Travelzoo Results

Travelzoo Reports Fourth Quarter 2017 Results

Revenue of $27.0 million, up 1% year-over-year

Travelzoo

Travelzoo (NASDAQ: TZOO):

  • 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 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.

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. 

         

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
               



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