Exhibit 99.1
| Travelzoo Inc.
590 Madison Avenue 21st Floor
New York, NY 10022
Media Contact: Kelly Ford +1 (212) 521-4216
kford@travelzoo-inc.com |
FOR IMMEDIATE RELEASE
Travelzoo Reports Third Quarter 2005 Financial Results
NEW YORK, October 18, 2005 -- Travelzoo Inc. (NASDAQ: TZOO), the Internet’s largest publisher of travel offers available directly from hundreds of companies, today reported financial results for the third quarter ended September 30, 2005. Diluted earnings per share (EPS) were $0.13, which includes a loss of $363,000 from Travelzoo’s new U.K. business.
Third Quarter 2005 Financial Highlights:
| • | Revenues of $13.4 million, up 41% year-over-year |
| • | Income from operations of $4.2 million, up 27% year-over-year |
| • | Operating margin of 31.5% |
| • | Net income of $2.3 million |
“Travelzoo continued to see growth in the third quarter as a result of our large audience of 8.9 million subscribers in the U.S., and our new U.K. business,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “In Q3, we decided to invest a record $5.7 million in marketing the Travelzoo brand. It’s our strong brand combined with a robust business model that we believe will enable us to take advantage of future growth opportunities.”
Travelzoo reported revenues of $13.4 million for the third quarter ended September 30, 2005, an increase of 41% over revenues of $9.5 million for the prior-year period, and a quarterly sequential increase of 9% over revenues of $12.3 million for the second quarter ended June 30, 2005. All revenues were generated from the sale of online advertising to travel companies.
Income from operations for the third quarter ended September 30, 2005 was approximately $4.2 million or 31.5% of revenues, compared to approximately $3.3 million, or 35.0% of revenues, for the prior-year period.
Travelzoo reported a net income of approximately $2.3 million for the third quarter of 2005, up from approximately $2.0 million for the prior-year period.
Cash flow from operations in the third of quarter 2005 was $1.0 million.
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Reported net income for the third quarter of 2005 includes a loss of $363,000 from Travelzoo’s new U.K. business. The loss was treated as having no recognizable tax benefit. Travelzoo UK began operations in May 2005.
Travelzoo’s new U.K. business generated revenues of $368,000 in the third quarter 2005, up from $9,000 in the second quarter 2005.
Travelzoo will host a conference call to discuss third quarter results at 11:00 a.m. Eastern Time today. A live Web cast can be accessed through the company’s investor relations Web site at www.travelzoo.com/ir.
About Travelzoo
Travelzoo Inc. (NASDAQ: TZOO) is the Internet’s largest publisher of travel offers available directly from hundreds of companies. Travelzoo’s media properties include the Travelzoo® Web site (www.travelzoo.com), the Top 20® e-mail newsletter, the Newsflash™ e-mail alert service and SuperSearch™, a travel search engine. With 9.1 million subscribers worldwide, Travelzoo lists offers from more than 500 advertisers. Travelzoo independently reviews all travel deals listed in its publications to ensure that offers are legitimate and easy-to-book.
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.
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Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts) |
| | Three months ended
September 30, | | Nine months ended
September 30, |
| | 2005 | | 2004 | | 2005 | | 2004 |
| | | | | | | | |
Revenues | | $13,384 | | $ 9,507 | | $36,871 | | $23,171 |
Cost of revenues | | 225 | | 183 | | 629 | | 529 |
| | | | | | | | |
Gross profit | | 13,159 | | 9,324 | | 36,242 | | 22,642 |
Operating expenses: | | | | | | | | |
Sales and marketing | | 7,101 | | 4,339 | | 18,283 | | 11,463 |
General and administrative | | 1,838 | | 1,657 | | 6,573 | | 3,873 |
| | | | | | | | |
Total operating expenses | | 8,939 | | 5,996 | | 24,856 | | 15,336 |
| | | | | | | | |
Income from operations | | 4,220 | | 3,328 | | 11,386 | | 7,306 |
Other income and expense: | | | | | | | | |
Interest income | | 279 | | 9 | | 656 | | 21 |
Gain/loss on foreign currency | | (4) | | - | | (8) | | - |
Income before income taxes | | 4,494 | | 3,337 | | 12,034 | | 7,327 |
Income taxes | | 2,174 | | 1,371 | | 5,703 | | 3,018 |
Net income | | $ 2,320 | | $ 1,966 | | $ 6,331 | | $ 4,309 |
| | | | | | | | |
Basic net income per share | | $ 0.14 | | $ 0.13 | | $ 0.39 | | $ 0.25 |
Diluted net income per share | | 0.13 | | 0.11 | | 0.35 | | 0.23 |
| | | | | | | | |
Shares used in computing basic net income per share | | 16,250 | | 15,488 | | 16,249 | | 17,111 |
Shares used in computing diluted net income per share | |
17,695
| |
17,293
| |
17,897
| |
18,562
|
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Travelzoo Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) |
|
| September 30, | | December 31, |
| 2005 | | 2004 |
ASSETS | | | |
Cash and cash equivalents | $ 22,735 | | $ 26,435 |
Short term investments | 19,918 | | 10,032 |
Accounts receivable, net | 8,330 | | 5,327 |
Deposits | 123 | | 163 |
Other current assets | 376 | | 674 |
Deferred income taxes | 371 | | 391 |
Total current assets | 51,853 | | 43,022 |
| | | |
Deposits, less current portion | 91 | | - |
Deferred income taxes, less current portion | 43 | | 43 |
Property and equipment, net | 148 | | 108 |
Intangible assets, net | 34 | | 84 |
Total Assets | $ 52,169 | | $ 43,257 |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Accounts payable | 701 | | 440 |
Accrued expenses | 3,649 | | 2,464 |
Deferred revenue | 312 | | 91 |
Income tax payable | 637 | | - |
Total Liabilities | 5,299 | | 2,995 |
Common stock | 163 | | 162 |
Additional paid-in capital | 30,606 | | 30,300 |
Accumulated other comprehensive income | (30) | | - |
Retained earnings | 16,131 | | 9,800 |
Total Stockholders’ Equity | 46,870 | | 40,262 |
Total Liabilities and | | | |
Stockholders’ Equity | $ 52,169 | | $ 43,257 |
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Travelzoo Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
|
| | Three months ended September 30, | | Nine months ended September 30, |
| | 2005 | | 2005 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | |
Net income | | $ 2,320 | | $ 6,331 |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 42 | | 126 |
Deferred income taxes | | - | | 20 |
Provision for losses on accounts receivable | | (8) | | 39 |
Tax benefit of stock option exercises | | - | | 396 |
Accrued income on short-term investments | | (145) | | (268) |
Changes in operating assets and liabilities: | | | | |
Accounts receivable | | (1,214) | | (3,050) |
Deposits | | (7) | | (52) |
Prepaid expenses and other current assets | | 247 | | 296 |
Accounts payable | | (722) | | 266 |
Accrued expenses | | 493 | | 1,188 |
Deferred revenue | | 25 | | 221 |
Income tax payable | | (1) | | 637 |
Net cash provided by operating activities | | 1,030 | | 6,150 |
| | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | |
Purchases of property and equipment | | (22) | | (117) |
Purchase of short-term investments | | (9,918) | | (29,691) |
Sale of short-term investments | | 9,985 | | 20,073 |
Net cash used in investing activities | | 45 | | (9,735) |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | |
Proceeds from issuance of common stock, net of related costs | | - | | (124) |
Proceeds from stock option exercises | | - | | 35 |
Effective of exchange rate on cash | | (26) | | (26) |
Recovery of profit from purchase and sale of stock by employees | | - | | - |
Net cash provided by financing activities | | (26) | | (115) |
Net increase in cash and cash equivalents | | 1,050 | | (3,700) |
Cash and cash equivalents at beginning of period | | 21,685 | | 26,435 |
| | | | |
Cash and cash equivalents at end of period | | 22,735 | | 22,735 |
Supplemental disclosure of cash flow information: | | | | |
Cash paid for income taxes net of refunds received | | 2,175 | | 4,476 |
| | | | |
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