Travelzoo Reports Third Quarter 2017 Results

  Travelzoo Reports Third Quarter 2017 Results

Business Wire

NEW YORK -- October 26, 2017

Travelzoo® (NASDAQ:TZOO):

  * Revenue of $24.7 million, down 9% year-over-year in constant currencies
  * Operating profit of $18,000
  * Earnings (loss) per share of $(0.05)
  * Cash flow from operations of $122,000

Travelzoo, a global publisher of exclusive deals for members, today announced
financial results for the third quarter ended September 30, 2017, with revenue
of $24.7 million and operating profit of $18,000. In nominal terms, revenue
decreased by 8% year-over-year. In constant currencies, revenue decreased by
9% year-over-year. Net loss was $576,000, with earnings (loss) per share of
$(0.05).

"Revenues were impacted by the two large hurricanes hitting the Caribbean and
parts of the U.S. during the quarter," said Dr. Holger Bartel, Global CEO of
Travelzoo. "We intend to leverage Travelzoo's global reach and trusted brand
to improve earnings in future periods."

Asia Pacific

Asia Pacific business segment revenue decreased 31% year-over-year to $1.8
million. In constant currencies, revenue decreased 28% year-over-year.
Operating loss for the third quarter was $1.7 million, compared to an
operating loss of $798,000 in the prior-year period.

Europe

Europe business segment revenue decreased 6% year-over-year to $7.9 million.
In constant currencies, revenue decreased 9% year-over-year. Operating profit
for the third quarter was $309,000, or 4% of revenue, compared to operating
income of $1.4 million, or 17% of revenue in the prior-year period.

North America

North America business segment revenue decreased 5% year-over-year to $15.0
million. Operating profit for the third quarter was $1.4 million, or 9% of
revenue, compared to operating income of $1.3 million, or 8% of revenue in the
prior-year period.

Members

As of September 30, 2017, Travelzoo had a worldwide unduplicated number of
members of 29.5 million. In Asia Pacific, unduplicated number of members was
3.6 million as of September 30, 2017, up 1% from September 30, 2016. In
Europe, unduplicated number of members was 8.5 million as of September 30,
2017, up 4% from September 30, 2016. In North America, unduplicated number of
members remained at 17.4 million as of September 30, 2017.

Income Taxes

Income tax expense was $680,000, compared to a $748,000 income tax expense in
the prior-year period.

Asset Management

During the third quarter of 2017, Travelzoo generated $122,000 of cash for
operating activities. Accounts receivable decreased by $5.3 million over the
prior-year period to $11.4 million. Accounts payable decreased by $2.6 million
over the prior-year period to $16.0 million. Capital expenditures were
$180,000, up from $155,000 in the prior-year period. As of September 30, 2017,
cash and cash equivalents were $18.8 million.

Conference Call

Travelzoo will host a conference call to discuss third 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 pulse on 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            Nine months ended
                         September 30,                 September 30,
                         2017           2016           2017           2016
Revenues                 $ 24,687       $ 26,823       $ 79,527       $ 87,450
Cost of revenues         3,018          3,270          9,447          10,593
Gross profit             21,669         23,553         70,080         76,857
Operating expenses:
Sales and marketing      13,973         14,075         43,542         45,060
Product development      2,315          2,230          7,016          7,019
General and              5,363          5,373          16,056         16,620
administrative
Total operating          21,651         21,678         66,614         68,699
expenses
Income from
continuing               18             1,875          3,466          8,158
operations
Other income             86             251            111            293
(expense), net
Income from
continuing               104            2,126          3,577          8,451
operations before
income taxes
Income tax expense       680            748            2,660          3,450
Income (loss) from
continuing               $ (576   )     $ 1,378        $ 917          $ 5,001
operations
Income from
discontinued             —              241            1,938          687
operations, net of
income taxes
Net income (loss)        $ (576   )     $ 1,619        $ 2,855        $ 5,688
                                                                       
Income (loss) per
share—basic:
Continuing               $ (0.05  )     $ 0.10         $ 0.07         $ 0.35
operations
Discontinued             0.00           0.02           0.15           0.05
operations
Net income (loss)        $ (0.05  )     $ 0.12         $ 0.22         $ 0.40
per share—basic
                                                                       
Income (loss) per
share—diluted:
Continuing               $ (0.05  )     $ 0.10         $ 0.07         $ 0.35
operations
Discontinued             0.00           0.02           0.15           0.05
operations
Net income (loss)        $ (0.05  )     $ 0.12         $ 0.22         $ 0.40
per share—diluted
                                                                       
Weighted average
shares:
Basic                    12,628         13,839         13,023         14,109
Diluted                  12,628         13,867         13,040         14,119
                                                                       

                                                                
Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)
                                                                  
                                               September 30,     December 31,
                                               2017              2016
Assets
Current assets:
Cash and cash equivalents                      $  18,822         $  26,838
Accounts receivable, net                       11,434            14,415
Income taxes receivable                        1,540             542
Deposits                                       396               105
Prepaid expenses and other                     1,961             1,773
Deferred tax assets                            —                 793         
Total current assets                           34,153            44,466
Deposits and other                             508               702
Deferred tax assets                            1,800             1,052
Restricted cash                                1,438             1,152
Property and equipment, net                    5,265             6,158       
Total assets                                   $  43,164         $  53,530   
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                               $  15,966         $  19,714
Accrued expenses and other                     7,932             8,699
Deferred revenue                               897               719
Income tax payable                             936               691         
Total current liabilities                      25,731            29,823
Long-term tax liabilities                      2,563             2,879
Long-term deferred rent and other              2,721             2,764       
Total liabilities                              31,015            35,466      
Common stock                                   125               135
Additional paid-in capital                     —                 —
Accumulated other comprehensive loss           (3,556     )      (3,787     )
Retained earnings                              15,580            21,716      
Total stockholders’ equity                     12,149            18,064      
Total liabilities and stockholders’ equity     $  43,164         $  53,530   
                                                                             

                                                    
Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)
                                                      
                       Three months ended            Nine months ended
                       September 30,                 September 30,
                       2017           2016           2017           2016
Cash flows from
operating
activities:
Net income (loss)      $ (576   )     $ 1,619        $ 2,855        $ 5,688
Adjustments to
reconcile net
income (loss) to
net cash provided
by (used in)
operating
activities:
Depreciation and       504            606            1,605          1,856
amortization
Discontinued
operations gain on     —              —              (2,890   )     —
sale of Fly.com
domain name
Deferred income        97             (13      )     28             (224     )
taxes
Stock-based            206            251            686            692
compensation
Provision for
losses on accounts     (7       )     (28      )     (34      )     17
receivable
Net foreign            (69      )     (71      )     (293     )     (308     )
currency effects
Changes in
operating assets
and liabilities:
Accounts               1,301          1,715          3,388          (547     )
receivable
Income tax             (903     )     (823     )     (868     )     (299     )
receivable
Prepaid expenses       (199     )     (538     )     (417     )     (387     )
and other
Accounts payable       1,359          (2,177   )     (4,695   )     (4,391   )
Accrued expenses       (1,450   )     (2,628   )     (1,009   )     (2,074   )
and other
Income tax payable     (70      )     504            109            1,772
Other non-current      (71      )     69             (349     )     121       
liabilities
Net cash provided
by (used in)           122            (1,514   )     (1,884   )     1,916     
operating
activities
Cash flows from
investing
activities:
Proceeds from sale
of Fly.com domain      —              —              2,890          —
name
Purchases of
property and           (180     )     (155     )     (486     )     (802     )
equipment
Net cash provided
by (used in)           (180     )     (155     )     2,404          (802     )
investing
activities
Cash flows from
financing
activities:
Acquisition of the
Asia Pacific           —              —              —              58
business
Payment of loan to     —              —              —              (5,658   )
related party
Repurchase of          (2,732   )     (771     )     (9,556   )     (5,727   )
common stock, net
Net cash used in
financing              (2,732   )     (771     )     (9,556   )     (11,327  )
activities
Effect of exchange
rate on cash and       281            (281     )     1,020          (76      )
cash equivalents
Net decrease in
cash and cash          (2,509   )     (2,721   )     (8,016   )     (10,289  )
equivalents
Cash and cash
equivalents at         21,331         27,560         26,838         35,128    
beginning of
period
Cash and cash
equivalents at end     $ 18,822       $ 24,839       $ 18,822       $ 24,839  
of period
Supplemental
disclosure of cash
flow information:
Cash paid for          $ 1,628        $ 1,126        $ 4,858        $ 2,198
income taxes, net
Cash paid for
interest on            $ —            $ —            $ —            $ 110
related party loan
                                                                              

                                                                 
Travelzoo

Segment Information

(Unaudited)

(In thousands)
                                                                   
Three months
ended              Asia Pacific     Europe         North          Consolidated
September 30,                                      America
2017
Revenue from
unaffiliated       $  1,767         $ 8,008        $ 14,912       $   24,687
customers
Intersegment       6                (62      )     56             —
revenue
Total net          1,773            7,946          14,968         24,687
revenues
Operating          $  (1,679  )     $ 309          $ 1,388        $   18
profit (loss)
Three months
ended              Asia Pacific     Europe         North          Consolidated
September 30,                                      America
2016
Revenue from
unaffiliated       $  2,521         $ 8,614        $ 15,688       $   26,823
customers
Intersegment       36               (140     )     104            —
revenue
Total net          2,557            8,474          15,792         26,823
revenues
Operating          $  (798    )     $ 1,412        $ 1,261        $   1,875
profit (loss)
                                                                   
Nine months
ended              Asia Pacific     Europe         North          Consolidated
September 30,                                      America
2017
Revenue from
unaffiliated       $  5,574         $ 25,231       $ 48,722       $   79,527
customers
Intersegment       (38        )     (317     )     355            —
revenue
Total net          5,536            24,914         49,077         79,527
revenues
Operating          $  (4,385  )     $ 1,526        $ 6,325        $   3,466
profit (loss)
Nine months
ended              Asia Pacific     Europe         North          Consolidated
September 30,                                      America
2016
Revenue from
unaffiliated       $  7,173         $ 28,893       $ 51,384       $   87,450
customers
Intersegment       78               (403     )     325            —
revenue
Total net          7,251            28,490         51,709         87,450
revenues
Operating          $  (3,080  )     $ 5,022        $ 6,216        $   8,158
profit (loss)
                                                                       

View source version on businesswire.com:
http://www.businesswire.com/news/home/20171026005477/en/

Contact:

Investor Relations:
Travelzoo
Lijun Qi
ir@travelzoo.com
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