Reports Record First Quarter Financial Results

April 24, 2000 at 12:00 AM EDT Reports Record First Quarter Financial Results
  • Net loss per share excluding certain items is $0.04 in 1st

    quarter 2000, compared to a net loss per share of $0.12 in 1Q

    1999 and $0.06 in 4Q 1999

  • adds a record 1.5 million new customers in 1st

    quarter, bringing its total customer base to 5.3 million

  • 830,000 repeat customers use in 1st quarter, a

    500% increase over 1Q 1999 and a 72% increase over 4Q 1999

  • 1st quarter revenues of $313.8 million are 535% better than 1Q

    1999 and 85% better than 4Q 1999; 1st quarter gross profit of $49.0 million is 752% better than 1Q 1999 and 103% better than 4Q 1999

  • 1st quarter gross margin of 15.6% sets new record for

NORWALK, Conn.--(BUSINESS WIRE)--April 24, 2000-- (Nasdaq: PCLN), the Name Your Own Price(SM) Internet pricing system where customers set the price for travel, automotive, home finance, groceries and telecommunications products, today reported record first quarter financial results driven by the largest quarterly customer base increase in's history and strong sequential momentum in both revenue and gross margin dollars. reported that it added 1.5 million unique customers during the first quarter, bringing its total customer base to 5.3 million.'s independent licensees, primarily Priceline WebHouse Club(SM), generated over 300,000 additional new customers during the quarter.

For the first quarter of 2000, the Company reported a net loss of $0.04 per share, compared to a net loss of $0.12 per share in the first quarter of 1999, and a net loss of $0.06 per share in the fourth quarter of 1999. Net loss per share, net loss, operating loss, gross margin and gross margin percentages in this release exclude all net warrant costs, option payroll taxes, and certain other items as described in the notes to the table below. reported revenue of $313.8 million for the first quarter of 2000, a 535% increase over revenues of $49.4 million in the first quarter of 1999 and an 85% increase over revenues of $169.2 million in the fourth quarter of 1999.'s gross profit grew even faster. Gross profit for the first quarter of 2000 was $49.0 million, a 752% increase over first quarter 1999 gross profit of $5.8 million and a 103% increase over fourth quarter 1999 gross profit of $24.1 million. Gross margin for the first quarter of 2000 was 15.6%, the highest ever for, compared to a first quarter 1999 gross margin of 11.6%. Operating expenses (excluding option payroll taxes) as a percent of revenue improved to 18.8%, a new low for, compared to 46.5% for the first quarter of 1999.

Operating loss in the first quarter of 2000 was $10.0 million, compared to an operating loss of $17.2 million in first quarter 1999. Net loss in the first quarter of 2000 was $7.3 million, compared to a net loss of $16.8 million in the first quarter of 1999.

                                Quarter Ended            Quarter Ended
                               March 31, 2000(1)      March 31, 1999(2)

Revenue                         $313.8  million         $49.4  million
Gross Profit                     $49.0  million          $5.8  million
Operating Loss                  $(10.0) million        $(17.2) million
Net Loss                         $(7.3) million        $(16.8) million
Net Loss Per Share              $(0.04)                $(0.12)
Unique Customers Added            1.52  million          0.50  million
Repeat Customer Offers            0.83  million          0.13  million

(1) Gross profit excludes $381,000 in non-cash supplier warrant charges; operating and net loss and net loss per share also

exclude $5.9 million in option payroll taxes.

(2) Gross profit excludes $381,000 in non-cash supplier warrant

charges; net loss and net loss per share also exclude $8.3 million

in non-cash accretion on convertible preferred stock. Loss per

share is based on quarter-end outstanding common shares of 142.3


"'s record-setting performance this quarter was anchored by several key metrics that underscore the uniqueness and scalability of our business, and the steady progress we continue to make toward profitability," said Richard S. Braddock,'s chairman and chief executive officer. "Our customer base grew by 1.5 million new customers and now stands at 5.3 million unique customers. Equally important is the fact that repeat use of our various services climbed 500 percent above levels achieved in the first quarter of 1999."

Braddock continued, "Recognizing the significant seasonal upside potential, we increased our advertising budget for the quarter and introduced our first-ever TV ads featuring William Shatner. These ads had an immediate impact and we were rewarded with record numbers of new customers.'s travel products benefitted significantly from our first-time TV exposure and the fact that three of America's largest airlines - American Airlines, United Airlines and U.S. Airways - began selling significant quantities of leisure airline tickets through in the first quarter. We also increased's brand awareness to an estimated two-thirds of the entire U.S. adult population, placing into a statistical dead-heat with as the most-recognized e-commerce brand in America according to independent consumer research. We believe that we paid back this new ad campaign in one quarter."

Business Highlights

During the first quarter, made several key additions to its management team. Heidi Miller, former CFO of Citigroup, joined as senior executive vice president, strategic planning and administration, and chief financial officer.

Jeffery H. Boyd, former EVP and general counsel for Oxford Health Plans, joined as executive vice president and general counsel. Michael McCadden, former EVP of Gap, Inc. Direct, joined as executive vice president and chief marketing officer.

" has assembled a management team deeply experienced in building and running large-scale businesses," said Daniel H. Schulman, president and chief operating officer of "These executives know how to scale businesses rapidly and manage for profitability. The experience of our team is already paying off. During the quarter, PricelineMortgage(SM) was launched nationwide and Priceline Auto Services(SM) was expanded to now cover 48 states. As a result of these initiatives, new car sales tripled in the quarter, while our loan demand nearly doubled. We also launched a new service for rental cars in the first quarter." also announced plans to enter several new markets and businesses, including a variety of business-to-business services and long distance telephone calling services. Long distance calling was introduced on a "sneak-peek" basis late in the quarter. independent licensee companies grew during the quarter. Priceline WebHouse Club(SM), a privately held licensee, significantly expanded its Name Your Own Price(SM) grocery service during the 1st quarter. After launching in the New York area, the service expanded during the quarter to cover the Philadelphia, Baltimore, Washington, DC, Boston and Detroit markets. By the end of the quarter, more than 400,000 families in total had become members of WebHouse Club(SM), purchasing over 20 million grocery items through over 3,000 participating major supermarkets. A second independent licensee, Priceline Perfect YardSale(SM), is conducting a market test in the greater Atlanta area. Perfect YardSale(SM) is a consumer-to-consumer Internet service that facilitates the local sale of quality used household items.

Internationally, announced initiatives to launch Name Your Own Price(SM) services through independent licensees in Asia, Australia and New Zealand.

About Incorporated is the Name Your Own Price(SM) patented Internet pricing system. currently provides services across four broad 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 through an independent licensee; an automotive service that offers new cars, and a telecommunications service that offers long distance calling services. has agreed to license its business model to independent licensees, including Priceline WebHouse Club(SM), Inc., which offers a Name Your Own Price(SM) service for groceries; PricelineMortgage(SM); Priceline Perfect YardSale(SM), Inc., a local-market, consumer-to-consumer selling service; and certain international licensees. In these arrangements, generally receives royalties for licensing its intellectual property. also holds securities carrying the right to purchase a significant equity stake in the licensees under certain conditions. Unless those rights are exercised, the results of licensee operations will not be included in's financial statements.

Information about forward looking statements

This press release may contain 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," or "continue," reflecting something other than historical fact are intended to identify forward-looking statements. The following factors, among others, could cause the Company's actual results to differ materially from those described in the forward-looking statements: inability to successfully expand the Company's business model both horizontally and geographically; management of the Company's rapid growth; adverse changes in the Company's relationships with airlines and other product and service providers; systems-related failures; the Company's ability to protect its intellectual property rights; the effects of increased competition; anticipated losses by the Company and its licensees; 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 the Company's actual results to differ materially from those described in the forward-looking statements, please refer to the Company's most recent Form 10-Q and Form 10-K filings with the Securities and Exchange Commission. *T

                 (In thousands, except per share data)

                                            Three Months Ended
                                   March 31,            March 31,
                                      2000                 1999
                            ----------------          ----------------

Revenues                            $313,798                   $49,411
Cost of revenues:
 Product costs                       264,771                    43,659
 Supplier warrant costs                  381                       381
                            ----------------          ----------------

Total cost of revenues               265,152                    44,040

Gross profit                          48,646                     5,371
                            ----------------           ---------------

Operating expenses:
 Sales and marketing                  40,449                    17,138
 General and administrative
  (including $5,907 of option
   payroll taxes in 2000)             18,611                     3,667
 Systems and business development      5,868                     2,184
                            ----------------          ----------------

  Total operating expenses            64,928                    22,989
                            ----------------          ----------------

Operating loss                       (16,282)                  (17,618)

Interest income, net                   2,715                       458
                            ----------------          ----------------

Net loss                             (13,567)                  (17,160)
Accretion on preferred stock               -                    (8,354)
                           -----------------          ----------------

Net loss applicable to
 common stockholders                $(13,567)                 $(25,514)
                           =================          ================

Net loss applicable to common
 stockholders per basic and
  diluted common share                $(0.08)                   $(0.27)
                           =================          ================

Weighted average number of
 basic and diluted common
  shares outstanding                 166,467                    94,939
                           =================          ================

                       CONDENSED BALANCE SHEETS
                            (In thousands)

                                   March 31,              December 31,
ASSETS                                2000                     1999
                               -------------           ---------------

 Cash and cash equivalents          $125,855                  $133,172
 Short-term investments               23,625                    38,771
 Accounts receivable, net of
  allowance for doubtful accounts
   of $3,075 and $1,961 at
    March 31, 2000 and
     December 31, 1999,
      respectively                    52,751                    21,289
 Related party receivables               108                       508
 Prepaid expenses and other
  current assets                      15,782                    17,999
                                ------------          ----------------
  Total current assets               218,121                   211,739

PROPERTY AND EQUIPMENT, net           37,130                    28,006

 OF PRICELINE WEBHOUSE CLUB, INC.    189,000                   189,000

OTHER ASSETS                          38,466                    13,141
                               -------------          ----------------

 TOTAL ASSETS                       $482,717                  $441,886
                               =============          ================


 Accounts payable                    $59,411                   $24,302
 Accrued expenses                     13,766                    13,695

 Other current liabilities             4,280                     1,253
                               -------------         -----------------
  Total current liabilities           77,457                    39,250
                               -------------         -----------------
  Total liabilities                   77,457                    39,250
                               -------------         -----------------

 Common stock                          1,361                     1,311
 Additional paid-in capital        1,591,880                 1,581,708
 Accumulated other comprehensive
  income                               5,969                         -
 Accumulated deficit              (1,193,950)               (1,180,383)
                              --------------         -----------------
  Total stockholders' equity         405,260                   402,636
                              --------------         -----------------

 STOCKHOLDERS' EQUITY               $482,717                  $441,886
                              ==============         =================

For press information:
Brian Ek, 203/299-8167
Mike Darcy, 203/299-8168
For investor information:
William Pike, 203/299-8451
Raya Papp, 203/299-8118