Travelzoo® (NASDAQ: TZOO):
- Revenue of $20.3 million, down from $29.2 million
year-over-year
- Operating loss of $3.7 million
- Earnings per share (EPS) of ($0.32) attributable to Travelzoo
from continuing operations
- Cash flow used in operations of $3.1 million
Travelzoo, a global Internet media company that publishes
exclusive offers and experiences for members, today announced
financial results for the first quarter ended March 31, 2020.
Revenue was $20.3 million, down from $29.2 million year-over-year.
Reported revenue excludes revenue from discontinued operations in
Asia Pacific. Travelzoo's reported revenue consists of advertising
revenues and commissions, derived from and generated in connection
with purchases made by Travelzoo® members.
The operating loss for Q1 was $3.7 million attributable to
Travelzoo from continuing operations. At the consolidated level,
including minority interests, the operating loss from
continuing operations was $5.3 million. The losses were
primarily caused by two unusual, non-recurring expenses: a one-time
impairment charge of $2.9 million for intangible assets and
goodwill due to the COVID-19 pandemic, and an increased bad debt
provision of $1.0 million. EPS was ($0.32), down from $0.41 in
the prior-year period.
“Going into Q2, we were able to adjust our content offering
quickly and successfully. After 92% of Travelzoo members indicated
in an online survey they were interested in receiving travel deals
if the offers were flexible, we focused our weekly Top 20®, which
has for the past 20 years been the definitive list of the week’s
best travel deals on the Internet, on flexible and worry-free
offers. Travel dates of most deals are extended to late summer,
fall or even into 2021. Accelerating demand from members has
created a relatively strong business for Travelzoo. In Q2, we have
already generated cash flow from operations of more than $11
million quarter-to-date,” said Travelzoo’s Global CEO, Holger
Bartel.
Cash PositionDuring Q2 2020, Travelzoo’s cash
position will be increasing significantly. As of March 31,
2020, cash, cash equivalents and restricted cash were $14.4
million. The estimated cash flow from operations in Q2 2020 is $13
to $14 million. In April, Travelzoo received a low-interest
government loan of $3.1 million. In June, a payment of $6.8 million
was made to partially settle the outstanding note due to the
sellers of Jack’s Flight Club, leaving a balance of $1.7 million as
an outstanding note. Travelzoo’s estimated cash balance as of June
30, 2020, will be in the range of $24 million to $25 million.
North AmericaNorth America business segment
revenue decreased 32% year-over-year to $12.7 million. Operating
loss for the first quarter was $976,000, or (8%) of revenue,
compared to an operating profit of $4.5 million, or 24% of revenue
in the prior-year period.
EuropeEurope business segment revenue decreased
34% year-over-year to $6.9 million. In constant currencies, revenue
decreased 33% year-over-year. Operating loss for the first quarter
was $1.3 million, or (19%) of revenue, compared to an operating
profit of $2.1 million, or 20% of revenue in the prior-year
period.
Jack’s Flight ClubOn January 13, 2020,
Travelzoo acquired 60% of Jack’s Flight Club®, a subscription
service. For the period from January 13, 2020 to March 31, 2020,
the new Jack's Flight Club business segment generated $1.1 million
in revenue from subscriptions with operating profit of $592,000.
After the consolidation with Travelzoo, Jack’s Flight Club reported
an operating loss of $3.0 million, with $1.8 million attributable
to Travelzoo, as a result of recording one-time impairment charges
for indefinite-lived intangible assets (tradenames) for $810,000
and goodwill for $2.1 million along with acquisition related
expenses.
Discontinued OperationsAs announced in a press
release on March 10, 2020, Travelzoo decided to exit its Asia
Pacific business which incurred a loss of $7.2 million in 2019 and
reduced EPS by $0.60. The Asia Pacific business was classified as
discontinued operations at March 31, 2020. Prior periods have been
reclassified to conform with the current presentation. Certain
reclassifications have been made for current and prior periods
between the continued operations and the discontinued operations in
accordance with U.S. GAAP.
Members and SubscribersAs of March 31,
2020, Travelzoo had an unduplicated number of members of 26.0
million from North America and Europe. In Europe, the unduplicated
number of members was 9.2 million as of March 31, 2020, up 3%
from March 31, 2019. In North America, the unduplicated number
of members was 16.9 million as of March 31, 2020, down 3% from
March 31, 2019. The number of new members in Q1 2020 was
634,000, compared to 667,000 in Q1 2019. On June 16, Travelzoo
disclosed that it has sold its subsidiary in Japan, Travelzoo Japan
K.K., to Mr. Hajime Suzuki. In connection with the sale, Travelzoo
and Travelzoo Japan K.K. entered into a licensing agreement. Under
the licensing agreement, Travelzoo’s existing members in Japan will
continue to be owned by Travelzoo as the licensor. Jack’s Flight
Club had 1.7 million subscribers as of March 31, 2020, up 38% from
March 31, 2019.
Income TaxesIncome tax benefit was $517,000,
compared to an income tax expense of $1.7 million in the prior-year
period.
Asset ManagementDuring the first quarter of
2020, Travelzoo used $3.1 million of cash in operating activities.
Accounts payable decreased by $6.4 million to $12.8 million.
Accounts receivable decreased by $2.5 million to $7.7 million. Cash
used in investing activities was $810,000. Cash used in financing
activities of $2.2 million. As of March 31, 2020, cash, cash
equivalents and restricted cash were $14.4 million.
Conference CallTravelzoo will host a conference
call to discuss first quarter results today at 11:00 a.m. ET.
Please visit http://ir.travelzoo.com/events-presentations to
- download the management presentation (PDF format) to be
discussed in the conference call; and
- access the webcast.
About TravelzooTravelzoo® provides
our 30 million members insider deals and one-of-a-kind experiences
personally reviewed by one of our deal experts around the globe. 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.
Investor Relations:Almira Puschir@travelzoo.com
TravelzooCondensed
Consolidated Statements of
Operations(Unaudited)(In
thousands, except per share amounts)
| |
Three months ended |
| |
March 31, |
| |
2020 |
|
2019 |
|
Revenues |
$ |
20,327 |
|
|
$ |
29,160 |
|
|
Cost of revenues |
2,703 |
|
|
2,865 |
|
|
Gross profit |
17,624 |
|
|
26,295 |
|
|
Operating expenses: |
|
|
|
|
Sales and marketing |
13,094 |
|
|
13,534 |
|
|
Product development |
1,428 |
|
|
1,659 |
|
|
General and administrative |
5,522 |
|
|
4,532 |
|
|
Impairment of intangible assets and goodwill |
2,920 |
|
|
— |
|
|
Total operating expenses |
22,964 |
|
|
19,725 |
|
|
Operating income |
(5,340 |
) |
|
6,570 |
|
|
Other income (loss), net |
(6 |
) |
|
45 |
|
|
Income (loss) from continuing operations before income taxes |
(5,346 |
) |
|
6,615 |
|
|
Income tax expense (benefit) |
(517 |
) |
|
1,670 |
|
|
Income (loss) from continuing operations |
(4,829 |
) |
|
4,945 |
|
|
Income (loss) from discontinued operations, net of taxes |
(2,919 |
) |
|
(1,825 |
) |
|
Net income (loss) |
(7,748 |
) |
|
3,120 |
|
|
Net income (loss) attributable to non-controlling interest |
(1,139 |
) |
|
— |
|
|
Net income (loss) attributable to Travelzoo |
$ |
(6,609 |
) |
|
$ |
3,120 |
|
|
|
|
|
|
|
Net income (loss) attributable to Travelzoo—continuing
operations |
(3,690 |
) |
|
4,945 |
|
|
Net income (loss) attributable to Travelzoo—discontinued
operations |
(2,919 |
) |
|
(1,825 |
) |
|
|
|
|
|
|
Income (loss) per share—basic |
|
|
|
|
Continuing operations |
$ |
(0.32 |
) |
|
$ |
0.41 |
|
|
Discontinued operations |
$ |
(0.26 |
) |
|
$ |
(0.15 |
) |
|
Net income (loss) per share —basic |
$ |
(0.58 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
|
Income (loss) per share—diluted |
|
|
|
|
Continuing operations |
$ |
(0.32 |
) |
|
$ |
0.41 |
|
|
Discontinued operations |
$ |
(0.26 |
) |
|
$ |
(0.15 |
) |
|
Net income (loss) per share—diluted |
$ |
(0.58 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
|
Shares used in per share calculation from continuing
operations—basic |
11,439 |
|
|
11,914 |
|
|
Shares used in per share calculation from discontinued
operations—basic |
11,439 |
|
|
11,914 |
|
|
|
|
|
|
|
Shares used in per share calculation from continuing
operations—diluted |
11,439 |
|
|
12,224 |
|
|
Shares used in per share calculation from discontinued
operations—diluted |
11,439 |
|
|
11,914 |
|
TravelzooCondensed
Consolidated Balance
Sheets(Unaudited)
| (In
thousands) |
March 31, 2020 |
|
December 31, 2019 |
| Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
12,130 |
|
|
$ |
18,743 |
|
|
Accounts receivable, net |
7,653 |
|
|
11,209 |
|
|
Prepaid income taxes |
— |
|
|
989 |
|
|
Deposits |
112 |
|
|
105 |
|
|
Prepaid expenses and other |
1,713 |
|
|
2,288 |
|
|
Assets from discontinued operations |
2,251 |
|
|
3,961 |
|
|
Total current assets |
23,859 |
|
|
37,295 |
|
|
Deposits and other |
430 |
|
|
572 |
|
|
Deferred tax assets |
3,404 |
|
|
2,051 |
|
|
Restricted cash |
1,130 |
|
|
1,135 |
|
|
Investment in WeekenGO |
2,258 |
|
|
2,484 |
|
|
Operating lease right-of-use assets |
11,210 |
|
|
8,140 |
|
|
Property and equipment, net |
1,964 |
|
|
2,861 |
|
|
Intangible assets, net |
5,595 |
|
|
|
— |
|
|
Goodwill |
10,944 |
|
|
|
— |
|
|
Total assets |
$ |
60,794 |
|
|
$ |
54,538 |
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
12,836 |
|
|
$ |
19,349 |
|
|
Accrued expenses and other |
6,528 |
|
|
6,281 |
|
|
Deferred revenue |
2,451 |
|
|
786 |
|
|
Operating lease liabilities |
4,801 |
|
|
4,847 |
|
|
Promissory notes payable |
9,971 |
|
|
— |
|
|
Income tax payable |
519 |
|
|
914 |
|
|
Liabilities from discontinued operations |
2,289 |
|
|
3,135 |
|
|
Total current liabilities |
39,395 |
|
|
35,312 |
|
|
Long-term tax liabilities |
367 |
|
|
359 |
|
|
Deferred tax liabilities |
1,210 |
|
|
— |
|
|
Long-term operating lease liabilities |
12,921 |
|
|
7,920 |
|
|
Other long-term liabilities |
84 |
|
|
84 |
|
|
Total liabilities |
53,977 |
|
|
43,675 |
|
|
Non-controlling interest |
4,616 |
|
|
— |
|
|
Common stock |
113 |
|
|
115 |
|
|
Additional paid-in capital |
— |
|
|
— |
|
|
Accumulated other comprehensive loss |
6,411 |
|
|
14,200 |
|
|
Retained earnings |
(4,323 |
) |
|
(3,452 |
) |
|
Total stockholders’ equity |
2,201 |
|
|
10,863 |
|
|
Total liabilities and stockholders’ equity |
$ |
60,794 |
|
|
$ |
54,538 |
|
TravelzooCondensed
Consolidated Statements of Cash
Flows(Unaudited)(In
thousands)
| |
Three months ended |
| |
March 31, |
| |
2020 |
|
2019 |
| Cash flows from
operating activities: |
|
|
|
|
Net income (loss) |
$ |
(7,748 |
) |
|
$ |
3,120 |
|
| Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
Depreciation and amortization |
551 |
|
|
330 |
|
|
Stock-based compensation |
23 |
|
|
163 |
|
|
Deferred income tax |
(609 |
) |
|
341 |
|
|
Impairment of intangible assets and goodwill |
2,920 |
|
|
— |
|
|
Loss on long-lived assets |
437 |
|
|
— |
|
|
Loss on equity investment in WeekenGO |
195 |
|
|
159 |
|
|
Net foreign currency effects |
(681 |
) |
|
(21 |
) |
|
Provision of loss on accounts receivable and other |
1,441 |
|
|
77 |
|
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
Accounts receivable |
2,509 |
|
|
(2,980 |
) |
|
Income tax receivable |
989 |
|
|
389 |
|
|
Prepaid expenses and other |
862 |
|
|
425 |
|
|
Accounts payable |
(6,393 |
) |
|
(1,101 |
) |
|
Accrued expenses and other |
704 |
|
|
1,733 |
|
|
Deferred revenue |
889 |
|
|
(146 |
) |
|
Income tax payable |
(333 |
) |
|
988 |
|
|
Other liabilities |
1,188 |
|
|
(71 |
) |
| Net cash provided by (used in)
operating activities |
(3,056 |
) |
|
3,406 |
|
| Cash flows from
investing activities: |
|
|
|
|
Acquisition of business, net of cash acquired |
(679 |
) |
|
— |
|
|
Purchases of property and equipment |
(131 |
) |
|
(131 |
) |
| Net cash used in investing
activities |
(810 |
) |
|
(131 |
) |
| Cash flows from
financing activities: |
|
|
|
|
Repurchase of common stock |
(1,205 |
) |
|
(1,591 |
) |
|
Payment of promissory notes |
(1,000 |
) |
|
— |
|
|
Proceeds from exercise of stock options, net of taxes paid for net
share settlement of equity awards |
— |
|
|
(26 |
) |
| Net cash used in financing
activities |
(2,205 |
) |
|
(1,617 |
) |
| Effect of exchange rate on
cash, cash equivalents and restricted cash |
(272 |
) |
|
152 |
|
| Net increase (decrease) in
cash, cash equivalents and restricted cash |
(6,343 |
) |
|
1,810 |
|
| Cash, cash equivalents and
restricted cash at beginning of period |
20,710 |
|
|
19,461 |
|
| Cash, cash equivalents and
restricted cash at end of period |
$ |
14,367 |
|
|
$ |
21,271 |
|
| Supplemental disclosure of
cash flow information: |
|
|
|
| Cash paid (refunded) for
income taxes, net |
$ |
542 |
|
|
$ |
(60 |
) |
TravelzooSegment
Information(Unaudited)(In
thousands)
| Three months ended
March 31, 2020 |
North America |
|
Europe |
|
Jack's Flight Club |
|
Elimination |
|
Consolidated |
|
Revenue from unaffiliated customers |
$ |
12,549 |
|
|
$ |
7,103 |
|
|
$ |
683 |
|
|
$ |
(8 |
) |
|
$ |
20,327 |
|
| Intersegment revenue |
148 |
|
|
(156 |
) |
|
— |
|
|
8 |
|
|
— |
|
| Total net revenues |
12,697 |
|
|
6,947 |
|
|
683 |
|
|
— |
|
|
20,327 |
|
| Operating income (loss) |
$ |
(976 |
) |
|
$ |
(1,341 |
) |
|
$ |
(3,015 |
) |
|
$ |
(8 |
) |
|
$ |
(5,340 |
) |
| |
|
|
|
|
|
|
|
|
|
| Three months ended
March 31, 2019 |
North America |
|
Europe |
|
Jack's Flight Club |
|
Elimination |
|
Consolidated |
| Revenue from unaffiliated
customers |
$ |
18,136 |
|
|
$ |
11,054 |
|
|
$ |
— |
|
|
$ |
(30 |
) |
|
$ |
29,160 |
|
| Intersegment revenue |
451 |
|
|
(481 |
) |
|
— |
|
|
30 |
|
|
(30 |
) |
| Total net revenues |
18,587 |
|
|
10,573 |
|
|
— |
|
|
|
|
29,130 |
|
| Operating income (loss) |
$ |
4,463 |
|
|
$ |
2,137 |
|
|
$ |
— |
|
|
$ |
(30 |
) |
|
$ |
6,570 |
|
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