Financial

Travelzoo Reports First Quarter 2015 Down 9% Year-over-year

Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2015, with revenue of $36.5 million, a decrease of 9% year-over-year. Net income was $1.9 million, with diluted earnings per share of $0.13, down from $0.31 in the prior-year period.

Travelzoo

Travelzoo Inc. (NASDAQ:TZOO):

  • Revenue of $36.5 million, down 9% year-over-year
  • Operating profit of $3.8 million
  • Earnings per share of $0.13, compared to $0.31 in the prior-year period
  • Cash flow provided by operations was $2.4 million

Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2015, with revenue of $36.5 million, a decrease of 9% year-over-year. Net income was $1.9 million, with diluted earnings per share of $0.13, down from $0.31 in the prior-year period.

"In spite of the strong dollar we achieved a sequential 16% increase in revenue over the previous quarter," said Chris Loughlin, chief executive officer. "Travelzoo added more new members than in any other quarter over the past three years."

North America

North America business segment revenue decreased 6% year-over-year to $24.7 million. Operating income for the first quarter was $2.1 million, or 8% of revenue, down from $4.6 million, or 17% of revenue, in the prior-year period.

Europe

Europe business segment revenue decreased 15% year-over-year to $11.8 million. In local currency terms, revenue decreased 7% year-over-year. Operating profit for the first quarter was $1.7 million, or 15% of revenue, down from $2.4 million, or 17% of revenue in the prior-year period.

Members

Travelzoo had a total unduplicated number of members in North America and Europe of 24.5 million as of March 31, 2015, up 1% from December 31, 2014. In North America, total unduplicated number of members was 17.2 million as of March 31, 2015, up 1% from December 31, 2014. In Europe, total unduplicated number of members was 7.5 million as of March 31, 2015, up 2% from December 31, 2014.

Income Taxes

Income tax expense was $1.8 million, compared to $2.5 million income tax expense in the prior-year period. The effective income tax rate was 49%, up from 35% in the prior-year period, driven by certain state tax reserves recorded in the current period.

Asset Management

During the first quarter of 2015, Travelzoo generated $2.4 million of cash from operating activities. Accounts receivable increased by $619,000 over the prior-year period to $16.0 million. Accounts payable decreased by $6.5 million over the prior-year period to $22.5 million. Capital expenditures were $184,000, down from $1.0 million in the prior-year period. As of March 31, 2015, cash and cash equivalents were $54.0 million.

About Travelzoo

Travelzoo Inc. is a global Internet media company. With more than 27 million members in North America, Europe, and Asia Pacific and 25 offices worldwide, Travelzoo® publishes deals from more than 2,000 travel and entertainment companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value. In Asia Pacific, Travelzoo is independently owned and operated by Travelzoo (Asia) Ltd. and Travelzoo Japan K.K. under a license agreement with Travelzoo Inc.

     

Travelzoo Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 
Three months ended
March 31,
2015     2014
Revenues $   36,492 $   40,195
Cost of revenues 4,234 4,777
Gross profit 32,258 35,418
Operating expenses:
Sales and marketing 17,996 17,843
General and administrative 10,460 10,578
Total operating expenses 28,456 28,421
Income from operations 3,802 6,997
Other income (loss) (87) 122
Income before income taxes 3,715 7,119
Income taxes 1,806 2,481
Net income $   1,909 $   4,638
Net income per share:    
Basic $   0.13 $   0.31
Diluted $   0.13 $   0.31
Weighted average shares:
Basic 14,730 14,880
Diluted 14,730 14,970
 
         

Travelzoo Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

     March 31,     

     2015    

December 31,

2014

Assets
Current assets:
Cash and cash equivalents $   53,975 $   54,812
Accounts receivable, net 15,974 14,608
Income taxes receivable 2,885 3,756
Deposits 598 74
Prepaid expenses and other 2,530 2,802
Deferred tax assets 1,482 1,311
Total current assets 77,444 77,363
Deposits 559 1,087
Deferred tax assets 1,482 1,460
Restricted cash 1,325 1,393
Property and equipment, net 8,693 9,022
Intangible assets, net 104 163

Total assets

$   89,607 $   90,488
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 22,526 $ 23,008
Accrued expenses and other 10,518 10,135
Deferred revenue 1,470 1,192
Income tax payable 689 574
Reserve for unexchanged promotional shares 1,393
Total current liabilities 35,203 36,302
Long-term tax liabilities 11,608 10,936
Long-term deferred rent and other 3,194 3,436
Total liabilities 50,005 50,674
Common stock 163 163
Treasury stock (21,517) (21,517)
Additional paid-in capital 11,191 11,043
Accumulated other comprehensive loss (5,266) (2,997)
Retained earnings 55,031 53,122
Total stockholders’ equity 39,602 39,814
Total liabilities and stockholders’ equity $   89,607 $   90,488
 
     

Travelzoo Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 
Three months ended
March 31,
2015     2014
Cash flows from operating activities:
Net income $   1,909 $   4,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 771 701
Deferred income taxes (222) 76
Stock-based compensation 148 395
Provision for losses on accounts receivable 25 (52)
Net foreign currency effects 111 (9)
Changes in operating assets and liabilities:
Accounts receivable (1,764) (1,288)
Deposits (37) 133
Income tax receivable 851 1,266
Prepaid expenses and other 281 447
Accounts payable 201 (2,984)
Accrued expenses and other 729 (1,179)
Income tax payable 144 722
Reserve for unexchanged promotional shares (1,393) (1,226)
Other non-current liabilities 672 111
Net cash provided by operating activities 2,426 1,751
Cash flows from investing activities:
Release of restricted cash 200
Purchases of property and equipment (184) (1,019)
Net cash used in investing activities (184) (819)
Cash flows from financing activities:
Repurchase of common stock (5,569)
Reverse/forward stock split, including transaction costs (479)
Net cash used in financing activities (6,048)
Effect of exchange rate on cash and cash equivalents (3,079) (72)
Net decrease in cash and cash equivalents (837) (5,188)
Cash and cash equivalents at beginning of period 54,812 66,223
Cash and cash equivalents at end of period $   53,975 $   61,035
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net $ 361 $ 335
 
                 

Travelzoo Inc.

Segment Information

(Unaudited)

(In thousands)

 
Three months ended March 31, 2015

North

America

Europe

  Elimination  

Consolidated
Revenue from unaffiliated customers $                 24,713 $               11,779 $   $   36,492
Intersegment revenue 257 38 (295)
Total net revenues 24,970 11,817 (295) 36,492
Operating income $                 2,080 $               1,722 $   $   3,802
 
Three months ended March 31, 2014 North

America

Europe

  Elimination  

Consolidated
Revenue from unaffiliated customers $ 26,353 $ 13,842 $ $ 40,195
Intersegment revenue 221 12 (233)
Total net revenues 26,574 13,854 (233) 40,195
Operating income $                 4,604 $               2,393 $   $   6,997
 



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