Travelzoo Reports Third Quarter 2009 Results

• Press Release
• Source: Travelzoo
• On 8:00 am EDT, Wednesday October 28, 2009

NEW YORK--(BUSINESS WIRE)--Travelzoo Inc. (NASDAQ:TZOO - News):

• Revenue of $23.6 million, up 27% year-over-year
• Operating profit from continuing operations of $2.3 million, up 15% year-over-year
• Income from continuing operations of $0.08 per share, up from $0.03 in the prior-year period
• Net loss per share of ($0.02), compared to ($0.11) in the prior-year period
• Income tax rate of 50%

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Symbol	Price	Change
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Travelzoo Inc., a global Internet media company, today announced financial results for the third quarter ended September 30, 2009, with revenue of $23.6 million, an increase of 27% year-over-year. Operating profit from continuing operations was $2.3 million. Income from continuing operations was $1.3 million, with diluted income per share from continuing operations of $0.08, up from diluted income per share from continuing operations of $0.03 in the prior-year period. Revenue, operating profit and income from continuing operations for all periods exclude the results of Travelzoo’s Asia Pacific business segment which are reported as discontinued operations. Including discontinued operations, diluted net loss per share was ($0.02), down from diluted net loss per share of ($0.11) in the prior-year period.

“We are pleased to report a 27% revenue growth year-over-year. Growth was particularly strong in Europe. North America revenue saw the strongest year-over-year growth in over two years,” said Holger Bartel, CEO of Travelzoo. “We also increased operating profits in spite of record investments into subscriber acquisition and expenses related to the launch of Fly.com earlier this year.”

North America

North America business segment revenue grew 18% year-over-year to $18.9 million. Operating profit was $3.6 million, or 19.2% of revenue, down from an operating profit of $4.2 million, or 26.4% of revenue, in the prior-year period.

Europe

Europe business segment revenue grew 82% year-over-year to $4.8 million. In local currency terms, revenue grew 110% year-over-year. Operating loss was $1.3 million, compared to an operating loss of $2.2 million in the prior-year period. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007. In May 2008, Travelzoo began publishing its weekly Top 20^® list in Spain, after having operated a sales office in Barcelona since November 2006.

Subscribers

Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 16.3 million as of September 30, 2009, up 3.0 million, or 23%, from September 30, 2008, and up 1.1 million, or 7%, from June 30, 2009. In North America, total unduplicated number of subscribers was 13.0 million as of September 30, 2009, up 1.9 million, or 17%, from September 30, 2008 and up 658,000, or 5%, from June 30, 2009. In Europe, total unduplicated number of subscribers was 3.3 million as of September 30, 2009, up 1.2 million, or 55%, from September 30, 2008 and up 442,000, or 16%, from June 30, 2009.

Income Taxes

Income tax expense was $1.3 million, compared to $1.5 million in the prior-year period for continuing operations. The effective income tax rate was 50%, down from 74% in the prior-year period. Operating losses from our Europe business segment and our discontinued Asia Pacific business segment were treated as having no recognizable tax benefit.

Asset Management

During the third quarter, Travelzoo generated $664,000 of cash from operating activities. Accounts receivable decreased by $284,000 quarter-over-quarter and increased by $1.8 million over the prior-year period to $11.8 million. Accounts payable decreased by $233,000 quarter-over-quarter and increased by $1.5 million over the prior-year period to $7.4 million. Capital expenditures were $405,000, up from $320,000 in the prior quarter and down from $1.6 million in the prior-year period. Travelzoo exited the third quarter with $15.7 million in cash and cash equivalents.

Conference Call

Travelzoo will host a conference call to discuss third 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 Web cast.

About Travelzoo

Travelzoo is a global Internet media company. Travelzoo's media properties, which reach more than 18 million travel enthusiasts in the U.S., Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, Taiwan and the U.K., include the Travelzoo^® Web site (www.travelzoo.com), the Top 20^® list, the Newsflash™ e-mail alert service, the Travelzoo Network™, the SuperSearch™ search tool, and the Fly.com™ search engine. Travelzoo publishes offers from more than 1,000 advertisers around the world. Travelzoo's deal experts review offers to find the best travel deals and confirm their true value. Travelzoo’s global headquarters is in New York City.

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 Inc. All other company and product names mentioned are trademarks of their respective owners.

Travelzoo
Mindy Joyce, 212-521-4218 (Media)
mjoyce@travelzoo.com