EX-99.1 2 exh99-1.htm PRESS RELEASE

Exhibit 99.1

 

Travelzoo
590 Madison Avenue
21st Floor
New York, NY 10022

 

 

 

Media Contact:
Mindy Joyce
(212) 521-4218
mjoyce@travelzoo.com

 

FOR IMMEDIATE RELEASE

 

Travelzoo Reports Second Quarter 2007 Results

 

NEW YORK, July 25, 2007 -- Travelzoo Inc. (NASDAQ: TZOO):

 

Second Quarter 2007 Financial Highlights:

 

 

•

Revenue of $20.1 million, up 16% year-over-year

 

•

Operating profit of $5.8 million, down 18% year-over-year

 

•

$0.17 earnings per share, down from $0.23 in the prior year period

 

•

Income tax rate of 54%, up from 47% in the prior year period

 

Travelzoo Inc., a global Internet media company, today announced financial results for the second quarter ended June 30, 2007, with revenue of $20.1 million, an increase of 16% year-over-year. Net income was $2.8 million, with diluted earnings per share (EPS) of $0.17, down from $0.23 in the prior year period.

 

“Q2 2007 marks our 36th consecutive quarter of revenue growth,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “In Q2, we continued to aggressively implement our strategy of turning Travelzoo into a global media brand. By doing so, we incurred non-tax deductible operating losses of $1.7 million related to the start-up of our operations in Canada, Germany, France, Hong Kong, and the U.K. We spent a record high $7.9 million on subscriber acquisition and marketing the Travelzoo brand. We believe that going global is an opportunity to create attractive shareholder value in the future and  we want to seize this opportunity.”

 

 

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North America

North America business segment revenue grew 12% year-over-year to $18.7 million. North America reported an operating profit of $7.3 million, or 39.1% of revenue, down from an operating profit of $7.5 million, or 44.9% of revenue, in the prior year period. Losses from Travelzoo’s new operations in Canada impacted North America’s profit. Travelzoo began operations in Canada in April 2006.

 

Europe

Europe business segment revenue grew 102% year-over-year to $1.5 million. Europe reported an operating loss of $1.2 million, compared to an operating loss of $494,000 in the prior year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition in Germany and the U.K. and increased salary expenses due to increased headcount. Travelzoo began operations in the U.K. in May 2005. In September 2006, Travelzoo launched its Top 20 e-mail newsletter in Germany. In March 2007, Travelzoo began operations in France.

 

Asia Pacific

The Asia Pacific business segment reported an operating loss of $400,000. In April 2007, Travelzoo began operations in Hong Kong.

 

Income Taxes

Travelzoo’s effective income tax rate was 54.2%, up from 47.3% in the prior year period. The effective tax rate was impacted by operating losses in Canada, Germany, France, Hong Kong, and the U.K. These operating losses were treated as having no recognizable tax benefit.

 

Conference Call

Travelzoo will host a conference call to discuss second quarter results at 5:00 p.m. ET today. A live Web cast can be accessed through the company’s investor relations Web site at www.travelzoo.com/ir.

 

 

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About Travelzoo

Travelzoo is a global Internet media company. Travelzoo’s media properties, which reach more than 11 million travel enthusiasts in the U.S., Canada, the U.K. and Germany, include the Travelzoo® Web site (www.travelzoo.com), the Top 20® list, the Newsflash™ e-mail alert service and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 600 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 Inc. All other company and product names mentioned are 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
June 30

 

Six months ended
June 30,

 

 

 

 

2007

 

 

2006

 

 

2007

 

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

20,115

 

$

17,358

 

$

39,855

 

$

34,287

 

Cost of revenues

 

 

444

 

 

286

 

 

797

 

 

551

 

Gross profit

 

 

19,671

 

 

17,072

 

 

39,058

 

 

33,736

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

10,745

 

 

7,973

 

 

20,062

 

 

15,038

 

General and administrative

 

 

3,173

 

 

2,112

 

 

5,766

 

 

4,747

 

Total operating expenses

 

 

13,918

 

 

10,085

 

 

25,828

 

 

19,785

 

Income from operations

 

 

5,753

 

 

6,987

 

 

13,230

 

 

13,951

 

Other income and expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

428

 

 

302

 

 

792

 

 

646

 

Gain on foreign currency

 

 

36

 

 

13

 

 

35

 

 

6

 

Income before income taxes

 

 

6,217

 

 

7,302

 

 

14,057

 

 

14,603

 

Income taxes

 

 

3,371

 

 

3,452

 

 

7,148

 

 

6,637

 

Net income

 

$

2,846

 

$

3,850

 

$

6,909

 

$

7,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.19

 

$

0.25

 

$

0.45

 

$

0.50

 

Diluted net income per share

 

 

0.17

 

 

0.23

 

 

0.42

 

 

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing
basic net income per share

 

 

15,250

 

 

15,459

 

 

15,250

 

 

15,778

 

Shares used in computing
diluted net income per share

 

 

16,482

 

 

16,677

 

 

16,481

 

 

16,983

 

 

 

 

4/7

 

 

Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

 

June 30,

 

 

December 31,

 

 

 

 

2007

 

 

2006

 

 

 

 

 

 

 

 

 

ASSETS     

 

 

 

 

 

 

 

Cash and cash equivalents     

 

$

41,876

 

$

33,415

 

Accounts receivable, net     

 

 

8,545

 

 

7,274

 

Deposits     

 

 

187

 

 

177

 

Prepaid expenses and other current
assets     

 

 

1,327

 

 

506

 

Deferred tax assets     

 

 

1,980

 

 

1,980

 

Total current assets     

 

 

53,915

 

 

43,352

 

 

 

 

 

 

 

 

 

Deposits, less current portion     

 

 

200

 

 

142

 

Property and equipment, net     

 

 

345

 

 

172

 

Intangible assets, net     

 

 

31

 

 

34

 

Total Assets     

 

$

54,491

 

$

43,700

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY     

 

 

 

 

 

 

 

Accounts payable     

 

 

6,442

 

 

2,839

 

Accrued expenses     

 

 

2,420

 

 

2,149

 

Deferred revenue     

 

 

715

 

 

750

 

Deferred rent     

 

 

17

 

 

—

 

Income tax payable

 

 

—

 

 

1,142

 

Total current liabilities

 

 

9,594

 

 

6,880

 

Other liabilities     

 

 

1,186

 

 

3

 

 

 

 

 

 

 

 

 

Common stock     

 

 

153

 

 

153

 

Additional paid-in capital     

 

 

2,076

 

 

2,076

 

Accumulated other comprehensive
income     

 

 

7

 

 

22

 

Retained earnings     

 

 

41,475

 

 

34,566

 

Total Stockholders’ Equity     

 

 

43,711

 

 

36,817

 

Total Liabilities and
Stockholders’ Equity     

 

$

54,491

 

$

43,700

 

 

 

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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,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

2,846

 

$

3,850

 

$

6,909

 

$

7,966

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

48

 

 

36

 

 

79

 

 

69

 

Provision for losses on accounts receivable

 

 

(36

)

 

(17

)

 

(8

)

 

231

 

Accrued income on short-term investments

 

 

—

 

 

(168

)

 

—

 

 

(334

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

736

 

 

504

 

 

(1,235

)

 

259

 

Deposits

 

 

16

 

 

(87

)

 

(67

)

 

(90

)

Prepaid expenses and other current assets

 

 

(381

)

 

219

 

 

(815

)

 

(23

)

Accounts payable

 

 

2,136

 

 

485

 

 

3,580

 

 

598

 

Accrued expenses

 

 

(233

)

 

272

 

 

248

 

 

114

 

Deferred revenue

 

 

(61

)

 

(66

)

 

(37

)

 

267

 

Deferred rent

 

 

55

 

 

—

 

 

55

 

 

—

 

Income tax payable

 

 

(2,974

)

 

(1,768

)

 

3

 

 

(8

)

Net cash provided by operating activities

 

 

2,152

 

 

3,260

 

 

8,712

 

 

9,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(169

)

 

(22

)

 

(246

)

 

(78

)

Purchase of short-term investments

 

 

—

 

 

—

 

 

—

 

 

(14,663

)

Sale of short-term investments

 

 

—

 

 

—

 

 

—

 

 

20,000

 

Net cash provided by (used in)
investing activities

 

 

(169

)

 

(22

)

 

(246

)

 

5,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

—

 

 

(19,986

)

 

—

 

 

(28,579

)

Net cash used in financing activities

 

 

—

 

 

(19,986

)

 

—

 

 

(28,579

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate on cash and cash
equivalents

 

 

4

 

 

6

 

 

(5

)

 

2

 

Net increase (decrease) in cash and cash
equivalents

 

 

1,987

 

 

(16,742

)

 

8,461

 

 

(14,269

)

Cash and cash equivalents at beginning of
period

 

 

39,889

 

 

26,942

 

 

33,415

 

 

24,469

 

Cash and cash equivalents at end of period

 

 

41,876

 

 

10,200

 

 

41,876

 

 

10,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow
information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes net of refunds
received

 

$

6,750

 

$

5,221

 

$

7,550

 

$

6,645

 

 

 

 

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Travelzoo Inc.

Segment Information

(Unaudited)

(In thousands)

 

Three months ended
June 30, 2007

 

 

North America

 

 

Europe

 

 

Asia Pacific

 

 

Elimination

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

 

$

18,619

 

$

1,496

 

$

—

 

$

—

 

$

20,115

 

Intersegment revenue

 

 

77

 

 

2

 

 

 

 

 

(79

)

 

—

 

Total net revenues

 

 

18,696

 

 

1,498

 

 

—

 

 

(79

)

 

20,115

 

Operating income
(loss)

 

$

7,313

 

$

(1,161

)

$

(400

)

$

1

 

$

5,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30, 2006

 

 

North America

 

 

Europe

 

 

Asia Pacific

 

 

Elimination

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

 

$

16,616

 

$

742

 

$

—

 

$

—

 

$

17,358

 

Intersegment revenue

 

 

42

 

 

1

 

 

—

 

 

(43

)

 

—

 

Total net revenues

 

 

16,658

 

 

743

 

 

—

 

 

(43

)

 

17,358

 

Operating income
(loss)

 

$

7,481

 

$

(494

)

$

—

 

$

—

 

$

6,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2007

 

 

North America

 

 

Europe

 

 

Asia Pacific

 

 

Elimination

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

 

$

37,074

 

$

2,781

 

$

—

 

$

—

 

$

39,855

 

Intersegment revenue

 

 

118

 

 

5

 

 

—

 

 

(123

)

 

—

 

Total net revenues

 

 

37,192

 

 

2,786

 

 

—

 

 

(123

)

 

39,855

 

Operating income
(loss)

 

$

15,473

 

$

(1,845

)

$

(400

)

$

2

 

$

13,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2006

 

 

North America

 

 

Europe

 

 

Asia Pacific

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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