Travelzoo Inc. posted $1.0 million in net loss in the first quarter, with diluted loss per share of $(0.07), down from diluted earnings per share of $0.25 in the prior-year period.

Published: 29 Apr 2008

Travelzoo Inc. posted $1.0 million in net loss in the first quarter, with diluted loss per share of $(0.07), down from diluted earnings per share of $0.25 in the prior-year period.

Its revenue was $20.9 million, an increase of 6% year-over-year.

Ralph Bartel, chairman and chief executive officer, Travelzoo said the company's aggressive expansion in Asia Pacific and Europe negatively impacted its operating income.

North America business segment revenue grew 2% year-over-year to $18.9 million. North America reported operating income of $6.3 million, or 33.1% of revenue, down from operating income of $8.2 million, or 44.1% of revenue, in the prior-year period.

Europe business segment revenue grew 59% year-over-year to $2.0 million. Europe reported an operating loss of $2.2 million, compared to an operating loss of $683,000 in the prior-year period. The increase in operating loss was primarily attributable to increased spending on subscriber acquisition in France, Germany and the UK and increased expenses associated with the start up of our operations in France. Travelzoo began operations in the UK in May 2005, in Germany in September 2006, and in France in March 2007.

Asia Pacific business segment revenue was $20,000. Asia Pacific reported an operating loss of $2.7 million, compared to an operating loss of $2.1 million 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.

According to newratings.com, analysts at Wedbush Morgan maintained their "hold" rating on Travelzoo Inc, while reducing their estimates for the company. The 12-month target price has been reduced from $15 to $12. "In a research note published on April 25, the analysts mention that the company is likely to post its F1Q08 EPS short of the consensus. Travelzoo's international operations are currently recording losses and are expected to continue to do so going into 2009, the analysts add. The EPS estimates for 2008 and 2009 have been reduced from $0.63 to $0.14 and from $0.75 to $0.50, respectively, reflecting significant investments into international expansion," reported the site.