Market Overview

Travelzoo Reports Second Quarter 2018 Results

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NEW YORK, July 25, 2018 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ:TZOO):

  • Revenue of $28.1 million, up 6% year-over-year
  • Operating profit of $1.1 million
  • Cash flow from operations of $601,000
  • Earnings per share (EPS) of $0.04

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the second quarter ended June 30, 2018, with revenue of $28.1 million and operating profit of $1.1 million. In nominal terms, revenue increased by 6% year-over-year. In constant currencies, revenue increased by 4% year-over-year. Net income was $477,000, with EPS from continuing operations of $0.04, down from $0.05 in the prior-year period.

"Given the topline growth in all regions, we decided in Q2 to invest more in marketing which we believe will lead to long-term business growth," said Dr. Holger Bartel. "With the travel and tourism industry worldwide showing steady growth, we like to leverage Travelzoo's global reach and trusted brand to improve earnings in future periods."

Asia Pacific
Asia Pacific business segment revenue increased 6% year-over-year to $2.1 million. In constant currencies, revenue increased 2% year-over-year. Operating loss for the second quarter was $1.5 million, compared to an operating loss of $1.2 million in the prior-year period. The increase in operating loss was primarily driven by higher investment in marketing.

Europe
Europe business segment revenue increased 8% year-over-year to $8.5 million. In constant currencies, revenue increased 1% year-over-year. Operating profit for the second quarter was $441,000, or 5% of revenue, compared to an operating profit of $268,000, or 3% of revenue in the prior-year period.

North America
North America business segment revenue increased 6% year-over-year to $17.5 million. Operating profit for the second quarter was $2.1 million, or 12% of revenue, compared to an operating profit of $2.3 million, or 14% of revenue in the prior-year period.

Members
As of June 30, 2018, Travelzoo had a worldwide unduplicated number of members of 29.8 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2018, consistent with June 30, 2017. In Europe, unduplicated number of members was 8.7 million as of June 30, 2018, up 4% from June 30, 2017. In North America, unduplicated number of members was 17.6 million as of June 30, 2018, up 1% from June 30, 2017.

Income Taxes
Income tax expense was $631,000, compared to a $771,000 income tax expense in the prior-year period. The effective income tax rate from continuing operations was 57%, compared to 55% for the prior-year period.

Asset Management
During the second quarter of 2018, Travelzoo generated $601,000 of cash from operating activities. Accounts receivable decreased by $67,000 over the prior-year period to $12.5 million. Accounts payable increased by $57,000 over the prior-year period to $14.3 million. Cash used in investing activities was $3.5 million, up from $186,000 in the prior-year period. Most of this cash was used for an equity investment in WeekenGO which we believe will lead to business growth. As of June 30, 2018, cash and cash equivalents were $19.4 million.

Conference Call
Travelzoo will host a conference call to discuss second quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to

  • download the management presentation (PDF format) to be discussed in the conference call;
  • access the webcast.

About Travelzoo
Travelzoo® provides our 28 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. With more than 25 offices worldwide, we have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. For over 15 years we have worked in partnership with more than 2,000 top travel suppliers—our long-standing relationships give Travelzoo members access to the very best deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words "expect", "predict", "project", "anticipate", "believe", "estimate", "intend", "plan", "seek" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Travelzoo and Top 20 are registered trademarks of Travelzoo.

Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

       
  Three months ended   Six months ended
  June 30,   June 30,
  2018   2017   2018   2017
Revenues $ 28,075     $ 26,411     $ 58,959     $ 54,840  
Cost of revenues 3,016     3,222     6,401     6,429  
Gross profit 25,059     23,189     52,558     48,411  
Operating expenses:              
Sales and marketing 15,628     14,213     31,170     29,569  
Product development 2,386     2,344     4,897     4,701  
General and administrative 5,967     5,246     11,756     10,693  
Total operating expenses 23,981     21,803     47,823     44,963  
Operating income from continuing operations 1,078     1,386     4,735     3,448  
Other income, net 30     18     191     25  
Income from continuing operations before income taxes 1,108     1,404     4,926     3,473  
Income tax expense 631     771     1,947     1,980  
Income from continuing operations $ 477     $ 633     $ 2,979     $ 1,493  
Income from discontinued operations including gain on
sale of Fly.com domain name, net of income taxes
    54         1,938  
Net income $ 477     $ 687     $ 2,979     $ 3,431  
               
Income per share—basic:              
Continuing operations $ 0.04     $ 0.05     $ 0.24     $ 0.11  
Discontinued operations             0.15  
Net income per share—basic $ 0.04     $ 0.05     $ 0.24     $ 0.26  
               
Income per share—diluted:              
Continuing operations $ 0.04     $ 0.05     $ 0.24     $ 0.11  
Discontinued operations             0.15  
Net income per share—diluted $ 0.04     $ 0.05     $ 0.24     $ 0.26  
               
Weighted average shares:              
Basic 12,462     13,030     12,462     13,224  
Diluted 12,780     13,058     12,622     13,229  
                       

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

 
  June 30,   
 2018   
  December 31,
 2017
Assets                              
Current assets:      
Cash and cash equivalents $ 19,409     $ 22,553  
Accounts receivable, net 12,509     11,769  
Income taxes receivable 794     517  
Deposits 88     259  
Prepaid expenses and other 1,731     2,141  
Total current assets 34,531     37,239  
Deposits and other 692     548  
Deferred tax assets 1,476     1,516  
Restricted cash 1,458     1,448  
Investment 2,961      
Property and equipment, net 4,528     4,921  
Total assets $ 45,646     $ 45,672  
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable $ 14,251     $ 19,105  
Accrued expenses and other 9,141     8,702  
Deferred revenue 966     825  
Income tax payable 1,086     961  
Total current liabilities 25,444     29,593  
Long-term tax liabilities 387     373  
Long-term deferred rent and other 2,440     2,628  
Total liabilities 28,271     32,594  
Common stock 125     125  
Additional paid-in capital 522      
Accumulated other comprehensive loss (4,115 )   (3,597 )
Retained earnings 20,843     16,550  
Total stockholders' equity 17,375     13,078  
Total liabilities and stockholders' equity $ 45,646     $ 45,672  
 

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

       
  Three months ended   Six months ended
  June 30,   June 30,
  2018   2017   2018   2017
Cash flows from operating activities:              
Net income $ 477     $ 687     $ 2,979     $ 3,431  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization 443     522     827     1,101  
Discontinued operations gain on sale of Fly.com domain name             (2,890 )
Deferred income tax (39 )   (33 )   (149 )   (69 )
Stock-based compensation 349     240     522     480  
Other 40     (34 )   (43 )   (27 )
Net foreign currency effects 35     (135 )   (136 )   (224 )
Changes in operating assets and liabilities:              
Accounts receivable 100     1,800     (897 )   2,087  
Income tax receivable (705 )   (509 )   (277 )   35  
Prepaid expenses and other 428     (132 )   418     (218 )
Accounts payable (15 )   (2,791 )   (3,200 )   (6,054 )
Accrued expenses and other (299 )   (549 )   725     441  
Income tax payable (48 )   (1,287 )   169     179  
Other non-current liabilities (165 )   (340 )   (158 )   (278 )
Net cash provided by (used in) operating activities 601     (2,561 )   780     (2,006 )
Cash flows from investing activities:              
Proceeds from sale of Fly.com domain name             2,890  
Investment in WeekenGO (3,083 )       (3,083 )    
Purchases of property and equipment (442 )   (186 )   (507 )   (306 )
Net cash provided by (used in) investing activities (3,525 )   (186 )   (3,590 )   2,584  
Cash flows from financing activities:              
Repurchase of common stock, net     (5,062 )       (6,824 )
Net cash used in financing activities     (5,062 )       (6,824 )
Effect of exchange rate on cash, cash equivalents and restricted cash (780 )   583     (324 )   754  
Net increase in cash, cash equivalents and restricted cash (3,704 )   (7,226 )   (3,134 )   (5,492 )
Cash, cash equivalents and restricted cash at beginning of period 24,571     29,970     24,001     28,236  
Cash, cash equivalents and restricted cash at end of period $ 20,867     $ 22,744     $ 20,867     $ 22,744  
Supplemental disclosure of cash flow information:              
Cash paid for income taxes, net $ 1,417     $ 2,920     $ 2,196     $ 3,230  
                               

Travelzoo
Segment Information
(Unaudited)
(In thousands)

 
Three months ended June 30, 2018 Asia Pacific   Europe   North
America

  Consolidated
 
Revenue from unaffiliated customers $        2,073     $        8,527     $      17,475      $    28,075   
Intersegment revenue (9 )   (27 )   36      —   
Total net revenues 2,064     8,500     17,511      28,075   
Operating income (loss) $ (1,472 )   $ 441     $ 2,109      $ 1,078   
Three months ended June 30, 2017 Asia Pacific   Europe   North
America

  Consolidated
 
Revenue from unaffiliated customers $ 1,963     $ 8,005     $      16,443      $ 26,411   
Intersegment revenue                                                (13 )   (108 )   121      —   
Total net revenues 1,950     7,897     16,564      26,411   
Operating income (loss) $ (1,165 )   $ 268     $ 2,283      $ 1,386   
                               
                               


Six months ended June 30, 2018        Asia Pacific   Europe   North
America
  Consolidated
 
Revenue from unaffiliated customers $        4,115     $      18,859     $        35,985     $   58,959   
Intersegment revenue (29 )   (79 )   108     —   
Total net revenues 4,086     18,780     36,093     58,959   
Operating income (loss) $ (3,212 )   $ 2,407     $ 5,540     $ 4,735   
Six months ended June 30, 2017                            Asia Pacific   Europe   North
America
  Consolidated
 
Revenue from unaffiliated customers $ 3,807     $ 17,223     $ 33,810     $ 54,840   
Intersegment revenue (44 )   (255 )   299     —   
Total net revenues 3,763     16,968     34,109     54,840   
Operating income (loss) $ (2,706 )   $ 1,217     $ 4,937     $ 3,448   
                               

Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com

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