Travelzoo Reports Fourth Quarter 2017 Results

NEW YORK--()--Travelzoo® (NASDAQ: TZOO):

“We will continue leveraging Travelzoo's trusted brand and worldwide relationships with top suppliers to negotiate more exclusive offers for Travelzoo members. High quality of every offer remains our top priority. We only present to our members offers which have passed a rigorous review and test booking.”

  • Revenue of $27.0 million, up 1% year-over-year
  • Operating profit of $1.1 million
  • Earnings per share of $0.05
  • Cash flow from operations of $4.0 million

Travelzoo, a global publisher of exclusive offers and experiences for members, today announced financial results for the fourth quarter ended December 31, 2017, with revenue of $27.0 million and operating profit of $1.1 million. In nominal terms, revenue increased by 1% year-over-year. In constant currencies, revenue decreased by 2% year-over-year. Net income was $675,000, with earnings per share (EPS) of $0.05.

Travelzoo's Global CEO, Dr. Holger Bartel, commented: "We will continue leveraging Travelzoo's trusted brand and worldwide relationships with top suppliers to negotiate more exclusive offers for Travelzoo members. High quality of every offer remains our top priority. We only present to our members offers which have passed a rigorous review and test booking."

Asia Pacific

Asia Pacific business segment revenue decreased 19% year-over-year to $2.0 million. Operating loss for the fourth quarter was $1.6 million, compared to an operating loss of $810,000 in the prior-year period. The fourth quarter 2017 operating loss was impacted by the cost of a severance payment to an executive in Asia Pacific.

Europe

Europe business segment revenue increased 4% year-over-year to $8.8 million. In constant currencies, revenue decreased 4% year-over-year. Operating profit for the fourth quarter was $764,000, or 9% of revenue, compared to operating income of $582,000, or 7% of revenue in the prior-year period.

North America

North America business segment revenue increased 2% year-over-year to $16.2 million. In constant currencies, revenue increased 1% year-over-year. Operating profit for the fourth quarter was $1.9 million, or 12% of revenue, compared to operating income of $2.3 million, or 14% of revenue in the prior-year period.

Members

As of December 31, 2017, Travelzoo had a worldwide unduplicated number of members of 29.4 million. In Asia Pacific, unduplicated number of members was 3.6 million as of December 31, 2017, up 1% from December 31, 2016. In Europe, unduplicated number of members was 8.5 million as of December 31, 2017, up 5% from December 31, 2016. In North America, unduplicated number of members was 17.4 million as of December 31, 2017, up 1% from December 31, 2016.

Income Taxes

Income tax expense was $466,000, compared to $542,000 in the prior-year period. The fourth quarter 2017 income tax expense includes a $505,000 one-time net tax benefit as a result of a tax reserve release related to the completion of an IRS tax audit offset by the estimated impact of the new U.S. tax law. Beginning with the first quarter of 2018, Travelzoo's earnings are expected to benefit from the new reduced U.S. federal tax rate because the largest portion of the company's taxable income is in the U.S.

Asset Management

During the fourth quarter of 2017, Travelzoo generated $4.0 million of cash from operating activities. Accounts receivable decreased by $2.6 million over the prior-year period to $11.8 million. Accounts payable decreased by $609,000 over the prior-year period to $19.1 million. Capital expenditures were $252,000, up from $107,000 in the prior-year period. As of December 31, 2017, cash and cash equivalents were $22.6 million.

Conference Call

Travelzoo will host a conference call to discuss fourth quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings 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 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)

 
   

  Three months ended

  Twelve months ended
December 31,   December 31,  
2017     2016   2017     2016  
Revenues $ 26,997   $ 26,813 $ 106,524   $ 114,263
Cost of revenues 3,462   3,262   12,909   13,855  
Gross profit 23,535   23,551   93,615   100,408  
Operating expenses:
Sales and marketing 13,746 13,369 57,288 58,429
Product development 2,208 2,077 9,224 9,096
General and administrative 6,502   6,077   22,558   22,697  
Total operating expenses 22,456     21,523   89,070   90,222  
Income from continuing operations 1,079 2,028 4,545 10,186
Other income (expense), net 62   (480 ) 173   (187 )
Income from continuing operations before income taxes 1,141 1,548 4,718 9,999
Income tax expense 466   542   3,126     3,992  
Income from continuing operations $ 675 $ 1,006 $ 1,592 $ 6,007
Income (loss) from discontinued operations, net of income taxes

-

  (63 ) 1,938     624  
Net income $ 675   $ 943   $ 3,530   $ 6,631  
 

Income per share-basic:

Continuing operations $ 0.05 $ 0.07 $ 0.12 $ 0.43
Discontinued operations

0.00

  0.00   0.15     0.04  

Net income per share-basic

$ 0.05   $ 0.07   $ 0.27     $ 0.47  
 

Income per share-diluted:

Continuing operations $ 0.05 $ 0.07 $ 0.12 $ 0.43
Discontinued operations 0.00   0.00   0.15     0.04  

Net income per share-diluted

$ 0.05   $ 0.07   $ 0.27     $ 0.47  
 
Weighted average shares:
Basic 12,462 13,665 12,882 13,997
Diluted 12,462 13,714 12,894 13,997
 
 

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

 
    December 31,
2017
  December 31,
2016
Assets
Current assets:
Cash and cash equivalents $ 22,553 $ 26,838
Accounts receivable, net 11,769 14,415
Income taxes receivable 517 542
Deposits 259 105
Prepaid expenses and other 2,141 1,773
Deferred tax assets   793  
Total current assets 37,239 44,466
Deposits and other 548 702
Deferred tax assets 1,516 1,052
Restricted cash 1,448 1,152
Property and equipment, net 4,921   6,158  
Total assets $ 45,672   $ 53,530  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 19,105 $ 19,714
Accrued expenses and other 8,702 8,699
Deferred revenue 825 719
Income tax payable 961   691  
Total current liabilities 29,593 29,823
Long-term tax liabilities 373 2,879
Long-term deferred rent and other 2,628   2,764  
Total liabilities 32,594   35,466  
Common stock 125 135
Additional paid-in capital
Accumulated other comprehensive loss (3,597 ) (3,787 )
Retained earnings 16,550   21,716  
Total stockholders’ equity 13,078   18,064  
Total liabilities and stockholders’ equity $ 45,672   $ 53,530  
 
 

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 
   

  Three months ended  

  Twelve months ended
December 31, December 31,
2017   2016 2017   2016
Cash flows from operating activities:
Net income $ 675 $ 943 $ 3,530 $ 6,631
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 470 674 2,075 2,530
Discontinued operations gain on sale of Fly.com (2,890 )
Deferred income taxes 281 25 309 (199 )
Stock-based compensation 321 241 1,007 933
Provision for losses on accounts receivable 152 83 118 100
Net foreign currency effects (61 ) (7 ) (354 ) (315 )
Changes in operating assets and liabilities:
Accounts receivable (323 ) 1,860 3,065 1,313
Income tax receivable 896 1,115 28 816
Prepaid expenses and other (70 ) 1,344 (487 ) 957
Accounts payable 3,105 1,928 (1,590 ) (2,463 )
Accrued expenses and other 534 327 (475 ) (1,747 )
Income tax payable 152 (1,485 ) 261 287
Other non-current liabilities (2,173 ) (242 ) (2,522 ) (121 )
Net cash provided by operating activities 3,959   6,806   2,075   8,722  
Cash flows from investing activities:
Proceeds from sale of Fly.com domain name 2,890
Purchases of property and equipment (252 ) (107 ) (738 ) (909 )
Net cash provided by (used in) investing activities (252 ) (107 ) 2,152   (909 )
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 (155 ) (3,936 ) (9,711 ) (9,662 )
Net cash used in financing activities (155 ) (3,936 ) (9,711 ) (15,262 )
Effect of exchange rate on cash and cash equivalents 179   (764 ) 1,199   (841 )
Net increase (decrease) in cash and cash equivalents 3,731 1,999 (4,285 ) (8,290 )
Cash and cash equivalents at beginning of period 18,822   24,839   26,838   35,128  
Cash and cash equivalents at end of period $ 22,553   $ 26,838   $ 22,553   $ 26,838  
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net $ 1,343 $ 1,111 $ 6,201 $ 3,309
Cash paid for interest on related party loan $ $ $ $ 88
 
 

Travelzoo
Segment Information
(Unaudited)
(In thousands)

 
Three months ended December 31, 2017    

 Asia Pacific 

 

     Europe    

 

North
    America    

  Consolidated
Revenue from unaffiliated customers $ 1,979 $ 8,803 $ 16,215 $ 26,997
Intersegment revenue   4     (36 )   32  
Total net revenues   1,983     8,767     16,247   26,997
Operating profit (loss) $ (1,582 ) $ 764   $ 1,897 $ 1,079
Three months ended December 31, 2016 Asia Pacific Europe

North
America

Consolidated
Revenue from unaffiliated customers $ 2,452 $ 8,609 $ 15,752 $ 26,813
Intersegment revenue   (5 )   (192 )   197  
Total net revenues   2,447     8,417     15,949   26,813
Operating profit (loss) $ (810 ) $ 582   $ 2,256 $ 2,028
 

Twelve months ended December 31, 2017

Asia Pacific

Europe

North
America

Consolidated

Revenue from unaffiliated customers $ 7,553 $ 34,034 $ 64,937 $ 106,524
Intersegment revenue   (34 )   (353 )   387  
Total net revenues   7,519     33,681     65,324   106,524
Operating profit (loss) $ (5,967 ) $ 2,290   $ 8,222 $ 4,545
Twelve months ended December 31, 2016 Asia Pacific Europe

North
America

Consolidated
Revenue from unaffiliated customers $ 9,625 $ 37,502 $ 67,136 $ 114,263
Intersegment revenue   73     (595 )   522  
Total net revenues   9,698     36,907     67,658   114,263
Operating profit (loss) $ (3,890 ) $ 5,604   $ 8,472 $ 10,186
 

Contacts

Investor Relations:
Travelzoo
Lijun Qi
ir@travelzoo.com

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