TZOO Travelzoo

Travelzoo® (NASDAQ:TZOO):

• Revenue of $26.4 million, down 8% year-over-year in constant currencies
• Operating profit of $1.4 million
• Earnings per share (EPS) from continuing operations of $0.05
• Cash flow used in operations of $2.6 million

Travelzoo, a travel deal site with exclusive offers for members, today announced financial results for the second quarter ended June 30, 2017, with revenue of $26.4 million and operating profit of $1.4 million. In nominal terms, revenue decreased by 11% year-over-year. In constant currencies, revenue decreased by 8% year-over-year. Net income was $687,000, with EPS of $0.05, which includes income from discontinued operations of $54,000.

"We never compromise the quality of the offers which we provide to our members—even if it resulted in less deals being promoted during the second quarter of 2017 and a corresponding decrease in revenue of certain products," said Dr. Holger Bartel, Global CEO of Travelzoo. "Our top priority is to provide Travelzoo members outstanding, exclusive travel and entertainment experiences. We remain ambitious to grow Travelzoo's global brand and business."

Asia Pacific

Asia Pacific business segment revenue decreased 20% year-over-year to $2.0 million. In constant currencies, revenue decreased 16% year-over-year. Operating loss for the second quarter was $1.2 million, compared to an operating loss of $1.2 million in the prior-year period.

Europe

Europe business segment revenue decreased 16% year-over-year to $7.9 million. In constant currencies, revenue decreased 9% year-over-year. Operating profit for the second quarter was $268,000, or 3% of revenue, compared to operating income of $1.7 million, or 18% of revenue in the prior-year period.

North America

North America business segment revenue decreased 7% year-over-year to $16.6 million. Operating profit for the second quarter was $2.3 million, or 14% of revenue, compared to operating income of $3.0 million, or 17% of revenue in the prior-year period.

Members

As of June 30, 2017, Travelzoo had a worldwide unduplicated number of members of 29.3 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2017, consistent with June 30, 2016. In Europe, unduplicated number of members was 8.4 million as of June 30, 2017, up 3% from June 30, 2016. In North America, unduplicated number of members was 17.4 million as of June 30, 2017, consistent with June 30, 2016.

Income Taxes

Income tax expense was $771,000, compared to a $1.5 million income tax expense in the prior-year period.

Asset Management

During the second quarter of 2017, Travelzoo used $2.6 million of cash for operating activities. Accounts receivable decreased by $5.8 million over the prior-year period to $12.6 million. Accounts payable decreased by $6.6 million over the prior-year period to $14.2 million. Capital expenditures were $186,000, down from $503,000 in the prior-year period. As of June 30, 2017, cash and cash equivalents were $21.3 million.

Conference Call

Travelzoo will host a conference call to discuss second 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® provides our 28 million members insider deals and one of a kind experiences personally reviewed by one of our deal experts around the globe. With more than 25 offices worldwide we have our pulse on outstanding travel, entertainment, and lifestyle experiences. For over 15 years we have worked in partnership with more than 2,000 top travel suppliers—our long-standing relationships allow us access to the very best deals.

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.

                 

Travelzoo

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

  Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Revenues

$

   

26,411

$

   

29,798

$

   

54,840

$

   

60,626

Cost of revenues       3,222         3,471         6,429         7,322 Gross profit       23,189         26,327         48,411         53,304 Operating expenses: Sales and marketing 14,213 15,455 29,569 30,985 Product development 2,344 2,001 4,701 4,789 General and administrative       5,246         5,434         10,693         11,247 Total operating expenses       21,803           22,890         44,963         47,021 Income from continuing operations 1,386 3,437 3,448 6,283 Other income (expense), net       18         (91 )       25         42 Income from continuing operations before income taxes 1,404 3,346 3,473 6,325 Income tax expense       771         1,548         1,980           2,702 Income from continuing operations

$

633

$

1,798

$

1,493

$

3,623

Income from discontinued operations, net of income taxes       54         222         1,938           446 Net income

$

   

687

 

$

   

2,020

 

$

   

3,431

 

$

   

4,069

  Income per share—basic: Continuing operations

$

0.05

$

0.13

$

0.12

$

0.26

Discontinued operations       0.00         0.01         0.14           0.03 Net income per share—basic

$

   

0.05

 

$

   

0.14

 

$

   

0.26

   

$

   

0.29

  Income per share—diluted: Continuing operations

$

0.05

$

0.13

$

0.12

$

0.26

Discontinued operations       0.00         0.01         0.14           0.03 Net income per share—diluted

$

   

0.05

 

$

   

0.14

 

$

   

0.26

   

$

   

0.29

  Weighted average shares: Basic 13,030 14,066 13,224 14,246 Diluted 13,058 14,066 13,229 14,246                    

Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

June 30,2017

December 31,2016

Assets Current assets: Cash and cash equivalents $ 21,331 $ 26,838 Accounts receivable, net 12,576 14,415 Income taxes receivable 639 542 Deposits 709 105 Prepaid expenses and other 1,481 1,773 Deferred tax assets —   793   Total current assets 36,736 44,466 Deposits and other 413 702 Deferred tax assets 1,860 1,052 Restricted cash 1,413 1,152 Property and equipment, net 5,418   6,158   Total assets $     45,840   $     53,530   Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 14,194 $ 19,714 Accrued expenses and other 9,334 8,699 Deferred revenue 954 719 Income tax payable 1,056   691   Total current liabilities 25,538 29,823 Long-term tax liabilities 2,602 2,879 Long-term deferred rent and other 2,674   2,764   Total liabilities 30,814   35,466   Common stock 128 135 Additional paid-in capital — — Accumulated other comprehensive loss (3,687 ) (3,787 ) Retained earnings 18,585   21,716   Total stockholders’ equity 15,026   18,064   Total liabilities and stockholders’ equity $     45,840   $     53,530                                      

Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

  Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Cash flows from operating activities: Net income $ 687 $ 2,020 $ 3,431 $ 4,069

Adjustments to reconcile net income to net cashprovided by (used in) operating activities:

Depreciation and amortization 522 608 1,101 1,250 Discontinued operations gain on sale of Fly.com domain name — — (2,890 ) — Deferred income taxes (33 ) 233 (69 ) (211 ) Stock-based compensation 240 230 480 442 Provision for losses on accounts receivable (34 ) 36 (27 ) 44 Net foreign currency effects (135 ) (23 ) (224 ) 236 Changes in operating assets and liabilities: Accounts receivable 1,800 (1,241 ) 2,087 (2,265 ) Income tax receivable (509 ) (397 ) 35 525 Prepaid expenses and other (132 ) 122 (218 ) 220 Accounts payable (2,791 ) (740 ) (6,054 ) (2,210 ) Accrued expenses and other (549 ) 937 441 484 Income tax payable (1,287 ) 665 179 1,268 Other non-current liabilities (340 ) 46   (278 ) 53   Net cash provided by (used in) operating activities (2,561 ) 2,496   (2,006 ) 3,905   Cash flows from investing activities: Proceeds from sale of Fly.com domain name — — 2,890 — Purchases of property and equipment (186 ) (503 ) (306 ) (648 ) Net cash provided by (used in) investing activities (186 ) (503 ) 2,584   (648 ) Cash flows from financing activities: Acquisition of the Asia Pacific business — — — 58 Payment of loan to related party — — — (5,658 ) Repurchase of common stock, net (5,062 ) (3,048 ) (6,824 ) (4,956 ) Net cash used in financing activities (5,062 ) (3,048 ) (6,824 ) (10,556 ) Effect of exchange rate on cash and cash equivalents 546   (192 ) 739   (269 ) Net decrease in cash and cash equivalents (7,263 ) (1,247 ) (5,507 ) (7,568 ) Cash and cash equivalents at beginning of period 28,594   28,807   26,838   35,128   Cash and cash equivalents at end of period $     21,331   $     27,560   $     21,331   $     27,560   Supplemental disclosure of cash flow information: Cash paid for income taxes, net $ 2,920 $ 1,022 $ 3,230 $ 1,072 Cash paid for interest on related party loan $ — $ — $ — $ 110                                    

Travelzoo

Segment Information

(Unaudited)

(In thousands)

  Three months ended June 30, 2017 Asia Pacific Europe NorthAmerica Consolidated Revenue from unaffiliated customers $ 1,963 $ 8,005 $ 16,443 $ 26,411 Intersegment revenue (13 ) (108 ) 121   — Total net revenues 1,950   7,897   16,564   26,411 Operating profit (loss) $     (1,165 ) $     268   $     2,283   $     1,386 Three months ended June 30, 2016 Asia Pacific Europe NorthAmerica Consolidated Revenue from unaffiliated customers $ 2,401 $ 9,638 $ 17,759 $ 29,798 Intersegment revenue 37   (181 ) 144   — Total net revenues 2,438   9,457   17,903   29,798 Operating profit (loss) $     (1,233 ) $     1,704   $     2,966   $     3,437   Six months ended June 30, 2017       Asia Pacific     Europe     NorthAmerica     Consolidated Revenue from unaffiliated customers $     3,807 $     17,223 $     33,810 $     54,840 Intersegment revenue (44 ) (255 ) 299   — Total net revenues 3,763   16,968   34,109   54,840 Operating profit (loss) $     (2,706 ) $     1,217   $     4,937   $     3,448 Six months ended June 30, 2016 Asia Pacific Europe NorthAmerica Consolidated Revenue from unaffiliated customers $ 4,651 $ 20,279 $ 35,696 $ 60,626 Intersegment revenue 42   (264 ) 222   — Total net revenues 4,693   20,015   35,918   60,626 Operating profit (loss) $     (2,282 ) $     3,611   $     4,954   $     6,283  

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TravelzooInvestor Relations:Lijun Qiir@travelzoo.com