Travelzoo chief ‘disappointed’ with Q3 trading

Travelzoo revealed a 42% slump in net profit to $3.4 million in the three months to September.

Operating income was $4.2 million, down 55% year-on-year. This was based on revenue down 8% to of $35.4 million, despite a rise in subscribers in both North America and Europe.

Chief executive Chris Loughlin said: “While we are confident about Travelzoo’s long-term opportunity, we are disappointed with our Q3 results.”

“Declines in SuperSearch and Local Deals were not made up by the positive momentum we saw in Getaways.

“Continued investments into sales team expansion and subscriber growth, as well as enhancements to our hotel and mobile products are affecting profitability in the near-term, but we believe these are the right steps to position Travelzoo for sustainable and profitable future growth.”

No mention was made of a speculated deal to acquire some or part of Travesse Lifestyle out of administration or of a hotel booking platform flagged up when preliminary results were announced earlier this month.

Travelzoo’s European revenue declined by 4% to $10.3 million over the same period last year.

The division’s operating profit was $1.1 million, or 10% of revenue, down from an operating profit of $1.4 million, or 13% of revenue a year earlier.

The drop in operating profit was attributed to a decrease in revenue and increased expenses related to sales force ramp up and subscriber marketing.

The total unduplicated number of subscribers in Europe was 6.3 million, up 10% from September 30, 2011, while numbers were up by 3% in North America to 16.1 million.

North America business segment revenue was down by 10% to $25.1 million. The divisional operating profit for the third quarter was $3.1 million.

Travelzoo said it exited the third quarter with $57.6 million in cash and cash equivalents.