Travelzoo Revenue of $37.0 Million, Up 30% Year-over-year Q1 2011
Subscribers grew by over 1 million, the second best performance in company’s history
“We kicked off 2011 with record revenues and record adjusted operating income. Subscribers grew by over 1 million, the second best performance in our company’s history”
- Revenue of $37.0 million, up 30% year-over-year
- Non-GAAP net income of $6.0 million, up 144% year-over year
- Non-GAAP earnings per share of $0.37, compared to $0.15 in the prior year period
- GAAP net loss of $14.0 million; GAAP loss per share of $0.85
- Cash flow from operations of $10.7 million
Travelzoo Inc., a global Internet media company, today announced financial results for the first quarter ended March 31, 2011, with revenue of $37.0 million, an increase of 30% year-over-year. Adjusted operating profit was $10.0 million. Adjusted net income was $6.0 million, with adjusted diluted net income per share (EPS) of $0.37, up from $0.15 in the prior-year period. Adjusted operating profit, adjusted net income and adjusted diluted earnings per share for the first quarter ended March 31, 2011 exclude a one-time expense item of $20.0 million related to the settlement of the State of Delaware unclaimed property review.
“We kicked off 2011 with record revenues and record adjusted operating income. Subscribers grew by over 1 million, the second best performance in our company’s history,” said Chris Loughlin, CEO of Travelzoo. “We doubled adjusted operating income year-over-year as we continued to ramp up Local Deals, which are now live in 48 markets in 6 countries. North America revenues grew at the fastest pace in over 4 years. Europe saw the highest quarterly subscriber growth ever and returned its first significant quarterly profit. We also reached a settlement agreement for a previously disclosed State of Delaware escheatment claim, incurring a one-time cash expense.”
North America
North America business segment revenue grew 23% year-over-year to $27.6 million. Adjusted operating profit was $9.3 million, or 34% of revenue, up from $6.1 million, or 27% of revenue, in the prior-year period.
Europe
Europe business segment revenue grew 53% year-over-year to $9.4 million. In local currency terms, revenue grew 49% year-over-year. Adjusted operating profit was $741,000, compared to an operating loss of $951,000 in the prior-year period.
Subscribers
Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 19.9 million as of March 31, 2011, up 12% from March 31, 2010, and up 6% from December 31, 2010. In North America, total unduplicated number of subscribers was 14.8 million as of March 31, 2011, up 7% from March 31, 2010 and up 4% from December 31, 2010. In Europe, total unduplicated number of subscribers was 5.1 million as of March 31, 2011, up 29% from March 31, 2010 and up 11% from December 31, 2010.
Asset Management
During the first quarter, Travelzoo generated $10.7 million of cash from operating activities. Accounts receivable increased by $3.1 million quarter-over-quarter and increased by $3.0 million over the prior-year period to $16.4 million. Accounts payable increased by $3.7 million quarter-over-quarter and increased by $6.8 million over the prior-year period to $13.6 million. Capital expenditures were $699,000, up from $138,000 in the prior quarter and up from $396,000 in the prior-year period. Travelzoo exited the first quarter with $51.7 million in cash and cash equivalents.
State of Delaware Unclaimed Property Settlement
On April 21, 2011, Travelzoo entered into an agreement with the State of Delaware resolving all claims relating to a previously-announced unclaimed property review. The primary issue raised in the preliminary findings from the review, received by Travelzoo on April 12, 2011, concerned the shares of Travelzoo which have not been claimed by former shareholders of Travelzoo.com Corporation following a 2002 merger, as previously disclosed in the company’s report on Form 10-K. In the preliminary findings under the unclaimed property review, up to 3.0 million shares were identified as "demandable" under Delaware escheat laws. While Travelzoo continues to take the position that such shares are issuable only to persons who establish their eligibility as shareholders, the company determined that it was in its best interest to promptly resolve all claims relating to the unclaimed property review. Travelzoo will make a one-time $20.0 million cash payment to the State of Delaware and is receiving a complete release of those claims. Travelzoo will provide the amount from cash on hand.
| Travelzoo Inc. | |||||||||
| Condensed Consolidated Statements of Operations | |||||||||
| (Unaudited) | |||||||||
| (In thousands, except per share amounts) | |||||||||
|
Three months ended |
|||||||||
| 2011 | 2010 | ||||||||
| Revenues | $ | 36,960 | $ | 28,518 | |||||
| Cost of revenues | 2,419 | 1,653 | |||||||
|
Gross profit |
34,541 | 26,865 | |||||||
| Operating expenses: | |||||||||
| Sales and marketing | 16,154 | 14,993 | |||||||
| General and administrative | 8,394 | 6,712 | |||||||
| Settlement with State of Delaware | 20,000 | - | |||||||
| Total operating expenses | 44,548 | 21,705 | |||||||
| Income (loss) from operations | (10,007 | ) | 5,160 | ||||||
| Other income and expense: | |||||||||
| Interest income and other income | 32 | 42 | |||||||
| Gain (loss) on foreign currency | 31 | (209 | ) | ||||||
| Income (loss) before income taxes | (9,944 | ) | 4,993 | ||||||
| Income taxes | 4,011 | 2,519 | |||||||
| Net income (loss) | $ | (13,955 | ) | $ | 2,474 | ||||
| Basic net income (loss) per share | $ | (0.85 | ) | $ | 0.15 | ||||
| Diluted net income (loss) per share | $ | (0.85 | ) | $ | 0.15 | ||||
|
Shares used in computing basic net income (loss) |
16,451 |
16,444 |
|||||||
|
Shares used in computing diluted net income (loss) |
16,451 |
16,452 |
|||||||
| Travelzoo Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (Unaudited) | |||||||||
| (In thousands) | |||||||||
| March 31, 2011 |
December 31, 2010 |
||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 51,698 | $ | 41,184 | |||||
| Accounts receivable, net | 16,409 | 13,290 | |||||||
| Income taxes receivable | - | 264 | |||||||
| Deposits | 132 | 129 | |||||||
| Prepaid expenses and other current assets | 1,312 | 1,489 | |||||||
| Deferred tax assets | 1,411 | 1,411 | |||||||
| Total current assets | 70,962 | 57,767 | |||||||
| Deposits, less current portion | 848 | 279 | |||||||
| Deferred tax assets, less current portion | 349 | 349 | |||||||
| Restricted cash | 3,125 | 3,124 | |||||||
| Property and equipment, net | 3,735 | 3,425 | |||||||
| Intangible assets, net | 969 | 1,058 | |||||||
| Total assets | $ | 79,988 | $ | 66,002 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Accounts payable | 13,602 | 9,931 | |||||||
| Accrued settlement with State of Delaware | 20,000 | - | |||||||
| Accrued expenses | 9,653 | 6,080 | |||||||
| Deferred revenue | 1,362 | 1,325 | |||||||
| Deferred rent | 164 | 218 | |||||||
| Income tax payable | 479 | 650 | |||||||
| Total current liabilities | 45,260 | 18,204 | |||||||
| Deferred tax liabilities | 86 | - | |||||||
| Long-term tax liabilities | 1,463 | 1,449 | |||||||
| Deferred rent, less current portion | 527 | 460 | |||||||
| Common stock | 165 | 164 | |||||||
| Additional paid-in capital | 7,093 | 6,598 | |||||||
| Accumulated other comprehensive loss | (816 | ) | (1,038 | ) | |||||
| Retained earnings | 26,210 | 40,165 | |||||||
| Total stockholders' equity | 32,652 | 45,889 | |||||||
|
Total liabilities and |
$ | 79,988 | $ | 66,002 | |||||
|
|
|
||||||||
| Travelzoo Inc. | |||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||
| (Unaudited) | |||||||||
| (In thousands) | |||||||||
| Three months ended March 31, |
|||||||||
| 2011 | 2010 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net income (loss) | $ | (13,955 | ) | $ | 2,474 | ||||
|
Adjustments to reconcile net income (loss) to net cash |
|||||||||
| Depreciation and amortization | 643 | 562 | |||||||
| Deferred income taxes | 86 | - | |||||||
| Stock-based compensation | 187 | 187 | |||||||
| Provision for losses on accounts receivable | 18 | 39 | |||||||
| Tax benefit of stock option exercises | (268 | ) | - | ||||||
| Net foreign currency effects | (31 | ) | 209 | ||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | (2,918 | ) | (2,321 | ) | |||||
| Deposits | (561 | ) | (8 | ) | |||||
| Income tax receivable | 264 | 6,061 | |||||||
| Prepaid expenses and other current assets | 193 | 130 | |||||||
| Accounts payable | 3,436 | 38 | |||||||
| Accrued settlement with State of Delaware | 20,000 | - | |||||||
| Accrued expenses | 3,433 | 1,256 | |||||||
| Deferred revenue | 19 | 412 | |||||||
| Deferred rent | 13 | 34 | |||||||
| Income tax payable | 89 | 683 | |||||||
| Other non-current liabilities | 14 | 11 | |||||||
| Net cash provided by operating activities | 10,662 | 9,767 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchases of property and equipment | (699 | ) | (396 | ) | |||||
| Net cash used in investing activities | (699 | ) | (396 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Proceeds from exercise of stock options | 40 | - | |||||||
| Tax benefit of stock option exercises | 268 | - | |||||||
| Proceeds from sale of Asia Pacific business segment | - | 1,073 | |||||||
| Net cash provided by financing activities | 308 | 1,073 | |||||||
| Effect of exchange rate on cash and cash equivalents | 243 | (95 | ) | ||||||
| Net increase in cash and cash equivalents | 10,514 | 10,349 | |||||||
| Cash and cash equivalents at beginning of period | 41,184 | 19,776 | |||||||
| Cash and cash equivalents at end of period | 51,698 | 30,125 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid for income taxes net of refunds received | $ | (3,558 | ) | $ | (4,225 | ) | |||
|
|
|
||||||||
| Travelzoo Inc. | ||||||||||||||||||||
| Segment Information | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
|
Three months ended |
North |
Europe |
Other(a) |
Elimination |
Consolidated |
|||||||||||||||
|
Revenue from |
$ |
27,517 |
|
$ |
9,443 |
$ |
- |
$ |
- |
$ |
36,960 |
|||||||||
| Intersegment revenue | 101 | 5 | - | (106 | ) | - | ||||||||||||||
| Total net revenues | 27,618 | 9,448 | - | (106 | ) | 36,960 | ||||||||||||||
| Operating income (loss) | $ | 9,252 | $ | 741 | $ | (20,000 | ) | $ | - | $ | (10,007 | ) | ||||||||
|
Three months ended |
North |
Europe |
Other |
Elimination |
Consolidated |
|||||||||||||||
|
Revenue from |
$ |
22,367 |
$ |
6,151 |
$ |
- |
$ |
- |
$ |
28,518 |
||||||||||
| Intersegment revenue | 29 | 9 | - | (38 | ) | - | ||||||||||||||
| Total net revenues | 22,396 | 6,160 | - | (38 | ) | 28,518 | ||||||||||||||
| Operating income (loss) | $ | 6,110 | $ | (951 | ) | $ | - | $ | 1 | $ | 5,160 | |||||||||
| Travelzoo Inc. | |||||||||
| Reconciliation of GAAP EPS to non-GAAP EPS | |||||||||
| (Unaudited) | |||||||||
| (In thousands, except per share amounts) | |||||||||
| Three months ended March 31, |
|||||||||
| 2011 | 2010 | ||||||||
| Operating income (loss) as reported under U.S. GAAP | $ | (10,007 | ) | $ |
5,160 |
|
|||
| State of Delaware settlement(a) | 20,000 | - | |||||||
| Adjusted operating income (a non-GAAP measure) | $ | 9,993 | $ | 5,160 | |||||
| Net income (loss) as reported under U.S. GAAP | $ | (13,955 | ) | $ | 2,474 | ||||
| State of Delaware settlement(a) | 20,000 | - | |||||||
| Adjusted net income (a non-GAAP measure) | $ | 6,045 | $ | 2,474 | |||||
|
Diluted earnings (loss) per share as reported under |
$ |
(0.85 |
) |
$ |
0.15 |
||||
| State of Delaware settlement(b) | 1.22 | - | |||||||
|
Adjusted diluted earnings per share |
$ |
0.37 |
$ |
0.15 |
|||||
| (a) | Results for the three months ended March 31, 2011 includes $20.0 million of expense related to the settlement of the State of Delaware unclaimed property review. |
| (b) | Net charges on a per share basis includes an adjustment to diluted earnings per share utilizing diluted shares of 16,551 for the three months ended March 31, 2011. Given that the Company recorded a net loss under U.S. GAAP, shares utilized to calculated diluted earnings per share are equivalent to basic shares. Shares utilized to calculate adjusted diluted earnings per share reflect the number of diluted shares the Company would have reported if reporting net income under U.S. GAAP. |
