Goldman Sachs
Technology Investment
Symposium
February 24, 2003
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2.21.03 | | page 1 |
Priceline.com would like to remind you that this presentation may contain forward looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements.
Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward looking statements. For a list of factors that could cause Priceline.com's actual results to differ materially from those described in the forward-looking statements, please refer to the risk factors in Priceline.com's most recent filings with the Securities and Exchange Commission. Unless required by law, Priceline.com undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
This presentation should be read in conjunction with priceline.com's audited financial statements and the notes thereto filed with the Securities and Exchange Commission on Form 10-K and quarterly financial statements filed with the Securities and Exchange Commission on Form 10-Q. Certain presentations are not consistent with Generally Accepted Accounting Principles.
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 2 |
Quarterly Historical Results
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 3 |
Quarterly Historical Results
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 4 |
Quarterly Historical Results
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 5 |
Quarterly Historical Results
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 6 |
Priceline Air
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- 9-11 Impact on Airline Industry
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- Initial severe decline in demand followed by recovery
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- Capacity cuts by airlines
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- Massive losses and bankruptcies among major carriers
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- 9-11 Impact on Priceline
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- Air bind rate
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- Air tickets sold
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 7 |
Priceline Air
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 8 |
Priceline Hotels
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 9 |
Travel Diversification
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- Hotel now represents over half of all booked offers
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 10 |
Priceline Hotels: Best Prices on Internet
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- Priceline consistently delivers significant discounts over Expedia, Hotels.com and Travelocity
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- Priceline's median customer savings are:
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- 45% vs. Expedia
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- 46% vs. Hotels.com
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- Priceline backs up savings claims with a best price guarantee
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- If you do find a better price online than you paid at Priceline, we will refund the difference
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 11 |
Priceline Hotels: Quality Accommodations
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- Only major Internet site with corporate participation from every major U.S. hotel company
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- More merchant hotels (9K+) than any other site, including Hotels.com and Expedia (PhocusWright)
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- Stringent and consistent star rating system. A recent internal study found:
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- Hotels.com rated the same hotel higher 76% of the time
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- Priceline compares favorably to Expedia and AAA
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 12 |
Priceline Hotels: Quality Customer Experience
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- Priceline delivers high quality hotels for the best customer experience
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- 92% of Priceline's hotel customers said their Priceline hotel experience met or exceeded their expectations in our most recent customer satisfaction survey
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- 55% said that experience exceeded expectations
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- 37% said that experience met expectations
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 13 |
Hotel Advertising Campaign
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- Goals
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- Advertise our strengths: Hotels
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- Break through savings claim clutter
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- Demonstrate ease of use of product
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- Assure customer of high quality
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 14 |
2003 Media Strategy
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- Use online primarily for Airline product
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- Direct response television focused on Hotels
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- Cable
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- Specific local network
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- 75% offline media spend
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- Radio
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- Accentuate television message
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- 20% offline media spend
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 15 |
Continued Diversification
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- Supplement core Hotel growth by diversifying away from opaque Air through:
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- Vacations
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- Opaque, GOGO Worldwide Vacations (Liberty Travel)
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- Lowestfare.com retail initiatives:
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- Satisfy unbound priceline.com customers that would've gone elsewhere
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- Cross-sell hotel and rental car to retail purchasers
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- Build bookings and awareness for Lowestfare.com
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 16 |
2003 Financial Goals
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- 25%+ yr/yr growth in Hotel room-nights
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- Year/year hotel revenue up approximately 35% as of 2/23/03
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- 70% of booked offers to come from services other than opaque Airline product
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- Year/year growth in revenues in second half of year
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- Year/year growth in full year EPS
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 17 |
Priceline Valuation
| Closing Stock Price (2/21/03) | | $ | 1.26 | |
| Gross Diluted Shares Outstanding | | | 231.212 | |
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| Gross Equity Value | | $ | 291.3 | |
| Less: Option Proceeds | | | (5.3 | ) |
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| Net Equity Value | | $ | 286.1 | |
| Add: Series B Preferred Stock | | | 13.5 | |
| Less: Cash and Marketable Securities | | | (149.6 | ) |
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| Fully Diluted Enterprise Value | | $ | 149.9 | |
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 18 |
Priceline Valuation
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- Comparative valuations based on 2003 consensus gross bookings estimates:
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 19 |
Priceline Valuation
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- Comparative valuations based on 2003 consensus gross profit estimates:
Reflects net revenue estimates for Expedia for purposes of direct comparability
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 20 |
Priceline Valuation
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- Comparative valuations based on 2003 consensus pro forma EBITDA estimates:
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 21 |
Priceline Valuation
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- Comparative valuations based on annualized 4Q02 merchant hotel room-nights sold:
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2/13/03 | | page 22 |
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| CONFIDENTIAL INFORMATION · Property ofpriceline.com incorporated. All Rights Reserved. · 2.21.03 | | page 23 |
