Travelzoo Reports Second Quarter 2019 Results

Date : 07/24/2019 @ 12:00PM
Source : GlobeNewswire Inc.
Stock : Travelzoo (TZOO)
Quote : 9.66  -0.01 (-0.10%) @ 12:15AM

Travelzoo Reports Second Quarter 2019 Results

Travelzoo (NASDAQ:TZOO)
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6 Months : From May 2019 to Nov 2019

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Travelzoo® (NASDAQ: TZOO):

  • Revenue of $28.2 million; up 3% year-over-year in constant currencies
  • Operating profit of $2.4 million, up 125% year-over-year
  • Earnings per share (EPS) of $0.11

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the second quarter ended June 30, 2019, with revenue of $28.2 million and operating profit of $2.4 million. In nominal terms, revenue increased $109,000 year-over-year. In constant currencies, revenue increased by 3% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from or generated in connection with a much larger amount of purchases made by Travelzoo® members. Net income was $1.3 million. EPS was $0.11, up from $0.04 in the prior-year period.

"Our attractive core business in North America and Europe generated an operating profit of $4.2 million, with an operating margin of 16%, of which $1.8 million was re-invested in our Asia Pacific business. We are strongly committed to driving up shareholder value by implementing a successful strategy to achieve profitable growth in Asia Pacific faster," said Holger Bartel, Global CEO of Travelzoo.

Core Business versus Development BusinessOur businesses in Europe and North America (the “Core Business”) and our business in Asia Pacific (the “Development Business”) are in very different situations. The following table illustrates how the Core Business compares to the Development Business:

 Core Business Development Business
Q2 2019 Operating profit / loss+$4.2 million -$1.8 million
Q2 2019 Operating margin16% N/A
Contribution to Q2 2019 EPS+$0.25 -$0.14
Contribution to six months EPS+$0.66 -$0.30

EuropeEurope business segment revenue increased 2% year-over-year to $8.7 million. In constant currencies, revenue increased 8% year-over-year. Revenue growth was primarily driven by the rollout of Travelzoo’s expanded vacations offering. Operating profit for the second quarter was $584,000, or 7% of revenue, compared to an operating profit of $441,000, or 5% of revenue in the prior-year period.

North AmericaNorth America business segment revenue increased 2% year-over-year to $17.9 million. Operating profit for the second quarter was $3.6 million, or 20% of revenue, compared to an operating profit of $2.1 million, or 12% of revenue in the prior-year period.

Asia PacificFor the Asia Pacific business segment, a new management team was installed during the quarter and Travelzoo has engaged a top management consulting firm in China to conduct a strategic review of its business. Our development business in Asia Pacific, which is currently in transition, saw a decrease in revenue of 23% year-over-year to $1.6 million. In constant currencies, revenue decreased 20% year-over-year. The operating loss in Asia Pacific for the second quarter was $1.8 million, compared to an operating loss of $1.5 million in the prior-year period.

MembersAs of June 30, 2019, Travelzoo had a worldwide unduplicated number of members of 30.2 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2019, consistent with June 30, 2018. In Europe, unduplicated number of members was 9.1 million as of June 30, 2019, up 4% from June 30, 2018. In North America, unduplicated number of members was 17.6 million as of June 30, 2019, consistent with June 30, 2018.

Income TaxesIncome tax expense was $953,000, compared to a $631,000 income tax expense in the prior-year period.

Asset ManagementDuring the second quarter of 2019, Travelzoo used $1.8 million of cash in operating activities. Accounts receivable increased by $2.8 million over the prior-year period to $15.3 million. Accounts payable increased by $168,000 over the prior-year period to $14.4 million. Cash used in investing activities was $743,000, down from $3.5 million in the prior-year period. As of June 30, 2019, cash and cash equivalents were $14.1 million.

Share Repurchase ProgramDuring the second quarter of 2019, the company repurchased 250,000 shares of its common stock. In May 2019, the company’s board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. 750,000 shares of common stock remain that are authorized to be repurchased.

Conference CallTravelzoo will host a conference call to discuss second quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to:

  • download the management presentation (PDF format) to be discussed in the conference call;
  • access the webcast.

About TravelzooTravelzoo® 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 finger on the pulse of 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 give Travelzoo members access to irresistible 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.

 
Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 Three months ended Six months ended
 June 30, June 30,
 2019 2018 2019 2018
Revenues$28,184  $28,075  $59,009  $58,959 
Cost of revenues2,757  3,016  5,703  6,401 
Gross profit25,427  25,059  53,306  52,558 
Operating expenses:       
Sales and marketing15,357  15,628  30,963  31,170 
Product development1,799  2,386  3,502  4,897 
General and administrative5,847  5,967  11,446  11,756 
Total operating expenses23,003  23,981  45,911  47,823 
Income from operations2,424  1,078  7,395  4,735 
Other income (loss), net(143) 30  (242) 191 
Income before income taxes2,281  1,108  7,153  4,926 
Income tax expense953  631  2,705  1,947 
Net income$1,328  $477  $4,448  $2,979 
        
Basic income per share$0.11  $0.04  $0.37  $0.24 
Diluted income per share$0.11  $0.04  $0.36  $0.24 
        
Weighted average shares:       
Basic12,003  12,462  11,959  12,462 
Diluted12,278  12,780  12,251  12,622 

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 June 30,  2019 December 31,  2018
Assets   
Current assets:   
Cash and cash equivalents$14,113  $18,017 
Accounts receivable, net15,323  12,646 
Income taxes receivable817  389 
Deposits84  167 
Prepaid expenses and other1,739  1,947 
Total current assets32,076  33,166 
Deposits and other744  685 
Deferred tax assets1,359  1,645 
Restricted cash1,331  1,444 
Investment in WeekenGO2,958  2,694 
Operating lease right-of-use assets14,110   
Property and equipment, net3,346  3,790 
Total assets$55,924  $43,424 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$14,419  $17,129 
Accrued expenses and other8,720  7,853 
Deferred revenue1,165  1,339 
Operating lease liabilities5,693   
Income tax payable395  489 
Total current liabilities30,392  26,810 
Long-term tax liabilities434  418 
Long-term operating lease liabilities10,788   
Other long-term liabilities83  2,137 
Total liabilities41,697  29,365 
Common stock119  120 
Additional paid-in capital   
Accumulated other comprehensive loss(4,229) (4,214)
Retained earnings18,337  18,153 
Total stockholders’ equity14,227  14,059 
Total liabilities and stockholders’ equity$55,924  $43,424 

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
 Three months Six months
 ended ended
 June 30, June 30,
 2019 2018 2019 2018
Cash flows from operating activities:               
Net income$1,328  $477  $4,448  $2,979 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:       
Depreciation and amortization333  443  663  827 
Stock-based compensation319  349  482  522 
Deferred income tax4  (39) 345  (149)
Loss on equity investment in WeekenGO238    397   
Net foreign currency effects(5) 35  (26) (136)
Other(51) 40  26  (43)
Changes in operating assets and liabilities:       
Accounts receivable201  100  (2,779) (897)
Income tax receivable(816) (705) (428) (277)
Prepaid expenses and other(186) 428  239  418 
Accounts payable(1,688) (15) (2,788) (3,200)
Accrued expenses and other(296) (299) 1,291  725 
Income tax payable(1,084) (48) (96) 169 
Other liabilities(103) (165) (174) (158)
Net cash provided by (used in) operating activities(1,806) 601  1,600  780 
Cash flows from investing activities:       
Investment in WeekenGO(673) (3,083) (673) (3,083)
Purchases of property and equipment(70) (442) (201) (507)
Net cash used in investing activities(743) (3,525) (874) (3,590)
Cash flows from financing activities:       
Repurchase of common stock(4,869)   (6,460)  
Exercise of stock options and taxes paid for net share settlement of equity awards1,738    1,712   
Net cash used in financing activities(3,131)   (4,748)  
Effect of exchange rate on cash, cash equivalents and restricted cash(147) (780) 5  (324)
Net decrease in cash, cash equivalents and restricted cash(5,827) (3,704) (4,017) (3,134)
Cash, cash equivalents and restricted cash at beginning of period21,271  24,571  19,461  24,001 
Cash, cash equivalents and restricted cash at end of period$15,444  $20,867  $15,444  $20,867 
Supplemental disclosure of cash flow information:       
Cash paid for income taxes, net$2,919  $1,417  $2,859  $2,196 

Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended June 30, 2019AsiaPacific Europe North America Consolidated
Revenue from unaffiliated customers$1,557  $9,133  $17,494  $28,184 
Intersegment revenue23  (451) 428   
Total net revenues1,580  8,682  17,922  28,184 
Operating income (loss)$(1,783) $584  $3,623  $2,424 
        
        
Three months ended June 30, 2018AsiaPacific Europe North America Consolidated
Revenue from unaffiliated customers$2,073  $8,527  $17,475  $28,075 
Intersegment revenue(9) (27) 36   
Total net revenues2,064  8,500  17,511  28,075 
Operating income (loss)$(1,472) $441  $2,109  $1,078 

Six months ended June 30, 2019AsiaPacific Europe North America Consolidated
Revenue from unaffiliated customers$3,192  $20,187  $35,630  $59,009 
Intersegment revenue53  (932) 879   
Total net revenues3,245  19,255  36,509  59,009 
Operating income (loss)$(3,418) $2,721  $8,092  $7,395 
        
        
Six months ended June 30, 2018AsiaPacific Europe North America Consolidated
Revenue from unaffiliated customers$4,115  $18,859  $35,985  $58,959 
Intersegment revenue(29) (79) 108   
Total net revenues4,086  18,780  36,093  58,959 
Operating income (loss)$(3,212) $2,407  $5,540  $4,735 
 

Investor Relations:Lijun Qiir@travelzoo.com

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