|TRIVAGO N.V. filed this Form 6-K on 10/24/2018|
nine months ended September 30, 2018 compared to €15.3 million in the same period in 2017 was primarily driven by the losses we incurred in the first half of 2018.
Income tax expense was €7.1 million in the third quarter of 2018 compared to income tax benefit of €6.3 million in the same period in 2017. The total weighted average tax rate was 30%, which is mainly driven by the German statutory rate of approximately 31%. Our effective tax rate was 41.6% largely due to the effect of share-based compensation expenses, which are non-deductible for tax purposes, compared to 44.8% in the third quarter in 2017.
In the nine months ended September 30, 2018, income tax benefit was €6.8 million compared to income tax benefit of €1.3 million in the same period in 2017. Our effective tax rate was 17.4% compared to 26.8% in the same period in 2017. The effective tax rates for the first nine months ended September 30, 2018 and 2017 were mainly due to the effect of share-based compensation expenses.
Balance sheet, cash flows and capitalization
Total Cash, cash equivalents and restricted cash were €147.5 million as of September 30, 2018, of which
144.9 million were Cash, cash equivalents and restricted cash and €2.6 million long-term restricted cash included in other long-term assets in the balance sheet mainly for the new campus building, compared to total Cash, cash equivalents and restricted cash of €192.9 million as of December 31, 2017. The decrease was mainly driven by negative cash flow from operating activities of €23.3 million, which is primarily due to a net loss of €32.5 million. Changes in operating assets and liabilities further contributed to the decrease as accounts receivable increased significantly more than accounts payable. Accounts receivable increased by €18.4 million, of which €7.8 million were related party receivables, as of September 30, 2018 compared to December 31, 2017. The increase was mainly driven by the seasonality in the revenue development of total referral revenue increasing from €177.2 million in the last quarter of 2017 to €250.4 million in the third quarter of 2018. Accounts payable decreased by €1.3 million as of September 30, 2018 compared to December 31, 2017.
The decrease in cash, cash equivalents and restricted cash was further driven by negative cash flows from investing activities of €22.1 million, which mainly consisted of capital expenditures related to the new campus.
Our current ratio decreased from 3.7 as of December 31, 2017 to 3.3 as of September 30, 2018 as a result of the movement in our accounts receivable.
During the construction period of both buildings related to our new campus in Düsseldorf, we are deemed the accounting owner and treat the construction as if we were the legal owner of the construction project. As such, an asset for construction-in-process and a liability for those costs not funded by trivago are recorded on our balance sheet. Upon moving into the first building in June 2018, we continue to be the accounting owner, and we are treating it as a financing. The second building remains under construction and we continue to recognize an asset and liability on our balance sheet for the construction costs that are not funded by trivago.
Update on legal proceedings
On August 23, 2018, the Australian Competition and Consumer Commission, or ACCC, instituted proceedings in the Australian Federal Court against us. The ACCC alleged breaches of Australian consumer law relating to our advertisements in Australia concerning the hotel prices available on our Australian site and our strike-through pricing practice, which is the display adjacent to the price quote in the top position in our search results of a higher price that is crossed out. On September 21, 2018, we agreed to participate in a mediation with the ACCC. If the matter is not resolved as part of that process, we will file a response to the ACCC's statement of claim within seven days of the end of the mediation. Management has established a provision in respect of this matter.
A consolidated class action is pending against us in the United States District Court for the Southern District of New York alleging securities law violations in our IPO registration statement and certain later disclosures.