EX-99.1 2 ex-99109x30x20198xk.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
 
travellogo11062017a07.jpg
Travelzoo
590 Madison Avenue
37th Floor
New York, NY 10022

Investor Relations:
Lijun Qi
ir@travelzoo.com 


FOR IMMEDIATE RELEASE

Travelzoo Reports Third Quarter 2019 Results

NEW YORK, October 23, 2019 — 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.




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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 margin
14%
 
N/A
Contribution to Q3 2019 EPS
+$0.21
 
-$0.18
Contribution to twelve months EPS
+$1.12
 
-$0.59

Europe
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.

Members
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.


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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 http://ir.travelzoo.com/events-presentations to
•
download the management presentation (PDF format) to be discussed in the conference call;
•
access the webcast.


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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.





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Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(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 revenues
2,980

 
2,987

 
8,683

 
9,388

Gross profit
22,525

 
22,314

 
75,831

 
74,872

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
14,233

 
13,375

 
45,196

 
44,545

Product development
1,478

 
2,297

 
4,980

 
7,194

General and administrative
5,600

 
5,928

 
17,046

 
17,684

Total operating expenses
21,311

 
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 taxes
1,076

 
623

 
8,229

 
5,549

Income tax expense
770

 
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:
 
 
 
 
 
 
 
Basic
11,767

 
12,314

 
11,894

 
12,412

Diluted
11,956

 
12,663

 
12,152

 
12,630



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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
 
September 30,
2019
 
December 31,
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
11,605

 
$
18,017

Accounts receivable, net
12,317

 
12,646

Income taxes receivable
930

 
389

Deposits
141

 
167

Prepaid expenses and other
1,965

 
1,947

Total current assets
26,958

 
33,166

Deposits and other
669

 
685

Deferred tax assets
1,347

 
1,645

Restricted cash
1,308

 
1,444

Investment in WeekenGO
2,635

 
2,694

Operating lease right-of-use assets
17,523

 
—

Property and equipment, net
3,142

 
3,790

Total assets
$
53,582

 
$
43,424

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,007

 
$
17,129

Accrued expenses and other
6,866

 
7,853

Deferred revenue
1,119

 
1,339

Operating lease liabilities
7,028

 
—

Income tax payable
446

 
489

Total current liabilities
28,466

 
26,810

Long-term tax liabilities
343

 
418

Long-term operating lease liabilities
12,291

 
—

Other long-term liabilities
84

 
2,137

Total liabilities
41,184

 
29,365

Common stock
117

 
120

Additional paid-in capital
—

 
—

Accumulated other comprehensive loss
(4,450
)
 
(4,214
)
Retained earnings
16,731

 
18,153

Total stockholders’ equity
12,398

 
14,059

Total liabilities and stockholders’ equity
$
53,582

 
$
43,424



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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 
 
Three months ended
 
Nine months 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 amortization
336

 
563

 
999

 
1,390

Stock-based compensation
393

 
241

 
875

 
763

Gain from sale of property and equipment
—

 
(143
)
 
—

 
(143
)
Deferred income tax
86

 
53

 
431

 
(96
)
Loss on equity investment in WeekenGO
214

 
85

 
611

 
85

Net foreign currency effects
85

 
59

 
59

 
(77
)
Other
106

 
120

 
132

 
77

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
2,652

 
(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 payable
60

 
(234
)
 
(36
)
 
(65
)
Other liabilities
(642
)
 
27

 
(816
)
 
(131
)
Net cash provided by (used in) operating activities
326

 
(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
—

 
—

 
1,712

 
—

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 period
15,444

 
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


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Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended September 30, 2019
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,630

 
$
9,432

 
$
14,443

 
$
25,505

Intersegment revenue
43

 
(938
)
 
895

 
—

Total net revenues
1,673

 
8,494

 
15,338

 
25,505

Operating income (loss)
$
(2,051
)
 
$
815

 
$
2,450

 
$
1,214

 
 
 
 
 
 
 
 
Three months ended September 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
1,977

 
$
8,396

 
$
14,928

 
$
25,301

Intersegment revenue
10

 
(18
)
 
8

 
—

Total net revenues
1,987

 
8,378

 
14,936

 
25,301

Operating income (loss)
$
(1,600
)
 
$
940

 
$
1,374

 
$
714


Nine months ended September 30, 2019
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
4,822

 
$
29,619

 
$
50,073

 
$
84,514

Intersegment revenue
96

 
(1,870
)
 
1,774

 
—

Total net revenues
4,918

 
27,749

 
51,847

 
84,514

Operating income (loss)
$
(5,469
)
 
$
3,536

 
$
10,542

 
$
8,609

 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
Asia Pacific
 
Europe
 
North
America
 
Consolidated
Revenue from unaffiliated customers
$
6,092

 
$
27,255

 
$
50,913

 
$
84,260

Intersegment revenue
(19
)
 
(97
)
 
116

 
—

Total net revenues
6,073

 
27,158

 
51,029

 
84,260

Operating income (loss)
$
(4,812
)
 
$
3,347

 
$
6,914

 
$
5,449



                                                                    

###


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