Travelzoo 2015 Annual Report Download - page 83

Download and view the complete annual report

Please find page 83 of the 2015 Travelzoo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

40
Europe revenues decreased $64,000 or 0.1% in 2014 compared to 2013. This decrease was primarily due to a decrease in
Local and Search revenues offset by an increase in Travel revenues and a $1.7 million positive impact from foreign currency
movements relative to the U.S. dollar. The decrease in Local revenues of $1.6 million was primarily due to the decreased
number of Local Deals vouchers sold. The decrease in Search revenue of $711,000 was primarily due to the decreased number
of clicks that generate revenue as a result of decreased spending on traffic acquisition. The increase in Travel revenues of
$597,000 was primarily due to an increase in revenues from travel publications due to an increased number of e-mails
delivered.
North America
North America revenues decreased $7.3 million or 8% in 2015 compared to 2014. This decrease was primarily due to the
decrease in Local and Travel revenues. The decrease in Local revenues of $3.8 million was primarily due to the decreased
number of Local Deals vouchers sold. The decrease in Travel revenue of $3.1 million was primarily due to the decreased
number of Getaway vouchers sold and paid clicks. The North America revenue decrease includes a $871,000 negative impact
from foreign currency movement relative to the U.S. dollar.
North America revenues decreased $16.3 million or 15% in 2014 compared to 2013. This decrease was primarily due to
the decrease in Local, Search and Travel revenues. The decrease in Local revenues of $6.2 million was primarily due to the
decreased number of Local Deals vouchers sold. The decrease in Search revenue of $5.7 million was primarily due to the
decreased number of clicks that generate revenue as a result of decreased spending on traffic acquisition. The decrease in
Travel revenue of $4.4 million was primarily due to the decreased number of Getaway vouchers sold and paid clicks. The
North America revenue decrease includes a $541,000 negative impact from foreign currency movement relative to the U.S.
dollar.
For 2015, 2014 and 2013, none of our customers accounted for 10% or more of our revenue.
Cost of Revenues
Cost of revenues consists primarily of network expenses, including fees we pay for co-location services and depreciation
and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network, fees we pay related
to user searches on Fly.com, amortization of capitalized website development costs, credit card fees, certain estimated member
refunds and customer service costs associated with vouchers we sell and hotel bookings, and salary expenses associated with
network operations and customer service staff. Cost of revenues was $18.8 million, $19.2 million and $18.5 million for the
years ended December 31, 2015, 2014 and 2013, respectively.
Cost of revenue decreased $350,000 in 2015 compared to 2014. This decrease was primarily due to a $892,000 decrease
in Local Deals and Getaway costs including a $335,000 decrease in member refunds, a $217,000 decrease in fees we paid
related to user searches on Fly.com offset by a $830,000 increase in payments made to third-party partners of the Travelzoo
Network.
Cost of revenue increased $697,000 in 2014 compared to 2013. This increase was primarily due to a $685,000 increase in
payments made to third-party partners of the Travelzoo Network, a $434,000 increase in salary and employee related expenses
due to headcount increase for hotel booking platform customer service, a $200,000 increase in professional service expenses
offset by a $827,000 decrease in fees we paid related to user searches on Fly.com.