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					                     RESEARCH REPORT

                      Created: 03-21-11
                      Authored by: neXtup

This report has been downloaded from SharesPost, Inc., but was prepared by Global Silicon Valley Partners under the neXtup
Research brand ("neXtup Research"), and any opinions contained herein are solely the opinions of Next Up Research. Information
contained herein, including but not limited to research, valuations, calculations, estimates and any other material or sources, is
believed to be reliable, however its accuracy and completeness is not warranted or guaranteed, and past performance is not
indicative of future results. These materials are provided for informational purposes only and should not be used or construed as
an offer to sell or a solicitation of an offer to buy any security. SharesPost, Inc. is not acting as nor is it registered as an investment
adviser.
Investment Highlights
                                                        March 21, 2011
Kayak is a leader among travel meta-search
websites, that aggregate travel information from        Navigating Travel Sites:
dozens of airlines and thousands of hotels to
provide travelers with the ability to make trade-offs   Kayak
on routes, timings and price.
                                                        Company Information
In five years, meta-search engines have captured
                                                        Founded:                     2004
20% of the online travel market, up from 7% in
2005. From 2010-13, we expect Kayak‘s revenues          Headquarters:                Norwalk, CT
to have CAGR of 18%, above the 7% we expect             Total Funding:               $225.7M
for online travel agents.
                                                        Investors: General Catalyst, Sequoia Capital ,
                                                        Accel Partners, Oak Investment Partners, Tenaya
                                                        Capital, Trident Capital, Gold Hill Capital, Norwest
We believe the online travel ad industry is in a
                                                        Venture Partners, Silicon Valley Bank
strong growth phase. TravelZoo, which derives
revenues from ads as does Kayak, reported 20%
                                                        CEO:                         Steve Hafner
YoY increase in revenues. Additionally, Online
                                                        CTO:                         Paul English
Travel Providers like Priceline and Expedia have
reported positive quarterly results.
                                                        neXtup Estimates (details on page 41)

Due to the improvement in industry outlook, we                                                     Previous
                                                                                     Current
have revised our estimates up. Using the following                                                 (10/15/10)
methods – a) Target EV based on steady state            Estimated Share Price:
                                                                                      $24.60-        $20.00-
revenues, normalized net margins, and a growth                                        $26.66         $21.86
multiple, and b) Multiple of EV/Revenue for                                          $930.6M-       $705.0M-
                                                        Estimated Market Cap:
comparable companies, we have arrived at a                                           $1012.8M       $770.6M
market capitalization of $930.6M - $1012.8M, an         2011E Revenue                $224.7M         $210M
estimated price per share of $24.60 - $26.66.           2012E Revenue                $257.4M         $242M

                                                                    www.nextupresearch.com
Investment Concerns


We are concerned that Kayak‘s large ad budget of $110M+ (estimated to be over 60% of estimated 2010
revenues) may not result in sufficient ROI in terms of sustained revenue levels.

In July 2010, Google announced the acquisition of ITA software for $700M. ITA is used by most travel
search engines such as Kayak. Google‘s entry into travel search could make it a potent competitor.

The company has yet to gain much traction in Europe, where it trails Travelsupermarket and Skyscanner
even five years after its European launch.
Recent Events
Positive Quarterly Results from Online Travel Providers



In 4Q10, Expedia‘s revenues increased 16% YoY to $808.4M. Excluding benefits due to changes in
foreign exchange rates, quarterly revenues increased 17% YoY. Revenue growth was primarily driven by
an increase in advertising revenues and in hotel and air bookings. Expedia‘s Leisure segment revenues
increased 13% YoY to $699M. The company‘s TripAdvisor revenues increased 33% YoY to $107M.



In 4Q10, Orbitz revenues increased 4.4% YoY to $182.4M. Orbitz‘s domestic revenue was almost flat at
$135.7M YoY, while international revenues increased 17% YoY to $46.7M. Revenues from hotels were
up 13% YoY and constituted 28% of the total revenues, up from 26%. Revenues from flight tickets were
up 12% YoY to $66.9M.



Ctrip reported 4Q10 revenues of $119M, up 39% YoY. Wing On Travel (acquired in February 2010) and
ezTravel (acquired in August 2009) contributed 8% to the YoY increase in revenues. Revenues from hotel
reservations increased 31% YoY to $55M, driven by increase in both reservation volumes and
commissions. Airline booking revenues increased 35% YoY to $48M, driven both by increased air ticket
sales and commission per ticket.



In 4Q10, Priceline reported revenues of $731M, up 35% YoY. Priceline‘s international business
contributed 51% to the overall revenue, up from 41% in 4Q09.



Kayak to Allow Direct Hotel Bookings

Kayak has partnered with Travelocity to facilitate direct hotel booking through its website. Prior to this
arrangement, Kayak users were redirected to partner sites for making hotel reservations. Users would still
have the option of booking hotels through partner sites.



Kayak files S-1

Kayak filed an S-1 with the SEC on November 17th, 2010. The company generated $128M in revenues in
the first three quarters of 2010, up 48% YoY. Advertising revenues were $74.3 M, 58% of the total
revenues, and the distribution revenues (revenues from referrals) constituted 42% of total revenues within
the same period. Highlights from the S-1 are given below




Important disclosures on page 61                                                               2
Revenues

Kayak generated $128.3M in revenues in first three quarters of 2010, up 48.2% YoY from 1Q-3Q‘09
revenues of $86.6M. Referral revenues and advertising revenues accounted for 42% and 58% of the total
revenues in 1Q-3Q‘10 respectively. US accounted for 93% of Kayak‘s revenues for the nine months
ended September 2010.

Exhibit 1a: Revenue Distribution


        1Q-3Q 2009                                  1Q-3Q 2010


                                                                                Ref erral
                                      Ref erral                                Revenues
                                     Revenues                                    42%
                                       45%
           Advertising
           Revenues                                      Advertising
             55%                                         Revenues
                                                           58%




Source: Company filings

Kayak spent $69.1M on marketing in 1Q-3Q‘10, comprising 54% of the total revenues within the same
period. Expenditure on marketing was 41.6% of the total revenues in 1Q-3Q‘10. The increase in
marketing expenditure in first nine months of 2010 was primarily due to brand marketing campaign
initiated by Kayak.




Important disclosures on page 61                                                            3
Exhibit 1b: Summary of Earnings


                                    Summary of Earnings Report

                                         Income Statement

                                            1Q-3Q 2010        1Q-3Q 2009
                                                                                     YoY
  $, millions                                    Actual            Actual

  Revenue

   Distribution Revenues                          54.0               39.1            38%

   Advertising and Other Revenues                 74.3               47.5            56%

  Total Revenue                                  128.3               86.6            48%

  Operating Costs
   Cost of Revenues                                7.2                8.1           -10%
   Marketing                                      69.1               36.0           92%
   Technology                                      9.7                8.1           20%
   Personnel                                      21.0               16.5           27%
   General and Administrative                      6.1                4.6           34%


  Operating Profit                                15.1               13.4            13%

  Interest & Other Income                           1.2              -1.4            NA

  EBIT                                            15.1               13.4            13%

  Income Tax                                      10.2                1.6            NM

  Net Income                                        6.2              10.4           -41%



Source: Company filings

Kayak generated profits of $6.2M in 1Q-3Q‘10 compared $10.4M in 1Q-3Q‘09, a decrease of
41%,primarly due to increase in marketing expense during the first nine months of 2010. The company
generated EBIT of $15.1M for 1Q-3Q‘10 compared to $13.4M for 1Q-3Q‘09, an increase of 13%.




Important disclosures on page 61                                                           4
Exhibit 1c: Balance Sheet Synopsis


             (in $, millions)         FY'08   FY'09   Q3'10


   Cash & Cash Equivalents             23.6    16.0    30.6


   Marketable Securities               10.7     1.5     3.8


   Accounts Recievable                 16.6    18.7    32.8


   Deferred Tax Asset                   5.6     9.6     0.4


   Prepaid Expenses                     2.0     2.9     3.6


   PPE                                  3.2     3.3     3.3


   Intangible Assets and Goodwill     169.0   165.7   186.9


   Deferred tax asset                   0.0     1.0     2.8


   Other Assets                         1.8     4.1     0.2


  Total Assets                        232.5   222.8   264.3


   Accounts Payable                     5.1     6.8     9.0


   Accrued Expenses and Liabilities     7.5     5.9    11.3


   LT Debt                             24.5     0.0     0.0


   LT Liabilites                        0.4     1.2     4.7


   Deferred Tax Liabilities             5.6     6.7    11.3


  Total Liabilities                    43.2    20.6    36.3

  Redeemable Convertible
                                      212.3   224.0   232.8
  Preferred Stock

  Total Equity                        -22.9   -21.8    -4.7


Source: Company filings




Important disclosures on page 61                        5
Kayak had cash and cash equivalents of $30.6M as of September 30, 2010. The company expects to use
the cash raised via their IPO for working capital and other general corporate purposes.

Exhibit 1d: Cash Flow Synopsis

                                                                                9 months ended
            ( in $,millions)                 FY'08               FY'09
                                                                                     3Q10

  Cash Flow From Operations                  12.9                 12.6                16.3


  Cash Flow From Investing Activities        -9.2                 7.0                 -7.2


  Cash Flow From Financing Activities        -5.2                -27.2                 5.3


  Change in Cash                             -1.5                 -7.7                14.6


Source: Company filings

Cash flow from operations for the nine months ended September 30, 2010 was $16.3M. During the same
period cash used in investing activities was $7.2M and cash generated from financing activities was
$5.3M.




Important disclosures on page 61                                                         6
History of Travel Planning
Cox & Kings, founded in 1758, claims to be one of the oldest travel agencies. But it restricted itself to an
aristocratic clientele. Thomas Cook, established in 1865, was the first travel agent to reach the masses.
Although a limited schedule of steamship or train timings were published by newspapers, most travelers
did not have the means to access schedules or fares of steamships or hotels in other regions. Travel
agents also helped with issuing travelers cheques and exchanging currencies (a task that is obviated by
the pervasiveness of ATMs today).

By mid 1920s, air travel became increasingly affordable at least to the wealthy. In the early days of
American commercial aviation, each airline's routes and fares were regulated by the Civil Aeronautics
Board. These were published in a volume entitled ―The Official Airline Guide‖, from which travel agents or
consumers could construct an itinerary, then call or telex an airline, which would then make the
reservation manually.

In this manual system, which was used until mid 1940s, a team of eight operators would sort through a
rotating file with cards for every flight. The operators would then place a mark on the side of the card to
mark it as booked. The system was limited to about eight operators because that was the maximum that
could fit around the file. As demand for air travel increased, the process expanded to add more layers of
hierarchy to filter down requests into batches.

In 1946, American Airlines developed the first automated booking system, called ―Magnetronic
Reservisor‖. This computer system consisted of a single magnetic drum, with each memory location
holding the number of seats left on a particular flight. To use this machine, the airline had to employ
operators who would handle the task of manually looking up the information and conveying the
information to agents. There was no option for travel agents to directly query the system.

In 1960, American Airlines and IBM together developed the Semi-Automated Business Research
Environment—SABRE at a cost $40M, including the expenses for initial research and development as
well as the actual installation of the system. In 1968, Delta Air Lines developed ―Delta Automated Travel
Account System‖. United Airlines developed the ―Apollo Reservation System‖ in 1971.

In 1976, the airlines opened up their system for direct access by travel agents. Later, these computer
reservation systems included access to multiple airlines as well as other travel products such as hotel
reservation and car rental bookings. These enhanced reservation systems came to be known as GDS i.e.
global distribution systems. The popular GDS in operation include Sabre, Worldspan, Galileo, and
Amadeus. By the 1980s, sales through GDS accounted for 80% of all air travel sales.

In mid 1990s, airlines and hotels started offering online reservation functionality directly to the end
consumer, bypassing the traditional travel agent altogether. For example, American Airlines launched an
information-based online portal, AmericanAir.com, in May 1995 and added an online reservation
capability in 1996.

Microsoft launched Expedia, an online travel agency, in 1996. In the same year, Travelocity was launched
by SABRE. These online travel agents also allowed consumers to do comparison shopping by providing
information on various travel services available in the market.




Important disclosures on page 61                                                                 7
In 1995, most of the major airlines placed a cap on commissions payable to all travel agencies for
domestic airline travel. In 1997, the bigger airlines in the United States reduced the commission rate
payable to travel agencies from 10% to 5%. In addition, since 1998, many airlines have implemented a
fixed-rate commission of $10.00 for domestic online roundtrip ticket sales.

Priceline, with a focus on price-conscious leisure travelers, was launched in April 1998. The company
introduced a ―name-your-own-price‖ business model allowing consumers to place a bid for the travel
service, guaranteed by a credit card. Using the ―Name Your Own Price‖ system, customer traded-off
flexibility about brands and service features in return for discounted prices. Thanks to the anonymity
Priceline provided, hotels and airlines were able to sell excess inventory without violating their ―low price
guarantee‖ (for reservations that were made through their online sites). Priceline pocketed the difference
between the discounted price and the accepted bid. Within its first six weeks, Priceline sold 10K worth of
leisure air tickets.

Frustrated with high agent commissions and recognizing the potential for on-line distribution, the leading
domestic airlines such as American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines and
United Air Lines founded Orbitz in 1999.

The online travel agencies were far from the most efficient as discount and service rates varied
substantially. Sidestep and FareChase took the concept of online travel agents a step further. These sites
were launched around the year 2000 as vertical online search engines for travel.

These travel meta-search agents would search across multiple travel agents and supplier portals to offer
the best alternative to a traveler.

In 2004, Kayak was launched by co-founders of Orbitz, Travelocity and Expedia. Within two years, the
company became the leader in travel meta-search with the highest number of monthly visitors. In 2007,
Kayak acquired its largest competitor Sidestep for $180M. Within two years, meta search engines were
used by several million travelers. In July 2006, meta-search attracted 6.2 million users representing a 9%
penetration among travel researchers compared to 3% reached in January 2005. We estimate that Kayak
attracted over 2.3M of those visitors.

In June 2007, Priceline eliminated its processing fees for its price-disclosed airline ticket, and in April
2008, it reduced its processing fees for its domestic price-disclosed hotel room service. In Q1:09,
Expedia, Orbitz and Travelocity eliminated air booking fees for travelers (and relied only on payments
from airlines).




Important disclosures on page 61                                                                  8
Exhibit 2: Online Travel Industry Time Line


               American Airlines installed the    1946
                    f irst automated booking
                                                         American Airlines developed
                                          1960           Sabre, a comuterized
                                                         reservation system

                          Sabre installed at      1976
                            travel agencies
                                        1980's       GDS accounted f or
                                                     80% of air travel
                         Microsof t launched      1996
                                     Expedia
                                          1997        Priceline Founded

                         Expedia spun of f        1999
                           f rom Microsof t
                                        1999             SideStep Founded
                       TripAdvisor Founded
                                        2003          IAC/InteractiveCorp
                                                      acquired Expedia
                                          2004           Kayak Founded
                      Expedia spun of f f rom     2004
                        IAC/InteractiveCorp
                                           2006          SideStep acquired
                                                         TravelPost
                                          2007       Kayak acquired SideStep
                         Microsof t acquired      2008
                                    Farecast
                                          2009           OTAs removed booking
                                                         f ees f or airline
                       TripAdvisor                2009
                       intoduced meta-                Kayak relaunched
                                          2009
                                                      TravelPost.com
                   NewTravelco acquires
        Travelpost.com. Kayak becomes
              an investor in NewTravelco 2010         Kayak f iles f or IPO




Source: neXtup Research and Company Reports




Important disclosures on page 61                                                       9
MARKET OVERVIEW
The number of travelers who use the internet for travel planning has increased to 127 million in 2010, up
from 55 million in 2005 - representing a CAGR of 18%. In 2009, the overall travel industry fell 11% to
$241B due to the economic downturn. We expect it to grow to $256B in 2011. However the online
industry, which managed to show a modest increase of 2% in 2009 from 2008, is expected to grow to
$107B in 2011.

Due to the large user base, we expect the online travel industry to continue to add users at a more
modest pace of 5 – 10% a year over the next 3 - 5 years. We expect the still nascent meta-search
market, which accounts for less than 20% of online travel, to exhibit stronger CAGR of 10 – 15% over the
next few years.

Exhibit 3: Travel meta-search engine audience in millions and penetration as a percentage of total
online travelers


   160                                                                                              25%
                    Online Travelers
                                                                                        22%
   140
                    Travel Search Engine Users                             20%
                                                                                                    20%
   120                                                         18%

                                                  16%
   100
                                                                                                    15%
                                       13%

    80

                           10%
                                                                                                    10%
    60

              7%
    40
                                                                                                    5%

    20



      0                                                                                             0%
             2005          2006        2007       2008        2009         2010        2011E



Source: Compete, neXtup Research Estimates and Company Reports


Important disclosures on page 61                                                               10
Until mid-2005, most travelers used an online travel agent such as Expedia or Orbitz to make flight or
hotel bookings. With the proliferation of other travel sites as well as those operated directly by hotels and
airlines, a consumer who wanted to do comparison shopping had to labor through several dozen websites
before arriving at his optimum pricing. This problem gave birth to meta-search engines.

The major players in the industry are Kayak, Farecast (which is now owned by Microsoft and branded as
Bing travel), Yahoo Travel, AOL (which uses Kayak‘s database) and Mobissimo. All meta search
companies provide similar services. Virtually all of them aggregate flight and hotel inventory data from
dozens of airlines and thousands of hotel sites to provide a traveler the ability to compare various offers
without having to visit multiple websites.

We estimate that the majority of meta search usage is for flight bookings. We estimate that airlines
generate 5% of the traffic to their websites from meta search engines, compared to just 2% for hotel
chains.

We estimate the number of consumers who used travel meta-search engine increased to 25.4 million in
2010 from only seven million in 2006, representing a CAGR of 38%. Kayak is the leader in meta-search
engine with over eight million monthly visitors. We estimate that Kayak has a 39% share among travel
meta-search engine users (up from 26% in 2006).

Exhibit 4: Kayak users as percentage of travel meta-search engine users


 35                                                                                                     50%
              Travel Search Engine users


 30           Percentage that Uses                                                          41%
                                                                              39%
              Kayak                                              38%                                    40%
                                                   36%
 25

                                      28%
                                                                                                        30%
 20                     26%


 15        19%
                                                                                                        20%


 10

                                                                                                        10%
   5



   0                                                                                                    0%
          2005          2006         2007          2008         2009          2010         2011E



Source: Compete and neXtup Research Estimates


Important disclosures on page 61                                                                   11
Nowadays, travel services provided by the online travel agents and meta search engines go beyond just
the best prices, flight schedules, hotel reservations and bookings. Increasingly, travelers look for
comprehensive reviews of various airline or hotel providers as well as information on destinations (such
as places to visit and things to do). Many of these sites include user generated reviews, videos, pictures,
and suggestions.

Expedia owns TripAdvisor, the largest such planning and review portal. Kayak‘s subsidiary, TravelPost,
provides a similar service to Kayak‘s visitors. In response to Expedia‘s move, Kayak re-launched
TravelPost in March 2009. The re-launched TravelPost aggregated reviews for hotels and airlines from a
variety of sources including other review sites. NewTravelco acquired TravelPost from Kayak in March
2010, and Kayak became an investor in NewTravelco. Travel planning and review portals generate
revenue from advertisements whereas meta-search engines generate revenue when consumers click on
the search results from travel suppliers and when travelers click on published advertisements. Some sites
such as IgoUgo encourage reviewers by awarding them ―Go Points‖, which can be redeemed for gift
cards at online retailers or other travel products. Sites such as Uptake.com (previously Kango) help
earlier in the decision process in terms of helping decide where to go.

Exhibit 5: Online travel industry various players




           Meta-Search                    Planning & Review                Online Travel Agent

       Aggregated         price                                             Aggregated airline and
       information f rom airline         User generated reviews
                                                                            hotel price information
       and hotel websites                and advice
                                                                            plus ability to purchase




Source: neXtup Research

Meta search engines earn revenues not only through referral fees from airlines and hotels (on a pay per
click, or a pay per acquisition basis) but also from advertisements on their websites. Advertisements by
airlines, hotels and online travel agents have ballooned to $2.33B in 2010, up from 900M in 2005. We
expect such online ads to increase to $3.5 billion by 2013 at a CAGR of 14.5% (Exhibit 6). Search and
banner ads, the type that appear on Kayak, account for about 55% of Kayak‘s revenue.




Important disclosures on page 61                                                                12
Exhibit 6: Travel industry online advertising spending


  $4.0
         Billions

  $3.5


  $3.0


  $2.5


  $2.0


  $1.5


  $1.0


  $0.5


  $0.0
           2005        2006       2007       2008     2009    2010      2011E      2012E   2013E



Source: Company Reports and neXtup Research Estimates

Exhibit 7: Travel industry online advertising spending through various online channels


                  Social Media
                      7%                      Other
                                               5%
                       Email                                         Paid Search
                        9%                                               33%

           Affiliate
            10%



                               Banner Adds                   SEO
                                   18%                       18%




Source: Compete and neXtup Research Estimates


Important disclosures on page 61                                                           13
COMPETITIVE LANDSCAPE
In the last few years, we believe the online travel industry has changed fundamentally with the arrival of
meta-search engines. With hundreds of travel sites scouring through dozens of airlines and thousands of
hotel listings, it is an arduous task for a traveler to wade through all that information before arriving at the
right trade off in terms of timing, price and convenience (such as number of stops). Meta-search engines
address many of these issues.

Online travel agents and meta-search engines collaborate. Kayak‘s websites features listings from online
travel agents such as Expedia, Priceline and Travelocity. However, we believe that in the long run they
are more of a competitor than a partner. By directing a user directly to the service provider (such as a
hotel), a traveler can avoid booking fees. For the travel provider, the fees paid to a meta-search company
for a completed sale is typically lower than that paid to online travel agents.

A key differentiator for meta-search sites has been the ability to search through a large database and
provide quick responses. SideStep, a pioneer, stalled as it was unable to search through the ever
expanding inventory of hotel fares and flight tickets in a quick enough fashion. Through clever use of
caching, Kayak has quickly become the market leader.

Another key differentiator among travel sites is the user generated review content. In this regard,
TripAdvisor (now owned by Expedia) is clearly the market leader with 12M monthly visitors. In March
2009, TripAdvisor added meta-search capability to its site, more directly competing with what Kayak does.
But we believe, TripAdvisor‘s meta search engine may also end up cannibalizing Expedia‘s business by
directing users to hotel or airline sites rather than routing them via Expedia.

In response to Expedia‘s move, Kayak re-launched TravelPost with the ability to aggregate reviews from
many third party sites such as Perfect Escapes, IgoUgo, Epinions, MyTravelGuide, Yahoo and
CitySearch. NewTravelco acquired TravelPost from Kayak in March 2010, and Kayak became an investor
in NewTravelco.

Despite the higher value provided to users, meta search engines accounted for less than 20% of all
online travel booked in 2010. We attribute this low penetration to low level of awareness. With a large ad
budget, we expect Kayak to benefit from higher awareness levels.




Priceline.com
(NASDAQ: PCLN)


Founded in 1997, Priceline is an online travel agent with more than 25 million monthly unique visitors. It
has 10M users in the US. The company also operates the websites booking.com and agoda.com, among
others.




Important disclosures on page 61                                                                     14
For the domestic market, Priceline.com offers online reservation for various travel services including
airline tickets, hotel rooms, rental car days, vacation packages and cruises among others in a price-
disclosed format and in an opaque system known as ―Name Your Own Price‖.

Through the ―Name Your Own Price‖ system, the company collects customers demand for a particular
travel service at a price set by the customer but does not reveal the name of the travel provider to the
customer until after the purchase has been made. The customer‘s offer is guaranteed by a credit card
and is non-refundable.

With the ―Name Your Own Price‖ system, customers make trade-offs on flexibility about brands and
service features in return for discounted prices. Travel providers generate incremental revenue without
disrupting their existing distribution channels or retail pricing structures. As a purchase made by the
consumer under ―Name Your Own Price‖ system is non-refundable, revenue reported under ―Name Your
Own Price‖ system is on gross basis.

Outside the US, Priceline offers online hotel reservation services in a price disclosed format through
Booking.com and Agoda.com. Booking.com, which was acquired by Priceline in 2005, offers hotel
reservation services primarily in European countries. Acquired in December 2007, Agoda.com offers
online hotel reservation services in Singapore and Thailand. Priceline also offers car rental service,
through TravelJigsaw, which it acquired in May 2010. TravelJigsaw service is available in 4,000 locations
and 80 countries (excluding US).

Additionally, Priceline offers home mortgages, refinancing and home equity loans through an independent
licensee. The company licenses its business model to independent licensees, including Priceline
mortgage and certain international licensees.

Exhibit 8: Priceline’s business model


                                Format                  Business Model           Travel Offerings


                                Price-disclosed         Merchant/Agent           All
   Priceline.com
                                                                                 Hotel, airline and car
                                Opaque                  Merchant
                                                                                 rentals

   Booking.com                  Price-disclosed         Agent                    Hotel


   Agoda.com                    Price-disclosed         Merchant                 Hotel


   TravelJigsaw                 Price-disclosed         Merchant/Agent           Car Rentals



Source: neXtup Research and Company Reports




Important disclosures on page 61                                                                15
In 4Q10, Priceline reported revenues of $731M, up 35% YoY. Priceline‘s international business
contributed 51% to overall revenue, up from 41% in 4Q09. The company‘s international revenue is
generated by Booking.com, Agoda.com and Travel Jigsaw.

Exhibit 9: Priceline quarterly revenue in million and Stock Price



  1250    Revenue in                                                                   Stock Price    500
           $,million                                                                      in $

  1000
                                                                                                      375

   750
                                                                                                      250
   500

                                                                                                      125
   250


     0                                                                                                0
          2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11E



Source: neXtup Research, Company Reports and CapIQ

Priceline is listed on the NASDAQ Global Select Market under the symbol ―PCLN‖. The company is
headquartered in Norwalk, CT and has 3,400 employees.




Expedia
(NASDAQ: EXPE)


Expedia was founded as a division of Microsoft in 1995 and was spun off as an independent public
company in 1999. In 2002, IAC/InterActiveCorp, then USA Networks, purchased a controlling stake in
Expedia. IAC/InterActiveCorp purchased the remaining stake in Expedia in 2003. In August 2005, IAC
spun off Expedia (with all of IAC‘s travel and travel-related business).

Expedia remains the largest online travel agent with 30 million monthly unique visitors including 15 million
from the US. Expedia operates more than 50 global points of sale in North America, South America, Latin
America, Europe, Middle East, Africa, and Asia Pacific.

Expedia caters to both leisure and business travelers with stand-alone and packaged travel products in all
segments ranging from discount to luxury. Its portfolio of brands includes Expedia, Hotels, Hotwire,
Classic Vacations, eLong, Venere, Egencia, and TripAdvisor.


Important disclosures on page 61                                                                 16
Egencia, launched in 2002, provides travel services to corporate travelers in Australia, Canada, China,
Europe, India and the United States. The company‘s other products such as Expedia, Hotels, Hotwire,
and Classic Vacations focuses on leisure travelers.

China based eLong (in which Expedia has a majority stake) offers vacation packages, airline ticketing
services and hotel reservations in more than 7,000 hotels in over 400 cities across China. Venere offers
hotel reservation services in more than 30,000 hotels to European customers. Venere has direct agency-
based relationships with hotels around the world.

IAC, the then parent of Expedia, bought TripAdvisor in March 2004. TripAdvisor features over 30 million
user generated travel reviews and opinions on its website. In the first quarter 2009, TripAdvisor launched
a meta search engine. TripAdvisor‘s search results provide links to the websites of its travel partners
through which travelers can make related travel arrangements. The site earns revenues through
advertisements.

Additionally, Expedia provides wholesale travel products and services to offline retail travel agents. It also
provides concierge services and airport activity desks for travelers.

Exhibit 10: Expedia quarterly revenue and Stock Price


  1200                                                                                                   40
                                                                                         Stock Price
           Revenue in USD                                                                   in $
               million
                                                                                                         30
   800

                                                                                                         20

   400
                                                                                                         10



      0                                                                                                  0
          2Q08    3Q08 4Q08      1Q09    2Q09 3Q09       4Q09    1Q10 2Q10      3Q10    4Q10 1Q11E


Source: neXtup Research, Company Reports and CapIQ

In 4Q10, Expedia‘s revenues increased 16% YoY to $808.4M. Excluding benefits due to changes in
foreign exchange rates, quarterly revenues increased 17% YoY. Revenue growth was primarily driven by
an increase in advertising revenues and, in hotel and air bookings. International business accounted for
41% of overall revenues in the quarter. Expedia‘s Leisure segment revenues increased 13% YoY to
$699M. TripAdvisor revenues increased 33% YoY to $107M.

Expedia is headquartered in Bellevue, WA and has 8,900 employees.




Important disclosures on page 61                                                                   17
Orbitz Worldwide
(NYSE: OWW)


Orbitz (partly owned by Travelport) is an online travel agent that operates a diverse portfolio of consumer
brands including Orbitz, CheapTickets, ebookers, HotelClub, RatesToGo and the Away Network. It also
operates the corporate travel brand Orbitz for Business. Orbitz has over 10 million monthly unique visitors
including 8 million from the US. Although Orbitz is publicly traded under the ticker OWW, approximately
58% of the firm is owned by Travelport.

Orbitz, predecessor of Orbitz Worldwide, was founded by a consortium that included American Airlines,
Continental Airlines, Delta Air Lines, Northwest Airlines and United Air Lines in 2000. Orbitz went public in
December 2003. Nine months later, Cendant bought Orbitz for $1.25B and added it to its expanding
portfolio that included Galileo, Worldspan, ebookers, CheapTickets, HotelClub and RatesToGo brands.
Cendant tried to spin off its travel business as an IPO in 2006. Instead, it sold the business under the
name ―Travelport‖ to Blackstone Group and Technology Crossover Ventures in June 2006.

Travelport, while retaining a 58% share, spun off Orbitz into a public company in June 2007 under the
ticker ―OWW‖. The offering of 34 million shares was priced at $15 per share.

Orbitz travel portfolio includes names such as CheapTickets.com, HotelClub.com, RatesToGo.com and
the Away Network. CheapTickets.com focuses on value-conscious travelers in the US. It offers travel
services on a stand-alone basis or as part of a dynamic vacation package. In addition, it offers value-
oriented promotions which further provide discounts to travelers on dynamic vacation packages. The
company‘s sites HotelClub.com, Accomline.com and Asia-hotels.com provide hotel reservation services
in over 120 countries.

OrbitzforBusiness.com offers travel services to corporate travelers. RatesToGo.com offers customers the
opportunity to book hotel reservations at last-minute discounts up to four weeks in advance in over 80
countries. ebookers.com caters to the UK vacation market. The Away Network includes Away.com,
GORPTravel.com, and GORP.com websites. In addition, the Away Network hosts outsideonline.com,
which provides travel content for travelers seeking information for thematic and experiential travel such as
adventure, family or romance trips.

In 4Q10, Orbitz revenues increased 4.4% YoY to $182.4M. Orbitz‘s domestic revenue was almost flat at
$135.7M YoY, while international revenues increased 17% YoY to $46.7M. Revenues from hotels were
up 13% YoY and constituted 28% of total revenue, up from 26%. Revenues from Air Tickets were up 12%
YoY to $66.9M.

Orbitz Worldwide is headquartered in Chicago, IL and has 1,400 employees.




Important disclosures on page 61                                                                  18
Exhibit 11: Orbitz quarterly revenue and Stock Price


  300                                                                                                  10

          Revenue in USD                                                                 Stock Price
              million                                                                       in $
                                                                                                       7.5
  200


                                                                                                       5


  100
                                                                                                       2.5



     0                                                                                                 0
         2Q08    3Q08    4Q08    1Q09   2Q09    3Q09    4Q09    1Q10   2Q10    3Q10    4Q10 1Q11E



Source: neXtup Research, Company Reports and CapIQ




Ctrip
(NASDAQ: CTRP)


Ctrip offers hotel reservations, airline ticketing, and packaged tours to corporate and leisure travelers in
China. Ctrip has a call center, which accounts for 70% of the company‘s business, as well as an online
channel. Ctrip.com has over 6 million monthly unique visitors.

The company had partnerships with approximately 7,700 hotels in China and approximately 16,000 hotels
internationally. The company sells air tickets for all major domestic Chinese airlines, including Air China,
China Eastern Airlines, China Southern Airlines and Shanghai Airlines as well as many international
airlines operating flights that originate from cities in China. Its international partners include United
Airlines, Northwest Airlines, Air Canada, DragonAir and Lufthansa.

In August 2009, Ctrip became a controlling shareholder in ezTravel. Taiwan‘s largest travel website,
ezTravel, was established in January 2000. Ctrip had earlier (in 2005) acquired a 20% stake in ezTravel.
In February 2010, Ctrip acquired 90% stake in Hong Kong based ‗Wing On Travel‘ for HK$684M
(approximately $88M). Headquartered in Hong Kong, Wing On Travel provides travel products such as
tour packages, airline ticketing and hotel reservation.

Ctrip reported 4Q10 revenues of $119M, up 39% YoY. Wing On Travel (acquired in February 2010) and
ezTravel (acquired in August 2009) contributed 8% for the YoY increase in revenues. Revenues from
hotel reservation increased 31% YoY to $55M, driven both by increase in reservation volumes and



Important disclosures on page 61                                                                 19
commissions. Airline booking revenues increased 35% YoY to $48M, driven both by increased air ticket
sales and commission per ticket.

The company‘s ADR is listed on NASDAQ under the ticker ―CTRP‖. Founded in 1999, the company is
headquartered in Shanghai, China and has 10,000 employees.

Exhibit 12: Ctrip Quarterly Revenue and Stock Price

  140                                                                                                        60

           Revenue in USD                                                                    Stock Price
  120                                                                                           in $         50
               million

  100
                                                                                                             40
   80
                                                                                                             30
   60
                                                                                                             20
   40

   20                                                                                                        10


    0                                                                                                        0
         2Q08    3Q08     4Q08    1Q09    2Q09    3Q09    4Q09     1Q10    2Q10    3Q10    4Q10 1Q11E



Source: neXtup Research, Company Reports and CapIQ


Travelocity



Travelocity, a subsidiary of Sabre Holdings, is an online travel agent with a portfolio of brands that
includes Travelocity, Zuji, HolidayAuto, LastMinute, and Travelocity Business. Travelocity is
headquartered in Southlake, TX.

Travelocity.com enables travelers to shop, compare prices and make travel reservations online with
airlines, car rental agencies, hotel companies and cruise and tour providers. Travelocity Business offers
online travel services to corporate customers. With more than 5 million monthly unique visitors from the
US, Travelocity.com is one of the largest online travel agents in the US.

In July 2005, Travelocity established a presence in Europe by acquiring Lastminute.com, a leisure travel
service provider, for $1034M. The subsidiary Lastminute.com now has inventory from over 62,000 hotels.
It sells over 750k airline tickets a year to 1300 destinations. Travelocity‘s other major affiliate, Zuji, offers
online travel services in the Asia Pacific region with operations in Australia, Hong Kong, Korea, New
Zealand, Singapore and Taiwan.




Important disclosures on page 61                                                                      20
The company generates revenue from service fees equal to the total amount paid by the customer, minus
Travelocity‘s payment to the travel supplier for the travel accommodations. Such revenues account for the
majority of the company‘s revenues. We estimate that the advertisement revenues are minimal.



eDreams



eDreams, headquartered in Barcelona, Spain, is one of the leading operators in Southern Europe. It was
founded in 1999 by Javier Perez Tenessa and James Hare, with funding from Apax Partners, Atlas
Venture, BSCH, Doll Capital Management, Net Partners and 3I.

In 2000, the company launched its websites in Spain and Italy. In March 2003, eDreams acquired the
Italian Travelonline, to become the largest travel agent in Italy. In April 2006, eDreams launched its
French website. eDreams was acquired by TA associates in October 2006 for €153M. In 2007, eDreams
added other language websites such as English, Portuguese and German. In July 2010, PE firm Permira
acquired a majority stake in eDreams at a valuation of approximately €300M.

eDreams enables consumers to search, compare and book flights, hotels and vacation packages. Its
flight search engine provides a functionality that allows users to conduct selective searches across all
airlines, both low-cost and traditional, making it possible to combine routes among companies and
showing the flight selections at the most competitive prices on the market. In Spain, eDreams clients can
choose between purchasing tickets online or by calling the company‘s call center.

More than 250,000 travelers visit its website to search for tickets for their travels. eDreams sends over
one million subscribers an email featuring the travel deals. eDreams‘ multi-channel focus makes it
possible to conduct highly personalized campaigns tailored to the objectives of each advertiser. Currently,
more than 500 companies are advertising clients for eDreams.

eDreams has 200 employees. Javier Perez-Tenessa has been company‘s CEO since inception




CheapOair



Founded in September 2005, CheapOair is one of the leading online travel agent for cost conscious
travelers in the US and Canada. With more than 4 million monthly unique visitors, CheapOair is rated the
seventh largest online travel company by Hitwise.

CheapOair offers consumers the ability to research, plan and book airfare, vacation packages, hotel
rooms and car rentals. The company offers over 18 million flight deals and 84,000 negotiated hotel rates.
In October 2009, CheapOair launched a Travel Blog, which is updated daily with travel news, travel tips,
and top five travel lists. In June 2009, the company launched a Travel RSS feed, bringing customers up
to the minute airfare and hotel feeds.




Important disclosures on page 61                                                                21
CheapOair uses Fareportal technology, which allows users to search multiple computer reservations
system databases for airfares in a single search. The site displays up to 200 flight results and
combinations for each city pair searched with a condensed flight matrix on the flights listing page.
Fareportal is a Multi-Airline Auto Ticketing Technology that integrates a three-tier fraud detection
checkpoint system that issues e-ticket confirmation to customers within a fraction of a second.
Additionally, CheapOair has integrated Auto-Airline Paper Tickets into FedEx Shipping Software which
makes transactions seamless and more efficient while still providing a secure environment.

CheapOair is headquartered in New York, NY.




Important disclosures on page 61                                                          22
Exhibit 13: Online Travel Agents



   Metrics                         Kayak          Expedia          Priceline        Orbitz



   Monthly Visitors                    8M             30M              25M              10M



   Conversion Rate                    13%             4%               7%               5%



   Rev - 2010                         177M           718M              0M              187M



   EBIDTA Margin                      35%             25%              27%              17%



   Market Cap                      $870-$999M       5,920M           22,571M           359M



   Role                            Meta-Search   Merchant/Agent   Merchant/Agent   Merchant/Agent



   Market Transperancy                High         Moderate         Moderate         Moderate



   Employees                          148            7,960            2,010            1,400



   Rev/Emp in '000                   $1,193           $90              $0              $134



   Call Centre                         NO             Yes              Yes              Yes



   Online Community                   Yes             Yes              Yes              NO



Source: Company reports and NeXtUp Research




Important disclosures on page 61                                                        23
Travel Meta-Search and Travel Communities


Travelzoo
(NASDAQ: TZOO)


Travelzoo is an online media company which publishes travel deals from travel agents and suppliers.
Travelzoo reaches more than 22 million users through online portals and e-mail.

Travelzoo.com lists nearly 1000 deals under different categories such as Hotels, Car rentals, Airfare, and
Last Minute deals among others. Additionally, Travelzoo operates a search tool called ―SuperSearch‖
which enables consumers to search for airfares and hotels across multiple providers. Unlike travel search
competitor Kayak, Travelzoo does not enable ―side-by-side‖ comparison of travel alternatives, because
this places many travel suppliers, who are Travelzoo‘s paying customers, at a disadvantage.

Travelzoo‘s flagship product, ―Travelzoo Top 20‖ is a weekly newsletter which features 20 last-minute
travel deals. Featured travel deals are screened manually to ensure accuracy, relevance to current
market demand, and availability. This weekly newsletter reaches more than 14 million subscribers.
Travelzoo also provide an alert service, ―Newsflash‖, to users. Newsflash alerts subscribers to late-
breaking deals relevant to their respective geographies. Newsflash is sent to subscribers within 2 hours of
identifying an offer from a respective region. Alerts comprise single deals, so that the advertiser which is
showcased enjoys undivided subscriber attention. Newsflash has more than 12 million subscribers.

In February 2009, Travelzoo launched fly.com, a travel meta search engine that enables travelers to find
and compare the flight options from multiple sources, including airline and online travel agencies.

Travelzoo operates its business in North America, which accounts for more than 75% of revenues, and
Europe. In August 2009, Travelzoo divested its Asia Pacific business for $3.6M. The business never
really caught on but had operating losses of $7.8M at the time of sale.

In 4Q10, Travelzoo revenues increased 20% YoY to $28.5M. North America revenues increased 14%
YoY to $22.2M. Revenues from Europe increased 43% YoY to $6.6M

Travelzoo has averaged revenue growth at a CAGR of 20% since 2004. Travelzoo is listed on the
NASDAQ under the ticker ―TZOO‖. The company is headquartered in New York, NY and has 255
employees.




Important disclosures on page 61                                                                 24
Exhibit 14: Travelzoo Quarterly Revenue and Stock Price


   40                                                                                                  50
                                                                                      Stock Price
         Revenue in
         USD million                                                                                   40
   30

                                                                                                       30
   20
                                                                                                       20

   10
                                                                                                       10


    0                                                                                                  0
        2Q08    3Q08    4Q08    1Q09    2Q09   3Q09    4Q09    1Q10    2Q10    3Q10    4Q10 1Q11E


Source: neXtup Research, Company Reports and CapIQ




Travelsupermarket



Launched in 2004, Travelsupermarket is the travel division of UK based Moneysupermarket, a
conglomerate which provides online services in finance, insurance, home services and travel markets.

Travelsupermarket is an online meta-search engine for travel products. In 2008, the company integrated
Expedia‘s customer reviews and ratings into their hotels channel which allowed customers to check the
suitability of their hotel choice before booking it. Additionally, the company added maps and geo coding to
the hotels‘ channel, allowing customers to view their hotel choice on an interactive map in conjunction
with other relevant information such as the location of museums, attractions and public transport.

We estimate that the Travelsupermarket is averaging annual revenues of $25 - $30M.




Important disclosures on page 61                                                                25
LowFares.com




Lowfares.com founded by Joshua Lippiner in 2001, in an online meta-search engine for travel products.
LowFares enable users to compare airline fares, hotel rates, and car rentals from various travel sites. In
addition to the search capability, the company offers complete travel information, including news, travel
guides, and other relevant trip planning tools.

In January 2007, the company was acquired by Oversee.net, which provides online marketing solutions
to search engines and publishers, advertising agencies, and financial institutions. LowFares partner
includes Priceline, Lowestfare, Hotwire, Expedia, and Kayak among others.

Lowfares.com is headquartered in Los Angeles, CA with additional offices in Portland, OR; and Pompano
Beach, FL.

Exhibit 15: LTM Return


   350%
                     EXPE           PCLN          TZOO           OWW           S&P 500

   300%
             LTM Return

   250%


   200%


   150%


   100%


    50%


      0%


    -50%
        Mar-10         May-10          Jul-10          Sep-10         Nov-10          Jan-11


Source: CapitalIQ




Important disclosures on page 61                                                               26
IPO’s and M&A activities in an Online Travel Space
Expedia acquired Mobiata in Nov 2010: Expedia acquired Ann Arbor-based mobile apps firm Mobiata
in November 2010. Founded in 2008, Mobiata is the developer of FlightTrack application and itinerary
manager app TripDeck. Financial terms of the agreement were not disclosed




Google acquired ITA Software for $700M: In July 2010, Google announced acquisition of ITA software
for $700M. Founded in 1996 by Dave Baggett and Jeremy Wertheimer, ITA develops software as a
service solution to the airline industry. ITA is used worldwide including American Airlines, Hotwire, Kayak,
Bing, Orbitz, TripAdvisor, United Airlines, US Airways and others.




TripAdvisor acquired Holiday Lettings in June 2010: TripAdvisor acquired Holiday Lettings from
Rightmove in June 2010. Existing management will continue to operate Holiday Lettings as an
independent brand.

Founded in 1999 by Ross Elder and Andy Firth, Holiday Lettings advertises holiday villas and apartments
primarily located in European countries such as Spain, France, Italy, Turkey, Cyprus, and Portugal
among others. Holiday Lettings had revenues of $8.4M in 2009.




Priceline acquired TravelJigsaw in May 2010: Priceline acquired TravelJigsaw from ISIS Equity
Partners in May 2010. Priceline retained TravelJigsaw's current management team after the acquisition.

Founded in 2004 by David Crossland and Rozel Bay, TravelJigsaw is a Manchester-based multinational
car hire reservation service. TravelJigsaw offers car hire services in more than 4,000 locations in 80
countries. In June 2008, ISIS Equity Partners and Yorkshire Bank acquired TravelJigsaw from David
Crossland and Rozel Bay for $50.7M.




TripAdvisor acquired Kuxun: TripAdvisor acquired Kuxun.cn from Ceyuan Ventures and SIG Asia
Investments for $12M in October 2009. Kuxun provides online travel search services of air tickets, train
tickets, hotels, holiday, and scenic spot search. Founded in 2008, Kuxun is headquartered in Beijing,
China.

In April 2009, TripAdvisor entered the Chinese market with the launch of its travel-review portal
DaoDao.com, a review and community site for Chinese travelers. TripAdvisor has announced plans to
invest more than $50M in China through late 2011. We estimate that China online travel is a $7B market,
with a potential for 20% CAGR over the next few years.




Important disclosures on page 61                                                                 27
TripAdvisor acquired FlipKey: TripAdvisor acquired FlipKey in August 2008. FlipKey operates an online
portal that provides information about various vacation home rentals in the United States. Founded in
2007, FlipKey is headquartered in Boston, Massachusetts.




Expedia acquired Venere: In July 2008, Expedia acquired Venere from Advent International Corporation
in cash. Founded in 1995, Venere provided online hotel reservation services primarily in Italy. The terms
of the acquisition were not disclosed.




Microsoft acquired Farecast: Microsoft acquired Farecast for $115M in April 2008. In June 2009,
Microsoft rebranded Farecast as Bing Travel. Founded in 2003 by Oren Etzioni, Farecast was an online
travel search engine that attempts to predict future airfares based upon previous airfare data. Prior to the
acquisition, Farecast raised $20M in funding from Sutter Hill Ventures, Madrona Venture, Par Capital
Management and Greylock Partners.




Priceline acquired Agoda.com: In November 2007, Priceline acquired Agoda.com for $169.8M. Agoda
provides online hotel reservations services in Asia. Founded in 1997, Agoda is headquartered in
Bangkok, Thailand.




IAC/InterActiveCorp acquired TripAdvisor: InterActive Corp acquired TripAdvisor in March 2004.
Founded in February 2000 by Stephen Kaufer, TripAdvisor is an online travel community. Currently,
TripAdvisor operates as a subsidiary of Expedia, which was spun off from InterActive Corp in 2005.
TripAdvisor reported revenues of $352M in 2009.




IAC/InterActiveCorp acquired Hotwire: InterActive Corp acquired Hotwire for $667.7M in September
2003. Hotwire is a discount travel website that offers low prices on airfare, hotel, rental car, and vacation
packages by selling off unsold travel inventory at discounted prices.

Hotwire was founded by Eric Grosse, Karl Peterson, Gregg Brockway, and Spencer Rascoff and by six
major airlines including American, Northwest, Continental, America West (now US Airways), and United in
2000. Currently, Hotwire operates as a subsidiary of Expedia.




IAC/InterActiveCorp (formerly USA Interactive) acquired Expedia: In February 2002, InterActive
Corporation purchased 33.7 million shares of Expedia from Microsoft and another million shares from
other Expedia shareholders bringing Interactive Corporation‘s ownership in Expedia to about 65% of the
53.7 million basic shares outstanding. The $1575M price tag valued Expedia at 7.1x revenues. On March



Important disclosures on page 61                                                                  28
2003, Interactive Corporation purchased the remaining 45% stake of Expedia shares in a stock-for-stock
transaction for $ 3.3 billion.

In August 2005, IAC/InterActiveCorp spun-off Expedia for $7.8 billion, at 3.0x ttm revenues. Expedia
began trading as an independent public company on the NASDAQ under the ticker "EXPE".




Priceline acquired Booking.com: In July 2005, Priceline acquired Booking.com for $134.7M.
Booking.com provides online hotel reservations services in Europe. It offers reservations for small
independent hotels and luxury hotels in leisure and business markets. Founded in 1996, Booking.com is
headquartered in Amsterdam.




Priceline IPO in March 1999: Priceline offered 10 million shares at $16 each and raised $160M in an
           th
IPO on 29 March 1999. Initially the IPO was priced at $7 -$9 per share. On its first day, Priceline price
increased 331% to $69. At the end of its first year of trading, Priceline was up 407% from its offering
price. After the dot com crash, the stock fell to below $2 in Jan 2003. But the stock recovered to over $20
six months later.




Expedia IPO in November 1999: Expedia was spun out of Microsoft. The offering was for 5.2 million
shares at $14. Microsoft maintained 86% stake in Expedia. EXPE opened at $37 the day after the
offering, and peaked at $63 before sliding to $53. At the time of the IPO, Expedia had reported 15.3M in
its most recent quarter.




Important disclosures on page 61                                                                29
Exhibit 16A: Industry M&A Transactions


                                                                                  Deal Size   Implied
   Date     Target             Description                          Acquirer
                                                                                    ($,M)   EV/Revenue




  Nov-10    Mobiata            Mobile travel app developer          Expedia         NA         NA




                               Software developer for        the
   Jul-10   ITA Software*                                           Goole           $700       NA
                               travel and airline industry




                               Operates a      holiday      home
  Jun-10    Holiday Lettings                                        TripAdvisor     NA         NA
                               rental portal




                               Manchester-based       car    hire
  May-10    Traveljigsaw                                            Priceline       NA         NA
                               reservation service




            Sinohotel Travel   Provides online hotel booking
  Apr-10                                                            eLong           NA         NA
            Network            and travel planning services




            Shaanxi qicheng    Provides    hotel     reservation
  Mar-10                                                            eLong           NA         NA
            netword            service in China



                               Founded in 2008, Kuxun is a
  Oct-09    Kuxun.cn           travel meta-search company in        TripAdvisor     $12        NA
                               China


                               TravelZoo Asia Pacific division
            TravelZoo Asia     has operations in Australia,
  Aug-09                                                              NA             $4       2.4x
            Pacific Division   China, Japan, Honk Kong, and
                               Taiwan.

Source: Company Reports and neXtup Research
*Transaction yet to close



Important disclosures on page 61                                                               30
Exhibit 16B: Industry M&A Transactions - continued



                                                                                Deal Size   Implied
   Date    Target               Description                       Acquirer
                                                                                  ($,M)   EV/Revenue



                                FlipKey provides information
  Aug-08   FlipKey              about various vacation home       TripAdvisor     NA         NA
                                rentals in the United States.



                                Venere provides online hotel
  Jul-08   Venere Net                                             Expedia         NA         NA
                                reservation services.



                                Onetime.com is an online
  Jul-08   Onetime.com          travel meta-search engine with    TripAdvisor     NA         NA
                                over 800K monthly visitors


                                Virtualtourist.com is an online
  Jul-08   VirtualTourist.com   travel community with over one    TripAdvisor     NA         NA
                                million members

                                Farecast was an airfare meta-
                                search engine that uses a
  Apr-08   Farecast             predictive    algorithm    to     Microsoft       $115       NA
                                recommend when a user
                                should buy ticket


                                CarRental.com is an online car
  Mar-08   CarRentals.com                                         Hotwire         NA         NA
                                rental booking portal.



                                Based in Hong Kong, Agoda
  Nov-07   Agoda                provides  hotel reservation       Priceline       $170       NA
                                services.



Source: Company Reports and neXtup Research




Important disclosures on page 61                                                             31
COMPANY OVERVIEW
Kayak, a leader in travel meta-search space, was founded in 2004 by Steve Hafner (a co-founder of
Orbitz), Paul English, Terrel Jones (co-founder of Travelocity) and Greg Slyngstad (co-founder of
Expedia). The company launched Kayak.com in February 2005. The company quickly overtook the then
market leader SideStep. Kayak‘s searches featured quick response, multi-city search and flexible travel
dates. SideStep suffered from longer load times and more limited functionality.

By mid-2007, Kayak had become the largest travel meta-search engine with over 3 million monthly
visitors. In December 2007, Kayak raised $166M in funding General Catalyst, Sequoia and Accel
Partners and others. They used the amount raised to buy SideStep, for $180M. SideStep also owned
Travelpost, a hotel review and user-generated content website. Kayak launched a European site in 2006
but has lagged competitors such as Travelsupermarket and Skyscanner.

Kayak displays search results from more than 400 travel sites, providing prices and itineraries for airlines,
hotels, car rentals and cruise lines. In 2009, Kayak added search functionality to Travelpost, allowing the
site to aggregate hotel review from other websites. NewTravelco acquired TravelPost from Kayak in
March 2010, and Kayak became an investor in NewTravelco

Kayak also offers an affiliate program for sites that have low to moderate traffic. This option allows
affiliates to incorporate Kayak search widgets onto their websites. Kayak pays about 50% of the revenues
to the affiliate websites on a CPC (cost per click) basis.

Kayak also develops integrated travel search engine for websites that have more than 500K searches a
month. The partner website retains the brand and control of its website. Kayak-partnered websites
includes AOL, Comcast and LonelyPlanet. Of the over eight million monthly visitors to Kayak,
approximately 10-15% click through to retailers‘ sites and buy products. Kayak receives referral fees on
either a CPC (Cost Per Click) or CPA (Cost Per Acquisition) basis, depending upon the agreement it has
with travel marketers and travel suppliers.

In 2009, Kayak launched its mobile application for iPhone, Blackberry, and Android. The company‘s
mobile apps have been downloaded more than 5M times since launch.

Kayak has local websites for 15 countries including the US, UK, Germany, France, Spain, Italy and India.
The company is headquartered in Norwalk, CT and also has offices in Concord (Massachusetts), London,
(England) and Munich (Germany). Kayak has 148 employees worldwide.

Kayak filed an S-1 for a prospective IPO in November 2010. The company generated $128M in revenues,
up 48% YoY, in the first three quarters of 2010.




Important disclosures on page 61                                                                  32
Kayak M&A and Partnership Activities
Kayak acquired swoodoo GmbH in May 2010:

Kayak acquired swoodoo GmbH from T-Online Venture Fund in May 2010. Kayak will operate swoodoo
as an independent brand. Founded in 2006 by Wolfgang Heigl and Lars Jankowfsky, swoodoo provides
online flight search and booking services in Germany.




NewTravelco acquired TravelPost in March 2010:

NewTravelco acquired TravelPost from Kayak in March 2010. Founded in 2010 by ex-Expedia employees
Rich Barton (current CEO of Zillow and a partner at Benchmark), Simon Breakwell, Greg Slyngstad and
Sunil Shah, NewTravelco, an online travel agent, raised $9.1M in funding from 25 investors in March
2010.

Kayak is one of the investors in NewTravelco.




Kayak acquired SideStep:

In December 2007, Kayak acquired its biggest competitor SideStep for $200M. The deal was for $180M
in cash. In addition, SideStep had $20M in cash that was distributed to its shareholders.

At the time of acquisition, Kayak and SideStep had revenues of about $50M and $35M respectively. They
also had nearly 3M monthly visitors. While SideStep had been in the business for seven years, it took
Kayak just two years to grow to the over three million monthly visitors. Kayak, despite having a similar
number of visitors, earned 30 – 50% more from lead referrals. After the acquisition, Kayak transferred
SideStep onto its technology platform.

At the time of acquisition, TravelPost significantly lagged TripAdvisor in terms of content and number of
reviews. In March 2009, Kayak added third party reviews to the site, significantly adding to the critical
mass of reviews.




SideStep acquired TravelPost:

In October 2006, SideStep acquired Travelpost. Travelpost provides users written reviews for hotels,
hotel directory, and user travel blogs. The financial terms for the deal were not disclosed. Founded in
January 2004, TravelPost raised $1M in Series A funding from Amicus Capital in 2005. Travelpost had
500K monthly visitors at the time of acquisition.




Important disclosures on page 61                                                               33
Kayak partnership with AOL, ComCast and Lonely Planet:

In November 2004, AOL partnered with Kayak to launch an online travel search portal powered by
Kayak's technology. As part of the deal, AOL made an investment in Kayak, although the financial terms
were not disclosed.

Kayak has a similar type of partnership with ComCast, USA Today and Lonely planet.




Important disclosures on page 61                                                            34
PRODUCT OVERVIEW
Kayak allows travelers to search real-time prices and availability of airline tickets, hotel rooms, car rentals,
cruises, vacation packages and travel deals. Kayak also integrates user-created ratings and other travel
information with search results.

The easy navigation of Kayak‘s interface allows travelers to make trade-offs between price, travel dates,
quality of service providers without having to search through hundreds of sites. In most instances, users
can get comprehensive results within seconds.

Exhibit 17: Kayak features



  Features                     Overview


                               Enables user to filter search results based on product characteristics
  Interactive Filter
                               such as price, brand, time, and location.


                               Using google map user can find the distance between the hotel and the
  Integrated Google map
                               custom address entered by him.


                               Enables two or more travelers in different locations to view the same
  Share Live results           search results simultaneously, and additionally, sort and filter those
                               results in real-time.


  Multi-city search            User can search airline tickets for a trip with three or more stops.



                               Offers historical airfare pricing trend for city/date pairs found by Kayak
  Best fare Trend Graph
                               users over the past 90 days.


                               It allows user to search flights up to three days before and/or after their
  Flexible Search
                               preferred travel dates for the lowest fare and itinerary combination.


                               Consolidates travel plans from multiple travel sites into one web-based
  Itinerary Management
                               itinerary.


                               Shows search results on Google map based on starting point, time and
  Explore
                               budget.



Source: Company Website



Important disclosures on page 61                                                                      35
Exhibit 18: Kayak Search results mapped on Google map




Source: Company Website

Exhibit 19: Kayak multi-city flight search




Source: Company Website




Important disclosures on page 61                        36
Exhibit 20: Kayak Fare History Chart




Source: Company Website

Kayak Buzz

The buzz search box enables a user to find the lowest fares to the 25 most popular destinations from any
city. Users can specify regions (such as World, US, Europe, Caribbean, South America, Asia, Africa and
Australia/Oceania), travel month, number of stops, and price constraints. Buzz‘s display results are based
on the lowest fare results found by Kayak users over the previous three days. Late Breaking Fares is a
continuous scroll of up-to-the-minute prices from real time searches on Kayak.com.

Kayak Buzz can also be used to estimate vacation budgets.


Important disclosures on page 61                                                               37
Exhibit 21: Kayak Buzz




Source: Company Website

Kayak Mobile Applications

Kayak offers mobile applications for the iPhone, Android and Blackberry. These mobile application
features include two-dimensional desktop-style navigation systems for flight, hotel and car searches. The
design includes a scrolling calendar. The app also serves as an itinerary management service that
consolidates flight, hotel, car rental, and other events into a single itinerary. Additionally these
applications allow users to access the airline phone directory.

Exhibit 22: Kayak iPhone application




Source: neXtup Research and Company Website


Important disclosures on page 61                                                              38
Kayak Trends

Kayak Trends provides users access to the past years‘ travel data on Kayak. The Kayak Travel Index is a
statistical model that provides a measure of travel demand based on searches through Kayak sites. It
also provides historical pricing on fares during various periods for hotel rates and flight tickets.

Using Kayak Trends, users can also get a snapshot of demand for popular destinations (such as Top 50)
and search for them by day, week, month or year. Travelers can also look for seasonal shifts in demand.

Exhibit 23: Kayak Trends




Source: neXtup Research and Company Website


Important disclosures on page 61                                                             39
Email Alerts

Kayak sends over 4M emails each week via Just-in-time Travel Deals, Weekly Deals Newsletter, Deal
Alerts and Private Sale.

Exhibit 24: Kayak email alerts



  Email Alerts                   Overview                                              Frequency



                                 Features hotels, cars, and other travel related
  Just-in-time Travel Deals                                                            Occasionally
                                 services for specific flight search


  Weekly Travel Deals            Features travel deals, discounts and offers for the
                                                                                       Weekly
  Newsletter                     particular week



  Deal Alerts                    Features last minute travel offers                    Occasionally




  Private Sale                   Features hotel deals                                  Weekly



Source: neXtup Research and Company Website




Important disclosures on page 61                                                                   40
FINANCIALS AND VALUATION
We expect Kayak to have a CAGR of 18% from 2010 to 2014. The company should benefit from
increased awareness in the domestic market, thanks to its large marketing budget of over $110 a year. In
next 3-4 years, Kayak should outperform the travel industry thanks to its leadership position as the
aggregator of data from dozens of airlines and thousands of hotels across the globe.

Exhibit 25: Kayak Projected Revenues


  $350
           Millions



  $300




  $250




  $200
                             Ref lects
                             SideStep
                             Acquisition
  $150




  $100




   $50




     $0
           2005       2006       2007      2008   2009   2010E    2011E     2012E    2013E    2014E


Source: Company reports, neXtup Research Estimates




Important disclosures on page 61                                                             41
Exhibit 26: Kayak’s Revenues


                       2006     2007     2008      2009    2010E      2011E     2012E   2013E    2014E


  Revenue ($, M)       16.9     48.4     112.0    112.7     176.6     224.7     257.4   288.4    316.7


   % y/y growth                187%      131%      1%       57%        27%      15%     12%      10%



Source: Company report, neXtup Research Estimates

We use the following methods, a) Target EV based on steady state revenues, normalized net margins,
and a growth multiple and b) Multiple of EV/Revenue.

A. Steady State Method:

For the purpose of our report, we are basing our valuation off the year 2011.

Exhibit 27: Valuations off Various Calendar Years Discounted to 2011



   1025
           $, M



   1000




    975




    950




    925




    900
                   2011E                  2012E                     2013E                2014E



Source: neXtup Research Estimates




Important disclosures on page 61                                                                 42
We calculate target EV based on the following formula (please refer to Appendix A for a description on
why we choose a particular multiple)

Target EV = Steady State Revenues * Normalized Margins* Growth Multiple

Target Market Cap = Target EV + Net Cash

Target Price = Target Market Cap/Diluted Shares Outstanding

Assuming steady state revenues of $224.7M in the year 2011, normalized net margins of 17.5%, a growth
multiple of 25x, we arrive at a target EV of $983.1M. Accounting for net cash of $29.7M, we arrive at a
market cap of $1,012.8M.

B. EV/Revenue Multiple:

To arrive at approximate estimates, we have used three groups of companies as a proxy for Kayak. The
first group is a set of online travel companies that includes Expedia, Priceline, Orbitz and Travelzoo. The
second group of companies includes Internet search engine service providers such as AOL, Yahoo,
Google and Microsoft. The third group of companies includes airline suppliers such as Delta Air Line,
AMR and UAL.

Exhibit 28a: Comparable online travel companies


  $, millions                                   Revenues           EV/Revenues       Secular    EBITDA
                              Enterprise
                     Ticker                                                          Growth     Margin
                                Value
  Company Name                              CY11E       CY12E     CY11E     CY12E     (Est)      (Est)


  Expedia            EXPE       6,363        3,715      4,074       1.7       1.6     14.0%      27.5%


  Priceline          PCLN       21,687       3,987      4,777       5.4       4.5     20.0%      25.0%


  Orbitz             OWW         758          773        817        1.0       0.9      5.0%      20.0%


  Travelzoo          TZOO        668          134        156        5.0       4.3     10.0%      17.5%



                                                        MEAN        3.3       2.8      12%        23%

                                                       MEDIAN       3.4       2.9      12%        23%


Source: Capital IQ, neXtup Research Estimates


The 2012 mean EV/Revenue multiple for the groups are 2.8x, 0.4x and 2.8x for online travel companies,
search engine providers and airline suppliers respectively (Exhibit 28a, 28b, 28c). We believe that Kayak
can achieve a secular growth rate of 18 - 20% and EBITDA margins of 30 - 35%. With a multiple of 3.5x


Important disclosures on page 61                                                                43
(Exhibit A3), we estimate Kayak‘s target EV at $900.9M, assuming the company‘s revenue to be
$257.4M in 2012. Accounting for net cash of $29.7M, we arrive at a market cap of $930.6M.

Exhibit 28b: Comparables - Airline Companies


  $, millions                                Revenues       EV/Revenues     Secular   EBITDA
                             Enterprise
                    Ticker                                                  Growth    Margin
                               Value
  Company Name                            CY11E    CY12E    CY11E   CY12E    (Est)     (Est)

  Delta              DAL       21,049     34,095   35,648    0.6     0.6        5%    15.0%

  AMR               AMR        8,817      24,326   25,621    0.4     0.3        5%     7.5%

  UAL               UAUA       14,650     36,635   38,371    0.4     0.4        5%    12.5%



                                                   MEAN      0.5     0.4        5%     12%

                                                   MEDIAN    0.4     0.4        5%     13%


Source: Capital IQ, neXtup Research Estimates

Exhibit 28c: Comparables - Internet Media Companies (Search Engine Providers)


  $, millions                                Revenues       EV/Revenues     Secular   EBITDA
                             Enterprise
                    Ticker                                                  Growth    Margin
                               Value
  Company Name                            CY11E    CY12E    CY11E   CY12E    (Est)     (Est)


  AOL                AOL       1,315      2,140     2,033    0.6     0.6        NM     30%


  Yahoo             YHOO       19,533     4,516     4,832    4.3     4.0        10%    35%


  Google           GOOG       157,430     35,460   41,163    4.4     3.8        15%    45%


  Microsoft         MSFT      183,206     71,831   76,430    2.6     2.4        10%    40%


                                                   MEAN      3.1     2.8        12%    38%
                                                   MEDIAN    4.3     3.8        10%    38%

Source: Capital IQ, neXtup Research Estimates




Important disclosures on page 61                                                      44
Exhibit 29: Valuation Summary


                                    Market Cap   Enterprise Value
  Methodology
                                      ($,M)            ($,M)


  Steady State Revenue               $1,012.8        $983.1



  Comparison to Peers                 $930.6         $900.9



Source: neXtup Research Estimates




Important disclosures on page 61                                    45
Exhibit 30: Kayak Post Money Valuation


                                                                                                              Base         Bull
                      Round 1                   Round 2        Round 3         Round 4        Round 5
                                                                                                              Case         Case

  Type                    A           A-1           B              B1              C              D

  Date                Mar-2004     Nov-2004     Dec-2004       May-2006       May-2006        Dec-2007
  Diluted Shares
                         8.5         15.1         16.3            21.3           23.4            27.2          37.8         38.0
  Estimated (M)
  Preferred Shares
                         6.6          1.2          5.0             2.1            3.9             8.0
  Issued (M)
  Type of            Conventional Conventional Conventional Conventional Conventional Conventional
  Preferred           Convertible Convertible Convertible Convertible Convertible Convertible

  Liquidation
                        1.5x         1.5x         1.5x            1.5x           1.5x            1.5x
  Multiple

  Anti-Dilution       Weighted     Weighted     Weighted       Weighted       Weighted        Weighted
  Provisions          Average      Average      Average        Average        Average         Average

  Conversion Rate
  (Preferred to         1 to 1       1 to 1       1 to 1         1 to 1          1 to 1         1 to 1
  Common)

  Issue
                         1.0          1.4          1.4             1.4            3.0            20.7         $24.60       $26.66
  Price/Share
  Dividend Rate
  (Non                  6.0%         6.0%         6.0%           6.0%            6.0%           6.0%
  Cumulative)
  Amount of
                        $6.6         $1.6         $7.0           $2.97           $11.5         $166.0
  Funding (M)
  Pre- Money
                        $8.5         $21.2        $22.8          $29.8           $69.7         $564.6
  Estimate (M)
  Debt                    -                         -               -               -           $30.0

  Post Money
                         $15          $23          $30            $33             $81            $761         $930.6 $1,012.8
  Estimate (M)
                       General                  General         General         General         General
                       Catalyst                 Catalyst        Catalyst        Catalyst        Catalyst
                                                Sequoia         Sequoia         Sequoia         Sequoia
                                                 Capital        Capital         Capital         Capital
  Investors                                   America Online Accel Partners Accel Partners Accel Partners      IPO          IPO
                                                                                  Oak             Oak
                                                                                 SVB             SVB
                                                                            Tenaya Capital Tenaya Capital
                                                                            Trident Capital Trident Capital
                                                                                                Gold Hill

Source: Company Reports and neXtup Research Estimates




Important disclosures on page 61                                                                                      46
Exhibit 31: Payoff Chart


  $35.00



                                            Series B-1
                                            Converts
                                            @ $34.34
  $30.00




  $25.00          Series B-1
                  Converts
                  @ $2.434

                         Series B
                         Converts
  $20.00                 @ $2.553
                                             Series C
                                             Converts
                               Series A-1    @ $5.176
                               Converts @
                               $2.560
  $15.00
                                                                                    Bull case
                                                                                    Valuation @
                                                                                    $1013 million



  $10.00
                                                     Base case
                                                     Valuation @
                                                     $931 million


   $5.00                        Series A
                                Converts @
                                $1.865



   $0.00
           $337          $431         $578          $728            $877   $1,027     $1,209        $1,459


Source: neXtup Research Estimates




Important disclosures on page 61                                                                    47
Exhibit 32: Kayak Liquidation Preference

                                                                   Dividend
                                                                                    Liquidation
                Shares Conversion Investment Liquidation           Accrued Dividend
    Round                                                                              Value
                  (M)    Price        (M)      Multiple               but    Rate
                                                                                       ($, M)
                                                                    unpaid
  Series A
                  6.6       $1.00         $6.6          1.5x         $2.79       6.0%         $12.7
  Preferred
  Series A-1
                  1.2       $1.40         $1.6          1.5x         $0.63       6.0%         $3.1
  Preferred
  Series B
                  5.0       $1.40         $7.0          1.5x         $2.65       6.0%         $13.1
  Preferred
  Series B-1
                  2.1       $1.40         $3.0          1.5x         $0.87       6.0%         $5.3
  Preferred
  Series C
                  3.9       $2.98         $11.5         1.5x         $3.37       6.0%         $20.6
  Preferred
  Series D
                  8.0       $20.73       $166.0         1.5x         $32.91      6.0%        $281.9
  Preferred

  Debt                                                                                        $30.0


                                                                                 Total       $366.9


Source: Company Reports and neXtup Research Estimates; Note: Liquidation payment per share = per
                                                                                    st
share price*1.5 + unpaid accruing dividends; Accrued Dividend is calculated as of 21 March 2011.

Liquidation Scenarios: Kayak has raised funding through six rounds of equity and one debt round. Debt
issuers will have seniority over equity investors. Preferred shareholders have seniority over common
shareholders.

Scenario 1: Exit Valuation less than or equal to $30 M

In this case, debt investors will receive all the proceeds because of their seniority over shareholders.

Scenario 2: Exit Valuation between $30 M to $358.4 M

In this case, debt investors will receive $30M and the remaining will be distributed ratably among
preferred share holders in proportion to the portion of aggregate liquidation payments.

Scenario 3: Exit Valuation between $358.4 M to $371.4 M

In this case, debt investors will receive $30M and preferred share holders will receive $325.5M in
proportion to the portion of aggregate liquidation payments. The remaining will be shared among common
share holders.




Important disclosures on page 61                                                                     48
Scenario 4: Exit Valuation between $371.4 M to $379.0 M

At an exit valuation of $371.4 M, Series A preferred shareholders convert all 6.6 M shares into common
stock as the stock price is greater than $ 1.865. Debt Investors, Series A1, Series B, Series B1, Series C
and Series D preferred shareholders receive their proceeds of $30.0 M, $3.0 M, $12.7 M, $5.2 M, $20.0
M and $272.2 M and the remaining proceeds are shared among common shareholders.

Scenario 5: Exit Valuation between $379.0 M to $380.8 M

At an exit valuation of $376.2 M, Series B-1 preferred shareholders convert all 2.1 M shares into common
stock as the stock price is greater than $ 2.553. Debt Investors, Series A-1, Series B, Series C and Series
D preferred shareholders receive their proceeds of $30.0 M, $3.0 M, $12.7 M, $20.0 M and $272.2 M and
the remaining proceeds are shared among common shareholders.

Scenario 6: Exit Valuation between $380.8 M to $381.0 M

At an exit valuation of $378.1 M, Series B preferred shareholders convert all 5.0 M shares into common
stock as the stock price is greater than $ 2.560. Debt Investors, Series A-1, Series C and Series D
preferred shareholders receive their proceeds of $30.0 M, $3.0 M, $20.0 M and $272.2 M and the
remaining proceeds are shared among common shareholders.

Scenario 6: Exit Valuation between $381.0 M to $438.1 M

At an exit valuation of $378.2 M, Series A-1 preferred shareholders convert all 1.2 M shares into common
stock as the stock price is greater than $ 2.560. Debt Investors, Series C and Series D preferred
shareholders receive their proceeds of $30.0 M, $20.0 M and $272.2 M and the remaining proceeds are
shared among common shareholders.

Scenario 7: Exit Valuation between $438.1 M to $1309.9 M

At an exit valuation of $435.4 M, Series C preferred shareholders convert all 3.9 M shares into common
stock as the stock price is greater than $ 5.176. Debt Investors and Series D preferred shareholders
receive their proceeds of $30.0 M and $272.2 M and the remaining proceeds are shared among common
shareholders.

Scenario 8: Exit Valuation is greater than $1309.9 M

At an exit valuation of $1291.1 M, Series D preferred shareholders convert all 8.0 M shares into common
stock as the stock price is greater than $34.34. Beyond this point, the entire proceeds are shared among
common shareholders as all Series A, Series A1, Series B, Series B1, Series C and Series D preferred
shareholders have converted all shares to common stock.




Important disclosures on page 61                                                                49
INVESTORS
      General Catalyst
      Sequoia Capital
      Accel Partners
      Oak Investment Partners
      Tenaya Capital
      Trident Capital
      Gold Hill Capital
      Norwest Venture Partners
      Silicon Valley Bank




Important disclosures on page 61   50
MANAGEMENT
Steve Hafner, Co-Founder and Chief Executive Officer

Steve Hafner is a co-founder of Kayak and has been the CEO since its inception in January 2004. Prior to
Kayak, Steve served as the EVP of Consumer Travel at Orbitz for four years. At Orbitz, he led the
business development, advertising sales, marketing, and product marketing activities. Founded in 1999,
Orbitz is an online travel company which went public in December 2003. Prior to joining Orbitz, Steve
served as a project lead at Boston Consultancy Group for three years. Previously, he also served as a
consultant at Marketing Corporation of America, now a unit of Interpublic Group.

Steve holds a BA in Economics from Dartmouth College and an MBA from the Kellogg School at
Northwestern University.




Paul English, Co-Founder and Chief Technology Officer

Paul English, a co-founder, has been the CTO of the company since its inception in 2004. Prior to
founding Kayak, Paul founded Intermute with his brother Ed, an anti-spyware company that was later sold
to Trend-Micro. Paul‘s earlier company, Boston Light Software, was sold to Intuit in 1999.

Paul holds a Bachelor‘s and Master‘s in Computer Science from the University of Massachusetts.

Paul is also the founder of Gethuman, an online customer care phone directory, in 2007. In addition, Paul
is a part-time chief technologist for the Division of Social Medicine at the Brigham and Women's Hospital
in Boston USA. His other activities include those with Harvard University on new initiatives for global
health delivery, building online communities of HIV/TB/Malaria workers, and building patient population
benchmarking tools for global health.




Keith Melnick, Chief Commercial Officer

Keith Melnick is Chief Commercial Officer of the company. Prior to joining Kayak, Keith served as a
management consultant at the Boston Consulting Group where he managed case teams focusing
primarily on travel, e-commerce, financial services and industrial goods. While with BCG, he helped found
the online travel company, Orbitz.

Prior to BCG, Keith worked in Revenue Management and Finance at American Airlines, where he
managed teams focused on American, European and Transpacific route networks including pricing and
inventory decisions, short-term and long-term revenue forecasting and ad hoc analysis related to each
market. In addition, he managed the airline's operating budget.

Keith holds an MBA degree in Finance from the University of Southern California and a BS in Mechanical
Engineering from the University of Illinois.




Important disclosures on page 61                                                              51
Robert Birge, Chief Marketing Officer

Robert Birge joined Kayak as CMO in May 2009. Prior to joining Kayak, Robert worked with IMG for over
three years. Most recently he served as CMO, Worldwide at IMG. Prior to joining IMG in 2006, Robert
was a Managing Director at TBWA\Chiat\Day, an advertising company. His prior roles include that of a
consultant at firms such as Boston Consulting Group, Miller Brewing Company and the Marketing
Corporation of America.

Robert holds a BA degree in Economics from Dartmouth College and an MBA from the Kellogg School at
Northwestern University.




Important disclosures on page 61                                                           52
Board of Directors
In addition to Steve Hafner (CEO) and Paul English (CTO), Terry Jones, Harry Nelis, Joe Clutter, Michael
Moritz and Grey Slyngstad are on the Board of Directors of Kayak.




Terry Jones, Chairman and Co-founder

Terry Jones is the chairman of the board of Kayak.com. Terry brings more than thirty years of travel, e-
commerce, and business development expertise to Kayak.com.

Terry founded Travelocity and served as the CEO of the company until May 2002. Previously, Terry
served as the CIO at Sabre. In his 24 years at Sabre, Terry held various executive positions including that
of President of Computer Services, VP of Applications Development and VP of Product Development.

Terry currently serves on the Board of Directors of Earthlink, La Quinta Corporation and Kayak. He is a
special venture partner with General Catalyst Partners.




Joe Clutter

Joe is a Managing Director of General Catalyst Partners. Prior to co-founding General Catalyst Partners,
Joel co-founded and operated numerous businesses focused on leveraging applied technology and high
standards of customer care for the travel, information services, specialty retail, consumer direct
marketing, and payment processing industries. These businesses include National Leisure Group, Retail
Growth ATM Systems and Starboard Cruise Services.

He is currently a board member of several companies including ChoiceStream, FanSnap, GameLogic,
ITA Software, Kayak.com, OLX, Reveal Imaging and Roost.




Harry Nelis

Harry Nelis is a venture capitalist at Accel Partners. He is responsible for Accel‘s investments in Double
Fusion, Check24, Gameforge, Gigle, Kayak, KDS, Netvibes, Onforce and Spreadshirt.

Before joining Accel, Harry was at Perry Capital, a $10B hedge fund, where he invested in public
communications, media and technology companies. At Goldman Sachs, Harry advised businesses on
corporate finance and M&A transactions.

Prior to Goldman Sachs career, Harry founded E-motion, a venture-backed software company. Before
that, Harry spent many years at Hewlett Packard, where he held various engineering positions.




Important disclosures on page 61                                                                53
Harry holds an MBA degree from Harvard Business School and a PhD and MS in Electrical Engineering
from Delft University of Technology in The Netherlands.




Michael Moritz

Michael is a venture capitalist at Sequoia Capital focusing on software and services investments. Prior to
joining Sequoia in 1986, Michael worked in a variety of positions at Time Warner. He also founded
Technologic Partners. Michael‘s internet company investments include Google, Yahoo!, PayPal, Apple
Computer, Cisco, Webvan, YouTube, and eToys.

Moritz holds an MBA degree from Wharton School of the University of Pennsylvania.




Greg Slyngstad

Greg Slyngstad is on the Board of Directors of Kayak. Greg worked at Microsoft for 14 years from 1983.
At Microsoft, he held various positions including that of Group Program Manager on Microsoft Word for
seven years, Director of Far East Product Strategy based in Tokyo, and General Manager of Microsoft's
Travel Group, where he built and managed the team that created Microsoft Expedia.

In 1997, Greg co-founded VacationSpot.com, a reservation network for vacation rentals. In March of
2000, Expedia acquired VacationSpot.com and Greg was once again within Expedia, this time as a
Senior Vice President, responsible for running the hotel and vacation package businesses. In March of
2002, Greg left Expedia.




Important disclosures on page 61                                                               54
Appendix A: Which Multiple?


It becomes very difficult to value companies while they are on a high growth trajectory. Not only do the
revenues grow rapidly but the profitability starts to expand as well. Under such a rapid growth scenario,
any valuation attempt could lead to significant errors due to timing of estimates.

A better approach is to focus on a year when growth rate is slow enough, that small shifts in time period
do not sufficiently alter the valuation and then discount the value to the present assuming a cost of capital
and risk premium that is in line with a slower growth steady state mode.

Due to law of large numbers, any growth company will moderate to a slower growth rate of 10 - 20% a
year (or less) in a finite number of years. For the purposes of our report, we are assuming that subject
companies will reach that ―steady state‖ level in 2 – 5 years.

Exhibit A1: Hypothetical Revenue Growth Pattern of a Firm since Inception

  450
  400
  350
  300
  250
                                                      Steady State Growth
  200
  150
  100
    50
     0
         0       2        4        6        8       10       12       14       16


Source: neXtup Research



At 20% or lower growth rate, the market multiple (Exhibit A2) is then determined primarily by the yield on
ten year notes. Accordingly, we are assigning a growth multiple as dictated by Exhibit A2.

Most companies tend to focus on growth at the expense of profitability during early stages of growth.
Normalized net margins are the maximum profitability that a company could potentially achieve at any
revenue level. This could vary dramatically from actual net margins.

Target EV = Steady State Revenues * Normalized Margins* Growth Multiple

Target Market Cap = Target EV + Net Cash


Important disclosures on page 61                                                                  55
Target Price = Target Market Cap/Diluted Shares Outstanding

Exhibit A2: EV/Revenue Multiple as a Function of T-Bill Rate and Revenue Growth




Formula:
P/E=(1-(g/ROEhg) x (1+g) x (1-((1+g)^n)/(1+khg)^n)/(khg-g)) + ((1-(gn/ROEst) x (1+ g)^n x (1+g)^n x (1+gn))/(kst-gn)x(1+khg)^n)

Assumptions:
Beta - 1

ROEhg – return on equity in the high growth period, made assumption that it’s 30%

ROEst – “ “ in the stable period, made assumption that it’s 10%

gn – growth in the stable period, made assumption that it’s 4%

Cost of equity khg=risk free rate (T-Bill)+ B (changed to 1.5 and 1) x (equity risk premium) (assumed 4%)


Source: Benjamin Graham, Security Analysis (1951), McGraw Hill

We are providing our methodology as a framework. Investors can change any of our variables to arrive at
their own metrics.

In our valuation methodology, we also have tried to look at comparable group of companies and estimate
their EV/Revenue multiple. We believe that adjusting for risk, the EV/Revenue multiple is a function of
growth rate (over the subsequent 2 – 3 years from our reference year) and EBITDA margins. We may
attribute a higher or lower multiple than peer group based on these two variables as outlined in Exhibit
A3.




Important disclosures on page 61                                                                                                  56
Exhibit A3: EV/Revenue Multiple as a Function of EBITDA and Revenue Growth

                                              Revenue Growth

  EBITDA
              0%      5%      10%    15%    20%    25%    30%    35%    40%    45%         50%
  Margin

    50%       2.5x    3.3x    4.0x   4.8x   5.6x   6.3x   7.1x   7.9x   8.7x   9.4x        10.2x

    45%       2.3x    2.9x    3.6x   4.3x   5.0x   5.7x   6.4x   7.1x   7.8x   8.5x        9.0x

    40%       2.0x    2.6x    3.2x   3.8x   4.5x   5.1x   5.7x   6.3x   6.9x   7.5x        8.2x

    35%       1.8x    2.3x    2.8x   3.4x   3.9x   4.4x   5.0x   5.5x   6.1x   6.6x        7.1x

    30%       1.5x    2.0x    2.4x   2.9x   3.3x   3.8x   4.3x   4.7x   5.2x   5.7x        6.1x

    25%       1.3x    1.6x    2.0x   2.4x   2.8x   3.2x   3.6x   3.9x   4.3x   4.7x        5.1x

    20%       1.0x    1.3x    1.6x   1.9x   2.2x   2.5x   2.8x   3.2x   3.5x   3.8x        3.1x

    15%       0.8x    1.0x    1.2x   1.4x   1.7x   1.9x   2.1x   2.4x   2.6x   2.8x        3.1x

    10%       0.5x    0.7x    0.8x   1.0x   1.1x   1.3x   1.4x   1.6x   1.7x   1.9x        2.0x

    5%        0.3x    0.3x    0.4x   0.5x   0.6x   0.6x   0.7x   0.8x   0.9x   0.9x        1.0x


Source: neXtup Research




Important disclosures on page 61                                                      57
Appendix B: Monthly visitors to online travel portals


Exhibit B1: Monthly Unique Visitors from the US


                           Expedia                Orbitz              Priceline

                           Travelocity            Kayak               Lowf ares.com
            20
                           Cheapoair.com          Onetravel.com       Bookit.com




            16
 Millions




            12




            8




            4




            0
                 Jan-10   Mar-10         May-10   Jul-10     Sep-10   Nov-10          Jan-11


Source: Compete




Important disclosures on page 61                                                   58
Exhibit B2: Monthly Visits from the US


                          Expedia                Orbitz                   Priceline
                          Travelocity            Kayak                    Lowf ares.com
            40            Cheapoair.com          Onetravel.com            Bookit.com




            30
 Millions




            20




            10




             0
                 Jan-10   Mar-10        May-10    Jul-10         Sep-10    Nov-10          Jan-11



Source: Compete




Important disclosures on page 61                                                          59
Appendix C: Online travel portals
Exhibit C1: Online Travel Agent affiliate websites



   Company       Affiliate Websites     Business            Region


                 TripAdvisor            Planning & Review   America


                 eLong                  Leisure Travel      Asia Pacific


                 Hotwire                Leisure Travel      America


   Expedia       Hotels                 Hotel Reservation   America


                 Venere                 Hotel Reservation   Europe


                 Classic Vacations      Luxury Travel       America


                 Egencia                Corporate Travel    America


                 ebookers               Leisure Travel      Europe


                 CheapTickets           Leisure Travel      America

                                                            America, Europe,
    Orbitz       HotelClub              Hotel Reservation
                                                            and Asia Pacific

                 Asia-hotels            Hotel Reservation   Asia Pacific


                 OrbitzforBusiness      Corporate Travel    America


                 Booking                Hotel Reservation   Europe


   Priceline     Agoda                  Hotel Reservation   Asia Pacific

                                                            Europe, Australia,
                 TravelJigsaw           Car Rentals
                                                            South Africa


Source: Company Reports and neXtup Research


Important disclosures on page 61                                                 60
DISCLAIMER

This report has been downloaded from SharesPost, Inc., but was prepared by Global Silicon Valley
Partners under the neXtup Research brand ("neXtup Research").The views expressed in this report
correspond to our subjective views on the subject securities and issuers. This report does not purport to
be a complete statement of all material facts related to any company, industry, or security mentioned. The
information provided, while not guaranteed as to accuracy or completeness, has been obtained from
sources believed to be reliable.

This notice shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of these securities in any state in which said offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.

Neither neXtup Research nor any of its employees own a direct or indirect long or short position in any of
the companies mentioned in this report.

The opinions expressed reflect our judgment at this time and are subject to change without notice and
may or may not be updated. Past performance should not be taken as an indication or guarantee of future
performance, and no representation or warranty, express or implied, is made regarding future
performance.

This research report was intended to provide background information for accredited or institutional
investors. Recipients who are not market professionals or institutional investors should seek the advice of
their personal financial advisor before making any investment decisions based on this report.




Email research@nextupresearch.com for further information.




Important disclosures on page 61                                                                     61

				
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