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    Travelzoo Reports Second Quarter 2023 Results

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    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.

    TravelzooCondensed Consolidated Statements of Operations(Unaudited)(In thousands, except per share amounts)
    Three months endedSix months ended
    June 30,June 30,
    2023202220232022
    Revenues$   21,128$   17,689$   42,729$   36,142
    Cost of revenues2,8802,1635,5714,995
    Gross profit18,24815,52637,15831,147
    Operating expenses:
    Sales and marketing10,1428,48019,43817,061
    Product development5184541,008907
    General and administrative4,3154,8118,7289,479
    Total operating expenses14,97513,74529,17427,447
    Operating income3,2731,7817,9843,700
    Other income, net4791958291,618
    Income from continuing operations before income taxes3,7521,9768,8135,318
    Income tax expense1,0919282,4691,896
    Income from continuing operations2,6611,0486,3443,422
    Income (loss) from discontinued operations, net of tax210—(1)
    Net income2,6631,0586,3443,421
    Net income attributable to non-controlling interest37304534
    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—basic15,27512,51315,48512,285
    Shares used in per share calculation from discontinued operations—basic15,27512,51315,48512,285
    Shares used in per share calculation from continuing operations—diluted15,33712,63715,55712,591
    Shares used in per share calculation from discontinued operations—diluted15,33712,63715,55712,591
    TravelzooCondensed 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, net10,28713,820
    Prepaid income taxes8011,778
    Prepaid expenses and other1,3681,289
    Assets from discontinued operations1011
    Total current assets31,97935,591
    Deposits and other2,4925,094
    Deferred tax assets3,2223,222
    Restricted cash675675
    Operating lease right-of-use assets6,2927,440
    Property and equipment, net652657
    Intangible assets, net2,8603,651
    Goodwill10,94410,944
    Total assets$             59,116$            67,274
    Liabilities and Equity
    Current liabilities:
    Accounts payable$               2,254$              4,271
    Merchant payables23,88532,574
    Accrued expenses and other4,3165,049
    Deferred revenue2,6972,216
    Income tax payable234—
    Operating lease liabilities2,3952,972
    Liabilities from discontinued operations451452
    Total current liabilities36,23247,534
    Long-term operating lease liabilities7,4938,326
    Other long-term liabilities4,3222,563
    Total liabilities48,04758,423
    Non-controlling interest—4,595
    Common stock152165
    Treasury stock (at cost)—(7,130)
    Tax indemnification(9,537)(9,537)
    Note receivable from shareholder(4,753)(4,753)
    Additional paid-in capital11,81923,274
    Retained earnings13,4417,142
    Accumulated other comprehensive loss(4,693)(4,905)
    Total stockholders’ equity6,4294,256
    Non-controlling interest4,640—
    Total equity11,0694,256
    Total liabilities and equity$             59,116$            67,274
    TravelzooCondensed Consolidated Statements of Cash Flows(Unaudited)(In thousands)
    Three months endedSix months ended
    June 30,June 30,
    2023202220232022
    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 amortization4675449451,118
    Stock-based compensation4315898271,131
    Deferred income tax30453(38)550
    Loss on long-lived assets10—1038
    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 receivable3,5163,0323,888(131)
    Prepaid income taxes557(89)964670
    Prepaid expenses, deposits and other2,556(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)377172
    Income tax payable198(29)198(186)
    Other liabilities6002571,419433
    Net cash provided by (used in) operating activities5,113(10,226)5,648(16,990)
    Cash flows from investing activities:
    Proceeds from repayment of note receivable74—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 activities28(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 cash213(1,652)384(2,176)
    Net increase (decrease) in cash, cash equivalents and restricted cash371(10,079)819(18,309)
    Cash, cash equivalents and restricted cash at beginning of period19,82636,75919,37844,989
    Cash, cash equivalents and restricted cash at end of period$   20,197$   26,680$   20,197$   26,680
    TravelzooSegment Information from Continuing Operations(Unaudited)(In thousands) 
    Three months ended June 30, 2023TravelzooNorthAmericaTravelzooEuropeJack’sFlight ClubNewInitiativesConsolidated
    Revenue from unaffiliated customers$       13,642$         6,462$         1,011$              13$          21,128
    Intersegment revenue (loss)491(575)84——
    Total net revenues14,1335,8871,0951321,128
    Operating income (loss)$         3,753$          (239)$              97$          (338)$            3,273
    Three months ended June 30, 2022TravelzooNorthAmericaTravelzooEuropeJack’sFlight ClubNew InitiativesConsolidated
    Revenue from unaffiliated customers$       12,337$         4,395$            952$                5$          17,689
    Intersegment revenue (loss)41(41)———
    Total net revenues12,3784,354952517,689
    Operating income (loss)$         3,272$       (1,472)$            161$          (180)$            1,781
    Six months ended June 30, 2023TravelzooNorthAmericaTravelzooEuropeJack’sFlight ClubNewInitiativesConsolidated
    Revenue from unaffiliated customers$       28,209$       12,540$         1,959$              21$           42,729
    Intersegment revenue (loss)682(766)84——
    Total net revenues28,89111,7742,0432142,729
    Operating income (loss)$         8,269$            218$              52$          (555)$             7,984
    Six months ended June 30, 2022TravelzooNorthAmericaTravelzooEuropeJack’sFlight ClubNewInitiativesConsolidated
    Revenue from unaffiliated customers$       23,835$       10,522$         1,775$              10$           36,142
    Intersegment revenue (loss)234(234)———
    Total net revenues24,06910,2881,7751036,142
    Operating income (loss)$         5,092$        (1,294)$            184$          (282)$             3,700
    TravelzooReconciliation of GAAP to Non-GAAP Information(Unaudited)(In thousands, except per share amounts)
    Three months endedSix months ended
    June 30,June 30,
    2023202220232022
    GAAP operating expense$        14,975$        13,745$        29,174$        27,447
    Non-GAAP adjustments:
    Amortization of intangibles (A)389217787443
    Stock option expenses (B)4315898271,131
    Severance-related expenses (C)56499562
    Non-GAAP operating expense14,09912,89027,46525,811
    GAAP operating income3,2731,7817,9843,700
    Non-GAAP adjustments (A through C)8768551,7091,636
    Non-GAAP operating income4,1492,6369,6935,336

    Investor Relations:
    ir@travelzoo.com

    SOURCE Travelzoo

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