Priceline Group Conference Call Highlights

reported its third quarter earnings on Monday. Shares of the company are down 9 percent. Below are the key highlights from its conference call.

• The group reported consolidated gross bookings for the third quarter of approximately $13.8 billion, up 28% year-over-year. • Non-GAAP net income was $1.2 billion, up 29% year-over-year • Earnings per share was $22.16, up 28% versus prior year surpassing guidance. • Our customers booked accommodation reservations for 95 million room nights in the quarter, up 27% year-over-year versus 29% in Q2. • This modest deceleration reflects the benefit of higher growth rates in new markets, which continue to become an increasing share of our worldwide business. • Growth rates also benefited from strong execution in building supply and availability during our peak booking season. • Booking.com's platform now has over 540,000 hotels and other accommodations in 207 countries, up 52% over last year. • Booking.com is establishing clear global leadership in the online accommodations markets. • We continue to see market share gains in every geography with particular strength outside of Western Europe. • The business is also growing in the non-hotels area as we continue to experiment and invest in adding these properties to our inventory and taking friction out of the booking process. • Growth in our vacation rental bookings including villas, chalets, apartments, apart-hotels and other self-catered product continues to exceed the growth of our hotel business. • Our marketing mix is also diversifying favorably. • We believe the offline branding investments of Booking.com have been a key component. • We intend to continue to complement our substantial online advertising investment with effective offline branding. • Priceline.com posted 10% growth in gross bookings versus 21% in Q2 reflecting the impact of tougher comps from increased advertising on KAYAK last year and a difficult environment for OPEG availability. • Conversely, retail hotel and rental car growth helped offset this challenge with solid performance. • Total rental car days accelerated in the quarter reflecting strong performance of both Rentalcars.com and Priceline.com. • Between KAYAK, Priceline.com and Booking.com, we feel good about our growing position in the United States travel market. • Asia-Pacific also continues to be a bright spot for the group, and we believe we delivered market share gains through the efforts of Agoda.com and Booking.com. • We saw strong growth in particular in North Asia with some recovery from the political unrest in Southeast Asia. • The group performed well in the third quarter with market leading growth on both the top and bottom lines and sustained leadership and profitability. • I believe our teams are executing very well in an intensely competitive marketplace and against a mixed global economic and political backdrop. • We continue to build our brands through smart investments in mobile, marketing, people, best-in-class customer service and product, and service innovation.

• We were excited to have OpenTable join our quarterly leadership team meetings in Amsterdam and the knowledge sharing between OpenTable and the balance of the group. • Pay with OpenTable, our mobile payments app, is off to a strong start with great adoption rates and feedback from diners and restaurants alike. • International expansion will be a longer-term rollout and the team is hard at work laying the ground work for success. • We've also completed our plans for co-marketing between our brands and experimentation and execution.

• OpenTable is included in our income statement from the acquisition close date of July 24 through the end of the quarter. • OpenTable revenue included in Q3 results amounted to $41.2 million and is included in advertising and other revenues in our consolidated statements of operations. • There was no cost of revenues for OpenTable in our reporting format so gross profit equals revenue. • We will report OpenTable's revenue for the first year to help investors understand the impact of the acquisition on our top-line growth. • Q3 was a strong quarter from a top and bottom line perspective. • Room nights booked grew by 27% in the third quarter, decelerating modestly compared to the 29% growth rate for Q2. • Average daily rates, or ADRs, for Q3 2014 were up on a local currency basis by about 3% for the consolidated group. • Q3 gross bookings grew by 28% compared to prior year. • Our Q3 international gross bookings grew by 32% both in U.S. • Gross bookings for our priceline.com brand business in the U.S. grew by 10%, driven by good performance for retail travel services. • We lapped the start of these ad placements in Q3, which caused gross bookings growth to decelerate for Priceline in Q3 and will result in further deceleration in Q4. • Hotel Express Deals performed well, but our Name Your Own Price hotel, air and car services were all down year-over-year due to limited availability of discounted rates and share shift to Express Deals. • I highlight that Name Your Own Price impacts merchant gross bookings and disproportionately impacts merchant revenues, since we record Name Your Own Price revenues on a gross basis, while our other revenues are recorded on a net basis. • Gross profit for the quarter was $2.6 billion and grew 32% as compared to prior year. • Our international operations generated gross profit of $2.34 billion, which constituted an increase of 33% both in U.S. dollars. • Gross profit for our U.S. operations, including OpenTable, which is largely a U.S. business, amounted to $275 million. • In terms of cash flow, we generated approximately $1.3 billion of cash from operations during third quarter 2014, which is about 33% above last year.

• We raised about $2.3 billion of additional capital in the U.S. • We expect international gross bookings to grow by 10% to 17% in U.S. dollars and by 16% to 23% on a local currency basis. • Obviously, the deterioration in the euro exchange rate over the last couple of months is indicative of weakening economic conditions in our most important market, which is of concern as we look at the business going forward. • We have hedge contracts in place to substantially shield our fourth quarter EBITDA and net earnings from any fluctuation in the euro. • We expect Q4 revenue to grow year-over-year by approximately 11% to 18% and gross profit to grow by approximately 17% to 24%. • We expect that declines in our Name Your Own Price service will continue to negatively impact revenue growth rates in Q4. • We estimate that we will spend about $50 million to $55 million for offline advertising in Q4. • We are targeting non-GAAP fully diluted EPS of approximately $9.40 to $10.10 per share, which at the midpoint represents 10% growth year-over-year. • Our non-GAAP EPS guidance assumes a fully diluted share count of 53.2 million shares based upon Monday's closing stock price. • Our Q4 forecast implies full-year EBITDA growth of 26% to 28% with an operating profit margin in the mid-40% range.