Travelzoo 2008 Annual Report Download - page 54

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compared to the same period in 2006. Sales and marketing expenses for North America increased to $32.9 million in
the year ended December 31, 2007 compared to $26.4 million in the prior year. This $6.5 million increase was
primarily due to a $2.6 million increase in salary and employee related expenses, a $1.3 million increase in
advertising to acquire traffic to our Web sites, a $1.1 million increase in advertising to acquire new subscribers for
our e-mail products and an $899,000 increase in advertising for brand awareness campaigns. There was also a
2 percentage point increase in general and administrative expenses as a percentage of revenue in the year ended
December 31, 2007 compared to the prior year. General and administrative expenses for North America increased to
$10.5 million in the year ended December 31, 2007 compared to $8.2 million in the prior year. This $2.3 million
increase was primarily due to an $825,000 increase in professional services expenses, an $818,000 increase in salary
and employee related expenses, a $399,000 increase in rent and office expenses, and a $373,000 increase in
expenses for corporate functions.
Europe
2008 2007 2006
Year Ended December 31,
(In thousands)
Net revenues .......................................... $9,623 $ 5,856 $ 3,232
Loss from operations .................................... (7,809) (5,172) (1,586)
Loss from operations as % of revenues ...................... 81% 88% 49%
In Europe, revenues increased 64% in the year ended December 31, 2008 compared to the prior year and
increased 81% in the year ended December 31, 2007 compared to the same period in 2006. The increases in revenue
were driven by the addition of new clients, increases in our advertising rates, increased spending from existing
clients, and new product offerings and revenue streams. We began operations in the U.K. in May 2005. In 2006 we
began operations in Germany and Spain and in 2007 we began operations in France.
Our loss from operations in Europe was $7.8 million in the year ended December 31, 2008 compared to
$5.2 million in the year ended December 31, 2007. The $3.8 million increase in revenues was offset by a
$3.7 million increase in sales and marketing expenses and a $2.4 million increase in general and administrative
expenses. The $3.7 million increase in sales and marketing expenses was due primarily to a $1.9 million increase in
salary expense, a $769,000 increase in advertising to acquire traffic to our Web sites, and a $714,000 increase in
advertising to acquire new subscribers for our e-mail products. The $2.4 million increase in general and
administrative expenses was due primarily to an $873,000 increase in salary and employee related expenses, a
$444,000 increase in rent and office expenses, a $375,000 increase in intercompany charges, and a $302,000
increase in professional services expense.
Our loss from operations in Europe was $5.2 million in the year ended December 31, 2007 compared to
$1.6 million in the year ended December 31, 2006. The $2.6 million increase in revenues was offset by a
$4.7 million increase in sales and marketing expenses and a $1.6 million increase in general and administrative
expenses. The $4.7 million increase in sales and marketing expenses was due primarily to a $2.5 million increase in
advertising to acquire new subscribers for our e-mail products, a $1.0 million increase in advertising to acquire
traffic to our Web sites, and a $1.0 million increase in salary and employee related expenses. The $1.6 million
increase in general and administrative expenses was due primarily to a $956,000 increase in salary expense and a
$377,000 increase in rent and office expenses.
Asia Pacific
2008 2007 2006
Year Ended December 31,
(In thousands)
Net revenues ............................................ $ 587 $ 8 $—
Loss from operations...................................... (10,201) (3,166) —
In Asia Pacific, revenues for the year ended December 31, 2008 were $587,000 compared to $8,000 for the
year ended December 31, 2007. We began operations in Asia Pacific in the second quarter of 2007. Sales and
30