First Quarter 2014 Financial Highlights:
• Revenue of $40.2 million, down 5% year-over-year
• Operating profit of $7.0 million, down 13% year-over-year
• Net income of $4.6 million
• Earnings per share of $0.31, compared to $0.36 in the prior-year period
Travelzoo Inc., a global Internet media company, today announced financial results for the firstquarter ended March 31, 2014, with revenue of $40.2 million, a decrease of 5% year-over-year.
Operating profit was $7.0 million, down 13% year-over-year. Net income was $4.6 million, with diluted earnings per share of $0.31, down from $0.36 in the prior-year period.
"Our European business delivered strong results. North America reported weak revenue. NorthAmerica was impacted by a reduction in Search marketing spend and slow Local voucher sales,” said Chris Loughlin, chief executive officer. “A positive highlight is the record number of mobile downloads we saw in the quarter. We believe in our strategy of quickly adapting to mobile usage."
North America
North America business segment revenue decreased 12% year-over-year to $26.4 million.
Operating profit for the first quarter was $4.6 million, or 17% of revenue, down from $5.5 million, or 18% of revenue, in the prior-year period.
Europe
Europe business segment revenue increased 13% year-over-year to $13.8 million. In local currency terms, revenue increased 6% year-over-year. Operating profit for the first quarter was $2.4 million, or 17% of revenue, down from $2.6 million, or 21% of revenue in the prior-year period.
Subscribers
Travelzoo had a total unduplicated number of subscribers in North America and Europe of 23.6 million as of March 31, 2014, up 1% from December 31, 2013. In North America, total unduplicated number of subscribers was 16.7 million as of March 31, 2014, up 1% from December 31, 2013. In Europe, total unduplicated number of subscribers was 6.9 million as of March 31, 2014, up 2% from December 31, 2013.
Update on Hotel Booking Platform
Travelzoo launched the first phase of its hotel booking platform at the end of March. A select group of U.S. subscribers can now book hotels any night of the year through Travelzoo. "We are working with many new hotels that previously were unable to accept the Local voucher format," said Chris Loughlin, chief executive officer. "The new platform also makes it easier for our subscribers to book a hotel deal on their mobile phones." The hotel booking platform is expected to begin contributing to revenues in the second quarter, an average of 60 to 70 days after bookings occur. Travelzoo recognizes revenue upon the hotel stay and not at the time of booking.
Income Taxes
Income tax expense was $2.5 million, compared to $2.5 million in the prior-year period. The effective income tax rate was 35%, up from 31% in the prior-year period.
Asset Management
During the first quarter of 2014, Travelzoo generated $1.8 million of cash from operating activities.
Accounts receivable increased by $52,000 over the prior-year period to $15.4 million. Accounts payable increased by $2.1 million over the prior-year period to $29.0 million. Capital expenditures were $1.0 million, up from $900,000 in the prior-year period. As of March 31, 2014, cash and cash equivalents were $61.0 million.
