Travelzoo Reports First Quarter 2016 Results

Travelzoo Inc. (NASDAQ:TZOO):

• Revenue of $34.8 million, down 9% in constant currencies
• Operating profit of $3.1 million
• Earnings per share of $0.14, compared to $0.05 in the prior-year period
• Cash flow from operations of $1.4 million

Travelzoo, a global media commerce company, today announced financial results for the first quarter ended March 31, 2016, with revenue of $34.8 million and operating income of $3.1 million. In nominal terms, revenue decreased by 11% year-over-year. In constant currencies, revenue decreased by 9% year-over-year. Net income was $2.0 million, up 181% year-over-year. Diluted earnings per share (EPS) were $0.14, up from $0.05 in the prior-year period.

"In the first quarter of 2016, more than 1 million new members joined Travelzoo. Our objective remains to leverage Travelzoo's global scale and trusted brand for further improvements in earnings in future periods," said Holger Bartel, Chairman and Global CEO.

Asia Pacific

Asia Pacific business segment revenue decreased 15% year-over-year to $2.3 million. In constant currencies, revenue decreased 10% year-over-year. Operating loss for the first quarter was $1.0 million, compared to an operating loss of $833,000 in the prior-year period.

Europe

Europe business segment revenue decreased 6% year-over-year to $10.9 million. In constant currencies, revenue decreased 2% year-over-year. Operating income for the first quarter was $2.1 million, or 19% of revenue, up from $1.7 million, or 15% of revenue in the prior-year period.

North America

North America business segment revenue decreased 13% year-over-year to $21.7 million. Operating income for the first quarter was $2.1 million, or 10% of revenue, compared to an operating income of $2.1 million in the prior-year period.

Members

As of March 31, 2016, Travelzoo had a worldwide unduplicated number of members of 28.7 million. In Asia Pacific, unduplicated number of members was 3.5 million as of March 31, 2016, up 2% from March 31, 2015. In Europe, unduplicated number of members was 8.1 million as of March 31, 2016, up 8% from March 31, 2015. In North America, unduplicated number of members was 17.3 million as of March 31, 2016, up 1% from March 31, 2015.

Income Taxes

Income tax expense was $1.2 million, compared to a $1.8 million income tax expense in the prior-year period. The effective income tax rate was 38%, down from 71% in the prior-year period, primarily due to certain state tax reserves recorded in the prior-year period.

Asset Management

During the first quarter of 2016, Travelzoo generated $1.4 million of cash from operating activities. Accounts receivable decreased by $178,000 over the prior-year period to $17.4 million. Accounts payable decreased by $6.2 million over the prior-year period to $22.1 million. Capital expenditures were $145,000, down from $189,000 in the prior-year period. As of March 31, 2016, cash and cash equivalents were $28.8 million.

Other Information

Travelzoo Inc.'s financial results have been adjusted to include the financial results of Asia Pacific for the current and prior periods. In addition, certain prior period statement of operations amounts have been reclassified to conform to current period presentation primarily due to the allocation of facilities costs and separate disclosure of product development costs.

Conference Call

Travelzoo will host a conference call to discuss first 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 is a global media commerce company. With more than 28 million members in Asia Pacific, Europe, and North America and 25 offices worldwide, Travelzoo® publishes offers from more than 2,000 travel, entertainment and local companies. Travelzoo’s deal experts review offers to find the best deals and confirm their true value.

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160428005488/en/