• 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 First Quarter 2020 Results

Press Releases

Travelzoo Reports First Quarter 2020 Results

NEW YORK, June 25, 2020 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $20.3 million, down from $29.2 million year-over-year
  • Operating loss of $3.7 million
  • Earnings per share (EPS) of ($0.32) attributable to Travelzoo from continuing operations
  • Cash flow used in operations of $3.1 million

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the first quarter ended March 31, 2020. Revenue was $20.3 million, down from $29.2 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 Q1 was $3.7 million attributable to Travelzoo from continuing operations. At the consolidated level, including minority interests, the operating loss from continuing operations was $5.3 million. The losses were primarily caused by two unusual, non-recurring expenses: a one-time impairment charge of $2.9 million for intangible assets and goodwill due to the COVID-19 pandemic, and an increased bad debt provision of $1.0 million. EPS was ($0.32), down from $0.41 in the prior-year period.

“Going into Q2, we were able to adjust our content offering quickly and successfully. After 92% of Travelzoo members indicated in an online survey they were interested in receiving travel deals if the offers were flexible, we focused our weekly Top 20®, which has for the past 20 years been the definitive list of the week’s best travel deals on the Internet, on flexible and worry-free offers. Travel dates of most deals are extended to late summer, fall or even into 2021. Accelerating demand from members has created a relatively strong business for Travelzoo. In Q2, we have already generated cash flow from operations of more than $11 million quarter-to-date,” said Travelzoo’s Global CEO, Holger Bartel.

Cash Position
During Q2 2020, Travelzoo’s cash position will be increasing significantly. As of March 31, 2020, cash, cash equivalents and restricted cash were $14.4 million. The estimated cash flow from operations in Q2 2020 is $13 to $14 million. In April, Travelzoo received a low-interest government loan of $3.1 million. In June, a payment of $6.8 million was made to partially settle the outstanding note due to the sellers of Jack’s Flight Club, leaving a balance of $1.7 million as an outstanding note. Travelzoo’s estimated cash balance as of June 30, 2020, will be in the range of $24 million to $25 million.

North America
North America business segment revenue decreased 32% year-over-year to $12.7 million. Operating loss for the first quarter was $976,000, or (8%) of revenue, compared to an operating profit of $4.5 million, or 24% of revenue in the prior-year period.

Europe
Europe business segment revenue decreased 34% year-over-year to $6.9 million. In constant currencies, revenue decreased 33% year-over-year. Operating loss for the first quarter was $1.3 million, or (19%) of revenue, compared to an operating profit of $2.1 million, or 20% 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. For the period from January 13, 2020 to March 31, 2020, the new Jack's Flight Club business segment generated $1.1 million in revenue from subscriptions with operating profit of $592,000. After the consolidation with Travelzoo, Jack’s Flight Club reported an operating loss of $3.0 million, with $1.8 million attributable to Travelzoo, as a result of recording one-time impairment charges for indefinite-lived intangible assets (tradenames) for $810,000 and goodwill for $2.1 million along with acquisition related expenses.

Discontinued Operations
As announced in a press release on March 10, 2020, Travelzoo decided to exit its Asia Pacific business which incurred a loss of $7.2 million in 2019 and 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.

Members and Subscribers
As of March 31, 2020, Travelzoo had an unduplicated number of members of 26.0 million from North America and Europe. In Europe, the unduplicated number of members was 9.2 million as of March 31, 2020, up 3% from March 31, 2019. In North America, the unduplicated number of members was 16.9 million as of March 31, 2020, down 3% from March 31, 2019. The number of new members in Q1 2020 was 634,000, compared to 667,000 in Q1 2019. On June 16, Travelzoo disclosed that it has 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. Jack’s Flight Club had 1.7 million subscribers as of March 31, 2020, up 38% from March 31, 2019.

Income Taxes
Income tax benefit was $517,000, compared to an income tax expense of $1.7 million in the prior-year period.

Asset Management
During the first quarter of 2020, Travelzoo used $3.1 million of cash in operating activities. Accounts payable decreased by $6.4 million to $12.8 million. Accounts receivable decreased by $2.5 million to $7.7 million. Cash used in investing activities was $810,000. Cash used in financing activities of $2.2 million. As of March 31, 2020, cash, cash equivalents and restricted cash were $14.4 million.

Conference Call
Travelzoo will host a conference call to discuss first 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.

Investor Relations:
Almira Pusch
ir@travelzoo.com

 

Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

  Three months ended
  March 31,
  2020   2019
Revenues $ 20,327     $ 29,160  
Cost of revenues 2,703     2,865  
Gross profit 17,624     26,295  
Operating expenses:      
Sales and marketing 13,094     13,534  
Product development 1,428     1,659  
General and administrative 5,522     4,532  
Impairment of intangible assets and goodwill 2,920      
Total operating expenses 22,964     19,725  
Operating income (5,340 )   6,570  
Other income (loss), net (6 )   45  
Income (loss) from continuing operations before income taxes (5,346 )   6,615  
Income tax expense (benefit) (517 )   1,670  
Income (loss) from continuing operations (4,829 )   4,945  
Income (loss) from discontinued operations, net of taxes (2,919 )   (1,825 )
Net income (loss) (7,748 )   3,120  
Net income (loss) attributable to non-controlling interest (1,139 )    
Net income (loss) attributable to Travelzoo $ (6,609 )   $ 3,120  
       
Net income (loss) attributable to Travelzoo—continuing operations (3,690 )   4,945  
Net income (loss) attributable to Travelzoo—discontinued operations (2,919 )   (1,825 )
       
Income (loss) per share—basic      
Continuing operations $ (0.32 )   $ 0.41  
Discontinued operations $ (0.26 )   $ (0.15 )
Net income (loss) per share —basic $ (0.58 )   $ 0.26  
       
Income (loss) per share—diluted      
Continuing operations $ (0.32 )   $ 0.41  
Discontinued operations $ (0.26 )   $ (0.15 )
Net income (loss) per share—diluted $ (0.58 )   $ 0.26  
       
Shares used in per share calculation from continuing operations—basic 11,439     11,914  
Shares used in per share calculation from discontinued operations—basic 11,439     11,914  
       
Shares used in per share calculation from continuing operations—diluted 11,439     12,224  
Shares used in per share calculation from discontinued operations—diluted 11,439     11,914  


 

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands) March 31,
 2020
  December 31,
 2019
Assets      
Current assets:      
Cash and cash equivalents $ 12,130     $ 18,743  
Accounts receivable, net 7,653     11,209  
Prepaid income taxes     989  
Deposits 112     105  
Prepaid expenses and other 1,713     2,288  
Assets from discontinued operations 2,251     3,961  
Total current assets 23,859     37,295  
Deposits and other 430     572  
Deferred tax assets 3,404     2,051  
Restricted cash 1,130     1,135  
Investment in WeekenGO 2,258     2,484  
Operating lease right-of-use assets 11,210     8,140  
Property and equipment, net 1,964     2,861  
Intangible assets, net 5,595        
Goodwill 10,944        
Total assets $ 60,794     $ 54,538  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 12,836     $ 19,349  
Accrued expenses and other 6,528     6,281  
Deferred revenue 2,451     786  
Operating lease liabilities 4,801     4,847  
Promissory notes payable 9,971      
Income tax payable 519     914  
Liabilities from discontinued operations 2,289     3,135  
Total current liabilities 39,395     35,312  
Long-term tax liabilities 367     359  
Deferred tax liabilities 1,210      
Long-term operating lease liabilities 12,921     7,920  
Other long-term liabilities 84     84  
Total liabilities 53,977     43,675  
Non-controlling interest 4,616      
Common stock 113     115  
Additional paid-in capital      
Accumulated other comprehensive loss 6,411     14,200  
Retained earnings (4,323 )   (3,452 )
Total stockholders’ equity 2,201     10,863  
Total liabilities and stockholders’ equity $ 60,794     $ 54,538  

 

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

  Three months ended
  March 31,
  2020   2019
Cash flows from operating activities:      
Net income (loss) $ (7,748 )   $ 3,120  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization 551     330  
Stock-based compensation 23     163  
Deferred income tax (609 )   341  
Impairment of intangible assets and goodwill 2,920      
Loss on long-lived assets 437      
Loss on equity investment in WeekenGO 195     159  
Net foreign currency effects (681 )   (21 )
Provision of loss on accounts receivable and other 1,441     77  
Changes in operating assets and liabilities, net of acquisitions:      
Accounts receivable 2,509     (2,980 )
Income tax receivable 989     389  
Prepaid expenses and other 862     425  
Accounts payable (6,393 )   (1,101 )
Accrued expenses and other 704     1,733  
Deferred revenue 889     (146 )
Income tax payable (333 )   988  
Other liabilities 1,188     (71 )
Net cash provided by (used in) operating activities (3,056 )   3,406  
Cash flows from investing activities:      
Acquisition of business, net of cash acquired (679 )    
Purchases of property and equipment (131 )   (131 )
Net cash used in investing activities (810 )   (131 )
Cash flows from financing activities:      
Repurchase of common stock (1,205 )   (1,591 )
Payment of promissory notes (1,000 )    
Proceeds from exercise of stock options, net of taxes paid for net share settlement of equity awards     (26 )
Net cash used in financing activities (2,205 )   (1,617 )
Effect of exchange rate on cash, cash equivalents and restricted cash (272 )   152  
Net increase (decrease) in cash, cash equivalents and restricted cash (6,343 )   1,810  
Cash, cash equivalents and restricted cash at beginning of period 20,710     19,461  
Cash, cash equivalents and restricted cash at end of period $ 14,367     $ 21,271  
Supplemental disclosure of cash flow information:      
Cash paid (refunded) for income taxes, net $ 542     $ (60 )

Travelzoo
Segment Information
(Unaudited)
(In thousands)

Three months ended March 31,
2020
North
America
  Europe   Jack's
Flight
Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 12,549     $ 7,103     $ 683     $ (8 )   $ 20,327  
Intersegment revenue 148     (156 )       8      
Total net revenues 12,697     6,947     683         20,327  
Operating income (loss) $ (976 )   $ (1,341 )   $ (3,015 )   $ (8 )   $ (5,340 )
                   
Three months ended March 31,
2019
North
America
  Europe   Jack's
Flight
Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 18,136     $ 11,054     $     $ (30 )   $ 29,160  
Intersegment revenue 451     (481 )       30     (30 )
Total net revenues 18,587     10,573             29,130  
Operating income (loss) $ 4,463     $ 2,137     $     $ (30 )   $ 6,570  

 

 

 

Travelzoo-Logo 11_30_2017 (1).jpg

 

Source: Travelzoo