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Priceline Group Acquisition of KAYAK
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"KAYAK has built a strong brand in online travel research and their track record of profitable growth is demonstrative of their popularity with consumers and value to advertisers," said
The board of directors of both companies approved the transaction, which is subject to KAYAK shareholder approval, customary closing conditions and regulatory approval. Until the transaction is closed, both companies will continue to operate independently.
Third Quarter 2012 Financial Results
In light of today's announcement, the previously scheduled conference call to discuss third quarter 2012 financial results has been canceled.
"We generated record revenue and profits," said
- GAAP EPS:
$0.19 , as compared to$0.18 in the third quarter of 2011.
- Non-GAAP EPS:
$0.26 , as compared to$0.26 in the third quarter of 2011. Non-GAAP earnings-per-share excludes$4.1 million in stock based compensation and$1.4 million of amortization of intangibles.
Third Quarter 2012 Operating Metrics
- We processed 302 million queries across our websites and mobile applications, a 31% increase from 231 million queries in the third quarter of 2011.
- We processed 246 million queries on our websites, a 23% increase from the third quarter of 2011.
- We processed 56 million queries through our mobile applications, an 87% increase from the third quarter of 2011.
- Our applications were downloaded 3.1 million times, a 95% increase compared to the third quarter of 2011.
- Total RPM was
$260 compared to$265 in the third quarter of 2011, due to increased mix of mobile queries.
- Website RPM was
$305 , a 2% increase from$299 in the third quarter of 2011.
- Mobile RPM was
$62 , a 63% increase from$38 in the third quarter of 2011. This increase reflects both improved monetization and the refined methodology for defining queries discussed above.
About KAYAK
KAYAK strives to be the best place to plan and book travel. The company's websites and mobile apps allow people to easily compare hundreds of travel sites at once, and give travelers choices on where to book. KAYAK operates websites in 18 countries and offers free apps for leading mobile platforms.
About the
Cautionary Note Regarding Forward Looking Statements:
Certain statements in this communication regarding the proposed transaction between priceline.com Incorporated ("Priceline") and
Participants in Solicitation
KAYAK, Priceline and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from KAYAK's stockholders with respect to the transactions contemplated by that certain Merger Agreement, dated as of
Additional Information and Where to Find It
This press release relates to a proposed transaction between KAYAK and Priceline, which will become the subject of a registration statement and joint proxy statement/prospectus forming a part thereof to be filed with the
Investors and security holders will be able to obtain free copies of the registration statement, joint proxy statement/prospectus and all other relevant documents filed or that will be filed with the
In addition, investors and security holders will be able to obtain free copies of the Proxy Statement/Prospectus from KAYAK by contacting
Use of Non-GAAP Financial Measures
We exclude the following items from one or more of our non-GAAP measures:
Stock-based compensation. We exclude stock-based compensation because it is non-cash in nature and because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. Due to varying available valuation methodologies, subjective assumptions and the variety of award types we can use under FASB ASC Topic 718, our management believes that providing non-GAAP financial measure that excludes stock-based compensation allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies. We further believe this measure is useful to investors in that it allows for greater transparency to certain line items in our financial statements and facilitates comparisons to competitors' operating results.
Amortization and impairment of acquired intangible assets and amortization and depreciation of tangible assets. We exclude (i) amortization and impairment of acquired intangible assets and (ii) amortization and depreciation of tangible assets because they are non-cash in nature and because we believe that the non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding these items from various non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors' operating results.
Income tax effect of non-GAAP adjustments. We adjust non-GAAP net income by including the income tax effects of excluding stock-based compensation and the amortization and impairment of acquired intangible assets. We believe that the inclusion of the income tax effect provides additional transparency to the overall or "after tax" effects of excluding these items from non-GAAP net income.
Dilutive shares under the treasury stock method. For the nine months ended
For more information on the non-GAAP financial measures, please see the "Schedule of Non-GAAP Reconciliations" and "Adjusted Net Income and Diluted Earnings Per Share (Non-GAAP)" tables in this press release. These accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
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Consolidated Statements of Operations (Unaudited, in thousands, except share and per share amounts) |
||||
|
Three Months Ended |
Nine Months Ended |
|||
| 2012 | 2011 | 2012 | 2011 | |
| Revenues | $ 78,604 | $ 61,160 | $ 228,880 | $ 170,587 |
| Cost of revenues (excludes depreciation and amortization) | 4,908 | 4,151 | 14,900 | 13,780 |
| Selling, general and administrative expenses: | ||||
| Marketing | 40,042 | 28,935 | 120,700 | 87,417 |
|
Personnel, includes stock-based compensation of |
12,393 | 10,286 | 35,612 | 30,125 |
|
Other general and administrative expenses, includes stock-based compensation of |
4,256 | 3,196 | 12,703 | 11,577 |
| Total selling, general and administrative expenses (excludes depreciation and amortization) | 56,691 | 42,417 | 169,015 | 129,119 |
| Depreciation and amortization | 2,078 | 1,935 | 6,178 | 6,337 |
| Impairment of intangible assets | — | — | — | 14,980 |
| Income from operations | 14,927 | 12,657 | 38,787 | 6,371 |
| Other income (expense) | ||||
| Interest income | 66 | 23 | 134 | 68 |
| Other income (expense) | (831) | (449) | (1,640) | 468 |
| Total other income (expense) | (765) | (426) | (1,506) | 536 |
| Income before taxes | 14,162 | 12,231 | 37,281 | 6,907 |
| Income tax expense | 6,208 | 5,263 | 17,894 | 3,077 |
| Net income | 7,954 | 6,968 | 19,387 | 3,830 |
| Redeemable convertible preferred stock dividends | (772) | (2,937) | (6,644) | (8,809) |
| Deemed dividend resulting from modification of redeemable convertible preferred stock | — | — | (2,929) | — |
| Net income (loss) attributed to common stockholders | $ 7,182 | $ 4,031 | $ 9,814 | $ (4,979) |
| Net income (loss) per common share | ||||
| Basic |
|
|
|
|
| Diluted |
|
|
|
|
| Weighted average common shares | ||||
| Basic | 29,962,706 | 7,336,438 | 14,739,047 | 7,412,882 |
| Diluted | 42,746,507 | 37,669,803 | 40,289,192 | 7,412,882 |
|
Condensed Consolidated Balance Sheets (Unaudited, in thousands, except share and per share amounts) |
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|
|
|
|
| 2012 | 2011 | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 170,140 | $ 35,127 |
| Marketable securities | 8,226 | 11,198 |
| Accounts receivable, net of allowance for doubtful accounts | 51,771 | 37,332 |
| Deferred tax asset | 2,212 | 2,212 |
| Prepaid expenses and other current assets | 5,387 | 5,425 |
| Total current assets | 237,736 | 91,294 |
| Property and equipment, net | 5,377 | 5,474 |
| Intangible assets, net | 13,446 | 17,684 |
| Goodwill | 155,572 | 155,677 |
| Deferred tax asset | 9,345 | 7,488 |
| Other assets | 1,323 | 331 |
| Total assets | $ 422,799 | $ 277,948 |
| Liabilities and stockholders' equity (deficit) | ||
| Current liabilities | ||
| Accounts payable | $ 17,833 | $ 9,514 |
| Accrued expenses and other current liabilities | 21,160 | 16,220 |
| Total current liabilities | 38,993 | 25,734 |
| Warrant liability | 542 | 1,150 |
| Deferred tax liability | 3,286 | 4,202 |
| Other long-term liabilities | 2,545 | 1,092 |
| Total liabilities | 45,366 | 32,178 |
| Redeemable convertible preferred stock | — | 247,494 |
| Commitments and contingencies | ||
| Stockholders' equity (deficit) | ||
| Preferred Stock | — | — |
| Common Stock | — | 7 |
|
Class A common stock: 4,587,563 shares issued and outstanding as of |
5 | — |
|
Class B common stock: 33,949,749 shares issued and outstanding as of |
34 | — |
| Additional paid-in capital | 366,442 | 3,296 |
| Cumulative translation adjustment | (1,456) | (977) |
| Accumulated earnings (deficit) | 12,408 | (4,050) |
| Total stockholders' equity (deficit) | 377,433 | (1,724) |
| Total liabilities and stockholders' equity (deficit) | $ 422,799 | $ 277,948 |
|
Consolidated Statements of Cash Flows (Unaudited, in thousands) |
||
|
Nine Months Ended |
||
| 2012 | 2011 | |
| Cash flows from operating activities | ||
| Net income (loss) | $ 19,387 | $ 3,830 |
| Adjustments to reconcile net income to net cash from operating activities: | ||
| Depreciation and amortization | 6,178 | 6,337 |
| Stock-based compensation expense | 9,952 | 9,312 |
| Excess tax benefits from exercise of stock options | (154) | (579) |
| Deferred taxes | (2,740) | (10,407) |
| Mark to market adjustments | 923 | (468) |
| Impairment of intangible assets | — | 14,980 |
| Other | — | 122 |
| Changes in assets and liabilities, net of effect of acquisitions: | ||
| Accounts receivable, net | (14,509) | (9,147) |
| Prepaid expenses and other current assets | (1,967) | (8,089) |
| Accounts payable | 8,330 | 4,345 |
| Accrued liabilities and other liabilities | 6,280 | 16,779 |
| Net cash from operating activities | 31,680 | 27,015 |
| Cash flows from investing activities | ||
| Capital expenditures | (1,957) | (2,693) |
| Proceeds from sale of property and equipment | — | 42 |
| Purchase of marketable securities | (8,472) | (21,289) |
| Maturities of marketable securities | 11,266 | 10,907 |
| Exercise of put options | — | (13,221) |
| Cash paid for business combinations, net of cash acquired | — | (9,160) |
| Net cash from investing activities | 837 | (35,414) |
| Cash flows from financing activities | ||
| Proceeds from exercise of stock options | 892 | 1,546 |
| Proceeds from initial public offering, net of offering costs | 95,705 | (1,234) |
| Tax benefits realized from exercise of stock options | 154 | 579 |
| Private placement Class A common stock issuances | 6,024 | — |
| Net cash from financing activities | 102,775 | 891 |
| Effect of exchange rate changes on cash and cash equivalents | (279) | 96 |
| Increase (decrease) in cash and cash equivalents | 135,013 | (7,412) |
| Cash and cash equivalents, beginning of period | 35,127 | 34,966 |
| Cash and cash equivalents, end of period | $ 170,140 | $ 27,554 |
| Supplemental disclosures of cash flow information | ||
| Cash paid during the period for: | ||
| Interest | — | — |
| Income taxes | $ 16,875 | $ 8,319 |
|
Key Operating Metrics (Unaudited, in thousands, except RPM) |
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|
Three months ended |
Nine months ended |
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| 2012 | 2011 | 2012 | 2011 | |
| Estimated Mobile Queries | 56,234 | 30,145 | 150,373 | 77,185 |
| Estimated Website Queries | 246,140 | 200,683 | 751,030 | 588,952 |
| Total Queries | 302,374 | 230,828 | 901,403 | 666,137 |
|
Three months ended |
Nine months ended |
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| 2012 | 2011 | 2012 | 2011 | |
| Estimated Mobile RPM | $ 62 | $ 38 | $ 52 | $ 37 |
| Estimated Website RPM | $ 305 | $ 299 | $ 294 | $ 285 |
| Total RPM | $ 260 | $ 265 | $ 254 | $ 256 |
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Schedule of Non-GAAP Reconciliations (Unaudited, in thousands) |
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|
Three months ended |
Nine months ended |
|||
| 2012 | 2011 | 2012 | 2011 | |
| Income from operations | $ 14,927 | $ 12,657 | $ 38,787 | $ 6,371 |
| Other income (expense), net | (831) | (449) | (1,640) | 468 |
| Depreciation and amortization | 2,078 | 1,935 | 6,178 | 6,337 |
| Impairment of intangible assets | — | — | — | 14,980 |
| EBITDA | 16,174 | 14,143 | 43,325 | 28,156 |
| Stock-based compensation | 4,112 | 3,121 | 9,952 | 9,312 |
| Other (income) expense, net | 831 | 449 | 1,640 | (468) |
| Adjusted EBITDA | $ 21,117 | $ 17,713 | $ 54,917 | $ 37,000 |
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Non-GAAP Net Income and Diluted Earnings Per Share (Unaudited, in thousands except Basic and Diluted Weighted Average Common Shares and Earnings Per Share) |
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|
Three months ended |
Nine months ended |
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| 2012 | 2011 | 2012 | 2011 | |
| GAAP Net income | $ 7,954 | $ 6,968 | $ 19,387 | $ 3,830 |
| Amortization of intangibles | 1,388 | 1,472 | 4,203 | 5,006 |
| Impairment of intangibles | — | — | — | 14,980 |
| Stock-based compensation | 4,112 | 3,121 | 9,952 | 9,312 |
| Tax impact | (2,167) | (1,951) | (5,441) | (12,776) |
| Non-GAAP Net income | 11,287 | 9,610 | 28,101 | 20,352 |
| Diluted weighted average common shares | 42,746,507 | 37,669,803 | 40,289,192 | 37,229,282 |
| Non-GAAP Diluted EPS | $ 0.26 | $ 0.26 | $ 0.70 | $ 0.55 |
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We recently revised our methodology for counting mobile queries to remove repetitive searches conducted during the same user session. By removing repetitive searches, our methodology is now consistent for both website queries and mobile. As a result, the number of reported mobile queries is lower, and the corresponding revenue per thousand queries (RPM) is higher for mobile. The table below presents the revised estimates for historical mobile queries and RPMs based on our revised methodology. These revised estimates will also be reflected in our future periodic reports, including our Form 10-Q for the quarter ending |
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| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
| 2011 | 2011 | 2011 | 2011 | 2012 | 2012 | 2012 | |
| Estimated Mobile Queries | 21,849 | 25,190 | 30,145 | 32,110 | 45,030 | 49,108 | 56,234 |
| Estimated Website Queries | 188,813 | 199,456 | 200,683 | 182,663 | 257,954 | 246,936 | 246,140 |
| Total Queries | 210,662 | 224,646 | 230,828 | 214,773 | 302,984 | 296,044 | 302,374 |
| Estimated Mobile RPM | $ 35 | $ 38 | $ 38 | $ 32 | $ 38 | $ 54 | $ 62 |
| Estimated Website RPM | $ 275 | $ 280 | $ 299 | $ 290 | $ 278 | $ 301 | $ 305 |
| Total RPM | $ 250 | $ 253 | $ 265 | $ 251 | $ 242 | $ 260 | $ 260 |
CONTACT: Investor Relations:
Denise Garcia
203-682-8335
IR@kayak.com
Media Relations:
Jessica Casano-Antonellis
prcontact@kayak.com
Source: Kayak
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