Travelzoo Reports Second Quarter 2022 Results

Jul 27th, 2022 7:30 EST

NEW YORK, July 27, 2022 (GLOBE NEWSWIRE) — Travelzoo® (NASDAQ: TZOO):

  • Revenue of $17.7 million, down 7% year-over-year
  • In constant currencies, revenue was $18.2 million
  • Non-GAAP operating profit of $2.6 million
  • Earnings per share (EPS) of $0.08 attributable to Travelzoo from continuing operations

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, 2022. Consolidated revenue was $17.7 million, down 7% from $19.1 million year-over-year. In constant currencies, revenue was $18.2 million. 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 $1.0 million for Q2 2022. At the consolidated level, including minority interests, the reported net income from continuing operations was $1.0 million. EPS from continuing operations was $0.08, compared to $0.22 in the prior-year period.

Non-GAAP operating profit was $2.6 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.2 million) and stock option expenses ($0.6 million). GAAP operating profit was $1.8 million. See section “Non-GAAP Financial Measures” below.

“In Q2, we achieved in North America an operating margin of 25%. We believe we can achieve significant increases in EPS in the near future. Revenue is expected to reach and exceed pre-pandemic levels”, said Holger Bartel, Global CEO. “Travelzoo members are affluent, active, and open to new experience. 84% say Travelzoo influences their travel destinations because they trust Travelzoo.”

Cash PositionAs of June 30, 2022, consolidated cash, cash equivalents and restricted cash were $26.7 million. Net cash used in operations was $10.2 million for the three months ended June 30, 2022. Cash was used primarily in connection with a decrease of merchant payables by $11.8 million. The Company also received cash of $1.9 million from an option exercise in Q2 2022.

ReserveReported revenues include a reserve of $2.9 million related to commissions to be earned from vouchers sold. The reserve is booked as contra revenue.

Travelzoo North AmericaNorth America business segment revenue decreased 11% year-over-year to $12.4 million. Operating profit for Q2 2022 was $3.1 million, or 25% of revenue, compared to an operating profit of $3.5 million in the prior-year period.

Travelzoo EuropeEurope business segment revenue increased 3% year-over-year to $4.4 million. At constant currencies, Europe business segment revenue increased 17% year-over-year. Operating loss for Q2 2022 was $1.5 million, compared to an operating loss of $227,000 in the prior-year period. The operating loss was primarily driven by investments in member acquisition which were all expensed in Q2.

Jack’s Flight ClubOn January 13, 2020, Travelzoo acquired 60% of Jack’s Flight Club, a membership subscription service. Jack’s Flight Club revenue increased 11% year-over-year to $952,000. Non-GAAP operating profit for Q2 2022 was $378,000, compared to a non-GAAP operating profit of $445,000 in the prior-year period. After consolidation with Travelzoo, Jack’s Flight Club’s net income was $76,000, with $46,000 attributable to Travelzoo as a result of recording $217,000 of amortization of intangible assets related to the acquisition.

LicensingIn 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 $5,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q2 2022. Licensing revenue is expected to increase going forward.

Members and SubscribersAs of June 30, 2022, we had 30.7 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.5 million as of June 30, 2022, down 7% from June 30, 2021. In Europe, the unduplicated number of Travelzoo members was 9.1 million as of June 30, 2022, up 7% from June 30, 2021. Jack’s Flight Club had 1.8 million subscribers as of June 30, 2022, up 9% from June 30, 2021.

Discontinued OperationsAs 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 TaxesIncome tax expense was $928,000 in Q2 2022, compared to an income tax expense of $1.1 million in the prior-year period.

Non-GAAP Financial MeasuresManagement 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: impairment of intangibles and goodwill, 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 AheadFor Q3 2022, we currently expect higher revenue year-over-year and profitability. We continue to see a trend of recovery of our revenue. However, there could be unexpected fluctuations in the short term. 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—while revenue is expected to grow.

Conference CallTravelzoo will host a conference call to discuss second quarter results and provide an update on Travelzoo META 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,
  • and access the webcast.

About TravelzooTravelzoo® 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, Top 20, 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,
    2022     2021     2022       2021  
Revenues $ 17,689   $ 19,079   $ 36,142     $ 33,363  
Cost of revenues   2,163     2,522     4,995       5,540  
Gross profit   15,526     16,557     31,147       27,823  
Operating expenses:              
Sales and marketing   8,480     7,340     17,061       14,130  
Product development   454     685     907       1,368  
General and administrative   4,811     5,056     9,479       9,616  
Total operating expenses   13,745     13,081     27,447       25,114  
Operating income   1,781     3,476     3,700       2,709  
Other income, net   195     684     1,618       518  
Income from continuing operations before income taxes   1,976     4,160     5,318       3,227  
Income tax expense   928     1,136     1,896       1,878  
Income from continuing operations   1,048     3,024     3,422       1,349  
Income (loss) from discontinued operations, net of tax   10     29     (1 )     14  
Net income   1,058     3,053     3,421       1,363  
Net income (loss) attributable to non-controlling interest   30     39     34       (9 )
Net income attributable to Travelzoo $ 1,028   $ 3,014   $ 3,387     $ 1,372  
               
Net income attributable to Travelzoo—continuing operations $ 1,018   $ 2,985   $ 3,388     $ 1,358  
Net income (loss) attributable to Travelzoo—discontinued operations $ 10   $ 29   $ (1 )   $ 14  
               
Income per share—basic              
Continuing operations $ 0.08   $ 0.26   $ 0.28     $ 0.12  
Discontinued operations $   $   $     $  
Net income per share—basic $ 0.08   $ 0.26   $ 0.28     $ 0.12  
               
Income per share—diluted              
Continuing operations $ 0.08   $ 0.22   $ 0.27     $ 0.10  
Discontinued operations $   $   $     $  
Net income per share—diluted $ 0.08   $ 0.22   $ 0.27     $ 0.10  
Shares used in per share calculation from continuing operations—basic   12,513     11,488     12,285       11,440  
Shares used in per share calculation from discontinued operations—basic   12,513     11,488     12,285       11,440  
Shares used in per share calculation from continuing operations—diluted   12,637     13,408     12,591       13,248  
Shares used in per share calculation from discontinued operations—diluted   12,637     13,408     12,591       13,248  
                           

 

 
Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
       
  June 30,2022   December 31,2021
Assets      
Current assets:      
Cash and cash equivalents $ 25,608     $ 43,815  
Accounts receivable, net   14,809       14,871  
Prepaid income taxes   2,569       3,325  
Prepaid expenses and other   1,603       1,891  
Prepaid expenses—related party         1,150  
Assets from discontinued operations   34       71  
Total current assets   44,623       65,123  
Deposits and other   6,815       6,784  
Deferred tax assets   3,551       3,949  
Restricted cash   1,061       1,142  
Operating lease right-of-use assets   6,192       7,700  
Property and equipment, net   550       659  
Intangible assets, net   4,785       3,426  
Goodwill   10,944       10,944  
Total assets $ 78,521     $ 99,727  
Liabilities and Stockholders’ Equity (Deficit)      
Current liabilities:      
Accounts payable $ 1,231     $ 3,411  
Merchant payables   47,899       68,678  
Accrued expenses and other   7,566       10,212  
Deferred revenue   2,106       1,733  
Operating lease liabilities   2,589       3,180  
Income tax payable         185  
Liabilities from discontinued operations   448       485  
Total current liabilities   61,839       87,884  
Long-term operating lease liabilities   8,125       9,111  
Other long-term liabilities   2,451       2,364  
Total liabilities   72,415       99,359  
Non-controlling interest   4,634       4,600  
Common stock   131       126  
Treasury stock (at cost)   (5,488 )     (5,488 )
Additional paid-in capital   7,426       4,415  
Retained earnings   3,895       508  
Accumulated other comprehensive loss   (4,492 )     (3,793 )
Total stockholders’ equity (deficit)   1,472       (4,232 )
Total liabilities and stockholders’ equity (deficit) $ 78,521     $ 99,727  
               

 

 
Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
  Three months ended   Six months ended
  June 30,   June 30,
    2022       2021       2022       2021  
Cash flows from operating activities:              
Net income $ 1,058     $ 3,053     $ 3,421     $ 1,363  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:              
Depreciation and amortization   544       476       1,118       960  
Stock-based compensation   592       935       1,134       1,817  
Deferred income tax   453       599       550       1,140  
Loss on long-lived assets               38        
Gain on sale of equity investment in WeGo               (196 )      
Gain on PPP notes payable forgiveness         (429 )           (429 )
Net foreign currency effects   227       (103 )     214       (255 )
Reversal of reserves on accounts receivable and other reserves   (838 )     (417 )     (2,246 )     (871 )
Changes in operating assets and liabilities:              
Accounts receivable   3,032       (2,552 )     (131 )     (4,781 )
Income tax receivable   (89 )     (168 )     670       (713 )
Prepaid expenses and other   (703 )     (418 )     (138 )     (2,775 )
Accounts payable   (2,159 )     (312 )     (2,056 )     1,415  
Merchant payables   (11,823 )     11,973       (19,784 )     25,185  
Accrued expenses and other   (745 )     321       172       (320 )
Income tax payable   (29 )     (102 )     (186 )     (228 )
Other liabilities   257       30       433       442  
Net cash provided by (used in) operating activities   (10,223 )     12,886       (16,987 )     21,950  
Cash flows from investing activities:              
Purchases of intangible assets               (1,049 )      
Proceeds from sale of equity investment in WeGo               196        
Purchases of property and equipment   (86 )     (77 )     (175 )     (84 )
Net cash used in investing activities   (86 )     (77 )     (1,028 )     (84 )
Cash flows from financing activities:              
Repurchase of common stock                     (1,583 )
Payment of promissory notes         (110 )           (110 )
Exercise of stock options, net of taxes paid for net share settlement of equity awards   1,885       (3,067 )     1,885       (3,067 )
Net cash provided by (used in) financing activities   1,885       (3,177 )     1,885       (4,760 )
Effect of exchange rate on cash, cash equivalents and restricted cash   (1,655 )     427       (2,179 )     697  
Net increase (decrease) in cash, cash equivalents and restricted cash   (10,079 )     10,059       (18,309 )     17,803  
Cash, cash equivalents and restricted cash at beginning of period   36,759       72,129       44,989       64,385  
Cash, cash equivalents and restricted cash at end of period $ 26,680     $ 82,188     $ 26,680     $ 82,188  
                               

 

 
Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)
 
Three months endedJune 30, 2022 Travelzoo NorthAmerica   Travelzoo Europe   Jack’s Flight Club   Elimination   Consolidated
Revenue from unaffiliated customers $ 12,342   $ 4,395     $ 952   $   $ 17,689
Intersegment revenue   41     (41 )            
Total net revenues   12,383     4,354       952         17,689
Operating income (loss) $ 3,092   $ (1,472 )   $ 161   $   $ 1,781
                   
Three months endedJune 30, 2021 Travelzoo NorthAmerica   Travelzoo Europe   Jack’s Flight Club   Elimination   Consolidated
Revenue from unaffiliated customers $ 13,650   $ 4,569     $ 860   $   $ 19,079
Intersegment revenue   335     (335 )            
Total net revenues   13,985     4,234       860         19,079
Operating income (loss) $ 3,533   $ (227 )   $ 170   $   $ 3,476

 

Six months endedJune 30, 2022 Travelzoo NorthAmerica   Travelzoo Europe   Jack’s Flight Club   Elimination   Consolidated
Revenue from unaffiliated customers $ 23,845   $ 10,522     $ 1,775   $   $ 36,142
Intersegment revenue   234     (234 )            
Total net revenues   24,079     10,288       1,775         36,142
Operating income (loss) $ 4,810   $ (1,294 )   $ 184   $   $ 3,700
                   
Six months endedJune 30, 2021 Travelzoo NorthAmerica   Travelzoo Europe   Jack’s Flight Club   Elimination   Consolidated
Revenue from unaffiliated customers $ 23,478   $ 8,138     $ 1,747   $   $ 33,363
Intersegment revenue   326     (326 )            
Total net revenues   23,804     7,812       1,747         33,363
Operating income (loss) $ 3,572   $ (923 )   $ 60   $   $ 2,709
                               

 

 
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,
    2022     2021     2022     2021
GAAP operating expense $ 13,745   $ 13,081   $ 27,447   $ 25,114
Non-GAAP adjustments:              
Impairment of intangible and goodwill (A)              
Amortization of intangibles (B)   217     275     443     559
Stock option expenses (C)   590     934     1,131     1,816
Severance-related expenses (D)   49     175     62     398
Non-GAAP operating expense   14,601     14,465     29,083     27,887
               
GAAP operating income   1,781     3,476     3,700     2,709
Non-GAAP adjustments (A through D)   856     1,384     1,636     2,773
Non-GAAP operating income   2,637     4,860     5,336     5,482
                       

Investor Relations:Almira Pusch[email protected]

PDF is available via the link:http://ml.globenewswire.com/Resource/Download/4f7bcecd-e281-4fd4-9211-8b2fa6b659c6

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