Internet media company Travelzoo Inc reported fourth-quarter net income of $46,000, with diluted earnings per share (EPS) of $0.00, down from $0.26 in the prior-year period.

Published: 07 Feb 2008

Internet media company Travelzoo Inc reported fourth-quarter net income of $46,000, with diluted earnings per share (EPS) of $0.00, down from $0.26 in the prior-year period.

Net income for the prior-year quarter was $4.29 million, or 26 cents a share. Revenue for the quarter ended Dec. 31 rose 8% to $19.1 million from $17.7 million a year earlier.

"Travelzoo's latest results were impacted by non-tax deductible losses from our foreign operations in Asia Pacific and Europe," said Ralph Bartel, Chairman and CEO, Travelzoo. "As announced frequently in our investor communications over the last twelve months, our strategy of investing in Asia Pacific and Europe affects our reported earnings. We believe that going global is an opportunity to create attractive shareholder value in the future and we want to seize this opportunity."

North America business segment revenue grew 6% year-over-year to $17.7 million. North America reported operating income of $6.4 million, or 36.3% of revenue, down from operating income of $8.0 million, or 47.9% of revenue, in the prior-year period.

The Asia Pacific business segment reported an operating loss of $2.1 million, compared to an operating loss of $706,000 in the prior quarter. Travelzoo began operations in Hong Kong in April 2007, in Japan in September 2007, in China in October 2007 and in Australia and Taiwan in December 2007.

Europe business segment revenue grew 52% year-over-year to $1.5 million. Europe reported an operating loss of $1.9 million, compared to an operating loss of $356,000 in the prior-year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition and increased salary expense and office expense associated with the start up of operations in Germany and France. Travelzoo began operations in the U.K. in May 2005, in Germany in September 2006, and in France in March 2007.

Revenue for the year ended December 31, 2007 was $78.9 million, an increase of 14% from the prior year. Operating profit for the year was $20.6 million, or 26.1% of revenue, down from $29.8 million, or 42.8% of revenue, in the prior year. Net income for the year was $9.1 million, compared to $16.8 million in the prior year.

Travelzoo's focus in 2008 will be on further developing its websites and expanding the Travelzoo Network, an affiliate network of Web sites that list travel deals published by Travelzoo. Further, Travelzoo plans to expand its Shows & Events section and plans to continue testing the publishing of non-travel deals. Travelzoo plans to launch the next generation of SuperSearch.