Exhibit 99.1
Travelzoo Inc. 590 Madison Avenue 37th Floor New York, NY 10022 Media Contact: Glen Ceremony Chief Financial Officer Travelzoo Inc. +1 (212) 484-4998 pr@travelzoo.com |
FOR IMMEDIATE RELEASE
Travelzoo Reports First Quarter 2014 Results
NEW YORK, April 17, 2014 - Travelzoo Inc. (NASDAQ: TZOO):
First Quarter 2014 Financial Highlights:
• | Revenue of $40.2 million, down 5% year-over-year |
• | Operating profit of $7.0 million, down 13% year-over-year |
• | Net income of $4.6 million |
• | Earnings per share of $0.31, compared to $0.36 in the prior-year period |
Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2014, with revenue of $40.2 million, a decrease of 5% year-over-year. Operating profit was $7.0 million, down 13% year-over-year. Net income was $4.6 million, with diluted earnings per share of $0.31, down from $0.36 in the prior-year period.
"Our European business delivered strong results. North America reported weak revenue. North America was impacted by a reduction in Search marketing spend and slow Local voucher sales,” said Chris Loughlin, chief executive officer. “A positive highlight is the record number of mobile downloads we saw in the quarter. We believe in our strategy of quickly adapting to mobile usage."
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North America
North America business segment revenue decreased 12% year-over-year to $26.4 million. Operating profit for the first quarter was $4.6 million, or 17% of revenue, down from $5.5 million, or 18% of revenue, in the prior-year period.
Europe
Europe business segment revenue increased 13% year-over-year to $13.8 million. In local currency terms, revenue increased 6% year-over-year. Operating profit for the first quarter was $2.4 million, or 17% of revenue, down from $2.6 million, or 21% of revenue in the prior-year period.
Subscribers
Travelzoo had a total unduplicated number of subscribers in North America and Europe of 23.6 million as of March 31, 2014, up 1% from December 31, 2013. In North America, total unduplicated number of subscribers was 16.7 million as of March 31, 2014, up 1% from December 31, 2013. In Europe, total unduplicated number of subscribers was 6.9 million as of March 31, 2014, up 2% from December 31, 2013.
Update on Hotel Booking Platform
Travelzoo launched the first phase of its hotel booking platform at the end of March. A select group of U.S. subscribers can now book hotels any night of the year through Travelzoo. "We are working with many new hotels that previously were unable to accept the Local voucher format," said Chris Loughlin, chief executive officer. "The new platform also makes it easier for our subscribers to book a hotel deal on their mobile phones." The hotel booking platform is expected to begin contributing to revenues in the second quarter, an average of 60 to 70 days after bookings occur. Travelzoo recognizes revenue upon the hotel stay and not at the time of booking.
Income Taxes
Income tax expense was $2.5 million, compared to $2.5 million in the prior-year period. The effective income tax rate was 35%, up from 31% in the prior-year period.
Asset Management
During the first quarter of 2014, Travelzoo generated $1.8 million of cash from operating activities. Accounts receivable increased by $52,000 over the prior-year period to $15.4 million. Accounts payable increased by $2.1 million over the prior-year period to $29.0 million. Capital expenditures were $1.0 million, up from $900,000 in the prior-year period. As of March 31, 2014, cash and cash equivalents were $61.0 million.
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Conference Call
Travelzoo will host a conference call to discuss first 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 webcast. |
About Travelzoo
Travelzoo Inc. is a global Internet media company. With more than 27 million subscribers in North America, Europe, and Asia Pacific and 25 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc.
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. All other names are trademarks and/or registered 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, | |||||||
2014 | 2013 | ||||||
Revenues | $ | 40,195 | $ | 42,177 | |||
Cost of revenues | 4,777 | 3,985 | |||||
Gross profit | 35,418 | 38,192 | |||||
Operating expenses: | |||||||
Sales and marketing | 17,843 | 19,659 | |||||
General and administrative | 10,578 | 10,497 | |||||
Total operating expenses | 28,421 | 30,156 | |||||
Income from operations | 6,997 | 8,036 | |||||
Other income | 122 | 31 | |||||
Income before income taxes | 7,119 | 8,067 | |||||
Income taxes | 2,481 | 2,472 | |||||
Net income | $ | 4,638 | $ | 5,595 | |||
Net income per share: | |||||||
Basic | $ | 0.31 | $ | 0.36 | |||
Diluted | $ | 0.31 | $ | 0.36 | |||
Weighted average shares: | |||||||
Basic | 14,880 | 15,362 | |||||
Diluted | 14,970 | 15,371 |
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Travelzoo Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
March 31, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 61,035 | $ | 66,223 | |||
Accounts receivable, net | 15,355 | 13,986 | |||||
Income taxes receivable | 1,388 | 2,656 | |||||
Deposits | 251 | 396 | |||||
Prepaid expenses and other current assets | 2,538 | 3,202 | |||||
Deferred tax assets | 1,067 | 1,143 | |||||
Restricted cash | — | 200 | |||||
Funds held for reverse/forward stock split | 212 | 13,668 | |||||
Total current assets | 81,846 | 101,474 | |||||
Deposits, less current portion | 1,231 | 1,168 | |||||
Deferred tax assets, less current portion | 2,032 | 2,032 | |||||
Restricted cash | 1,480 | 1,479 | |||||
Property and equipment, net | 10,305 | 8,245 | |||||
Intangible assets, net | 349 | 404 | |||||
Total assets | $ | 97,243 | $ | 114,802 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 28,999 | $ | 31,766 | |||
Accrued expenses | 9,820 | 10,543 | |||||
Deferred revenue | 1,688 | 1,578 | |||||
Deferred rent | 271 | 281 | |||||
Income tax payable | 726 | — | |||||
Reserve for unexchanged promotional shares | 11,500 | 12,726 | |||||
Payable to shareholders for reverse/forward stock split | 212 | 13,668 | |||||
Total current liabilities | 53,216 | 70,562 | |||||
Long-term tax liabilities | 10,546 | 10,436 | |||||
Deferred rent, less current portion | 3,111 | 2,469 | |||||
Total liabilities | 66,873 | 83,467 | |||||
Common stock | 163 | 163 | |||||
Treasury stock | (21,231 | ) | (15,662 | ) | |||
Additional paid-in capital | 10,642 | 10,247 | |||||
Accumulated other comprehensive loss | (613 | ) | (530 | ) | |||
Retained earnings | 41,409 | 37,117 | |||||
Total stockholders’ equity | 30,370 | 31,335 | |||||
Total liabilities and stockholders’ equity | $ | 97,243 | $ | 114,802 |
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Travelzoo Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three months ended | |||||||
March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 4,638 | $ | 5,595 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 701 | 716 | |||||
Deferred income taxes | 76 | 193 | |||||
Stock-based compensation | 395 | 307 | |||||
Provision for losses on accounts receivable | (52 | ) | 95 | ||||
Net foreign currency effects | (9 | ) | 94 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (1,288 | ) | (2,036 | ) | |||
Deposits | 133 | (155 | ) | ||||
Income tax receivable | 1,266 | 1,564 | |||||
Prepaid expenses and other current assets | 447 | 350 | |||||
Accounts payable | (2,984 | ) | (549 | ) | |||
Accrued expenses | (1,294 | ) | 850 | ||||
Deferred revenue | 110 | (517 | ) | ||||
Deferred rent | 5 | (110 | ) | ||||
Income tax payable | 722 | — | |||||
Reserve for unexchanged promotional shares | (1,226 | ) | — | ||||
Other non-current liabilities | 111 | 103 | |||||
Net cash provided by operating activities | 1,751 | 6,500 | |||||
Cash flows from investing activities: | |||||||
Release of restricted cash | 200 | — | |||||
Purchases of property and equipment | (1,019 | ) | (900 | ) | |||
Net cash used in investing activities | (819 | ) | (900 | ) | |||
Cash flows from financing activities: | |||||||
Repurchase of common stock | (5,569 | ) | — | ||||
Reverse/forward stock split, including transaction costs | (479 | ) | — | ||||
Net cash used in financing activities | (6,048 | ) | — | ||||
Effect of exchange rate on cash and cash equivalents | (72 | ) | (1,662 | ) | |||
Net increase (decrease) in cash and cash equivalents | (5,188 | ) | 3,938 | ||||
Cash and cash equivalents at beginning of period | 66,223 | 61,169 | |||||
Cash and cash equivalents at end of period | $ | 61,035 | $ | 65,107 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for income taxes, net | $ | 335 | $ | 10 |
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Travelzoo Inc.
Segment Information
(Unaudited)
(In thousands)
Three months ended March 31, 2014 | North America | Europe | Elimination and Other | Consolidated | |||||||||||
Revenue from unaffiliated customers | $ | 26,353 | $ | 13,842 | $ | — | $ | 40,195 | |||||||
Intersegment revenue | 221 | 12 | (233 | ) | — | ||||||||||
Total net revenues | 26,574 | 13,854 | (233 | ) | 40,195 | ||||||||||
Operating income | $ | 4,604 | $ | 2,393 | $ | — | $ | 6,997 | |||||||
Three months ended March 31, 2013 | North America | Europe | Elimination and Other | Consolidated | |||||||||||
Revenue from unaffiliated customers | $ | 29,911 | $ | 12,266 | $ | — | $ | 42,177 | |||||||
Intersegment revenue | 262 | 108 | (370 | ) | — | ||||||||||
Total net revenues | 30,173 | 12,374 | (370 | ) | 42,177 | ||||||||||
Operating income | $ | 5,484 | $ | 2,552 | $ | — | $ | 8,036 | |||||||
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