Investors send Travelzoo shares packing after 2Q results miss profit estimate

Shares in Travelzoo (NASDAQ:TZOO) plunged today after the quarterly performance of the US publisher of travel deals fell short of Wall Street’s estimate for its second-quarter profit.

On a per-share basis, the New York group earned US$0.04 per share, or US$477,000, in net income, which failed to approach analysts’ estimate of US$0.09 per share. Revenue of US$28.1mln squeezed past the consensus estimate of US$27.98mln.

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Dismayed investors sent Travelzoo shares packing in response, pushing the stock down nearly 30% to US$13.10.

Cash concerns

CEO Holger Bartel said the company threw more money into marketing in the quarter as a way to achieve long-term growth in the business. Cash used for investing activities swung to US$3.5mln in the quarter, up from US$186,000 in the same period last year.

Much of its cash was used to fund an equity investment worth US$3.1mln in WeekenGO, a rival travel site, the company said.

“With the travel and tourism industry worldwide showing steady growth, we like to leverage Travelzoo’s global reach and trusted brand to improve earnings in future periods,” Bartel said in a statement.

The company’s North American business fared best in the quarter, with its revenue climbing 6% from the year-ago quarter to US$17.5mln. Revenue from its European business, meanwhile, climbed 8% to US$8.5mln.

Travelzoo has 29.8mln members who subscribe to its online travel deal e-mails. About 17.6mln members are in North America while 8.7mln are in Europe and another 3.6mln are in Asia.

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