Slide 1: Company Overview Q3 2009
_, /expedia inc. Company Overview Q3 2009 Ze. (23 2009 Company Overview (/Sipedia ine. pany
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, including statements about the future financial and operational performance of the Company. These statements are not guarantees of future per
Slide 3: Global Opportunity
Global Opportunity Sources: U.S. Online Travel Overview 8th Edition Update: 2009 - 2010 (April 2009); U.S. Corporate Travel Distribution 4th Edition (July 2009); European Online Travel Overview 4th Edition Electronic Market Data Sheet (January 2009); European figures assume Euro/USD exchange rate in
Slide 4: World's Largest and Most Intelligent Travel Marketplace
World's Largest and Most Intelligent Travel Marketplace Suppliers Customers Hotels Airlines Car rental companies Cruise lines Global distribution system (GDS) partners Advertisers Leisure travelers Corporate travelers Travel service providers ("white label") Offline retail travel agents Secure super
Slide 5: Expedia - the Travel Sector Leader
Expedia - the Travel Sector Leader 1Sources: comScore MediaMetrix, August, 2009 & company data; 2 See Appendix B for reconciliation of non-GAAP to GAAP numbers. Adjusted EBITDA is calculated as operating income plus depreciation, restructuring charges, intangibles amortization, stock-based compensat
Slide 6: Largest Worldwide Audience
Largest Worldwide Audience Source: comScore MediaMetrix, August 2009 1 Denotes Expedia's percentage difference over next largest competitor U.S. Worldwide Millions Millions UV's Expedia 22.524 Orbitz 9.955 Travelocity 8.206 Priceline 10.083 Yahoo 9.248 UV's Expedia 63.56 Orbitz 17.018 Priceline 29.9
Slide 7: Expedia's Virtuous Cycle
Expedia's Virtuous Cycle Growth / Scale More travelers Compelling supplier & advertising channel Better supplier economics Cash flow to improve traveler experience 7 User-generated content Scale drives opportunity to enhance supplier & traveler value propositions, reward stakeholders More ad revenue
Slide 8: Revenue by Product & Geography
Revenue by Product & Geography Product Categories (TTM 9.30.09) Geographic Segments (TTM 9.30.09) Hotel 64% Revenue Air 12% * Hotel & Advertising - key revenue & profitability drivers * Europe & other international markets benefit from earlier stage online penetration * Significant international gro
Slide 9: Product Category - Hotel
Product Category - Hotel Business Overview Merchant Model Hotels (Supplier) Travelers Revenues to Expedia: Spread between the discounted rate provided by suppliers and sales price paid by travelers Service fees from travelers Other: Cash received on booking, revenue recognized at stay Revenue margin
Slide 10: Product Category - Advertising & Media
Oct 02 0.1 Oct 03 0.202 Oct 04 0.66 Oct 05 2.9 Jun 06 5 Jun 07 10 May08 15 Oct08 20 Jul09 25 Product Category - Advertising & Media Ad & Media Brand Portfolio Business Overview Two primary businesses - TripAdvisor Media Network (leading global collection of user-generated content sites) Expedia Medi
Slide 11: Product Category - Air
Product Category - Air Business Overview Air revenue < 15% of Expedia's worldwide annual revenue - - ~90% of airplane tickets sold over Expedia's online properties are agency transactions, in which Expedia acts as agent on behalf of a supplier and collects a commission - - Customer pays supplier dir
Slide 12: Stable Supplier Relationships & Economics
Stable Supplier Relationships & Economics Strong, stable revenue margin driven by: Long-term agreements with airlines and GDS providers Growth in merchant hotel mix offsets fee cut activity Better hotel relationships through PSG investment Recent fee reductions / eliminations put some pressure on re
Slide 13: YTD 2009 Results
YTD 2009 Results Figures in $mm unless otherwise noted Unit Acceleration & Share Gains - Q309 room night growth of 27% v. 26% Q209; Q3 US room demand off (5%) per Smith Travel Air ticket growth improved to +27% in Q309 v. 13% Q209; Global RPMs off (2.5%) Q309 Q308 y/y YTD09 YTD08 y/y Transactions (m
Slide 14: Trended Free Cash Flow (TTM)
Trended Free Cash Flow (TTM) $millions '08 cash flows down due to taxes, slowing merchant hotel & increasing cap ex Over $2B in free cash flow generated in past 4 years '09 cash flows stabilizing due to merchant hotel improvement & decreasing cap ex
Slide 15: Efficiently Managing Dilution
Efficiently Managing Dilution 9% reduction in share base since Q107 millions of adjusted diluted shares
Slide 16: Capitalization
Capitalization 1 Does not include eLong cash invested in time deposits, Reserve Fund investment or restricted cash 2 Total size of facility is $1bn; available capacity reduced by $42mm in outstanding letters of credit; $650mm of revolver was repaid in Q109 3 Based on 293.7mm diluted shares & 10/23/0
Slide 17: Trended Credit Metrics
Trended Credit Metrics Demonstrated strong credit metrics, consistent with investment grade rating 2005 2006 2007 2008 TTM 9.30.09 Total Debt / Adjusted EBITDA1 0.3 0.8 1.5 2.0 1.1 Net Debt / Adjusted EBITDA1 N / A N / A 0.6 1.1 0.1 Adj. EBITDA / Interest Expense1 N / A 37.5 13.8 10.8 9.6 Free Cash
Slide 18: Rating Agency Snapshot
Rating Agency Snapshot S&P (Analyst: Andy Liu) Expedia Inc. Rating Raised To 'BBB-' From 'BB'; Outlook Stable Oct 14, 2009 "The ratings upgrade is based on Expedia's revised financial policy, solid operating performance, and strong financial measures. The 'BBB-' rating reflects the company's leading
Slide 19: Summary
Summary Attractive macro tailwind as travel industry shifts online World's #1 online provider of travel-related services Leading traffic, supply, scale, bookings, revenue and cash flow Strong and complementary portfolio of brands and products Critical partner to airlines, hotels and other travel sup
Slide 20: Appendix A
Appendix A 20
Slide 21: Business Model - income statement (TTM 9.30.09)
Business Model - income statement (TTM 9.30.09) ($MM) Gross bookings $20,783 Revenue 2,879 Cost of revenue * 598 Selling and marketing * 998 General and administrative * 246 Technology and content * 291 "OIBA" * (inc. $9mm hedge loss) 736 OIBA margin* 26% Stock-based compensation 60 Amortization of
Slide 22: Trended Historical Results
Trended Historical Results y/y growth 2005 2006 2007 2008 2006 2007 2008 Gross Bookings 15,336 16,882 19,632 21,269 10% 16% 8% Revenue 2,119 2,238 2,665 2,937 6% 19% 10% Cost of goods sold & operating expenses * 1,492 1,639 1,996 2,239 10% 22% 12% OIBA*** 627 599 670 698 (5%) 12% 4% OIBA Margin*** 3
Slide 23: Appendix B
/ &xpedia inc. Appendix B (23 2009 Company Overview 23
Slide 24: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Operating Income Before Amortization 12 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended Sept 30, 2009 Sept 30, 2009 Sept 30, 2009 Sept 30, 2008 Sept 30, 2008 OIBA $ 735,713 $ 598,629 $ 256,426 $ 560,690 $ 230,780 Amortization of inta
Slide 25: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Operating Income Before Amortization Year Ended Dec. 31, 2005 Year Ended Dec. 31, 2006 Year Ended Dec. 31, 2007 Year Ended Dec. 31, 2008 OIBA $ 627,441 $ 599,018 $ 669,487 $ 697,774 OIBA margin 30% 27% 25% 24% Amortization of intangible assets (126,067) (110
Slide 26: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Costs & Expenses Year Ended Dec. 31, 2005 Year Ended Dec. 31, 2006 Year Ended Dec. 31, 2007 Year Ended Dec. 31, 2008 Total costs and expenses* $ 1,583,739 $ 1,718,853 $ 2,058,694 $ 2,300,530 Less: stock-based compensation (91,725) (80,285) (62,849) (61,291)
Slide 27: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization 12 Months Ended Sept 30, 2009 9 Months Ended Sept 30, 2009 3 Months Ended Sept 30, 2009 9 Months Ended Sept 30, 2008 3 Months Ended Sept 30, 2008 Adjusted EBITDA 832,918 673,969 282,337 61
Slide 28: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization Year Ended Dec. 31, 2005 Year Ended Dec. 31, 2006 Year Ended Dec. 31, 2007 Year Ended Dec. 31, 2008 Adjusted EBITDA 677,886 647,797 729,013 774,574 Adjusted EBITDA margin 32% 29% 27% 26% D
Slide 29: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Free Cash Flow ($000's) TTM = Trailing Twelve Month periods ended (c) 2009 Expedia, Inc. All rights reserved. Trademarks and logos are property of their respective owners. TTM 6.07 TTM 9.07 TTM 12.07 TTM 3.08 TTM 6.08 Net cash provided by operating activitie
Slide 30: Tabular Reconciliations For Non-GAAP Data
Tabular Reconciliations For Non-GAAP Data Costs & Expenses 12 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended Sept 30, 2009 Sept 30, 2009 Sept 30, 2009 Sept 30, 2008 Sept 30, 2008 Cost of revenue 600,398 461,711 169,436 500,022 177,735 Less: stock-based compensation (2,229)