcondensedconsolidatedfinancialstatements.SeeNote8Redeemablenoncontrollinginterestsforfurtherdiscussion.
Accountingestimates
Weuseestimatesandassumptionsinthepreparationofourcondensedconsolidatedfinancialstatementsinaccordancewithaccounting
principlesgenerallyacceptedintheUnitedStates(GAAP).Ourestimatesandassumptionsaffectthereportedamountsofassetsand
liabilitiesanddisclosureofcontingentassetsandliabilitiesasofthedateofourcondensedconsolidatedfinancialstatements.These
estimatesandassumptionsalsoaffectthereportedamountofnetincomeorlossduringanyperiod.Ouractualfinancialresultscoulddiffer
significantlyfromtheseestimates.Thesignificantestimatesunderlyingourcondensedconsolidatedfinancialstatementsincluderevenue
recognitionintangibleassetsandgoodwillredeemablenoncontrollinginterestsacquisitionpurchasepriceallocationsandsharebased
compensation.
Advertisingexpense
Weincuradvertisingexpenseconsistingofofflinecosts,includingtelevisionandradioadvertising,aswellasonlineadvertisingexpenseto
promoteourbrands.Asignificantportionoftrafficfromusersisdirectedtoourwebsitesthroughourparticipationindisplayadvertising
campaignsonsearchengines,advertisingnetworks,affiliatewebsitesandsocialnetworkingsites.Weconsidertrafficacquisitioncoststobe
indirectadvertisingfees.Weexpensetheproductioncostsassociatedwithadvertisementsintheperiodinwhichtheadvertisementfirst
takesplace.Weexpensethecostsofcommunicatingtheadvertisement(e.g.,televisionairtime)asincurredeachtimetheadvertisementis
shown.Thesecostsareincludedinsellingandmarketingexpenseinourcondensedconsolidatedstatementofoperations.Forthenine
monthsendedSeptember30,2015and2016,ouradvertisingexpensewas362.8millionand499.2million,respectively.AsofDecember
31,2015andSeptember30,2016,wehad3.8millionand1.8million,respectively,ofprepaidmarketingexpensesincludedinprepaid
expensesandothercurrentassets.
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wedonothaveatradinghistoryforourordinaryshares,theexpectedsharepricevolatilityforourordinarysharewasestimatedbytakingthe
averagehistoricpricevolatilityforindustrypeersbasedondailypriceobservationsoveraperiodcommensuratetotheexpectedterm.We
baseourexpectedtermassumptionsonthetermsandconditionsoftheemployeeshareoptionagreementsscheduledexercisewindows.
Additionally,thesharepriceassumptionusedinthemodelisbaseduponavaluationoftrivagossharesasofthegrantdateutilizinga
blendedanalysisofthepresentvalueoffuturediscountedcashflowsandamarketvaluationapproach.Weamortizethefairvaluetothe
extenttheawardsqualifyforequitytreatment,netofactualforfeitures,overthevestingtermonastraightlinebasis.Themajorityofour
shareoptionsvestbetweenoneandthreeyearsandhavecontractualtermsthatalignwithprescribedliquidationwindows.
risksandrewardsofstockownershipforareasonableperiodoftime.Weremeasuretheseinstrumentsatfairvalueattheendofeach
awards,andsubsequenteventsarenotindicativeofthereasonablenessofouroriginalestimatesoffairvalue.
Fairvaluerecognition,measurementanddisclosure
Thecarryingamountsofcashandrestrictedcashreportedonourcondensedconsolidatedbalancesheetsapproximatefairvalueaswe
maintainthemwithvarioushighqualityfinancialinstitutions.Theaccountsreceivableareshortterminnatureandaregenerallysettled
shortlyafterthesale.
Wedisclosethefairvalueofourfinancialinstrumentsbasedonthefairvaluehierarchyusingthefollowingthreecategories:
Level1Valuationsbasedonquotedpricesforidenticalassetsandliabilitiesinactivemarkets.
Level2ValuationsbasedonobservableinputsotherthanquotedpricesincludedinLevel1,suchasquotedpricesforsimilarassets
andliabilitiesinactivemarkets,quotedpricesforidenticalorsimilarassetsandliabilitiesinmarketsthatarenotactive,orotherinputs
thatareobservableorcanbecorroboratedbyobservablemarketdata.
Level3ValuationsbasedonunobservableinputsreflectingtheCompanysownassumptions,consistentwithreasonablyavailable
assumptionsmadebyothermarketparticipants.Thesevaluationsrequiresignificantjudgment.
Certainrisksandconcentrationofcreditrisk
Ourbusinessissubjecttocertainrisksandconcentrationsincludingdependenceonrelationshipswithadvertisers,dependenceonthird
depositorsholdingtheCompanyscashandcustomerswithsignificantaccountsreceivablebalances.
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Ourcustomerbaseincludesprimarilyonlinetravelagenciesandhoteliers.Weperformongoingcreditevaluationsofourcustomersand
maintainallowancesforpotentialcreditlosses.Wegenerallydonotrequirecollateralorothersecurityfromourcustomers.Expedia,our
majorityshareholder,anditsaffiliatesrepresent39%and35%ofourrevenuefortheninemonthsendedSeptember30,2015and2016,
respectively,and55%and50%oftotalaccountsreceivableasofDecember31,2015andSeptember30,2016,respectively.Priceline.com
anditsaffiliatesrepresent27%and43%ofrevenuesfortheninemonthsendedSeptember30,2015and2016,respectively,and21%and
32%oftotalaccountsreceivableasofDecember31,2015andSeptember30,2016,respectively.
Contingentliabilities
Wehavelegalmattersoutstanding,asdiscussedfurtherinNote11Commitmentsandcontingencies.Periodically,wereviewthestatusof
allsignificantoutstandingmatterstoassessthepotentialfinancialexposure.When(i)itisprobablethatanassethasbeenimpairedora
liabilityhasbeenincurredand(ii)theamountofthelosscanbereasonablyestimated,werecordtheestimatedlossinourconsolidated
statementsofoperations.Weprovidedisclosureinthenotestothecondensedconsolidatedfinancialstatementsforlosscontingenciesthat
donotmeetbothoftheseconditionsifthereisareasonablepossibilitythatalossmayhavebeenincurredthatwouldbematerialtothe
financialstatements.Significantjudgmentisrequiredtodeterminetheprobabilitythataliabilityhasbeenincurredandwhethersuchliability
isreasonablyestimable.Webaseaccrualsmadeonthebestinformationavailableatthetimewhichcanbehighlysubjective.Thefinal
outcomeofthesematterscouldvarysignificantlyfromtheamountsincludedintheaccompanyingcondensedconsolidatedfinancial
statements.
Deferredofferingcosts
Wecapitalizecertainlegal,accountingandotherthirdpartyrelatedfeesthataredirectlyassociatedwithinprocessequityfinancingsas
deferredofferingcosts(noncurrent)untilsuchfinancingsareconsummated.Afterconsummationoftheequityfinancing,thesecostsare
recordedinstockholdersequityasareductionofadditionalpaidincapitalgeneratedasaresultofthisoffering.AsofSeptember30,2016,
wehaverecorded1.4millionofdeferredofferingcosts.Shouldtheequityfinancingnolongerbeconsideredprobableofbeing
consummated,alldeferredofferingcostswillbechargedtooperatingexpensesintheconsolidatedstatementofoperations.Wedidnot
recordanydeferredofferingcostsasofDecember31,2015.
Adoptionofnewaccountingpronouncements
InNovember2015,theFASBissuedanASUthatsimplifiedthepresentationofdeferredtaxesbyrequiringalldeferredtaxassetsand
liabilitiestobeclassifiedasnoncurrentonthebalancesheet.Underthepreviouspractice,therequirementwastoseparatedeferredtaxes
intocurrentandnoncurrentamountsonthebalancesheet.Thenewstandarddoesnotaffecttherequirementtooffsetdeferredtaxassets
andliabilitiesforeachtaxpayingcomponentwithinataxjurisdiction.Weelectedtoearlyadoptforthecurrentreportingperiodending
December31,2015onaretrospectivebasis.Otherthantherevisedbalancesheetpresentationofdeferredincometaxassetsandliabilities,
theadoptionofthisstandarddidnothaveaneffectonourcondensedconsolidatedfinancialstatements.
InMarch2016,theFASBissuednewguidancerelatedtoaccountingforsharebasedpayments.Theupdatedguidancechangeshow
companiesaccountforcertainaspectsofsharebasedpaymentsawardstoemployees,includingtheaccountingforincometaxes,
forfeitures,andstatutorytaxwithholdingrequirements,aswellas
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classificationinthestatementofcashflows.TheguidanceiseffectiveforannualandinterimreportingperiodsbeginningafterDecember15,
2016,withearlyadoptionpermitted.Theadoptionofthisnewguidancedidnothaveamaterialimpacttoourcondensedconsolidated
financialstatements.
Recentaccountingpoliciesnotyetadopted
InMay2014,theFASBissuedanASUamendingrevenuerecognitionguidanceandrequiringmoredetaileddisclosurestoenableusersof
financialstatementstounderstandthenature,amount,timing,anduncertaintyofrevenueandcashflowsarisingfromcontractswith
customers.InAugust2015,theFASBissuedanASUdeferringtheeffectivedateoftherevenuestandardsoitwouldbeeffectiveforannual
andinterimreportingperiodsbeginningafterDecember15,2017,withearlyadoptionprohibitedforaccountingperiodsbeginningbefore
December15,2016.Weareintheprocessofevaluatingtheimpactoftheadoptionofthisnewguidanceonourcondensedconsolidated
financialstatements.
InJanuary2016,theFASBissuednewguidancerelatedtoaccountingforequityinvestments,financialliabilitiesunderthefairvalueoption,
andthepresentationanddisclosurerequirementsforfinancialinstruments.Inaddition,theFASBclarifiedguidancerelatedtothevaluation
allowanceassessmentwhenrecognizingdeferredtaxassetsresultingfromunrealizedlossesonavailableforsaledebtsecurities.Thenew
standardiseffectiveforannualperiods,andinterimperiodswithinthoseannualperiods,beginningafterDecember15,2017.Weareinthe
processofevaluatingtheimpactofadoptingthisnewguidanceonourcondensedconsolidatedfinancialstatements.
InFebruary2016,theFASBissuednewguidancerelatedtoaccountingandreportingguidelinesforleasingarrangements.Thenew
guidancerequiresentitiesthatleaseassetstorecognizeassetsandliabilitiesonthebalancesheetrelatedtotherightsandobligations
createdbythoseleasesregardlessofwhethertheyareclassifiedasfinanceoroperatingleases.Consistentwithcurrentguidance,the
recognition,measurement,andpresentationofexpensesandcashflowsarisingfromaleaseprimarilywilldependonitsclassificationasa
financeoroperatinglease.Theguidancealsorequiresnewdisclosurestohelpfinancialstatementusersbetterunderstandtheamount,
timinganduncertaintyofcashflowsarisingfromleases.Thisguidanceiseffectiveforannualandinterimreportingperiodsbeginningafter
December15,2018.Earlyadoptionispermittedandshouldbeappliedusingamodifiedretrospectiveapproach.Weareintheprocessof
evaluatingtheimpactofadoptingthisnewguidanceonourcondensedconsolidatedfinancialstatements.
InAugust2016,theFASBissuednewguidanceintendedtoreducediversityinpracticeasitrelatestohowcertaintransactionsareclassified
inthestatementofcashflows,aspreviousguidancewaseitheromittedorunclear.Thenewstandardiseffectiveforannualperiods,and
interimperiodswithinthoseannualperiods,beginningafterDecember15,2017.Weareintheprocessofevaluatingtheimpactofadopting
thisnewguidanceonourcondensedconsolidatedfinancialstatements.
3.Acquisitions
OnAugust5,2015,wecompletedtheacquisitionofa52.3%equityinterestinbase7booking.comSarl(base7),acloudbasedproperty
managementserviceprovider,fortotalpurchaseconsiderationof2.1millionincash.Theacquisitionprovidesusaccesstothecompanys
workforceandtheknowhowregardingbase7sallinonepropertymanagementsystemwhichcreatesopportunitytoenhancetrivagos
directmarketing.
OnJuly16,2015,wecompletedtheacquisitionofa61.3%equityinterestinmyhotelshopGmbH(myhotelshop),amarketingmanager,for
totalpurchaseconsiderationof0.6millionconsistingofcashandthesettlementofpreexistingdebtattheclosingoftheacquisition.The
acquisitionprovidestrivagodirectrelationshipswithindependenthotelsthroughthemyhotelshopportal.
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Thepurchasepricefromouracquisitionswasallocatedtothefairvalueofassetsacquiredandliabilitiesassumedduringtheyearended
December31,2015asfollows:
(inthousands)
Goodwill
Identifiableintangibleassets:
Customerrelationships
Netassetsacquired(1)
Redeemablenoncontrollinginterest
Totalpurchaseconsideration
38
2,224
(2,230)
2,615
2,583
(1) Includescashacquiredof2.4million
Theidentifiableintangibleassetrelatestothecustomerrelationshipsacquiredaspartofthemyhotelshopacquisition.Thegoodwillof2.6
millionforacquisitionsintheyearendedDecember31,2015isprimarilyattributabletoassembledworkforceandoperatingsynergies.
DuringtheninemonthsendedSeptember30,2016,therehavebeennoacquisitions.
4.Fairvaluemeasurement
Thefairvalueofthenoncontrollinginterestwasestimatedtobe2.2millionatthetimeofacquisition.Inaddition,thepurchaseagreementof
myhotelshopandbase7eachcontaincertainput/callrightswherebywemayacquire,andtheminorityshareholdersmayselltous,the
minoritysharesofthecompanyatfairvaluebeginningin2018.Asthenoncontrollinginterestisredeemableattheoptionoftheminority
holders,weclassifiedthebalanceasredeemablenoncontrollinginterestwithfuturechangesinthefairvalueabovetheinitialbasisrecorded
aschargesorcreditstoretainedearnings(oradditionalpaidincapitalinabsenceofretainedearnings).
TheredeemablenoncontrollinginterestismeasuredatfairvalueonarecurringbasisasofDecember31,2015andSeptember302016
respectively,andclassifiedusingthefairvaluehierarchyinthetablebelow:
(inthousands)
Put/calloption
2,076
2,076
Total
Level1
December31,2015
Level2
Level3
2,076
2,076
Totalmezzanineequity
(inthousands)
Put/calloption
Total
2,078
2,078
Level1
September30,2016
Level2
Level3
2,078
2,078
SeeNote8Redeemablenoncontrollinginterestforfurtherinformationonthefairvalueoftheput/calloptionclassifiedasLevel3.Asof
December31,2015andSeptember30,2016,thecarryingvalueofthecreditfacilityapproximatesfairvalue.Duringtheyear
endedDecember31,2015andtheninemonthsendedSeptember30,2016wehadnofinancialassetsclassifiedasLevel2or3.SeeNote
2Significantaccountingpoliciesformoreinformation.
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5.Debtcreditfacility
Wemaintaina50.0millionuncommittedcreditfacilityataninterestrateofLIBOR+1%perannum,whichisguaranteedbyExpedia,Inc.,
thatmaybeterminatedatanytimebythelender.AsofDecember31,2015,wehad20.0millioninborrowingsoutstandingclassifiedasa
shorttermdebtbasedonthelendersabilitytoterminatethefacilityatanytime.AsofSeptember30,2016,wehadnooutstanding
borrowingsunderourcreditfacility.
6.Sharebasedawardsandotherequityinstruments
Therewerecertainsharesheldbytrivagoemployeeswhichwereoriginallyawardedintheformofsharebasedoptionspursuanttothe
trivagoemployeeoptionplanandsubsequentlyexercisedbysuchemployees.Duringthesecondquarterof2016,Expediaexercisedacall
rightonthesesharesandelectedtodosoatapremiumtofairvalue,theaggregatepaymentofwhich,62.5million,wasrecordedasa
ContributionfromParentinMembersEquity.Theexerciseresultedinanincrementalsharebasedcompensationchargeofapproximately
43.7millioninthesecondquarterof2016pursuanttoliabilityawardtreatment.Thedifferentialbetweenthecashsettlementamountandthe
incrementalsharebasedcompensationchargereflectssharebasedcompensationexpenserecordedontheseawardsinpreviousperiods.
TheacquisitionoftheseemployeeminorityinterestsincreasedExpediasordinaryownershipoftrivagoto63.5%.
Anadditionalchargeof8.6millionofsharebasedcompensationwasrecordedduringtheninemonthperiodrelatedtootherliability
classifiedawardsandvestingofourequityclassifiedawards.Theaggregateoftheseamountswasoffsetby0.3millionofcapitalizedshare
basedcompensationcostaspartofinternalusesoftwareandwebsitedevelopmentcosts.Sharebasedcompensationexpenseforthenine
monthsendedSeptember30,2015of9.8millionrelatedtothechangeinfairvalueofourliabilityclassifiedawardsandthevestingofour
equityclassifiedawards.Inthethirdquarterof2016,38classAequivalenttrivagoemployeeoptionawardswereexercisedfornominal
proceeds.SeeNote14Subsequenteventsforthesubsequentsettlementofthemembersliabilityrelatedtotheseoptionawards.Asof
September30,2016,therewere632ClassAand121ClassAequivalent(ClassB)optionsoutstandingwithaweightedaverageexercise
priceof2,642.67and16.53,respectively.
7.Incometaxes
Wedetermineourprovisionforincometaxesforinterimperiodsusinganestimateofourannualeffectivetaxrate.Werecordanychanges
affectingtheestimatedannualtaxrateintheinterimperiodinwhichthechangeoccurs,includingdiscretetaxitems.Ouractualeffectiverate
was22.6%and(3.2)%fortheninemonthsendedSeptember30,2015and2016,respectively.Thechangeinoureffectivetaxrateforthe
ninemonthsendedSeptember30,2015comparedtotheninemonthsendedSeptember30,2016wasprimarilydrivenbyanincreasein
nondeductiblesharebasedcompensationcosts,whichincreased42.2million,from9.8millionintheninemonthsendedSeptember30,
2015to52.0millionfortheninemonthsendedSeptember30,2016.
Theestimateofourexpectedannualeffectivetaxforalltheseperiodswas30%.Thedifferencebetweentheexpectedandeffectivetaxrate
forallperiodswasdrivenbynondeductiblesharebasedcompensationandcorporatecostswhichwerepusheddownfromExpediaand
whicharenondeductiblefortaxpurposes.
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8.Redeemablenoncontrollinginterests
Noncontrollinginterestexistsinentitiesmajorityownedbyus,whicharecarriedatfairvalueasthenoncontrollinginterestscontaincertain
rights,wherebywemayacquireandtheminorityshareholdersmayselltoustheadditionalsharesofthecompanies.Areconciliationof
redeemablenoncontrollinginterestfortheninemonthsendedSeptember30,2016isasfollows:
(inthousands)
Balance,beginningoftheperiod
Fairvalueadjustmentsthroughmembersequity
Balance,endofperiod
NineMonthsended
September30,2016
2,076
(524)
524
2,078
Thefairvalueoftheredeemablenoncontrollinginteresthasbeenadjustedby(522)thousandforthenetlossattributabletononcontrolling
interest.Afairvalueadjustmenthasbeenrecordedof522thousandtoreflectthefairvalueofthenoncontrollinginterestforthenine
monthsendedSeptember30,2016.
9.Membersequity
Subscribedcapital
TheshareholdersandtheirsharesinthesubscribedcapitalisasfollowsasofDecember31,2015andSeptember30,2016,infullEuros:
AShares:
ExpediaLodgingPartnerServicesS..r.l.,Geneva,Switzerland
RolfSchrmgens,Dsseldorf
PeterVinnemeier,Dsseldorf
MalteSiewert,Dsseldorf
Employees
BShares:
ExpediaLodgingPartnerServicesS..r.l.,Geneva,Switzerland
Employees
December31,2015
Subscribed
Voting
Capital Interest
24,036
7,337
5,489
1,273
475

9,164
47,774
1%
100%
September30,2016
Subscribed
Voting
Capital Interest
63%
19%
14%
3%

24,511
7,337
5,489
1,273
37
9,164
1,200
49,011
63%
19%
14%
3%
1%
100%
Reserves
Reservesprimarilyrepresentstheeffectsofpushdownaccountingappliedduetothechangeincontrolin2013.SeeNote1Organization
andbasisofpresentation.
Accumulatedothercomprehensiveincomerepresentsforeigncurrencytranslationadjustmentsandthechangeyearoveryearisprimarily
duetotheacquisitionofbase7,aSwitzerlandbasedcompanyinAugust2015.Note8RedeemableNoncontrollinginterests.
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ThebeginningcontributionfromparentbalancerepresentsthepushdownofsharebasedcompensationexpensefromExpedia.Thechange
yearoveryearprimarilyrelatestoadditionalsharebasedcompensationexpense.SeeNote6Sharebasedawardsandotherequity
instruments.
10.Other,net
Other,netconsistsprimarilyofforeignexchangesrategains(losses)of(0.8)millionand0.6millionduringtheninemonthsended
September30,2015and2016,respectively.
11.Commitmentsandcontingencies
Legalproceedings
Intheordinarycourseofbusiness,weareapartytovariouslawsuits.Managementdoesnotexpecttheselawsuitstohaveamaterialimpact
ontheliquidity,resultsofoperations,orfinancialconditionoftrivago.Wealsoevaluateotherpotentialcontingentmatters,includingvalue
addedtax,excisetax,salestax,transientoccupancyoraccommodationtaxandsimilarmatters.AsofDecember31,2015andSeptember
30,2016,therewerenomaterialcontingentmattersorlawsuits.
12.Relatedpartytransactions
WehavecommercialrelationshipswithExpediaandmanyofitsaffiliatedbrands,includingBrandExpedia,Hotels.com,Orbitz,Travelocity,
ontheapplicableExpediawebsite.RelatedpartyrevenuefromExpediawas154.4millionand206.3millionfortheninemonthsended
September30,2015and2016,respectively,andprimarilyconsistsofclickthroughfeesandotheradvertisingservicesprovidedtoExpedia
anditssubsidiaries.Theseamountsarerecordedatcontractvalue,whichwebelieveisareasonablereflectionofthevalueoftheservices
provided.Relatedpartyrevenuerepresented39%and35%ofourtotalrevenuefortheninemonthsendedSeptember30,2015and2016,
respectively.
Ouroperatingexpensesincludearelatedpartysharedservicesfeeof2.3millionand2.9millionduringtheninemonthsendedSeptember
30,2015and2016,respectively.ThissharedservicefeeiscomprisedofallocationsfromExpediaforlegal,tax,treasury,auditandcorporate
developmentcostsandincludesanallocationofemployeecompensationwithinthesefunctions.Theseexpenseswereallocatedbasedona
numberoffactorsincludingheadcount,estimatedtimespentandoperatingexpenseswhichtrivagoconsidersreasonableestimates.These
amountsmayhavebeendifferenthadtrivagooperatedasanunaffiliatedentity.
TherelatedpartytradereceivablebalanceswithExpediaanditssubsidiariesreflectedinourcondensedconsolidatedbalancesheetsasof
December31,2015andSeptember30,2016were23.6millionand44.4million,respectively.Therelatedpartytradepayablebalances
withExpediaanditssubsidiariesreflectedinourcondensedconsolidatedbalancesheetsasofDecember31,2015andSeptember30,2016
were7.1millionand0million,respectively.DuringtheninemonthsendedSeptember30,2016,the7.1millionrelatedpartypayabledue
toExpediawasextinguishedduetocashwithheldfromproceedspaidtoemployeesbyExpediaaspartofthe2016liquidationtransaction.
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Guarantee
OnSeptember5,2014,weenteredintoanuncommittedcreditfacilitywithBankofAmericaMerrillLynchInternationalLtd,withamaximum
principalamountof10.0million.AdvancesunderthisfacilitybearinterestatarateofLIBORplus1.0%perannum.Thisfacilitymaybe
anamendmenttothisfacilitypursuanttowhichthemaximumprincipalamountwasincreasedto50.0million.AsofDecember31,2015,we
had20.0millionoutstandingunderthisfacility.AsofSeptember30,2016wehadnooutstandingprincipalunderourcreditfacility.
OnJuly23,2015,weenteredintoanagreementtodesignandbuildournewheadquartersbuildinginDusseldorf,Germany.Aspartofthat
agreement,ExpediahasguaranteedcertainpaymentsduebytrivagounderthecontractwhichareexpectedtocommenceonMay31,2017.
TheguaranteebyExpediaendsuponreceiptofabankguaranteebytrivago,butinanycasenotlaterthanDecember31,2018.
Servicesagreement
OnMay1,2013,weenteredintoanAssetsPurchaseAgreement,pursuanttowhichExpediapurchasedcertaincomputerhardwareand
30dayspriorwrittennotice.WepaidExpedia16thousandforthesedatahostingservicesforboththeninemonthsendedSeptember30,
2015and2016.
13.Segmentinformation
segments:theAmericas,DevelopedEuropeandRestofWorld.WehaverestatedoursegmentsfortheyearsendedDecember31,2015
andDecember31,2014.ThechangefromonetothreereportablesegmentswastheresultofashiftintheCompanysfocusonmanaging
thebusinesstoreflectuniquemarketopportunitiesandcompetitivedynamicsinherentinourbusinesswithineachofouroperating
segments.OurAmericassegmentisgrowingandbecomingalargershareofconsolidatedreferralrevenueandhasthesecondlargest
exposuretoourextensivemarketingandadvertisingcampaigns.OurAmericassegmentiscurrentlycomprisedofArgentina,Brazil,Canada,
Chile,Colombia,Ecuador,Mexico,Peru,theUnitedStatesandUruguay.OurDevelopedEuropesegmentrepresentstheregionwherewe
areawellmaturebrandandiscomprisedofAustria,Belgium,Denmark,Finland,France,Germany,Ireland,Italy,theNetherlands,Norway,
Portugal,Spain,Sweden,SwitzerlandandtheUnitedKingdom.TheDevelopedEuropemarketwasourinitialmarketofoperationsandhas
thelargestexposuretoourextensivemarketingandadvertisingcampaigns.OurRestofWorldsegmentrepresentsallregionsoutsideofthe
AmericasandDevelopedEuropeandisinitsearlystagesofgrowth.Atthepointintimeinwhichweidentifiedoursegments,Australia,
HongKong,Japan,NewZealandandPolandrepresentedthetopcountriesbyrevenueintheRestofWorldsegment.Revenuesfromour
majorcustomers,ExpediaandPriceline.com(inclusiveoftheiraffiliates),arereportedwithintheDevelopedEurope,Americas,andRestof
Worldsegments.
andevaluateoperatingperformance.OurprimaryoperatingmetricisReturnonAdvertisingSpend,orROAS,foreachofoursegments
whichcomparesreferralrevenuetoadvertisingspend.ROASincludestheallocationofrevenuebysegmentwhichisbasedonthelocation
ofthewebsite,ordomainname,regardlessofwheretheconsumerresides.Thisisconsistentwithhowmanagementmonitorsandrunsthe
business.
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CorporateandEliminationsalsoincludesallcorporatefunctionsandexpensesexceptfordirectadvertising.Inaddition,werecord
amortizationofintangibleassetsandanyrelatedimpairment,aswellasstockbasedcompensationexpense,restructuringandrelated
reorganizationcharges,legalreserves,occupancytaxandother,andotheritemsexcludedfromsegmentoperatingperformancein
CorporateandEliminations.Suchamountsaredetailedinoursegmentreconciliationbelow.
ThefollowingtablespresentoursegmentinformationfortheninemonthsendedSeptember30,2015and2016.WhiletheCompanyis
finalizingtheallocationofgoodwill,ourpreliminaryallocationofgoodwilltoeachofoursegmentswas215.2milliontoDevelopedEurope,
192.7milliontoAmericasand82.5milliontoRestofWorld.Asasignificantportionofourpropertyandequipmentisnotallocatedtoour
operatingsegmentsanddepreciationisnotincludedinoursegmentmeasure,wedonotreporttheassetsbysegmentasitwouldnotbe
meaningful.Wedonotregularlyprovidesuchinformationtoourchiefoperatingdecisionmakers.
Referralrevenue
Otherrevenue
Totalrevenue
Advertisingspend
ROASContribution
Developed
Europe
209,097

209,097
Americas
137,581

137,581
NinemonthsendedSeptember30,2015
Restof
Corporate&
World
Eliminations
Total
45,616
392,294

1,526
1,526
45,616
1,526
393,820
166,200
42,897
143,003
(5,422)
53,551
(7,935)

1,526
362,754
31,066
Costsandexpenses:
Costofrevenue,includingrelatedparty,
excludingamortization
Othersellingandmarketing(1)
Generalandadministrative,including
relatedpartysharedservicefee
Operatingloss
Otherexpense
Interestexpense
Otherexpense
Totalotherexpense
Incometaxbenefit
Netloss
1,965
20,669
20,939
12,412
22,521
(47,440)
(78)
(761)
(839)
(48,279)
(10,841)
(37,438)
(1) Representsallothersalesandmarketing,excludingadvertisingspend,asadvertisingspendistrackedbyreportablesegment.
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Referralrevenue
Otherrevenue
Totalrevenue
Advertisingspend
ROASContribution
Developed
Europe
276,054

276,054
Americas
223,501

223,501
NinemonthsendedSeptember30,2016
Restof
Corporate&
World
Eliminations
Total
79,769
579,324

5,678
5,678
79,769
5,678
585,002
211,369
64,685
196,822
26,679
90,983
(11,214)

5,678
499,174
85,828
Costsandexpenses:
Costofrevenue,includingrelatedparty,excluding
amortization
sharedservicefee
Operatingloss
3,118
38,876
40,608
42,220
11,330
(50,324)
Interestexpense
Other,net
Provisionforincometaxes
Netloss
(127)
533
406
(49,918)
1,580
(51,498)
14.Subsequentevents
OnOctober4,2016,Expediaexercisedacallrighton37ClassAsharesand1ClassAequivalent(1,200ClassB)shares,whichwereheld
byemployeesandacquiredthroughanoptionexerciseinthethirdquarterof2016.Thecallresultedinanetcashpaymentof2.3millionby
Expedia.OnOctober4,2016,wedrewdown10.0millionunderourcreditfacility,whichwethenpaiddownonNovember7,2016.On
November18,2016,theCompanygranted150ClassAequivalenttrivagoemployeeoptionawardswithacombinedfairvalueof16.5
millionwithathreeyearvestingterm.Weexpecttoincur0.6millionofexpenseasitrelatestothevestingoftheseawardsinQ42016.
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Reportofindependentregisteredpublicaccountingfirm
TheManagingDirectorsandShareholdersoftrivagoGmbH
WehaveauditedtheaccompanyingconsolidatedbalancesheetsoftrivagoGmbHandsubsidiariesasofDecember31,2015and2014,and
therelatedconsolidatedstatementsofoperations,comprehensiveincome,membersequityandcashflowsforeachofthetwoyearsinthe
periodendedDecember31,2015.ThesefinancialstatementsaretheresponsibilityoftheCompanysmanagement.Ourresponsibilityisto
expressanopiniononthesefinancialstatementsbasedonouraudits.
WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Those
standardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeof
materialmisstatement.WewerenotengagedtoperformanauditoftheCompanysinternalcontroloverfinancialreporting.Ouraudits
includedconsiderationofinternalcontroloverfinancialreportingasabasisfordesigningauditproceduresthatareappropriateinthe
circumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompanysinternalcontroloverfinancial
reporting.Accordingly,weexpressnosuchopinion.Anauditalsoincludesexamining,onatestbasis,evidencesupportingtheamountsand
disclosuresinthefinancialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,and
evaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionoftrivago
GmbHandsubsidiariesatDecember31,2015and2014,andtheconsolidatedresultsofitstheiroperationsandtheircashflowsforeachof
thetwoyearsintheperiodendedDecember31,2015,inconformitywithU.S.generallyacceptedaccountingprinciples.
/s/MarcusSenghaas
Wirtschaftsprfer
(GermanPublicAuditor)
/s/NicoleDietl
Wirtschaftsprferin
(GermanPublicAuditor)
Ernst&YoungGmbH
Wirtschaftsprfungsgesellschaft
Cologne,Germany
September8,2016
ExceptforNote16SegmentInformation,forwhichthedateisOctober14,2016
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trivagoGmbH
Consolidatedstatementsofoperations
(inthousands)
Revenue
Totalrevenue
Costsandexpenses:
Costofrevenue,includingrelatedparty,excludingamortization(1)(2)
Interestexpense
Other,net
Netloss
(1)Includessharebasedcompensationasfollows:
Costofrevenue
Sellingandmarketing
Technologyandcontent,netofcapitalizedinternalusesoftwareandwebsitedevelopmentcosts
2014
2015
209,137
298,842
100,195
194,241
309,332
493,083
1,443
286,234
15,388
6,536
30,025
(30,294)
2,946
461,219
28,693
18,065
30,030
(47,870)
(11)
(1,435)
(1,446)
(31,740)
(8,644)
(23,096)

(23,096)
(147)
(2,667)
(2,814)
(50,684)
(11,318)
(39,366)
239
(39,127)

1,052
1,207
123
238
3,360
4,545
5,986
19,927
(3)Includesrelatedpartysharedservicefeeasfollows:
(2)AmortizationofacquiredtechnologyincludedinAmortizationofintangibleassetsisasfollows:
AmortizationofinternalusesoftwareandwebsitedevelopmentcostsincludedinTechnologyand
contentisasfollows:
19,927
191
475
2,826
1,506
SeenotestotrivagoGmbHconsolidatedfinancialstatements
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trivagoGmbH
Consolidatedstatementsofcomprehensiveincome(loss)
(inthousands)
Netloss
Othercomprehensiveloss
Totalothercomprehensiveloss
2014
2015
(23,096)
(39,366)
(166)
(166)
Comprehensiveloss
Less:Comprehensivelossattributabletononcontrollinginterests
ComprehensivelossattributabletotrivagoGmbH
(23,096)

(23,096)
(39,532)
393
(39,139)
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trivagoGmbH
Consolidatedbalancesheets
(inthousands)
ASSETS
Currentassets:
Cash
Restrictedcash
Accountsreceivable,lessallowanceof251and661atDecember31,2015and2014,respectively
Accountsreceivable,relatedparty
Prepaidexpensesandothercurrentassets
TotalCurrentAssets
Otherlongtermassets
Longtermtaxreceivable
Goodwill
TOTALASSETS
LIABILITIESANDMEMBERSEQUITY
Currentliabilities:
Accountspayable
Incometaxespayable
Shorttermdebt
Membersliability
Relatedpartypayable(Note9and15)
Accruedexpensesandothercurrentliabilities
Deferredincometaxes
Otherlongtermliabilities
Longtermtaxliability
Commitmentsandcontingencies(Note14)
Redeemablenoncontrollinginterests
Membersequity:
Subscribedcapital
Reserves
Retainedearnings(Accumulateddeficit)
Totalmembersequity
TOTALLIABILITIESANDMEMBERSEQUITY
AsofDecember31,
2014
2015
6,142
501
17,150
7,884
4,731
36,408
4,007
862
1,666
219,901
487,954
750,798
12,853
936
189,909
490,360
760,255
68,438
151
1,666
57,994
5,896
2,076
26,263
256
20,000
13,377
7,129
4,984
72,009
38
701,856
52,703

(90,029)
664,568
750,798
12,860
280
631
1,039
1,165
15,975
17,556
685
19,748
23,605
4,603
66,197
48
695,871
55,529
(12)
(129,156)
622,280
760,255
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trivagoGmbH
Consolidatedstatementsofmembersequity
(inthousands)
BalanceatJanuary1,
2014
Netloss
Othercomprehensive
income(netoftax)
Sharebased
compensation
expense
BalanceatDecember
31,2014
Netloss(excludes239
ofnetloss
attributableto
redeemable
noncontrolling
interest)
Othercomprehensive
loss(netoftax)
Adjustmenttothefair
valueofredeemable
noncontrolling
interests
Issueofsubscribed
capital,options
granted
Sharebased
compensation
expense
BalanceatDecember
31,2015
Subscribed
capital
Reserves
Retainedearnings
(accumulated
deficit)
38 700,105
Accumulatedother
comprehensive
income(loss)
(66,933)
(23,096)
Contributionfrom
parent
1,751
Totalmembers
equity
51,197

684,407
(23,096)

1,506
1,506
1,751
38 701,856
(90,029)
52,703
(39,127)
(39,127)
(12)
(12)
(239)

2,826
10
2,826
(5,746)
(5,746)
(239)
664,568
10
48 695,871
(129,156)
(12)
55,529
622,280
SeenotestotrivagoGmbHconsolidatedfinancialstatements.
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trivagoGmbH
Consolidatedstatementsofcashflows
(inthousands)
Operatingactivities:
Netloss
Adjustmentstoreconcilenetlosstonetcashused:
Depreciation(propertyandequipmentandinternalusesoftwareandwebsitedevelopment)
Sharebasedcompensation(SeeNote9)
Deferredincometaxes
Foreignexchange(gain)loss
Baddebt(recovery)expense
Noncashcharge,contributionfromparent
Changesinoperatingassetsandliabilities,netofeffectsfrombusinessesacquired:
Accountsreceivable
Prepaidexpenseandotherassets
Accountspayable
Accruedexpensesandotherliabilities
Taxespayable/receivable,net
Netcash(usedin)/providedbyoperatingactivities
Investingactivities:
Acquisitionofbusiness,netofcashacquired
Capitalexpenditures,includinginternalusesoftwareandwebsitedevelopment
Netcashusedininvestingactivities
Financingactivities:
Paymentofloantomembers
Paymentofloantorelatedparty
Proceedsfromissuanceofloanfromrelatedparty
Proceedsfromissuanceofcreditfacility
Proceedsfromexerciseofmembersequityawards
Netcashprovidedbyfinancingactivities
Effectofexchangeratechangesoncash
Netincrease(decrease)incash
Cashatbeginningofyear
Cashatendofyear
Supplementalcashflowinformation:
Cashpaidforinterest
Cashpaidfortaxes
11
2,100
Noncashinvestingactivities:
Fixedassetsrelatedpayable
Capitalizationofconstructioninprocessrelatedtobuildtosuitlease
53

2014
2015
(23,096)
1,400
30,025
2,382
(9,315)
1,554
408
1,506
(10,710)
(461)
6,930
(1,866)
1,873
630
2,649
30,030
14,129
(10,444)
960
(410)
2,826
(18,540)
(121)
13,102
4,195
(25)
(1,015)
(897)
(3,726)
(4,623)
1,039

1,039
105
(2,849)
8,991
6,142
(286)
(6,224)
(6,510)
(39,366)
(7,129)
(1,039)
7,129
20,000
10
18,971
(32)
11,414
6,142
17,556
100
751
306
4,852
SeenotestotrivagoGmbHconsolidatedfinancialstatements.
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Notestoconsolidatedfinancialstatements
1.Organizationandbasisofpresentation
Descriptionofbusiness
trivagoGmbH(trivagotheCompany,us,weandour)anditssubsidiariesofferonlinemetasearchforhotelsbyfacilitating
consumerssearchforhotelaccommodation,throughonlinetravelagents(OTAs),hotelchainsandindependenthotels.Oursearchdriven
marketplace,deliveredonwebsitesandapps,providesuserswithatailoredsearchexperienceviaourproprietarymatchingalgorithms.We
employacostperclick(orCPC)pricingstructure,allowingadvertiserstocontroltheirownreturnoninvestmentandthevolumeoflead
trafficwegenerateforthem.
Basisofpresentation
During2013,Expedia,Inc.(theParentExpedia)completedthepurchaseofa63%stakeintheCompany.Inaddition,thepurchase
agreementcontainscertainput/callrightswherebyExpediamayacquireandtheminorityshareholdersoftheCompanymayselltoExpedia
upto50%and100%oftheminoritysharesoftheCompanyatfairvalueduringtwowindows,thefirstofwhichopenedinthefirstquarterof
2016andthesecondopensin2018(seeNote18SubsequentEvents).ThesefinancialstatementsreflectExpediasbasisofaccounting
duetothechangeincontrolin2013whenExpediaacquiredamajorityownershipintrivago,asweelectedtheoptiontoapplypushdown
accountingintheperiodinwhichthechangeincontroleventoccurred.
Expediaincurscertaincostsonbehalfoftrivago.Theconsolidatedfinancialstatementsoftrivagoreflecttheallocationtotrivagoofcertain
Expediacorporateexpenses(seeNote15RelatedPartiesforfurtherinformation).Werecordedallcorporateallocationchargesfrom
Expediawithinourconsolidatedstatementofincomeoperationsandasacontributionfromparentwithintheconsolidatedstatementof
membersequity.Ourmanagementbelievesthattheassumptionsunderlyingtheconsolidatedfinancialstatementsarereasonable.However,
thisfinancialinformationdoesnotnecessarilyreflectthefuturefinancialposition,resultsofoperationsandcashflowsoftrivago,nordoesit
reflectwhatthehistoricalfinancialposition,resultsofoperationsandcashflowsoftrivagowouldhavebeenhadwebeenastandalone
companyduringtheperiodspresented.
Reclassifications
Wehavereclassifiedcertainamountsrelatedtoourpriorperiodresultstoconformtoourcurrentperiodpresentation.
Seasonality
Weexperienceseasonalfluctuationsinthedemandforourservicesasaresultofseasonalpatternsintravel.Forexample,ourrevenueis
generallyhighestinthesecondandthirdquartersofeachyear.Ourrevenuetypicallydecreasesinthefourthquarter.Wegenerallyexpectto
experiencehigherprofitsinthesecondhalfoftheyearaswetypicallyhavehighermarketingexpensesinthefirsthalfoftheyearinadvance
ofhightravelseasons.Seasonalfluctuationsaffectingourrevenuealsoaffectthetimingofourcashflows.Wetypicallyreceivepaymentfor
referralswithin30daysofthereferral.Therefore,ourcashflowvariesseasonallywithaslightlagtoourrevenue,andissignificantlyaffected
bythetimingofouradvertisingspending.Thecontinuedgrowthofourofferingsincountriesandareaswhereseasonaltravelpatternsvary
mayinfluencethetypicaltrendofourseasonalpatternsinthefuture.
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2.Significantaccountingpolicies
Consolidation
Ourconsolidatedfinancialstatementsincludetheaccountsoftrivago,ourwhollyownedsubsidiaries,andentitieswecontrol.Werecord
noncontrollinginterestinourconsolidatedfinancialstatementstorecognizetheminorityownershipinterestinourconsolidatedsubsidiaries.
Noncontrollinginterestintheearningsandlossesofconsolidatedsubsidiariesrepresenttheshareofnetincomeorlossallocatedto
membersorpartnersinourconsolidatedentities,whichincludesthenoncontrollinginterestshareofnetincomeorlossfromourredeemable
noncontrollinginterestentities.
Noncontrollinginterestswithsharesredeemableattheoptionoftheminorityholdersinmyhotelshopandbase7havebeenincludedin
redeemablenoncontrollinginterests.Weclassifytheredeemablenoncontrollinginterestasamezzanineequitybelownoncurrentliabilities
inourconsolidatedfinancialstatements.SeeNote11Redeemablenoncontrollinginterestsforfurtherdiscussion.
Accountingestimates
Weuseestimatesandassumptionsinthepreparationofourconsolidatedfinancialstatementsinaccordancewithaccountingprinciples
generallyacceptedintheUnitedStates(GAAP).Ourestimatesandassumptionsaffectthereportedamountsofassetsandliabilitiesand
disclosureofcontingentassetsandliabilitiesasofthedateofourconsolidatedfinancialstatements.Theseestimatesandassumptionsalso
affectthereportedamountofnetincomeorlossduringanyperiod.Ouractualfinancialresultscoulddiffersignificantlyfromtheseestimates.
Thesignificantestimatesunderlyingourconsolidatedfinancialstatementsincluderevenuerecognitionintangibleassetsandgoodwill
redeemablenoncontrollinginterestsacquisitionpurchasepriceallocationsandsharebasedcompensation.
Revenuerecognition
Werecognizerevenuefromservicesrenderedwhenthefollowingfourrevenuerecognitioncriteriaaremet:persuasiveevidenceofan
arrangementexists,serviceshavebeenrendered,thepriceisfixedordeterminableandcollectabilityisreasonablyassured.
Revenueisgeneratedeachtimeavisitortooneofourwebsitesorappsclicksonahotelroomofferinoursearchresultsandisreferredto
oneofouradvertisers.Advertiserspayonaperreferralbasis,withtheaforementionedvisitorclickthroughbeingconsideredasingle
referral.Giventhenatureoftheindustry,itisnotunusualforreferralstobegeneratedfromautomatedscriptsdesignedtobrowseandcollect
dataonourwebsites.However,reviewprocessesareinplacetoidentifyanomaliestoensurerevenuerecognitionisappropriate.Pricingis
determinedthroughacompetitivebiddingprocesswherebyadvertisersbidontheirplacementpriorityforaspecificroomofferwithineach
roomlisting.Bidscanbeplacedasoftenasdaily,andchangesinbidsareappliedonaprospectivebasisonthefollowingday.Additionally,
aninsignificantportionofourrevenueisgeneratedthroughsubscriptionbasedservicesearnedthroughmyhotelshopandtrivagoHotel
ManagerProapplications.Thisrevenueisrecognizedratablyoverthesubscriptionperiodwithdeferredrevenuerecognizeduponreceiptof
paymentinadvanceofrevenuerecognition.
Costofrevenue
Costofrevenueconsistsofexpensesthataredirectlyorcloselycorrelatedtorevenuegeneration,includingdatacentercosts,salariesand
sharebasedcompensationforourdatacenteroperationsstaffandourcustomerserviceteamwhoaredirectlyinvolvedinrevenue
generation.ForbothyearsendedDecember31,
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2015and2014costofrevenueexcludes19.9millionofamortizationexpenseofacquiredtechnology.AsofDecember31,2015and2014
costofrevenueexcludes0.5millionand0.2millionofamortizationexpenserelatedtointernalusesoftwareandwebsitedevelopment,
respectively.
Restrictedcash
Restrictedcashprimarilyconsistsoffundsheldasguaranteesinconnectionwithcorporateleasesandfundsheldinescrowaccountsinthe
eventofdefaultoncorporatecreditcardstatements.Thecarryingvalueofrestrictedcashapproximatesitsfairvalue.
Accountsreceivable
Accountsreceivablearegenerallyduewithinthirtydaysandarerecordednetofanallowancefordoubtfulaccounts.Wedetermineour
allowancebyconsideringanumberoffactors,includingthelengthoftimetradeaccountsreceivablearepastdue,previouslosshistory,a
specificcustomersabilitytopayitsobligationstous,andtheconditionofthegeneraleconomyandindustryasawhole.
Propertyandequipment,netincludingsoftwareandwebsitecapitalization
Werecordpropertyandequipmentatcost,netofaccumulateddepreciationandamortization.Wecomputedepreciationusingthestraight
linemethodovertheestimatedusefullivesoftheassets,whichisgenerallythreetofiveyearsforcomputerequipment,capitalizedsoftware
developmentandfurnitureandotherequipment.Weamortizeleaseholdimprovementusingthestraightlinemethod,overtheshorterofthe
estimatedusefullifeoftheimprovementortheremainingtermofthelease,themajorityofwhichwillbefullyamortizedthrough2018.
Certaindirectdevelopmentcostsassociatedwithwebsiteandinternalusesoftwarearecapitalizedduringtheapplicationdevelopment
stage.Capitalizedcostsincludeexternaldirectcostsofservicesandpayrollcosts(includingsharebasedcompensation).Thepayrollcosts
areforemployeesdevotingtimetothesoftwaredevelopmentprojectsprincipallyrelatedtowebsiteandmobileappdevelopment,including
supportsystems,softwarecoding,designingsysteminterfacesandinstallationandtestingofthesoftware.Thesecostsarerecordedas
propertyandequipmentandaregenerallyamortizedoveraperiodofthreeyearsbeginningwhentheassetisreadyforuse.Costsincurred
forenhancementsthatareexpectedtoresultinadditionalfeaturesorfunctionalityarecapitalizedandamortizedovertheestimateduseful
lifeoftheenhancements,whichisgenerallyaperiodofthreeyears.Costsincurredduringthepreliminaryprojectstage,aswellas
maintenanceandtrainingcosts,areexpensedasincurred.
Leases
Weleaseofficespaceinseveralcountriesundernoncancelableleaseagreements.Wegenerallyleaseourofficefacilitiesunderoperating
leaseagreements.Werecognizerentexpenseonastraightlinebasisovertheleaseperiod.Anyleaseincentivesarerecognizedas
reductionsofrentalexpenseonastraightlinebasisoverthetermofthelease.Theleasetermbeginsonthedatewebecomelegally
obligatedfortherentpaymentsorwhenwetakepossessionoftheofficespace,whicheverisearlier.
Weestablishassetsandliabilitiesfortheestimatedconstructioncostsincurredunderleasearrangementswhereweareconsideredthe
ownerforaccountingpurposesonly,orbuildtosuitleases,totheextentthatweareinvolvedintheconstructionofstructuralimprovements
ortakeconstructionriskpriortocommencementofalease.
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InJuly2015,weenteredintoaleaseforanewcorporateheadquarters.Pursuanttothelease,theLandlordwillbuilda25,900squaremeter
officebuildinginDusseldorf,Germany.Asaresultofourinvolvementintheconstructionprojectandourresponsibilityforpayingaportionof
thecostsofnormalfinishworkandstructuralelementsofthepremises,theCompanywasdeemedforaccountingpurposestobetheowner
ofthepremisesduringtheconstructionperiodpursuanttobuildtosuitleaseaccountingguidanceunderASC840.Therefore,theCompany
recordedprojectconstructioncostsduringtheconstructionperiodincurredbythelandlordasaconstructioninprogressassetandarelated
constructionfinancingobligationonourconsolidatedbalancesheets.TheamountsthattheCompanyhaspaidorincurredfornormaltenant
improvementsandstructuralimprovementshadalsobeenrecordedtotheconstructioninprogressasset.
Wehavebifurcatedourleasepaymentspursuanttothepremisesinto:aportionthatisallocatedtothebuilding(areductiontothefinancing
obligation)andaportionthatisallocatedtothelandonwhichthebuildingwasconstructed.Theportionoftheleaseobligationsallocatedto
thelandistreatedasanoperatingleasethatcommencedinJuly2015.Wehaverecorded0.9millionoflandrentexpensefortheyear
endedDecember31,2015inconnectionwiththislease.
Businesscombinations
Weassignthevalueoftheconsiderationtransferredtoacquireabusinesstothetangibleassetsandidentifiableintangibleassetsacquired
andliabilitiesassumedonthebasisoftheirfairvaluesatthedateofacquisition.Anyexcesspurchasepriceoverthefairvalueofthenet
tangibleandintangibleassetsacquiredisallocatedtogoodwill.Whendeterminingthefairvaluesofassetsacquiredandliabilitiesassumed,
managementmakessignificantestimatesandassumptions,especiallywithrespecttointangibleassets.Criticalestimatesinvaluingcertain
intangibleassetsincludebutarenotlimitedtofutureexpectedcashflowsfromcustomerrelationshipsanddiscountrates.Managements
estimatesoffairvaluearebaseduponassumptionsbelievedtobereasonable,butwhichareinherentlyuncertainandunpredictableand,as
aresult,actualresultsmaydifferfromestimates.
Recoverabilityofgoodwillandindefinitelivedintangibleassets
Goodwillisassignedtooursinglereportingunit,whichisexpectedtobenefitfromthesynergiesofthebusinesscombinationsinwhichsuch
goodwillwasgeneratedasoftheacquisitiondate.Weassessgoodwillandindefinitelivedassets,neitherofwhichareamortized,for
impairmentannuallyasofOctober1,ormorefrequently,ifeventsandcircumstancesindicatethatanimpairmentmayhaveoccurred.Inthe
evaluationofgoodwillforimpairment,wetypicallyfirstperformaqualitativeassessmenttodeterminewhetheritismorelikelythannotthat
thefairvalueofthereportingunitislessthanthecarryingamount.Ifso,weperformaquantitativeassessmentandcomparethefairvalueof
thereportingunittothecarryingvalue.Ifthecarryingvalueofareportingunitexceedsitsfairvalue,thegoodwillofthatreportingunitis
potentiallyimpairedandweproceedtosteptwooftheimpairmentanalysis.Insteptwooftheanalysis,wewillrecordanimpairmentloss
equaltotheexcessofthecarryingvalueofthereportingunitsgoodwilloveritsimpliedfairvalueshouldsuchacircumstancearise.
Periodically,wemaychoosetoforgotheinitialqualitativeassessmentandperformquantitativeanalysistoassistinourannualevaluation.
Wegenerallybaseourmeasurementoffairvalueofoursinglereportingunitonablendedanalysisofthepresentvalueoffuturediscounted
cashflowsandmarketvaluationapproach.Thediscountedcashflowsmodelindicatesthefairvalueofthereportingunitbasedonthe
presentvalueofthecashflowsthatweexpectthereportingunittogenerateinthefuture.Oursignificantestimatesinthediscountedcash
flowsmodelinclude:ourweightedaveragecostofcapitalandlongtermrateofgrowthandprofitabilityofourbusiness.Themarket
valuationapproachindicatesthefairvalueofthebusinessbasedonacomparisonoftheCompanytocomparablepubliclytradedfirmsin
similarlinesofbusiness.Oursignificantestimatesinthemarketapproach
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modelincludeidentifyingsimilarcompanieswithcomparablebusinessfactors,suchassize,growth,profitability,riskandreturnon
investmentandassessingcomparablerevenueandoperatingincomemultiplesinestimatingthefairvalueofthereportingunit.
Webelievetheweighteduseofdiscountedcashflowsandmarketapproachisthebestmethodfordeterminingthefairvalueofourreporting
unitbecausethesearethemostcommonvaluationmethodologiesusedwithinthetravelandinternetindustriesandtheblendeduseofboth
modelscompensatesfortheinherentrisksassociatedwitheithermodelifusedonastandalonebasis.
Inourevaluationofourindefinitelivedintangibleassets,wetypicallyfirstperformaqualitativeassessmenttodeterminewhetherthefair
valueoftheindefinitelivedintangibleassetsismorelikelythannotimpaired.Ifso,weperformaquantitativeassessmentandanimpairment
chargeisrecordedfortheexcessofthecarryingvalueoftheindefinitelivedintangibleassetsoverthefairvalue.Webaseourmeasurement
ofthefairvalueofourindefinitelivedintangibleassets,whichconsistoftradename,trademarks,anddomainnamesusingtherelieffrom
royaltymethod.Thismethodassumesthatthetradenameandtrademarkshavevaluetotheextentthattheirownerisrelievedofthe
obligationtopayroyaltiesforthebenefitsreceivedfromthem.Aswithgoodwill,periodically,wemaychoosetoforgotheinitialqualitative
assessmentandperformquantitativeanalysisinourannualevaluationofindefinitelivedintangibleassets.
Recoverabilityofintangibleassetswithdefinitelivesandotherlonglivedassets
Intangibleassetswithdefinitelivesandotherlonglivedassetsarecarriedatcostandareamortizedonastraightlinebasisovertheir
estimatedusefullivesofgenerallylessthansevenyears.Wereviewthecarryingvalueoflonglivedassetsorassetgroups,including
propertyandequipmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountoftheassetsmightnotbe
recoverable.Factorsthatwouldnecessitateanimpairmentassessmentincludeasignificantadversechangeintheextentormannerin
whichanassetisused,asignificantadversechangeinlegalfactorsorthebusinessclimatethatcouldaffectthevalueoftheasset,ora
significantdeclineintheobservablemarketvalueofanasset,amongothers.Ifsuchfactsindicateapotentialimpairment,wewouldassess
therecoverabilityofanassetgroupbydeterminingifthecarryingvalueoftheassetgroupexceedsthesumoftheprojectedundiscounted
cashflowsexpectedtoresultfromtheuseandeventualdispositionoftheassetsovertheremainingeconomiclifeoftheprimaryassetinthe
assetgroup.Iftherecoverabilitytestindicatesthatthecarryingvalueoftheassetgroupisnotrecoverable,wewillestimatethefairvalueof
theassetgroupusingappropriatevaluationmethodologieswhichwouldtypicallyincludeanestimateofdiscountedcashflows.Any
impairmentwouldbemeasuredasthedifferencebetweentheassetgroupscarryingamountanditsestimatedfairvalue.
Incometaxes
Werecordincometaxesundertheliabilitymethod.Deferredtaxassetsandliabilitiesreflectourestimationofthefuturetaxconsequencesof
temporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforbookandtaxpurposes.Wedeterminedeferredincome
taxesbasedonthedifferencesinaccountingmethodsandtimingbetweenfinancialstatementandincometaxreporting.Accordingly,we
determinethedeferredtaxassetorliabilityforeachtemporarydifferencebasedontheenactedtaxratesexpectedtobeineffectwhenwe
realizetheunderlyingitemsofincomeandexpense.Weconsidermanyfactorswhenassessingthelikelihoodoffuturerealizationofour
deferredtaxassets,includingourrecentearningsexperiencebyjurisdiction,expectationsoffuturetaxableincome,andthecarryforward
periodsavailabletousfortaxreportingpurposes,aswellasotherrelevantfactors.Wemayestablishavaluationallowancetoreduce
deferredtaxassetstotheamountwebelieveismorelikelythannottoberealized.Duetoinherentcomplexitiesarisingfromthenature
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ofourbusinesses,futurechangesinincometaxlaw,taxsharingagreementsorvariancesbetweenouractualandanticipatedresultsof
operations,wemakecertainjudgmentsandestimates.Therefore,actualincometaxescouldmateriallyvaryfromtheseestimates.
Weaccountforuncertaintaxpositionsbasedonatwostepprocessofevaluatingrecognitionandmeasurementcriteria.Thefirststep
assesseswhetherthetaxpositionismorelikelythannottobesustaineduponexaminationbythetaxauthority,includingresolutionofany
appealsorlitigation,basedonthetechnicalmeritsoftheposition.Ifthetaxpositionmeetsthemorelikelythannotcriteria,theportionofthe
taxbenefitgreaterthan50%likelytoberealizeduponsettlementwiththetaxauthorityisrecognizedinthefinancialstatements.Interestand
penaltiesrelatedtouncertaintaxpositionsareclassifiedinthefinancialstatementsasacomponentofincometaxexpense.
Presentationoftaxesinthestatementsofoperations
Wepresenttaxesthatwecollectfromadvertisersandremittogovernmentauthoritiesonanetbasisinourconsolidatedstatementsof
operations.
Foreigncurrencytranslationandtransactiongainsandlosses
TheconsolidatedfinancialstatementshavebeenpreparedinEuros,thefunctionalcurrency.
CertainofouroperationsoutsideoftheEurozoneusethelocalcurrencyastheirfunctionalcurrency.Wetranslaterevenueandexpenseat
averageexchangeratesduringtheperiodandassetsandliabilitiesattheexchangeratesasoftheconsolidatedbalancesheetdatesand
includesuchforeigncurrencytranslationgainsandlossesasacomponentofothercomprehensiveincome.Duetothenatureofour
operationsandourcorporatestructure,wealsohavesubsidiariesthathavesignificanttransactionsinforeigncurrenciesotherthantheir
functionalcurrency.Werecordtransactiongainsandlossesinourconsolidatedstatementsofoperationsrelatedtotherecurring
remeasurementandsettlementofsuchtransactions.
Advertisingexpense
Weincuradvertisingexpenseconsistingofofflinecosts,includingtelevisionandradioadvertising,aswellasonlineadvertisingexpenseto
promoteourbrands.Asignificantportionoftrafficfromusersisdirectedtoourwebsitesthroughourparticipationindisplayadvertising
campaignsonsearchengines,advertisingnetworks,affiliatewebsitesandsocialnetworkingsites.Weconsidertrafficacquisitioncoststobe
indirectadvertisingfees.Weexpensetheproductioncostsassociatedwithadvertisementsintheperiodinwhichtheadvertisementfirst
takesplace.Weexpensethecostsofcommunicatingtheadvertisement(e.g.,televisionairtime)asincurredeachtimetheadvertisementis
shown.Thesecostsareincludedinsellingandmarketingexpenseinourconsolidatedstatementofoperations.Fortheyearsended
December31,2015and2014,ouradvertisingexpensewas432.2millionand271.4million,respectively.AsofDecember31,2015and
2014,wehad3.8millionand4.5million,respectively,ofprepaidmarketingexpensesincludedinprepaidexpensesandothercurrent
assets.
wedonothaveatradinghistoryforourClassAshares,theexpectedsharepricevolatilityforourClassAshareswasestimatedbytaking
theaveragehistoricpricevolatilityforindustrypeersbasedondailypriceobservationsoveraperiodcommensuratetotheexpectedterm.
Webaseourexpectedtermassumptionsonthetermsandconditionsoftheemployeeshare
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optionagreementsscheduledexercisewindows.Additionally,thesharepriceassumptionusedinthemodelisbaseduponavaluationof
trivagossharesasofthegrantdateutilizingablendedanalysisofthepresentvalueoffuturediscountedcashflowsandamarketvaluation
approach.Weamortizethefairvaluetotheextenttheawardsqualifyforequitytreatment,netofestimatedforfeitures,overthevestingterm
onastraightlinebasis.Themajorityofourshareoptionsvestbetweenoneandthreeyearsandhavecontractualtermsthatalignwith
prescribedliquidationwindows.
riskandrewardsofstockownershipforareasonableperiodoftime.Weremeasuretheseinstrumentsatfairvalueattheendofeach
awards,andsubsequenteventsarenotindicativeofthereasonablenessofouroriginalestimatesoffairvalue.Indeterminingtheestimated
forfeitureratesforsharebasedawards,weconsidertheactualnumberofsharebasedawardsthathavebeenforfeitedtodateaswellas
thoseexpectedtobeforfeitedinthefuture.
Fairvaluerecognition,measurementanddisclosure
Thecarryingamountsofcashandrestrictedcashreportedonourconsolidatedbalancesheetsapproximatefairvalueaswemaintainthem
withvarioushighqualityfinancialinstitutions.Theaccountsreceivableareshortterminnatureandaregenerallysettledshortlyafterthe
sale.
Wedisclosethefairvalueofourfinancialinstrumentsbasedonthefairvaluehierarchyusingthefollowingthreecategories:
Level1Valuationsbasedonquotedpricesforidenticalassetsandliabilitiesinactivemarkets.
Level2ValuationsbasedonobservableinputsotherthanquotedpricesincludedinLevel1,suchasquotedpricesforsimilarassets
andliabilitiesinactivemarkets,quotedpricesforidenticalorsimilarassetsandliabilitiesinmarketsthatarenotactive,orotherinputs
thatareobservableorcanbecorroboratedbyobservablemarketdata.
Level3ValuationsbasedonunobservableinputsreflectingtheCompanysownassumptions,consistentwithreasonablyavailable
assumptionsmadebyothermarketparticipants.Thesevaluationsrequiresignificantjudgment.
Certainrisksandconcentrationofcreditrisk
Ourbusinessissubjecttocertainrisksandconcentrationsincludingdependenceonrelationshipswithadvertisers,dependenceonthird
depositorsholdingtheCompanyscashandcustomerswithsignificantaccountsreceivablebalances.
Ourcustomerbaseincludesprimarilyonlinetravelagenciesandhoteliers.Weperformongoingcreditevaluationsofourcustomersand
maintainallowancesforpotentialcreditlosses.Wegenerallydonotrequirecollateralorothersecurityfromourcustomers.Expedia,our
majorityshareholder,anditsaffiliatesrepresent39%and32%ofourrevenuefortheyearsendedDecember31,2015and2014,
respectively,and55%and31%oftotalaccountsreceivableasofDecember31,2015and2014,respectively.Priceline.comanditsaffiliates
represent27%and28%ofrevenuesfortheyearsendedDecember31,2015and2014and21%and27%oftotalaccountsreceivableasof
December31,2015and2014,respectively.
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Contingentliabilities
Wehavelegalmattersoutstanding,asdiscussedfurtherinNote14CommitmentsandContingencies.Periodically,wereviewthestatusof
allsignificantoutstandingmatterstoassessthepotentialfinancialexposure.When(i)itisprobablethatanassethasbeenimpairedora
liabilityhasbeenincurredand(ii)theamountofthelosscanbereasonablyestimated,werecordtheestimatedlossinourconsolidated
statementsofoperations.Weprovidedisclosureinthenotestotheconsolidatedfinancialstatementsforlosscontingenciesthatdonotmeet
bothoftheseconditionsifthereisareasonablepossibilitythatalossmayhavebeenincurredthatwouldbematerialtothefinancial
statements.Significantjudgmentisrequiredtodeterminetheprobabilitythataliabilityhasbeenincurredandwhethersuchliabilityis
reasonablyestimable.Webaseaccrualsmadeonthebestinformationavailableatthetimewhichcanbehighlysubjective.Thefinal
outcomeofthesematterscouldvarysignificantlyfromtheamountsincludedintheaccompanyingconsolidatedfinancialstatements.See
Note14CommitmentsandContingencies.
Adoptionofnewaccountingpronouncements
InNovember2015,theFASBissuedanASUthatsimplifiedthepresentationofdeferredtaxesbyrequiringalldeferredtaxassetsand
liabilitiestobeclassifiedasnoncurrentonthebalancesheet.Underthepreviouspractice,therequirementwastoseparatedeferredtaxes
intocurrentandnoncurrentamountsonthebalancesheet.Thenewstandarddoesnotaffecttherequirementtooffsetdeferredtaxassets
andliabilitiesforeachtaxpayingcomponentwithinataxjurisdiction.Weelectedtoearlyadoptforthecurrentreportingperiodending
December31,2015onaretrospectivebasis.Otherthantherevisedbalancesheetpresentationofdeferredincometaxassetsandliabilities,
theadoptionofthisstandarddidnothaveaneffectonourconsolidatedfinancialstatements.
Recentaccountingpoliciesnotyetadopted
InMay2014,theFASBissuedanASUamendingrevenuerecognitionguidanceandrequiringmoredetaileddisclosurestoenableusersof
financialstatementstounderstandthenature,amount,timing,anduncertaintyofrevenueandcashflowsarisingfromcontractswith
customers.InAugust2015,theFASBissuedanASUdeferringtheeffectivedateoftherevenuestandardsoitwouldbeeffectiveforannual
andinterimreportingperiodsbeginningafterDecember15,2017,withearlyadoptionprohibitedforaccountingperiodsbeginningbefore
December15,2016.Weareintheprocessofevaluatingtheimpactoftheadoptionofthisnewguidanceonourconsolidatedfinancial
statements.
InJanuary2016,theFASBissuednewguidancerelatedtoaccountingforequityinvestments,financialliabilitiesunderthefairvalueoption,
andthepresentationanddisclosurerequirementsforfinancialinstruments.Inaddition,theFASBclarifiedguidancerelatedtothevaluation
allowanceassessmentwhenrecognizingdeferredtaxassetsresultingfromunrealizedlossesonavailableforsaledebtsecurities.Thenew
standardiseffectiveforannualperiods,andinterimperiodswithinthoseannualperiods,beginningafterDecember15,2017.Weareinthe
processofevaluatingtheimpactofadoptingthisnewguidanceonourconsolidatedfinancialstatements.
InFebruary2016,theFASBissuednewguidancerelatedtoaccountingandreportingguidelinesforleasingarrangements.Thenew
guidancerequiresentitiesthatleaseassetstorecognizeassetsandliabilitiesonthebalancesheetrelatedtotherightsandobligations
createdbythoseleasesregardlessofwhethertheyareclassifiedasfinanceoroperatingleases.Consistentwithcurrentguidance,the
recognition,measurement,andpresentationofexpensesandcashflowsarisingfromaleaseprimarilywilldependonitsclassificationasa
financeoroperatinglease.Theguidancealsorequiresnewdisclosurestohelpfinancialstatementusersbetterunderstandtheamount,
timinganduncertaintyofcashflowsarisingfromleases.Thisguidanceiseffectivefor
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annualandinterimreportingperiodsbeginningafterDecember15,2018.Earlyadoptionispermittedandshouldbeappliedusingamodified
retrospectiveapproach.Weareintheprocessofevaluatingtheimpactofadoptingthisnewguidanceonourconsolidatedfinancial
statements.
InMarch2016,theFASBissuednewguidancerelatedtoaccountingforsharebasedpayments.Theupdatedguidancechangeshow
companiesaccountforcertainaspectsofsharebasedpaymentsawardstoemployees,includingtheaccountingforincometaxes,
forfeitures,andstatutorytaxwithholdingrequirements,aswellasclassificationinthestatementofcashflows.Theguidanceiseffectivefor
annualandinterimreportingperiodsbeginningafterDecember15,2016,withearlyadoptionpermitted.Weareintheprocessofevaluating
theimpactofadoptingthisnewguidanceonourconsolidatedfinancialstatements.
InAugust2016,theFASBissuednewguidanceintendedtoreducediversityinpracticeasitrelatestohowcertaintransactionsareclassified
inthestatementofcashflows,aspreviousguidancewaseitheromittedorunclear.Thenewstandardiseffectiveforannualperiods,and
interimperiodswithinthoseannualperiods,beginningafterDecember15,2017.Weareintheprocessofevaluatingtheimpactofadopting
thisnewguidanceonourconsolidatedfinancialstatements.
3.Acquisitions
OnAugust5,2015,wecompletedtheacquisitionofa52.3%equityinterestinbase7booking.comSarl(base7),acloudbasedproperty
managementserviceprovider,fortotalpurchaseconsiderationof2.1millionincash.TheacquisitionprovidesusaccesstotheCompanys
workforceandtheknowhowregardingbase7sallinonepropertymanagementsystemwhichcreatesopportunitytoenhancetrivagos
directmarketing.
OnJuly16,2015,wecompletedtheacquisitionofa61.3%equityinterestinmyhotelshopGmbH(myhotelshop),amarketingmanager,for
totalpurchaseconsiderationof0.6millionconsistingofcashandthesettlementofpreexistingdebtattheclosingoftheacquisition.The
acquisitionprovidestrivagodirectrelationshipswithindependenthotelsthroughthemyhotelshopportal.
Theacquisitionsofbase7andmyhotelshopprovideustheopportunitytoenhanceourstrategicmarketingcapabilitiesasweintendto
integratetheworkforceandindependenthotelrelationshipsacquiredwithoursinordertodeliveranoverallbettercustomerexperienceto
ourcustomerbase.
OnDecember19,2014,wecompletedtheacquisitionofa100%equityinterestinRheinfabrik,foratotalpurchaseconsiderationof1.0
millionincash.TheacquisitionprovidesusatalentbaseofemployeesskilledintheAndroidandiOSappdevelopment.
Thepurchasepricefromouracquisitionswasallocatedtothefairvalueofassetsacquiredandliabilitiesassumedasfollows:
(inthousands)
Goodwill
Identifiableintangibleassets:
Netassetsacquired(1)
Totalpurchaseconsideration
Yearended
December31,
2014
2015
859 2,583

180

1,039
38
2,224
(2,230)
2,615
(1) Includescashacquiredof2.4millionand0.1millionin2015and2014,respectively.
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Theidentifiableintangibleassetrelatestothecustomerrelationshipsacquiredaspartofthemyhotelshopacquisition.Thefairvaluewas
estimatedusingthemultiperiodexcessearningsmethodoftheincomeapproach(Level3onthefairvaluehierarchy).Underthismethod,
anintangibleassetsfairvalueisequaltothepresentvalueoftheaftertaxcashflows(excessearnings)attributablesolelytotheintangible
assetoveritsremainingusefullife.Tocalculatefairvalue,weestimatedthepresentvalueofcashflowsdiscountedatratescommensurate
withtheinherentrisksassociatedwitheachtypeofasset.Webelievethatthelevelandtimingofcashflowsappropriatelyreflectmarket
participantassumptions.
Thegoodwillof2.6millionand0.9millionforacquisitionsintheyearsendedDecember31,2015and2014,respectively,isprimarily
attributabletoassembledworkforceandoperatingsynergies.Thegoodwillhasbeenallocatedtoouroneoperatingsegmentandisnot
expectedtobedeductiblefortaxpurposes.
Thefairvalueofthenoncontrollinginterestwasestimatedtobe2.2millionatthetimeofacquisition.Inaddition,thepurchaseagreementof
myhotelshopandbase7eachcontaincertainput/callrightswherebywemayacquire,andtheminorityshareholdersmayselltous,the
minoritysharesofthecompanyatfairvaluebeginningin2018.Asthenoncontrollinginterestisredeemableattheoptionoftheminority
holders,weclassifiedthebalanceasredeemablenoncontrollinginterestwithfuturechangesinthefairvalueabovetheinitialbasisrecorded
aschargesorcreditstoretainedearnings(oradditionalpaidincapitalinabsenceofretainedearnings).
Acquisitionrelatedcostsof0.8millionand0.2millionhavebeenrecognizedinthestatementofoperationsasgeneralandadministrative
expensesfortheyearsendedDecember31,2015and2014,respectively.
Theacquiredcompanieshavebeenconsolidatedintoourfinancialstatementsontheacquisitiondate.Wehaverecognized1.4millionin
revenueand0.5millioninoperatinglossesfortheyearendedDecember31,2015forbase7andmyhotelshop.Revenueandoperatingloss
recognizedin2014forRheinfabrikisnotsignificant.
CombinedProformaInformation
Supplementalinformationonanunauditedcombinedproformabasis,asiftheacquisitionshadbeenconsummatedonJanuary1,2014,is
presentedasfollows:
2014
2015
311,076
494,387
(22,973)
(39,359)
(inthousands)
Revenue
Netloss
4.Fairvaluemeasurement
TheredeemablenoncontrollinginterestismeasuredatfairvalueonarecurringbasisasofDecember31,2015andclassifiedusingthefair
valuehierarchyinthetablebelow:
(inthousands)
Put/calloption
2,076
2,076
2,076
2,076
Total
Level1
AsofDecember31,2015
Level2
Level3
SeeNote11Redeemablenoncontrollinginterestsforfurtherinformationonthefairvalueoftheput/calloptionclassifiedasLevel3.Asof
December31,2015,thecarryingvalueofthecreditfacilityapproximatesfairvalue.FortheyearsendedDecember31,2015and2014we
hadnofinancialassetsclassifiedasLevel2or3.SeeNote2Significantaccountingpoliciesformoreinformation.
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5.Propertyandequipment,net
(inthousands)
Capitalizedsoftwareandsoftwaredevelopmentcosts
Computerequipment
Furnitureandfixtures
Officeequipment
Leaseholdimprovements
Subtotal
Less:accumulateddepreciation
Constructioninprocess
AsofDecember
31,
2014
2015
2,221 4,517
2,561 5,186
1,057 1,963
284
394
249
964
6,372 13,024
2,365 5,024
4,853
4,007 12,853
AsofDecember31,2015and2014,ourinternallydevelopedcapitalizedsoftwaredevelopmentcosts,netofaccumulatedamortization,were
1.9millionand0.9million,respectively.FortheyearsendedDecember31,2015and2014,werecordedamortizationofcapitalized
softwaredevelopmentcostsof0.5millionand0.2million,respectively,whichisincludedintechnologyandcontentexpenseswithinthe
consolidatedstatementsofoperations.
InJune2015,wesignedacontracttobuildournewfuturecorporateheadquartersinDusseldorf,Germany.TheCompanywasdeemedto
betheownerofthepremisesduringtheconstructionperiodunderbuildtosuitleaseaccountingguidanceunderASC840.Therefore,a
constructioninprogressassetandarelatedconstructionfinancingobligationwererecordedonourconsolidatedbalancesheets.The
buildingassetsareincludedinconstructioninprocessandwillbegindepreciatingwhenthecostsincurredrelatedtothebuildoutofthe
headquartersarecompleteandthenormaltenantimprovementsarereadyfortheirintendeduse,whichisexpectedtobein2018.
6.Goodwillandintangibleassets,net
ThefollowingtablepresentsourgoodwillandintangibleassetsasofDecember31,2015and2014:
(inthousands)
Goodwill
Intangibleassetswithdefinitelives,net
Intangibleassetswithindefinitelives
Total
AsofDecember31,
2014
2015
490,360
487,954
50,401
20,409
169,500
169,500
680,269
707,855
ImpairmentAssessments
AsofDecember31,2015and2014,wehadnoaccumulatedimpairmentlossesofgoodwillorindefinitelivedintangibleassets.
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Goodwill
Thefollowingtablepresentsthechangesingoodwill:
(inthousands)
BalanceasofJanuary1,2014
Additions
BalanceasofDecember31,2014
Additions
Foreignexchangetranslation
Goodwill
487,095
859
487,954
2,583
(177)
490,360
FortheyearsendedDecember31,2015and2014,theadditionstogoodwillrelatetoouracquisitionsasdescribedinNote3Acquisitions.
IndefinitelivedIntangibleAssets
Ourindefinitelivedintangibleassetsrelateprincipallytotradenames,trademarksanddomainnames.
IntangibleAssetswithDefiniteLives
ThefollowingtablepresentsthecomponentsofourintangibleassetswithdefinitelivesasofDecember31,2015and2014:
(inthousands)
Partnerrelationships
Technology
Noncompeteagreement
Total
Cost

34,220
59,780
10,800
104,800
AsofDecember31,2014
(Accumulated
amortization)
Net
(15,500) 18,720
(36,104) 23,676
(2,795) 8,005
(54,399) 50,401
Cost
38
34,220
59,780
10,800
104,838
AsofDecember31,2015
(Accumulated
amortization)
Net
(5)
33
(24,055) 10,165
(56,030) 3,750
(4,339) 6,461
(84,429) 20,409
Amortizationexpensewas30.0millionforeachoftheyearsendedDecember31,2015andDecember31,2014.Theestimatedfuture
amortizationexpenserelatedtointangibleassetswithdefinitelivesasofDecember31,2015,assumingnosubsequentimpairmentofthe
underlyingassets,isasfollows:
(inthousands)
2016
2017
2018
2019
2020
Total
Amortization
13,857
3,163
1,553
1,546
290
20,409
7.Debtcreditfacility
Wemaintaina50.0millionuncommittedcreditfacilityataninterestrateofLIBOR+1%perannum,whichisguaranteedbyExpedia,Inc.,
thatmaybeterminatedatanytimebythelender.AsofDecember31,2015,wehad
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20.0millioninborrowingsoutstandingontheconsolidatedbalancesheetclassifiedasashorttermdebtbasedonthelendersabilityto
terminatethefacilityatanytime.WehadnoamountsdrawnunderthecreditfacilityasofDecember31,2014.
8.Employeebenefitplans
Fordefinedcontributionplans,trivagopayscontributionstopubliclyorprivatelyadministeredpensioninsuranceplansonamandatory,
contractualorvoluntarybasis.Wehavenofurtherpaymentobligationsoncethecontributionshavebeenpaid.Thecontributionsare
recognizedasemployeebenefitexpensewhentheyaredue.Theamountofexpenserecognizedfordefinedcontributionpensionplanswas
notmaterialfortheyearsendedDecember31,2015and2014.
9.Sharebasedawardsandotherequityinstruments
Optionissuance
InconnectionwiththecontrollinginterestacquisitionoftrivagobyExpediain2013,certainoutstandingtrivagoemployeeoptionsasofthe
acquisitiondatewerereplacedwithnewtrivagoemployeeoptionawardsexercisableintotrivagoClassAshares.Thereplacementawards
wereexchangedatacquisitiondatefairvalueandmaintainedtheiroriginalservicebasedvestingscheduleandstrikepriceof1.The
originalservicebasedvestingperiodfortheseawardsarebetweenoneandthreeyears.Theoptionsalsocontainedconditionswhich
allowedholderstoputunderlyingsharestoExpedia(andforwhichExpediaInc.cancall)duringprescribedliquiditywindowsin2016and
2018,howeverholdersarerequiredtoexerciseoptionsandholdunderlyingsharesforareasonableperiodoftimepriortoliquidationin
ordertoparticipateintherisksandrewardsofequityownership.Ofthe887optionawardsoutstandingasJanuary1,2014,858option
awardswerereplacedatthetimeofExpediasacquisitionofacontrollinginterestandtheremainingwereadditionalgrantsin2013which
containedsimilarprovisionsasthereplacementawards.
77and180ClassAemployeeshareoptionsweregrantedin2015and2014,respectively.Additionally,62,178ClassBemployeeshare
optionsweregrantedin2015whichhaveeconomicandvotingrightsthatare1/1,000ofaClassAoption.ClassAandClassBare
presentedasthesameclassofsharesandClassBoptionawardsarepresentedintermsofClassAequivalents.Themajorityofthe
employeeshareoptionsgrantedin2015and2014hadstrikepricesof1andtheremainingweregrantedwithstrikepriceswhich
approximatedthe2013acquisitiondatefairvalueoftrivagoshares.Alloptionawardsgrantedin2014and2015containservicebased
vestingprovisionsbetweentwoandthreeyears.Thesharessubscribedforunderlyingthegrantsin2015and2014areeligibletoparticipate
inprescribedliquidityeventsoriginallyscheduledtooccurin2016,2018and2020.Optionsgrantedwithexercisepricesinexcessof1are
notexpectedtoparticipateintherisksandrewardsofownershipforareasonableperiodoftimeandarethereforeaccountedforasliability
awards.
Inthethirdquarterof2015,484ClassAequivalenttrivagoemployeeoptionawardswereexercisedfornominalproceeds.Theunderlying
shareswereheldbyemployeesinordertoparticipateinthe2016liquiditywindow.SeeNote18Subsequentevents.Uponexerciseof
theseoptions,trivagopaidemployeespersonaltaxliabilityrelatedtotheoptionexercisecollateralizedbytheunderlyingsharesandtobe
repaidbyemployeesfrom2016liquidationproceeds.Astheproceedsof7.1millionwerefundedbyExpedia,trivagorecognizedarelated
partypayableforthisamountwhichwillberepaidtoExpediain2016atthetimeoftheliquidation.trivagosextensionofthisnonrecourse
loantoemployeestriggeredanaccountingmodificationandchangedtheclassificationoftheawardsfromequitytoliabilityaccounting
treatment,resultinginaonetimemodificationchargeof7.3millionandsubsequentliabilityaccountingtreatmentrequiringremeasurement
tofairvalueateachreportingperioduntilsettlementin2016.Theshareholderloanreceivableisnettedwithinthemembersliabilitybalance
whichreflectsthevalueoftheliabilityawards,netoftheloan.
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trivagooptionplan
Wemaygrantshareoptionsandothersharebasedawardstomanagementboardandsupervisoryboardmembers,officers,employeesand
consultants.Weissuenewsharestosatisfytheexerciseorreleaseofsharebasedawards.
Thefollowingtablepresentsasummaryofourshareoptionactivity:
AsofDecember31,2015
BalanceasofJanuary1,2014
Granted
Granted
Exercised
ExercisableasofDecember31,2015
VestedandexpectedtovestafterDecember31,2015
Options
Weighted
average
exercise
price
887
180
1,067
139
484
722
495
722
1
9,974
1,683
3,871
1
3,239
1,197
3,239
Remaining
contractual
life
(Inyears)
Aggregate
intrinsic
value
1.97
1.84
1.97
36,187
39,263
36,187
Asdiscussedabove,theoptionslegallyexercisedin2015weresubjecttoanaccountingmodificationthatchangedtheirclassificationfrom
equitytoliabilityawards.TheseawardsremainsubjecttovariableaccountingtreatmentthroughtheirsettlementdateinJune2016.Thetotal
intrinsicvalueofshareoptionsexercisedwas16.2millionfortheyearendedDecember31,2015.Therewerenoexercisesin2014.
OftheoutstandingoptionsatDecember31,2015,130ClassAand7ClassBoptions(intermsofClassAequivalentsoptions)aresubjectto
liabilityaccounting.AsofDecember31,2014,100ClassAoptionawardsaresubjecttoliabilityaccounting.
DuringthetwoyearsendedDecember31,2015and2014,weawardedshareoptionsasouronlyformofsharebasedcompensation.The
fairvalueofshareoptionsgrantedduringtheyearsendedDecember31,2015and2014wereestimatedatthedateofgrantusingtheBlack
Scholesoptionpricingmodel,assumingthefollowingweightedaverageassumptions:
Riskfreeinterestrate
Expectedvolatility
Expectedlife(inyears)
Dividendyield
Weightedaverageestimatedfairvalueofoptionsgrantedduringtheyear
2014
2015
1.31%
1.31%
46%
46%
2.98
1.82
0%
0%
22,689
29,496
In2015and2014,werecognizedtotalsharebasedcompensationexpenseof14.1millionand2.4million,respectfully.Thetotalincome
taxbenefitrelatedtosharebasedcompensationexpensewas0and0for2015and2014.Additionally,103thousandand8thousandof
sharebasedcompensationcostwascapitalizedin2015and2014aspartofsoftwaredevelopmentcosts.
CashreceivedfromsharebasedawardexercisesfortheyearsendedDecember31,2015and2014was10thousandand0,respectfully.
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AsofDecember31,2015,therewasapproximately3.9millionofunrecognizedsharebasedcompensationexpense,netofestimated
forfeitures,whichareestimatedtobenil,relatedtounvestedsharebasedawardssubjecttoequitytreatment,whichisexpectedtobe
recognizedinexpenseoveraweightedaverageperiodof2.2years.
10.Incometaxes
Thefollowingtablesummarizesourincometaxexpense/(benefit):
2014
2015
(inthousands)
Currentincometaxexpense:
Germany
Othercountries
Currentincometaxexpense
Deferredincometax(benefit)expense:
Germany
Othercountries
Deferredincometax(benefit)expense:
Incometaxexpense(benefit)
628
43
671
(1,032)
158
(874)
(9,315)

(9,315)
(8,644)
(10,444)
(10,444)
(11,318)
ReconciliationofGermanstatutoryincometaxratetoeffectiveincometaxrate
Thefollowingtablesummarizesourincome(loss)beforeincometaxesallocatedtoGermanyandtoothercountries:
(inthousands)
2014
2015
Germany
Othercountries
(32,033)
293
(31,740)
(50,446)
(238)
(50,684)
AreconciliationofamountscomputedbyapplyingtheGermanstatutoryincometaxratetoincomefromcontinuingoperationsbeforeincome
taxestototalincometaxexpense(benefit)isasfollows:
(inthousands)
2014
2015
IncometaxexpenseatGermantaxrate(31.23%)
Foreignratedifferential
Expectedtaxexpense(benefit)
Taxeffectfrom:
Nondeductiblesharebasedcompensation
Nondeductiblecorporatecosts
Changesinuncertaintaxpositions
Otherpermanentdifferences
Incometaxexpense(benefit)
(31,740)
(9,912)
(11)
(9,923)
(50,684)
(15,829)
34
(15,795)
744
470

65
(8,644)
4,409
882
(1,666)
852
(11,318)
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Oureffectivetaxratewas22.3%in2015and27.2%in2014.Thisismainlyduetonondeductiblesharebasedcompensationof(pretax)
14.1millionin2015and2.4millionin2014.Furthermore,corporatecostswerepusheddownfromExpedia(pretax2.8millionfor2015
and1.5millionfor2014),whicharenondeductiblefortaxpurposes.
Uncertaintaxpositions
Areconciliationofthebeginningandendingamountofgrossunrecognizedtaxbenefitsisasfollows:
(inthousands)
AsofDecember31,
2014
2015
Balance,beginningofyear
Reductionsduetolapsedstatuteoflimitationsduringcurrentyear
Interestandpenalties
Balance,endofyear
1,545
121
1,666
1,666
(1,666)
In2013,anuncertaintaxpositionwasprovidedforrelatedtothedeductibilityofcertaincompensationpaymentsin2010and2011.In2015,
ataxauditwasfinalizedfortheyears2009throughto2012.Thisresultedinafullreleaseoftheuncertaintaxposition.
Deferredincometaxes
InNovember2015,theFASBissuedAccountingStandardsUpdate201517.Tosimplifythepresentationofdeferredincometaxes,the
amendmentsinASU201517requirethatdeferredtaxliabilitiesandassetsbeclassifiedasnoncurrentinaclassifiedstatementoffinancial
position.TheCompanyearlyadoptedASU201517asofDecember31,2015andappliedthestandardretrospectivelytoalldeferredtax
liabilitiesandassetsinallperiodspresented.
TheclassificationofdeferredtaxassetsandliabilitiespreadoptionofASU201517wouldhavebeenasfollows:
(inthousands)
Currentdeferredtaxassets
Noncurrentdeferredtaxassets
Currentdeferredtaxliabilities
Noncurrentdeferredtaxliabilities
Deferredtaxasset/(liability)
AsofDecember31,
2014
2015
249
1,277
68,687
59,271
(68,438)
(57,994)
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AsofDecember31,2015and2014,thesignificantcomponentsofourdeferredtaxassetsanddeferredtaxliabilitieswereasfollows:
AsofDecember31,
2014
2015
(inthousands)
Deferredtaxassets:
Prepaidexpenseandothercurrentassets
Accountspayable,other
Netoperatinglossandtaxcreditcarryforwards
Other
Totaldeferredtaxassets
Lessvaluationallowance
Netdeferredtaxassets
Deferredtaxliabilities:
Propertyandequipment
Other
Totaldeferredtaxliabilities
Netdeferredtaxasset/(liability)
81

440
521

521
683
456
110
750
1,998
(98)
1,900
68,664
226
29
68,919
(68,398)
59,301
594
59,894
(57,994)
AsofDecember31,2015,wehadnetoperatinglosscarryforwards(NOLs)ofapproximately0.4million(0asofDecember31,2014).
TheseNOLsarerelatedtomyhotelshop,whichwasacquiredin2015andhadexistingNOLs.TheseNOLsmaybecarriedforward
indefinitely.However,ifcertainsubstantialchangesintheentitysownershipoccur,therecouldbealimitationontheamountofthe
carryforward(s)thatcouldbeutilized.
Wehaveavaluationallowance0.1millionofasofDecember31,2015(novaluationallowanceasofDecember31,2014),resultinginanet
changeof0.1million.ThevaluationallowancerelatesfullytothemyhotelshopNOLs.
Theamountofthedeferredtaxassetconsideredrealizable,however,couldbeadjustedifestimatesoffuturetaxableincomeduringthe
carryforwardperiodchange,orifobjectivenegativeevidenceintheformofcumulativelossesisnolongerpresentandadditionalweightmay
begiventosubjectiveevidencesuchasourprojectionsforgrowth.
Thetotalcumulativeamountofundistributedearningsrelatedtoinvestmentsincertainforeignsubsidiarieswheretheforeignsubsidiaryhas
orwillinvestundistributedearningsindefinitelywasinsignificant(below0.1million)asofDecember31,2015andthereforewehavenot
providedfordeferredincometaxesonthistaxabletemporarydifference.Intheeventwedistributesuchearningsintheformofdividendsor
otherwise,thesewouldbetaxexemptforallinvestmentslocatedinEurope.Anycapitalgainsonthesaleofparticipationswouldbe95%
exemptunderGermantaxlaw.
TheCompanyissubjecttoauditbyfederal,state,localandforeignincometaxauthorities.TheGermantaxauthoritieshavefinalizedtheir
taxauditoftrivagosGermanfederalincometaxreturnsfortheperiodsendedDecember31,2009throughDecember312012andno
materialcorrectionswereidentified.Currently,therearenotaxreturnsfortrivagoorsubsidiariesunderaudit.AsofDecember31,2015,for
trivagoanditssubsidiaries,statuteoflimitationsfortaxyears2013through2015remainopentoexaminationbyGermantaxauthorities.
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11.Redeemablenoncontrollinginterests
Noncontrollinginterestexistsinentitiesmajorityownedbyus,whicharecarriedatfairvalueasthenoncontrollinginterestscontaincertain
rights,wherebywemayacquireandtheminorityshareholdersmayselltoustheadditionalsharesofthecompanies.Areconciliationof
redeemablenoncontrollinginterestfortheyearendedDecember31,2015isasfollows:
(inthousands)
Balance,beginningoftheperiod
Acquisitionofredeemablenoncontrollinginterest
Fairvalueadjustmentsthroughmembersequity
Currencytranslationadjustmentsandother
Balance,endofperiod
Asof
December31,2015
2,230
(239)
239
(154)
2,076
WehadnoredeemablenoncontrollinginterestfortheyearendedDecember31,2014.
Forinformationonredeemablenoncontrollinginterestacquiredduring2015,seeNote3Acquisitions.
Thefairvalueoftheredeemablenoncontrollinginteresthasbeenadjustedby239thousandforthenetlossattributabletononcontrolling
interest.Afairvalueadjustmenthasbeenrecordedof239thousandtoreflectthefairvalueofthenoncontrollinginterestfortheyearended
December31,2015.
12.Membersequity
Subscribedcapital
TheshareholdersandtheirsharesinthesubscribedcapitalisasfollowsasofDecember31,2015,infullEuros:
AShares:
ExpediaLodgingPartnerServicesS.r.l.,Geneva,Switzerland
RolfSchrmgens,Dsseldorf
PeterVinnemeier,Dsseldorf
MalteSiewert,Dsseldorf
Employees
BShares:
Employees
24,036
7,337
5,489
1,273
475
50%
15
11
9,164
47,774
20
100%
SeeNote9Sharebasedawardsandotherequityinstrumentsforadescriptionoftheexerciseofemployeeshareoptions.
Reserves
Reservesprimarilyrepresentstheeffectsofpushdownaccountingappliedduetothechangeincontrolin2013.SeeNote1Organization
andbasisofpresentation.
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Accumulatedothercomprehensiveincomerepresentsforeigncurrencytranslationadjustmentsandthechangeyearoveryearisprimarily
duetotheacquisitionofbase7,aSwitzerlandbasedcompany.SeeNote3AcquisitionsandNote11Redeemablenoncontrolling
interests.
ThebeginningcontributionfromparentbalancerepresentsthepushdownofsharebasedcompensationexpensefromExpedia.Thechange
yearoveryearisaresultoftheExpediacorporateexpensesallocatedtotrivago.SeeNote1Organizationandbasisofpresentation.
13.Other,net
FortheyearsendedDecember31,2015and2014,Other,netweremadeupofthefollowing:(i)foreignexchangesrategains(losses)due
totherevaluationofforeigncurrencyreceivablesandpayables,(ii)thereversalofanindemnificationassetrelatedtoanuncertaintax
positionandtherelatedinterestSeeNote10Incometaxes.Thecomponentsareasfollows:
(inthousands)
Foreignexchangerategains(losses),net
Indemnificationassetandrelatedinterest
Total
2014
2015
(1,558)
(1,006)
123
(1,661)
(1,435)
(2,667)
14.Commitmentsandcontingencies
Creditfacility,purchaseobligationsandguarantees
Wehavecommitmentsandobligationsthatincludeacreditfacilityandpurchasecommitments,whichcouldpotentiallyrequireourpayment
intheeventofdemandsbythirdpartiesorcontingentevents.CommitmentsandobligationsasofDecember31,2015wereasfollows:
(inthousands)
Creditfacility
Purchaseobligations
Total
20,000
36,097
56,097
Lessthan1year
20,000
25,603
45,603
1to3years
10,494
10,494
3to5years
Byperiod
Morethan5years
Ourpurchaseobligationsrepresentminimumobligationswehaveunderagreementswithcertainofourvendorsandmarketingpartners.
Theseminimumobligationsarelessthanourprojecteduseforthoseperiods.Paymentsmaybemorethantheminimumobligationsbased
onactualuse.
Inaddition,ourredeemablenoncontrollinginterestinmyhotelshopandbase7containscertainput/callrightswherebywemayacquireand
theminorityshareholdersmayselltoustheminoritysharesoftheCompany.SeeNote3Acquisitionsforfurtherinformation.
Leasecommitments
Wehavecontractualobligationsintheformofoperatingleasesforofficespaceandrelatedofficeequipment.Certainleasescontainperiodic
rentescalationadjustmentsandrenewaloptions.Rentexpenserelatedtosuch
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leasesisrecordedonastraightlinebasisovertheleaseterm.Leaseobligationsexpireatvariousdatesthrough2038.Fortheyearsended
December31,2015and2014,ourrentalexpensewas3.3millionand2.2million,respectively.
Wehaveoperatingleaseagreementsthatrequireustodecommissionphysicalspaceforwhichwehavenotyetrecordedanasset
retirementobligation.Duetotheuncertaintyofspecificdecommissioningobligations,timingandrelatedcosts,wecannotreasonably
estimateanassetretirementobligationforthesepropertiesandwehavenotrecordedaliabilityatthistimeforsuchproperties.
Thefollowingtablepresentsourestimatedfutureminimumrentalpaymentsunderoperatingleaseswithnoncancelableleasetermsthat
expireafterDecember31,2015:
(inthousands)
2016
2017
2018
2019
2020
2021andthereafter
Total
4,066
4,035
5,225
8,324
6,799
44,088
72,537
Legalproceedings
Intheordinarycourseofbusiness,weareapartytovariouslawsuits.Managementdoesnotexpecttheselawsuitstohaveamaterialimpact
ontheliquidity,resultsofoperations,orfinancialconditionoftrivago.Wealsoevaluateotherpotentialcontingentmatters,includingvalue
addedtax,excisetax,salestax,transientoccupancyoraccommodationtaxandsimilarmatters.AsofDecember31,2015and2014there
werenomaterialcontingentmattersorlawsuits.
15.Relatedpartytransactions
WehavecommercialrelationshipswithExpediaandmanyofitsaffiliatedbrands,includingBrandExpedia,Hotels.com,Orbitz,Travelocity,
ontheapplicableExpediawebsite.RelatedpartyrevenuefromExpediaof194.2millionand100.2millionfortheyearsendedDecember
31,2015and2014,respectively,primarilyconsistsofclickthroughfeesandotheradvertisingservicesprovidedtoExpediaandits
subsidiaries.Theseamountsarerecordedatcontractvalue,whichwebelieveisareasonablereflectionofthevalueoftheservices
provided.Relatedpartyrevenuerepresented39%and32%ofourtotalrevenuefortheyearsendedDecember31,2015and2014,
respectively.
Ouroperatingexpensesincludearelatedpartysharedservicesfeeof2.8millionand1.5millionfortheyearsendedDecember31,2015
and2014,respectively.ThissharedservicefeeiscomprisedofallocationsfromExpediaforlegal,tax,treasury,auditandcorporate
developmentcostsandincludesanallocationofemployeecompensationwithinthesefunctions.Theseexpenseswereallocatedbasedona
numberoffactorsincludingheadcount,estimatedtimespentandoperatingexpenseswhichtrivagoconsidersreasonableestimates.These
amountsmayhavebeendifferenthadtrivagooperatedasanunaffiliatedentity.
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TherelatedpartytradereceivablebalanceswithExpediaanditssubsidiariesreflectedinourconsolidatedbalancesheetsasofDecember
31,2015and2014were23.6millionand7.9million,respectively.TherelatedpartytradepayablebalanceswithExpediaandits
subsidiariesreflectedinourconsolidatedbalancesheetsasofDecember31,2015and2014were7.1and1.0million,respectfully.
Guarantee
OnSeptember5,2014,weenteredintoanuncommittedcreditfacilitywithBankofAmericaMerrillLynchInternationalLtd.withamaximum
principalamountof10.0million.AdvancesunderthisfacilitybearinterestarateofLIBORplus1.0%perannum.Thisfacilitymaybe
anamendmenttothisfacilitypursuanttowhichthemaximumprincipalamountwasincreasedto50.0million.AsofDecember31,2015,we
had20.0millionoutstandingunderthisfacility.
OnJuly23,2015,weenteredintoanagreementtodesignandbuildournewheadquartersbuildinginDusseldorf,Germany.Aspartofthat
agreement,ExpediahasguaranteedcertainpaymentsduebytrivagounderthecontractwhichareexpectedtocommenceonMay31,2017.
TheguaranteebyExpediaendsuponreceiptofabankguaranteebytrivago,butinanycasenotlaterthanDecember31,2018.
LoanfromExpedia
In2014,Expediaissuedaloanof1.0milliontotrivagoinconjunctionwithtrivagosacquisitionofRheinfabrikin2014.Theloanwas
subsequentlyrepaidbytrivagoduring2015.SeeNote3Acquisitions.
Servicesagreement
OnMay1,2013,weenteredintoanAssetsPurchaseAgreement,pursuanttowhichExpediapurchasedcertaincomputerhardwareand
30dayspriorwrittennotice.ForeachoftheyearsendedDecember31,2015and2014,wepaidExpedia21thousandannuallyforthese
datahostingservices.
16.Segmentinformation
segments:theAmericas,DevelopedEuropeandRestofWorld.WehaverestatedoursegmentsfortheyearsendedDecember31,2015
andDecember31,2014.ThechangefromonetothreereportablesegmentswastheresultofashiftintheCompanysfocusonmanaging
thebusinesstoreflectuniquemarketopportunitiesandcompetitivedynamicsinherentinourbusinesswithineachofouroperating
segments.OurAmericassegmentisgrowingandbecomingalargershareofconsolidatedreferralrevenueandhasthesecondlargest
exposuretoourextensivemarketingandadvertisingcampaigns.OurAmericassegmentiscurrentlycomprisedofArgentina,Brazil,Canada,
Chile,Colombia,Ecuador,Mexico,Peru,theUnitedSatesandUruguay.OurDevelopedEuropesegmentrepresentstheregionwherewe
areawellmaturedbrandandiscomprisedofAustria,Belgium,Denmark,Finland,France,Germany,Ireland,Italy,theNetherlands,Norway,
Portugal,Spain,Sweden,SwitzerlandandtheUnitedKingdom.TheDevelopedEuropemarketwasourinitialmarketofoperationsandhas
thelargestexposuretoourextensivemarketingandadvertisingcampaigns.OurRestofWorldsegmentrepresentsallregionsoutsideofthe
AmericasandDevelopedEuropeandisinitsearlystagesofgrowth.ThetopcountriesbyrevenueintheRestofWorldsegmentinclude
Australia,HongKong,Japan,NewZealandandPoland.
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andevaluateoperatingperformance.OurprimaryoperatingmetricisReturnonAdvertisingSpend,orROAS,foreachofoursegments
whichcomparesreferralrevenuetoadvertisingspend.ROASincludestheallocationofrevenuebysegmentwhichisbasedonthelocation
ofthewebsite,ordomainname,regardlessofwheretheconsumerresides.Thisisconsistentwithhowmanagementmonitorsandrunsthe
business.
CorporateandEliminationsalsoincludesallcorporatefunctionsandexpensesexceptfordirectadvertising.Inaddition,werecord
amortizationofintangibleassetsandanyrelatedimpairment,aswellassharebasedcompensationexpense,restructuringandrelated
reorganizationcharges,legalreserves,occupancytaxandother,andotheritemsexcludedfromsegmentoperatingperformancein
CorporateandEliminations.Suchamountsaredetailedinoursegmentreconciliationbelow.
ThefollowingtablespresentoursegmentinformationfortheyearsendedDecember31,2015and2014.Asasignificantportionofour
propertyandequipmentisnotallocatedtoouroperatingsegmentsanddepreciationisnotincludedinoursegmentmeasure,wedonot
reporttheassetsbysegmentasitwouldnotbemeaningful.Wedonotregularlyprovidesuchinformationtoourchiefoperatingdecision
makers.
YearendedDecember31,2015
Corporate&
Eliminations
Total
490,240

2,843
2,843
2,843
493,083
Developed
Europe
259,568

259,568
Americas
171,910

171,910
Rest
ofWorld
58,762

58,762
194,886
64,682
169,415
2,495
67,872
(9,110)
(inthousands)
Referralrevenue
Otherrevenue
Totalrevenue
Advertisingspend
ROAScontribution
2,843
432,173
60,910
Costsandexpenses:
amortization
sharedservicefee
2,946
29,046
28,693
18,065
30,030
(47,870)
Interestexpense
Other,net
Netloss
(147)
(2,667)
(2,814)
(50,684)
(11,318)
(39,366)
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Developed
Europe
210,241

210,241
Americas
73,316

73,316
YearendedDecember31,2014
Restof
Corporate&
theWorld Eliminations
Total
25,595
309,152

180
180
25,595
180
309,332
162,358
47,883
(inthousands)
Referralrevenue
Otherrevenue
Totalrevenue
Advertisingspend
ROAScontribution
81,110
(7,794)
27,899
(2,304)
180
271,367
37,965
Costsandexpenses:
amortization
sharedservicefee
1,443
14,867
15,388
6,536
30,025
(30,294)
Interestexpense
Other,net
Netloss
(11)
(1,435)
(1,446)
(31,740)
(8,644)
(23,096)
Geographicinformation
ThefollowingtablepresentsrevenuebygeographicareafortheyearsendedDecember31,2015and2014.Referralrevenuewasallocated
bycountryusingthesamemethodologyastheallocationofsegmentrevenue,whilenonreferralrevenuewasallocatedbaseduponthe
locationofthecustomerusingtheservice.
(inthousands)
TotalRevenues
UnitedStates
Germany
UnitedKingdom
Spain
Italy
Canada
Allothercountries
AsofDecember31,
2015
2014
128,891
67,470
61,541
29,206
26,394
23,156
156,425
493,083
54,560
57,826
46,707
25,776
23,197
15,422
85,844
309,332
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Thefollowingtablepresentspropertyandequipment,netforGermanyandallothercountries,asofDecember31,2015and2014:
(inthousands)
Germany
Allothercountries
AsofDecember31,
2014
2015
3,905
102
4,007
12,676
177
12,853
17.Valuationandqualifyingaccounts
Thefollowingtablepresentsthechangesinourvaluationandqualifyingaccounts.
(inthousands)
2015
Allowancefordoubtfulaccounts
2014
Allowancefordoubtfulaccounts
Balanceof
beginning
ofperiod
Chargesto
earnings
661
253
Deductions
241
624
Balances
atendof
period
(651)
(216)
251
661
18.Subsequentevents
Therewerecertainsharesheldbytrivagoemployeeswhichwereoriginallyawardedintheformofsharebasedoptionspursuanttothe
trivagoemployeeoptionplanandsubsequentlyexercisedbysuchemployees.Duringthesecondquarterof2016,Expediaexercisedacall
rightonthesesharesandelectedtodosoatapremiumtofairvalue,whichresultedinanincrementalsharebasedcompensationchargeof
approximately$49millioninthesecondquarterof2016pursuanttoliabilityawardtreatment.Theacquisitionoftheseemployeeminority
interestsincreasedExpediasordinaryownershipoftrivagoto63.5%.
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DataasofSeptember30,2016
SeeManagementsdiscussionandanalysisoffinancialconditionandresultsofoperationsKeyfactorsaffectingourfinancialconditionand
resultsofoperationsforadefinitionandexplanationofqualifiedreferrals.
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26,110,118ADSs
Representing26,110,118ClassAshares
J.P.Morgan
Allen&CompanyLLC
CowenandCompany
Goldman,Sachs&Co.
BofAMerrillLynch
Citigroup
MorganStanley
DeutscheBankSecurities
GuggenheimSecurities
ThroughandincludingJanuary9,2017(25daysafterthedateofthisprospectus),alldealersthatbuy,sellortradeourADSs,
whetherornotparticipatinginthisoffering,mayberequiredtodeliveraprospectus.Thisdeliveryrequirementisinadditiontothe
dealersobligationtodeliveraprospectuswhenactingasunderwritersandwithrespecttotheirunsoldallotmentsor
subscriptions.
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424B4 1 d246736d424b4.htm 424B4

324.6 239.4 378.7 $425.6

(1.2) (13.4) 16.3 $ 18.3

0.0 0.1 0.1

1.4 2.7 2.8

0.0 0.1 0.1

1.4 2.7 2.8

2.4 14.1 15.3

9.3 15.1 44.1

19.8 15.1 44.1

209,008,088 65.1% 64.6%

58,442,758 18.2% 18.1%

* * 111,991,882 34.9% 34.6%

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