Travelzoo Reports Fourth Quarter 2016 Results

NEW YORK--()--Travelzoo Inc. (NASDAQ:TZOO):

  • Revenue of $29.3 million, down 5% year-over-year in constant currencies
  • Operating profit of $1.9 million, compared to $976,000 in prior-year period
  • Earnings per share (EPS) of $0.07, compared to $0.03 in prior-year period
  • Cash flow from operations of $6.8 million

Travelzoo, a global publisher of travel and entertainment offers, today announced financial results for the fourth quarter ended December 31, 2016, with revenue of $29.3 million and operating income of $1.9 million. In nominal terms, revenue decreased by 9% year-over-year. In constant currencies, revenue decreased by 5% year-over-year. Net income was $943,000, with EPS of $0.07.

"We completed 2016 with the successful launch of the new Travelzoo® site along with increased operating profits and cash flows,” said Holger Bartel, Chairman and Global CEO. “In 2017, we will further increase the number of exclusive offers negotiated for our members.”

Asia Pacific

Asia Pacific business segment revenue decreased 6% year-over-year to $2.4 million. In constant currencies, revenue decreased 9% year-over-year. Operating loss for the fourth quarter ended December 31, 2016 was $808,000, compared to an operating loss of $920,000 in the prior-year period.

Europe

Europe business segment revenue decreased 15% year-over-year to $8.5 million. In constant currencies, revenue increased 3% year-over-year. Operating income for the fourth quarter ended December 31, 2016 was $574,000, or 7% of revenue, compared to operating income of $1.5 million, or 15% of revenue in the prior-year period.

North America

North America business segment revenue decreased 6% year-over-year to $18.3 million. Operating Income for the fourth quarter ended December 31, 2016 was $2.2 million, or 12% of revenue, up from $390,000 or 2% of revenue in the prior-year period.

Members

As of December 31, 2016, Travelzoo had a worldwide unduplicated number of members of 28.8 million. In Asia Pacific, unduplicated number of members was 3.6 million as of December 31, 2016, up 3% from December 31, 2015. In Europe, unduplicated number of members was 8.2 million as of December 31, 2016, up 4% from December 31, 2015. In North America, unduplicated number of members was 17.2 million as of December 31, 2016, flat from December 31, 2015.

Income Taxes

Income tax expense was $516,000, compared to a $165,000 income tax expense in the prior-year period, driven by higher operating income.

Asset Management

During the fourth quarter of 2016, we generated $6.8 million cash from operating activities. Accounts receivable decreased by $2.0 million over the prior-year period to $14.4 million. Accounts payable decreased by $3.9 million over the prior-year period to $19.7 million. Capital expenditures were $107,000, down from $397,000 in the prior-year period. As of December 31, 2016, cash and cash equivalents were $26.8 million.

Non-GAAP Information

To give an enhanced view of Travelzoo's operating performance, management has calculated non-GAAP income tax expense, non-GAAP effective tax rate, non-GAAP net income and non-GAAP earnings per share by excluding the release of a tax reserve related to the unexchanged promotional shares in the prior period. We believe these metrics assist investors to assess certain business trends in the same way that these trends are analyzed by management. The discussion of these non-GAAP metrics are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Non-GAAP metrics are merely a supplement to, and not a replacement for GAAP financial information. As the only difference between GAAP and non-GAAP information is the release of a tax reserve related to the unexchanged promotional shares in the prior-year period, today’s reporting should not be viewed as Travelzoo’s intention to report non-GAAP information in future periods. Refer to the “Reconciliation of GAAP to Non-GAAP Information” section of this press release for important information. Management presents year-over-year revenue percentage rates of change in constant currencies, calculated using prior-year period foreign currency rates on current-year period non-US revenue, as it believes this is a useful metric that facilitates comparison to historical performance.

Conference Call

Travelzoo will host a conference call to discuss fourth 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 vendors—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     Twelve months ended
December 31, December 31,
2016     2015 2016     2015
Revenues $ 29,262 $ 32,051 $ 128,552 $ 141,716
Cost of revenues 3,331   4,328   14,313   18,824  
Gross profit 25,931   27,723   114,239   122,892  
Operating expenses:
Sales and marketing 15,751 17,161 71,029 79,042
Product development 2,164 3,316 9,445 12,528
General and administrative 6,077   6,270   22,697   24,176  
Total operating expenses 23,992   26,747   103,171   115,746  
Income from operations 1,939 976 11,068 7,146
Other loss (480 ) (376 ) (187 ) (1,242 )
Income before income taxes 1,459 600 10,881 5,904
Income taxes 516   165   4,250   (4,960 )
Net income $ 943   $ 435   $ 6,631   $ 10,864  
Net income per share:        
Basic $ 0.07   $ 0.03   $ 0.47   $ 0.74  
Diluted $ 0.07   $ 0.03   $ 0.47   $ 0.74  
Weighted average shares:
Basic 13,665

14,699

13,997 14,722
Diluted 13,714

14,699

13,997 14,722
 
 
Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
   

December 31,
2016

   

December 31,
2015

Assets

Current assets:

Cash and cash equivalents $ 26,838 $ 35,128
Accounts receivable, net 14,415 16,398
Income taxes receivable 542 1,356
Deposits and other 105 782
Prepaid expenses and other 1,773 2,167
Deferred tax assets 793   1,230  

Total current assets

44,466 57,061
Deposits and other 702 516
Deferred tax assets 1,052 1,769
Restricted cash 1,152 1,328
Property and equipment, net 6,158   7,905  
Total assets $ 53,530   $ 68,579  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 19,714 $ 23,655
Accrued expenses and other 8,699 10,140
Deferred revenue 719 1,085
Income tax payable 691 477
Note payable to related party   5,658  
Total current liabilities 29,823 41,015
Long-term tax liabilities 2,879 3,000
Long-term deferred rent and other 2,764   3,177  
Total liabilities 35,466   47,192  
Common stock 135 150
Additional paid-in capital 7,759
Accumulated other comprehensive loss (3,787 ) (3,908 )
Retained earnings 21,716   17,386  
Total stockholders’ equity 18,064   21,387  
Total liabilities and stockholders’ equity $ 53,530   $ 68,579  
 
 
Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
    Three months ended     Twelve months ended
December 31, December 31,
2016   2015 2016   2015
Cash flows from operating activities:
Net income $ 943 $ 435 $ 6,631 $ 10,864
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 674 590 2,530 2,788
Deferred income taxes 25 138 (199 ) (269 )
Stock-based compensation 241 255 933 401
Provision for losses on accounts receivable 83 79 100 (20 )
Net foreign currency effects (7 ) (309 ) (315 ) 480
Changes in operating assets and liabilities:
Accounts receivable 2,233 1,145 1,737 (789 )
Income tax receivable 1,115 391 816 2,371
Prepaid expenses and other 971 552 533 675
Accounts payable 1,928 1,567 (2,463 ) (1,139 )
Accrued expenses and other 327 (1,173 ) (1,747 ) (1,681 )
Income tax payable (1,485 ) (467 ) 287 (161 )
Reserve for unexchanged promotional shares (1,393 )
Other non-current liabilities (242 ) (86 ) (121 ) (7,935 )
Net cash provided by operating activities 6,806   3,117   8,722   4,192  
Cash flows from investing activities:
Release of restricted cash (2 ) 64
Purchases of property and equipment (107 ) (397 ) (909 ) (1,282 )
Net cash used in investing activities (107 ) (399 ) (909 ) (1,218 )
Cash flows from financing activities:
Payment for the acquisition of Asia Pacific business 58 (16,974 )
Payment of loan to related party (5,658 ) (3,250 )
Proceeds from loan from related party 2,224
Increase in bank overdraft 44
Decrease in bank overdraft (385 )
Repurchase of common stock (3,936 ) (1,569 ) (9,662 ) (1,569 )
Reverse/forward stock split, including transaction costs       (102 )
Net cash used in financing activities (3,936 ) (1,569 ) (15,262 ) (20,012 )
Effect of exchange rate on cash and cash equivalents (764 ) (591 ) (841 ) (3,251 )
Net increase (decrease) in cash and cash equivalents 1,999 558 (8,290 ) (20,289 )
Cash and cash equivalents at beginning of period 24,839   34,570   35,128   55,417  
Cash and cash equivalents at end of period $ 26,838   $ 35,128   $ 26,838   $ 35,128  
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net $ 1,111 $ 59 $ 3,309 $ 801
Cash paid for interest on related party loan $ $ $ 110 $ 128
Note payable for Asia Pacific business $ $ $ $ 5,658
 
 
Travelzoo
Segment Information
(Unaudited)
(In thousands)
 
Three months ended December 31, 2016     Asia Pacific     Europe    

North
America

    Consolidated
Revenue from unaffiliated customers $ 2,456 $   8,722 $   18,084 $ 29,262
Intersegment revenue (7 ) (192 ) 199  
Total net revenues 2,449   8,530   18,283   29,262
Operating income (loss) $ (808 ) $   574   $   2,173   $ 1,939
Three months ended December 31, 2015 Asia Pacific Europe

North
America

Consolidated
Revenue from unaffiliated customers 2,619 10,028 19,404 32,051
Intersegment revenue (15 ) (34 ) 49  
Total net revenues 2,604   9,994   19,453   32,051
Operating income (loss) $ (920 ) $   1,506   $   390   $ 976
 
Twelve months ended December 31, 2016 Asia Pacific Europe

North
America

Consolidated
Revenue from unaffiliated customers $ 9,658 $ 38,637 $ 80,257 $ 128,552
Intersegment revenue 64   (701 ) 637  
Total net revenues 9,722   37,936   80,894   128,552
Operating income (loss) $ (3,866 ) $   6,085   $   8,849   $ 11,068
Twelve months ended December 31, 2015 Asia Pacific Europe

North
America

Consolidated
Revenue from unaffiliated customers $ 10,746 $ 42,588 $ 88,382 $ 141,716
Intersegment revenue (63 ) (456 ) 519  
Total net revenues 10,683   42,132   88,901   141,716
Operating income (loss) $ (2,435 ) $   3,871   $   5,710   $ 7,146
 
 
Travelzoo
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)
           
   
Three months ended Twelve months ended
December 31, December 31,
2016 2015 2016 2015
GAAP income tax expense (benefit) $ 516 $ 165 $ 4,250 $ (4,960 )
Non-GAAP adjustments*       8,413  
Non-GAAP income tax expense $ 516 $ 165 $ 4,250 $ 3,453
 
GAAP effective tax rate 35.4 % 27.5 % 39.1 % (84.0 ) %
Non-GAAP adjustments* % % % 142.5 %
Non-GAAP effective tax rate 35.4 % 27.5 % 39.1 % 58.5 %
 
GAAP net income $ 943 $ 435 $ 6,631 $ 10,864
Non-GAAP adjustments*       (8,413 )
Non-GAAP net income $ 943 $ 435 $ 6,631 $ 2,451
 
GAAP diluted earnings per share $ 0.07 $ 0.03 $ 0.47 $ 0.74
Non-GAAP adjustments*       (0.57 )
Non-GAAP earnings per share $ 0.07 $ 0.03 $ 0.47 $ 0.17
 

* Includes an $8.4 million release of a tax reserve for the twelve months ended December 31, 2015, related to the unexchanged promotional shares.

Contacts

Travelzoo Inc.
Investor Relations:
Lijun Qi
ir@travelzoo.com

Contacts

Travelzoo Inc.
Investor Relations:
Lijun Qi
ir@travelzoo.com