Travelzoo® (NASDAQ: TZOO):
- Revenue of $25.5 million; up 2% year-over-year in constant
currencies
- Operating profit of $1.2 million, up 70% year-over-year
- Earnings per share (EPS) of $0.03
Travelzoo, a global publisher of exclusive offers and
experiences for members, today announced financial results for the
third quarter ended September 30, 2019, with revenue of $25.5
million, an increase of $204,000 year-over-year, and an operating
profit of $1.2 million. In constant currencies, revenue increased
by 2% year-over-year. Travelzoo's reported revenue consists of
advertising revenues and commissions, derived from and generated in
connection with a much larger amount of purchases made by
Travelzoo® members. Net income was $306,000. EPS was $0.03, up from
$0.01 in the prior-year period.
"Our attractive core business in North America and Europe
generated an operating profit of $3.3 million, with an operating
margin of 14%, of which $2.1 million was re-invested in our Asia
Pacific business with a focus on China where we see, after
completing a rigorous review of the market and Travelzoo’s current
position, a very substantial opportunity for revenue
growth," 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 |
Q3 2019 Operating
profit/loss |
+$3.3 million |
|
-$2.1 million |
Q3 2019 Operating margin |
14% |
|
N/A |
Contribution to Q3 2019
EPS |
+$0.21 |
|
-$0.18 |
Contribution to twelve months
EPS |
+$1.12 |
|
-$0.59 |
EuropeEurope business segment revenue increased
1% year-over-year to $8.5 million. In constant currencies, revenue
increased 6% year-over-year. Operating profit for the third quarter
was $815,000, or 10% of revenue, compared to an operating profit of
$940,000, or 11% of revenue in the prior-year period.
North AmericaNorth America business segment
revenue increased 3% year-over-year to $15.3 million. Operating
profit for the third quarter was $2.5 million, or 16% of revenue,
compared to an operating profit of $1.4 million, or 9% of revenue
in the prior-year period.
Asia PacificIn Asia Pacific, we worked with a
top management consulting firm in China and developed together a
strategy for a significant presence of Travelzoo in social media
and mobile channels. The execution began in mid September. During
the third quarter, our Asia Pacific segment still saw a decrease in
revenue of 16% year-over-year to $1.7 million. We do not see this
as a trend. We expect revenue from China to grow in the fourth
quarter. The operating loss for the third quarter was $2.1 million,
compared to an operating loss of $1.6 million in the prior-year
period. The reported operating loss was impacted by costs of the
strategy consulting project. All costs of the project were
expensed.
MembersAs of September 30, 2019, Travelzoo
had a worldwide unduplicated number of members of 30.3 million. In
Asia Pacific, unduplicated number of members was 3.6 million as of
September 30, 2019, consistent with September 30, 2018.
In Europe, unduplicated number of members was 9.1 million as of
September 30, 2019, up 4% from September 30, 2018. In
North America, unduplicated number of members was 17.6 million as
of September 30, 2019, up 1% from September 30, 2018.
Income TaxesIncome tax expense was $770,000,
compared to a $505,000 income tax expense in the prior-year period.
Operating losses from the Development Business were not used to
offset operating income from the Core Business.
Asset ManagementDuring the third quarter of
2019, Travelzoo generated $326,000 of cash in operating activities.
Accounts receivable decreased by $2.7 million to $12.3 million, and
accounts payable decreased by $1.2 million to $13.0 million in the
third quarter of 2019. Cash used in investing activities was
$149,000. Cash used in financing activities was $2.3 million. Cash
was used primarily for the share repurchase program described
below. As of September 30, 2019, cash and cash equivalents
were $11.6 million.
Share Repurchase ProgramDuring the third
quarter of 2019, Travelzoo repurchased 186,369 shares of its common
stock. In May 2019, Travelzoo's board of directors had authorized
the repurchase of up to 1,000,000 shares of its outstanding common
stock. 563,631 shares of common stock remain to be repurchased.
Conference CallTravelzoo will host a conference
call to discuss third 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.
TravelzooCondensed
Consolidated Statements of
Operations(Unaudited)(In
thousands, except per share amounts)
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
$ |
25,505 |
|
|
$ |
25,301 |
|
|
$ |
84,514 |
|
|
$ |
84,260 |
|
Cost of revenues |
2,980 |
|
|
2,987 |
|
|
8,683 |
|
|
9,388 |
|
Gross profit |
22,525 |
|
|
22,314 |
|
|
75,831 |
|
|
74,872 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
14,233 |
|
|
13,375 |
|
|
45,196 |
|
|
44,545 |
|
Product development |
1,478 |
|
|
2,297 |
|
|
4,980 |
|
|
7,194 |
|
General and administrative |
5,600 |
|
|
5,928 |
|
|
17,046 |
|
|
17,684 |
|
Total operating expenses |
21,311 |
|
|
21,600 |
|
|
67,222 |
|
|
69,423 |
|
Income from operations
|
1,214 |
|
|
714 |
|
|
8,609 |
|
|
5,449 |
|
Other income (loss), net |
(138 |
) |
|
(91 |
) |
|
(380 |
) |
|
100 |
|
Income before income taxes |
1,076 |
|
|
623 |
|
|
8,229 |
|
|
5,549 |
|
Income tax expense |
770 |
|
|
505 |
|
|
3,475 |
|
|
2,452 |
|
Net income |
$ |
306 |
|
|
$ |
118 |
|
|
$ |
4,754 |
|
|
$ |
3,097 |
|
|
|
|
|
|
|
|
|
Basic income per share |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
$ |
0.40 |
|
|
$ |
0.25 |
|
Diluted income per share |
$ |
0.03 |
|
|
$ |
0.01 |
|
|
0.39 |
|
|
|
0.25 |
|
|
|
|
|
|
|
|
|
Weighted average shares: |
|
|
|
|
|
|
|
Basic |
11,767 |
|
|
12,314 |
|
|
11,894 |
|
|
12,412 |
|
Diluted |
11,956 |
|
|
12,663 |
|
|
12,152 |
|
|
12,630 |
|
TravelzooCondensed
Consolidated Balance
Sheets(Unaudited)(In
thousands)
|
September 30, 2019 |
|
December 31, 2018 |
Assets |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
11,605 |
|
|
$ |
18,017 |
|
Accounts receivable, net |
12,317 |
|
|
12,646 |
|
Income taxes receivable |
930 |
|
|
389 |
|
Deposits |
141 |
|
|
167 |
|
Prepaid expenses and other |
1,965 |
|
|
1,947 |
|
Total current assets |
26,958 |
|
|
33,166 |
|
Deposits and other |
669 |
|
|
685 |
|
Deferred tax assets |
1,347 |
|
|
1,645 |
|
Restricted cash |
1,308 |
|
|
1,444 |
|
Investment in WeekenGO |
2,635 |
|
|
2,694 |
|
Operating lease right-of-use assets |
17,523 |
|
|
— |
|
Property and equipment, net |
3,142 |
|
|
3,790 |
|
Total assets |
$ |
53,582 |
|
|
$ |
43,424 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
13,007 |
|
|
$ |
17,129 |
|
Accrued expenses and other |
6,866 |
|
|
7,853 |
|
Deferred revenue |
1,119 |
|
|
1,339 |
|
Operating lease liabilities |
7,028 |
|
|
— |
|
Income tax payable |
446 |
|
|
489 |
|
Total current liabilities |
28,466 |
|
|
26,810 |
|
Long-term tax liabilities |
343 |
|
|
418 |
|
Long-term operating lease liabilities |
12,291 |
|
|
— |
|
Other long-term liabilities |
84 |
|
|
2,137 |
|
Total liabilities |
41,184 |
|
|
29,365 |
|
Common stock |
117 |
|
|
120 |
|
Additional paid-in capital |
— |
|
|
— |
|
Accumulated other comprehensive loss |
(4,450 |
) |
|
(4,214 |
) |
Retained earnings |
16,731 |
|
|
18,153 |
|
Total stockholders’ equity |
12,398 |
|
|
14,059 |
|
Total liabilities and stockholders’ equity |
$ |
53,582 |
|
|
$ |
43,424 |
|
TravelzooCondensed
Consolidated Statements of Cash
Flows(Unaudited)(In
thousands)
|
Three months |
|
Nine months ended |
|
ended |
|
ended |
|
September 30, |
|
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Cash flows from operating
activities: |
Net income |
$ |
306 |
|
|
$ |
118 |
|
|
$ |
4,754 |
|
|
$ |
3,097 |
|
Adjustments to reconcile net
income to net cash provided by(used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
336 |
|
|
563 |
|
|
999 |
|
|
1,390 |
|
Stock-based compensation |
393 |
|
|
241 |
|
|
875 |
|
|
763 |
|
Gain from sale of property and equipment |
— |
|
|
(143 |
) |
|
— |
|
|
(143 |
) |
Deferred income tax |
86 |
|
|
53 |
|
|
431 |
|
|
(96 |
) |
Loss on equity investment in WeekenGO |
214 |
|
|
85 |
|
|
611 |
|
|
85 |
|
Net foreign currency effects |
85 |
|
|
59 |
|
|
59 |
|
|
(77 |
) |
Other |
106 |
|
|
120 |
|
|
132 |
|
|
77 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
2,652 |
|
|
(189 |
) |
|
(127 |
) |
|
(1,086 |
) |
Income tax receivable |
(112 |
) |
|
(73 |
) |
|
(540 |
) |
|
(350 |
) |
Prepaid expenses and other |
(242 |
) |
|
2 |
|
|
(3 |
) |
|
420 |
|
Accounts payable |
(1,183 |
) |
|
(400 |
) |
|
(3,971 |
) |
|
(3,600 |
) |
Accrued expenses and other |
(1,733 |
) |
|
(973 |
) |
|
(442 |
) |
|
(248 |
) |
Income tax payable |
60 |
|
|
(234 |
) |
|
(36 |
) |
|
(65 |
) |
Other liabilities |
(642 |
) |
|
27 |
|
|
(816 |
) |
|
(131 |
) |
Net cash provided by (used in)
operating activities |
326 |
|
|
(744 |
) |
|
1,926 |
|
|
36 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Proceeds from sale of property and equipment |
— |
|
|
150 |
|
|
— |
|
|
150 |
|
Investment in WeekenGO |
— |
|
|
— |
|
|
(673 |
) |
|
(3,083 |
) |
Purchases of property and equipment |
(149 |
) |
|
(159 |
) |
|
(350 |
) |
|
(666 |
) |
Net cash used in investing
activities |
(149 |
) |
|
(9 |
) |
|
(1,023 |
) |
|
(3,599 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Repurchase of common stock |
(2,308 |
) |
|
(2,873 |
) |
|
(8,768 |
) |
|
(2,873 |
) |
Proceeds from exercise of stock options, net of taxes paid for net
share settlement of equity awards |
— |
|
|
— |
|
|
1,712 |
|
|
— |
|
Net cash used in financing
activities |
(2,308 |
) |
|
(2,873 |
) |
|
(7,056 |
) |
|
(2,873 |
) |
Effect of exchange rate on cash,
cash equivalents and restricted cash |
(400 |
) |
|
(9 |
) |
|
(395 |
) |
|
(333 |
) |
Net decrease in cash, cash
equivalents and restricted cash |
(2,531 |
) |
|
(3,635 |
) |
|
(6,548 |
) |
|
(6,769 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
15,444 |
|
|
20,867 |
|
|
19,461 |
|
|
24,001 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
12,913 |
|
|
$ |
17,232 |
|
|
$ |
12,913 |
|
|
$ |
17,232 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid for income taxes,
net |
$ |
917 |
|
|
$ |
767 |
|
|
$ |
3,776 |
|
|
$ |
2,963 |
|
TravelzooSegment
Information(Unaudited)(In
thousands)
Three months ended
September 30, 2019 |
Asia Pacific |
|
Europe |
|
North America |
|
Consolidated |
Revenue from unaffiliated customers |
$ |
1,630 |
|
|
$ |
9,432 |
|
|
$ |
14,443 |
|
|
$ |
25,505 |
Intersegment revenue |
43 |
|
|
(938 |
) |
|
895 |
|
|
— |
|
Total net revenues |
1,673 |
|
|
8,494 |
|
|
15,338 |
|
|
25,505 |
|
Operating
income (loss) |
$ |
(2,051 |
) |
|
$ |
815 |
|
|
$ |
2,450 |
|
|
$ |
1,214 |
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2018 |
Asia Pacific |
|
Europe |
|
North America |
|
Consolidated |
Revenue from unaffiliated customers |
$ |
1,977 |
|
|
$ |
8,396 |
|
|
$ |
14,928 |
|
|
$ |
25,301 |
Intersegment revenue |
10 |
|
|
(18 |
) |
|
8 |
|
|
— |
|
Total net revenues |
1,987 |
|
|
8,378 |
|
|
14,936 |
|
|
25,301 |
|
Operating income (loss) |
$ |
(1,600 |
) |
|
$ |
940 |
|
|
$ |
1,374 |
|
|
$ |
714 |
|
Nine months ended
September 30, 2019 |
Asia Pacific |
|
Europe |
|
North America |
|
Consolidated |
Revenue from unaffiliated customers |
$ |
4,822 |
|
|
$ |
29,619 |
|
|
$ |
50,073 |
|
|
$ |
84,514 |
Intersegment revenue |
96 |
|
|
(1,870 |
) |
|
1,774 |
|
|
— |
|
Total net revenues |
4,918 |
|
|
27,749 |
|
|
51,847 |
|
|
84,514 |
|
Operating
income (loss) |
$ |
(5,469 |
) |
|
$ |
3,536 |
|
|
$ |
10,542 |
|
|
$ |
8,609 |
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2018 |
Asia Pacific |
|
Europe |
|
North America |
|
Consolidated |
Revenue from unaffiliated customers |
$ |
6,092 |
|
|
$ |
27,255 |
|
|
$ |
50,913 |
|
|
$ |
84,260 |
Intersegment revenue |
(19 |
) |
|
(97 |
) |
|
116 |
|
|
— |
|
Total net revenues |
6,073 |
|
|
27,158 |
|
|
51,029 |
|
|
84,260 |
|
Operating income (loss) |
$ |
(4,812 |
) |
|
$ |
3,347 |
|
|
$ |
6,914 |
|
|
$ |
5,449 |
|
Investor Relations:Lijun
Qiir@travelzoo.com
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