Priceline.com Reports Record Fourth Quarter Financial Results
27 January 2000
Priceline.com Reports Record Fourth Quarter Financial Results
NORWALK, Conn.--Jan. 27, 2000--| - | 4th quarter revenue of $169.2 million is up 791% over 4th quarter 1998 |
| - | Net loss per share excluding certain items is $0.06 in 4th quarter 1999, compared to $0.14 in 4Q 1998 and $0.08 in 3Q 1999 |
| - | Priceline.com adds almost 1 million new customers in 4th quarter, bringing its total customer base to nearly 4 million |
| - | 4th quarter gross margin of 14.2% is highest ever for priceline.com |
| - | Company also reports full-year 1999 revenue of nearly half a billion dollars |
| - | Company sets 2000 revenue target of $1 billion |
Priceline.com , the Internet pricing system that enables consumers to save money by naming their own prices for travel, automotive and home finance products, today reported record 4th quarter financial results and said that, based on early 1st quarter performance, it had established a target of $1 billion in revenue in 2000. The Company also reported that it added nearly 1 million new unique customers in the quarter and reduced its net loss per share excluding certain items to $0.06, or 2 cents per share better than the First Call consensus of analyst estimates and less than half the $0.14 per share loss priceline.com reported in the 4th quarter of 1998.
Priceline.com reported revenue of $169.2 million for the fourth quarter ended December 31, 1999, a 791% increase over revenue of $19.0 million for the fourth quarter ended December 31, 1998. Gross margin for the 4th quarter was 14.2%, the highest ever for priceline.com. Gross profit for the fourth quarter of 1999 was $24.1 million, a 952% increase over gross profit of $2.3 million for the fourth quarter ended December 31, 1998. Gross profit and gross margin percentages for both periods exclude non-cash supplier warrant charges.
Operating loss in the fourth quarter of 1999 was $12.7 million, compared to an operating loss of $12.9 million in the fourth quarter of 1998. Net loss in the fourth quarter of 1999 was $10.0 million, or $0.06 per share compared to a net loss in the fourth quarter of 1998 of $12.7 million, or $0.14 per share. Operating loss and net loss results for both periods exclude certain items as described in the footnotes to the table below.
Quarter Ended Quarter Ended
December 31, 1999(1) December 31, 1998(2)
--------------------- --------------------
Revenue $ 169.2 million $ 19.0 million
Gross Profit $ 24.1 million $ 2.3 million
Operating Loss $ (12.7) million $ (12.9) million
Net Loss $ (10.0) million $ (12.7) million
(1) Excludes a non-cash charge of $910.4 million of net warrant costs
related to the issuance of warrants to certain of priceline's
airline partners (net of income from the receipt of a warrant to
purchase shares in the Priceline WebHouse Club), a non-cash
charge of $380,759 for supplier warrant charges, $264,744 in
option payroll taxes resulting from the exercise of non-qualified
employee stock options, and the write-off of $380,609 in deferred
financing costs. (2) Excludes the effect of a non-cash charge of $61.0 million for the
issuance of warrants to certain of priceline.com's airline
partners and a $2.2 million charge for the accretion of preferred
stock.
Priceline.com also reported strong results for 1999, its first full year of operation. Revenue for the full year 1999 was $482.4 million, with $59.4 million in gross profit and a net loss of $52.5 million or $0.39 per share. That compares to 1998 results of $35.2 million in revenue, $1.7 million in gross profit and a net loss of $44.4 million or $0.55 per share. Gross profit and net loss results exclude non-cash net warrant costs, supplier warrant charges, option payroll taxes, and the write-off of deferred financing costs in 1999 and exclude non-cash net warrant costs, supplier warrant charges, stock based compensation expense and accretion of preferred stock in 1998. Including such items, reported net loss for the fourth quarter and full-year 1999 were $921.5 million and $1.1 billion respectively, and $75.9 million and $114.4 million for the fourth quarter and full- year 1998 respectively.
"Priceline.com had a strong year and a particularly strong fourth quarter as we continued to deliver on our commitment to steadily reduce our operating losses and improve our operating margins on our way to profitability," said Richard S. Braddock, priceline.com's chairman and CEO. "This was a landmark quarter for priceline.com in terms of adding customers, increasing sales and margins, bringing on board new industry leading suppliers and partners and introducing new product initiatives."
Braddock continued, "Based on our performance so far this year, we are now comfortable that our revenues will increase sequentially from the fourth quarter of 1999 to the first quarter of 2000 at a rate of at least 30%. More importantly, we have established a target of $1 billion of revenue for the year 2000, which is more than double our revenue in 1999."
Business Highlights
During the 4th quarter, priceline.com added a record 982,000 unique customers (including the 80,000 unique customers who joined the Priceline WebHouse Club, a priceline.com licensee, in the 4th quarter). In total, priceline.com had 3.8 million unique customers at the end of the fourth quarter. Nearly half became customers in the last 6 months.
During the fourth quarter, priceline.com continued to build a broad, horizontal e-commerce business and made substantial strides in solidifying and expanding its offerings into new vertical markets, as well as announcing several new Name-Your-Own-Price initiatives.
In November, priceline.com announced that American Airlines, United Airlines and US Airways would join priceline.com's airline service. Today, all 8 major full-service U.S. airlines participate in priceline.com, as well as over 20 international carriers. Priceline.com believes that it now accounts for over 3% of all of the leisure airline tickets sold in the U.S.
Priceline.com also announced during the fourth quarter a co-marketing agreement with Travelocity.com and Preview Travel. As part of the alliance with Travelocity.com and Preview Travel, all three Web sites will offer customers the ability to either name their own price through priceline.com, or purchase published-fare tickets through Travelocity.com and Preview Travel. The three companies will share a total customer base estimated at more than 20 million.
Priceline.com Auto Services, LLC, expanded in the fourth quarter to cover 26 states. The Company also launched a market trial with Ford Motor Company in Florida where Ford customers can name their price for a new car and get that car from a local Ford dealership. As a result of these initiatives, priceline.com doubled the number of cars sold in the fourth quarter, compared to third quarter 1999.
Vertical Market Expansion
Priceline.com announced plans in the fourth quarter to enter two new vertical markets. The Company said it would offer a Name Your Own Price service for rental cars in the first half of 2000, and that Budget Rent A Car and National Car Rental would be the first two companies to participate in the program.
Long-distance calling is another service priceline.com said it would offer in 2000. The Company named Net2Phone as its first supplier for the new service that will allow customers to name their own price for individual calls or blocks of international and domestic calling time.
As part of that marketing agreement, Net2Phone will pay priceline.com $18 million over three years in fees for being featured as priceline.com's premier service provider of long distance services. In addition to the consumer market, priceline.com said that this service would be attractive to small businesses that normally cannot negotiate deep discounts for their domestic and international calls.
Also in the fourth quarter, priceline.com licensed its business model to Priceline WebHouse Club, a company that offers retail goods, beginning with groceries, on a Name Your Own Price basis. The service, which launched in November, has attracted over 125,000 customers in the New York area (or approximately 2% of all households) in its first 10 weeks of operation. To date, the service has sold more than 4 million grocery items. In return for the WebHouse Club license, priceline.com has received warrants allowing it to take a majority equity stake in the WebHouse Club under certain conditions. The financial results of Priceline WebHouse Club will not be included in priceline.com's financial statements unless those warrants are exercised.
International Expansion
During the fourth quarter, priceline.com continued discussions with potential alliance partners to expand its services internationally. Yesterday, priceline.com announced the first in a series of international expansion initiatives. The Company announced an alliance with Hutchison-Whampoa, one of Asia's largest companies with an extensive Internet presence, to create a new company to introduce priceline.com's buyer-driven business model to China and Hong Kong, Singapore, Taiwan, India, Indonesia, Malaysia, the Philippines, India and Vietnam.
About priceline.com
Priceline.com is the patented Internet pricing system that enables consumers to achieve significant savings by naming their own price for goods and services. Priceline.com takes consumer offers and then presents them to sellers who can fill as much of that guaranteed demand as they wish at price points determined by buyers.
Priceline.com's "virtual" business model allows for rapid scaling using the Internet. Because the Company electronically collects consumer demand, it can fill this demand directly with sellers or by using proprietary databases. Priceline.com does not maintain or warehouse inventories in any of its product lines. Priceline.com is currently selling multiple services to its sellers across three distinct product categories: a travel service that offers leisure airline tickets, hotel rooms and rental cars, a personal finance service that offers home mortgages, refinancing and home equity loans, and an automotive service that offers new cars. Recently, priceline.com announced that it would also offer new services for long-distance telephone calling and credit cards.
For investor relations, contact: Raya Papp at priceline.com 203-299-8160 (investorrelations@priceline.com)
For press information, contact: Brian Ek at priceline.com 203-299-8167 (brian.ek@priceline.com) Mike Darcy at priceline.com 203-299-8168 (mike.darcy@priceline.com)
This press release may contain forward-looking statements that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals and similar expressions including, without limitation, "may," "will," "believes," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential," and "forecast," reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties, including the timely development and market acceptance of products and technologies and other factors described in the Company's filings with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. The Company undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
priceline.com Incorporated
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1999 1998 1999
----------- ------------ ------------ -------------
Revenues $ 18,993,127 $ 169,213,345 $ 35,236,860 $ 482,409,988
Cost of Revenues:
Product costs 16,701,948 145,104,504 33,495,745 423,056,185
Supplier warrant
costs 3,029,014 380,759 3,029,014 1,523,036
Total cost of
revenues 19,730,962 145,485,263 36,524,759 424,579,221
Gross profit
(loss) (737,835) 23,728,082 (1,287,899) 57,830,767
Expenses:
Warrant costs, net, including $189,000,000
of warrant income in the three and
twelve months ended December 31,
1999 57,978,678 910,442,774 57,978,678 998,831,785
Sales and
marketing 8,462,960 23,238,316 24,388,061 79,576,556
General and administrative, including
$264,744 and $1,811,610 of option
payroll taxes in the three and twelve
months ended December 31, 1999,
respectively 3,805,924 10,103,261 18,004,585 27,609,408
Systems and business
development 2,962,666 3,777,513 11,131,650 14,023,168
Total
expenses 73,210,228 947,561,864 111,502,974 1,120,040,917
Operating loss (73,948,063) (923,833,782) (112,790,873)(1,062,210,150)
Other expense - (380,609) - (380,609)
Interest income,
net 244,115 2,757,472 548,374 7,501,225
Total other income/expense,
net 244,115 2,376,863 548,374 7,120,616
Net loss (73,703,948) (921,456,919) (112,242,499)(1,055,089,534)
Accretion on preferred
stock (2,183,424) - (2,183,424) (8,353,973)
Net loss applicable to common
shareholders $(75,887,372) $(921,456,919)$(114,425,923)$(1,063,443,507)
Basic and diluted loss per
common share $ (0.81) $ (5.91) $ (1.41) $ (7.90)
Weighted average common shares
outstanding 93,167,679 156,031,746 81,231,425 134,621,746
priceline.com Incorporated
CONDENSED BALANCE SHEETS
(UNAUDITED)
December 31, December 31,
ASSETS 1998 1999
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 53,593,026 $ 133,171,813
Short term investments - 38,771,417
Accounts receivable, net of allowance for uncollectible
accounts of $290,823 and $1,960,680 at December 31, 1998
and December 31, 1999,
respectively
4,176,980 21,288,946
Related party receivable - 507,770
Prepaid expenses and
other current assets 2,433,542 17,999,123
Total current assets 60,203,548 211,739,069
PROPERTY AND EQUIPMENT - net 5,926,877 28,006,478
WARRANTS TO PURCHASE COMMON STOCK OF
WEBHOUSE CLUB, INC. - 189,000,000
OTHER ASSETS 442,060 13,140,742
TOTAL ASSETS $ 66,572,485 $ 441,886,289
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,268,430 $ 24,302,434
Related party payable 32,447 -
Accrued expenses 4,258,641 13,695,269
Other current liabilities 722,030 1,252,956
Total current liabilities 10,281,548 39,250,659
LONG-TERM DEBT - net 989,018 -
CAPITAL LEASE OBLIGATIONS 26,074 -
Total liabilities 11,296,640 39,250,659
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 311,262 -
Common stock 745,802 1,310,937
Additional paid-in
capital 171,158,186 1,581,707,605
Accumulated deficit (116,939,405) (1,180,382,912)
Total stockholders'
equity 55,275,845 402,635,630
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 66,572,485 $ 441,886,289
