Expedia Group, Inc. · NASDAQ:EXPE
Expedia — Allen & Company 2006 Arizona Conference
36 slides from Expedia's conference presentation, Mar 6, 2006
Slide 1: Allen & Company 2006 Arizona Conference
Allen & Company 2006 Arizona Conference Dara Khosrowshahi Expedia, Inc. CEO & President March 6, 2006
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements are based on assumptions which are inherently sub
Slide 3: Travel Industry - Global Opportunity
Travel Industry - Global Opportunity Online Total World Travel 90 785 Worldwide $875 Billion Total Online Total Europe & Asia 24 267 Online Total World Travel 52 157 10% ($90B) online United States $209 Billion Total 25% ($52B) online Europe $265 Billion Total 9% ($24B) online Source : 2004 estimate
Slide 4: Gross Bookings Growth
Gross Bookings Growth Q4 03 9.569 Q1 04 10.743 Q2 04 11.558 Q3 04 12.241 Q4 04 12.774 Q1 05 13.526 Q2 05 14.38 Q3 05 15.052 Q4 05 15.552 Source: Company financial reports Expedia, Inc. worldwide gross bookings, trailing 12 months ($B) 33% Growth 2003 - 2004 22% Growth 2004 - 2005
Slide 5: International Mix
International Mix Q4 03 1.1406 8.429 Q1 04 1.486 9.256996 Q2 04 1.751 9.808 Q3 04 2.059 10.182 Q4 04 2.319 10.455 Q1 05 2.658 10.868 Q2 05 3.041 11.339 Q3 05 3.292 11.76 Q4 05 3.479 12.073 Expedia, Inc. U.S. & International gross bookings, trailing 12 months ($B) International now 22% of mix, up fro
Slide 6: Brand Portfolio
Brand Portfolio Packages Complex itineraries Business travel Air tickets Hotel rooms Rental cars $$$$ $ Simple Complex Portfolio approach appeals to broadest range of traveler needs
Slide 7: Brand Portfolio - Hotels.com
Brand Portfolio - Sources : Company estimates; Company financial reports; Hotels.com website. Hotels.com Gross Bookings - Y/Y Growth Percent Q1 04 38 Q2 04 13 Q3 04 6 Q4 04 -4 Q1 05 -2 Q2 05 6 Q3 05 9 Q4 05 16 ~$1.9B 2005 Gross Bookings #5 WW Online Travel Agency WW presence in 29 countries Complime
Slide 8: Brand Portfolio - TripAdvisor
Brand Portfolio - Brand Portfolio - Sources : Company estimates; comscore media metrix; TripAdvisor website. 1MM 2MM 3MM 4MM 19MM Jan '06 unique visitors (41% Y/Y) #3 worldwide travel website 4MM reviews & opinions Expanded reach to U.K., Germany, France, Italy & Spain
Slide 9: Brand Portfolio - Corporate Travel
Brand Portfolio - Sources : Company financial reports; Company estimates; Company website. $700MM+ Gross Booking - 90% Y/Y growth Top 10 Corporate Travel Agency Launched TripController - leading technology solution Operating in U.S., U.K., France, Canada, Belgium, Netherlands & Lux.
Slide 10: Benefits of Brand Breadth & Scale
Benefits of Brand Breadth & Scale EXPE Travelocity Cendant (A) Gross bookings $15,551 Gross booking $7,446 $8,776 Revenue 2,119 Revenue 830 587 Revenue % gross bookings 13.6% Revenue % GB 11.1% 6.7% OIBA * 627 EBITDA 48 74 OIBA % revenue 29.6% EBITDA % Rev 5.8% 12.6% Figures in $MM Note A: Cendant r
Slide 11: Strong Free Cash Flow, Flow Through
Strong Free Cash Flow, Flow Through FY 2005 Results OIBA $627 MM + Depreciation 50 MM + Changes in working capital & other 173 MM - - Capital expenditures (52 MM) = Free cash flow $798 MM Flow Through: 2005 FCF as % of : EXPE Travel Average (A) Internet Average (B) Revenue 38% Revenue 8% Revenue 32%
Slide 12: 2005 Results
2005 Results Source: Company Financial Reports. Figures in $MM
Slide 13: Q4 2005 Results
Q4 2005 Results Figures in $MM Source: Company Financial Reports.
Slide 14: Leverage Points
Leverage Points G&A - Public Company Costs/Apollo Revenue Margin Supply Relationships Business Analytics Volume Long-Term Selling & Marketing Efficiency Product Improve end-to-end traveler experience Short & medium-term investments for long-term results
Slide 15: Value to Suppliers - Lodging
Value to Suppliers - Lodging We bring our partners business when they need it Solid weekday business, while also improving weekend utilization Higher ADRs than industry average Our ADRs are nearly 50% higher than the industry Our customers stay longer than industry customers Average length of stay i
Slide 16: Value to Suppliers - Air
Value to Suppliers - Air Dot Filled Box Filled Box Unfilled Triangle Filled Triangle Unfilled Diamond Filled Diamond Unfilled X Unfilled X Filled Cross Unfilled Cross Filled Xcross Unfilled Xcross Filled 2001 1 2002 1.8 2003 3.2 2004 3.7 2005 4 Index Carrier Expedia Box Unfilled Triangle Filled Tria
Slide 17: Value to Suppliers - Beyond Bookings
Value to Suppliers - Beyond Bookings Based on industry benchmarks of other media/search companies, impressions on our sites are worth $200M in free annual advertising for our suppliers. This is in addition to the value derived from completed transactions In the course of a year, millions of consumer
Slide 18: Why Retail?
Why Retail? TODAY Industry-leading OLTA Technology leadership Strong brand awareness Broad selection Competitive prices Most travelers are one-time buyers Vast majority buy a single item <5% U.S. Leisure spend at Expedia.com YET...
Slide 19: Fragmented Traveler Behavior
Fragmented Traveler Behavior Traveler behavior Upside to Expedia Source: Company estimates; Forrester; Jupiter; Merrill Lynch; comScore; Yankelovich % Total 2005 travel spend by U.S. households with online access Opportunity to convince our shoppers to buy with us Opportunity to convince our shopper
Slide 20: Creating Personal Travel Company Requires Expansion of Offering
Creating Personal Travel Company Requires Expansion of Offering Our Value to Customers = (Our Brand + Our Benefits) - Our Price Brand Leader Familiar/Trusted Low differentiation Add elements to existing brand personality consistent with our strengths Benefits Easy to use Convenient Choice Control Ad
Slide 21: Move from Selling Inventory to Selling an Experience
Move from Selling Inventory...to Selling an Experience At the core of all travel is a story...... Segmentation Wishlist Recommender Booking TSF and itinerary planner Travel experience Memories and storytelling Expedia's current view of the story and its climax The customer's view of the story and it
Slide 22: Transformation: From ATM to Merchant
Transformation: From ATM ... to Merchant ...
Slide 23: From One Site Fits All to Personal & Relevant
....From "One Site Fits All" ... to Personal & Relevant
Slide 24: Personal & Relevant - Air Shopper E-mail Campaign
Personal & Relevant - Air Shopper E-mail Campaign Site behavior drives promotion
Slide 25: Experience - Hotels.com Comparison Feature
Experience - Hotels.com Comparison Feature
Slide 26: Experience - Personal Trip Guides
Experience - Personal Trip Guides
Slide 27: Experience - Expedia Best Price Guarantee
Experience - Expedia Best Price Guarantee Experience - Expedia Best Price Guarantee
Slide 28: Customer View of Travel Market
X Y Size of bubble 0.31 0.13 0.37 aaa 0.23 0.11 0.26 hilton 0.2 0.3 0.33 southwest 0 0.24 0.16 cheap 0 0.18 0.21 orbitz 0 0.22 0.27 travelocity 0 0.24 0.29 expedia AAA Hilton Southwest OTA2 Expedia OTA1 OTA3 Customer View of Travel Market Brand perception and loyalty Size of circle = Percent who wou
Slide 29: In Summary
In Summary.... ATTRACTIVE INDUSTRY Sizeable global target market - $875B Low global online penetration of 10% with significant upside EXPEDIA STRENGTHS #1 in most WW points of sale Industry-leading brand recognition, traffic, travelers Brand portfolio offers broadest customer & supplier appeal WW, c
Slide 30: Q & A
Q & A
Slide 31: Appendix
Azan a 206 soizona Conference Appendix
Slide 32: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures The following are defined as non-GAAP measures by the SEC: Operating Income Before Amortization is defined as operating income plus: (1) amortization of non-cash distribution and marketing expense, (2) stock-based compensation expense, (3) amortization of intangible
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Reconciliation of Non-GAAP Measures
Slide 35: Business Model - Operating Income
Business Model - Operating Income FY 2005 Results ($MM) Gross bookings $15,552 Revenue 2,119 Cost of revenue 470 Gross profit 1,649 Gross margin 78% Selling and marketing 698 General and administrative 212 Technology and content 112 OIBA 627 OIBA margin 30% Non-cash marketing & dist. 13 Stock-based
Slide 36: Business Model - Free Cash Flow Build
Business Model - Free Cash Flow Build Free Cash Flow $ Millions Depre- ciation Intangibles Non-Cash Marketing Non-Cash Charges 50 126 13 Stock-Based Comp. Accounts Payable, Merchant Deferred Merchant Bookings Working Capital Changes 86 45 Inc. Tax Payable (A) Cap Ex 2005 Free Cash Flow 798 2005 Net