TZOO - Earnings call transcript Q1 2018

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Operator

Hello, everyone. Welcome to the Travelzoo First Quarter 2018 Financial Results Conference Call. All participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. Today’s call is being recorded. The company would like to remind you that all statements made during this conference call and presented in the slides that are not statements of historical facts constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. materially contained vary statements. the could results from in those forward-looking Actual company’s XX-Q that to the statements the the results cause SEC. are XX-K materially in Factors actual in differ could filings other and periodic from those described Forms with and forward-looking forward-looking information, Unless any future otherwise. the events update law, a as by undertakes no or whether required to result obligations company publicly statements of new important and information, issued Please recording including company’s website refer website to call release morning the at earnings available Travelzoo conference earlier the for this made on archive company’s of press www.travelzoo.com/ir. be Investor the will the Relations Glen Ceremony, CFO, analysis an overview of quarter Travelzoo’s will financial results. he one start

Glen Ceremony

along Please which highlights To management presentation, remarks. open Slide our begin, is let’s you. turn Investor quarter. which the our financial our to key with provides the to prepared on Thank follow X, for available Relations website

million, terms currencies. Our to grew year-over-year $XX.X revenue constant in X% X% nominal the for up up in quarter and

from despite Our and $X.XX. by revenue diluted in earnings per Pacific. in the growth year-over-year, continuing operations up Asia $X.XX That’s the continued driven investments was our quarter for share

year-over-year to and increase Revenue currency scale. nominal X over app is build $XX.X year-over-year members America Revenue invest currency in increase $XX.X continue and a followers our in Slide increase our we shows year-over-year representing million, Pacific, constant detail of America our mobile or activity Revenues million. North of Our up revenue segments. And our a increase. on increased The year-over-year, which or our a $X from our in members, downloads a representing Slide growing illustrates for segment. products few now terms of currency Asia our revenue Asia was Europe revenue basis. XX%, X% constant increasing in North of X% the highlights improvement next revenue and million, three Slide slides In on America social of continue by representing to cover Europe. each $XX.X basis. and basis. of profitability core $XX.X at on advertisers was and of further a X million, significant X last due North and was XX%, XX in to Revenue media remain year-over-year million year-over-year stable months. flat driving is partners. Pacific constant

from was year and prior X. in period X well flat. to revenue due impact Turning Hong revenue FX local was provides from million. core the America and This North million, generated $X.X Asia X, $X.X loss of by income our million profitability million. Pacific And million. of North $X reminder, on Income profit benefit offsetting of taxes Europe taxes profit operating America while of income our reflect any was to the Europe than breakdown $XX.X separate a operating $X.X generated On Revenue Pacific’s income FX was million combined our for China, income. higher were of as million. products which and our $X.X Europe grew, Kong, segment Slide as improvements $X operating positive of is positive tax the operating offset without total million, Australia, impact. taxes as Pacific revenue $X.X Slide Slide Asia Asian losses. was the

increased The were lower approximately points cost margin. operating the members benefiting effective as X.X the Tax XX slightly expenses with from of voucher tax marketing. product continued through that and down. in revenue percent our percentage core our quarter a to operating slightly Slide our as North The our driven due Asia’s headcount investment of the as American are Asia’s our expenses and operating the we presents XX%, decreased XX expenses by servicing by and in margin is to down and segment. and revenue operating operating in shows Europe shows to U.S. Slide year-over-year focus of decreasing travel revenue of revenue the productivity strength up cost our XX on up a our Slide a However, corporate were revenue. revenue. rate and efficiently due Cuts percent was

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

significantly improved in core travel months, driven Turning revenue last financial our XX operating profit summary, XX, to including products. particularly by in Slide and our performance, the was

Pacific Asia it growth investment mode. generated revenue in is still

solid operating generate cash a flow position. cash have continue maintained We positive and to

Looking expect following. the forward, we

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

are as We well our Pacific. as planning increase acquisition member member maintain maintain in to and spend, marketing and investments Asia

to We expenses business during these investments, summary, in trends given expect QX an second for $XXX,XXX XXXX. non-recurring initiatives. to selected of we year-over-year compared quarter growth expect additional In the quarter, and continue of our

income operating year-over-year. expect We

expect selectively in in the will in audience in as various further of areas the as However, the update such reinvest members initiatives products Asia drive second-half year. our by to future support purchases you business our on we starting well underway bookings that our growth. Holger to in Pacific, as we will

costs also continuously take area to our control to non-investment continue steps will We productivity. to increase

update Now, Travelzoo’s Holger business will provide you initiatives. on an

Holger Bartel

everyone. Hello,

paying in community. or we making Travelzoo has that all looking As build the On start Asia which technology continue almost I pleased grow that revenues and Slide invest in, margins in quarter and growth show, markets and we’re the larger, Europe, XXXX focused North goal revenue. believe and operating our we our in resumed in results other are progress member just product of Revenue and countries and operating and off. the global to like we’re and our travel solid with profitable the beyond. accelerated two highly underway, years investments a from much faster will franchise highlight in organization we’re grow and America into are in first With membership China XX, initiatives in we will into activity Pacific, to our even to second-half to

Over technology the to we ability to who around the of been members, hotel every deals the live on nine book our package as we exclusive offer months, hundreds month past world working also the have that negotiate offers.

likely a airfare includes Rome. and offer We found rate, example, if in when, hotel-only have is book local times for for the not to activities. that hotel just a special are receives hotels, package in offer member more that They several the a but Berlin

are better us them bundle also in if rates We give have offerings. willing and package found that we airlines to hotels

we the not to towards out operate planning looking in with established tour the are this partners various become but a of I’d to are markets to are We markets QX. experienced select roll in industry. we working in and technology in like local end ourselves, note that instead travel Europe And

leveraging We technology members. partnerships our to offering global are merely these better and create a for

our the have to teams side, up beef On world. around marketing we marketing the started

existing or what and research need but still we do consumers we shows core we eat do. of a visibility member our know Travelzoo exactly as further loyal, to about that know current Our have or members scale. beyond us, don’t base, build large not to our Many many highly are opportunity

finding cost-efficient franchise. our and audiences new are way and to are build reach We partnerships that effective with strong an brands

to on XX. So summarize Slide

aiming to it the double require This we years. company our in profit to of that on even maintain want size will do and demand. As we next will as the are we leadership, increase while the increasing the least exclusive quality some in way, few top of have line maintaining number margins. are a in smart done members investments. past, the we or But growth for available offers We accelerate at

Now to the operator. back

Operator

for Dan you. come the Instructions] open floor And question our The questions. from first Thank is Kurnos of now from line [Operator will Benchmark.

begin. may You

Daniel Kurnos

congratulations some still you’ve and seeing a a – been I morning, has the Obviously, on high-level there. discussion. businesses we’re mean, I things, Good loss in of grew, I kind Are few Thanks. internal know traction some the just good there of areas. know, Look, I some guys. quarter, revamped here. Holger, Asia there. heads you Great.

thoughts to gotten a looking least, generally, So still Are – on, partnerships? business sort long-term do that you outlook just is? of trajectory can you now your profitability? for you just for that thing the Are quarter give me What how your And get you for to this growth. you’ve, at that segment?

Holger Bartel

Hi, are Yes. revenues growing Yes, we’re that again Dan. Pacific. happy Asia in

clearly increased development Asia marketing have see by in quarter, these product most course, where Travelzoo the partners. investments. generating with have going it that we it’s a China begin markets yes, in for to you looking we can The us. which this loss these Greater the is brand – And do and China are, build it’s markets to We of important work a this in where just just we are in be market market We not start feel China, ourselves. to and

So great and in other where be general were managers looking in, really strong with we’re partners. a the it countries In we have will we market brought place. operating

next growth seeing profitability, bring in these we continue them couple can believe of as several are to we We the double-digit more years. in And we yes, to than scale, markets. of build

Daniel Kurnos

remarks couple QX out packaged subs. Got at in it. although two near-term. more like sounds drivers that’s so kind know then end called products tailwind That’s of towards of shift helpful. a of that Europe of things, than prepared you’ve your on And uptick longer-term the I nice the more in

out? of there perspective, than little from I is a seeing else to bit was there can to kind out uptick sequentially is previous, year call it even of volatile a but little there So the call nice Beginning anything you bit were there? a sub be always anything more, think,

Holger Bartel

as hotels and up is continues we to airlines. the better as is than will are Well, and And been an to which have always our members an are we strong traveling the from needs be – they see, a are busier deal where hotels need to for strong sell as can of all more product. has is Europe, to go, we in still our benefiting and looking more to quite likely travel we’re strong is this All are periods world. that many people them, travel growth. grow this be traveling they is industry increasing or travel people over the industry they that industry environment more want available picking and the becoming more continue suppliers certain to ever. as to when are bit. decades offerings In and just ourselves But their And because when continue certainly years to and come, grow

Daniel Kurnos

strategy. you about us give the much new explicitly too it’s I But in any out of an now? granularity I percentage can know don’t of a it’s talked front on that you it How new around that Just part just you’re booking brought of up. the of update you’ll kind give since products you many On just and pacing? hotel parcel with is platform. customers How doubt the roll touching fast it terms how helpful? I that be will revenue? growing? know,

Holger Bartel

is the the also not an only Look, hotel offering. hotel platform essential package but for for bookings, part,

the to. So take product offers in and a able hotel trips highly build respect the to to ultimately towards the want of pieces that in part haven’t offer been is attractive they destinations important offer an one to really to world that the end of exclusive we’re feel we part they I year, was platform strategy. our receive this join us, want around our to it this that members. of needed because and Members we to order the integral to members to And

Daniel Kurnos

accelerating of in finishing up of here, growth then doubling mean, talked and size you back-half longer-term the just I the company. then the the about And of year sort

guys questions final know I FX that QX. was don’t aided would obviously, by are neutral, be first Europe my of your for because be, currency, in assumptions assume Just will currency I all, effectively what

the sign organically to you’ll make goal? – a going or company, neutral order in get sort So partnerships assume the if And you your able I’m or think to to do to doubling fair you accelerating growth then that is XXXX, in FX to things going are are improve, either to neutral do that take acquisitions do think that size you so you’ll you’re the some to you path – and of statement? to be that have FX of seeing a opportunity

Glen Ceremony

currencies second, on of sorry, Yes, basis, looking growth to accelerate or in correct, of that is of a tailwind nominal, this are and all we are a to to U.S. are And travel very correct. company. extra visibility. from scale. highly membership we yes, We for looking now large, FX a triple world. the currency our us, something but expenses come constant profitable across said, to I on company a build we size dollars, because for a revenues Right most can It’s as lot vision build I can even We be, have opportunity global, double do. the the organization. have

We’re But bigger making product. of yes, the keen cannot on the Travelzoo have. strategic a in company our we I much, very course, initiatives on that expanding comment, much we are future. all

Daniel Kurnos

All right. the thanks for color Well, again. congrats, all and

Holger Bartel

Great. Dan. Thanks,

Operator

Thank you. Woo comes from from Capital. And question Ed our the of next Ascendiant line

begin. may You

Edward Woo

feel of the heading you Great. do couple and is congratulations summer year for more obviously you the around taking world? in you Thank Thank you How of to My the the stronger. is this I on think versus questions terms quarter. years the need be question travel on you. season into that my outlook mentioned past you the industry. do know what

Holger Bartel

a Hi, year. general, stronger than seen year But the in still the we the are this have years. Ed, in is even bit little same that few last trends last

not you few are see next very we the by the And is in that Portugal, And America, as or is countries although and introduce still the high we can just traveling China, of market. opportunity travelers sourcing members, can in the generally, you beyond in are that not they’re that economy Rome in are destinations it’s destinations are are rates like increasing relatively environment. that – exploring example, that because York. interested safe. good. now For Paris They’re of in now not this New outbound places last, familiar for a well-known. thrive Hotel still concentration as will these in And did, into travel the that we trips the a Spain, still around People shows North just and like press and you’ve years. seen travelers, just into grow typical to venture us, so to we regarded Chinese example, in a are for and China like continue Europe, or it in the the great this world, places but in offers with. releases country but some a the looking travel see, destinations Canada destinations Chinese China more U.S. largest are least. more This are more demand

Edward Woo

Talking bag. good we a about because right with especially businesses the that advertise as economy some pushback see are sometimes either some what do more alternative or say, to to, suppliers commerce don’t suppliers are from in-house? bring your trying competitive be could mixed Are accommodations you hey so need travel seeing as to strong the you now, are stuff much, with outlook or direct of

Holger Bartel

that travel and little our suppliers standard. trips just what very are products very more Look, are unique bit different and often providing

have is we experiences really simple just appreciating deals. to more than here’s What our learned Maui. Okay, flight [indiscernible] are in a members

to to in participate to example, learn go class. to Italy they how cooking They to So, to to want a want Hawaii serve. travel for

a to So Europe to just – one to traveling destination. go and or river instead cruise want they on of

much want continue and to than in actually travel So something do not I few only what our the we there years, think place the get mentioned, not destinations, are promote interested when the our are more themselves, I to anymore, sophisticated. even that with cheapest to going way but offer this our trips just as there. travelers members only with partners in you regards so more just not It’s that is suppliers, see you to product price. at about last because And It’s a regards standard. actually to so and trips about most that the the are becoming

Edward Woo

Airbnb? And any impacts on alternative like accommodations

Holger Bartel

seen haven’t we No, that.

I probably the the I loan Paris providing think are can hotel, and about stay. where can in companies think future all if additional tourists are tourists Airbnb like the similar mean, accommodate that anymore places, place a coming. not you

that industry. by companies affected that’s much changes, just or more adding like us. are not Booking.com think these to I So Expedia probably But supply the it’s so

Edward Woo

Well, Great. you. Good luck. thank

Holger Bartel

Thanks, Ed.

Operator

you. Thank

it Now Bartel. Holger back turn I’ll it to – now turn I’ll back Mr.

Holger Bartel

and Well, your quarter. with support, Thanks. time thanks, ladies and and you, gentlemen. Thanks, we next for Bye. again, again, speak

Operator

and conference. ladies you, concludes This gentlemen. Thank today’s

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

Glen Ceremony	Chief Financial Officer
Holger Bartel	Global Chief Executive Officer
Daniel Kurnos	The Benchmark Company LLC
Edward Woo	Ascendiant Capital Markets, LLC

Travelzoo (TZOO) 25 Apr 182018 Q1 Earnings call transcript