NEW YORK, March 02, 2020 (GLOBE NEWSWIRE) — Travelzoo® (NASDAQ: TZOO):
Revenue of $26.9 million; consistent year-over-year in constant currencies
Cash flow from operations of $9.4 million
GAAP operating profit of $0.8 million
Earnings per share (EPS) of ($0.05)
New Travelzoo® members growth 18% higherAcquisition of fast-growing, highly profitable Jack’s Flight Club completed on January 13.Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the fourth quarter ended December 31, 2019. Global consolidated revenue was $26.9 million, a decrease of $164,000 year-over-year. In constant currencies, revenue was consistent year-over-year. Travelzoo’s reported revenue consists of advertising revenues and commissions, derived from and generated in connection with a much larger amount of purchases made by Travelzoo® members. The operating profit was $818,000. Operating profit was impacted by three factors: special marketing initiatives, including a TV advertising campaign with partner Deutsche Bahn in Germany; one-time HR expenses; and one-time restructuring expenses in Asia Pacific. After increased tax provisions, the reported net loss was $636,000. EPS was ($0.05), down from $0.13 in the prior-year period.“I would like to thank all Travelzoo employees worldwide who contributed to our solid financial results throughout 2019,” said Holger Bartel, Global CEO of Travelzoo. “We are excited about the prospects of our recent acquisition of Jack’s Flight Club, a highly profitable, best in class subscription service, on Travelzoo’s financial performance going forward. During the month of February alone, about 100,000 Travelzoo members in the UK signed up for Jack’s Flight Club. We will see an immediate contribution to Q1 2020 revenue and EPS. Then, throughout 2020, we plan to introduce Jack’s Flight Club to 30 million Travelzoo members.”Core Business versus Development Business
Our businesses in Europe and North America (the “Core Business”) and our business in Asia Pacific (the “Development Business”) are in very different situations. The following table illustrates how the Core Business compares to the Development Business:Europe
Europe business segment revenue increased 2% year-over-year to $9.1 million. In constant currencies, revenue increased 3% year-over-year. Operating profit for the fourth quarter was $823,000, or 9% of revenue, compared to an operating profit of $1.6 million, or 18% of revenue in the prior-year period.North America
North America business segment revenue decreased 1% year-over-year to $16.2 million. Operating profit for the fourth quarter was $2.0 million, or 13% of revenue, compared to an operating profit of $2.7 million, or 16% of revenue in the prior-year period.Asia Pacific
During the fourth quarter, our Asia Pacific segment saw a decrease in revenue of 12% year-over-year, a smaller decrease than in previous periods. Segment revenue was $1.6 million. Revenue from China increased by 11% quarter-over-quarter. The operating loss for the fourth quarter was $2.0 million, compared to $1.5 million in the prior-year period. Asia Pacific Q4 2019 operating loss includes one-time restructuring costs primarily related to Japan and Asia Pacific regional headquarters. As a result of the restructuring, fixed costs are expected to be substantially less going forward.Members
As of December 31, 2019, Travelzoo had a worldwide unduplicated number of members of 30.3 million. In Asia Pacific, unduplicated number of members was 3.6 million as of December 31, 2019, consistent with December 31, 2018. In Europe, unduplicated number of members was 9.1 million as of December 31, 2019, up 4% from December 31, 2018. In North America, unduplicated number of members was 17.7 million as of December 31, 2019, up 1% from December 31, 2018.The number of new members in Q4 2019 was 609,000, compared to 515,000 in Q4 2018. This represents an increase of 18% in new member growth.Income Taxes
Income tax expense was $1.3 million, compared to a $1.2 million income tax expense in the prior-year period. Travelzoo saw an unusually high income tax provision recorded for Q4 2019 of 167%, up from 43% in the prior-year period, primarily due to a one-time adjustment to pre-tax profit estimates for North America and Europe. Operating losses from the Development Business were not used to offset operating income from the Core Business.Asset Management
During the fourth quarter of 2019, Travelzoo generated $9.4 million of cash from operating activities. Accounts payable increased by $7.0 million to $20.4 million in the fourth quarter of 2019. Cash used in investing activities was $124,000. Cash used in financing activities of $2.0 million was for share repurchases. As of December 31, 2019, cash and cash equivalents were $19.5 million.Jack’s Flight Club
On January 13, 2020, Travelzoo completed the acquisition of a majority stake in Jack’s Flight Club. Jack’s Flight Club is a highly profitable, fast-growing and best in class subscription service that monitors flight prices and informs its members about airfare sales and cheap flights. It offers a free subscription as well as a premium service, for which members pay between $40 to $60 annually.At the time of the acquisition, the immediate contribution to Travelzoo’s financial performance was an additional 5% revenue growth and an additional EPS of $0.20 for 2020. In 2019, the number of premium members of Jack’s Flight Club grew 93% compared to 2018. Travelzoo’s plan is to accelerate this growth by introducing Jack’s Flight Club to Travelzoo members worldwide. Since January 30, more than 100,000 Travelzoo members in the UK alone signed up for Jack’s Flight Club.Conference Call
Travelzoo will host a conference call to discuss fourth quarter results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations todownload the management presentation (PDF format) to be discussed in the conference call;access the webcast.About Travelzoo
Travelzoo® provides our 30 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. With 22 offices worldwide, we have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. For over 20 years we have worked in partnership with more than 5,000 top travel suppliers-our long-standing relationships give Travelzoo members access to irresistible 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.
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