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Travelzoo Inc Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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Travelzoo Inc (TZOO) filed Quarterly Report for the period ended 2010-09-30.

Travelzoo Inc has a market cap of $554.2 million; its shares were traded at around $33.7 with a P/E ratio of 51.1 and P/S ratio of 5.9. Travelzoo Inc had an annual average earning growth of 28.4% over the past 10 years.TZOO is in the portfolios of Jim Simons of Renaissance Technologies LLC.
This is the annual revenues and earnings per share of TZOO over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of TZOO.


Highlight of Business Operations:

Our total revenues increased to $27.7 million for the three months ended September 30, 2010 from $23.6 million for the three months ended September 30, 2009. This represents an increase of $4.1 million or 17%. $2.3 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 $1.1 million increase in revenues from our publications, which includes the Travelzoo website, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $755,000 increase in revenue from our search products, which consists of SuperSearch and Fly.com. $1.8 million of the increase in revenues came from our operations in Europe, which had an increase of 37% in revenues year-over-year, and was attributed primarily to a $1.4 million increase in revenue from our publications, which includes the Travelzoo website, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $320,000 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 45% year-over-year. The strengthening of the U.S. dollar relative to the British Pound Sterling and the Euro in the three months ended September 30, 2010 compared to the three months ended September 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 September 30, 2010 would have been approximately $501,000 higher than reported revenues of $6.5 million.

Our total revenues increased to $84.3 million for the nine months ended September 30, 2010 from $70.2 million for the nine months ended September 30, 2009. This represents an increase of $14.1 million or 20%. $7.2 million of the increase in revenues came from our operations in North America and was attributed primarily to a $5.4 million increase in revenues from our publications, which includes the Travelzoo website, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $1.2 million increase in revenue from our search products, which consists of SuperSearch and Fly.com. $6.9 million of the increase in revenues came from our operations in Europe, which had an increase of 59% in revenues year-over-year, and was attributed primarily to a $5.9 million increase in revenue from our publications, which includes the Travelzoo website, the Top 20 e-mail newsletter, and the Newsflash e-mail alert service and a $956,000 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 61% year-over-year. The strengthening of the U.S. dollar relative to the British Pound Sterling and the Euro in the nine months ended September 30, 2010 compared to the nine months ended September 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 nine months ended September 30, 2010 would have been approximately $363,000 higher than reported revenues of $18.7 million.

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 website development costs, and salary expenses associated with network operations staff. Our cost of revenues increased to $1.7 million for the three months ended September 30, 2010 from $1.5 million for the three months ended September 30, 2009. As a percentage of revenue, cost of revenues increased to 6.3% for the three months ended September 30, 2010 from 6.2% for the three months ended September 30, 2009. The $278,000 increase in cost of revenues for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 was primarily due to $119,000 increase in payments made to third-party partners of the Travelzoo Network, an $89,000 increase in depreciation and maintenance costs and a $55,000 increase in fees we pay related to user searches on Fly.com.

Our cost of revenues increased to $5.0 million for the nine months ended September 30, 2010 from $4.1 million for the nine months ended September 30, 2009. As a percentage of revenue, cost of revenues increased to 6.0% for the nine months ended September 30, 2010 from 5.9% for the nine months ended September 30, 2009. The $872,000 increase in cost of revenues for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 was primarily due to a $473,000 increase in fees we pay related to user searches on Fly.com, a $274,000 increase in depreciation and maintenance costs, and a $139,000 increase in payments made to third-party partners of the Travelzoo Network.

Sales and marketing expenses consist primarily of advertising and promotional expenses, salary expenses associated with sales, marketing and production staff, expenses related to our participation in industry conferences, and public relations expenses. Sales and marketing expenses increased to $13.6 million for the three months ended September 30, 2010 from $13.4 million for the three months ended September 30, 2009. The goal of our advertising was to acquire new subscribers for our e-mail products, increase the traffic to our websites, and increase brand awareness for Travelzoo and Fly.com. The $193,000 increase in sales and marketing expenses for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 was primarily due to an $813,000 increase in marketing expenses for Fly.com, and a $615,000 increase in salary and employee related expenses due in part to an increase in headcount, offset by a $1.3 million decrease in subscriber acquisition expense. For the three months ended September 30, 2010 and 2009, advertising expenses accounted for 59% and 64%, respectively, of total sales and marketing expenses.

General and administrative expenses increased to $19.8 million for the nine months ended September 30, 2010 from $18.4 million for the nine months ended September 30, 2009. The $1.4 million increase in general and administrative expenses was primarily due to a $405,000 increase in professional services expense, a $368,000 increase in rent, office and insurance expense, a $252,000 increase in salary and employee related expenses, and a $215,000 increase in bank and merchant account fees.

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