• Travelzoo® provides our 30 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. For over 20 years we have worked in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible deals.

Travelzoo Reports Second Quarter 2020 Results

Press Releases

Travelzoo Reports Second Quarter 2020 Results

NEW YORK, July 30, 2020 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $7.0 million, down 73% from $26.6 million year-over-year
  • Non-GAAP operating loss of $2.5 million (adjustment of GAAP operating loss by excluding $4.1 million in stock option compensation expense)
  • GAAP operating loss of $6.6 million
  • Earnings per share (EPS) of ($0.48) attributable to Travelzoo from continuing operations

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the second quarter ended June 30, 2020. Revenue was $7.0 million, down 73% from $26.6 million year-over-year. Reported revenue excludes revenue from discontinued operations in Asia Pacific. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members.

The operating loss for Q2 was $6.4 million attributable to Travelzoo from continuing operations. At the consolidated level, including minority interests, the operating loss from continuing operations was $6.8 million. The losses were primarily caused by an unusually high stock option compensation expense of $4.1 million related to repricing of outstanding options, offset by a $1.1 million gain from the reduction of the purchase price for Jack's Flight Club®. EPS from continuing operations was ($0.48), down from $0.25 in the prior-year period.

"After adjusting our cost structure quickly in Q2, we have turned our view to the future to regain profitability as soon as Q3. We are already seeing irresistibly priced travel deals coming to the market, which were unheard of previously. Airlines, hotels, destinations and entertainment companies want travelers to come back and will need to invest in advertising. Travelzoo, as the most trusted media company in publishing and recommending travel deals, will tell its members about the very best deals," said Holger Bartel, Global CEO.

Cash Position
As of June 30, 2020, cash, cash equivalents and restricted cash were $27.0 million. In April 2020 and May 2020, Travelzoo received low-interest government loans under the Paycheck Protection Program of $3.1 million and $535,000, respectively. No further applications for loans have been made since then and the company does not anticipate requiring any further loans.

North America
North America business segment revenue decreased 77% year-over-year to $4.2 million. GAAP operating loss for the second quarter was $4.7 million, or (112%) of revenue, compared to an operating profit of $3.6 million, or 20% of revenue in the prior-year period.

Europe
Europe business segment revenue decreased 79% year-over-year to $1.9 million. In constant currencies, revenue decreased 76% year-over-year. Operating loss for the second quarter was $1.7 million, or (91%) of revenue, compared to an operating profit of $584,000, or 5% of revenue in the prior-year period. 

Jack’s Flight Club 
On January 13, 2020, Travelzoo acquired 60% of Jack’s Flight Club, a subscription service. In Q2 2020, the Jack's Flight Club business segment generated $1.2 million in revenue from subscriptions with operating profit of $914,000. After consolidation with Travelzoo, Jack’s Flight Club's operating loss was $615,000, with $369,000 attributable to Travelzoo as a result of recording $462,000 for a one-time expense due to the revision of the purchase agreement with the sellers, $395,000 of amortization of intangible assets related to the acquisition and a haircut of revenue (derived from deferred revenue sold prior to acquisition) of $305,000 due to purchase accounting in accordance with U.S. GAAP.

Members and Subscribers
As of June 30, 2020, we had 31.0 million members worldwide. In Europe, the unduplicated number of Travelzoo members was 9.0 million as of June 30, 2020, consistent with June 30, 2019. In North America, the unduplicated number of Travelzoo members was 16.8 million as of June 30, 2020, down 5% from June 30, 2019. Jack’s Flight Club had 1.7 million subscribers as of June 30, 2020, up 19% from June 30, 2019. On June 16, 2020, Travelzoo disclosed that it sold its subsidiary in Japan, Travelzoo Japan K.K., to Mr. Hajime Suzuki. In connection with the sale, Travelzoo and Travelzoo Japan K.K. entered into a licensing agreement. Under the licensing agreement, Travelzoo’s existing members in Japan will continue to be owned by Travelzoo as the licensor.

Discontinued Operations
As announced in a press release on March 10, 2020, Travelzoo decided to exit its Asia Pacific business which in 2019 reduced EPS by $0.60. The Asia Pacific business was classified as discontinued operations at 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 benefit was $1.3 million, compared to an income tax expense of $1.1 million in the prior-year period.

Outlook
We currently see a trend of recovery of our revenue. We have been able to reduce our operating expenses significantly. As a result of recovery of revenue and substantially lower operating expenses, we expect to achieve a break-even or small profit in terms of non-GAAP operating income for Q3 and a non-GAAP operating profit for Q4 2020.

Conference Call
Travelzoo will host a conference call to discuss second 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 our 30 million members insider deals and one-of-a-kind experiences personally reviewed by one of our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. For over 20 years we have worked 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 Top 20 are registered trademarks of Travelzoo.

 

Travelzoo
Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)  Three months ended   Six months ended
(Unaudited) June 30,   June 30,
  2020   2019   2020   2019
Revenues $ 7,004      $ 26,606      $ 27,331      $ 55,766   
Cost of revenues 2,141      2,672      4,844      5,537   
Gross profit 4,863      23,934      22,487      50,229   
Operating expenses:              
Sales and marketing 4,288      13,104      17,382      26,638   
Product development 566      1,763      1,994      3,422   
General and administrative 6,642      4,914      12,164      9,446   
Impairment of intangible assets and goodwill —      —      2,920      —   
  Total operating expenses 11,496      19,781      34,460      39,506   
Operating income (loss) (6,633)     4,153      (11,973)     10,723   
Other income (loss), net (179)     (29)     (185)     16   
Income (loss) from continuing operations before income taxes (6,812)     4,124      (12,158)     10,739   
Income tax expense (benefit) (1,309)     1,066      (1,826)     2,736   
Income (loss) from continuing operations (5,503)     3,058      (10,332)     8,003   
Loss from discontinued operations, net of tax (795)     (1,730)     (3,714)     (3,555)  
Net income (loss) (6,298)     1,328      (14,046)     4,448   
Net loss attributable to non-controlling interest (108)     —      (1,247)     —   
Net income (loss) attributable to Travelzoo $ (6,190)     $ 1,328      $ (12,799)     $ 4,448   
               
Net income (loss) attributable to Travelzoo—continuing operations $ (5,395)     $ 3,058      $ (9,085)     $ 8,003   
Net income (loss) attributable to Travelzoo—discontinued operations $ (795)     $ (1,730)     $ (3,714)     $ (3,555)  
               
Income (loss) per share—basic              
Continuing operations $ (0.48)     $ 0.25      $ (0.80)     $ 0.67   
Discontinued operations $ (0.07)     $ (0.14)     $ (0.33)     $ (0.30)  
Net income (loss) per share —basic $ (0.55)     $ 0.11      $ (1.13)     $ 0.37   
               
Income (loss) per share—diluted              
Continuing operations $ (0.48)     $ 0.25      $ (0.80)     $ 0.66   
Discontinued operations $ (0.07)     $ (0.14)     $ (0.33)     $ (0.30)  
Net income (loss) per share—diluted $ (0.55)     $ 0.11      $ (1.13)     $ 0.36   
Shares used in per share calculation from continuing operations—basic 11,310      12,003      11,375      11,959   
Shares used in per share calculation from discontinued operations—basic 11,310      12,003      11,375      11,959   
Shares used in per share calculation from continuing operations—diluted 11,310      12,278      11,375      12,251   
Shares used in per share calculation from discontinued operations—diluted 11,310      12,003      11,375      11,959   
                       

 

Travelzoo
Condensed Consolidated Balance Sheets

(In thousands)
(Unaudited)
June 30,
2020
  December 31,
2019
Assets      
Current assets:      
Cash and cash equivalents $ 25,563      $ 18,743   
Accounts receivable, net 4,031      11,209   
Prepaid income taxes —      989   
Deposits 112      105   
Prepaid expenses and other 1,173      2,288   
Assets from discontinued operations 590      3,961   
Total current assets 31,469      37,295   
Deposits and other 829      572   
Deferred tax assets 4,341      2,051   
Restricted cash 1,138      1,135   
Investments in WeekenGO and other 2,152      2,484   
Operating lease right-of-use assets 9,929      8,140   
Property and equipment, net 1,689      2,861   
Intangible assets, net 5,200      —   
Goodwill 10,944      —   
Total assets $ 67,691      $ 54,538   
Liabilities and Stockholders’ Equity (Deficit)      
Current liabilities:      
Accounts payable $ 29,674      $ 19,349   
Accrued expenses and other 5,436      6,281   
Deferred revenue 2,779      786   
Operating lease liabilities 4,440      4,847   
Promissory notes payable 1,700      —   
Income tax payable 773      914   
Liabilities from discontinued operations 1,456      3,135   
Total current liabilities 46,258      35,312   
Notes payable 3,663      —   
Deferred tax liabilities 1,044      —   
Long-term operating lease liabilities 12,062      7,920   
Other long-term liabilities 457      443   
Total liabilities 63,484      43,675   
Non-controlling interest 4,508      —   
Common stock 113      115   
Additional paid-in capital 4,031      —   
Retained earnings 221      14,200   
Accumulated other comprehensive loss (4,666)     (3,452)  
Total stockholders’ equity (deficit) (301)     10,863   
Total liabilities and stockholders’ equity (deficit) $ 67,691      $ 54,538   
               

 

Travelzoo
Condensed Consolidated Statements of Cash Flows

(In thousands) Three months ended   Six months ended
(Unaudited) June 30,   June 30,
  2020   2019   2020   2019
Cash flows from operating activities:              
Net income (loss) $ (6,298)     $ 1,328      $ (14,046)     $ 4,448   
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:              
Depreciation and amortization 667      333      1,218      663   
Stock-based compensation 4,122      319      4,145      482   
Deferred income tax (1,152)         (1,761)     345   
Impairment of intangible assets and goodwill —      —      2,920      —   
Loss on long-lived assets —      —        437     —   
Loss on equity investment in WeekenGO 141      238      336      397   
Gain on notes payable settlement (1,500)     —      (1,500)     —   
Net foreign currency effects 225      (5)     (456)     (26)  
Provision of loss on accounts receivable and other 986      (51)     2,427      26   
Changes in operating assets and liabilities, net of acquisitions:              
Accounts receivable 3,674      201      6,183      (2,779)  
Income tax receivable —      (817)     989      (428)  
Prepaid expenses and other 558      (186)     1,420      239   
Accounts payable 16,702      (1,687)     10,309      (2,788)  
Accrued expenses and other (2,084)     (442)     (1,380)     1291  
Deferred revenue 360      146      1,249      —   
Income tax payable 266      (1,084)     (67)     (96)  
Other liabilities (97)     (103)     1,091      (174)  
Net cash provided by (used in) operating activities 16,570      (1,806)     13,514      1,600   
Cash flows from investing activities:              
Acquisition of business, net of cash acquired —      (673)     (679)     (673)  
Other investment (430)     —      (430)     —   
Purchases of property and equipment (72)     (70)     (203)     (201)  
Net cash used in investing activities (502)     (743)     (1,312)     (874)  
Cash flows from financing activities:              
Repurchase of common stock —      (4,869)     (1,205)     (6,460)  
Payment of promissory notes (6,800)     —      (7,800)     0  
Proceeds from notes payable 3,663      —      3,663      —   
Proceeds from exercise of stock options, net of taxes paid for net share settlement of equity awards —      1,738      —      1,712   
Net cash used in financing activities (3,137)     (3,131)     (5,342)     (4,748)  
Effect of exchange rate on cash, cash equivalents and restricted cash (330)     (147)     (602)      
Net increase (decrease) in cash, cash equivalents and restricted cash 12,601      (5,827)     6,258      (4,017)  
Cash, cash equivalents and restricted cash at beginning of period 14,367      21,271      20,710      19,461   
Cash, cash equivalents and restricted cash at end of period $ 26,968      $ 15,444      $ 26,968      $ 15,444   
Supplemental disclosure of cash flow information:                    
Cash paid (refunded) for income taxes, net $ (60)      $ 2,919      $ 482      $ 2,859   

 

Travelzoo
Segment Information
(Unaudited)
(In thousands)

Three months ended June 30, 2020 North
America
  Europe   Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 4,254      $ 1,805      $ 945      $ —      $ 7,004   
Intersegment revenue (52)     52      —      —      —   
Total net revenues 4,202      1,857      945      —      7,004   
Operating loss $ (4,702)     $ (1,683)     $ (248)     $ —      $ (6,633)  
                   
Three months ended June 30, 2019 North
America
  Europe   Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 17,494      $ 9,133      $ —      $ (21)     $ 26,606   
Intersegment revenue 430      (451)     —      21      —   
Total net revenues 17,924      8,682      —          26,606   
Operating income (loss) $ 3,590      $ 584      $ —      $ (21)     $ 4,153   

 

Six months ended June 30, 2020 North
America
  Europe   Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 16,803      $ 8,908      $ 1,628      $ (8)     $ 27,331   
Intersegment revenue 96      (104)     —          —   
Total net revenues 16,899      8,804      1,628      —      27,331   
Operating loss $ (5,678)     $ (3,024)     $ (3,263)     $ (8)     $ (11,973)  
                   
Six months ended June 30, 2019 North
America
  Europe   Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 35,630      $ 20,187      $ —      $ (51)     $ 55,766   
Intersegment revenue 881      (932)     —      51      —   
Total net revenues 36,511      19,255      —      0   55,766   
Operating income (loss) $ 8,053      $ 2,721      $ —      $ (51)     $ 10,723   

Investor Relations:
Almira Pusch
ir@travelzoo.com 

 

Travelzoo-Logo 11_30_2017 (1).jpg

 

Source: Travelzoo