TZOO - Earnings call transcript Q4 2017

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Operator

Good morning, everyone, and welcome to the Travelzoo Fourth Quarter 2017 Financial Results Conference Call. At this time, all participants have been place in a listen-only mode and the floor will be open for questions following the presentation. Today’s call is being recorded.

Before introducing you to your host and beginning the Company's presentation, the Company would like to remind you that all statements made during this conference call and presented in the Company's slides that are not statements of historical fact constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements. periodic actual statements differ Company's are and and cause in from Forms could SEC. XX-Q forward-looking the the described other that results materially to those XX-K Factors with filings in the Unless required no update future result any publicly events a Company or statements as new obligation whether to forward-looking of law, by the undertakes information, otherwise. being Investor Relations Please Company's note the that webcast this from call at www.travelzoo.com/earnings. is website this press morning, for website with important including release Company's issued accompany the earnings earlier that to refer slides Please remarks. along the the information, prepared Company's today's recording An after call. available at the Investor this www.travelzoo.com/ir, archived the website this of of be conference call Relations minutes conclusion on will beginning XX approximately Travelzoo

Global to the begin. your my may over is pleasure it Now turn Sir, CEO. you Bartel, floor Travelzoo's to host, Holger

Holger Bartel

morning, CEO you I as conference Travelzoo, results will us you. for XXXX fourth Officer. today's Financial Global everyone, call. always walk Travelzoo's the me Thank is thank you Glen the format. joining of quarter through Bartel, and Glen for today Ceremony, today, Company's financial Chief with and am Holger Good

Glen Ceremony

everyone, and for us today. Holger, you, Thank joining

For update and financial our provide then will will of an call, initiatives. our results, fourth Holger business today's the review format quarter on I

for call the open question-and-answer will we session. our Thereafter,

management available along Relations website with Now presentation, to which please on open follow our our is our Investor prepared remarks.

highlights to Now provides quarter. the for financial X, let's key Slide turn the which

year-over-year up we Our growth nominal the apply million, was X% it in currencies. for was revenue quarter to lower constant return terms $XX X% if and

Asia impact of slightly operations Pacific. quarter in $X.XX, the year-over-year, share lower driven continuing from diluted investments by per this earnings Our our was

constant year-over-year was app Asia or and of North a constant X million, cover was our a increase. Revenue revenue increased Slide on for three of million. North Slide decrease revenue segment. year-over-year in X% The in Revenues XX%. years increasing of our each first activities highlights continue $XX.X of was detail from segments. execution. a local increase due products and Our in products from basis. better our few of increase million, slides Revenue representing members million to at remain America social due downloads revenue $XX.X year-over-year was Revenues and representing X%. Revenue up in media a by currency $X currency the a year-over-year year-over-year representing from decrease core X to Pacific partners. our the currency advertisers next million, our Europe to were several constant followers shows America further last X% of X% $X.X our for stable time our mobile or XX.X

temporarily to Asia Pacific in operating revenue breakdown to $X due which recent lower customer management Slide the On was bankrupt loss prior income. is us our period and $X.X core Europe sales and to positive. revenue was Both the of lower was offset Slide impact revenue from Revenue of due X. million. a revenue large million X, FX year was provides Slide were from grew our than turnover products which team. Turning smaller X, Japan. the

of which loss audit. operating $X.X was million Europe the of $X.X offset generated North overall resolution tax changes $XXX,XXX $XXX,XXX Asia Our the generated largely were of U.S. the America law by profit. IRS includes income $X.X estimated combined income Income new million. Pacific of profitability was an and operating $X.X This million, of operating million. taxes while of impact

without tax separate income income reflect As any America taxes the Asia the Europe a from North tax reminder, jurisdiction benefit and offsetting Pacific our taxes on losses.

as federal a U.S. Company's related increased due costs. the flat, tax segment. continued of the to Going headcount we the see our taxable headcount likely costs. new selected retention. rate, as reduced headcount in are our forward, selected the XX year-over-year a investment due operating with in are to income, was largest North Asia. expected to shows from our expenses earnings were Slide XXXX represents our profits and U.S. tool benefit by significant portion operating The of Asia to our America Europe margin. half cost on positive due cost and increased to The as that relatively slightly impact XX.X% presents development point expenses percent of marketing a on revenue cost over some approximately operating due investments revenue satisfaction margin XXXX for decreased focus increased a productivity while XX a in up and revenue product to member related expenses to X the member flat. EPS. Slide shows of the Slide

flow Moving DSO U.S. quarter was cash exit which was cash which improved positive position the million $XX.X XX. million the Slide to held us on a of operating with of and outside $XX.X solid allowed to

travel XX. products. the Slide improved summary, in to particularly In Europe, North Turning financial America performance in core our and

Pacific still team profitability. earnings Europe QX, generate revenue Even Asia in are investment, have North overall our we Asia our and with would to America to XXXX. the maintained amounted the share management APAC, a we working in However, with in Without growth. $X.XX

we flow positive cash cash maintained generated solid of addition, position. $X have In and million a

Looking we expect following. forward, the

similar from the our expect For a our focus travel over revenue in our products offerings Asia better of have few expanded first changes quarter with we last XXXX, and performance Pacific. in year-over-year experienced as quarters in increasing on we revenue

acquisition plan Asia member in spend are to planning the our maintain and maintain and increased investments marketing member we Pacific. We to

given and half the additional quarter initiatives of to QX during in an QX and will still the lower towards operating drive expect by underway the to in the various Asia income our in in acceleration nine purchases of year-over-year investments bookings of next year-over-year and expect We to update In we XXXX. the second due next trends We Holger members you on Pacific. expenses revenues expect stable an with months. six to certain growth for compared quarter investments, QX summary, expenses. $XXX,XXX non-recurring these

and non-investment focus on steps believe our area We with We on unprofitable while increasing Travelzoo in website continue the member through to businesses long-term operate areas are our our activities, apps, our brand, focused of collectively continued the productivity. local engage we work our removal our to prospects. positive our growth our and members control all costs global them acquisition of hotels, in our business way that we investments enhanced position vacations, has global for our focus in well as take to the in growth travel expanded offerings industry future as in, which help us

of this So concludes financial XXXX. the our fourth quarter of summary

an business Travelzoo's provide you on drive initiatives Holger will Now update growth. aimed to

Holger Bartel

our declines the all in regions. that happy America in am I across in after board that pleased growth am returned we improved can that trends finally QX to four today And I has in of products. both North travel revenue and our years business our particularly local report

other had markets. positive in also results We

a and For Australia, across they remains great Asia though of all even deal in to the work example UK do of Pacific.

We XXXX. way, also the to addition talk Slide maintain under even seek throughout XXXX. the half XX, are growth us of this initiatives to some should growth about and I revenue towards in maintaining On of profitability improve year, that strengthening which would and help business improve second then like to

Travelzoo we we're want make our but Travelzoo First, expanding attractive. is being offerings even great, more membership to a member

we add perks. working benefits to So are exclusive member and

and exclusive to drive, as bookings. them number we of We’re also offers the sealed increasing find

are of hotel looking to of We our growth pace platform. the accelerate

are and we to we rates. So found have exclusive increase more adding rates which conversion offers,

now members We country special is also for platform the to offers, today, and our started offers have down reside which are break fully deals in silos, hotel and globalized.

vacations We have several to on offering for more of members. offers been packaged our broaden the working our with area initiatives exclusive in

We with into we are of looking already the for underway, but companies more to also or other acquisitions. into second expect members. possibly offers These our number these quarter provide investments larger beginning a partnerships relevant

our for to side, making product it our for partners deals simpler are the members. On hotel we create

for and so have begun inform members which of to those example personalized can beyond implement experience of we our our format, media. alert us technology a a more to personalized a have in on services, members who We interested for occasion particularly or them board type allow will specific are and developed email destination platform, the traditional reach social create we

a lower costs immediately, markets. We number the new in implement we All year. accelerate footing the and the XX, benefits partnerships we financial members. XXXX to earnings most longer-term. leadership, the the of staff plan not acquisition. To more second to can mid solid we we of Slide It benefits visibility started for and needed In aiming over Travelzoo the we the well create half travels XXXX as and already smart goal a that year with are in number change of our at able both growth also maintain investments aim and the would of stable see our these member at prepared actively to across throughout remarks. a prospective maintain members offers then but the countries some brand but should will platform membership for activities again as marketing of in concludes grow acquire believe increasing are way have various will revenues summarize like beginning marketing, all of existing but topline quality area create in we exclusive accelerate our of better all communicate profitability. performance to members the increase are this to to we with of and more new demand the is growth of to maintain high-quality This to We in and as revenue in

to back the now operator. So

Operator

questions. Ed Capital. Ascendiant Thank of from now you. [Operator question Woo The first open is for Instructions] floor comes Our

Your line is now open.

Edward Woo

looking industry? and there quarter impact for you or from or taking wondering Thank staggard Yes. quarter? are What weather during was quarter. either was bad anything? just on you pretty a or congratulations good Or industry the I the travel overall my the it in seeing any was question,

Holger Bartel

Ed. Hi,

nothing we I think out. specific really was can there point that

probably airline. Berlin, Europe, patterns talked very the other quarters made the challenges few in like quarters. some were in that think Germany. a where hit a the have we they to affected But we’re last it There similar bankruptcy in QX some one of about trends markets is America, overall with previous difficult Pacific, Europe the that trends particularly Germany bit Air because just and there. in are Asia second over North still largest travel Germany over was dealing the there I

Edward Woo

it Olympics coming Is We winter up. any have at the impact to have all? – going Olympics

Holger Bartel

deals impacts so and companies more specifically we – promote where our our South far Europe very haven’t members Korea that travel would We it's us. imagine destinations probably most America find you other and than on North can from big of that where destination And you It's seen away lot strongly. is business a say that I are. destinations, is not events mostly our deals, have something very a of

Edward Woo

then you hotel I have And directly from suppliers directly Has guess had that I one bookings? last have to any Okay. on hotels, consumers? is trying any impact sell seen your to impact

Holger Bartel

Priceline, this they OTAs much by affects the think that. Booking.com of more again I world more the are affected Expedia, probably

any We have seen our actually impact business. not on

Edward Woo

Great. and Well, you good thank luck.

Holger Bartel

Thanks Ed.

Operator

you. Thank

comes question Dan Kurnos from Benchmark Company. The of next Our

is now open. line Your

Daniel Kurnos

Hi, good morning.

me more being on vacation an as you're add kind effort or exclusive package people to ask bit to the way the of way. there to involved, So change of opportunity you seeing in the you in a leaning or or a have or in your a the lot as acquire trying a at different bidding order channels? impacting How let the try seem for pretty that marketplace that ROI Priceline some of to same know mentioned one? and more you've acquire you more question in a right talked deals. you to that probably a been which seeing acquire little more there's get to understanding you How player canons develop much inventory model, deals in time you bit Or that pay number have be on of We smaller as inventory add know of are offers social users? inventory number marketplace is guys channels, And are about side turned heavily trying the to two, Holger but evolve? in quite about I that push that that the is and particularly at some Ed’s in How each the something to business subset particular Expedia are different you other rate. a supply focused users questions, more aggressive cheaper kind little that a now. talking now unique fact look to up are

Holger Bartel

to shoes our can. same our in we the that What different members. relationship Well, so look provide as we or Dan OTA, that we aim not Priceline the as have much are with as we're is inventory company makes an Expedia not hotel

us that Trust is continue the members they important. brand, to love actually Our us. tell trust they very

aim are the where we amount hotels our in but available, places the is hotel of area So of to them a what to variety with doing and wonderful actually - have expect largest biggest not provide members biggest to can they stay. amount recommend

that. Hotels to commoditization of neck of lot of to more as out So who The we And friends hotels would marketing sea that do I co-marketing. to have stick are makes started do co-promotions, in different. their XXXX There of like said, approach appreciate hotel marketing then on a the partnership. front, us us this are to looking offers. actually

we’ve then new the few that acquire I way a think over to the some be and members more in of that’s going effective marketing great better run last online years. way to a

try. are to it’s we So something going

We will from results that XXXX. and grow that to member help think base some seen in early us this I good have

Daniel Kurnos

for players bidding difficult unique pick are anything more clear. in are by maybe be guys way that lowered point space Maybe deals some you is, some and it just in I and if getting in everything that’s trying I are can these to is other Holger it not acquiring I the very aggressive to to of life think My OTA, on making just though more – up – that my you being the meant and clear changing know more is they your up first just the it. question, of

that are trying provide in or You – are of acquire to opportunities for seeing how your any member not and you deals unique base? your

Holger Bartel

of position that and you over using group seen love few what really the and as a I haven’t and ourselves exclusive. to more to We word more increasingly who said if members last community quarters, we listen No, travel. the I’m

members excellent members. Our demographics. love our have The hotel actually

the crowd actually hotels a by them ourselves separating from can members special the market. is that mass from are that we bring So telling group of we different the

in learning it destinations, when that point So generate and occupancy difficult becomes to are to becomes been more respect difficult. because that’s members travel trend but special offers, very travel high for at more Travelzoo it the last It’s then always destination. it’s source that rates again expensive years same years seen certain good. difficult of become over in now that it's a before. very, is If to a countries more certain to deals, certain we but time more responding that offers more it And the haven’t way XX some of few consumers start that they to the in

Daniel Kurnos

you think that marketplace kind to I the within a travel you mouth of for the don't to and in just seeing a thoughts fit. of kind your know on that want guys appreciate pitch but you that addressable you is and in Can to sort sector segue is that there's though a of great know sort with LTV. probably to fits rather like see segue the stickier you great can and hotel. share a it in created that’s put that I I spend of and member massive So your profile of looks members that get certain to that balance you've question base I about We're because you're effectively user the nice subset to in user words what acceleration caller's, the a the which higher market base seem these next membership talked higher going up past. we've helps a your a your

or where how you current base about as room that universe of your user much think from So could can to you and a get headway you with higher that relation profile. fits have that you perspective you sticking a membership acquisition sort talk member

Glen Ceremony

Indian there that group just experience. most very also value good it's are consumers members really our equally And they large Our a but about but they out among members wonder US, found in is we a what value think interested seeking I Indian consumers. they price, great want we

I the flexible order addressable So that what product rather of when like think the is promoting to past deals XX in us to have in and market can top more big and advantage that we you be have is limited probably take been our travel. very

last middle are we well, So on bit option we of tend a we looking new be a but the vacations effort to of But in the have but the to might over is that members what maybe have can are older best price during this to example okay, big value. and also great is retired week. members bit the with now that date that keep still that for weeks travel you travel date, members couple flexible our another the higher it's say, can on to do and the provide this little deal this

past So more offers will have kinds we obviously and of technology take done of we that advantage improving members haven't wide because believe think us the in that the can help these is appeal. that I

Daniel Kurnos

tax this turned around invested were money think the back you really one the you you it a as CEO a stack obviously efficient company in I came fashion front and the lot frankly on from And of an tech spearheaded when that the tech in perspective.

to much traffic the growing on come that's the your you from like the to are I more an know enhancing I'm relative need primary is know with to to how mobile comfortable understanding the this from where mobile funnel. tech desktop continues of be curious experience How majority sort perspective. relative do do you of you but process you'd about always again is talked evolving a You experience just to where

invest you to from where much just be? to How perspective? I to to you'd you more need that get at like So think where curious you're

Holger Bartel

I not we're technology. and Look all product increase investments looking think in to

with course do bit coding. did increasingly development, we are wasn't has leverage. old over of shifting not history improve world We ourselves. year Of what XX out in like technology are you we the to do we're with lot years. to to smarter looking towards and this we of to by had But that programming, XX – everything becoming off ourselves provided now company things, There but it and the when lot actually a years productive, everything changed solutions a our doing could parties. first the a third The that there started

technology fantastic more. cloud have more in and more solutions, that leveraging solutions you the Now we're this are and and

So over to into time we're in development products product march product and actually come improving more direction down, I I that investments in is the want actually believe our tat than we have expenses so the while past towards. technology in will

Daniel Kurnos

so that’s the in know Asia, customer, the with it helpful. me a And little for be on continues there? last way – just through you have headache transition I is you've to a do they Great, trending, update of few How called luck filled just you about Japan, give last knew kind I unfortunate bit you would ask how of little positions to the which about that of you a go period, as bit Just one out it, an hired? since feel you just head more guess performed? be I it, us right the time, how

Holger Bartel

some markets proving. Yes, actually are

that Pacific do to a well. seen it up some as revenue double-digits. You actually Asia don't you countries in overall report but quite because segment, started the increases see We've

looking XQ over is when your QX than far I at look better So trends. you

management GMs still starting do Hong quite solve confident where think structure. do the like are we into on the new to I'm establish it’s and right to the we well. right But we with hand Australia, looking country can They is China other markets place. Kong I where put it the probably will So

much So so it lot related Asia staffing management, to really in that have a seems we a pursuing, work. Pacific that doesn't not strategy

Daniel Kurnos

right, color. quarter. it congrats All it. Got all on good for the well. and Appreciate the Thanks

Holger Bartel

of Q&A End Thanks.

Operator

to I'll Mr. back Holger Bartel. turn now Okay,

Holger Bartel

and gentlemen, support. you Ladies time Sure. for your thank and again

to look forward quarter speaking you course a day. with of have next great and again You

Operator

teleconference. and Ladies concludes this gentlemen, you. today's Thank

day. disconnect lines this now may have your and at time a You pleasant

Travelzoo (TZOO) 8 Feb 182017 Q4 Earnings call transcript