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Travelzoo Inc Reports Operating Results (10-Q)

August 09, 2010 | About:

10qk

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Travelzoo Inc (TZOO) filed Quarterly Report for the period ended 2010-06-30.

Travelzoo Inc has a market cap of $259.98 million; its shares were traded at around $15.81 with a P/E ratio of 30.4 and P/S ratio of 2.77. Travelzoo Inc had an annual average earning growth of 28.4% over the past 10 years.

Highlight of Business Operations:

Our total revenues increased to $28.1 million for the three months ended June 30, 2010 from $23.6 million for the three months ended June 30, 2009. This represents an increase of $4.5 million or 19%. $2.5 million of the increase in revenues came from our operations in North America, which had an increase of 12% in revenues year-over-year and was attributed primarily to a $2.1 million increase in revenues from our publications, which includes the Travelzoo Web site, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $366,000 increase in revenue from our search products, which consists of SuperSearch and Fly.com. $2.0 million of the increase in revenues came from our operations in Europe, which had an increase of 49% in revenues year-over-year, and was attributed primarily to a $1.7 million increase in revenue from our publications, which includes the Travelzoo Web site, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $198,000 increase in revenue from our search products, which consists of SuperSearch and Fly.com. We launched Fly.com in Europe in October 2009. In local currency terms, revenues from our operations in Europe increased 55% year-over-year. The strengthening of the U.S. dollar relative to the British Pound Sterling and the Euro in the three months ended June 30, 2010 compared to the three months ended June 30, 2009 had an unfavorable impact on the revenues from our operations in Europe. Had foreign exchange rates remained constant in these periods, revenues from our operations in Europe for the three months ended June 30, 2010 would have been approximately $296,000 higher than reported revenues of $6.0 million.

Our total revenues increased to $56.6 million for the six months ended June 30, 2010 from $46.6 million for the six months ended June 30, 2009. This represents an increase of $10.0 million or 21.5%. $5.1 million of the increase in revenues came from our operations in Europe, which had an increase of 74% in revenues year-over-year, and was attributed primarily to a $4.5 million increase in revenue from our publications, which includes the Travelzoo Web site, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $636,000 increase in our search products, which consists of SuperSearch and Fly.com. We launched Fly.com in Europe in October 2009. In local currency terms, revenues from our operations in Europe increased 71% year-over-year. The weakening of the U.S. dollar relative to the British Pound Sterling and the Euro in the six months ended June 30, 2010 compared to the six months ended June 30, 2009 had a favorable impact on the revenues from our operations in Europe. Had foreign exchange rates remained constant in these periods, revenues from our operations in Europe for the six months ended June 30, 2010 would have been approximately $138,000 lower than reported revenues of $12.1 million. $4.8 million of the increase in revenues came from our operations in North America and was attributed primarily to a $4.3 million increase in revenues from our publications, which includes the Travelzoo Web site, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $478,000 increase in revenue from our search products, which consists of SuperSearch and Fly.com.

Cost of revenues consists primarily of network expenses, including fees we pay for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network, fees we pay related to user searches on Fly.com, amortization of capitalized Web site development costs, and salary expenses associated with network operations staff. Our cost of revenues increased to $1.6 million for the three months ended June 30, 2010 from $1.5 million for the three months ended June 30, 2009. As a percentage of revenue, cost of revenues decreased to 5.7% for the three months ended June 30, 2010 from 6.2% for the three months ended June 30, 2009. The $158,000 increase in cost of revenues for the three months ended June 30, 2010 compared to the three months ended June 30, 2009 was primarily due to a $93,000 increase in fees we pay related to user searches on Fly.com and a $72,000 increase in depreciation and maintenance costs.

Sales and marketing expenses increased to $29.0 million for the six months ended June 30, 2010 from $24.0 million for the six months ended June 30, 2009. The $5.0 million increase in sales and marketing expenses for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 was primarily due to a $1.9 million increase in salary and employee related expenses due in part to an increase in headcount, a $1.3 million increase in marketing expenses for Fly.com, a $963,000 increase in advertising to acquire new subscribers for our e-mail products and a $416,000 increase in advertising to acquire traffic to our Web sites. For the six months ended June 30, 2010 and 2009, advertising expenses accounted for 60% and 69%, respectively, of total sales and marketing expenses.

General and administrative expenses consist primarily of compensation for administrative, executive, and software development staff, fees for professional services, rent, bad debt expense, amortization of intangible assets, and general office expense. General and administrative expenses increased to $6.5 million for the three months ended June 30, 2010 from $6.2 million for the three months ended June 30, 2009. The $294,000 increase in general and administrative expenses was primarily due to a $110,000 increase in bank and merchant account fees and a $110,000 increase in employee development expenses.

General and administrative expenses increased to $13.2 million for the six months ended June 30, 2010 from $12.0 million for the six months ended June 30, 2009. The $1.2 million increase in general and administrative expenses was primarily due to a $431,000 increase in salary and employee related expenses, a $232,000 increase in professional services expense, a $175,000 increase in bank and merchant account fees, and a $172,000 increase in rent and office expense.

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10qk
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