Exhibit 99.1
| Travelzoo 37th Floor Mindy Joyce (212) 521-4218
|
FOR IMMEDIATE RELEASE
Travelzoo Reports First Quarter 2008 Results
NEW YORK, April 28, 2008 -- Travelzoo Inc. (NASDAQ: TZOO):
| • | Revenue of $20.9 million, up 6% year-over-year |
| • | Operating profit of $1.3 million |
| • | Loss per share of $(0.07), down from earnings per share of $0.25 in the prior-year period |
| • | Income tax rate of 164% |
Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2008, with revenue of $20.9 million, an increase of 6% year-over-year. Net loss was $1.0 million with diluted loss per share of $(0.07), down from diluted earnings per share of $0.25 in the prior-year period.
“In Q1 2008, we continued our strategy of going global,” said Ralph Bartel, chairman and chief executive officer, Travelzoo. “As frequently announced in our investor communications over the last twelve months, our aggressive expansion in Asia Pacific and Europe negatively impacts our operating income.”
North America
North America business segment revenue grew 2% year-over-year to $18.9 million. North America reported operating income of $6.3 million, or 33.1% of revenue, down from operating income of $8.2 million, or 44.1% of revenue, in the prior-year period.
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Europe
Europe business segment revenue grew 59% year-over-year to $2.0 million. Europe reported an operating loss of $2.2 million, compared to an operating loss of $683,000 in the prior-year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition in France, Germany and the U.K. and increased expenses associated with the start up of our operations in France. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007.
Asia Pacific
Asia Pacific business segment revenue was $20,000. Asia Pacific reported an operating loss of $2.7 million, compared to an operating loss of $2.1 million in the prior quarter. Travelzoo began operations in Hong Kong in April 2007, in Japan in September 2007, in China in October 2007 and in Australia and Taiwan in December 2007.
Income Taxes
Income tax expense was $2.6 million compared to $3.8 million in the prior-year period. Travelzoo’s effective income tax rate was 164.2%, up from 48.2% in the prior-year period. The effective tax rate was impacted by operating losses from our Asia Pacific business segment and Europe business segment. These operating losses were treated as having no recognizable tax benefit.
Asset Management
Travelzoo generated $3.6 million of cash from operating activities. Accounts receivable increased $870,000 sequentially and increased $1.6 million over the prior-year period to $10.8 million. Accounts payable increased $2.3 million sequentially and increased $3.0 million over the prior-year period to $7.2 million. Travelzoo exited the quarter with $24.4 million in cash and cash equivalents.
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.
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About Travelzoo
Travelzoo is a global Internet media company. Travelzoo’s media properties, which reach more than 12 million travel enthusiasts in the U.S., Australia, Canada, China, France, Germany, Hong Kong, Japan, Taiwan and the U.K., include the Travelzoo® Web site (www.travelzoo.com), the Top 20® list, the Newsflash™ e-mail alert service, the Travelzoo Network™ and SuperSearch™, a travel search engine. Travelzoo publishes offers from more than 900 advertisers. Travelzoo’s deal experts review offers to find the best travel deals and confirm their true value. Travelzoo’s global headquarters are 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 |
| ||||
|
| 2008 |
| 2007 |
| ||
Revenues |
| $ | 20,948 |
| $ | 19,740 |
|
Cost of revenues |
|
| 864 |
|
| 353 |
|
Gross profit |
|
| 20,084 |
|
| 19,387 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
|
| 13,394 |
|
| 9,317 |
|
General and administrative |
|
| 5,411 |
|
| 2,593 |
|
Total operating expenses |
|
| 18,805 |
|
| 11,910 |
|
Income from operations |
|
| 1,279 |
|
| 7,477 |
|
Other income and expense: |
|
|
|
|
|
|
|
Interest income |
|
| 136 |
|
| 364 |
|
Gain (loss) on foreign currency |
|
| 152 |
|
| (1 | ) |
Income before income taxes |
|
| 1,567 |
|
| 7,840 |
|
Income taxes |
|
| 2,573 |
|
| 3,777 |
|
Net income (loss) |
| $ | (1,006 | ) | $ | 4,063 |
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
| $ | (0.07 | ) | $ | 0.27 |
|
Diluted net income (loss) per share |
|
| (0.07 | ) |
| 0.25 |
|
|
|
|
|
|
|
|
|
Shares used in computing |
|
| 14,250 |
|
| 15,250 |
|
Shares used in computing |
|
| 14,250 |
|
| 16,480 |
|
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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
|
| March 31, |
| December 31, |
| ||
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 24,445 |
| $ | 22,641 |
|
Accounts receivable, net |
|
| 10,839 |
|
| 9,969 |
|
Deposits |
|
| 97 |
|
| 272 |
|
Prepaid expenses and other current assets |
|
| 1,377 |
|
| 1,982 |
|
Deferred tax assets |
|
| 1,393 |
|
| 1,393 |
|
Total current assets |
|
| 38,151 |
|
| 36,257 |
|
Deposits, less current portion |
|
| 381 |
|
| 349 |
|
Restricted cash |
|
| 875 |
|
| — |
|
Property and equipment, net |
|
| 1,366 |
|
| 622 |
|
Intangible assets, net |
|
| 55 |
|
| 58 |
|
Total assets |
| $ | 40,828 |
| $ | 37,286 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Accounts payable |
|
| 7,245 |
|
| 4,960 |
|
Accrued expenses |
|
| 5,359 |
|
| 4,608 |
|
Deferred revenue |
|
| 715 |
|
| 450 |
|
Deferred rent |
|
| 40 |
|
| 37 |
|
Income tax payable |
|
| 1,127 |
|
| — |
|
Total current liabilities |
|
| 14,486 |
|
| 10,055 |
|
Other non-current liabilities |
|
| 1,629 |
|
| 1,329 |
|
|
|
|
|
|
|
|
|
Common stock |
|
| 143 |
|
| 143 |
|
Accumulated other comprehensive (loss) |
|
| (363 | ) |
| (180 | ) |
Retained earnings |
|
| 24,933 |
|
| 25,939 |
|
Total stockholders’ equity |
|
| 24,713 |
|
| 25,902 |
|
Total liabilities and stockholders’ equity |
| $ | 40,828 |
| $ | 37,286 |
|
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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
| Three months ended |
| ||||
|
| 2008 |
| 2007 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income (loss) |
| $ | (1,006 | ) | $ | 4,063 |
|
Adjustments to reconcile net income (loss) to net |
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 103 |
|
| 31 |
|
Provision for losses on accounts receivable |
|
| 22 |
|
| 28 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
| (895 | ) |
| (1,971 | ) |
Deposits |
|
| 147 |
|
| (83 | ) |
Prepaid expenses and other current assets |
|
| 620 |
|
| (434 | ) |
Accounts payable |
|
| 2,255 |
|
| 1,444 |
|
Accrued expenses |
|
| 709 |
|
| 481 |
|
Deferred revenue |
|
| 265 |
|
| 24 |
|
Deferred rent |
|
| 300 |
|
| — |
|
Income tax payable |
|
| 1,127 |
|
| 2,977 |
|
Net cash provided by operating activities |
|
| 3,647 |
|
| 6,560 |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| (842 | ) |
| (77 | ) |
Purchase of restricted cash |
|
| (875 | ) |
| — |
|
Net cash used in investing activities |
|
| (1,717 | ) |
| (77 | ) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash and cash equivalents |
|
| (126 | ) |
| (9 | ) |
Net increase in cash and cash equivalents |
|
| 1,804 |
|
| 6,474 |
|
Cash and cash equivalents at beginning of period |
|
| 22,641 |
|
| 33,415 |
|
Cash and cash equivalents at end of period |
|
| 24,445 |
|
| 39,889 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid for income taxes net of refunds received |
| $ | 446 |
| $ | 800 |
|
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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended |
| North |
| Europe |
| Asia |
| Elimination |
|
| Consolidated |
| ||||
Revenue from |
| $ | 18,890 |
| $ | 2,038 |
| $ | 20 |
| $ | — |
| $ | 20,948 |
|
Intersegment revenue |
|
| 25 |
|
| 11 |
|
| — |
|
| (36 | ) |
| — |
|
Total net revenues |
|
| 18,915 |
|
| 2,049 |
|
| 20 |
|
| (36 | ) |
| 20,948 |
|
Operating income (loss) |
| $ | 6,264 |
| $ | (2,241 | ) | $ | (2,745 | ) | $ | 1 |
| $ | 1,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
| North |
| Europe |
| Asia |
| Elimination |
|
| Consolidated |
| ||||
Revenue from |
| $ | 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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