TZOO
$5.10
Travelzoo
($.08)
(1.54%)
Earnings Details
3rd Quarter September 2022
Wednesday, October 26, 2022 7:30:00 AM
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Summary

Travelzoo (TZOO) Recent Earnings

Travelzoo (TZOO) reported 3rd Quarter September 2022 earnings of $0.06 per share on revenue of $15.8 million. The consensus earnings estimate was $0.06 per share on revenue of $20.4 million. Revenue grew 1.0% on a year-over-year basis.

Travelzoo Inc. is an Internet media company, which informs over 27 million subscribers, as well as millions of Web site users, about the travel and entertainment deals available from thousands of Companies.

Results
Reported Earnings
$0.06
Earnings Whisper
-
Consensus Estimate
$0.06
Reported Revenue
$15.8 Mil
Revenue Estimate
$20.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Travelzoo Reports Third Quarter 2022 Results

NEW YORK, Oct. 26, 2022 /PRNewswire/ -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $15.8 million, up 1% year-over-year
  • In constant currencies, revenue was $16.7 million, up 6% year-over-year
  • Non-GAAP consolidated operating profit of $1.1 million
  • Earnings per share (EPS) of $0.06 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 third quarter ended September 30, 2022. Consolidated revenue was $15.8 million, up 1% from $15.7 million year-over-year. In constant currencies, revenue was $16.7 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 $790,000 for Q3 2022. At the consolidated level, including minority interests, the reported net income from continuing operations was $792,000. EPS from continuing operations was $0.06. A comparison with EPS of $0.22 in the prior-year period should consider that Q3 2021 EPS included the effect of $3.3 million other income.

Non-GAAP operating profit was $1.1 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($440,000), stock option expenses ($325,000) and severance-related expenses ($74,000). GAAP operating profit was $273,000 million. See section "Non-GAAP Financial Measures" below.

"In Q3, our revenue was lower than expected due to the unique travel situation in the summer of 2022. Demand jumped after the pandemic while suppliers were still rebuilding capacity. The demand curve temporarily shifted, while the supply curve remained inelastic in the short-term. This pushed up prices to levels where we did not want to recommend certain overpriced travel services to Travelzoo members", said Holger Bartel, Global CEO.

"While airlines, other travel suppliers, and online travel agencies (OTAs) benefited from overpriced travel services, our business remained flat. But we are seeing a rapid change in Q4: Demand is returning to normal levels. Suppliers continue to build up capacity. We have more and better offers for our members again, and revenues are accelerating."

Cash Position
As of September 30, 2022, consolidated cash, cash equivalents and restricted cash were $20.5 million. Net cash used in operations was $3.9 million for the three months ended September 30, 2022. Cash was used primarily in connection with a decrease of merchant payables by $9.1 million.

Reserve
Reported revenues include a reserve of $1.9 million related to commissions to be earned from vouchers sold. The reserve is booked as contra revenue.

Travelzoo North America
North America business segment revenue increased 9% year-over-year to $10.5 million. Operating profit for Q3 2022 was $812.000, or 8% of revenue, compared to an operating loss of $918,000 in the prior-year period.

Travelzoo Europe
Europe business segment revenue decreased 14% year-over-year to $4.5 million. At constant currencies, Europe business segment revenue increased 2% year-over-year. Operating loss for Q3 2022 was $551,000, compared to an operating profit of $600,000 in the prior-year period.

Jack's Flight Club
On January 13, 2020, Travelzoo acquired 60% of Jack's Flight Club, a membership subscription service. Jack's Flight Club revenue increased 6% year-over-year to $847,000. Non-GAAP operating profit for Q3 2022 was $228,000, compared to a non-GAAP operating profit of $331,000 in the prior-year period. After consolidation with Travelzoo, Jack's Flight Club's net income was $4,000, with $2,000 attributable to Travelzoo as a result of recording $216,000 of amortization of intangible assets related to the acquisition.

Licensing
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 $8,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q3 2022. Licensing revenue is expected to increase going forward.

Members and Subscribers
As of September 30, 2022, we had 30.5 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.4 million as of September 30, 2022, down 5% from September 30, 2021. In Europe, the unduplicated number of Travelzoo members was 9.1 million as of September 30, 2022, up 8% from September 30, 2021. Jack's Flight Club had 1.9 million subscribers as of September 30, 2022, up 10% from September 30, 2021.

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
Income tax expense was $317,000 in Q3 2022, compared to an income tax expense of $233,000 in the prior-year period.

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: 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 Ahead
For Q4 2022, we currently expect substantially higher revenue and profitability. We see the demand curve in the travel industry returning to a more normal situation. We believe this allows us to negotiate and recommend more and better offers, resulting in higher 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.

Conference Call
Travelzoo will host a conference call to discuss third quarter 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; and 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, 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


Nine months ended


September 30,


September 30,


2022


2021


2022


2021

Revenues

$    15,849


$    15,688


$   51,991


$   49,051

Cost of revenues

2,324


2,992


7,319


8,532

Gross profit

13,525


12,696


44,672


40,519

Operating expenses:








Sales and marketing

8,512


7,709


25,573


21,839

Product development

484


684


1,391


2,052

General and administrative

4,256


4,564


13,735


14,180

Total operating expenses

13,252


12,957


40,699


38,071

Operating income (loss)

273


(261)


3,973


2,448

Other income, net

836


3,344


2,454


3,862

Income from continuing operations before income taxes

1,109


3,083


6,427


6,310

Income tax expense

317


233


2,213


2,111

Income from continuing operations

792


2,850


4,214


4,199

Income (loss) from discontinued operations, net of tax

5


(19)


4


(5)

Net income

797


2,831


4,218


4,194

Net income (loss) attributable to non-controlling interest

2


8


36


(1)

Net income attributable to Travelzoo

$         795


$      2,823


$     4,182


$     4,195









Net income attributable to Travelzoo—continuing operations

$         790


$      2,842


$     4,178


$     4,200

Net income (loss) attributable to Travelzoo—discontinued operations

$             5


$          (19)


$            4


$           (5)









Income (loss) per share—basic








Continuing operations

$        0.06


$        0.24


$       0.34


$       0.36

Discontinued operations

$           —


$           —


$          —


$          —

Net income (loss) per share—basic

$        0.06


$       0.24


$       0.34


$       0.36









Income (loss) per share—diluted








Continuing operations

$        0.06


$        0.22


$       0.33


$       0.32

Discontinued operations

$           —


$           —


$          —


$          —

Net income (loss) per share—diluted

$        0.06


$       0.22


$       0.33


$       0.32

Shares used in per share calculation from continuing operations—basic

12,489


11,648


12,354


11,510

Shares used in per share calculation from discontinued operations—basic

12,489


11,648


12,354


11,510

Shares used in per share calculation from continuing operations—diluted

12,578


12,904


12,659


13,132

Shares used in per share calculation from discontinued operations—diluted

12,578


11,648


12,659


11,510

 

Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)



September 30,
2022


December 31,
2021

Assets




Current assets:




Cash and cash equivalents

$             19,494


$            43,815

Accounts receivable, net

11,835


14,871

Prepaid income taxes

2,763


3,325

Prepaid expenses and other

1,381


1,891

Prepaid expenses—related party


1,150

Assets from discontinued operations

35


71

Total current assets

35,508


65,123

Deposits and other

6,778


6,784

Deferred tax assets

3,445


3,949

Restricted cash

1,037


1,142

Operating lease right-of-use assets

5,799


7,700

Property and equipment, net

505


659

Intangible assets, net

4,304


3,426

Goodwill

10,944


10,944

Total assets

$             68,320


$            99,727

Liabilities and Stockholders' Equity (Deficit)




Current liabilities:




Accounts payable

$               3,557


$              3,411

Merchant payables

38,175


68,678

Accrued expenses and other

5,857


10,212

Deferred revenue

2,537


1,733

Operating lease liabilities

2,332


3,180

Income tax payable


185

Liabilities from discontinued operations

413


485

Total current liabilities

52,871


87,884

Long-term operating lease liabilities

7,723


9,111

Other long-term liabilities

2,474


2,364

Total liabilities

63,068


99,359

Non-controlling interest

4,636


4,600

Common stock

131


126

Treasury stock (at cost)

(6,658)


(5,488)

Additional paid-in capital

7,797


4,415

Retained earnings

4,690


508

Accumulated other comprehensive loss

(5,344)


(3,793)

Total stockholders' equity (deficit)

616


(4,232)

Total liabilities and stockholders' equity (deficit)

$            68,320


$           99,727

 

Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



Three months ended


Nine months ended


September 30,


September 30,


2022


2021


2022


2021

Cash flows from operating activities:








Net income

$        797


$     2,831


$     4,218


$     4,194

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








Depreciation and amortization

534


448


1,652


1,408

Stock-based compensation

325


971


1,456


2,788

Deferred income tax

151


(67)


701


1,073

Loss on long-lived assets



38


Gain on sale of equity investment in WeGo



(196)


Gain on PPP notes payable forgiveness


(3,159)



(3,588)

Net foreign currency effects

(180)


(45)


34


(300)

Reversal of reserves on accounts receivable and other reserves

(1,156)


(854)


(3,402)


(1,725)

Changes in operating assets and liabilities:








Accounts receivable

2,671


933


2,540


(3,848)

Income tax receivable

(316)


(1,294)


354


(2,007)

Prepaid expenses and other

179


(6,698)


41


(9,473)

Accounts payable

2,458


3,609


402


5,024

Merchant payables

(9,110)


(8,699)


(28,894)


16,486

Accrued expenses and other

(19)


(132)


153


(452)

Income tax payable


(35)


(186)


(263)

Other liabilities

(193)


(476)


240


(34)

Net cash provided by (used in) operating activities

(3,859)


(12,667)


(20,849)


9,283

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

(61)


60


(236)


(24)

Net cash provided by (used in) investing activities

(61)


60


(1,089)


(24)

Cash flows from financing activities:








Repurchase of common stock

(1,170)



(1,170)


(1,583)

Payment of promissory notes




(110)

Short swing settlement

46




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


(2,357)


1,931


(5,424)

Net cash provided by (used in) financing activities

(1,124)


(2,357)


761


(7,117)

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

(1,091)


(823)


(3,267)


(126)

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

(6,135)


(15,787)


(24,444)


2,016

Cash, cash equivalents and restricted cash at beginning of period

26,680


82,188


44,989


64,385

Cash, cash equivalents and restricted cash at end of period

$   20,545


$   66,401


$   20,545


$   66,401

 

Travelzoo 

Segment Information from Continuing Operations 

(Unaudited) 

(In thousands) 


Three months ended
September 30, 2022

Travelzoo
North

America


Travelzoo
Europe


Jack's
Flight Club


Elimination


Consolidated

Revenue from unaffiliated customers

$         10,281


$          4,721


$             847


$               —


$           15,849

Intersegment revenue

217


(217)




Total net revenues

10,498


4,504


847



15,849

Operating income (loss)

$              812


$            (551)


$               12


$               —


$                273











Three months ended
September 30, 2021

Travelzoo
North

America


Travelzoo
Europe


Jack's
Flight Club


Elimination


Consolidated

Revenue from unaffiliated customers

$           9,527


$          5,365


$             796


$               —


$           15,688

Intersegment revenue

136


(136)




Total net revenues

9,663


5,229


796



15,688

Operating income (loss)

$             (918)


$             600


$               57


$               —


$              (261)











Nine months ended
September 30, 2022

Travelzoo North

America


Travelzoo
Europe


Jack's
Flight Club


Elimination


Consolidated

Revenue from unaffiliated customers

$         34,126


$        15,243


$          2,622


$               —


$           51,991

Intersegment revenue

451


(451)




Total net revenues

34,577


14,792


2,622



51,991

Operating income (loss)

$           5,622


$         (1,845)


$             196


$               —


$             3,973











Nine months ended
September 30, 2021

Travelzoo North

America


Travelzoo
Europe


Jack's
Flight Club


Elimination


Consolidated

Revenue from unaffiliated customers

$         33,005


$        13,503


$          2,543


$               —


$           49,051

Intersegment revenue

462


(462)




Total net revenues

33,467


13,041


2,543



49,051

Operating income (loss)

$           2,654


$            (323)


$             117


$               —


$             2,448

 

Travelzoo

Reconciliation of GAAP to Non-GAAP Information

(Unaudited)

(In thousands, except per share amounts)



Three months ended


Nine months ended


September 30,


September 30,


2022


2021


2022


2021

GAAP operating expense

$     13,252


$     12,957


$     40,699


$     38,071

Non-GAAP adjustments:








Amortization of intangibles (A)

440


274


1,318


833

Stock option expenses (B)

325


971


1,456


2,788

Severance-related expenses (C)

74


95


136


493

Non-GAAP operating expense

12,413


11,617


37,789


33,957









GAAP operating income (loss)

273


(261)


3,973


2,448

Non-GAAP adjustments (A through D)

839


1,340


2,910


4,114

Non-GAAP operating income

1,112


1,079


6,883


6,562

 

Investor Relations:
ir@travelzoo.com 

 

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SOURCE Travelzoo