Travelzoo Inc., a global Internet media company, today announced financial results for the second quarter ended June 30, 2009, with revenue of $24.3 million, an increase of 12% year-over-year. Operating profit was $1.6 million. Net loss was $191,000, with diluted loss per share of $(0.01), down from diluted loss per share of $(0.08) in the prior-year period.

“In the second quarter, we accelerated marketing for the Travelzoo and Fly.com brands. We are taking advantage of attractive prices for media and are beginning to build-up our new product, Fly.com. This negatively impacted reported earnings per share by approximately $0.07 versus the previous quarter,” said Holger Bartel, CEO of Travelzoo. “The number of subscribers to our publications grew during the second quarter by 1.3 million to 16.7 million. This is the largest quarterly increase in subscribers in Travelzoo’s history. Our mission remains to provide our subscribers with the highest quality information on outstanding deals in travel and entertainment.”

North America business segment revenue grew 3% year-over-year to $19.7 million. Operating profit was $4.5 million, or 22.6% of revenue, down from an operating profit of $6.9 million, or 36.1% of revenue, in the prior-year period.

Europe business segment revenue grew 57% year-over-year to $4.0 million. In local currency terms, revenue grew 100% year-over-year. Operating loss was $1.1 million, compared to an operating loss of $2.0 million in the prior-year period. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007. In May 2008, Travelzoo began publishing its weekly Top 20^® list in Spain, after having operated a sales office in Barcelona since November 2006.

Asia Pacific business segment revenue grew to $642,000 from $90,000 in the prior-year period. Operating loss was $1.8 million, compared to an operating loss of $3.2 million in the prior-year period. Travelzoo began operations in Hong Kong in April 2007, in Japan in September 2007, in China in October 2007, and in Australia and Taiwan in December 2007.

Travelzoo had a total unduplicated number of newsletter subscribers of 16.7 million as of June 30, 2009, up 2.9 million, or 21%, from June 30, 2008, and up 1.3 million, or 8%, from March 31, 2009. In North America, total unduplicated number of subscribers was 12.4 million as of June 30, 2009, up 1.3 million, or 12%, from June 30, 2008 and up 608,000, or 5%, from March 31, 2009. In Europe, total unduplicated number of subscribers was 2.8 million as of June 30, 2009, up 939,000, or 50%, from June 30, 2008 and up 356,000, or 14%, from March 31, 2009. In Asia Pacific, total unduplicated number of subscribers was 1.5 million as of June 30, 2009, up 633,000, or 69%, from June 30, 2008 and up 288,000, or 23%, from March 31, 2009.

Income tax expense was $1.6 million, compared to $2.9 million in the prior year period. The effective income tax rate was 113%, down from 168% in the prior-year period. Operating losses from the Asia Pacific business segment and the Europe business segment were treated as having no recognizable tax benefit.

During the second quarter, Travelzoo generated $1,000 of cash from operating activities. Accounts receivable increased by $240,000 quarter-over-quarter and increased by $914,000 over the prior-year period to $12.5 million. Accounts payable increased by $2.1 million quarter-over-quarter and increased by $577,000 over the prior-year period to $8.3 million. Capital expenditures were $320,000, down from $884,000 in the prior quarter and down from $515,000 in the prior-year period. Travelzoo exited the second quarter with $15.5 million in cash and cash equivalents.

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

Travelzoo is a global Internet media company. Travelzoo's media properties, which reach more than 16 million travel enthusiasts in the U.S., Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, Taiwan and the U.K., include the Travelzoo^®Web site (www.travelzoo.com), the Top 20^® list, the Newsflash™ e-mail alert service, the Travelzoo Network™, the SuperSearch™ search tool, and the Fly.com™ search engine. Travelzoo publishes offers from more than 1,000 advertisers. Travelzoo's deal experts review offers to find the best travel deals and confirm their true value. Travelzoo’s global headquarters is 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.

	Three months ended						Six months ended
	June 30,						June 30,
	2009			2008			2009			2008

Revenues	$	24,279		$	21,769		$	47,647		$	42,718
Cost of revenues		1,511			637			2,774			1,166
Gross profit		22,768			21,132			44,873			41,552

Operating expenses:
Sales and marketing		13,800			12,520			26,136			25,914
General and administrative		7,417			6,930			14,365			12,676
Total operating expenses		21,217			19,450			40,501			38,590

Income from operations		1,551			1,682			4,372			2,962

Other income and expense:
Interest income		13			77			33			213
Gain (loss) on foreign currency		(114	)		(6	)		(317	)		145
Income before income taxes		1,450			1,753			4,088			3,320
Income taxes		1,641			2,946			3,942			5,519
Net income (loss)	$	(191	)	$	(1,193	)	$	146		$	(2,199	)

Basic net income (loss) per share	$	(0.01	)	$	(0.08	)	$	0.01		$	(0.15	)
Diluted net income (loss) per share		(0.01	)		(0.08	)		0.01			(0.15	)

Shares used in computing basic net income (loss) per share		16,444			14,269			16,372			14,260
Shares used in computing diluted net income (loss) per share		16,444			14,269			16,379			14,260

	June 30,			December 31,
	2009			2008

ASSETS
Cash and cash equivalents	$	15,544		$	14,179
Accounts receivable, net		12,480			11,582
Deposits		280			226
Prepaid expenses and other current assets		3,066			2,726
Deferred tax assets		1,089			1,089
Total current assets		32,459			29,802

Deposits, less current portion		323			341
Restricted cash		875			875
Property and equipment, net		4,344			4,259
Intangible assets, net		1,624			45
Total assets	$	39,625		$	35,322

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		8,284			6,605
Accrued expenses		4,787			4,962
Deferred revenue		828			703
Deferred rent		125			125
Total current liabilities		14,024			12,395

Deferred tax liabilities		465			465
Long-term tax liabilities		918			900
Deferred rent, less current portion		700			799

Common stock		164			143
Additional paid-in capital		2,322			185
Accumulated other comprehensive loss		(937	)		(1,388	)
Retained earnings		21,969			21,823
Total stockholders' equity		23,518			20,763
Total liabilities and stockholders' equity	$	39,625		$	35,322

	Three months ended						Six months ended
	June 30,						June 30,
	2009			2008			2009			2008

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(191	)	$	(1,193	)	$	146		$	(2,199	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		484			130			926			233
Provision for losses on accounts receivable		38			44			316			66
Tax benefit from exercise of stock options		–			(110	)		–			(110	)
Net foreign currency effects		114			–			317			–
Changes in operating assets and liabilities:
Accounts receivable		23			(763	)		(983	)		(1,657	)
Deposits		(97	)		(105	)		(24	)		42
Prepaid expenses and other current assets		167			(422	)		1,636			196
Accounts payable		2,141			77			2,029			2,332
Accrued expenses		(360	)		(80	)		(369	)		629
Deferred revenue		179			40			105			305
Deferred rent		(41	)		414			(102	)		714
Income tax payable		(2,465	)		(1,127	)		(1,945	)		–
Other non-current liabilities		9			33			19			33
Net cash provided by (used in) operating activities		1			(3,062	)		2,071			584

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(320	)		(515	)		(1,204	)		(1,357	)
Purchase of restricted cash		–			–			–			(875	)
Purchase of intangible asset		–			–			(1,760	)		–
Net cash used in investing activities		(320	)		(515	)		(2,964	)		(2,232	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		–			75			2,158			75
Tax benefit from exercise of stock options		–			110			–			110
Net cash provided by financing activities		–			185			2,158			185

Effect of exchange rate on cash and cash equivalents		219			(36	)		100			(161	)

Net increase (decrease) in cash and cash equivalents		(100	)		(3,428	)		1,365			(1,624	)
Cash and cash equivalents at beginning of period		15,644			24,445			14,179			22,641
Cash and cash equivalents at end of period		15,544			21,017			15,544			21,017

Supplemental disclosure of cash flow information:
Cash paid for income taxes net of refunds received	$	4,106		$	4,572		$	4,179		$	5,018

Three months ended June 30, 2009	North America		Europe			Asia Pacific			Elimination			Consolidated

Revenue from unaffiliated customers	$	19,637	$	4,000		$	642		$	–		$	24,279
Intersegment revenue		99		21			–			(120	)		–
Total net revenues		19,736		4,021			642			(120	)		24,279
Operating income (loss)	$	4,453	$	(1,068	)	$	(1,835	)	$	1		$	1,551


Three months ended June 30, 2008		North America		Europe			Asia Pacific			Elimination			Consolidated

Revenue from unaffiliated customers	$	19,129	$	2,550		$	90		$	–		$	21,769
Intersegment revenue		39		19			–			(58	)		–
Total net revenues		19,168		2,569			90			(58	)		21,769
Operating income (loss)	$	6,929	$	(2,013	)	$	(3,235	)	$	1		$	1,682


Six months ended June 30, 2009		North America		Europe			Asia Pacific			Elimination			Consolidated

Revenue from unaffiliated customers	$	39,643	$	6,974		$	1,030		$	–		$	47,647
Intersegment revenue		124		26			–			(150	)		–
Total net revenues		39,767		7,000			1,030			(150	)		47,647
Operating income (loss)	$	10,268	$	(2,344	)	$	(3,553	)	$	1		$	4,372


Six months ended June 30, 2008		North America		Europe			Asia Pacific			Elimination			Consolidated

Revenue from unaffiliated customers	$	38,019	$	4,589		$	110		$	–		$	42,718
Intersegment revenue		64		30			–			(94	)		–
Total net revenues		38,083		4,619			110			(94	)		42,718
Operating income (loss)	$	13,193	$	(4,254	)	$	(5,979	)	$	2		$	2,962

	Travelzoo 590 Madison Avenue 37th Floor New York, NY 10022

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