Travelzoo up in Q4 but poorly performing search products prompt review

By Travolution
By Travolution
January 23, 2014 02:49 PM GMT

Travelzoo could merge or close its two travel search brands following a performance review, the deals publisher revealed today in a fourth quarter trading update.

The NASDAQ-listed firm said in a statement SuperSearch and Fly.com meta-search sites have suffered from declining revenue and profit.

Fourth quarter net income for the period to December 31 came in at $3.23 million, down from $3.76 million, although revenues were up 1% to $35.7 million.

For the full year the firm recorded a loss of £5 million in the back of $158.2 million revenue, having made an $18.2 million profit in 2012.

However, Travelzoo said that figure includes a £22 million charge related to “a dispute over unclaimed property audits”.

Non-generally accepted accounting principles (GAAP) figures showed a net income of $16.99 million.

Travelzoo also announced a share repurchase programme for 500,000 of the firm’s outstanding common shares.

Referring to the firm’s search products, Glen Ceremony, Travelzoo chief financial officer, said:

“Challenges in traffic acquisition from search engines and poor monetisation on mobile devices have led to continued decline in search revenue.

“As we are reviewing these products and working on their improvement, we will also put a stronger focus on profitability, which could result in a revenue decline of approximately $1.5 million from SuperSearch versus the prior-year period.”

Travelzoo said its fourth quarter showed continues strength in Europe with revenue up 12% year on year to $11.9 million and operating profit of $1.8 million, up from $1 million.

Chief executive Chris Loughlin said: “Our travel products showed continued strength in Q4, par5ticularly in Europe, which contributed 40% of the company’s profits.

“These gains were offset by revenue declines in SuperSearch and Fly.com. We will continue to invest in audience products to spur future growth. These include our hotel booking platform, which is now in internal testing, as well as features that make life easier for our users to find deals when and where they need them, particularly on their mobile devices.”

Travelzoo subscribers at the end of the year were 4% up in North America and Europe to 23.3 million, 16.6 million of which were from North America. European subscriber numbers were up 6% to 6.8 million.

Revenue in North America decreased 3% in the fourth quarter to $25.6 million and profit was also down to £2.7 million from $3.4 million.

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