Exhibit 99.1
| Travelzoo Inc.
590 Madison Avenue 21st Floor
New York, NY 10022 |
| |
| Media Contact:
Mindy Joyce
(212) 521-4218
mjoyce@travelzoo-inc.com |
FOR IMMEDIATE RELEASE
Travelzoo Reports First Quarter 2007 Results
NEW YORK, April 24, 2007 -- Travelzoo Inc. (NASDAQ: TZOO):
First Quarter 2007 Financial Highlights:
| • | Revenues of $19.7 million, up 17% year-over-year |
| • | Operating profit of $7.5 million, up 7% year-over-year |
| • | Cash flow from operations of $6.6 million, up 13% year-over-year |
| • | $0.25 earnings per share, up from $0.24 in the prior year period |
| • | Income tax rate of 48%, up from 44% in the prior year period |
Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2007, with revenue of $19.7 million, an increase of 17% year-over-year. Net income was $4.1 million, with diluted earnings per share (EPS) of $0.25, up from $0.24 in the prior year period.
"Q1 2007 marks our 35th consecutive quarter of growth in online advertising sales," said Ralph Bartel, chairman and chief executive officer, Travelzoo. "In Q1, we decided to invest a record $6.7 million in subscriber acquisition and in marketing the Travelzoo brand. We added four senior executives in North America, Europe, and Asia. We believe that this positions Travelzoo well to capture the growth opportunities we see ahead for the future."
North America
North America business segment revenue grew 13% year-over-year to $18.5 million. North America reported an operating profit of $8.2 million, or 44.1% of revenue, up from an operating profit of $7.4 million, or 45.2% of revenue, in the prior year period. Losses from Travelzoo's new Canada operations impacted North America's operating profit. Travelzoo began operations in Canada in April 2006.
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Europe
Europe business segment revenue grew 128% year-over-year to $1.3 million. Europe reported an operating loss of $683,000, compared to an operating loss of $460,000 in the prior year period and an operating loss of $356,000 in the prior quarter. The $327,000 increase in the operating loss from the prior quarter was primarily attributable to increased subscriber acquisition expenses in Germany and the U.K. Travelzoo began operations in the U.K. in May 2005. In September 2006, Travelzoo launched its Top 20 e-mail newsletter in Germany.
Income Taxes
Travelzoo’s effective income tax rate was 48.2%, up from 43.6% in the prior year period. The effective tax rate was impacted by operating losses in Europe and Canada. These operating losses were treated as having no recognizable tax benefit.
Conference Call
Travelzoo will host a conference call to discuss first quarter results at 5:00 p.m. ET today. A live Web cast can be accessed through the company's investor relations Web site at www.travelzoo.com/ir.
About Travelzoo
Travelzoo is a global Internet media company. Travelzoo's media properties, which reach more than 11 million travel enthusiasts in the U.S., Canada, the U.K. and Germany, include the Travelzoo® Web site (www.travelzoo.com), the Top 20® list, the Newsflash™ e-mail alert service and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 600 advertisers. Travelzoo's deal experts review each offer to find the best travel deals and confirm their true value. Travelzoo is headquartered in New York City.
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
March 31, |
| | 2007 | | 2006 |
| | | | |
Revenues | | $ 19,740 | | $ 16,928 |
Cost of revenues | | 353 | | 264 |
| | | | |
Gross profit | | 19,387 | | 16,664 |
Operating expenses: | | | | |
Sales and marketing | | 9,317 | | 7,099 |
General and administrative | | 2,593 | | 2,601 |
| | | | |
Total operating expenses | | 11,910 | | 9,700 |
| | | | |
Income from operations | | 7,477 | | 6,964 |
Other income and expense: | | | | |
Interest income | | 364 | | 344 |
Loss on foreign currency | | (1) | | (7) |
| | | | |
Income before income taxes | | 7,840 | | 7,301 |
| | | | |
Income taxes | | 3,777 | | 3,185 |
| | | | |
Net income | | $ 4,063 | | $ 4,116 |
| | | | |
| | | | |
Basic net income per share | | $ 0.27 | | $ 0.26 |
Diluted net income per share | | 0.25 | | 0.24 |
| | | | |
Shares used in computing
basic net income per share | | 15,250 | | 16,103 |
Shares used in computing
diluted net income per share | | 16,480 | | 17,298 |
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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
| March 31, | | December 31, |
| 2007 | | 2006 |
| | | |
ASSETS | | | |
Cash and cash equivalents | $ 39,889 | | $ 33,415 |
Accounts receivable, net | 9,220 | | 7,274 |
Deposits | 295 | | 177 |
Prepaid expenses and other current assets | 941 | | 506 |
Deferred tax assets | 1,980 | | 1,980 |
| | | |
Total current assets | 52,325 | | 43,352 |
| | | |
Deposits, less current portion | 107 | | 142 |
Property and equipment, net | 219 | | 172 |
Intangible assets, net | 32 | | 34 |
| | | |
Total Assets | $ 52,683 | | $ 43,700 |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Accounts payable | 4,285 | | 2,839 |
Accrued expenses | 2,633 | | 2,149 |
Deferred revenue | 774 | | 750 |
Income tax payable | 4,119 | | 1,142 |
| | | |
Total current liabilities | 11,811 | | 6,880 |
| | | |
Deferred tax liabilities | 3 | | 3 |
| | | |
Common stock | 153 | | 153 |
Additional paid-in capital | 2,076 | | 2,076 |
Accumulated other comprehensive
income | 11 | | 22 |
Retained earnings | 38,629 | | 34,566 |
| | | |
Total Stockholders' Equity | 40,869 | | 36,817 |
| | | |
Total Liabilities and
Stockholders' Equity | $ 52,683 | | $ 43,700 |
| | | |
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| | Three months ended
March 31, |
| | 2007 | | 2006 |
| | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | |
Net income | | $ 4,063 | | $ 4,116 |
Adjustments to reconcile net income to net cash
provided by operating activities: | | | | |
Depreciation and amortization | | 31 | | 33 |
Provision for losses on accounts receivable | | 28 | | 247 |
Accrued income on short-term investments | | – | | (166) |
Changes in operating assets and liabilities: | | | | |
Accounts receivable | | (1,971) | | (246) |
Deposits | | (83) | | (3) |
Prepaid expenses and other current assets | | (434) | | (243) |
Accounts payable | | 1,444 | | 115 |
Accrued expenses | | 481 | | (156) |
Deferred revenue | | 24 | | 333 |
Income tax payable | | 2,977 | | 1,760 |
| | | | |
Net cash provided by operating activities | | 6,560 | | 5,790 |
| | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | |
Purchases of property and equipment | | (77) | | (56) |
Purchase of short-term investments | | – | | (14,663) |
Sale of short-term investments | | – | | 20,000 |
| | | | |
Net cash provided by (used in) investing
activities | | (77) | | 5,281 |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | |
Repurchase of common stock | | – | | (8,594) |
| | | | |
Net cash used in financing activities | | – | | (8,594) |
| | | | |
Effect of exchange rate on cash | | (9) | | (4) |
| | | | |
Net increase in cash and cash equivalents | | 6,474 | | 2,473 |
Cash and cash equivalents at beginning of period | | 33,415 | | 24,469 |
| | | | |
Cash and cash equivalents at end of period | | 39,889 | | 26,942 |
| | | | |
Supplemental disclosure of cash flow information: | | | | |
Cash paid for income taxes net of refunds received | | 800 | | 1,425 |
| | | | |
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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended March 31, 2007 | North
America | | Europe | | Elimination | | Consolidated |
| | | | | | | |
Revenue from unaffiliated
customers | $ 18,455 | | $ 1,285 | | $ – | | $ 19,740 |
Intersegment revenue | 42 | | 3 | | (45) | | – |
| | | | | | | |
Total net revenues | 18,497 | | 1,288 | | (45) | | 19,740 |
| | | | | | | |
Operating income (loss) | $ 8,159 | | $ (683) | | $ 1 | | $ 7,477 |
| | | | | | | |
| | | | | | | |
Three months ended March 31, 2006 | North
America | | Europe | | Elimination | | Consolidated |
| | | | | | | |
Revenue from unaffiliated
customers | $ 16,365 | | $ 563 | | $ – | | $ 16,928 |
Intersegment revenue | 71 | | 2 | | (73) | | – |
| | | | | | | |
Total net revenues | 16,436 | | 565 | | (73) | | 16,928 |
| | | | | | | |
Operating income (loss) | $ 7,424 | | $ (460) | | $ – | | $ 6,964 |
| | | | | | | |
| | | | | | | |
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