Travelzoo (TZOO) Crushed on Earnings Miss

An ugly morning for Travelzoo (TZOO) longs as the earnings report did not make investors happy.  I try to avoid any momo names on earnings for this reason, even if it means missing a big move upward post earnings.  Waking up to a -22% loss is not a great way to start a morning.

That said, the rise in Travelzoo has been so spectacular, this drop to $67 has only taken the stock back at the beginning of the month.  (while nicely filling that gap)

Expectations were for $39M in revenue, along with $0.38 EPS.  TZOO came in light on the top line at $37.6M, while disappointing mightily on EPS at $0.30.  Not a good job by analysts to guide analysts to the typical lowball game that almost all of Wall Street plays.  They appear to be blaming the lion’s share of the miss on TV advertising, but that should have been communicated better to the Street.

Full report here.

  • Travelzoo Inc., a global Internet media company, today announced financial results for the second quarter ended June 30, 2011, with revenue of $37.6 million, an increase of 34% year-over-year. Operating profit was $7.6 million, up 29% year-over-year. Net income was $4.9 million, with diluted net income per share (EPS) of $0.30, up from $0.20 in the prior-year period.
  • “We achieved record revenues and our fastest growth rate in 4 years. We accelerated our investment in future growth, adding 27 new Local Deals markets, 800,000 new subscribers and we grew our headcount faster than in any prior quarter,” said Chris Loughlin, CEO of Travelzoo. “We also ran a television advertising test, which negatively impacted earnings per share by approximately $0.07. We are pleased with our accelerated growth rate and confident that our investments will fuel future growth.”
  • North America business segment revenue grew 25% year-over-year to $27.7 million. Operating profit was $6.5 million, or 24% of revenue, down from $6.7 million, or 30% of revenue, in the prior-year period.
  • Europe business segment revenue grew 67% year-over-year to $10.0 million. In local currency terms, revenue grew 53% year-over-year. Operating profit was $1.1 million, compared to an operating loss of $808,000 in the prior-year period.
  • Travelzoo had a total unduplicated number of newsletter subscribers in North America and Europe of 20.7 million as of June 30, 2011, up 13% from June 30, 2010, and up 4% from March 31, 2011. In North America, total unduplicated number of subscribers was 15.3 million as of June 30, 2011, up 9% from June 30, 2010 and up 3% from March 31, 2011. In Europe, total unduplicated number of subscribers was 5.5 million as of June 30, 2011, up 29% from June 30, 2010 and up 7% from March 31, 2011.

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About Mark Hanna 542 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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