Exhibit 99.1
Travelzoo Mindy Joyce |
FOR IMMEDIATE RELEASE
Travelzoo Reports Fourth Quarter 2008 Results
NEW YORK, February 3, 2009 -- Travelzoo Inc. (NASDAQ: TZOO):
| • | Revenue of $19.9 million, up 4% year-over-year |
| • | Operating profit of $509,000 |
| • | Loss per share of $(0.01), down from earnings per share of $0.00 in the prior-year period |
| • | Income tax rate of 113% |
Travelzoo Inc., a global Internet media company, today announced financial results for the fourth quarter ended December 31, 2008, with revenue of $19.9 million, an increase of 4% year-over-year. Net loss was $129,000 with diluted loss per share of $(0.01), down from net income of $46,000 and diluted earnings per share of $0.00 in the prior-year period.
“Travelzoo performed well in Europe and in North America in the fourth quarter, despite an increasingly difficult economic environment,” said Holger Bartel, CEO of Travelzoo. “In Asia Pacific, we have a lot more work to do, but I am excited by Travelzoo’s opportunities.”
North America
North America business segment revenue decreased 2% year-over-year and grew 8% quarter-over-quarter to $17.2 million. North America reported an operating profit of $3.7 million, or 21.5% of revenue, down from an operating profit of $6.4 million, or 36.3% of revenue, in the prior-year period.
Europe
Europe business segment revenue grew 65% year-over-year to $2.4 million. Revenue decreased 8% quarter-over-quarter due to currency translations. In local currency terms, revenue grew 114% year-over-year and 11% quarter-over-quarter. Europe reported an operating loss of $1.3 million, compared to an operating loss of $1.9 million in the prior-year period. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007. In May 2008, Travelzoo began publishing its Web site and its weekly Top 20® list in Spain, after having operated a sales office in Barcelona since November 2006.
Asia Pacific
Asia Pacific business segment revenue was $269,000, up from $207,000 in the prior quarter and up from $8,000 in the prior-year period. Asia Pacific reported an operating loss of $1.9 million, compared to an operating loss of $2.3 million in the prior quarter and an operating loss of $2.1 million in the prior-year period. 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.
Subscribers
Travelzoo had a total unduplicated number of newsletter subscribers of 14.6 million as of December 31, 2008, up 2.0 million, or 16% from December 31, 2007. In North America, subscribers grew year-over-year from 10,996,000 to 11,283,000, or 3%. In Europe, subscribers grew year-over-year from 1,381,000 to 2,223,000, or 61%. In Asia Pacific, subscribers grew from 214,000 to 1,108,000, or 418%.
Income Taxes
Income tax expense was $1.1 million compared to $2.7 million in the prior-year period. The effective income tax rate was 113%, up from 98% in the prior-year period. The operating losses from the Asia Pacific business segment, the Europe business segment and the operations in Canada were treated as having no recognizable tax benefit.
Asset Management
Travelzoo used $441,000 of cash for operating activities. Accounts receivable increased $1.5 million sequentially and increased $1.6 million over the prior-year period to $11.6 million. Accounts payable increased $436,000 sequentially and increased $1.6 million over the prior-year period to $6.6 million. Capital expenditures were $916,000, up from $292,000 in the prior year period. Travelzoo exited the quarter with $14.2 million in cash and cash equivalents.
Conference Call
Travelzoo will host a conference call to discuss fourth quarter results at 5:00 p.m. ET today. A live Webcast can be accessed through Travelzoo’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 14 million travel enthusiasts in the U.S., Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, 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™, the SuperSearch™ search tool, and the Fly.com™ search engine. Travelzoo publishes offers from more than 1,000 advertisers. Travelzoo’s deal experts review offers to find the best travel deals and confirm their true value. Travelzoo’s global headquarters is 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.
###
Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
|
| Three months ended |
| Year ended |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
Revenues |
| $ | 19,879 |
| $ | 19,114 |
| $ | 81,404 |
| $ | 78,911 |
|
Cost of revenues |
|
| 963 |
|
| 288 |
|
| 2,996 |
|
| 957 |
|
Gross profit |
|
| 18,916 |
|
| 18,826 |
|
| 78,408 |
|
| 77,954 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
| 11,638 |
|
| 10,425 |
|
| 49,135 |
|
| 41,440 |
|
General and administrative |
|
| 6,769 |
|
| 5,946 |
|
| 26,162 |
|
| 15,890 |
|
Total operating expenses |
|
| 18,407 |
|
| 16,371 |
|
| 75,297 |
|
| 57,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
| 509 |
|
| 2,455 |
|
| 3,111 |
|
| 20,624 |
|
Other income and expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 21 |
|
| 205 |
|
| 298 |
|
| 1,309 |
|
Gain on foreign currency |
|
| 432 |
|
| 76 |
|
| 500 |
|
| 178 |
|
Income before income taxes |
|
| 962 |
|
| 2,736 |
|
| 3,909 |
|
| 22,111 |
|
Income taxes |
|
| 1,091 |
|
| 2,690 |
|
| 8,025 |
|
| 13,002 |
|
Net income (loss) |
| $ | (129 | ) | $ | 46 |
| $ | (4,116 | ) | $ | 9,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
| $ | (0.01 | ) | $ | 0.00 |
| $ | (0.29 | ) | $ | 0.61 |
|
Diluted net income (loss) per share |
|
| (0.01 | ) |
| 0.00 |
|
| (0.29 | ) |
| 0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic |
|
| 14,285 |
|
| 14,250 |
|
| 14,273 |
|
| 14,847 |
|
Shares used in computing diluted |
|
| 14,285 |
|
| 15,484 |
|
| 14,273 |
|
| 16,074 |
|
Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
|
| December 31, |
| December 31, |
| ||
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 14,179 |
| $ | 22,641 |
|
Accounts receivable, net |
|
| 11,582 |
|
| 9,969 |
|
Deposits |
|
| 226 |
|
| 272 |
|
Prepaid expenses and other current assets |
|
| 2,992 |
|
| 1,982 |
|
Deferred tax assets |
|
| 1,089 |
|
| 1,393 |
|
Total current assets |
|
| 30,068 |
|
| 36,257 |
|
Deposits, less current portion |
|
| 341 |
|
| 349 |
|
Restricted cash |
|
| 875 |
|
| — |
|
Property and equipment, net |
|
| 4,259 |
|
| 622 |
|
Intangible assets, net |
|
| 45 |
|
| 58 |
|
Total assets |
| $ | 35,588 |
| $ | 37,286 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Accounts payable |
|
| 6,605 |
|
| 4,960 |
|
Accrued expenses |
|
| 4,962 |
|
| 4,608 |
|
Deferred revenue |
|
| 703 |
|
| 450 |
|
Deferred rent |
|
| 125 |
|
| 37 |
|
Total current liabilities |
|
| 12,395 |
|
| 10,055 |
|
|
|
|
|
|
|
|
|
Other non-current liabilities |
|
| 2,430 |
|
| 1,329 |
|
|
|
|
|
|
|
|
|
Common stock |
|
| 143 |
|
| 143 |
|
Additional paid-in capital |
|
| 185 |
|
| — |
|
Accumulated other comprehensive loss |
|
| (1,388 | ) |
| (180 | ) |
Retained earnings |
|
| 21,823 |
|
| 25,939 |
|
Total stockholders’ equity |
|
| 20,763 |
|
| 25,902 |
|
Total liabilities and stockholders’ equity |
| $ | 35,588 |
| $ | 37,286 |
|
Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
| Three months ended |
| Year ended |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | (129 | ) | $ | 46 |
| $ | (4,116 | ) | $ | 9,109 |
|
Adjustments to reconcile net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 258 |
|
| 62 |
|
| 667 |
|
| 193 |
|
Deferred income taxes |
|
| 1,035 |
|
| 584 |
|
| 1,035 |
|
| 584 |
|
Provision for losses on accounts receivable |
|
| 73 |
|
| 4 |
|
| 316 |
|
| (48 | ) |
Tax benefit from exercise of stock options |
|
| — |
|
| — |
|
| (110 | ) |
| — |
|
Gain on foreign currency |
|
| (432 | ) |
| (76 | ) |
| (500 | ) |
| (178 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (1,869 | ) |
| (596 | ) |
| (2,443 | ) |
| (2,614 | ) |
Deposits |
|
| 24 |
|
| (204 | ) |
| 25 |
|
| (300 | ) |
Prepaid expenses and other current assets |
|
| (406 | ) |
| (894 | ) |
| (916 | ) |
| (1,465 | ) |
Accounts payable |
|
| 425 |
|
| (771 | ) |
| 1,054 |
|
| 2,110 |
|
Accrued expenses |
|
| 514 |
|
| 1,511 |
|
| 877 |
|
| 2,404 |
|
Deferred revenue |
|
| 64 |
|
| (20 | ) |
| 314 |
|
| (302 | ) |
Deferred rent |
|
| (18 | ) |
| 38 |
|
| 828 |
|
| 109 |
|
Income tax payable |
|
| — |
|
| — |
|
| — |
|
| 3 |
|
Other non-current liabilities |
|
| 20 |
|
| 111 |
|
| (356 | ) |
| 111 |
|
Net cash provided by (used in) operating activities |
|
| (441 | ) |
| (205 | ) |
| (3,325 | ) |
| 9,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| (916 | ) |
| (292 | ) |
| (3,867 | ) |
| (627 | ) |
Purchase of restricted cash |
|
| — |
|
| — |
|
| (875 | ) |
| — |
|
Purchase of intangible assets |
|
| — |
|
| (31 | ) |
| — |
|
| (36 | ) |
Net cash used in investing activities |
|
| (916 | ) |
| (323 | ) |
| (4,742 | ) |
| (663 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
| — |
|
| — |
|
| 75 |
|
| — |
|
Tax benefit from exercise of stock options |
|
| — |
|
| — |
|
| 110 |
|
| — |
|
Repurchase of common stock |
|
| — |
|
| — |
|
| — |
|
| (19,822 | ) |
Net cash provided by (used in) financing activities |
|
| — |
|
| — |
|
| 185 |
|
| (19,822 | ) |
Effect of exchange rate on cash and cash equivalents |
|
| (300 | ) |
| (84 | ) |
| (580 | ) |
| (5 | ) |
�� |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
| (1,657 | ) |
| (612 | ) |
| (8,462 | ) |
| (10,774 | ) |
Cash and cash equivalents at beginning of period |
|
| 15,836 |
|
| 23,253 |
|
| 22,641 |
|
| 33,415 |
|
Cash and cash equivalents at end of period |
|
| 14,179 |
|
| 22,641 |
|
| 14,179 |
|
| 22,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes net of refunds received |
| $ | 850 |
| $ | 2,930 |
| $ | 8,193 |
| $ | 13,334 |
|
Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended |
| North |
| Europe |
| Asia |
| Elimination |
| Consolidated |
| |||||
Revenue from |
| $ | 17,220 |
| $ | 2,390 |
| $ | 269 |
| $ | — |
| $ | 19,879 |
|
Intersegment revenue |
|
| 16 |
|
| 12 |
|
| — |
|
| (28 | ) |
| — |
|
Total net revenues |
|
| 17,236 |
|
| 2,402 |
|
| 269 |
|
| (28 | ) |
| 19,879 |
|
Operating income (loss) |
| $ | 3,702 |
| $ | (1,307 | ) | $ | (1,887 | ) | $ | 1 |
| $ | 509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
| North |
| Europe |
| Asia |
| Elimination |
| Consolidated |
| |||||
Revenue from |
| $ | 17,656 |
| $ | 1,450 |
| $ | 8 |
| $ | — |
| $ | 19,114 |
|
Intersegment revenue |
|
| 20 |
|
| 9 |
|
| — |
|
| (29 | ) |
| — |
|
Total net revenues |
|
| 17,676 |
|
| 1,459 |
|
| 8 |
|
| (29 | ) |
| 19,114 |
|
Operating income (loss) |
| $ | 6,419 |
| $ | (1,906 | ) | $ | (2,059 | ) | $ | 1 |
| $ | 2,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
| North |
| Europe |
| Asia |
| Elimination |
| Consolidated |
| |||||
Revenue from |
| $ | 71,245 |
| $ | 9,572 |
| $ | 587 |
| $ | — |
| $ | 81,404 |
|
Intersegment revenue |
|
| 94 |
|
| 51 |
|
| — |
|
| (145 | ) |
| — |
|
Total net revenues |
|
| 71,339 |
|
| 9,623 |
|
| 587 |
|
| (145 | ) |
| 81,404 |
|
Operating income (loss) |
| $ | 21,118 |
| $ | (7,809 | ) | $ | (10,201 | ) | $ | 3 |
| $ | 3,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
| North |
| Europe |
| Asia |
| Elimination |
| Consolidated |
| |||||
Revenue from |
| $ | 73,061 |
| $ | 5,842 |
| $ | 8 |
| $ | — |
| $ | 78,911 |
|
Intersegment revenue |
|
| 171 |
|
| 14 |
|
| — |
|
| (185 | ) |
| — |
|
Total net revenues |
|
| 73,232 |
|
| 5,856 |
|
| 8 |
|
| (185 | ) |
| 78,911 |
|
Operating income (loss) |
| $ | 28,959 |
| $ | (5,172 | ) | $ | (3,166 | ) | $ | 3 |
| $ | 20,624 |
|