Travelzoo Reports Third Quarter 2019 Results

Mountain View, California, UNITED STATES

NEW YORK, Oct. 23, 2019 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $25.5 million; up 2% year-over-year in constant currencies
  • Operating profit of $1.2 million, up 70% year-over-year
  • Earnings per share (EPS) of $0.03

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2019, with revenue of $25.5 million, an increase of $204,000 year-over-year, and an operating profit of $1.2 million. In constant currencies, revenue increased by 2% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with a much larger amount of purchases made by Travelzoo® members. Net income was $306,000. EPS was $0.03, up from $0.01 in the prior-year period.

"Our attractive core business in North America and Europe generated an operating profit of $3.3 million, with an operating margin of 14%, of which $2.1 million was re-invested in our Asia Pacific business with a focus on China where we see, after completing a rigorous review of the market and Travelzoo’s current position, a very substantial opportunity for revenue growth," said Holger Bartel, Global CEO of Travelzoo.

Core Business versus Development Business
Our 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
Q3 2019 Operating profit/loss+$3.3 million -$2.1 million
Q3 2019 Operating margin14% N/A
Contribution to Q3 2019 EPS+$0.21 -$0.18
Contribution to twelve months EPS+$1.12 -$0.59

Europe business segment revenue increased 1% year-over-year to $8.5 million. In constant currencies, revenue increased 6% year-over-year. Operating profit for the third quarter was $815,000, or 10% of revenue, compared to an operating profit of $940,000, or 11% of revenue in the prior-year period.

North America
North America business segment revenue increased 3% year-over-year to $15.3 million. Operating profit for the third quarter was $2.5 million, or 16% of revenue, compared to an operating profit of $1.4 million, or 9% of revenue in the prior-year period.

Asia Pacific
In Asia Pacific, we worked with a top management consulting firm in China and developed together a strategy for a significant presence of Travelzoo in social media and mobile channels. The execution began in mid September. During the third quarter, our Asia Pacific segment still saw a decrease in revenue of 16% year-over-year to $1.7 million. We do not see this as a trend. We expect revenue from China to grow in the fourth quarter. The operating loss for the third quarter was $2.1 million, compared to an operating loss of $1.6 million in the prior-year period. The reported operating loss was impacted by costs of the strategy consulting project. All costs of the project were expensed.

As of September 30, 2019, Travelzoo had a worldwide unduplicated number of members of 30.3 million. In Asia Pacific, unduplicated number of members was 3.6 million as of September 30, 2019, consistent with September 30, 2018. In Europe, unduplicated number of members was 9.1 million as of September 30, 2019, up 4% from September 30, 2018. In North America, unduplicated number of members was 17.6 million as of September 30, 2019, up 1% from September 30, 2018.

Income Taxes
Income tax expense was $770,000, compared to a $505,000 income tax expense in the prior-year period. Operating losses from the Development Business were not used to offset operating income from the Core Business.

Asset Management
During the third quarter of 2019, Travelzoo generated $326,000 of cash in operating activities. Accounts receivable decreased by $2.7 million to $12.3 million, and accounts payable decreased by $1.2 million to $13.0 million in the third quarter of 2019. Cash used in investing activities was $149,000. Cash used in financing activities was $2.3 million. Cash was used primarily for the share repurchase program described below. As of September 30, 2019, cash and cash equivalents were $11.6 million.

Share Repurchase Program
During the third quarter of 2019, Travelzoo repurchased 186,369 shares of its common stock. In May 2019, Travelzoo's board of directors had authorized the repurchase of up to 1,000,000 shares of its outstanding common stock. 563,631 shares of common stock remain to be repurchased.

Conference Call
Travelzoo will host a conference call to discuss third quarter results today at 11:00 a.m. ET. Please visit to

  • download the management presentation (PDF format) to be discussed in the conference call;
  • access the webcast.

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 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.

Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

 Three months ended Nine months ended
 September 30, September 30,
 2019 2018 2019 2018
Revenues$25,505  $25,301  $84,514  $84,260 
Cost of revenues2,980  2,987  8,683  9,388 
Gross profit22,525  22,314  75,831  74,872 
Operating expenses:       
Sales and marketing14,233  13,375  45,196  44,545 
Product development1,478  2,297  4,980  7,194 
General and administrative5,600  5,928  17,046  17,684 
Total operating expenses21,311  21,600  67,222  69,423 
Income from operations

1,214  714  8,609  5,449 
Other income (loss), net(138) (91) (380) 100 
Income before income taxes1,076  623  8,229  5,549 
Income tax expense770  505  3,475  2,452 
Net income$306  $118  $4,754  $3,097 
Basic income per share$0.03  $0.01  $0.40  $0.25 
Diluted income per share$0.03  $0.01  0.39   0.25 
Weighted average shares:       
Basic11,767  12,314  11,894  12,412 
Diluted11,956  12,663  12,152  12,630 


Condensed Consolidated Balance Sheets
(In thousands)

 September 30,
 December 31,
Current assets:   
Cash and cash equivalents$11,605  $18,017 
Accounts receivable, net12,317  12,646 
Income taxes receivable930  389 
Deposits141  167 
Prepaid expenses and other1,965  1,947 
Total current assets26,958  33,166 
Deposits and other669  685 
Deferred tax assets1,347  1,645 
Restricted cash1,308  1,444 
Investment in WeekenGO2,635  2,694 
Operating lease right-of-use assets17,523   
Property and equipment, net3,142  3,790 
Total assets$53,582  $43,424 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$13,007  $17,129 
Accrued expenses and other6,866  7,853 
Deferred revenue1,119  1,339 
Operating lease liabilities7,028   
Income tax payable446  489 
Total current liabilities28,466  26,810 
Long-term tax liabilities343  418 
Long-term operating lease liabilities12,291   
Other long-term liabilities84  2,137 
Total liabilities41,184  29,365 
Common stock117  120 
Additional paid-in capital   
Accumulated other comprehensive loss(4,450) (4,214)
Retained earnings16,731  18,153 
Total stockholders’ equity12,398  14,059 
Total liabilities and stockholders’ equity$53,582  $43,424 


Condensed Consolidated Statements of Cash Flows
(In thousands)

 Three months  Nine months ended
 ended ended
   September 30,   September 30,
 2019 2018 2019 2018
Cash flows from operating activities:
Net income$306  $118  $4,754  $3,097 
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization336  563  999  1,390 
Stock-based compensation393  241  875  763 
Gain from sale of property and equipment  (143)   (143)
Deferred income tax86  53  431  (96)
Loss on equity investment in WeekenGO214  85  611  85 
Net foreign currency effects85  59  59  (77)
Other106  120  132  77 
Changes in operating assets and liabilities:       
Accounts receivable2,652  (189) (127) (1,086)
Income tax receivable(112) (73) (540) (350)
Prepaid expenses and other(242) 2  (3) 420 
Accounts payable(1,183) (400) (3,971) (3,600)
Accrued expenses and other(1,733) (973) (442) (248)
Income tax payable60  (234) (36) (65)
Other liabilities(642) 27  (816) (131)
Net cash provided by (used in) operating activities326  (744) 1,926  36 
Cash flows from investing activities:       
Proceeds from sale of property and equipment  150    150 
Investment in WeekenGO    (673) (3,083)
Purchases of property and equipment(149) (159) (350) (666)
Net cash used in investing activities(149) (9) (1,023) (3,599)
Cash flows from financing activities:       
Repurchase of common stock(2,308) (2,873) (8,768) (2,873)
Proceeds from exercise of stock options, net of taxes paid for
net share settlement of equity awards
Net cash used in financing activities(2,308) (2,873) (7,056) (2,873)
Effect of exchange rate on cash, cash equivalents and restricted cash(400) (9) (395) (333)
Net decrease in cash, cash equivalents and restricted cash(2,531) (3,635) (6,548) (6,769)
Cash, cash equivalents and restricted cash at beginning of period15,444  20,867  19,461  24,001 
Cash, cash equivalents and restricted cash at end of period$12,913  $17,232  $12,913  $17,232 
Supplemental disclosure of cash flow information:       
Cash paid for income taxes, net$917  $767  $3,776  $2,963 

Segment Information
(In thousands)

Three months ended September 30, 2019Asia
 Europe North
Revenue from unaffiliated customers$1,630  $9,432  $14,443  $25,505
Intersegment revenue43  (938) 895   
Total net revenues1,673  8,494  15,338  25,505 
Operating income (loss)$(2,051) $815  $2,450  $1,214 
Three months ended September 30, 2018Asia
 Europe North
Revenue from unaffiliated customers$ 1,977  $ 8,396  $ 14,928  $ 25,301
Intersegment revenue10  (18) 8   
Total net revenues1,987  8,378  14,936  25,301 
Operating income (loss)$(1,600) $940  $1,374  $714 

Nine months ended September 30, 2019Asia
 Europe North
Revenue from unaffiliated customers$ 4,822  $ 29,619  $ 50,073  $ 84,514
Intersegment revenue96  (1,870) 1,774   
Total net revenues4,918  27,749  51,847  84,514 
Operating income (loss)$(5,469) $3,536  $10,542  $8,609 
Nine months ended September 30, 2018Asia
 Europe North
Revenue from unaffiliated customers$ 6,092  $ 27,255  $ 50,913  $ 84,260
Intersegment revenue(19) (97) 116   
Total net revenues6,073  27,158  51,029  84,260 
Operating income (loss)$(4,812) $3,347  $6,914  $5,449 

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