Travelzoo Reports Second Quarter 2023 Results

NEW YORK, July 27, 2023 /PRNewswire/ — Travelzoo® (NASDAQ: TZOO):

Revenue of $21.1 million, up 19% year-over-year
Consolidated operating profit of $3.3 million
Non-GAAP consolidated operating profit of $4.2 million
Cash flow from operations of $5.1 million
Earnings per share (EPS) of $0.17

Travelzoo, a global Internet media company that provides exclusive offers and experiences for members, today announced financial results for the Second quarter ended June 30, 2023. Consolidated revenue was $21.1 million, up 19% from $17.7 million year-over-year. In constant currencies, revenue was $21.2 million, up 20% year-over-year. Travelzoo’s reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members.

The reported net income attributable to Travelzoo from continuing operations was $2.6 million for Q2 2023. At the consolidated level, including minority interests, the reported net income from continuing operations was $2.7 million. EPS from continuing operations was $0.17, compared to $0.08 in the prior-year period.

Non-GAAP operating profit was $4.2 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.4 million), stock option expenses ($0.4 million) and severance-related expenses ($56,000). See section “Non-GAAP Financial Measures” below.

“Year-over-year revenue growth accelerated from Q1 to Q2,” said Holger Bartel, Travelzoo’s Global CEO. “We will continue to leverage Travelzoo’s global reach, trusted brand, and strong relationships with top travel suppliers to negotiate more exclusive offers for Travelzoo members. With more than 30 million members, 8 million mobile app users, and 4 million social media followers, Travelzoo is loved by travel enthusiasts who are affluent, active, and open to new experiences.”

Cash Position

As of June 30, 2023, consolidated cash, cash equivalents and restricted cash were $20.2 million. Net cash provided by operations was $5.1 million.

Travelzoo North America

North America business segment revenue increased 14% year-over-year to $14.1 million. Operating profit for Q2 2023 was $3.8 million, or 27% of revenue, compared to an operating profit of $3.3 million in the prior-year period.

Travelzoo Europe

Europe business segment revenue increased 35% year-over-year to $5.9 million. At constant currencies, Europe business segment revenue increased 36% year-over-year. Operating loss for Q2 2023 was $239,000, compared to an operating loss of $1.5 million in the prior-year period.

Jack’s Flight Club

Jack’s Flight Club business segment revenue increased 15% year-over-year to $1.1 million. Jack’s Flight Club is a membership subscription service in which Travelzoo has a 60% ownership interest. The number of premium subscribers increased 30% year-over-year. Revenue from increases in subscribers is reported with a lag because we recognize revenue from subscriptions monthly pro rata over the subscription period (quarterly, semi-annually, annually). Operating profit for Q2 2023 was $97,000, compared to an operating profit of $161,000 in the prior-year period. Non-GAAP operating profit for Q2 2023 was $255,000. Non-GAAP operating profit excludes amortization of intangibles ($0.2 million) related to the acquisition.

New Initiatives

New Initiatives business segment revenue, which includes Licensing and Travelzoo META, was $13,000. Operating loss for Q2 2023 was $338,000.

In June 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoo’s brand, business model, and members in Japan. In August of 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Australia for the exclusive use of Travelzoo’s brand, business models, and members in Australia, New Zealand, and Singapore. Under these arrangements, Travelzoo’s existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor. Licensing revenue is booked with a lag of one quarter. Travelzoo recorded $4,000 in licensing revenue from the licensee in Japan in Q2 2023. Travelzoo recorded $9,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q2 2023. Licensing revenue is expected to increase going forward.

Members and Subscribers

As of June 30, 2023, we had 30.8 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.2 million as of June 30, 2023, down 2% from June 30, 2022. In Europe, the unduplicated number of Travelzoo members was 9.2 million as of June 30, 2023, up 1% from June 30, 2022. Jack’s Flight Club had 2.2 million subscribers as of June 30, 2023, up 22% from June 30, 2022.

Discontinued Operations

As announced in a press release on March 10, 2020, Travelzoo decided to exit its Asia Pacific business and operate it as a licensing business going forward. Consequently, the Asia Pacific business has been classified as discontinued operations since March 31, 2020. Prior periods have been reclassified to conform with the current presentation. Certain reclassifications have been made for current and prior periods between the continued operations and the discontinued operations in accordance with U.S. GAAP.

Income Taxes

A provision of $1.1 million for income taxes was recorded for Q2 2023, compared to an income tax expense of $928,000 in the prior-year period. The provision for Q2 2023 does not reflect the expected utilization of NOLs by Travelzoo in the U.S.

Non-GAAP Financial Measures

Management calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoo’s calculation of non-GAAP operating income, also called “non-GAAP operating profit” in this press release and today’s earnings conference call, excludes the following items: amortization of intangibles, stock option expenses, and severance-related expenses. This press release includes a table which reconciles GAAP operating income to the calculation of non-GAAP operating income. Non-GAAP operating income is not required by, or presented in accordance with, generally accepted accounting principles in the United States of America (“GAAP”). This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Looking Ahead

For Q3 2023, we currently expect growth in revenue and growth in operating profit to continue year-over-year. During the pandemic, we have been able to lower our fixed costs. We believe we can keep our fixed costs relatively low in the foreseeable future.

Conference Call

Travelzoo will host a conference call to discuss second quarter 2023 results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to

download the management presentation (PDF format) to be discussed in the conference call
access the webcast.

About Travelzoo

Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words “expect”, “predict”, “project”, “anticipate”, “believe”, “estimate”, “intend”, “plan”, “seek” and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Travelzoo and Jack’s Flight Club are registered trademarks of Travelzoo.

Travelzoo

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

Three months ended

Six months ended

June 30,

June 30,

2023

2022

2023

2022

Revenues

$   21,128

$   17,689

$   42,729

$   36,142

Cost of revenues

2,880

2,163

5,571

4,995

Gross profit

18,248

15,526

37,158

31,147

Operating expenses:

Sales and marketing

10,142

8,480

19,438

17,061

Product development

518

454

1,008

907

General and administrative

4,315

4,811

8,728

9,479

Total operating expenses

14,975

13,745

29,174

27,447

Operating income

3,273

1,781

7,984

3,700

Other income, net

479

195

829

1,618

Income from continuing operations before income taxes

3,752

1,976

8,813

5,318

Income tax expense

1,091

928

2,469

1,896

Income from continuing operations

2,661

1,048

6,344

3,422

Income (loss) from discontinued operations, net of tax

2

10

(1)

Net income

2,663

1,058

6,344

3,421

Net income attributable to non-controlling interest

37

30

45

34

Net income attributable to Travelzoo

$     2,626

$     1,028

$      6,299

$     3,387

Net income attributable to Travelzoo—continuing operations

$     2,624

$     1,018

$      6,299

$     3,388

Net income (loss) attributable to Travelzoo—discontinued operations

$            2

$          10

$           —

$          (1)

Income per share—basic

Continuing operations

$       0.17

$        0.08

$       0.41

$       0.28

Discontinued operations

$          —

$           —

$           —

$          —

Net income per share—basic

$       0.17

$        0.08

$       0.41

$       0.28

Income per share—diluted

Continuing operations

$       0.17

$       0.08

$       0.40

$       0.27

Discontinued operations

$          —

$          —

$          —

$          —

Net income per share—diluted

$       0.17

$       0.08

$       0.40

$       0.27

Shares used in per share calculation from continuing operations—basic

15,275

12,513

15,485

12,285

Shares used in per share calculation from discontinued operations—basic

15,275

12,513

15,485

12,285

Shares used in per share calculation from continuing operations—diluted

15,337

12,637

15,557

12,591

Shares used in per share calculation from discontinued operations—diluted

15,337

12,637

15,557

12,591

Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

June 30,
2023

December 31,
2022

Assets

Current assets:

Cash and cash equivalents

$             19,513

$            18,693

Accounts receivable, net

10,287

13,820

Prepaid income taxes

801

1,778

Prepaid expenses and other

1,368

1,289

Assets from discontinued operations

10

11

Total current assets

31,979

35,591

Deposits and other

2,492

5,094

Deferred tax assets

3,222

3,222

Restricted cash

675

675

Operating lease right-of-use assets

6,292

7,440

Property and equipment, net

652

657

Intangible assets, net

2,860

3,651

Goodwill

10,944

10,944

Total assets

$             59,116

$            67,274

Liabilities and Equity

Current liabilities:

Accounts payable

$               2,254

$              4,271

Merchant payables

23,885

32,574

Accrued expenses and other

4,316

5,049

Deferred revenue

2,697

2,216

Income tax payable

234

Operating lease liabilities

2,395

2,972

Liabilities from discontinued operations

451

452

Total current liabilities

36,232

47,534

Long-term operating lease liabilities

7,493

8,326

Other long-term liabilities

4,322

2,563

Total liabilities

48,047

58,423

Non-controlling interest

4,595

Common stock

152

165

Treasury stock (at cost)

(7,130)

Tax indemnification

(9,537)

(9,537)

Note receivable from shareholder

(4,753)

(4,753)

Additional paid-in capital

11,819

23,274

Retained earnings

13,441

7,142

Accumulated other comprehensive loss

(4,693)

(4,905)

Total stockholders’ equity

6,429

4,256

Non-controlling interest

4,640

Total equity

11,069

4,256

Total liabilities and equity

$             59,116

$            67,274

Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Three months ended

Six months ended

June 30,

June 30,

2023

2022

2023

2022

Cash flows from operating activities:

Net income

$     2,663

$     1,058

$     6,344

$     3,421

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

467

544

945

1,118

Stock-based compensation

431

589

827

1,131

Deferred income tax

30

453

(38)

550

Loss on long-lived assets

10

10

38

Gain on sale of equity investment in WeGo

(196)

Net foreign currency effects

(36)

227

(33)

214

Reversal of reserves on accounts receivable and other reserves

(260)

(838)

(829)

(2,246)

Changes in operating assets and liabilities:

Accounts receivable

3,516

3,032

3,888

(131)

Prepaid income taxes

557

(89)

964

670

Prepaid expenses, deposits and other

2,556

(703)

2,573

(138)

Accounts payable

(1,072)

(2,159)

(2,393)

(2,056)

Merchant payables

(4,013)

(11,823)

(8,604)

(19,784)

Accrued expenses and other

(534)

(745)

377

172

Income tax payable

198

(29)

198

(186)

Other liabilities

600

257

1,419

433

Net cash provided by (used in) operating activities

5,113

(10,226)

5,648

(16,990)

Cash flows from investing activities:

Proceeds from repayment of note receivable

74

113

Purchases of intangible assets

(1,049)

Proceeds from sale of equity investment in WeGo

196

Purchases of property and equipment

(46)

(86)

(157)

(175)

Net cash provided by (used in) investing activities

28

(86)

(44)

(1,028)

Cash flows from financing activities:

Repurchase of common stock

(4,684)

(4,870)

Exercise of stock options and taxes paid for net share settlement of equity awards

(299)

1,885

(299)

1,885

Net cash provided by (used in) financing activities

(4,983)

1,885

(5,169)

1,885

Effect of exchange rate on cash, cash equivalents and restricted cash

213

(1,652)

384

(2,176)

Net increase (decrease) in cash, cash equivalents and restricted cash

371

(10,079)

819

(18,309)

Cash, cash equivalents and restricted cash at beginning of period

19,826

36,759

19,378

44,989

Cash, cash equivalents and restricted cash at end of period

$   20,197

$   26,680

$   20,197

$   26,680

Travelzoo

Segment Information from Continuing Operations

(Unaudited)

(In thousands)

 

Three months ended June 30, 2023

Travelzoo

North

America

Travelzoo

Europe

Jack’s

Flight Club

New

Initiatives

Consolidated

Revenue from unaffiliated customers

$       13,642

$         6,462

$         1,011

$              13

$          21,128

Intersegment revenue (loss)

491

(575)

84

Total net revenues

14,133

5,887

1,095

13

21,128

Operating income (loss)

$         3,753

$          (239)

$              97

$          (338)

$            3,273

Three months ended June 30, 2022

Travelzoo

North

America

Travelzoo

Europe

Jack’s

Flight Club

New

 Initiatives

Consolidated

Revenue from unaffiliated customers

$       12,337

$         4,395

$            952

$                5

$          17,689

Intersegment revenue (loss)

41

(41)

Total net revenues

12,378

4,354

952

5

17,689

Operating income (loss)

$         3,272

$       (1,472)

$            161

$          (180)

$            1,781

Six months ended June 30, 2023

Travelzoo

North

America

Travelzoo

Europe

Jack’s

Flight Club

New

Initiatives

Consolidated

Revenue from unaffiliated customers

$       28,209

$       12,540

$         1,959

$              21

$           42,729

Intersegment revenue (loss)

682

(766)

84

Total net revenues

28,891

11,774

2,043

21

42,729

Operating income (loss)

$         8,269

$            218

$              52

$          (555)

$             7,984

Six months ended June 30, 2022

Travelzoo

North

America

Travelzoo

Europe

Jack’s

Flight Club

New

Initiatives

Consolidated

Revenue from unaffiliated customers

$       23,835

$       10,522

$         1,775

$              10

$           36,142

Intersegment revenue (loss)

234

(234)

Total net revenues

24,069

10,288

1,775

10

36,142

Operating income (loss)

$         5,092

$        (1,294)

$            184

$          (282)

$             3,700

Travelzoo

Reconciliation of GAAP to Non-GAAP Information

(Unaudited)

(In thousands, except per share amounts)

Three months ended

Six months ended

June 30,

June 30,

2023

2022

2023

2022

GAAP operating expense

$        14,975

$        13,745

$        29,174

$        27,447

Non-GAAP adjustments:

Amortization of intangibles (A)

389

217

787

443

Stock option expenses (B)

431

589

827

1,131

Severance-related expenses (C)

56

49

95

62

Non-GAAP operating expense

14,099

12,890

27,465

25,811

GAAP operating income

3,273

1,781

7,984

3,700

Non-GAAP adjustments (A through C)

876

855

1,709

1,636

Non-GAAP operating income

4,149

2,636

9,693

5,336

Investor Relations:
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SOURCE Travelzoo


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