Travelzoo Inc. (NASDAQ: TZOO):
- Revenue of $38.7 million, up 40% year-over-year
- Operating profit of $9.2 million, up 62% year-over-year
- Net income of $5.9 million, up 62% year-over-year
- Earnings per share of $0.36, compared to $0.22 in the prior year period
Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2011, with revenue of $38.7 million, an increase of 40% year-over-year. Operating profit was $9.2 million, up 62% year-over-year. Net income was $5.9 million, with diluted net income per share (EPS) of $0.36, up from $0.22 in the prior-year period.
“In a typically slow third quarter, Travelzoo's growth accelerated; revenues grew at the fastest pace in five years and reached record levels in both North America and Europe," said Chris Loughlin, chief executive officer of Travelzoo. "Our expansion into local deals focuses on growing both the top and the bottom line. Operating margins improved, and operating income and earnings per share increased even more than revenues.
North America
North America business segment revenue grew 32% year-over-year to $28.1 million. Operating profit was $7.8 million, or 28% of revenue, up from $5.5 million, or 26% of revenue, in the prior-year period.
Europe
Europe business segment revenue grew 65% year-over-year to $10.7 million. In local currency terms, revenue grew 59% year-over-year. Operating profit was $1.4 million, compared to an operating profit of $248,000 in the prior-year period.
Subscribers
Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 21.3 million as of September 30, 2011, up 14% from September 30, 2010, and up 3% from June 30, 2011. In North America, total unduplicated number of subscribers was 15.6 million as of September 30, 2011, up 10% from September 30, 2010 and up 2% from June 30, 2011. In Europe, total unduplicated number of subscribers was 5.7 million as of September 30, 2011, up 27% from September 30, 2010 and up 5% from June 30, 2011.
Asset Management
During the third quarter, Travelzoo generated $9.1 million of cash from operating activities. Accounts receivable decreased by $1.9 million quarter-over-quarter and decreased by $86,000 over the prior-year period to $14.1 million. Accounts payable increased by $1.5 million quarter-over-quarter and increased by $9.8 million over the prior-year period to $17.2 million. Capital expenditures were $847,000, up from $356,000 in the prior quarter and up from $391,000 in the prior-year period. Travelzoo exited the third quarter with $32.4 million in cash and cash equivalents.
Conference Call
Travelzoo will host a conference call to discuss third quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to
- download the management presentation (PDF format) to be discussed in the conference call;
- access the webcast.
About Travelzoo
Travelzoo Inc. is a global Internet media company. With more than 24 million subscribers in North America, Europe, and Asia Pacific and 24 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc.
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.
| Travelzoo Inc. | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Revenues | $ | 38,661 | $ | 27,693 | $ | 113,186 | $ | 84,317 | ||||||||||||
| Cost of revenues | 4,221 | 1,742 | 9,603 | 5,012 | ||||||||||||||||
| Gross profit | 34,440 | 25,951 | 103,583 | 79,305 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Sales and marketing | 16,737 | 13,630 | 51,569 | 42,671 | ||||||||||||||||
| General and administrative | 8,478 | 6,616 | 25,167 | 19,833 | ||||||||||||||||
| Settlement with State of Delaware | - | - | 20,000 | - | ||||||||||||||||
| Total operating expenses | 25,215 | 20,246 | 96,736 | 62,504 | ||||||||||||||||
| Income (loss) from operations | 9,225 | 5,705 | 6,847 | 16,801 | ||||||||||||||||
| Other income and expense: | ||||||||||||||||||||
| Interest income and other income | 52 | 45 | 128 | 132 | ||||||||||||||||
| Gain (loss) on foreign currency | (52 | ) | 20 | (24 | ) | (190 | ) | |||||||||||||
| Income (loss) before income taxes | 9,225 | 5,770 | 6,951 | 16,743 | ||||||||||||||||
| Income taxes | 3,299 | 2,120 | 10,061 | 7,373 | ||||||||||||||||
| Net income (loss) | $ | 5,926 | $ | 3,650 | $ | (3,110 | ) | $ | 9,370 | |||||||||||
| Basic net income (loss) per share | $ | 0.36 | $ | 0.22 | $ | (0.19 | ) | $ | 0.57 | |||||||||||
| Diluted net income (loss) per share | $ | 0.36 | $ | 0.22 | $ | (0.19 | ) | $ | 0.57 | |||||||||||
| Shares used in computing basic net | ||||||||||||||||||||
income (loss) per share | 16,396 | 16,444 | 16,434 | 16,444 | ||||||||||||||||
| Shares used in computing diluted | ||||||||||||||||||||
net income (loss) per share | 16,504 | 16,453 | 16,434 | 16,453 | ||||||||||||||||
| Travelzoo Inc. | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (Unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
| September 30, | December 31, | |||||||||||
| 2011 | 2010 | |||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 32,433 | $ | 41,184 | ||||||||
| Accounts receivable, net | 14,066 | 13,290 | ||||||||||
| Income taxes receivable | 2,563 | 264 | ||||||||||
| Deposits | 210 | 129 | ||||||||||
| Prepaid expenses and other current assets | 2,278 | 1,489 | ||||||||||
| Deferred tax assets | 1,362 | 1,411 | ||||||||||
| Total current assets | 52,912 | 57,767 | ||||||||||
| Deposits, less current portion | 753 | 279 | ||||||||||
| Deferred tax assets, less current portion | 349 | 349 | ||||||||||
| Restricted cash | 3,102 | 3,124 | ||||||||||
| Property and equipment, net | 3,519 | 3,425 | ||||||||||
| Intangible assets, net | 792 | 1,058 | ||||||||||
| Total assets | $ | 61,427 | $ | 66,002 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Accounts payable | 17,177 | 9,931 | ||||||||||
| Accrued expenses | 11,000 | 6,080 | ||||||||||
| Deferred revenue | 1,587 | 1,325 | ||||||||||
| Deferred rent | 108 | 218 | ||||||||||
| Income tax payable | 294 | 650 | ||||||||||
| Total current liabilities | 30,166 | 18,204 | ||||||||||
| Deferred tax liabilities | 160 | - | ||||||||||
Long term tax liabilities | 2,109 | 1,449 | ||||||||||
| Deferred rent, less current portion | 734 | 460 | ||||||||||
| Common stock | 160 | 164 | ||||||||||
| Treasury stock | (15,119 | ) | - | |||||||||
Additional paid in capital | 7,468 | 6,598 | ||||||||||
| Accumulated other comprehensive loss | (1,306 | ) | (1,038 | ) | ||||||||
| Retained earnings | 37,055 | 40,165 | ||||||||||
| Total stockholders' equity | 28,258 | 45,889 | ||||||||||
| Total liabilities and | ||||||||||||
stockholders' equity | $ | 61,427 | $ | 66,002 | ||||||||
| Travelzoo Inc. | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
| Net income (loss) | $ | 5,926 | $ | 3,650 | $ | (3,110 | ) | $ | 9,370 | |||||||||||||||
| Adjustments to reconcile net income | ||||||||||||||||||||||||
| (loss) to net cash provided by operating | ||||||||||||||||||||||||
| activities: | ||||||||||||||||||||||||
| Depreciation and amortization | 746 | 619 | 2,054 | 1,766 | ||||||||||||||||||||
| Deferred income taxes | 49 | 64 | 209 | 64 | ||||||||||||||||||||
| Stock-based compensation | 187 | 187 | 562 | 562 | ||||||||||||||||||||
| Provision for losses on accounts | ||||||||||||||||||||||||
| receivable | (67 | ) | 107 | (25 | ) | 106 | ||||||||||||||||||
| Tax benefit of stock option exercises | - | - | (268 | ) | - | |||||||||||||||||||
| Net foreign currency effects | 52 | (20 | ) | 24 | 190 | |||||||||||||||||||
| Changes in operating assets and | ||||||||||||||||||||||||
| liabilities: | ||||||||||||||||||||||||
| Accounts receivable | 1,734 | (414 | ) | (722 | ) | (2,982 | ) | |||||||||||||||||
| Deposits | 92 | (24 | ) | (568 | ) | (109 | ) | |||||||||||||||||
| Income tax receivable | 359 | (984 | ) | (2,031 | ) | 4,280 | ||||||||||||||||||
| Prepaid expenses and other current | ||||||||||||||||||||||||
| assets | (668 | ) | (238 | ) | (785 | ) | (278 | ) | ||||||||||||||||
| Accounts payable | 1,840 | 863 | 7,454 | 594 | ||||||||||||||||||||
| Accrued expenses | (2,192 | ) | (239 | ) | 4,992 | 1,416 | ||||||||||||||||||
| Deferred revenue | 170 | 127 | 268 | 348 | ||||||||||||||||||||
| Deferred rent | 83 | (55 | ) | 179 | (20 | ) | ||||||||||||||||||
| Income tax payable | 165 | 140 | (353 | ) | 496 | |||||||||||||||||||
| Other non-current liabilities | 659 | (733 | ) | 673 | (704 | ) | ||||||||||||||||||
| Net cash provided by (used in) | ||||||||||||||||||||||||
| operating activities | 9,135 | 3,050 | 8,553 | 15,099 | ||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
| Purchases of property and equipment | (847 | ) | (391 | ) | (1,902 | ) | (1,142 | ) | ||||||||||||||||
| Net cash used in investing activities | (847 | ) | (391 | ) | (1,902 | ) | (1,142 | ) | ||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
| Proceeds from exercise of stock options | - | - | 40 | - | ||||||||||||||||||||
| Repurchase of common stock | (15,124 | ) | - | (15,124 | ) | - | ||||||||||||||||||
| Tax benefit of stock option exercises | - | - | 268 | - | ||||||||||||||||||||
| Proceeds from sale of Asia Pacific | ||||||||||||||||||||||||
| business segment | - | - | - | 1,073 | ||||||||||||||||||||
| Net cash provided by financing | ||||||||||||||||||||||||
activities | (15,124 | ) | - | (14,816 | ) | 1,073 | ||||||||||||||||||
| Effect of exchange rate on cash and cash | ||||||||||||||||||||||||
| equivalents | (817 | ) | 183 | (586 | ) | (89 | ) | |||||||||||||||||
| Net increase (decrease) in cash and | ||||||||||||||||||||||||
| cash equivalents | (7,653 | ) | 2,842 | (8,751 | ) | 14,941 | ||||||||||||||||||
| Cash and cash equivalents at beginning of | ||||||||||||||||||||||||
| period | 40,086 | 31,875 | 41,184 | 19,776 | ||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 32,433 | $ | 34,717 | $ | 32,433 | $ | 34,717 | ||||||||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||||||||||||||
| Cash paid (received) for income taxes, net | $ | 2,096 | $ | 3,632 | $ | 11,572 | $ | 3,264 | ||||||||||||||||
| Travelzoo Inc. | ||||||||||||||||||||||
| Segment Information | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| Three months ended | North | |||||||||||||||||||||
| September 30, 2011 | America | Europe | Elimination | Consolidated | ||||||||||||||||||
| Revenue from | ||||||||||||||||||||||
| unaffiliated customers | $ | 27,944 | $ | 10,717 | $ | - | $ | 38,661 | ||||||||||||||
| Intersegment revenue | 130 | 30 | (160 | ) | - | |||||||||||||||||
| Total net revenues | 28,074 | 10,747 | (160 | ) | 38,661 | |||||||||||||||||
| Operating income (loss) | $ | 7,811 | $ | 1,414 | $ | - | $ | 9,225 | ||||||||||||||
| Three months ended | North | |||||||||||||||||||||
| September 30, 2010 | America | Europe | Elimination | Consolidated | ||||||||||||||||||
| Revenue from | ||||||||||||||||||||||
| unaffiliated customers | $ | 21,196 | $ | 6,497 | $ | - | $ | 27,693 | ||||||||||||||
| Intersegment revenue | 57 | 14 | (71 | ) | - | |||||||||||||||||
| Total net revenues | 21,253 | 6,511 | (71 | ) | 27,693 | |||||||||||||||||
| Operating income (loss) | $ | 5,457 | $ | 248 | $ | - | $ | 5,705 | ||||||||||||||
| Nine months ended | North | |||||||||||||||||||||
September 30, 2011 | America | Europe | Elimination | Consolidated | ||||||||||||||||||
| Revenue from | ||||||||||||||||||||||
| unaffiliated customers | $ | 83,048 | $ | 30,138 | $ | - | $ | 113,186 | ||||||||||||||
| Intersegment revenue | 342 | 92 | (434 | ) | - | |||||||||||||||||
| Total net revenues | 83,390 | 30,230 | (434 | ) | 113,186 | |||||||||||||||||
| Operating income (loss) | $ | 3,605 | $ | 3,242 | $ | - | $ | 6,847 | ||||||||||||||
| Nine months ended | North | |||||||||||||||||||||
September 30, 2010 | America | Europe | Elimination | Consolidated | ||||||||||||||||||
| Revenue from | ||||||||||||||||||||||
| unaffiliated customers | $ | 65,716 | $ | 18,601 | $ | - | $ | 84,317 | ||||||||||||||
| Intersegment revenue | 128 | 79 | (207 | ) | - | |||||||||||||||||
| Total net revenues | 65,844 | 18,680 | (207 | ) | 84,317 | |||||||||||||||||
| Operating income (loss) | $ | 18,310 | $ | (1,511 | ) | $ | 2 | $ | 16,801 | |||||||||||||