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-- Revenue of $23.6 million, up 27% year-over-year
-- Operating profit from continuing operations of $2.3 million, up 15% year-over-year
-- Income from continuing operations of $0.08 per share, up from $0.03 in the prior-year period
-- Net loss per share of ($0.02), compared to ($0.11) in the prior-year period
-- Income tax rate of 50%
Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2009, with revenue of $23.6 million, an increase of 27% year-over-year. Operating profit from continuing operations was $2.3 million. Income from continuing operations was $1.3 million, with diluted income per share from continuing operations of $0.08, up from diluted income per share from continuing operations of $0.03 in the prior-year period. Revenue, operating profit and income from continuing operations for all periods exclude the results of Travelzoo's Asia Pacific business segment which are reported as discontinued operations. Including discontinued operations, diluted net loss per share was ($0.02), down from diluted net loss per share of ($0.11) in the prior-year period.
"We are pleased to report a 27% revenue growth year-over-year. Growth was particularly strong in Europe. North America revenue saw the strongest year-over-year growth in over two years," said Holger Bartel, CEO of Travelzoo. "We also increased operating profits in spite of record investments into subscriber acquisition and expenses related to the launch of Fly.com earlier this year."
North America
North America business segment revenue grew 18% year-over-year to $18.9 million. Operating profit was $3.6 million, or 19.2% of revenue, down from an operating profit of $4.2 million, or 26.4% of revenue, in the prior-year period.
Europe
Europe business segment revenue grew 82% year-over-year to $4.8 million. In local currency terms, revenue grew 110% year-over-year. Operating loss was $1.3 million, compared to an operating loss of $2.2 million in the prior-year period. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007. In May 2008, Travelzoo began publishing its weekly Top 20(R) list in Spain, after having operated a sales office in Barcelona since November 2006.
Subscribers
Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 16.3 million as of September 30, 2009, up 3.0 million, or 23%, from September 30, 2008, and up 1.1 million, or 7%, from June 30, 2009. In North America, total unduplicated number of subscribers was 13.0 million as of September 30, 2009, up 1.9 million, or 17%, from September 30, 2008 and up 658,000, or 5%, from June 30, 2009. In Europe, total unduplicated number of subscribers was 3.3 million as of September 30, 2009, up 1.2 million, or 55%, from September 30, 2008 and up 442,000, or 16%, from June 30, 2009.
Income Taxes
Income tax expense was $1.3 million, compared to $1.5 million in the prior-year period for continuing operations. The effective income tax rate was 50%, down from 74% in the prior-year period. Operating losses from our Europe business segment and our discontinued Asia Pacific business segment were treated as having no recognizable tax benefit.
Asset Management
During the third quarter, Travelzoo generated $664,000 of cash from operating activities. Accounts receivable decreased by $284,000 quarter-over-quarter and increased by $1.8 million over the prior-year period to $11.8 million. Accounts payable decreased by $233,000 quarter-over-quarter and increased by $1.5 million over the prior-year period to $7.4 million. Capital expenditures were $405,000, up from $320,000 in the prior quarter and down from $1.6 million in the prior-year period. Travelzoo exited the third quarter with $15.7 million in cash and cash equivalents.
Conference Call
Travelzoo will host a conference call to discuss third quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to:
-- download the management presentation (PDF format) to be discussed in the conference call;
-- access the Web cast.
About Travelzoo
Travelzoo is a global Internet media company. Travelzoo's media properties, which reach more than 18 million travel enthusiasts in the U.S., Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, Taiwan and the U.K., include the Travelzoo(R) Web site (www.travelzoo.com), the Top 20(R) list, the Newsflash(TM) e-mail alert service, the Travelzoo Network(TM), the SuperSearch(TM) search tool, and the Fly.com(TM) search engine. Travelzoo publishes offers from more than 1,000 advertisers around the world. Travelzoo's deal experts review offers to find the best travel deals and confirm their true value. Travelzoo's global headquarters is in New York City.
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 and 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 Inc. All other company and product names mentioned are trademarks of their respective owners.
Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
Revenues $ 23,576 $ 18,600 $ 70,194 $ 61,207
Cost of revenues 1,464 819 4,140 1,934
-------- -------- -------- --------
Gross profit 22,112 17,781 66,054 59,273
Operating expenses:
Sales and marketing 13,437 10,326 37,450 32,696
General and administrative 6,395 5,480 18,420 15,662
-------- -------- -------- --------
Total operating expenses 19,832 15,806 55,870 48,358
-------- -------- -------- --------
Operating income from 2,280 1,975 10,184 10,915
continuing operations
Other income and expense:
Interest income 8 59 40 266
Gain (loss) on foreign currency 320 (69 ) 17 70
-------- -------- -------- --------
Income from continuing 2,608 1,965 10,241 11,251
operations before income taxes
Income taxes 1,308 1,451 5,292 7,064
-------- -------- -------- --------
Income from continuing 1,300 514 4,949 4,187
operations
Loss from discontinued (1,595 ) (2,303 ) (5,097 ) (8,175 )
operations, net of tax
-------- -------- -------- --------
Net loss $ (295 ) $ (1,789 ) $ (148 ) $ (3,988 )
======== ======== ======== ========
Basic net income (loss) per
share from:
Continuing operations $ 0.08 $ 0.04 $ 0.30 $ 0.29
Discontinued operations $ (0.10 ) $ (0.17 ) $ (0.31 ) $ (0.57 )
Net loss $ (0.02 ) $ (0.13 ) $ (0.01 ) $ (0.28 )
Diluted net income (loss) per
share from:
Continuing operations $ 0.08 $ 0.03 $ 0.30 $ 0.26
Discontinued operations $ (0.10 ) $ (0.14 ) $ (0.31 ) $ (0.50 )
Net loss $ (0.02 ) $ (0.11 ) $ (0.01 ) $ (0.25 )
Shares used in computing basic 16,444 14,285 16,396 14,268
net income (loss) per share
Shares used in computing diluted 16,452 16,166 16,413 16,220
net income (loss) per share
Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, December 31,
2009 2008
-------- --------
ASSETS
Cash and cash equivalents $ 15,694 $ 14,179
Accounts receivable, net 11,772 11,397
Deposits 270 185
Prepaid expenses and other current assets 2,046 2,356
Deferred tax assets 1,089 1,089
Assets held for sale 1,050 831
-------- --------
Total current assets 31,921 30,037
-------- --------
Deposits, less current portion 302 292
Restricted cash 875 875
Property and equipment, net 4,167 4,100
Intangible assets, net 1,509 18
-------- --------
Total assets $ 38,774 $ 35,322
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 7,408 6,434
Accrued expenses 4,089 3,913
Deferred revenue 836 666
Deferred rent 129 101
Liabilities related to assets held for sale 1,498 1,281
-------- --------
Total current liabilities 13,960 12,395
-------- --------
Deferred tax liabilities 465 465
Long-term tax liabilities 918 900
Deferred rent, less current portion 659 799
Common stock 164 143
Additional paid-in capital 2,322 185
Accumulated other comprehensive loss (1,388 ) (1,388 )
Retained earnings 21,674 21,823
-------- --------
Total stockholders' equity 22,772 20,763
-------- --------
Total liabilities and stockholders' equity $ 38,774 $ 35,322
======== ========
Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
--------- -------- --------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (295 ) $ (1,789 ) $ (148 ) $ (3,988 )
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 531 177 1,457 409
Provision for losses on accounts (14 ) 177 302 244
receivable
Tax benefit from exercise of stock options - - - (110 )
Net foreign currency effects (320 ) - (17 ) -
Changes in operating assets and
liabilities:
Accounts receivable 217 1,084 (766 ) (573 )
Deposits (50 ) (41 ) (75 ) 1
Prepaid expenses and other current (17 ) (708 ) 1,618 (510 )
assets
Accounts payable (429 ) (1,703 ) 1,600 628
Accrued expenses 268 (265 ) (101 ) 363
Deferred revenue 49 (55 ) 153 250
Deferred rent (25 ) 132 (127 ) 846
Income tax payable 749 - (1,196 ) -
Other non-current liabilities - (409 ) 19 (376 )
--------- -------- --------- --------
Net cash provided by (used in) 664 (3,400 ) 2,719 (2,816 )
operating activities
--------- -------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (405 ) (1,594 ) (1,608 ) (2,961 )
Purchase of restricted cash - - - (875 )
Purchase of intangible asset - - (1,760 ) -
--------- -------- --------- --------
Net cash used in investing activities (405 ) (1,594 ) (3,368 ) (3,826 )
--------- -------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options - - 2,158 75
Tax benefit from exercise of stock options - - - 110
--------- -------- --------- --------
Net cash provided by financing - - 2,158 185
activities
--------- -------- --------- --------
Effect of exchange rate on cash and cash (109 ) (187 ) 6 (348 )
equivalents
--------- -------- --------- --------
Net increase (decrease) in cash and cash 150 (5,181 ) 1,515 (6,805 )
equivalents
Cash and cash equivalents at beginning of 15,544 21,017 14,179 22,641
period
--------- -------- --------- --------
Cash and cash equivalents at end of period 15,694 15,836 15,694 15,836
========= ======== ========= ========
Supplemental disclosure of cash flow
information:
Cash paid for income taxes net of refunds $ 553 $ 2,325 $ 4,732 $ 7,343
received
--------- -------- --------- --------
Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended North Europe Elimination Consolidated
September 30, 2009 America
-------- -------- ----------- ------------
Revenue from $ 18,830 $ 4,746 $ - $ 23,576
unaffiliated customers
Intersegment revenue 84 4 (88 ) -
-------- -------- ----------- -----------
Total net revenues 18,914 4,750 (88 ) 23,576
-------- -------- ----------- -----------
Operating income (loss) $ 3,630 $ (1,317 ) $ (33 ) $ 2,280
-------- -------- ----------- -----------
Three months ended North Europe Elimination Consolidated
September 30, 2008 America
-------- --------- ----------- ------------
Revenue from $ 16,006 $ 2,594 $ - $ 18,600
unaffiliated customers
Intersegment revenue 13 9 (22 ) -
-------- --------- ----------- -----------
Total net revenues 16,019 2,603 (22 ) 18,600
-------- --------- ----------- -----------
Operating income (loss) $ 4,222 $ (2,248 ) $ 1 $ 1,975
-------- --------- ----------- -----------
Nine months ended North Europe Elimination Consolidated
September 30, 2009 America
-------- --------- ----------- ------------
Revenue from $ 58,473 $ 11,720 $ - $ 70,193
unaffiliated customers
Intersegment revenue 208 30 (238 ) -
-------- --------- ----------- -----------
Total net revenues 58,681 11,750 (238 ) 70,193
-------- --------- ----------- -----------
Operating income (loss) $ 13,898 $ (3,661 ) $ (53 ) $ 10,184
-------- --------- ----------- -----------
Nine months ended North Europe Elimination Consolidated
September 30, 2008 America
-------- --------- ----------- ------------
Revenue from $ 54,025 $ 7,183 $ - $ 61,208
unaffiliated customers
Intersegment revenue 77 39 (116 ) -
-------- --------- ----------- -----------
Total net revenues 54,102 7,222 (116 ) 61,208
-------- --------- ----------- -----------
Operating income (loss) $ 17,415 $ (6,502 ) $ 2 $ 10,915
-------- --------- ----------- -----------
Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Quarters Ended
-----------------------------------------------------------------------------------------------
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, Mar 31,
2009 2009 2009 2008 2008 2008 2008
-------- -------- -------- -------- -------- -------- --------
Revenues $ 23,576 $ 23,638 $ 22,980 $ 19,610 $ 18,600 $ 21,680 $ 20,928
Cost of revenues 1,464 1,458 1,218 909 819 599 516
-------- -------- -------- -------- -------- -------- --------
Gross profit 22,112 22,180 21,762 18,701 17,781 21,081 20,412
Operating expenses:
Sales and marketing 13,437 12,599 11,414 10,601 10,326 10,625 11,745
General and administrative 6,395 6,211 5,814 5,704 5,480 5,540 4,643
-------- -------- -------- -------- -------- -------- --------
Total operating expenses 19,832 18,810 17,228 16,305 15,806 16,165 16,388
-------- -------- -------- -------- -------- -------- --------
Operating income from 2,280 3,370 4,534 2,396 1,975 4,916 4,024
continuing operations
Other income and expense:
Interest income 8 13 19 18 59 74 133
Gain (loss) on foreign currency 320 (116 ) (187 ) 424 (69 ) (2 ) 141
-------- -------- -------- -------- -------- -------- --------
Income from continuing 2,608 3,267 4,366 2,838 1,965 4,988 4,298
operations before income taxes
Income taxes 1,308 1,659 2,325 1,113 1,451 2,993 2,619
-------- -------- -------- -------- -------- -------- --------
Income from continuing 1,300 1,608 2,041 1,725 514 1,995 1,679
operations
Loss from discontinued (1,595 ) (1,799 ) (1,703 ) (1,853 ) (2,303 ) (3,188 ) (2,685 )
operations, net of tax
-------- -------- -------- -------- -------- -------- --------
Net loss $ (295 ) $ (191 ) $ 338 $ (128 ) $ (1,789 ) $ (1,193 ) $ (1,006 )
======== ======== ======== ======== ======== ======== ========
Basic net income (loss) per
share from:
Continuing operations $ 0.08 $ 0.10 $ 0.13 $ 0.12 $ 0.04 $ 0.14 $ 0.12
Discontinued operations $ (0.10 ) $ (0.11 ) $ (0.10 ) $ (0.13 ) $ (0.16 ) $ (0.22 ) $ (0.19 )
Net loss $ (0.02 ) $ (0.01 ) $ 0.02 $ (0.01 ) $ (0.13 ) $ (0.08 ) $ (0.07 )
Diluted net income (loss) per
share from:
Continuing operations $ 0.08 $ 0.10 $ 0.13 $ 0.11 $ 0.03 $ 0.12 $ 0.10
Discontinued operations $ (0.10 ) $ (0.11 ) $ (0.10 ) $ (0.12 ) $ (0.14 ) $ (0.20 ) $ (0.17 )
Net loss $ (0.02 ) $ (0.01 ) $ 0.02 $ (0.01 ) $ (0.11 ) $ (0.07 ) $ (0.06 )
Shares used in computing basic 16,444 16,444 16,300 14,285 14,285 14,269 14,250
net income (loss) per share
Shares used in computing 16,452 16,452 16,306 16,098 16,166 16,238 16,255
diluted net income (loss) per
share
SOURCE: Travelzoo
Travelzoo Mindy Joyce, 212-521-4218 (Media) mjoyce@travelzoo.com
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