• 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 pulse on outstanding travel, entertainment, and lifestyle experiences. For over 15 years we have worked in partnership with more than 2,000 top travel vendors—our long-standing relationships allow us access to the very best deals.

Travelzoo Reports Third Quarter 2019 Results

Press Releases

Travelzoo Reports Third Quarter 2019 Results

NEW YORK, Oct. 23, 2019 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $25.5 million; up 2% year-over-year in constant currencies
  • Operating profit of $1.2 million, up 70% year-over-year
  • Earnings per share (EPS) of $0.03

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2019, with revenue of $25.5 million, an increase of $204,000 year-over-year, and an operating profit of $1.2 million. In constant currencies, revenue increased by 2% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with a much larger amount of purchases made by Travelzoo® members. Net income was $306,000. EPS was $0.03, up from $0.01 in the prior-year period.

"Our attractive core business in North America and Europe generated an operating profit of $3.3 million, with an operating margin of 14%, of which $2.1 million was re-invested in our Asia Pacific business with a focus on China where we see, after completing a rigorous review of the market and Travelzoo’s current position, a very substantial opportunity for revenue growth," said Holger Bartel, Global CEO of Travelzoo.

Core Business versus Development Business
Our businesses in Europe and North America (the "Core Business") and our business in Asia Pacific (the "Development Business") are in very different situations. The following table illustrates how the Core Business compares to the Development Business:

  Core Business   Development Business
Q3 2019 Operating profit/loss +$3.3 million   -$2.1 million
Q3 2019 Operating margin 14%   N/A
Contribution to Q3 2019 EPS +$0.21   -$0.18
Contribution to twelve months EPS +$1.12   -$0.59

Europe
Europe business segment revenue increased 1% year-over-year to $8.5 million. In constant currencies, revenue increased 6% year-over-year. Operating profit for the third quarter was $815,000, or 10% of revenue, compared to an operating profit of $940,000, or 11% of revenue in the prior-year period.

North America
North America business segment revenue increased 3% year-over-year to $15.3 million. Operating profit for the third quarter was $2.5 million, or 16% of revenue, compared to an operating profit of $1.4 million, or 9% of revenue in the prior-year period.

Asia Pacific
In Asia Pacific, we worked with a top management consulting firm in China and developed together a strategy for a significant presence of Travelzoo in social media and mobile channels. The execution began in mid September. During the third quarter, our Asia Pacific segment still saw a decrease in revenue of 16% year-over-year to $1.7 million. We do not see this as a trend. We expect revenue from China to grow in the fourth quarter. The operating loss for the third quarter was $2.1 million, compared to an operating loss of $1.6 million in the prior-year period. The reported operating loss was impacted by costs of the strategy consulting project. All costs of the project were expensed.

Members
As of September 30, 2019, Travelzoo had a worldwide unduplicated number of members of 30.3 million. In Asia Pacific, unduplicated number of members was 3.6 million as of September 30, 2019, consistent with September 30, 2018. In Europe, unduplicated number of members was 9.1 million as of September 30, 2019, up 4% from September 30, 2018. In North America, unduplicated number of members was 17.6 million as of September 30, 2019, up 1% from September 30, 2018.

Income Taxes
Income tax expense was $770,000, compared to a $505,000 income tax expense in the prior-year period. Operating losses from the Development Business were not used to offset operating income from the Core Business.

Asset Management
During the third quarter of 2019, Travelzoo generated $326,000 of cash in operating activities. Accounts receivable decreased by $2.7 million to $12.3 million, and accounts payable decreased by $1.2 million to $13.0 million in the third quarter of 2019. Cash used in investing activities was $149,000. Cash used in financing activities was $2.3 million. Cash was used primarily for the share repurchase program described below. As of September 30, 2019, cash and cash equivalents were $11.6 million.

Share Repurchase Program
During the third quarter of 2019, Travelzoo repurchased 186,369 shares of its common stock. In May 2019, Travelzoo's board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. 563,631 shares of common stock remain to be repurchased.

Conference Call
Travelzoo will host a conference call to discuss third 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 irresistible 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 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.

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

  Three months ended   Nine months ended
  September 30,   September 30,
  2019   2018   2019   2018
Revenues $ 25,505     $ 25,301     $ 84,514     $ 84,260  
Cost of revenues 2,980     2,987     8,683     9,388  
Gross profit 22,525     22,314     75,831     74,872  
Operating expenses:              
Sales and marketing 14,233     13,375     45,196     44,545  
Product development 1,478     2,297     4,980     7,194  
General and administrative 5,600     5,928     17,046     17,684  
Total operating expenses 21,311     21,600     67,222     69,423  
Income from operations

 
1,214     714     8,609     5,449  
Other income (loss), net (138 )   (91 )   (380 )   100  
Income before income taxes 1,076     623     8,229     5,549  
Income tax expense 770     505     3,475     2,452  
Net income $ 306     $ 118     $ 4,754     $ 3,097  
               
Basic income per share $ 0.03     $ 0.01     $ 0.40     $ 0.25  
Diluted income per share $ 0.03     $ 0.01     0.39       0.25  
               
Weighted average shares:              
Basic 11,767     12,314     11,894     12,412  
Diluted 11,956     12,663     12,152     12,630  


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

  September 30,
 2019
  December 31,
 2018
Assets
Current assets:      
Cash and cash equivalents $ 11,605     $ 18,017  
Accounts receivable, net 12,317     12,646  
Income taxes receivable 930     389  
Deposits 141     167  
Prepaid expenses and other 1,965     1,947  
Total current assets 26,958     33,166  
Deposits and other 669     685  
Deferred tax assets 1,347     1,645  
Restricted cash 1,308     1,444  
Investment in WeekenGO 2,635     2,694  
Operating lease right-of-use assets 17,523      
Property and equipment, net 3,142     3,790  
Total assets $ 53,582     $ 43,424  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 13,007     $ 17,129  
Accrued expenses and other 6,866     7,853  
Deferred revenue 1,119     1,339  
Operating lease liabilities 7,028      
Income tax payable 446     489  
Total current liabilities 28,466     26,810  
Long-term tax liabilities 343     418  
Long-term operating lease liabilities 12,291      
Other long-term liabilities 84     2,137  
Total liabilities 41,184     29,365  
Common stock 117     120  
Additional paid-in capital      
Accumulated other comprehensive loss (4,450 )   (4,214 )
Retained earnings 16,731     18,153  
Total stockholders’ equity 12,398     14,059  
Total liabilities and stockholders’ equity $ 53,582     $ 43,424  


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

  Three months    Nine months ended
  ended   ended
    September 30,     September 30,
  2019   2018   2019   2018
Cash flows from operating activities:
Net income $ 306     $ 118     $ 4,754     $ 3,097  
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
             
Depreciation and amortization 336     563     999     1,390  
Stock-based compensation 393     241     875     763  
Gain from sale of property and equipment     (143 )       (143 )
Deferred income tax 86     53     431     (96 )
Loss on equity investment in WeekenGO 214     85     611     85  
Net foreign currency effects 85     59     59     (77 )
Other 106     120     132     77  
Changes in operating assets and liabilities:              
Accounts receivable 2,652     (189 )   (127 )   (1,086 )
Income tax receivable (112 )   (73 )   (540 )   (350 )
Prepaid expenses and other (242 )   2     (3 )   420  
Accounts payable (1,183 )   (400 )   (3,971 )   (3,600 )
Accrued expenses and other (1,733 )   (973 )   (442 )   (248 )
Income tax payable 60     (234 )   (36 )   (65 )
Other liabilities (642 )   27     (816 )   (131 )
Net cash provided by (used in) operating activities 326     (744 )   1,926     36  
Cash flows from investing activities:              
Proceeds from sale of property and equipment     150         150  
Investment in WeekenGO         (673 )   (3,083 )
Purchases of property and equipment (149 )   (159 )   (350 )   (666 )
Net cash used in investing activities (149 )   (9 )   (1,023 )   (3,599 )
Cash flows from financing activities:              
Repurchase of common stock (2,308 )   (2,873 )   (8,768 )   (2,873 )
Proceeds from exercise of stock options, net of taxes paid for
net share settlement of equity awards
        1,712      
Net cash used in financing activities (2,308 )   (2,873 )   (7,056 )   (2,873 )
Effect of exchange rate on cash, cash equivalents and restricted cash (400 )   (9 )   (395 )   (333 )
Net decrease in cash, cash equivalents and restricted cash (2,531 )   (3,635 )   (6,548 )   (6,769 )
Cash, cash equivalents and restricted cash at beginning of period 15,444     20,867     19,461     24,001  
Cash, cash equivalents and restricted cash at end of period $ 12,913     $ 17,232     $ 12,913     $ 17,232  
Supplemental disclosure of cash flow information:              
Cash paid for income taxes, net $ 917     $ 767     $ 3,776     $ 2,963  

 

Travelzoo
Segment Information
(Unaudited)
(In thousands)

Three months ended September 30, 2019 Asia
Pacific
  Europe   North
America
  Consolidated
Revenue from unaffiliated customers $ 1,630     $ 9,432     $ 14,443     $ 25,505
Intersegment revenue 43     (938 )   895      
Total net revenues 1,673     8,494     15,338     25,505  
Operating income (loss) $ (2,051 )   $ 815     $ 2,450     $ 1,214  
               
Three months ended September 30, 2018 Asia
Pacific
  Europe   North
America
  Consolidated
Revenue from unaffiliated customers $  1,977     $  8,396     $  14,928     $  25,301
Intersegment revenue 10     (18 )   8      
Total net revenues 1,987     8,378     14,936     25,301  
Operating income (loss) $ (1,600 )   $ 940     $ 1,374     $ 714  

 

Nine months ended September 30, 2019 Asia
Pacific
  Europe   North
America
  Consolidated
Revenue from unaffiliated customers $  4,822     $  29,619     $  50,073     $  84,514
Intersegment revenue 96     (1,870 )   1,774      
Total net revenues 4,918     27,749     51,847     84,514  
Operating income (loss) $ (5,469 )   $ 3,536     $ 10,542     $ 8,609  
               
Nine months ended September 30, 2018 Asia
Pacific
  Europe   North
America
  Consolidated
Revenue from unaffiliated customers $  6,092     $  27,255     $  50,913     $  84,260
Intersegment revenue (19 )   (97 )   116      
Total net revenues 6,073     27,158     51,029     84,260  
Operating income (loss) $ (4,812 )   $ 3,347     $ 6,914     $ 5,449  



Investor Relations:
Lijun Qi
ir@travelzoo.com 

Travelzoo-Logo 11_30_2017 (1).jpg

 

Source: Travelzoo