Travelzoo Inc. (TZOO):
Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2013, with revenue of $42.2 million, an increase of 7% year-over-year. Operating profit was $8.0 million. Net income was $5.6 million, with earnings per share of $0.36, up from $0.23 in the prior-year period. Non-GAAP earnings per share was $0.36, down from $0.42 in the prior-year period.
“We kicked off 2013 with record revenues, driven by strong performance within our travel segments in both North America and Europe,” said Chris Loughlin, chief executive officer. “We accelerated subscriber growth and made significant improvements in audience engagement across email, social media and mobile apps. We continued to develop our new hotel booking platform, which we plan to roll out later this year.”
North America
North America business segment revenue increased 5% year-over-year to $30.2 million. Operating profit for the first quarter was $5.5 million, or 18% of revenue, down from $7.1 million, or 25% of revenue, in the prior-year period. The decrease in operating profit was a result of increased expenses related to sales force expansion, hotel booking platform development, traffic acquisition and subscriber marketing.
Europe
Europe business segment revenue increased 14% year-over-year to $12.4 million. In local currency terms, revenue for the first quarter increased 14% year-over-year. Operating profit was $2.5 million, or 21% of revenue, up from an operating profit of $2.4 million, or 23% of revenue in the prior-year period.
Subscribers
Travelzoo had a total unduplicated number of subscribers in North America and Europe of 22.9 million as of March 31, 2013, up 5% from March 31, 2012. In North America, total unduplicated number of subscribers was 16.3 million as of March 31, 2013, up 3% from March 31, 2012. In Europe, total unduplicated number of subscribers was 6.5 million as of March 31, 2013, up 9% from March 31, 2012.
Income Taxes
Income tax expense was $2.5 million, compared to $2.9 million in the prior-year period. The non-GAAP effective income tax rate was 31%, up from 30% in the prior-year period.
Asset Management
During the first quarter 2013, Travelzoo generated $6.5 million of cash from operating activities. Accounts receivable increased by $648,000 over the prior-year period to $15.3 million. Accounts payable increased by $4.5 million over the prior-year period to $26.9 million. Capital expenditures were $900,000, up from $678,000 in the prior-year period. Travelzoo exited the first quarter with $65.1 million in cash and cash equivalents.
Non-GAAP Measures
To give an enhanced view of the company's operating performance, management has calculated non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share by excluding the $3 million charge related to our unexchanged promotional merger shares in the prior-year period. The company believes these metrics assist investors to assess certain business trends in the same way that these trends are analyzed by management. The discussion of non-GAAP operating income, non-GAAP net income, and non-GAAP earnings share are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. As the only difference between GAAP and non-GAAP measures is the charge related to our unexchanged promotional merger shares in the prior- year period, today's reporting should not be viewed as the company's intention to report non-GAAP measures in future periods. Refer to the “Reconciliation of GAAP to Non-GAAP Measures” section of this release for a summary of these non-GAAP measures and their reconciliation to the reported GAAP measures.
Conference Call
Travelzoo will host a conference call to discuss first quarter results at 11:00 a.m. ET today. Please visit http://www.travelzoo.com/earnings to
About Travelzoo
Travelzoo Inc. is a global Internet media company. With more than 26 million subscribers 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.
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 Inc. All other company and product names mentioned are trademarks of their respective owners.
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Travelzoo Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) |
||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2013 | 2012 | |||||||||
|
Revenues |
$ | 42,177 | $ | 39,333 | ||||||
| Cost of revenues | 3,985 | 4,054 | ||||||||
| Gross profit | 38,192 | 35,279 | ||||||||
| Operating expenses: | ||||||||||
| Sales and marketing | 19,659 | 16,265 | ||||||||
| General and administrative | 10,497 | 9,444 | ||||||||
| Unexchanged promotional merger shares | — |
3,000 |
||||||||
| Total operating expenses | 30,156 | 28,709 | ||||||||
| Income from operations | 8,036 | 6,570 | ||||||||
| Other income | 31 | 99 | ||||||||
| Income before income taxes | 8,067 | 6,669 | ||||||||
| Income taxes | 2,472 | 2,922 | ||||||||
| Net income | $ | 5,595 | $ | 3,747 | ||||||
| Net income per share: | ||||||||||
| Basic | $ | 0.36 | $ | 0.23 | ||||||
| Diluted | $ | 0.36 | $ | 0.23 | ||||||
| Weighted Average Shares: | ||||||||||
| Basic | 15,362 | 15,962 | ||||||||
| Diluted | 15,371 | 16,019 | ||||||||
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Travelzoo Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) |
|||||||||||
| March 31,
2013 |
December 31,
2012 |
||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 65,107 | $ | 61,169 | |||||||
| Accounts receivable, net | 15,303 | 13,626 | |||||||||
| Income taxes receivable | 5,117 | 6,682 | |||||||||
| Deposits | 398 | 389 | |||||||||
| Prepaid expenses and other current assets | 2,187 | 2,260 | |||||||||
| Deferred tax assets | 2,426 | 2,194 | |||||||||
| Total current assets | 90,538 | 86,320 | |||||||||
| Deposits, less current portion | 1,208 | 1,107 | |||||||||
| Deferred tax assets, less current portion | 1,240 | 1,710 | |||||||||
| Restricted cash | 3,252 | 3,396 | |||||||||
| Property and equipment, net | 5,316 | 4,314 | |||||||||
| Intangible assets, net | 796 | 986 | |||||||||
| Total assets | $ | 102,350 | $ | 97,833 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 26,909 | $ | 28,695 | |||||||
| Accrued expenses | 12,796 | 11,993 | |||||||||
| Deferred revenue | 2,158 | 2,698 | |||||||||
| Deferred rent | 262 | 280 | |||||||||
| Income tax payable | 559 | — | |||||||||
| Total current liabilities | 42,684 | 43,666 | |||||||||
| Long-term tax liabilities | 10,133 | 10,030 | |||||||||
| Deferred rent, less current portion | 1,510 | 798 | |||||||||
| Total liabilities | 54,327 | 54,494 | |||||||||
| Common stock | 163 | 163 | |||||||||
| Treasury stock | (7,898 | ) | (7,898 | ) | |||||||
| Additional paid-in capital | 9,169 | 8,863 | |||||||||
| Accumulated other comprehensive loss | (1,954 | ) | (737 | ) | |||||||
| Retained earnings | 48,543 | 42,948 | |||||||||
| Total stockholders’ equity | 48,023 | 43,339 | |||||||||
| Total liabilities and stockholders’ equity | $ | 102,350 | $ | 97,833 | |||||||
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Travelzoo Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
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| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2013 | 2012 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 5,595 | $ | 3,747 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 716 | 627 | |||||||||
| Deferred income taxes | 193 | — | |||||||||
| Stock-based compensation | 307 | 287 | |||||||||
| Provision for losses on accounts receivable | 95 | 108 | |||||||||
| Net foreign currency effects | 94 | (35 | ) | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (2,036 | ) | (1,271 | ) | |||||||
| Deposits | (155 | ) | (132 | ) | |||||||
| Income tax receivable | 1,564 | 845 | |||||||||
| Prepaid expenses and other current assets | 350 | (295 | ) | ||||||||
| Accounts payable | (549 | ) | 460 | ||||||||
| Accrued expenses | 850 | 5,619 | |||||||||
| Deferred revenue | (517 | ) | 134 | ||||||||
| Deferred rent | (110 | ) | (75 | ) | |||||||
| Income tax payable | — | (284 | ) | ||||||||
| Other non-current liabilities | 103 | 52 | |||||||||
| Net cash provided by operating activities | 6,500 | 9,787 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (900 | ) | (678 | ) | |||||||
| Net cash provided by (used in) investing activities | (900 | ) | (678 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Net cash used in financing activities | — |
— |
|
||||||||
| Effect of exchange rate on cash and cash equivalents | (1,662 | ) | 706 | ||||||||
| Net increase in cash and cash equivalents | 3,938 | 9,815 | |||||||||
| Cash and cash equivalents at beginning of period | 61,169 | 38,744 | |||||||||
| Cash and cash equivalents at end of period | $ | 65,107 | $ | 48,559 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid for income taxes, net | $ | 328 | $ | 2,309 | |||||||
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Travelzoo Inc. Segment Information (Unaudited) (In thousands) |
|||||||||||||||||||
| Three months ended March 31, 2013 |
North America |
Europe |
Elimination | Consolidated | |||||||||||||||
| Revenue from unaffiliated customers | $ | 29,911 | $ | 12,266 | $ | — |
$ |
42,177 | |||||||||||
| Intersegment revenue | 262 | 108 | (370 | ) | — | ||||||||||||||
| Total net revenues | 30,173 | 12,374 | (370 | ) | 42,177 | ||||||||||||||
| Operating income | $ | 5,484 | $ | 2,552 | $ | — | $ | 8,036 | |||||||||||
| Three months ended March 31, 2012 | North
America |
Europe |
Elimination and Other (a) |
Consolidated | |||||||||||||||
| Revenue from unaffiliated customers | $ | 28,556 | $ | 10,777 | $ | — | $ | 39,333 | |||||||||||
| Intersegment revenue | 79 | 10 | (89 | ) | — | ||||||||||||||
| Total net revenues | 28,635 | 10,787 | (89 | ) | 39,333 | ||||||||||||||
| Operating income | $ | 7,142 | $ | 2,428 | $ | (3,000 | ) | $ | 6,570 | ||||||||||
|
(a) |
Includes a charge related to unexchanged promotional merger shares for the three months ended March 31, 2012. |
| Travelzoo Inc. | |||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | |||||||||||
| (Unaudited) | |||||||||||
| (In thousands, except per share and percentage amounts) | |||||||||||
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2013 |
2012 |
||||||||||
| GAAP operating income | $ | 8,036 | $ | 6,570 | |||||||
| Unexchanged promotional merger shares (a) | — |
3,000 |
|||||||||
| Non-GAAP operating income | $ | 8,036 | $ | 9,570 | |||||||
| GAAP net income | $ | 5,595 | $ | 3,747 | |||||||
| Unexchanged promotional merger shares (a) | — | 3,000 | |||||||||
| Non-GAAP net income | $ | 5,595 | $ | 6,747 | |||||||
| Diluted net income per share | $ | 0.36 | $ | 0.23 | |||||||
| Unexchanged promotional merger shares (a) | — | 0.19 | |||||||||
| Non-GAAP diluted net income per share | $ | 0.36 | $ | 0.42 | |||||||
| GAAP operating margin | 19.1 | % | 16.7 | % | |||||||
| Unexchanged merger shares (a) | — | 7.6 | % | ||||||||
| Non-GAAP operating margin | 19.1 | % | 24.3 | % | |||||||
| GAAP effective tax rate | 30.6 | % | 43.8 |
% |
|||||||
| Unexchanged merger shares (a) | — |
-13.6 |
% |
||||||||
| Non-GAAP effective tax rate | 30.6 | % | 30.2 | % | |||||||
|
(a) |
Includes a charge related to unexchanged promotional merger shares of $3.0 million for the three months ended March 31, 2012. |
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