Exhibit 99.1
Travelzoo 37th Floor Mindy Joyce (212) 521-4218
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FOR IMMEDIATE RELEASE
Travelzoo Reports Third Quarter 2009 Results
NEW YORK, October 28, 2009 -- Travelzoo Inc. (NASDAQ: TZOO):
| • | Revenue of $23.6 million, up 27% year-over-year |
| • | Operating profit from continuing operations of $2.3 million, up 15% year-over-year |
| • | Income from continuing operations of $0.08 per share, up from $0.03 in the prior-year period |
| • | Net loss per share of ($0.02) compared to ($0.11) in the prior-year period |
| • | Income tax rate of 50% |
Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2009, with revenue of $23.6 million, an increase of 27% year-over-year. Operating profit from continuing operations was $2.3 million. Income from continuing operations was $1.3 million, with diluted income per share from continuing operations of $0.08, up from diluted income per share from continuing operations of $0.03 in the prior-year period. Revenue, operating profit and income from continuing operations for all periods exclude the results of Travelzoo’s Asia Pacific business segment which are reported as discontinued operations. Including discontinued operations, diluted net loss per share was ($0.02), down from diluted net loss per share of ($0.11) in the prior-year period.
“We are pleased to report a 27% revenue growth year-over-year. Growth was particularly strong in Europe. North America revenue saw the strongest year-over-year growth in over two years,” said Holger Bartel, CEO of Travelzoo. “We also increased operating profits in spite of record
investments into subscriber acquisition and expenses related to the launch of Fly.com earlier this year.”
North America
North America business segment revenue grew 18% year-over-year to $18.9 million. Operating profit was $3.6 million, or 19.2% of revenue, down from an operating profit of $4.2 million, or 26.4% of revenue, in the prior-year period.
Europe
Europe business segment revenue grew 82% year-over-year to $4.8 million. In local currency terms, revenue grew 110% year-over-year. Operating loss was $1.3 million, compared to an operating loss of $2.2 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 weekly Top 20® list in Spain, after having operated a sales office in Barcelona since November 2006.
Subscribers
Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 16.3 million as of September 30, 2009, up 3.0 million, or 23%, from September 30, 2008, and up 1.1 million, or 7%, from June 30, 2009. In North America, total unduplicated number of subscribers was 13.0 million as of September 30, 2009, up 1.9 million, or 17%, from September 30, 2008 and up 658,000, or 5%, from June 30, 2009. In Europe, total unduplicated number of subscribers was 3.3 million as of September 30, 2009, up 1.2 million, or 55%, from September 30, 2008 and up 442,000, or 16%, from June 30, 2009.
Income Taxes
Income tax expense was $1.3 million, compared to $1.5 million in the prior-year period for continuing operations. The effective income tax rate was 50%, down from 74% in the prior-year period. Operating losses from our Europe business segment and our discontinued Asia Pacific business segment were treated as having no recognizable tax benefit.
Asset Management
During the third quarter, Travelzoo generated $664,000 of cash from operating activities. Accounts receivable decreased by $284,000 quarter-over-quarter and increased by $1.8 million over the prior-year period to $11.8 million. Accounts payable decreased by $233,000 quarter-over-
quarter and increased by $1.5 million over the prior-year period to $7.4 million. Capital expenditures were $405,000, up from $320,000 in the prior quarter and down from $1.6 million in the prior-year period. Travelzoo exited the third quarter with $15.7 million in cash and cash equivalents.
Conference Call
Travelzoo will host a conference call to discuss third quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to
| • | download the management presentation (PDF format) to be discussed in the conference call; |
| • | access the Web cast. |
About Travelzoo
Travelzoo is a global Internet media company. Travelzoo's media properties, which reach more than 18 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 around the world. 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 | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
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Revenues | $ | 23,576 | $ | 18,600 | $ | 70,194 | $ | 61,207 | |||||
Cost of revenues | 1,464 | 819 | 4,140 | 1,934 | |||||||||
Gross profit | 22,112 | 17,781 | 66,054 | 59,273 | |||||||||
Operating expenses: |
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Sales and marketing | 13,437 | 10,326 | 37,450 | 32,696 | |||||||||
General and administrative | 6,395 | 5,480 | 18,420 | 15,662 | |||||||||
Total operating expenses | 19,832 | 15,806 | 55,870 | 48,358 | |||||||||
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Operating income from | 2,280 | 1,975 | 10,184 | 10,915 | |||||||||
Other income and expense: |
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Interest income | 8 | 59 | 40 | 266 | |||||||||
Gain (loss) on foreign currency | 320 | (69) | 17 | 70 | |||||||||
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Income from continuing | 2,608 | 1,965 | 10,241 | 11,251 | |||||||||
Income taxes | 1,308 | 1,451 | 5,292 | 7,064 | |||||||||
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Income from continuing | 1,300 | 514 | 4,949 | 4,187 | |||||||||
Loss from discontinued | (1,595 | ) | (2,303 | ) | (5,097 | ) | (8,175 | ) | |||||
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Net loss | $ | (295 | ) | $ | (1,789 | ) | $ | (148 | ) | $ | (3,988 | ) | |
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Basic net income (loss) per |
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Continuing operations | $ | 0.08 | $ | 0.04 | $ | 0.30 | $ | 0.29 | |||||
Discontinued operations | $ | (0.10 | ) | $ | (0.17 | ) | $ | (0.31 | ) | $ | (0.57 | ) | |
Net loss | $ | (0.02 | ) | $ | (0.13 | ) | $ | (0.01 | ) | $ | (0.28 | ) | |
Diluted net income (loss) per |
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Continuing operations | $ | 0.08 | $ | 0.03 | $ | 0.30 | $ | 0.26 | |||||
Discontinued operations | $ | (0.10 | ) | $ | (0.14 | ) | $ | (0.31 | ) | $ | (0.50 | ) | |
Net loss | $ | (0.02 | ) | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.25 | ) | |
Shares used in computing basic | 16,444 | 14,285 | 16,396 | 14,268 | |||||||||
Shares used in computing diluted | 16,452 | 16,166 | 16,413 | 16,220 |
Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
| September 30, | December 31, | |||||
| 2009 | 2008 | |||||
ASSETS |
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Cash and cash equivalents | $ | 15,694 | $ | 14,179 | |||
Accounts receivable, net | 11,772 | 11,397 | |||||
Deposits | 270 | 185 | |||||
Prepaid expenses and other current assets | 2,046 | 2,356 | |||||
Deferred tax assets | 1,089 | 1,089 | |||||
Assets held for sale | 1,050 | 831 | |||||
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Total current assets | 31,921 | 30,037 | |||||
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Deposits, less current portion | 302 | 292 | |||||
Restricted cash | 875 | 875 | |||||
Property and equipment, net | 4,167 | 4,100 | |||||
Intangible assets, net | 1,509 | 18 | |||||
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Total assets | $ | 38,774 | $ | 35,322 | |||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Accounts payable | 7,408 | 6,434 | |||||
Accrued expenses | 4,089 | 3,913 | |||||
Deferred revenue | 836 | 666 | |||||
Deferred rent | 129 | 101 | |||||
Liabilities related to assets held for sale | 1,498 | 1,281 | |||||
Total current liabilities | 13,960 | 12,395 | |||||
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Deferred tax liabilities | 465 | 465 | |||||
Long-term tax liabilities | 918 | 900 | |||||
Deferred rent, less current portion | 659 | 799 | |||||
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Common stock | 164 | 143 | |||||
Additional paid-in capital | 2,322 | 185 | |||||
Accumulated other comprehensive loss | (1,388 | ) | (1,388 | ) | |||
Retained earnings | 21,674 | 21,823 | |||||
Total stockholders' equity | 22,772 | 20,763 | |||||
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Total liabilities and |
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stockholders' equity | $ | 38,774 | $ | 35,322 |
Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
In thousands)
| Three months ended | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss | $ | (295) | $ | (1,789 | ) | $ | (148) | $ | (3,988 | ) | |||
Adjustments to reconcile net loss |
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Depreciation and amortization | 531 | 177 | 1,457 | 409 | |||||||||
Provision for losses on accounts receivable | (14 | ) | 177 | 302 | 244 | ||||||||
Tax benefit from exercise of stock options | – | – | – | (110 | ) | ||||||||
Net foreign currency effects | (320 | ) | – | (17 | ) | – | |||||||
Changes in operating assets and liabilities: |
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Accounts receivable | 217 | 1,084 | (766 | ) | (573 | ) | |||||||
Deposits | (50 | ) | (41 | ) | (75 | ) | 1 | ||||||
Prepaid expenses and other current assets | (17 | ) | (708 | ) | 1,618 | (510 | ) | ||||||
Accounts payable | (429 | ) | (1,703 | ) | 1,600 | 628 | |||||||
Accrued expenses | 268 | (265 | ) | (101 | ) | 363 | |||||||
Deferred revenue | 49 | (55 | ) | 153 | 250 | ||||||||
Deferred rent | (25 | ) | 132 | (127 | ) | 846 | |||||||
Income tax payable | 749 | – | (1,196 | ) | – | ||||||||
Other non-current liabilities | – | (409) | 19 | (376) | |||||||||
Net cash provided by (used in) operating activities | 664 | (3,400) | 2,719 | (2,816) | |||||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment | (405 | ) | (1,594 | ) | (1,608 | ) | (2,961 | ) | |||||
Purchase of restricted cash | – | – | – | (875 | ) | ||||||||
Purchase of intangible asset | – | – | (1,760) | – | |||||||||
Net cash used in investing activities | (405) | (1,594) | (3,368) | (3,826) | |||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from exercise of stock options | – | – | 2,158 | 75 | |||||||||
Tax benefit from exercise of stock options | – | – | – | 110 | |||||||||
Net cash provided by financing activities | – | – | 2,158 | 185 | |||||||||
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Effect of exchange rate on cash and cash equivalents | (109) | (187) | 6 | (348) | |||||||||
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Net increase (decrease) in cash and cash equivalents | 150 | (5,181 | ) | 1,515 | (6,805 | ) | |||||||
Cash and cash equivalents at beginning of period | 15,544 | 21,017 | 14,179 | 22,641 | |||||||||
Cash and cash equivalents at end of period | 15,694 | 15,836 | 15,694 | 15,836 | |||||||||
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes net of refunds received | $ | 553 | $ | 2,325 | $ | 4,732 | $ | 7,343 |
Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended | North | Europe | Elimination | Consolidated | |||||||||
Revenue from | $ | 18,830 | $ | 4,746 | $ | - | $ | 23,576 | |||||
Intersegment revenue | 84 | 4 | (88) | – | |||||||||
Total net revenues | 18,914 | 4,750 | (88) | 23,576 | |||||||||
Operating income (loss) | $ 3,630 | $(1,317) | $ (33) | $ 2,280 | |||||||||
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Three months ended | North | Europe | Elimination | Consolidated | |||||||||
Revenue from | $ | 16,006 | $ | 2,594 | $ | - | $ | 18,600 | |||||
Intersegment revenue | 13 | 9 | (22) | – | |||||||||
Total net revenues | 16,019 | 2,603 | (22) | 18,600 | |||||||||
Operating income (loss) | $ 4,222 | $ (2,248) | $ 1 | $ 1,975 | |||||||||
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Nine months ended | North | Europe | Elimination | Consolidated | |||||||||
Revenue from | $ | 58,473 | $ | 11,720 | $ | – | $ | 70,193 | |||||
Intersegment revenue | 208 | 30 | (238) | – | |||||||||
Total net revenues | 58,681 | 11,750 | (238) | 70,193 | |||||||||
Operating income (loss) | $ 13,898 | $ (3,661) | $ (53) | $ 10,184 | |||||||||
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Nine months ended | North | Europe | Elimination | Consolidated | |||||||||
Revenue from | $ | 54,025 | $ | 7,183 | $ | – | $ | 61,208 | |||||
Intersegment revenue | 77 | 39 | (116) | – | |||||||||
Total net revenues | 54,102 | 7,222 | (116) | 61,208 | |||||||||
Operating income (loss) | $ 17,415 | $ (6,502) | $ 2 | $ 10,915 |
Travelzoo Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Quarters Ended | ||||||||||||||||||||||
| Sept 30, | Jun 30, | Mar 31, | Dec 31, | Sept 30, | Jun 30, | Mar 31, | |||||||||||||||
| 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | |||||||||||||||
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Revenues | $ | 23,576 | $ | 23,638 | $ | 22,980 | $ | 19,610 | $ | 18,600 | $ | 21,680 | $ | 20,928 | ||||||||
Cost of revenues | 1,464 | 1,458 | 1,218 | 909 | 819 | 599 | 516 | |||||||||||||||
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Gross profit | 22,112 | 22,180 | 21,762 | 18,701 | 17,781 | 21,081 | 20,412 | |||||||||||||||
Operating expenses: |
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Sales and marketing | 13,437 | 12,599 | 11,414 | 10,601 | 10,326 | 10,625 | 11,745 | |||||||||||||||
General and administrative | 6,395 | 6,211 | 5,814 | 5,704 | 5,480 | 5,540 | 4,643 | |||||||||||||||
Total operating expenses | 19,832 | 18,810 | 17,228 | 16,305 | 15,806 | 16,165 | 16,388 | |||||||||||||||
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Operating income from | 2,280 | 3,370 | 4,534 | 2,396 | 1,975 | 4,916 | 4,024 | |||||||||||||||
Other income and expense: |
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Interest income | 8 | 13 | 19 | 18 | 59 | 74 | 133 | |||||||||||||||
Gain (loss) on foreign currency | 320 | (116 | ) | (187 | ) | 424 | (69 | ) | (2 | ) | 141 | |||||||||||
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Income from continuing | 2,608 | 3,267 | 4,366 | 2,838 | 1,965 | 4,988 | 4,298 | |||||||||||||||
Income taxes | 1,308 | 1,659 | 2,325 | 1,113 | 1,451 | 2,993 | 2,619 | |||||||||||||||
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Income from continuing | 1,300 | 1,608 | 2,041 | 1,725 | 514 | 1,995 | 1,679 | |||||||||||||||
Loss from discontinued | (1,595 | ) | (1,799 | ) | (1,703 | ) | (1,853 | ) | (2,303 | ) | (3,188 | ) | (2,685 | ) | ||||||||
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Net loss | $ | (295 | ) | $ | (191 | ) | $ | 338 | $ | (128 | ) | $ | (1,789 | ) | $ | (1,193 | ) | $ | (1,006 | ) | ||
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Basic net income (loss) per |
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Continuing operations | $ | 0.08 | $ | 0.10 | $ | 0.13 | $ | 0.12 | $ | 0.04 | $ | 0.14 | $ | 0.12 | ||||||||
Discontinued operations | $ | (0.10 | ) | $ | (0.11 | ) | $ | (0.10 | ) | $ | (0.13 | ) | $ | (0.16 | ) | $ | (0.22 | ) | $ | (0.19 | ) | |
Net loss | $ | (0.02 | ) | $ | (0.01 | ) | $ | 0.02 | $ | (0.01 | ) | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.07 | ) | ||
Diluted net income (loss) per |
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Continuing operations | $ | 0.08 | $ | 0.10 | $ | 0.13 | $ | 0.11 | $ | 0.03 | $ | 0.12 | $ | 0.10 | ||||||||
Discontinued operations | $ | (0.10 | ) | $ | (0.11 | ) | $ | (0.10 | ) | $ | (0.12 | ) | $ | (0.14 | ) | $ | (0.20 | ) | $ | (0.17 | ) | |
Net loss | $ | (0.02 | ) | $ | (0.01 | ) | $ | 0.02 | $ | (0.01 | ) | $ | (0.11 | ) | $ | (0.07 | ) | $ | (0.06 | ) | ||
Shares used in computing basic | 16,444 | 16,444 | 16,300 | 14,285 | 14,285 | 14,269 | 14,250 | |||||||||||||||
Shares used in computing | 16,452 | 16,452 | 16,306 | 16,098 | 16,166 | 16,238 | 16,255 |