Travelzoo (NASDAQ: TZOO), a global publisher of exclusive offers and experiences for members, is expected to release its September quarter financial results on 24th October 2018. The company has had a good year so far, with its stock gaining almost 75% since the beginning of the year, backed by the solid growth in its North American and European markets. While its operations in the Asia Pacific region have been a drag on its bottom-line, the company plans to invest in these markets and improve its performance in the coming quarters.
We currently have a price estimate of $15 per share for the company, which is higher than its market price. View our interactive dashboard – Travelzoo’s Outlook For 2018 – and modify the key drivers to visualize the impact on the company’s valuation.
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Key Trends To Watch For In 3Q Results
- Travelzoo’s social media followers and mobile app downloads have been growing steadily over the last few quarters. At the end of 2Q’18, the company’s global members had increased to 29.8 million, driven by the increased activity levels of the members, advertisers, and partners in the North American and European markets. We expect the company to witness a steady growth in its global member base in the third quarter as well.
- Similar to the last quarter, the weak growth in the Asia Pacific markets is likely to dampen the company’s top-line growth. Further, since the losses in the Asia Pacific businesses are not deductible for tax purposes, the company is expected to experience a high effective tax rate, which could weigh on its bottom-line.
- On the cost side, the company is expected to see a sharp rise in its operating expenses due to the high marketing spend in North America and Asia Pacific markets, which could further pull down its earnings for the quarter as well as the full year.
- Travelzoo plans to launch a global technology that will allow its members across the globe to book hundreds of exclusive hotels as part of a complete trip or package. The company aims to negotiate competitive rates with its established and experienced partners in the hotel and airline industry and bundle them together in a package offering. The company will launch this technology in select markets in Europe, starting with Germany in the third quarter. This will allow the company to leverage its partnerships to create an enhanced product offering for its members.
- Further, Travelzoo believes that there is a huge potential to grow its current member base, which it plans to achieve by investment in marketing and strategic partnerships. These investments will be used to strengthen the company’s brand and increase its visibility and reach. We expect these investments to accelerate the company’s top-line growth and double its size over the next few years.
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