Travelzoo Reports Second Quarter 2019 Results
NEW YORK, July 24, 2019 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):
- Revenue of $28.2 million; up 3% year-over-year in constant currencies
- Operating profit of $2.4 million, up 125% year-over-year
- Earnings per share (EPS) of $0.11
Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the second quarter ended June 30, 2019, with revenue of $28.2 million and operating profit of $2.4 million. In nominal terms, revenue increased $109,000 year-over-year. In constant currencies, revenue increased by 3% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from or generated in connection with a much larger amount of purchases made by Travelzoo® members. Net income was $1.3 million. EPS was $0.11, up from $0.04 in the prior-year period.
"Our attractive core business in North America and Europe generated an operating profit of $4.2 million, with an operating margin of 16%, of which $1.8 million was re-invested in our Asia Pacific business. We are strongly committed to driving up shareholder value by implementing a successful strategy to achieve profitable growth in Asia Pacific faster," said Holger Bartel, Global CEO of Travelzoo.
Core Business versus Development BusinessOur businesses in Europe and North America (the “Core Business”) and our business in Asia Pacific (the “Development Business”) are in very different situations. The following table illustrates how the Core Business compares to the Development Business:
| Core Business | Development Business | ||
| Q2 2019 Operating profit / loss | +$4.2 million | -$1.8 million | |
| Q2 2019 Operating margin | 16% | N/A | |
| Contribution to Q2 2019 EPS | +$0.25 | -$0.14 | |
| Contribution to six months EPS | +$0.66 | -$0.30 |
EuropeEurope business segment revenue increased 2% year-over-year to $8.7 million. In constant currencies, revenue increased 8% year-over-year. Revenue growth was primarily driven by the rollout of Travelzoo’s expanded vacations offering. Operating profit for the second quarter was $584,000, or 7% of revenue, compared to an operating profit of $441,000, or 5% of revenue in the prior-year period.
North AmericaNorth America business segment revenue increased 2% year-over-year to $17.9 million. Operating profit for the second quarter was $3.6 million, or 20% of revenue, compared to an operating profit of $2.1 million, or 12% of revenue in the prior-year period.
Asia PacificFor the Asia Pacific business segment, a new management team was installed during the quarter and Travelzoo has engaged a top management consulting firm in China to conduct a strategic review of its business. Our development business in Asia Pacific, which is currently in transition, saw a decrease in revenue of 23% year-over-year to $1.6 million. In constant currencies, revenue decreased 20% year-over-year. The operating loss in Asia Pacific for the second quarter was $1.8 million, compared to an operating loss of $1.5 million in the prior-year period.
MembersAs of June 30, 2019, Travelzoo had a worldwide unduplicated number of members of 30.2 million. In Asia Pacific, unduplicated number of members was 3.6 million as of June 30, 2019, consistent with June 30, 2018. In Europe, unduplicated number of members was 9.1 million as of June 30, 2019, up 4% from June 30, 2018. In North America, unduplicated number of members was 17.6 million as of June 30, 2019, consistent with June 30, 2018.
Income TaxesIncome tax expense was $953,000, compared to a $631,000 income tax expense in the prior-year period.
Asset ManagementDuring the second quarter of 2019, Travelzoo used $1.8 million of cash in operating activities. Accounts receivable increased by $2.8 million over the prior-year period to $15.3 million. Accounts payable increased by $168,000 over the prior-year period to $14.4 million. Cash used in investing activities was $743,000, down from $3.5 million in the prior-year period. As of June 30, 2019, cash and cash equivalents were $14.1 million.
Share Repurchase ProgramDuring the second quarter of 2019, the company repurchased 250,000 shares of its common stock. In May 2019, the company’s board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. 750,000 shares of common stock remain that are authorized to be repurchased.
Conference CallTravelzoo will host a conference call to discuss second quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to:
- download the management presentation (PDF format) to be discussed in the conference call;
- access the webcast.
About TravelzooTravelzoo® 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 finger on the pulse of 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 give Travelzoo members access to irresistible 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.
| Travelzoo | |||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
| Revenues | $ | 28,184 | $ | 28,075 | $ | 59,009 | $ | 58,959 | |||||||||||||||||||||||
| Cost of revenues | 2,757 | 3,016 | 5,703 | 6,401 | |||||||||||||||||||||||||||
| Gross profit | 25,427 | 25,059 | 53,306 | 52,558 | |||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||
| Sales and marketing | 15,357 | 15,628 | 30,963 | 31,170 | |||||||||||||||||||||||||||
| Product development | 1,799 | 2,386 | 3,502 | 4,897 | |||||||||||||||||||||||||||
| General and administrative | 5,847 | 5,967 | 11,446 | 11,756 | |||||||||||||||||||||||||||
| Total operating expenses | 23,003 | 23,981 | 45,911 | 47,823 | |||||||||||||||||||||||||||
| Income from operations | 2,424 | 1,078 | 7,395 | 4,735 | |||||||||||||||||||||||||||
| Other income (loss), net | (143 | ) | 30 | (242 | ) | 191 | |||||||||||||||||||||||||
| Income before income taxes | 2,281 | 1,108 | 7,153 | 4,926 | |||||||||||||||||||||||||||
| Income tax expense | 953 | 631 | 2,705 | 1,947 | |||||||||||||||||||||||||||
| Net income | $ | 1,328 | $ | 477 | $ | 4,448 | $ | 2,979 | |||||||||||||||||||||||
| Basic income per share | $ | 0.11 | $ | 0.04 | $ | 0.37 | $ | 0.24 | |||||||||||||||||||||||
| Diluted income per share | $ | 0.11 | $ | 0.04 | $ | 0.36 | $ | 0.24 | |||||||||||||||||||||||
| Weighted average shares: | |||||||||||||||||||||||||||||||
| Basic | 12,003 | 12,462 | 11,959 | 12,462 | |||||||||||||||||||||||||||
| Diluted | 12,278 | 12,780 | 12,251 | 12,622 | |||||||||||||||||||||||||||
| Travelzoo | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| (In thousands) | |||||||||||
| June 30, 2019 | December 31, 2018 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 14,113 | $ | 18,017 | |||||||
| Accounts receivable, net | 15,323 | 12,646 | |||||||||
| Income taxes receivable | 817 | 389 | |||||||||
| Deposits | 84 | 167 | |||||||||
| Prepaid expenses and other | 1,739 | 1,947 | |||||||||
| Total current assets | 32,076 | 33,166 | |||||||||
| Deposits and other | 744 | 685 | |||||||||
| Deferred tax assets | 1,359 | 1,645 | |||||||||
| Restricted cash | 1,331 | 1,444 | |||||||||
| Investment in WeekenGO | 2,958 | 2,694 | |||||||||
| Operating lease right-of-use assets | 14,110 | — | |||||||||
| Property and equipment, net | 3,346 | 3,790 | |||||||||
| Total assets | $ | 55,924 | $ | 43,424 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 14,419 | $ | 17,129 | |||||||
| Accrued expenses and other | 8,720 | 7,853 | |||||||||
| Deferred revenue | 1,165 | 1,339 | |||||||||
| Operating lease liabilities | 5,693 | — | |||||||||
| Income tax payable | 395 | 489 | |||||||||
| Total current liabilities | 30,392 | 26,810 | |||||||||
| Long-term tax liabilities | 434 | 418 | |||||||||
| Long-term operating lease liabilities | 10,788 | — | |||||||||
| Other long-term liabilities | 83 | 2,137 | |||||||||
| Total liabilities | 41,697 | 29,365 | |||||||||
| Common stock | 119 | 120 | |||||||||
| Additional paid-in capital | — | — | |||||||||
| Accumulated other comprehensive loss | (4,229 | ) | (4,214 | ) | |||||||
| Retained earnings | 18,337 | 18,153 | |||||||||
| Total stockholders’ equity | 14,227 | 14,059 | |||||||||
| Total liabilities and stockholders’ equity | $ | 55,924 | $ | 43,424 | |||||||
| Travelzoo | |||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||
| Three months | Six months | ||||||||||||||||||||||||||||||
| ended | ended | ||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||||||||||
| Net income | $ | 1,328 | $ | 477 | $ | 4,448 | $ | 2,979 | |||||||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||||||||||||||||
| Depreciation and amortization | 333 | 443 | 663 | 827 | |||||||||||||||||||||||||||
| Stock-based compensation | 319 | 349 | 482 | 522 | |||||||||||||||||||||||||||
| Deferred income tax | 4 | (39 | ) | 345 | (149 | ) | |||||||||||||||||||||||||
| Loss on equity investment in WeekenGO | 238 | — | 397 | — | |||||||||||||||||||||||||||
| Net foreign currency effects | (5 | ) | 35 | (26 | ) | (136 | ) | ||||||||||||||||||||||||
| Other | (51 | ) | 40 | 26 | (43 | ) | |||||||||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||||
| Accounts receivable | 201 | 100 | (2,779 | ) | (897 | ) | |||||||||||||||||||||||||
| Income tax receivable | (816 | ) | (705 | ) | (428 | ) | (277 | ) | |||||||||||||||||||||||
| Prepaid expenses and other | (186 | ) | 428 | 239 | 418 | ||||||||||||||||||||||||||
| Accounts payable | (1,688 | ) | (15 | ) | (2,788 | ) | (3,200 | ) | |||||||||||||||||||||||
| Accrued expenses and other | (296 | ) | (299 | ) | 1,291 | 725 | |||||||||||||||||||||||||
| Income tax payable | (1,084 | ) | (48 | ) | (96 | ) | 169 | ||||||||||||||||||||||||
| Other liabilities | (103 | ) | (165 | ) | (174 | ) | (158 | ) | |||||||||||||||||||||||
| Net cash provided by (used in) operating activities | (1,806 | ) | 601 | 1,600 | 780 | ||||||||||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||||||||||
| Investment in WeekenGO | (673 | ) | (3,083 | ) | (673 | ) | (3,083 | ) | |||||||||||||||||||||||
| Purchases of property and equipment | (70 | ) | (442 | ) | (201 | ) | (507 | ) | |||||||||||||||||||||||
| Net cash used in investing activities | (743 | ) | (3,525 | ) | (874 | ) | (3,590 | ) | |||||||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||||||||||
| Repurchase of common stock | (4,869 | ) | — | (6,460 | ) | — | |||||||||||||||||||||||||
| Exercise of stock options and taxes paid for net share settlement of equity awards | 1,738 | — | 1,712 | — | |||||||||||||||||||||||||||
| Net cash used in financing activities | (3,131 | ) | — | (4,748 | ) | — | |||||||||||||||||||||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash | (147 | ) | (780 | ) | 5 | (324 | ) | ||||||||||||||||||||||||
| Net decrease in cash, cash equivalents and restricted cash | (5,827 | ) | (3,704 | ) | (4,017 | ) | (3,134 | ) | |||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 21,271 | 24,571 | 19,461 | 24,001 | |||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 15,444 | $ | 20,867 | $ | 15,444 | $ | 20,867 | |||||||||||||||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||||||||||||||||||||
| Cash paid for income taxes, net | $ | 2,919 | $ | 1,417 | $ | 2,859 | $ | 2,196 | |||||||||||||||||||||||
| Travelzoo | |||||||||||||||||||||||
| Segment Information | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Three months ended June 30, 2019 | AsiaPacific | Europe | North America | Consolidated | |||||||||||||||||||
| Revenue from unaffiliated customers | $ | 1,557 | $ | 9,133 | $ | 17,494 | $ | 28,184 | |||||||||||||||
| Intersegment revenue | 23 | (451 | ) | 428 | — | ||||||||||||||||||
| Total net revenues | 1,580 | 8,682 | 17,922 | 28,184 | |||||||||||||||||||
| Operating income (loss) | $ | (1,783 | ) | $ | 584 | $ | 3,623 | $ | 2,424 | ||||||||||||||
| Three months ended June 30, 2018 | AsiaPacific | Europe | North America | Consolidated | |||||||||||||||||||
| Revenue from unaffiliated customers | $ | 2,073 | $ | 8,527 | $ | 17,475 | $ | 28,075 | |||||||||||||||
| Intersegment revenue | (9 | ) | (27 | ) | 36 | — | |||||||||||||||||
| Total net revenues | 2,064 | 8,500 | 17,511 | 28,075 | |||||||||||||||||||
| Operating income (loss) | $ | (1,472 | ) | $ | 441 | $ | 2,109 | $ | 1,078 | ||||||||||||||
| Six months ended June 30, 2019 | AsiaPacific | Europe | North America | Consolidated | |||||||||||||||||||
| Revenue from unaffiliated customers | $ | 3,192 | $ | 20,187 | $ | 35,630 | $ | 59,009 | |||||||||||||||
| Intersegment revenue | 53 | (932 | ) | 879 | — | ||||||||||||||||||
| Total net revenues | 3,245 | 19,255 | 36,509 | 59,009 | |||||||||||||||||||
| Operating income (loss) | $ | (3,418 | ) | $ | 2,721 | $ | 8,092 | $ | 7,395 | ||||||||||||||
| Six months ended June 30, 2018 | AsiaPacific | Europe | North America | Consolidated | |||||||||||||||||||
| Revenue from unaffiliated customers | $ | 4,115 | $ | 18,859 | $ | 35,985 | $ | 58,959 | |||||||||||||||
| Intersegment revenue | (29 | ) | (79 | ) | 108 | — | |||||||||||||||||
| Total net revenues | 4,086 | 18,780 | 36,093 | 58,959 | |||||||||||||||||||
| Operating income (loss) | $ | (3,212 | ) | $ | 2,407 | $ | 5,540 | $ | 4,735 | ||||||||||||||
Investor Relations:Lijun Qi[email protected]
