Exhibit 99.1
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| | | Travelzoo 590 Madison Avenue 37th Floor New York, NY 10022
Investor Relations: Lijun Qi ir@travelzoo.com
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FOR IMMEDIATE RELEASE
Travelzoo Reports Third Quarter 2017 Results
NEW YORK, October 26, 2017—Travelzoo® (NASDAQ: TZOO):
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| • | Revenue of $24.7 million, down 9% year-over-year in constant currencies |
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| • | Operating profit of $18,000 |
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| • | Earnings (loss) per share of $(0.05) |
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| • | Cash flow from operations of $122,000 |
Travelzoo, a global publisher of exclusive deals for members, today announced financial results for the third quarter ended September 30, 2017, with revenue of $24.7 million and operating profit of $18,000. In nominal terms, revenue decreased by 8% year-over-year. In constant currencies, revenue decreased by 9% year-over-year. Net loss was $576,000, with earnings (loss) per share of $(0.05).
"Revenues were impacted by the two large hurricanes hitting the Caribbean and parts of the U.S. during the quarter," said Dr. Holger Bartel, Global CEO of Travelzoo. "We intend to leverage Travelzoo's global reach and trusted brand to improve earnings in future periods."
Asia Pacific
Asia Pacific business segment revenue decreased 31% year-over-year to $1.8 million. In constant currencies, revenue decreased 28% year-over-year. Operating loss for the third quarter was $1.7 million, compared to an operating loss of $798,000 in the prior-year period.
Europe
Europe business segment revenue decreased 6% year-over-year to $7.9 million. In constant currencies, revenue decreased 9% year-over-year. Operating profit for the third quarter was $309,000, or 4% of revenue, compared to operating income of $1.4 million, or 17% of revenue in the prior-year period.
North America
North America business segment revenue decreased 5% year-over-year to $15.0 million. Operating profit for the third quarter was $1.4 million, or 9% of revenue, compared to operating income of $1.3 million, or 8% of revenue in the prior-year period.
Members
As of September 30, 2017, Travelzoo had a worldwide unduplicated number of members of 29.5 million. In Asia Pacific, unduplicated number of members was 3.6 million as of September 30, 2017, up 1% from September 30, 2016. In Europe, unduplicated number of members was 8.5 million as of September 30, 2017, up 4% from September 30, 2016. In North America, unduplicated number of members remained at 17.4 million as of September 30, 2017.
Income Taxes
Income tax expense was $680,000, compared to a $748,000 income tax expense in the prior-year period.
Asset Management
During the third quarter of 2017, Travelzoo generated $122,000 of cash for operating activities. Accounts receivable decreased by $5.3 million over the prior-year period to $11.4 million. Accounts payable decreased by $2.6 million over the prior-year period to $16.0 million. Capital expenditures were $180,000, up from $155,000 in the prior-year period. As of September 30, 2017, cash and cash equivalents were $18.8 million.
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
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| • | download the management presentation (PDF format) to be discussed in the conference call; |
About Travelzoo
Travelzoo® provides our 28 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. With more than 25 offices worldwide we have our pulse on outstanding travel, entertainment, and lifestyle experiences. For over 15 years we have worked in partnership with more than 2,000 top travel suppliers—our long-standing relationships allow us access to the very best deals.
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.
Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
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| | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| | September 30, | | September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenues | $ | 24,687 |
| | $ | 26,823 |
| | $ | 79,527 |
| | $ | 87,450 |
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| Cost of revenues | 3,018 |
| | 3,270 |
| | 9,447 |
| | 10,593 |
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| Gross profit | 21,669 |
| | 23,553 |
| | 70,080 |
| | 76,857 |
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| Operating expenses: | | | | | | | |
| Sales and marketing | 13,973 |
| | 14,075 |
| | 43,542 |
| | 45,060 |
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| Product development | 2,315 |
| | 2,230 |
| | 7,016 |
| | 7,019 |
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| General and administrative | 5,363 |
| | 5,373 |
| | 16,056 |
| | 16,620 |
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| Total operating expenses | 21,651 |
| | 21,678 |
| | 66,614 |
| | 68,699 |
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| Income from continuing operations | 18 |
| | 1,875 |
| | 3,466 |
| | 8,158 |
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| Other income (expense), net | 86 |
| | 251 |
| | 111 |
| | 293 |
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| Income from continuing operations before income taxes | 104 |
| | 2,126 |
| | 3,577 |
| | 8,451 |
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| Income tax expense | 680 |
| | 748 |
| | 2,660 |
| | 3,450 |
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| Income (loss) from continuing operations | $ | (576 | ) | | $ | 1,378 |
| | $ | 917 |
| | $ | 5,001 |
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| Income from discontinued operations, net of income taxes | — |
| | 241 |
| | 1,938 |
| | 687 |
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| Net income (loss) | $ | (576 | ) | | $ | 1,619 |
| | $ | 2,855 |
| | $ | 5,688 |
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| | | | | | | | |
| Income (loss) per share—basic: | | | | | | | |
| Continuing operations | $ | (0.05 | ) | | $ | 0.10 |
| | $ | 0.07 |
| | $ | 0.35 |
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| Discontinued operations | 0.00 |
| | 0.02 |
| | 0.15 |
| | 0.05 |
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| Net income (loss) per share—basic | $ | (0.05 | ) | | $ | 0.12 |
| | $ | 0.22 |
| | $ | 0.40 |
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| | | | | | | | |
| Income (loss) per share—diluted: | | | | | | | |
| Continuing operations | $ | (0.05 | ) | | $ | 0.10 |
| | $ | 0.07 |
| | $ | 0.35 |
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| Discontinued operations | 0.00 |
| | 0.02 |
| | 0.15 |
| | 0.05 |
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| Net income (loss) per share—diluted | $ | (0.05 | ) |
| $ | 0.12 |
| | $ | 0.22 |
| | $ | 0.40 |
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| | | | | | | | |
| Weighted average shares: | | | | | | | |
| Basic | 12,628 |
| | 13,839 |
| | 13,023 |
| | 14,109 |
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| Diluted | 12,628 |
| | 13,867 |
| | 13,040 |
| | 14,119 |
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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
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| | | | | | | |
| | September 30,
2017 | | December 31,
2016 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 18,822 |
| | $ | 26,838 |
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| Accounts receivable, net | 11,434 |
| | 14,415 |
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| Income taxes receivable | 1,540 |
| | 542 |
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| Deposits | 396 |
| | 105 |
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| Prepaid expenses and other | 1,961 |
| | 1,773 |
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| Deferred tax assets | — |
| | 793 |
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| Total current assets | 34,153 |
| | 44,466 |
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| Deposits and other | 508 |
| | 702 |
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| Deferred tax assets | 1,800 |
| | 1,052 |
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| Restricted cash | 1,438 |
| | 1,152 |
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| Property and equipment, net | 5,265 |
| | 6,158 |
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| Total assets | $ | 43,164 |
| | $ | 53,530 |
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| Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 15,966 |
| | $ | 19,714 |
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| Accrued expenses and other | 7,932 |
| | 8,699 |
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| Deferred revenue | 897 |
| | 719 |
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| Income tax payable | 936 |
| | 691 |
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| Total current liabilities | 25,731 |
| | 29,823 |
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| Long-term tax liabilities | 2,563 |
| | 2,879 |
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| Long-term deferred rent and other | 2,721 |
| | 2,764 |
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| Total liabilities | 31,015 |
| | 35,466 |
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| Common stock | 125 |
| | 135 |
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| Additional paid-in capital | — |
| | — |
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| Accumulated other comprehensive loss | (3,556 | ) | | (3,787 | ) |
| Retained earnings | 15,580 |
| | 21,716 |
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| Total stockholders’ equity | 12,149 |
| | 18,064 |
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| Total liabilities and stockholders’ equity | $ | 43,164 |
| | $ | 53,530 |
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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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| | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| | September 30, | | September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Cash flows from operating activities: | | | | | | | |
| Net income (loss) | $ | (576 | ) | | $ | 1,619 |
| | $ | 2,855 |
| | $ | 5,688 |
|
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | |
| Depreciation and amortization | 504 |
| | 606 |
| | 1,605 |
| | 1,856 |
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| Discontinued operations gain on sale of Fly.com domain name | — |
| | — |
| | (2,890 | ) | | — |
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| Deferred income taxes | 97 |
| | (13 | ) | | 28 |
| | (224 | ) |
| Stock-based compensation | 206 |
| | 251 |
| | 686 |
| | 692 |
|
| Provision for losses on accounts receivable | (7 | ) | | (28 | ) | | (34 | ) | | 17 |
|
| Net foreign currency effects | (69 | ) | | (71 | ) | | (293 | ) | | (308 | ) |
| Changes in operating assets and liabilities: | | | | | | | |
| Accounts receivable | 1,301 |
| | 1,715 |
| | 3,388 |
| | (547 | ) |
| Income tax receivable | (903 | ) | | (823 | ) | | (868 | ) | | (299 | ) |
| Prepaid expenses and other | (199 | ) | | (538 | ) | | (417 | ) | | (387 | ) |
| Accounts payable | 1,359 |
| | (2,177 | ) | | (4,695 | ) | | (4,391 | ) |
| Accrued expenses and other | (1,450 | ) | | (2,628 | ) | | (1,009 | ) | | (2,074 | ) |
| Income tax payable | (70 | ) | | 504 |
| | 109 |
| | 1,772 |
|
| Other non-current liabilities | (71 | ) | | 69 |
| | (349 | ) | | 121 |
|
| Net cash provided by (used in) operating activities | 122 |
| | (1,514 | ) | | (1,884 | ) | | 1,916 |
|
| Cash flows from investing activities: | | | | | | | |
| Proceeds from sale of Fly.com domain name | — |
| | — |
| | 2,890 |
| | — |
|
| Purchases of property and equipment | (180 | ) | | (155 | ) | | (486 | ) | | (802 | ) |
| Net cash provided by (used in) investing activities | (180 | ) | | (155 | ) | | 2,404 |
| | (802 | ) |
| Cash flows from financing activities: | | | | | | | |
| Acquisition of the Asia Pacific business | — |
| | — |
| | — |
| | 58 |
|
| Payment of loan to related party | — |
| | — |
| | — |
| | (5,658 | ) |
| Repurchase of common stock, net | (2,732 | ) | | (771 | ) | | (9,556 | ) | | (5,727 | ) |
| Net cash used in financing activities | (2,732 | ) | | (771 | ) | | (9,556 | ) | | (11,327 | ) |
| Effect of exchange rate on cash and cash equivalents | 281 |
| | (281 | ) | | 1,020 |
| | (76 | ) |
| Net decrease in cash and cash equivalents | (2,509 | ) | | (2,721 | ) | | (8,016 | ) | | (10,289 | ) |
| Cash and cash equivalents at beginning of period | 21,331 |
| | 27,560 |
| | 26,838 |
| | 35,128 |
|
| Cash and cash equivalents at end of period | $ | 18,822 |
| | $ | 24,839 |
| | $ | 18,822 |
| | $ | 24,839 |
|
| Supplemental disclosure of cash flow information: | | | | | | | |
| Cash paid for income taxes, net | $ | 1,628 |
| | $ | 1,126 |
| | $ | 4,858 |
| | $ | 2,198 |
|
| Cash paid for interest on related party loan | $ | — |
| | $ | — |
| | $ | — |
| | $ | 110 |
|
Travelzoo
Segment Information
(Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | |
| Three months ended September 30, 2017 | Asia Pacific | | Europe | | North
America | | Consolidated |
| Revenue from unaffiliated customers | $ | 1,767 |
| | $ | 8,008 |
| | $ | 14,912 |
| | $ | 24,687 |
|
| Intersegment revenue | 6 |
| | (62 | ) | | 56 |
| | — |
|
| Total net revenues | 1,773 |
| | 7,946 |
| | 14,968 |
| | 24,687 |
|
| Operating profit (loss) | $ | (1,679 | ) | | $ | 309 |
| | $ | 1,388 |
| | $ | 18 |
|
| Three months ended September 30, 2016 | Asia Pacific | | Europe | | North
America | | Consolidated |
| Revenue from unaffiliated customers | $ | 2,521 |
| | $ | 8,614 |
| | $ | 15,688 |
| | $ | 26,823 |
|
| Intersegment revenue | 36 |
| | (140 | ) | | 104 |
| | — |
|
| Total net revenues | 2,557 |
| | 8,474 |
| | 15,792 |
| | 26,823 |
|
| Operating profit (loss) | $ | (798 | ) | | $ | 1,412 |
| | $ | 1,261 |
| | $ | 1,875 |
|
|
| | | | | | | | | | | | | | | |
| Nine months ended September 30, 2017 | Asia Pacific | | Europe | | North
America | | Consolidated |
| Revenue from unaffiliated customers | $ | 5,574 |
| | $ | 25,231 |
| | $ | 48,722 |
| | $ | 79,527 |
|
| Intersegment revenue | (38 | ) | | (317 | ) | | 355 |
| | — |
|
| Total net revenues | 5,536 |
| | 24,914 |
| | 49,077 |
| | 79,527 |
|
| Operating profit (loss) | $ | (4,385 | ) | | $ | 1,526 |
| | $ | 6,325 |
| | $ | 3,466 |
|
| Nine months ended September 30, 2016 | Asia Pacific | | Europe | | North
America | | Consolidated |
| Revenue from unaffiliated customers | $ | 7,173 |
| | $ | 28,893 |
| | $ | 51,384 |
| | $ | 87,450 |
|
| Intersegment revenue | 78 |
| | (403 | ) | | 325 |
| | — |
|
| Total net revenues | 7,251 |
| | 28,490 |
| | 51,709 |
| | 87,450 |
|
| Operating profit (loss) | $ | (3,080 | ) | | $ | 5,022 |
| | $ | 6,216 |
| | $ | 8,158 |
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