Travelzoo 2010 Annual Report Download - page 52

We do not know what our cost of revenues as a percentage of revenues will be in future periods. Our cost of
revenues will increase if the number of searches performed on Fly.com increases because we pay a fee based on the
number of searches performed on Fly.com. Our cost of revenues will increase if the total face value of vouchers that
we sell through Local Deals increases because we pay credit card fees based the total face value of vouchers sold.
We expect fluctuations of cost of revenues as a percentage of revenues from quarter to quarter. Some of the
fluctuations may be significant and have a material impact on our results of operations.
We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods.
Increased competition in our industry may require us to increase advertising for our brand and for our products.
Increases in the average cost of acquiring new subscribers (see “Subscriber Acquisition” below) may result in an
increase of sales and marketing expenses as a percentage of revenue. We may decide to accelerate our subscriber
acquisition for various strategic and tactical reasons and, as a result, increase our marketing expenses. We may see a
unique opportunity for a brand marketing campaign that will result in an increase of marketing expenses. Further,
we expect our strategy to replicate our business model in selected foreign markets (see “Growth Strategy” below) to
result in a significant increase in our sales and marketing expenses and have a material adverse impact on our results
of operations. We expect fluctuations of sales and marketing expenses as a percentage of revenue from year to year
and from quarter to quarter. Some of the fluctuations may be significant and have a material impact on our results of
operations.
We do not know what our general and administrative expenses as a percentage of revenue will be in future
periods. There may be fluctuations that have a material impact on our results of operations. We expect our
headcount to continue to increase in the future. The Company’s headcount is one of the main drivers of general and
administrative expenses. Therefore, we expect our absolute general and administrative expenses to continue to
increase. We expect our continued expansion into foreign markets to result in a significant additional increase in our
general and administrative expenses. Our general and administrative expenses as a percentage of revenue may also
fluctuate depending on the number of requests received related to a program under which the Company intends to
make cash payments to people who establish that they were former stockholders of Travelzoo.com Corporation, and
who failed to submit requests to convert shares into Travelzoo Inc. within the required time period.
Reach
The following table sets forth the number of subscribers of each of our e-mail publications in North America
and Europe as of December 31, 2010 and 2009 and the total number of page views for the homepages of the
Travelzoo websites in North America and Europe for the years ended December 31, 2010 and 2009. Management
considers page views for the Travelzoo homepages as indicators for the growth of website traffic. Management
reviews these non-financial metrics for two reasons: First, to monitor our progress in increasing the reach of our
products. Second, to evaluate whether we are able to convert higher reach into higher revenues.
2010 2009
Year-Over-Year
Growth(1)
Year Ended December 31,
Subscribers:
North America
Travelzoo Top 20.......................... 13,594,000 12,680,000 7%
Newsflash ............................... 12,052,000 10,905,000 11%
Europe
Travelzoo Top 20 ........................... 4,472,000 3,520,000 27%
Newsflash ................................. 4,424,000 3,435,000 29%
Page views of homepages of Travelzoo websites:
North America ............................. 37,772,000 36,455,000 4%
Europe ................................... 17,859,000 16,491,000 8%
(1) The comparability of year-over-year changes of page views of the homepages of Travelzoo websites may be
limited due to the design and navigation of the websites.
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