Ambassadors Group, Inc. has a market cap of $88.7 million; its shares were traded at around $4.69 with a P/E ratio of 16.3 and P/S ratio of 1.3. The dividend yield of Ambassadors Group, Inc. stocks is 4.8%.
Highlight of Business Operations:In addition to our People to People student programs, we operate professional travel programs for adults under the People to People brand (“Citizen Ambassadors Program”) and a student travel operation under the Discovery Student Adventures brand (“DSA”). Our DSA program is associated with Discovery Student Education and operates through a teacher recruited revenue model. Lastly, we operate BookRags (www.bookrags.com), an education oriented research website which provides study guides, lesson plans and other educational resources to students and teachers. The site attracts students and teachers each month to its millions of pages of content, which includes internally developed material, licensed material, and user-generated content.
During the three months ended September 30, 2012, we traveled 8,300 delegates compared to 9,855 during the third quarter of 2011. During the nine months ended September 30, 2012, we traveled 21,089 delegates compared to 23,437 delegates traveled during the same period in 2011. Overall, our gross revenue decreased during the three and nine months ended September 30, 2012 compared to the same periods in 2011, primarily due to the decrease in delegates traveled from our core Student Ambassadors Program. This expected decline in travel revenue was partially offset by an increase in revenue from BookRags during the first nine months of 2012 compared to the same period in 2011 reflecting increased content sales.
Associated with the decrease in delegates traveled, gross margin decreased $4.2 million and $7.0 million, respectively, during the third quarter and first nine months of 2012 compared to 2011. Gross margin as a percentage of gross revenues declined to 35.5 percent during the third quarter of 2012 compared to 38.0 percent during the third quarter of 2011, primarily due to higher airfare expense associated with rising fuel costs and higher foreign exchange rates year-over-year increasing our land vendor payments. For those same reasons, gross margin as a percentage of gross revenue during the first nine months of 2012 was 36.4 percent compared to 38.0 percent during the first nine months of 2011.
The continuation of several cost cutting initiatives reduced operating expenses by $1.0 million and $5.3 million, respectively, during the third quarter and first nine months of 2012 compared to those same periods in 2011. In line with our strategy to reduce overall operating expenses to maximize profitability, these reductions consisted mainly of lower marketing expenses related to selected travel campaigns and reduced personnel costs associated with a reduction in staffing. In addition, we experienced lower legal expenses related to the SEC investigation that has now been closed, offset by costs incurred related to the previously disclosed proxy contest.
In spite of the decline in delegate counts, our cost cutting initiatives discussed above helped increase profitability in the first nine months of 2012 compared to the same period in 2011. As a result, net income increased $1.0 million in the nine months ended September 30, 2012, compared to the same periods in 2011. The decrease in third quarter net income in 2012 compared to the same period in 2011 is primarily due to a 17 percent decline in travel-related revenue and an increase in air and land costs, offset by a decrease of $1.0 million, or six percent, in total operating expenses as well as a $2.4 million positive variance in income tax (benefit) provision.
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