Travelzoo's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Travelzoo Inc. (TZOO)

Q2 2012 Earnings Call

July 19, 2012 11:00 am ET


Christopher Loughlin – Chief Executive Officer

Glen Ceremony – Chief Financial Officer


Edward Woo – Ascendiant Capital Markets

Daniel Kunros – The Benchmark Company



Good morning everyone and welcome to the Travelzoo Second Quarter 2012 Financial Results Conference Call. At this time, all participants have been placed in a listen-only mode. And the floor will be open to questions following the presentation. Today’s call is being recorded.

It is now my pleasure to turn the floor over to your host Chris Loughlin, Travelzoo’s Chief Executive Officer. Sir, you may begin.

Christopher Loughlin

Thank you, operator. Good morning and thank you for joining us today for Travelzoo’s second quarter 2012 financial results conference call. I’m Chris Loughlin, Chief Executive Officer. With me today is Glen Ceremony, the Company's Chief Financial Officer.

Glen will walk you through today’s format.

Glen Ceremony

Thank you Chris and good morning everyone. Before we begin our presentation, we would like to remind you that all statements made during this conference call and presented in our slides, that are not statements of historical facts constitute forward-looking statements, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our Forms 10-K and 10-Q and other periodic filings with the SEC.

Please note that this call is being webcast from our investor relations website at Please refer to our website for important information, including our earnings press release issued earlier this morning, along with the slides that accompany today's prepared remarks.

And archive recording of this conference call will be available on the Travelzoo investor relations website at beginning approximately 90 minutes after the conclusion of this call.

For the format of today’s call, I will review our second quarter financial results and then Chris will provide an update on our strategy. Thereafter, we will conclude with a question-and-answer session. Now, please open our management presentation, which is available at

Turning to slide four, this provides you the key financial highlights for the quarter. We achieved revenue of $39.4 million this quarter which is slightly higher than prior quarter despite an expected seasonally slower quarter and up 5% year-over-year.

We achieved record earnings per share of $0.45, which is up 53% from our $0.30 earnings per share for the same period last year. And we had growth in new subscribers, helping the Travelzoo brand reach our 25 million worldwide subscriber milestone this quarter. These results are demonstration of our ability to operate a profitable company in a competitive landscape.

On slide five, we look at revenue by segment. Revenue in North America was $28.7 million representing a year-over-year growth rate of 4%. In Europe, revenue growth was 7% year-over-year, which is lapping high growth from last year. In local currency, Europe revenue growth was 10% year-over-year. We will provide some more insights on revenue in the next few slides.

Turning to slide six, as a reminder we break out our revenue by type. First category of revenue is travel. This includes the products our subscribers and advertisers have enjoyed over the years that present tested high quality deals coming primarily from our flagship products, such as Top 20, Newsflash, website and Network. In addition, our travel revenue includes our Getaway voucher-based formats. This aligns with the way we manage our Getaways offerings along with our existing hotel advertising products included in travel.

The second category of revenue is search. This includes both our search products and SuperSearch. We continue to believe these tools are great complements to our business as both provide an easy way for our subscribers to comparison shop for airline, hotels, and car rentals. The third category of revenue is local. This includes both Local Deals voucher-based format, as well as our entertainment business, which contains a mix of voucher-based and non-voucher-based deals. We view these revenues as one category as they represent our efforts to provide subscribers with high quality local deals whether it is a restaurant, spa, activity, show or concert event.

Now, let’s take a look at the revenue by type for each segment starting on slide 7. North America second quarter revenue broken down by type, shows travel decreasing sequentially by 6% and increasing 3% year-over-year. The sequential decrease is due primarily to seasonality. The year-over-year increase is due to the increase in our hotel business deals by our Getaways offerings offset by continued reduced spending by certain online travel agencies, as well as airline consolidation and competition.

North America Search second quarter revenue was flat sequentially and declined 6% year-over-year. While continued to grow, this was offset by declines in SuperSearch revenue caused by our reduced spend, some challenging pricing for traffic acquisitions and reduced spend by the airlines.

North America local revenue increased 16% sequentially and increased 15% year-over-year. Our management and sales force divisions continue to build-out a foundation for continued growth. The metrics for us continued to be stable with our deals now reaching 125 markets, an average deal size of approximately 25,000 and almost half the purchases made up of repeat buyers.

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