Cheap Tickets Records Strong First Quarter Gross Bookings

The company reports ninth consecutive profitable quarter despite softening   Economy and Weakening Markets;
total gross bookings and revenue up 44% and 35% respectively over prior quarter; internet gross bookings up 59% over prior quarter; unique Internet visitors increase 81% year-over-year.
Cheap Tickets Inc., a premier seller of discount leisure travel services, today announced gross bookings for the first quarter of 2001 of
$192.0 million, up 44% over the prior quarter and up 21% over the year-ago quarter.  Internet bookings reached a record $77.7 million, growing sharply at 59% over the prior quarter and 29% over the year-ago quarter. Revenue for the first quarter of 2001 grew to $24.9 million, up 35% over
the prior quarter and 17% over the year-ago quarter.  Net income for the first
quarter was $1.2 million, or $0.05 per share (diluted).
“We`ve made strong progress over the first quarter toward our stated goal to be the leading distributor of discount leisure travel in North America,” said Cheap Tickets, Inc. President and Chief Executive Officer, Sam E. Galeotos. “We are very pleased with our double-digit growth in gross bookings
and revenue, especially in light of the weakening economy and slow-down in
consumer spending. We have continued to attract record numbers of visitors to
cheaptickets.com, as well as increased sales inquiries to our call centers. “In the first quarter Cheap Tickets overhauled its marketing strategy, including a harder-hitting television campaign and increased e-mail outreach.
As a result, call volume in the first quarter grew 40% sequentially and unique
visitors to cheaptickets.com were exceptionally strong.  As reported by Jupiter Media Metrix, unique visitors to cheaptickets.com grew 81%
year-over-year.
“Last quarter we committed to be the company where consumers could find
the best travel deals, while delivering strong top and bottom line growth. We`re making solid progress on our plans to implement technology upgrades, deliver competitively superior service, and accelerate our market awareness,” said Galeotos.
In the quarter, Cheap Tickets entered the testing stage of its new technology platform; expanded its call center hours to 24/7; began notifying
its customers of airline schedule changes; and increased its spending against
a new television campaign.
“We are very pleased to report our ninth consecutive quarter of profitability,” said Cheap Tickets, Inc., Vice President and Chief Financial Officer, Samuel D. Horgan. “We have increased gross bookings, gross profit,
and revenue, while at the same time controlling our operating expenses. The
quarter reflects continuing investments in advertising, technology, and infrastructure initiatives.”
First Quarter Financial and Operating Highlights is as follows:

* Total Company gross bookings reached $192.0 Million, up 44% sequentially and 21% year-over-year.
* Internet gross bookings were a record $77.7 million in the quarter, up 59% sequentially and 29% year-over-year. Internet bookings were 40% of total gross bookings compared with 38% in the first quarter last year.
Internet sales during the first quarter also saw a record number of back-to-back $1 million-plus gross bookings days.
* Total bookings through Cheap Tickets` four call centers rose to $109.7 million, exceeding bookings 37% over the prior quarter and
16% over the year-ago quarter.
* Revenue rose to $24.9 million, a sequential increase of 35% and a 17% increase over the first quarter in 2000. Revenue includes the net amount retained from the sales of non-published fares and commissions on published fares.
* Gross profit was 92.1% of revenue compared with 91.5% last year. Margins on non-published fares for the first quarter were higher than the year-ago quarter by 1.30 percentage points, primarily owing to improved supplier agreements and enhanced yield management.
* Operating expenses in the quarter were $23.2 million, compared to $17.5 million during the same time last year. The increase in operating expenses was due to significant increases in advertising expenses as the company continues to expand its branding reach in order to increase market share, in addition to building out management infrastructure as
the company grows.
* Quarterly net income was $1.2 million, or $0.05 per share (diluted), beating the First Call consensus of $0.04. These results compare to $2.3 million, or $0.10 per share, in the first quarter 2000.
* While a small component of total business, rental car bookings increased 116%, cruise bookings increased 35% and hotel bookings increased 144% compared to the first quarter in 2000.
“Cheap Tickets` momentum is evident in our financial results, in our growing subscriber base and in the energy and confidence of the Cheap Tickets team. Our strategy to lead the discount leisure travel space through strong supplier relationships and exceptional customer service is on target,” said
Galeotos. “Looking ahead, we expect to continue to demonstrate the strength
and scalability of our business model, and prove our ability to diversify
revenue streams.”
Cheap Tickets` outlook for the second quarter and the year continue to be as previously provided. The Company will continue to invest in and build its
leadership position as the leading discount leisure travel seller and take
advantage of opportunities to build market share. In addition to its core
efforts to enhance supplier relationships, invest in technology and deliver
superior customer service, the Company will invest in its ongoing effort to
deliver premium consumer services, additional merchant products, and richer
promotional programs.
For the full year 2001, Cheap Tickets expects total gross bookings to rise 25% to 30% over the full year 2000, with revenues growing 18% to 23%.  For the full year 2001, Cheap Tickets expects gross profit to increase 1% to 1.5% over
the full year 2000. For the full year 2001, the Company expects non-published revenues to account for 52% to 53% of total revenues, with commissions from the sale of published fares to account for 33% to 35% and revenue from other sales to be
between 12% and 15%. Internet sales, as a percentage of total gross bookings,
are expected to reach 40% to 41% for the full year 2001.  Revenues for the second quarter 2001 are expected to increase 18% to 23% over the same quarter last year.
Based on these assumptions and its strategic growth initiatives, the Company expects earnings per share (EPS) of $0.56 to $0.58 for the full year 2001. EPS for the second quarter 2001 is expected to be in a comparable range as the second quarter in 2000.
It is currently expected that these business outlook statements will not be updated until the release of Cheap Tickets` next quarterly earnings announcement. The Company reserves the right to update the outlook for any reason during the quarter, including the occurrence of material events.
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