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 Third Quarter 2007 Results

 

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

 

 

•

Revenue of $19.9 million, up 13% year-over-year

 

•

Operating profit of $4.9 million

 

•

$0.14 earnings per share, down from $0.28 in the prior-year period

 

•

Income tax rate of 59.5%

 

Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2007, with revenue of $19.9 million, an increase of 13% year-over-year. Net income was $2.2 million, with diluted earnings per share (EPS) of $0.14, down from $0.28 in the prior-year period.

 

“Travelzoo’s latest results were impacted by non-tax deductible losses from our foreign operations and our aggressive spending on acquiring more subscribers in new markets,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “North America revenue was impacted by technical and execution problems of a third-party provider that manages traffic acquisition for our SuperSearch™ product. In Q4, we will continue to aggressively execute our global strategy and focus on better execution in North America.”

 

North America

North America business segment revenue grew 10% year-over-year to $18.4 million. North America reported operating income of $7.1 million, or 38.5% of revenue, down from operating income of $8.4 million, or 50.5% of revenue, in the prior-year period.

 

1/7

 

 

Europe

Europe business segment revenue grew 67% year-over-year to $1.6 million. Europe reported an operating loss of $1.4 million, compared to an operating loss of $277,000 in the prior-year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition and the start up of operations in Germany and France. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007.

 

Asia Pacific

The Asia Pacific business segment reported an operating loss of $706,000. Travelzoo began operations in Hong Kong in April 2007 and began operations in Japan in September 2007.

 

Income Taxes

Travelzoo’s effective income tax rate was 59.5%, up from 45.9% in the prior-year period. The effective tax rate was impacted by operating losses in Canada, Europe and Asia. These operating losses were treated as having no recognizable tax benefit.

 

Asset Management

Travelzoo generated $1.3 million in cash flow from operations. Accounts receivable increased $863,000 sequentially and increased $581,000 over the prior-year period to $9.4 million. Accounts payable decreased $692,000 sequentially and increased $3.3 million over the prior-year period to $5.8 million. Travelzoo utilized $19.8 million of cash during the third quarter to repurchase 1 million shares of common stock from the open market. Travelzoo exited the quarter with $23.3 million in cash and cash equivalents.

 

Conference Call

Travelzoo will host a conference call to discuss third 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.

2/7

 

 

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, France, Germany, Hong Kong and the U.K. , 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.

 

3/7

 

 

Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

Three months ended

 

Nine months ended

 

September 30,

 

September 30,

 

2007

 

2006

 

2007

 

2006

Revenues

$      19,943

 

$        17,586

 

$       59,798

 

$         51,873

Cost of revenues

563

 

232

 

1,360

 

782

Gross profit

19,380

 

17,354

 

58,438

 

51,091

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

10,954

 

6,974

 

31,015

 

22,047

General and administrative

3,488

 

2,249

 

9,254

 

6,962

Total operating expenses

14,442

 

9,223

 

40,269

 

29,009

Income from operations

4,938

 

8,131

 

18,169

 

22,082

Other income and expense:

 

 

 

 

 

 

 

Interest income

312

 

279

 

1,103

 

926

Gain on foreign currency

68

 

7

 

103

 

12

Income before income taxes

5,318

 

8,417

 

19,375

 

23,020

Income taxes

3,164

 

3,866

 

10,312

 

10,502

Net income

$        2,154

 

$         4,551

 

$       9,063

 

$         12,518

 

 

 

 

 

 

 

 

Basic net income per share

$          0.15

 

$           0.30

 

$         0.60

 

$            0.80

Diluted net income per share

0.14

 

0.28

 

0.56

 

0.74

 

 

 

 

 

 

 

 

Shares used in computing
   basic net income per share

14,659

 

15,250

 

15,053

 

15,595

Shares used in computing
   diluted net income per share

15,873

 

16,464

 

16,278

 

16,803

 

4/7

 

 

Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

September 30,

 

December 31,

 

2007

 

2006

ASSETS

 

 

 

Cash and cash equivalents

$        23,253 

 

$        33,415

Accounts receivable, net

9,408 

 

7,274

Deposits

181 

 

177

Prepaid expenses and other current

assets

1,088 

 

506

Deferred tax assets

1,980 

 

1,980

Total current assets

35,910 

 

43,352

Deposits, less current portion

239 

 

142

Property and equipment, net

387 

 

172

Intangible assets, net

33 

 

34

Total Assets

$       36,569 

 

$        43,700

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

5,750 

 

2,839

Accrued expenses

3,101 

 

2,149

Deferred revenue

471 

 

750

Deferred rent

25 

 

-

Income tax payable

- 

 

1,142

Total current liabilities

9,347 

 

6,880

Other liabilities

1,196 

 

3

 

 

 

 

Common stock

153 

 

153

Treasury stock

(19,823)

 

-

Additional paid-in capital

2,076 

 

2,076

Accumulated other comprehensive

income

(9)

 

22

Retained earnings

43,629 

 

34,566

Total Stockholders' Equity

26,026 

 

36,817

Total Liabilities and
Stockholders' Equity

$       36,569 

 

$        43,700

 

 

5/7

 

 

Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2007

 

2006

 

2007

 

2006

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

$      2,154 

 

$      4,551 

 

$      9,063 

 

$     12,518 

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

 

 

 

 

 

 

 

Depreciation and amortization

53 

 

35 

 

132 

 

103 

Provision for losses on accounts receivable

(44)

 

(2)

 

(52)

 

228 

Accrued income on short-term investments

-

 

(115)

 

- 

 

(449)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

(783)

 

(256)

 

(2,018)

 

3 

Deposits

(30)

 

(2)

 

(96)

 

(92)

Prepaid expenses and other current assets

243 

 

86 

 

(571)

 

63 

Accounts payable

(698)

 

(498)

 

2,881 

 

100 

Accrued expenses

645 

 

(386)

 

892 

 

(271)

Deferred revenue

(246)

 

14 

 

(283)

 

282 

Deferred rent

17 

 

- 

 

72 

 

- 

Income tax payable

- 

 

(641)

 

3 

 

(649)

Net cash provided by operating activities

1,311 

 

2,786 

 

10,023 

 

11,836 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of property and equipment

(89)

 

(17)

 

(335)

 

(96)

Purchase of short-term investments

- 

 

- 

 

- 

 

(14,663)

Sale of short-term investments

- 

 

15,000 

 

- 

 

35,000 

Purchase of intangible assets

(5)

 

- 

 

(5)

 

- 

Net cash provided by (used in) investing activities

(94)

 

14,983 

 

(340)

 

20,241 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repurchase of common stock

(19,823)

 

- 

 

(19,823)

 

(28,579)

Net cash used in financing activities

(19,823)

 

- 

 

(19,823)

 

(28,579)

 

 

 

 

 

 

 

 

Effect of exchange rate on cash and cash equivalents

(17)

 

8 

 

(22)

 

10 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

(18,623)

 

17,777 

 

(10,162)

 

3,508 

Cash and cash equivalents at beginning of period

41,876 

 

10,200 

 

33,415 

 

24,469 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

23,253 

 

27,977 

 

23,253 

 

27,977 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for income taxes net of refunds received

$       2,853 

 

$      4,507 

 

$    10,404 

 

$     11,152 

 

6/7

 

 

Travelzoo Inc.

Segment Information

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three months ended
September 30, 2007

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

$       18,332

 

$      1,611 

 

$             - 

 

$              - 

 

$        19,943

Intersegment revenue

33

 

- 

 

 

 

(33)

 

-

Total net revenues

18,365

 

1,611 

 

- 

 

(33)

 

19,943

Operating income (loss)

$         7,066

 

$    (1,423)

 

$       (706)

 

$             1 

 

$         4,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
September 30, 2006

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

$        16,627

 

$         959 

 

$             - 

 

$             - 

 

$       17,586

Intersegment revenue

37

 

4 

 

- 

 

(41)

 

-

Total net revenues

16,664

 

963 

 

- 

 

(41)

 

17,586

Operating income (loss)

$          8,407

 

$       (277)

 

$             - 

 

$            1 

 

$         8,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended
September 30, 2007

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

$       55,406

 

$     4,392 

 

$             - 

 

$            1 

 

$      59,798

Intersegment revenue

152

 

5 

 

- 

 

(157)

 

-

Total net revenues

55,558

 

4,397 

 

- 

 

(157)

 

59,798

Operating income (loss)

$       22,540

 

$    (3,266)

 

$    (1,107)

 

$            2 

 

$      18,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended
September 30, 2006

North
America

 

Europe

 

Asia
Pacific

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

Revenue from
unaffiliated customers

$       49,607

 

$     2,266 

 

$             - 

 

$            1 

 

$     51,873

Intersegment revenue

150

 

6 

 

- 

 

(156)

 

-

Total net revenues

49,757

 

2,272 

 

- 

 

(156)

 

51,873

Operating income (loss)

$       23,311

 

$    (1,231)

 

$             - 

 

$            2 

 

$     22,082

 

 

7/7