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[LOGO]priceline.com(R)
CIBC World Markets
Annual Gaming, Lodging & Leisure Conference
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February 26, 2002
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CONFIDENTIAL INFORMATION o Property of priceline.com incorporated. Page 1
All Right Reserved. 2/26/2002
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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 INCLUDING, WITHOUT LIMITATION, "MAY,"
"WILL," "SHOULD," "COULD," "EXPECTS," "DOES NOT CURRENTLY EXPECT," "PLANS,"
"ANTICIPATES," "BELIEVES," "ESTIMATES," "PREDICTS," "POTENTIAL," "TARGETS," OR
"CONTINUE," REFLECTING SOMETHING OTHER THAN HISTORICAL FACT ARE INTENDED TO
IDENTIFY FORWARD LOOKING STATEMENTS. THE FOLLOWING FACTORS, AMONG OTHERS, COULD
CAUSE PRICELINE.COM'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED
IN THE FORWARD-LOOKING STATEMENTS: ADVERSE CHANGES IN GENERAL MARKET CONDITIONS
FOR LEISURE AND OTHER TRAVEL PRODUCTS AS THE RESULT OF RECENT TERRORIST EVENTS,
HOSTILITIES OR OTHER SIMILAR OR RELATED EVENTS; ADVERSE CHANGES IN
PRICELINE.COM'S RELATIONSHIPS WITH AIRLINES AND OTHER PRODUCT AND SERVICE
PROVIDERS; SYSTEMS-RELATED FAILURES AND/OR SECURITY BREACHES; THE EFFECTS OF
INCREASED COMPETITION; PRICELINE.COM'S ABILITY TO PROTECT ITS INTELLECTUAL
PROPERTY RIGHTS; LOSSES BY PRICELINE.COM AND ITS LICENSEES; ANY ADVERSE IMPACT
FROM NEGATIVE PUBLICITY AND NEGATIVE CUSTOMER REACTION TO SUCH PUBLICITY; LEGAL
AND REGULATORY RISKS AND THE ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL.
FOR A DETAILED DISCUSSION OF THESE AND OTHER FACTORS THAT COULD CAUSE
PRICELINE.COM'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE
FORWARD-LOOKING STATEMENTS, PLEASE REFER TO PRICELINE.COM'S MOST RECENT FORM
10-Q, FORM 10-K AND FORM 8-K 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.
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CONFIDENTIAL INFORMATION o Property of priceline.com incorporated. Page 2
All Right Reserved. 12/21/01
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PRODUCTS
o Travel
-- Airline Tickets
-- Hotel Rooms
-- Rental Cars
-- Vacations
-- Cruises
o Non - Travel
-- Home Finance
-- Telecom
-- New Cars
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HISTORICAL RESULTS: POST-IPO QUARTERLY PERFORMANCE
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KEY STRENGTHS: BRAND
o Powerful Brand Awareness: Top 5 Internet Brand
[LOGO]America Online(R) [LOGO]amazon.com(R)
[LOGO]priceline.com(R)
[LOGO]ebay(TM) [LOGO]YAHOO!
Source: Opinion Research
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KEY STRENGTHS: CUSTOMER BASE
o 12.7 million unique customers (Q4)
o Repeat offer rate grew from 55% in 4Q00 to 64% in 4Q01
o Over 900,000 new customers acquired on average per quarter over the last
twelve months
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KEY STRENGTHS: BUSINESS MODEL
o Compelling Value Proposition
-- Savings ranging 20-80% off published prices - the best prices and
availability on the Net
CUSTOMER CHOOSES PRICELINE CHOOSES
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Itinerary date Airline (majors only)
AIR Price Time of day (no redeye)
Circuity (1 connection only)
Itinerary date
HOTEL Location by zone Hotel property
Star level - upgrade
Price
Itinerary date Rental car company
RENTAL CAR Specific pick up location - upgrade
Car type
Price
-- Name Your Own Price model shields suppliers
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KEY STRENGTHS: BUSINESS MODEL
o Margin Structure
-- Priceline earns higher margins than online or offline agents
-- Margin structure protected by Name Your Own Price model
-- Priceline model and allocation system protect airline retail pricing
and provides incremental revenue/profits at competitive yields
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KEY STRENGTHS: SUPPLIER NETWORK
o Broadest supplier participation in all products
o Priceline reflects meaningful scale to suppliers
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KEY STRENGTHS: EFFICIENT COST STRUCTURE
o Fixed costs run at $20 million / quarter, including $4 million of D&A
-- Includes consolidation of Europe
o 16.5% + gross margin
o Variable costs normally run at 5-6% of revenues
o Efficient customer acquisition costs (Advertising Cost / New Customer)
-- $8.65 Q4
o $6.2 million of Proforma EBITDA in Q4
o Favorable cash flows due to working capital cycle
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NEW PRODUCTS
o Name Your Own Price Vacations
o Cruises
o eBay
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PRICELINE VACATIONS
"BUILD YOUR OWN VACATION, NAME YOUR OWN PRICE"
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PRICELINE.COM VACATIONS IS AN ATTRACTIVE PRODUCT EXTENSION OPPORTUNITY,
OFFERING:
Entry into the $1.4B online packaged vacation market
- Higher revenue/sale
- Higher margins
Operating leverage from priceline's core product
- Limited capital expenditure
- Built on strength of existing supplier relationships
Enhancement of priceline's key brand attributes
- Maintains/supports ownership of "Best Deal"
- Broadens brand appeal
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PRICELINE HOME FINANCE
o Priceline Mortgage: JV between Priceline (49%) / First Alliance Bank (51%)
-- Best rates and closing costs available (guaranteed)
-- Float down protection and loan-level pricing
-- No tradeoffs
-- Impressive growth with limited marketing support
-- Contributed $517K in income in Q4
o Online mortgage penetration gaining consumer acceptance: 1% in 1999; 15%
in 2003(1)
(1) Source: Morgan Stanley Research
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MARKETING OPPORTUNITIES
o Existing Customer Base
o Online Marketing
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PRICELINE OUTLOOK
o MARKET OUTLOOK
-- TRAVEL INDUSTRY
-- ONLINE TRAVEL
o BRAND
o BUSINESS MODEL
o SCALE AND EFFICIENCY
o ABILITY TO MANAGE THROUGH CHANGE
o OPPORTUNITIES
-- VACATIONS / CRUISES
-- EBAY
-- ONLINE MARKETING
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CONFIDENTIAL INFORMATION o Property of priceline.com incorporated. Page 15
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CONFIDENTIAL INFORMATION o Property of priceline.com incorporated. Page 16
All Right Reserved. 2/26/2002