Travelzoo · NASDAQ:TZOO
Travelzoo — Q3 2009 Earnings Presentation
25 slides from Travelzoo's earnings presentation, Oct 28, 2009
Slide 1: Third Quarter 2009 Performance and Growth Strategy Overview
Exhibit 99.2 Travelzoo Inc. Third Quarter 2009 Performance and Growth Strategy Overview October 28, 2009
Slide 2: Important Notice
IMPORTANT NOTICE Please read this management presentation together with the Company’s press release issued earlier today announcing the Company’s third quarter 2009 financial results and in conjunction with the Company’s recent Annual Report and Quarterly Results as filed with the Securities and Exc
Slide 3: Forward-looking statements
Certain statements contained in this presentation that are not historical facts may be forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These forward looking statements may
Slide 4: Part 1: Q3 2009 Financial Performance; Part 2: Growth Strategy Overview
Part 1: Third Quarter 2009 Financial Performance Part 2: Growth Strategy Overview
Slide 5: Q3 2009 financial performance: significant growth across key metrics
In a challenging economy, Travelzoo was able to close Q3 2009 with significant growth across our most important metrics. Q3 2009 FINANCIAL PERFORMANCE Revenues EPS Subscribers (continuing operations) (continuing operations) (continuing operations) $ millions $ per share Millions +27% +24% 23.6 +167%
Slide 6: EPS from continuing operations; Asia Pacific as discontinued operations
With the pending sale of our Asia Pacific assets, the business segment is now being treated as discontinued operations. EPS FROM CONTINUING OPERATIONS $ per share 2008 2009 Sale of Asia Pacific assets expected to close Q1 0.10 0.13 on October 31. Asia Pacific business segment treated as Q2 0.13 0.10
Slide 7: Quarterly revenues by segment
Year-over-year revenue growth accelerated in both North America and Europe. QUARTERLY REVENUES BY SEGMENT Europe North America Europe (local currency) $ millions $ millions £ millions Q1 2008 18.9 2.0 1.0 +6% +45% +100% 2009 20.0 3.0 2.1 Q2 2008 19.2 2.6 1.3 +3% +57% +100% 2009 19.7 4.0 2.6 Q3 2008
Slide 8: Q3 operating income 2009 vs. 2008
Operating income increased in spite of significantly higher spending on subscriber acquisition and the launch of Fly.com. Q3 OPERATING INCOME – 2009 VS. 2008 $ millions Total* North America Europe 4.2 Increased investment 3.6 levels in Q3 2009: Subscriber acquisition up by 2.3 2.0 $1.3 million versu
Slide 9: Q3 2009 income and tax expenses
The effective tax rate continues to be high, as we treat losses from Europe as not having a recognizable tax benefit. Q3 2009 INCOME AND TAX EXPENSES* $ millions 3.6 -1.3 2.6 0.3 Effective -1.3 tax income 1.3 rate 50% Operating Operating Non- Income Income Income income income operating from con- ta
Slide 10: DSO and cash balances
Cash management during Q3 2009 improved slightly versus last year and the previous quarter. DSO AND CASH BALANCES DSO Cash Balance (Days Sales Outstanding) at End of Quarter* # of days $ millions 52 49 48 15.8 15.5 15.7 Q3 Q2 Q3 Q3 Q2 Q3 2008 2009 2009 2008 2009 2009 * Includes cash and cash equival
Slide 11: Headcount and average annualized revenue per employee
While headcount has increased, productivity has remained relatively stable. HEADCOUNT AND AVERAGE ANNUALIZED REVENUE PER EMPLOYEE* 185 174 163 168 156 147 68 140 Headcount 60 65 56 44 52 Europe 39 Average annualized revenues per employee 104 107 108 109 117 (in $ thousands) North America 101 103 Q1
Slide 12: Operating expenses – North America division
Operating expenses in North America increased, driven primarily by increased spend on subscriber acquisition, SuperSearch, and Fly.com. OPERATING EXPENSES – NORTH AMERICA DIVISION $ millions and as percentage of revenues 13.9 74% 70% 11.1 Major reasons for Y/Y increase 4.7 25% in operating expenses
Slide 13: Operating expenses – Europe division
In Europe, operating expenses as a percentage of revenues declined in spite of increased spend on subscriber acquisition. OPERATING EXPENSES – EUROPE DIVISION $ millions and as percentage of revenues 6.0 125% 183% 4.8 1.7 35% Major reasons for Y/Y increase in operating expenses General & 66% 1.7 Imp
Slide 14: Subscribers to Travelzoo publications in North America and Europe
During Q3 2009 we further accelerated subscriber acquisition as we see audience growth as investment into future revenues and profits. Subscribers to Travelzoo publications Quarter-over-quarter in North America & Europe comparison: Q3 09 vs. Q2 08 Millions Millions 16.3 16.3 15.2 1.6 -0.5 13.5 12.4
Slide 15: Subscriber acquisition cost per subscriber
Improved execution and lower media prices helped us drive down acquisition costs for new subscribers significantly year-over-year. Subscriber Acquisition cost New subscribers acquisition expense per subscriber added $ millions $/subscriber Thousands North Q3 2008 1.3 3.73 361 America Q4 2008 1.3 2.7
Slide 16: Part 2: Growth Strategy Overview
Part 1: Third Quarter 2009 Financial Performance Part 2: Growth Strategy Overview
Slide 17: Travelzoo's growth strategy: three pillars
Our growth strategy is built on three pillars that include both geographical and product expansion. TRAVELZOO’S GROWTH STRATEGY International Expansion Multiply the Travelzoo business in attractive international markets; build global brand and global content Expand scope of Travelzoo® business Expan
Slide 18: Subscribers by country at end of 2005
In 2005, Travelzoo’s subscriber base resided almost exclusively in the U.S. We just started growing internationally. TRAVELZOO SUBSCRIBERS BY COUNTRY AT END OF 2005 Millions U.K. 0.3 U.S. 9.4 Worldwide: 9.7 million subscribers
Slide 19: Subscribers by country at end of 2008
From 2005 through 2008, we expanded primarily in Europe and launched operations in Asia Pacific. TRAVELZOO SUBSCRIBERS BY COUNTRY AT END OF 2008 Millions Canada 0.9 U.K. 1.1 Germany U.S. France 0.4 U.S. 10.4 0.6 Japan 10.4 Spain 0.3 0.1 Greater China* 0.7 Australia 0.1 Worldwide: 14.6 million subscr
Slide 20: Subscribers by country as of Q3 2009
During 2009, we have begun re-igniting growth in North America, and accelerated our expansion in Europe. TRAVELZOO SUBSCRIBERS BY COUNTRY (AS OF Q3 2009) Millions Canada 1.1 U.K. 1.5 Germany 0.7 France U.S. 0.8 Japan 12.0 Spain 0.6 0.4 Greater China* 0.9 Australia 0.3 Worldwide: 18.2 million subscri
Slide 21: Operating income and net income on per-share basis
The international expansion comes at a cost: Subscriber acquisition as well as losses that have no immediate tax benefit, are dragging EPS down. OPERATING INCOME AND NET INCOME ON PER-SHARE BASIS $ per share 0.39 Q3 2009 EXAMPLE 0.34 0.03 0.02 (0.12) (0.11) 0.16 (0.08) (0.10) -0.02 North Europe Inte
Slide 22: Earnings including and excluding subscriber acquisition
As a result of our aggressive global expansion, EPS is impacted by increased investments in subscriber acquisition. EARNINGS FROM CONTINUING OPERATIONS, INCLUDING AND EXCLUDING SUBSCRIBER ACQUISITION Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Operating income excluding $0.27 $0.27 $0.44 $0.38 $0.37 sub
Slide 23: U.K. example: subscribers, revenues and operating income
Over time, audience and revenue growth appear to drive profitability. U.K. EXAMPLE: SUBSCRIBERS, REVENUES AND OPERATING INCOME/LOSS Millions, and £ millions Subscribers at Year-End* Revenues Operating income/loss 4.9** 1.5* 4.2 1.1 2.8 0.8 0.6 1.7 0.3 0.4 0.3** (0.6) (0.6) (0.5) (0.2) 2005 2006 2007
Slide 24: Revenue growth, expenses and operating margins by country
In our international markets revenues are growing faster than expenses, bringing us closer to our goal of profitability in each country. COMPARISON OF REVENUE GROWTH, EXPENSES AND OPERATING MARGINS BY COUNTRY Percent* U.K. Canada Germany France Spain Year launched 2005 2006 2006 2007 2008 Revenue gr
Slide 25: Management focus Q4 2009 and 2010
MANAGEMENT FOCUS Q4 2009 AND 2010 Close sale of Asia Pacific assets (Keeping option to purchase back Asia Pacific business in the future) Continue to grow audience in Europe, while moving operations closer to positive income/contribution Monetize the increased audience in North America Aggressively