EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

 

 

Travelzoo Inc.
590 Madison Avenue

21st Floor
New York, NY 10022

 

 

 

Media Contact:

Mindy Joyce

(212) 521-4218
mjoyce@travelzoo-inc.com

 

 

FOR IMMEDIATE RELEASE

 

Travelzoo Reports Second Quarter 2006 Financial Results

 

NEW YORK, July 20, 2006 -- Travelzoo Inc. (NASDAQ: TZOO):

 

 

•

Revenue of $17.4 million, up 42% year-over-year

 

•

Operating profit of $7.0 million, up 86% year-over-year

 

•

Net income of $3.9 million, $0.23 earnings per share

 

Travelzoo Inc. (NASDAQ: TZOO), a global Internet media company, today reported financial results for the second quarter ended June 30, 2006, with revenue of $17.4 million, an increase of 42% year-over-year. Net income was $3.9 million, with diluted earnings per share (EPS) of $0.23, up from $0.12 in the prior-year period.

 

“Q2 2006 marks our 32nd consecutive quarter of growth in online advertising sales,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “With a large reach of more than 10 million subscribers in the U.S., Canada, and the U.K. and a robust business model, we believe that we are well positioned to take advantage of future growth opportunities.”

 

North America

 

North America business segment revenue grew 36% year-over-year to $16.7 million. North America reported an operating profit of $7.5 million, or 45% of revenue, up from an operating profit of $3.9 million, or 32% of revenue, in the prior-year period.

 

Europe

 

Europe business segment revenue was $743,000, up 32% from $565,000 in Q1 2006. Europe reported an operating loss of $494,000, compared to $460,000 in Q1 2006. Travelzoo began operations in Europe in May 2005.

 

Income Taxes

 

Travelzoo’s effective income tax rate increased to 47.3% from 43.6% in Q1 2006 and from 45.1% in the prior-year period.

 

 

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Conference Call

 

Travelzoo will host a conference call to discuss second quarter results at 11:00 a.m. ET today. A live Web cast can be accessed through the company's investor relations Web site at www.travelzoo.com/ir.

 

About Travelzoo

 

Travelzoo Inc. is a global Internet media company. Travelzoo’s media properties, which reach more than 10 million travel enthusiasts in the U.S., Canada and the U.K., include the Travelzoo® Web site (www.travelzoo.com), the Top 20® e-mail newsletter, the Newsflash™ e-mail alert service and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 500 advertisers. Travelzoo’s deal experts review each offer to find the best travel deals and confirm their true value. Travelzoo is headquartered 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. All other names are trademarks and/or registered trademarks of their respective owners.

 

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Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30,

 

June 30,

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

Revenues

$   17,358

 

$   12,258

 

$   34,287

 

$   23,487

 

Cost of revenues

286

 

224

 

551

 

404

 

 

 

 

 

 

 

 

 

 

Gross profit

17,072

 

12,034

 

33,736

 

23,083

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

7,939

 

6,152

 

15,038

 

11,182

 

General and administrative

2,146

 

2,127

 

4,747

 

4,735

 

 

 

 

 

 

 

 

 

 

Total operating expenses

10,085

 

8,279

 

19,785

 

15,917

 

 

 

 

 

 

 

 

 

 

Income from operations

6,987

 

3,755

 

13,951

 

7,166

 

Other income and expense:

 

 

 

 

 

 

 

 

Interest income

302

 

218

 

646

 

377

 

Gain (loss) on foreign currency

14

 

(4)

 

6

 

(4)

 

 

 

 

 

 

 

 

 

 

Income before income taxes

7,303

 

3,969

 

14,603

 

7,539

 

 

 

 

 

 

 

 

 

 

Income taxes

3,452

 

1,791

 

6,637

 

3,529

 

 

 

 

 

 

 

 

 

 

Net income

$     3,851

 

$     2,178

 

$     7,966

 

$     4,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

$ 0.25

 

$ 0.13

 

$ 0.50

 

$ 0.25

 

Diluted net income per share

0.23

 

0.12

 

0.47

 

0.22

 

 

 

 

 

 

 

 

 

 

Shares used in computing
  basic net income per share

 

15,459

 

 

16,250

 

 

15,778

 

 

16,248

 

Shares used in computing
  diluted net income per share


16,677

 


17,852

 


16,983

 


17,998

 

 

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Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

June 30,

 

December 31,

 

2006

 

2005

 

 

 

 

ASSETS

 

 

 

Cash and cash equivalents

$     10,200 

 

$     24,469 

Short-term investments

14,884 

 

19,887 

Accounts receivable, net

8,550 

 

9,020 

Deposits

23 

 

28 

Prepaid expenses and other current assets

659 

 

631 

Deferred tax assets

1,020 

 

1,020 

 

 

 

 

Total current assets

35,336 

 

55,055 

 

 

 

 

Deposits, less current portion

287 

 

190 

Deferred tax assets, less current portion

28 

 

28 

Property and equipment, net

184 

 

159 

Intangible assets, net

7 

 

20 

 

 

 

 

Total assets

$     35,842 

 

$     55,452 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

2,982 

 

2,373 

Accrued expenses

3,524 

 

3,394 

Deferred revenue

563 

 

296 

Income tax payable

848 

 

856 

 

 

 

 

Total liabilities

7,917 

 

6,919 

 

 

 

 

Common stock

153 

 

163 

Accumulated other comprehensive income

(34)

 

(38)

Additional paid-in capital

2,076 

 

30,645 

Retained earnings

25,730 

 

17,763 

 

 

 

 

Total stockholders' equity

27,925 

 

48,533 

 

 

 

 

Total liabilities and

 

 

 

stockholders' equity

$ 35,842 

 

$ 55,452 

 

 

 

 

 

 

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Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

$   3,851 

 

$   2,178 

 

$   7,966 

 

$   4,010

Adjustments to reconcile net income to net
   cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

36 

 

39 

 

69 

 

84 

Deferred income taxes

- 

 

- 

 

- 

 

20 

Provision for losses on accounts receivable

(17)

 

19 

 

231 

 

47 

Tax benefit of stock option exercises

- 

 

- 

 

- 

 

396 

Accrued income on short-term investments

(168)

 

(66)

 

(334)

 

(123)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

503 

 

(660)

 

259 

 

(1,836)

Deposits

(87)

 

(33)

 

(90)

 

(45)

Prepaid expenses and other current assets

219 

 

(276)

 

(23)

 

50 

Accounts payable

485 

 

700 

 

598 

 

989 

Accrued expenses

272 

 

472 

 

114 

 

695 

Deferred revenue

(66)

 

134 

 

267 

 

195 

Income tax payable

(1,768)

 

(598)

 

(8)

 

638 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

3,260 

 

1,909 

 

9,049 

 

5,120 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of property and equipment

(22)

 

(53)

 

(78)

 

(95)

Purchase of short-term investments

- 

 

(19,773)

 

(14,663)

 

(19,773)

Sale of short-term investments

- 

 

10,088 

 

20,000 

 

10,088 

 

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

(22)

 

(9,738)

 

5,259 

 

(9,780)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock,
  net of related costs

 

- 

 

 

- 

 

 

- 

 

 

(124)

Proceeds from stock option exercises

- 

 

- 

 

- 

 

35 

Repurchase of common stock

(19,986)

 

- 

 

(28,579)

 

- 

 

 

 

 

 

 

 

 

Net cash used in financing activities

(19,986)

 

- 

 

(28,579)

 

(89)

 

 

 

 

 

 

 

 

Effect of exchange rate on cash and cash equivalents

6 

 

(1)

 

2 

 

(1)

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

(16,742)

 

(7,830)

 

(14,269)

 

(4,750)

Cash and cash equivalents at beginning of period

26,942 

 

29,515 

 

24,469 

 

26,435 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

10,200 

 

21,685 

 

10,200 

 

21,685 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes net of refunds received

$   5,221 

 

$   2,389 

 

$   6,645 

 

$   2,475 

 

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Travelzoo Inc.

Segment Information

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

Three months ended June 30, 2006

North America

 

Europe

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$     16,615 

 

$     743 

 

$          - 

 

$      17,358

Intersegment revenue

42 

 

- 

 

(42)

 

- 

 

 

 

 

 

 

 

 

Total net revenues

16,657 

 

743 

 

(42)

 

17,358 

 

 

 

 

 

 

 

 

Operating income (loss)

7,481 

 

(494)

 

- 

 

6,987 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2005

North America

 

Europe

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$     12,249 

 

$          9 

 

$         - 

 

$     12,258 

Intersegment revenue

14 

 

-

 

(14)

 

- 

 

 

 

 

 

 

 

 

Total net revenues

12,263 

 

9 

 

(14)

 

12,258 

 

 

 

 

 

 

 

 

Operating income (loss)

3,929 

 

(174)

 

- 

 

3,755 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2006

North America

 

Europe

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$     32,980 

 

$    1,307 

 

$       -  

 

$    34,287 

Intersegment revenue

113 

 

2 

 

(115)

 

- 

 

 

 

 

 

 

 

 

Total net revenues

33,093 

 

1,309 

 

(115)

 

34,287 

 

 

 

 

 

 

 

 

Operating income (loss)

14,905 

 

(954)

 

- 

 

13,951 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2005

North America

 

Europe

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

Revenue from unaffiliated customers

$   23,478 

 

$          9 

 

$             - 

 

$     23,487 

Intersegment revenue

14 

 

- 

 

(14)

 

- 

 

 

 

 

 

 

 

 

Total net revenues

23,492 

 

9 

 

(14)

 

23,487 

 

 

 

 

 

 

 

 

Operating income (loss)

7,341 

 

(175)

 

- 

 

7,166 

 

 

 

 

 

 

 

 

 

 

 

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