TZOO - Travelzoo Reports Second Quarter 2019 Results

July, 24 2019 08:00 AM Travelzoo

NEW YORK, July 24, 2019 (GLOBE NEWSWIRE) -- 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 Business
Our 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 margin

16%

N/A

Contribution to Q2 2019 EPS

+$0.25

-$0.14

Contribution to six months EPS

+$0.66

-$0.30

Europe
Europe 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 America
North 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 Pacific
For 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.

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

Asset Management
During 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 Program
During 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 Call
Travelzoo 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 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 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 revenues
2,757


3,016


5,703


6,401

Gross profit
25,427


25,059


53,306


52,558

Operating expenses:







Sales and marketing
15,357


15,628


30,963


31,170

Product development
1,799


2,386


3,502


4,897

General and administrative
5,847


5,967


11,446


11,756

Total operating expenses
23,003


23,981


45,911


47,823

Income from operations
2,424


1,078


7,395


4,735

Other income (loss), net
(143
)

30


(242
)

191

Income before income taxes
2,281


1,108


7,153


4,926

Income tax expense
953


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:







Basic
12,003


12,462


11,959


12,462

Diluted
12,278


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, net
15,323


12,646

Income taxes receivable
817


389

Deposits
84


167

Prepaid expenses and other
1,739


1,947

Total current assets
32,076


33,166

Deposits and other
744


685

Deferred tax assets
1,359


1,645

Restricted cash
1,331


1,444

Investment in WeekenGO
2,958


2,694

Operating lease right-of-use assets
14,110


—

Property and equipment, net
3,346


3,790

Total assets
$
55,924


$
43,424

Liabilities and Stockholders’ Equity



Current liabilities:



Accounts payable
$
14,419


$
17,129

Accrued expenses and other
8,720


7,853

Deferred revenue
1,165


1,339

Operating lease liabilities
5,693


—

Income tax payable
395


489

Total current liabilities
30,392


26,810

Long-term tax liabilities
434


418

Long-term operating lease liabilities
10,788


—

Other long-term liabilities
83


2,137

Total liabilities
41,697


29,365

Common stock
119


120

Additional paid-in capital
—


—

Accumulated other comprehensive loss
(4,229
)

(4,214
)
Retained earnings
18,337


18,153

Total stockholders’ equity
14,227


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 amortization
333


443


663


827

Stock-based compensation
319


349


482


522

Deferred income tax
4


(39
)

345


(149
)
Loss on equity investment in WeekenGO
238


—


397


—

Net foreign currency effects
(5
)

35


(26
)

(136
)
Other
(51
)

40


26


(43
)
Changes in operating assets and liabilities:







Accounts receivable
201


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 awards
1,738


—


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 period
21,271


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, 2019
Asia Pacific

Europe

North America

Consolidated
Revenue from unaffiliated customers
$
1,557


$
9,133


$
17,494


$
28,184

Intersegment revenue
23


(451
)

428


—

Total net revenues
1,580


8,682


17,922


28,184

Operating income (loss)
$
(1,783
)

$
584


$
3,623


$
2,424

















Three months ended June 30, 2018
Asia Pacific

Europe

North America

Consolidated
Revenue from unaffiliated customers
$
2,073


$
8,527


$
17,475


$
28,075

Intersegment revenue
(9
)

(27
)

36


—

Total net revenues
2,064


8,500


17,511


28,075

Operating income (loss)
$
(1,472
)

$
441


$
2,109


$
1,078

Six months ended June 30, 2019
Asia Pacific

Europe

North America

Consolidated
Revenue from unaffiliated customers
$
3,192


$
20,187


$
35,630


$
59,009

Intersegment revenue
53


(932
)

879


—

Total net revenues
3,245


19,255


36,509


59,009

Operating income (loss)
$
(3,418
)

$
2,721


$
8,092


$
7,395

















Six months ended June 30, 2018
Asia Pacific

Europe

North America

Consolidated
Revenue from unaffiliated customers
$
4,115


$
18,859


$
35,985


$
58,959

Intersegment revenue
(29
)

(79
)

108


—

Total net revenues
4,086


18,780


36,093


58,959

Operating income (loss)
$
(3,212
)

$
2,407


$
5,540


$
4,735

Investor Relations:
Lijun Qi
ir@travelzoo.com

Company Name:	Travelzoo
Stock Symbol:	TZOO
Market:	NASDAQ
Website:	travelzoo.com

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