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.

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.

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“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.