Travelocity Reports Profitability Ahead of Plan - Record Revenues of 73 Million USD, Up 104% - Record Gross Travel Bookings of $834 Million, Up 65% - Record Conversion Rate of 8.9% - Membership Rises to 27 Million - Expects to Maintain Quarterly Profitabi
FORT WORTH, Texas, April 18 /
Gross travel bookings grew 65% over the first quarter of last year and 20% over the prior quarter to $833.6 million. At $72.9 million, revenues were 104% higher than the quarter a year ago and 11% higher than last year's fourth quarter. Gross profit of $47.7 million improved 141% and 7% over the first and fourth quarters of 2000, respectively. Net profit, excluding special items described below, was $618,000 or $0.03 per share for the quarter.
During the quarter, Travelocity's membership rose by 2 million to 27 million members and the conversion ratio increased to 8.9%, compared to 4.7% in the first quarter of last year and 8.1% in the prior quarter. Average monthly unique bookers were 661,000, up 67% from 395,000 for the same period a year ago and up 26% from 525,000 for the prior quarter. During the quarter, 1.1 million hotel room nights were booked, representing a 50% increase over the fourth quarter.
On April 3 we celebrated Travelocity's fifth birthday, which marks a major milestone for an Internet company, said Terrell B. Jones, president and chief executive officer of Travelocity. During those years, we have been consistent in building and executing our successful business model. We have continually introduced new features and innovations that keep Travelocity in a leadership position, and we have been disciplined in accomplishing our operating goals time and again. Our results prove that the concept of booking travel on the Internet works.
We are pleased with the first quarter performance and Travelocity's resilience within a slower economy, commented Ramesh Punwani, chief financial officer. With a positive EBITDA of $3.4 million in the first quarter, we have reached a key mark in the Company's history a quarter ahead of schedule. Our liquidity improved as well to $86.1 million in cash and marketable securities at the end of the quarter, without taking on any debt. Despite economic pressures, we are projecting modest growth during the remaining three quarters of the year with a net profit, excluding special items, that will range from $0.17 to $0.21 per share for 2001.
Special items in the first quarter of 2001 include a $22.4 million expense related to the amortization of goodwill, $2.6 million in non-cash stock compensation expense, a $7.2 million gain related to the cumulative effect of the adoption of SFAS 133, and a $5.8 million loss related to unrealized changes in the fair value of warrants held by the company.
Key Pro Forma Financial Highlights
[see "Notes on Attached Financial Exhibits" below]
- Gross travel bookings were $833.6 million compared to $504.3 million in the first quarter of last year and $696.4 million in the prior quarter.
- First quarter revenues were $72.9 million compared to $35.7 million in the first quarter of last year and $65.5 million in the prior quarter.
- Transaction revenues were $50.9 million, an increase of 71% over the first quarter of 2000 and 16% over the prior quarter. Revenue for air sales rose 71% over the first quarter of last year and 24% over the prior quarter. Non-air travel revenue rose 72% compared to last year's first quarter and declined 7% over last year's fourth quarter, due primarily to timing of cash receipts. Non-air revenue accounted for 22% of first quarter transaction revenues compared to 27% of transaction revenues in the fourth quarter of last year.
- Advertising revenues were $16.8 million in the first quarter, up 221% from the first quarter of last year and down 10% from the prior quarter. The quarter's performance was very strong despite the significant slowdown in industry advertising revenue. First quarter advertising revenues are typically lower than the fourth quarter, which is the strongest quarter for advertising revenues due to the seasonality of travel and holiday advertising.
- Other revenues of $5.2 million grew 81% over the prior quarter.
- Gross profit was $47.7 million compared to $19.8 million in the first quarter of last year and $44.8 million in the prior quarter. Gross margin for the quarter was 65.5% compared to 55.5% for the first quarter of 2000 and 68.4% for the prior quarter. The decrease in gross margin from the prior quarter was a result of a change in revenue mix due to the anticipated seasonal decrease in higher-margin advertising revenues.
- Operating expenses (excluding intangibles) declined as a percentage of revenue to 65% in the first quarter of 2001 compared to 98% in the first quarter of 2000 and 74% in the prior quarter.
- Net profit before special items was $618,000 or $0.03 per share, as compared to a pro forma net loss before special items of $0.31 per share for the same period a year ago and a net loss before special items of $0.05 cents per share in the previous quarter.
- Cash profit from operations (EBITDA) was $3.4 million for the quarter, compared to a cash loss of $1.3 million in the prior quarter.
Alliances / Operating Highlights
- On April 3 during Travelocity's fifth anniversary celebration, the Company announced five new innovations: the GoodBuy program, which expands upon the already successful Travelocity Value program featuring special low fares and hotel room rates; Travelocity Preferred Traveler, a travel club designed for the online traveller that includes perks and discounts worldwide; an online Travelocity Vacations brand; Option Finder, which advises members about alternate dates and cities where lower fares may be available; and the Travelocity.com World MasterCard.
- Travelocity and Hotel Reservations Network announced they would extend their alliance through July 31, 2005 and expand the scope of their relationship. As part of this agreement, Travelocity will continue to integrate and promote a wide array of HRN's negotiated discount rates through its hotel offerings and will now provide vacation rental units through HRN's Condosaver.com. HRN will offer and promote Travelocity's air and car rental products through its Web sites. In connection with the expanded and extended agreement, Travelocity's existing equity rights in HRN have been enhanced through accelerated vesting to the mutual benefit of both companies.
- In March, Travelocity announced a long-term relationship in which TravelCLICK will provide Travelocity with advertising and value-added promotional messages from local travel, hospitality and destination advertisers around the world.
- Travelocity announced an alliance with Yahoo! Inc. to be the content provider for Yahoo!® Travel Web-enabled cell phones in the United States.
- The Company unveiled its new Business Travel Center designed to provide business travelers with instant access to all of Travelocity's powerful travel features, in addition to tools tailored to make planning and booking business travel easier.
- Early in March, Travelocity.ca announced a multi-year alliance with AOL Canada as the reservations engine provider for the new AOL Canada(TM) Travel Channel.
- In response to the Northwest and KLM decision to eliminate the commissions paid to online travel agents, Travelocity announced in February that it would impose a $10 service fee for Northwest/KLM tickets.
- Also in February, Travelocity announced a marketing alliance with MasterCard International making MasterCard the preferred payment brand for Travelocity. Travelocity also announced its Travelocity Rewards program, where Travelocity.com World MasterCard cardholders can earn points redeemable for any travel product available on Travelocity, with no blackout periods, no matter when the date of travel or where the destination.
- In January, Sprint PCS, Sabre Holdings Corporation and Travelocity announced agreements that will provide wireless travel tools to Sprint PCS customers via their Sprint PCS Internet-ready phones.
- Also in January, a study was released by Topaz International, the independent airfare auditing and benchmarking company, that found Travelocity located the lowest fare 80% of the time when searching 300 different reservation requests, compared to less than 50% for other online travel companies.
Special Honors - Recognition
- In April, Travelocity was recognized by FamilyPC and named a "Family Tested" winner in the Travel category for the publication's "Top 100 Family Web Sites."
- Travelocity was honored by the Software & Information Industry Association and recognized as the "Best Travel Product or Service" at the Codie Awards in San Diego on March 12.
Management will review first quarter results during a conference call scheduled for 9:00 a.m. CDT on Thursday, April 19. The call can be accessed by dialing 877-601-3547, pass code 'Travelocity', or by clicking on the link '1Q Conference Call - 4/19 9 am CDT' at the bottom of the home page of the Company's Web site at www.Travelocity.com.
About Travelocity
Travelocity.com Inc., a database-driven travel marketing and transaction company, provides Internet and wireless reservation information for more than 700 airlines, more than 50,000 hotels and more than 50 car rental companies. In addition, Travelocity offers more than 6,500 vacation packages, tour and cruise departures and a vast database of destination and interest information. Travelocity employs more than 1,000 customer service professionals, has sold more than 14 million airline tickets and has registered 27 million members.
Notes on Attached Financial Exhibits
Exhibit 1 outlines the results of operations before special items for the Company for the first quarter of 2001 compared to the respective year-ago period for the combined Company (including Preview Travel). Exhibit 2 includes combined Company GAAP financial statements for the first quarter of 2001 and the as-reported financial statements for Travelocity.com alone for January 1 through March 7, 2000 and the combined Company financial statements for March 8 through March 31, 2000. Travelocity.com believes that the results of operations before special items in Exhibit 1 are more representative of the financial performance of the Company's business. Exhibits 3 and 3A outline key pro forma performance and derived performance statistics for the combined Company for the past five quarters. Exhibit 4 presents selected balance sheet data as of March 31, 2001, and December 31, 2000.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this release that are not purely historical facts, including statements about anticipated or expected future revenue and earnings growth and profitability, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are based only upon information available to Travelocity on the date of this report. All such forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described, including risks related to additional elimination or reduction of commissions paid by travel suppliers, which could reduce Travelocity's revenues; risks associated with travel industry consolidation, including strategic alliances and consortia (including travel supplier consortia); risks relating to Travelocity's relationships with Sabre Holdings Corporation and its affiliates (including the risks of potential conflicts of interest); risks associated with the continued use and growth of the Internet and, relatedly, the extent of acceptance and profitability of online commerce; and risks relating to Travelocity's technology, including Travelocity's ability to rapidly develop and achieve market acceptance of new products and services, and related risks that rapid technological changes may render Travelocity's technology obsolete or decrease the attractiveness of its existing products and services relative to the products and services, respectively, of its competitors.
Further information about risks and uncertainties that could affect Travelocity's financial and other results is included in Travelocity's other documents filed with, or furnished to, the Securities and Exchange Commission. Travelocity undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on forward- looking statements.
EXHIBIT 1
Travelocity.com Inc.
Statements of Operations Before Special Items (A)
(In Thousands)
(Unaudited)
Three Months Ended March 31,
2001 2000
Gross travel bookings (B) $833,600 $504,300
Revenues
Transaction $50,858 $29,774
Advertising 16,757 5,225
Other 5,236 696
Total revenues 72,851 35,695
Cost of revenues 25,120 15,895
Gross profit 47,731 19,800
Gross margin % 65.5% 55.5%
Operating expenses
Selling and marketing 35,840 24,357
Technology and development 5,123 5,207
General and administrative 6,349 5,400
Total operating expenses 47,312 34,964
Operating profit (loss) 419 (15,164)
Interest income, net 1,150 544
Profit (loss) before Sabre interest 1,569 (14,620)
Sabre's interest in partnership (C) (951) 9,058
Profit (loss) after Sabre interest $618 ($5,562)
Provision for income taxes (D) 0 0
Net profit (loss) after Sabre interest $618 ($5,562)
Net profit (loss) per share after
Sabre interest $0.03 ($0.31)
Weighted average diluted shares
outstanding (E) 22,289 17,658
(A) The information presented above assumes the merger of Travelocity.com
and Preview Travel occurred on January 1, 2000. The unaudited
statements of operations before special items are based upon certain
estimates and assumptions, and may not be indicative of the Company's
actual results of operations. The unaudited statements of operations
before special items exclude the recognition of certain expenses,
including the amortization of goodwill and intangible assets recorded
in connection with the acquisition of Preview Travel, certain
non-recurring costs incurred during the integration of Preview
Travel, non-cash stock compensation expenses, the cumulative effect
of the adoption of SFAS No. 133 on January 1, 2001 and unrealized
changes in the fair value of warrants held by the Company which have
been recorded in the GAAP financial statements included in Exhibit 2.
(B) Commencing with 4Q 2000, gross travel bookings include those bookings
made directly through an agreement the Company has with Hotel
Reservations Network, a leading consolidator of hotel rooms for
resale in the consumer market in the United States.
(C) Represents the allocation of approximately 61% and 62% of the profits
or losses of Travelocity.com LP, which consolidates with
Travelocity.com Inc. for financial reporting purposes to Sabre, based
upon Sabre's direct ownership interest in the partnership during 2001
and 2000, respectively.
(D) The Company's net operating loss carryforwards shield current income
for 1Q 2001 without need for a provision for income taxes.
(E) Weighted average shares outstanding counts have been computed to
include 3.0 million shares of common stock attributable to Sabre's
direct ownership interest in Travelocity.com Inc. The 1Q 2001
weighted average shares outstanding counts include shares computed
under the treasury method for computation of diluted EPS.
EXHIBIT 2
Travelocity.com Inc.
Statements of Operations (A)
(In Thousands)
(Unaudited)
Three Months Ended March 31,
2001 2000
Gross travel bookings (B) $833,600 $399,400
Revenues
Transaction $50,858 $22,924
Advertising 16,757 3,403
Other 5,236 696
Total revenues 72,851 27,023
Cost of revenues 25,120 12,144
Gross profit 47,731 14,879
Gross margin % 65.5% 55.0%
Operating expenses
Selling and marketing 35,840 16,674
Technology and development 5,123 3,988
General and administrative 6,349 3,494
Integration related expenses 0 526
Stock compensation expense 2,642 1,546
Amortization of intangibles 22,397 5,714
Total operating expenses 72,351 31,942
Operating loss (24,620) (17,063)
Interest income, net 1,150 334
Cumulative effect of adoption of SFAS 133 7,178 0
Other income (C) (5,750) 0
Loss before Sabre interest (22,042) (16,729)
Sabre's interest in partnership (D) 0 7,658
Loss after Sabre interest ($22,042) ($9,071)
Provision for income taxes (138) 0
Net loss ($22,180) ($9,071)
Net loss per share ($1.14) ($0.32)
Weighted average shares outstanding (E) 19,420 28,449
(A) The information presented above reflects the actual performance for
Travelocity.com alone for January 1 through March 7, 2000; and the
combined company for March 8, 2000 and beyond.
(B) Commencing with 4Q 2000, gross travel bookings include those bookings
made directly through an agreement the Company has with Hotel
Reservations Network, a leading consolidator of hotel rooms for
resale in the consumer market in the United States.
(C) Other income includes the unrealized changes in the fair value of the
Hotel Reservation Network warrants held by Travelocity.com during the
reporting period, as recorded subsequent to the adoption of SFAS No.
133 on January 1, 2001.
(D) Represents the allocation of the losses of Travelocity.com LP, which
consolidates with Travelocity.com Inc. for financial reporting
purposes to Sabre, based on Sabre's direct ownership interest in the
partnership during 2000. The amount of losses which may be allocated
to Sabre are, under generally accepted accounting principles, limited
to the amount of Sabre's investment in the partnership.
(E) The weighted average shares used in the calculation of basic earnings
per share for the quarter ended March 31, 2000 have been calculated
as if the 33 million shares of preferred stock held by Sabre were
outstanding, as common shares, from January 1, 2000 through the
merger with Preview Travel, Inc. on March 7, 2000. For periods after
the merger with Preview Travel, Inc., weighted average shares
outstanding counts have been computed to include 3.0 million shares
of common stock attributable to Sabre's direct ownership interest in
Travelocity.com Inc.
EXHIBIT 3
Combined Travelocity.com Pro Forma Performance Statistics (A)
1Q 2000 2Q 2000 3Q 2000 4Q 2000
GROSS TRAVEL BOOKINGS
($ millions) (B) $504.3 $610.2 $649.5 $696.4
MEMBERSHIP (C) 19,200,000 21,600,000 23,400,000 24,900,000
AVERAGE MONTHLY UNIQUE
BOOKERS (D) 395,000 486,000 509,000 525,000
AVERAGE MONTHLY MEDIA
METRIX REACH (E) 8,400,000 6,900,000 7,200,000 6,500,000
CONVERSION RATIO (F) 4.7% 7.1% 7.1% 8.1%
CUMULATIVE UNIQUE
BOOKERS (G) 3,337,000 4,208,000 5,124,000 6,010,000
TRANSACTIONS (H) 1,831,000 2,144,000 2,206,000 2,306,000
PAGE VIEWS (millions) (I) 750 684 679 560
EXHIBIT 3
Combined Travelocity.com Pro Forma Performance Statistics (A)
1Q 2001
GROSS TRAVEL BOOKINGS
($ millions) (B) $833.6
MEMBERSHIP (C) 26,900,000
AVERAGE MONTHLY UNIQUE
BOOKERS (D) 661,000
AVERAGE MONTHLY MEDIA
METRIX REACH (E) 7,400,000
CONVERSION RATIO (F) 8.9%
CUMULATIVE UNIQUE BOOKERS (G) 7,122,000
TRANSACTIONS (H) 3,042,000
PAGE VIEWS (millions) (I) 692
NOTES:
(A) Data presented includes actual data points where available; however,
certain data points represent estimates of period activity and
estimated duplication factors for duplications across the period
and/or the uncombined companies. Additionally, commencing with 4Q
2000, gross travel bookings include those bookings made through Hotel
Reservations Network.
(B) Gross Travel Bookings represents the total value of travel sales
activity of the two companies for the respective periods.
(C) Membership represents the unduplicated membership at the end of each
period based on the two companies for the respective periods.
(D) Average Monthly Unique Bookers represents the unduplicated (during
the month) average monthly booker activity for the two companies for
the respective periods.
(E) Average Monthly Media Metrix Reach represents the unduplicated
(during the month) unique reach/visitors of the two companies for the
respective periods.
(F) Conversion Ratio computed by dividing average monthly bookers by
average monthly Media Metrix reach.
(G) Cumulative Unique Bookers represents the unduplicated (during the
accumulation period) cumulative booker activity.
(H) Data represents transactions processed in each respective period.
Transactions are gross purchases or PNRs made for customers and may
include one or more airline, car, hotel or vacation and cruise
reservations.
(I) Page views represents total page view activity for the respective
periods.
EXHIBIT 3A
Combined Travelocity.com Pro Forma Derived Performance Statistics (A)
1Q 2000 2Q 2000 3Q 2000 4Q 2000 1Q 2001
GROSS TRAVEL BOOKINGS PER
TRANSACTION (B) $275 $285 $294 $302 $274
NEW MEMBER CONVERSION (C) 24% 36% 51% 59% 56%
REPEAT BOOKER PERCENTAGE (D) 46% 40% 40% 44% 44%
NEW BOOKER ACQUISITION COST (E) $38.42 $34.84 $36.84 $44.42 $32.23
ROLLING NEW BOOKER ACQUISITION
COST (F) $39.22 $37.84 $36.77 $38.64 $36.80
TOTAL BOOKER ACQUISITION
COST (G) $20.55 $20.81 $22.08 $24.97 $18.06
ROLLING TOTAL BOOKER ACQUISITION
COST (H) $22.61 $21.84 $21.22 $22.24 $21.28
GROSS PROFIT PER BOOKER (I) $16.71 $18.99 $21.70 $28.43 $24.06
GROSS PROFIT GAP PER BOOKER (J) ($3.85) ($1.82) ($0.38) $3.46 $5.99
NOTES:
(A) Data presented includes actual data points where available; however,
certain data points represent estimates of period activity and
estimated duplication factors for duplication across the period
and/or the uncombined companies.
(B) Gross Travel Bookings per Transaction is computed as the quarterly
gross travel bookings divided by the quarterly transaction volume.
(C) New Member Conversion is computed as the change in cumulative unique
bookers divided by the change in cumulative membership.
(D) Repeat Booker Percentage is computed as quarterly repeat bookers
(computed as the product of three times average monthly unique
bookers less the quarterly change in cumulative unique bookers)
divided by three times average monthly unique bookers.
(E) New Booker Acquisition Cost is computed as quarterly selling and
marketing expenses divided by the change in cumulative unique
bookers.
(F) Rolling New Booker Acquisition Cost is computed as the rolling four
quarter selling and marketing expense divided by the four quarter
change in cumulative unique bookers.
(G) Total Booker Acquisition Cost is computed as quarterly marketing and
selling expense divided by three times average monthly unique
bookers.
(H) Rolling Total Booker Acquisition Cost is computed as the four quarter
average selling and marketing expense divided by average total
bookers over the same four quarter period.
(I) Gross Profit per Booker computed as quarterly gross profit divided by
the product of three times average monthly unique bookers.
(J) Gross Profit Gap per Booker is computed as the quarterly gross profit
less quarterly selling and marketing expenses divided by the product
of three times the average monthly unique bookers.
EXHIBIT 4
Travelocity.com Inc.
Summary Selected Financial Data
(Unaudited)
March 31, 2001 December 31, 2000
(in thousands) (in thousands)
Balance Sheet Data:
Cash, cash equivalents and
marketable securities 86,146 71,555
Accounts receivable 24,380 19,196
Property and equipment 16,869 17,781
Intangible assets and goodwill 175,539 198,113
Total assets 349,243 327,968
Accounts payable 11,740 6,242
Total current liabilities 33,407 17,653
Working capital 91,174 91,853
Total liabilities (excluding Sabre
interest in partnership) 58,574 21,680
Sabre interest in partnership 0 0
Stockholders' equity 290,669 306,288
Contacts: Travelocity Vollmer
Ramesh Punwani Jennifer Tweeton
817-785-8236 713-546-2230
David Carpenter Judy Haveson
817-785-8237 512-472-3515
