Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________________________________________
FORM 8-K
____________________________________________________
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 25, 2018
____________________________________________________

Travelzoo
(Exact name of registrant as specified in its charter)
____________________________________________________
Delaware
000-50171
36-4415727
(State or Other
Jurisdiction of
Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
590 Madison Avenue, 37th Floor
New York, New York
10022
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code (212) 484-4900
(Former Name or Former Address, if Changed Since Last Report)
____________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company    ¨    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨ 






Item 2.02.         Results of Operations and Financial Condition.
 
On July 25, 2018, Travelzoo (the "Company") reported its second quarter 2018 financial results. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this report on Form 8-K and is incorporated herein by reference.
 
The information furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
 

Item 9.01.        Financial Statements and Exhibits.
(d)           Exhibits.  See Exhibit Index






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
TRAVELZOO
 
 
 
 
Date:
July 25, 2018
By:
/s/ Glen Ceremony
 
 
 
Glen Ceremony
Chief Financial Officer






EXHIBIT INDEX

Exhibit
Description
 
 
Press Release, dated July 25, 2018.



Exhibit


Exhibit 99.1
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12370054&doc=3
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Second Quarter 2018 Results

NEW YORK, July 25, 2018 — 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."






1/7





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.

2/7




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 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.





3/7




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



4/7




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



5/7




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


6/7




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





                                                                    

###


7/7