• 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 Third Quarter 2020 Results

Press Releases

Travelzoo Reports Third Quarter 2020 Results

NEW YORK, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Consolidated revenue of $13.8 million, down 42% from $23.8 million year-over-year
  • Net loss of $1.2 million
  • Non-GAAP consolidated operating profit of $1.2 million
  • Earnings per share (EPS) of ($0.10) 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 third quarter ended September 30, 2020. Consolidated revenue was $13.8 million, down 42% from $23.8 million year-over-year. Revenue increased by 97% from $7.0 million in Q2 2020. 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 reported net loss attributable to Travelzoo from continuing operations was $1.1 million for Q3 2020. At the consolidated level, including minority interests, the reported net loss from continuing operations was $1.2 million. EPS from continuing operations was ($0.10), down from $0.21 in the prior-year period.

Non-GAAP operating profit was $1.2 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.3 million), stock option expenses ($1.2 million), and severance-related expenses ($0.9 million). See section “Non-GAAP Financial Measures” below.

“A strong improvement in our business is evident compared to Q2. We are seeing irresistibly priced deals coming to the market, and Travelzoo, as the most trusted media brand publishing and recommending travel deals, is telling its members about the very best deals," said Holger Bartel, Global CEO.

Cash Position
As of September 30, 2020, consolidated cash, cash equivalents and restricted cash were $51.7 million. In April 2020 and May 2020, Travelzoo received low-interest government loans under the Paycheck Protection Program (PPP) 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.

Travelzoo North America
North America business segment revenue decreased 40% year-over-year to $9.1 million. North America business segment revenue increased by 118% from $4.2 million in Q2 2020. Operating loss for Q3 was $696,000, or (8%) of revenue, compared to an operating profit of $2.6 million, or 17% of revenue in the prior-year period.

Travelzoo Europe
Europe business segment revenue decreased 57% year-over-year to $3.7 million. In constant currencies, revenue decreased 62% year-over-year. Europe business segment revenue increased by 97% from $1.9 million in Q2 2020. Operating loss for Q3 was $757,000, or (21%) of revenue, compared to an operating profit of $815,000, or 10% 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 Q3 2020, the Jack's Flight Club business segment generated $1.1 million in revenue from subscriptions with operating profit of $731,000. After consolidation with Travelzoo, Jack’s Flight Club's net income was $312,000, with $187,000 attributable to Travelzoo as a result of recording $333,000 of amortization of intangible assets related to the acquisition and a haircut of revenue (derived from deferred revenue sold prior to acquisition) of $148,000 due to purchase accounting in accordance with U.S. GAAP.

Members and Subscribers
As of September 30, 2020, we had 30.5 million members worldwide. In Europe, the unduplicated number of Travelzoo members was 8.9 million as of September 30, 2020, down 3% from September 30, 2019. In North America, the unduplicated number of Travelzoo members was 16.5 million as of September 30, 2020, down 7% from September 30, 2019. Jack’s Flight Club had 1.7 million subscribers as of September 30, 2020, up 9% from September 30, 2019. In June 2020, Travelzoo 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 royalty-bearing licensing agreement for the exclusive use of Travelzoo members in Japan. In August 2020, Travelzoo sold its Singapore subsidiary to Mr. Julian Rembrandt and entered into a royalty-bearing licensing agreement for, among other things, the exclusive use of Travelzoo's members in Australia, New Zealand and Singapore. Under the licensing agreements, Travelzoo’s existing members in Australia, Japan, New Zealand, and Singapore 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 $244,000 in Q3 2020, compared to an income tax expense of $860,000 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, 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
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 currently expect to achieve for Q4 a result close to break-even or a profit.

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 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
(Unaudited)

 (In thousands, except per share amounts) Three months ended   Nine months ended
  September 30,   September 30,
  2020   2019   2020   2019
Revenues $ 13,787       $ 23,833       $ 41,118       $ 79,599    
Cost of revenues 2,924       2,852       7,768       8,389    
Gross profit 10,863       20,981       33,350       71,210    
Operating expenses:              
Sales and marketing 6,929       11,967       24,311       38,605    
Product development 592       1,434       2,586       4,856    
General and administrative 4,545       4,188       16,709       13,634    
Impairment of intangible asset and goodwill             2,920          
Total operating expenses 12,066       17,589       46,526       57,095    
Operating income (loss) (1,203 )     3,392       (13,176 )     14,115    
Other income (loss), net (37 )     32       (222 )     48    
Income (loss) from continuing operations before income taxes (1,240 )     3,424       (13,398 )     14,163    
Income tax expense (benefit) (244 )     860       (2,070 )     3,596    
Income (loss) from continuing operations (996 )     2,564       (11,328 )     10,567    
Loss from discontinued operations, net of tax (230 )     (2,258 )     (3,944 )     (5,813 )  
Net income (loss) (1,226 )     306       (15,272 )     4,754    
Net income (loss) attributable to non-controlling interest 125             (1,122 )        
Net income (loss) attributable to Travelzoo $ (1,351 )     $ 306       $ (14,150 )     $ 4,754    
               
Net income (loss) attributable to Travelzoo—continuing operations $ (1,121 )     $ 2,564       $ (10,206 )     $ 10,567    
Net income (loss) attributable to Travelzoo—discontinued operations $ (230 )     $ (2,258 )     $ (3,944 )     $ (5,813 )  
               
Income (loss) per share—basic              
Continuing operations $ (0.10 )     $ 0.22       $ (0.90 )     $ 0.89    
Discontinued operations $ (0.02 )     $ (0.19 )     $ (0.35 )     $ (0.49 )  
Net income (loss) per share —basic $ (0.12 )     $ 0.03       $ (1.25 )     $ 0.40    
               
Income (loss) per share—diluted              
Continuing operations $ (0.10 )     $ 0.21       $ (0.90 )     $ 0.87    
Discontinued operations $ (0.02 )     $ (0.19 )     $ (0.35 )     $ (0.49 )  
Net income (loss) per share—diluted $ (0.12 )     $ 0.03       $ (1.25 )     $ 0.39    
Shares used in per share calculation from continuing operations—basic 11,310       11,767       11,353       11,894    
Shares used in per share calculation from discontinued operations—basic 11,310       11,767       11,353       11,894    
Shares used in per share calculation from continuing operations—diluted 11,310       11,956       11,353       12,152    
Shares used in per share calculation from discontinued operations—diluted 11,310       11,767       11,353       11,894    


 

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands) September 30,
2020
  December 31,
2019
Assets      
Current assets:      
Cash and cash equivalents $ 50,528       $ 18,743    
Accounts receivable, net 4,195       11,209    
Prepaid income taxes 304       989    
Deposits 98       105    
Prepaid expenses and other 990       2,288    
Assets from discontinued operations 454       3,961    
Total current assets 56,569       37,295    
Deposits and other 806       572    
Deferred tax assets 4,415       2,051    
Restricted cash 1,155       1,135    
Investment in WeGo 2,101       2,484    
Operating lease right-of-use assets 9,076       8,140    
Property and equipment, net 1,499       2,861    
Intangible assets, net 4,867          
Goodwill 10,944          
Total assets $ 91,432       $ 54,538    
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 53,018       $ 19,349    
Accrued expenses and other 6,953       6,281    
Deferred revenue 2,777       786    
Operating lease liabilities 3,988       4,847    
Promissory notes payable 1,700          
Income tax payable 373       914    
Liabilities from discontinued operations 1,509       3,135    
Total current liabilities 70,318       35,312    
PPP notes payable 3,663          
Deferred tax liabilities 851          
Long-term operating lease liabilities 11,425       7,920    
Other long-term liabilities 473       443    
Total liabilities 86,730       43,675    
Non-controlling interest 4,633          
Common stock 113       115    
Additional paid-in capital 5,220          
Retained earnings (accumulated deficit) (1,130 )     14,200    
Accumulated other comprehensive loss (4,134 )     (3,452 )  
Total stockholders’ equity 69       10,863    
Total liabilities and stockholders’ equity $ 91,432       $ 54,538    
                   

Travelzoo
Segment Information from Continuing Operations
(Unaudited)

(In thousands)

Three months ended September 30, 2020 Travelzoo
North

America
  Travelzoo
Europe
  Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 9,002       $ 3,798       $ 987     $       $ 13,787    
Intersegment revenue 141       (141 )                  
Total net revenues 9,143       3,657       987           13,787    
Operating income (loss) $ (696 )     $ (757 )     $ 250     $       $ (1,203 )  
                   
Three months ended September 30, 2019 Travelzoo
North

America
  Travelzoo
Europe
  Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 14,444       $ 9,432       $     $ (43 )     $ 23,833    
Intersegment revenue 895       (938 )         43          
Total net revenues 15,339       8,494               23,833    
Operating income (loss) $ 2,620       $ 815       $     $ (43 )     $ 3,392    

 

Nine months ended September 30, 2020 Travelzoo
North

America
  Travelzoo
Europe
  Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 25,805       $ 12,706       $ 2,615       $ (8 )     $ 41,118    
Intersegment revenue 237       (245 )           8          
Total net revenues 26,042       12,461       2,615             41,118    
Operating loss $ (6,374 )     $ (3,781 )     $ (3,013 )     $ (8 )     $ (13,176 )  
                   
Nine months ended September 30, 2019 Travelzoo
North

America
  Travelzoo
Europe
  Jack's
Flight Club
  Elimination   Consolidated
Revenue from unaffiliated customers $ 50,074       $ 29,619       $       $ (94 )     $ 79,599    
Intersegment revenue 1,776       (1,870 )           94          
Total net revenues 51,850       27,749             0   79,599    
Operating income (loss) $ 10,673       $ 3,536       $       $ (94 )     $ 14,115    


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,
  2020   2019   2020   2019
GAAP operating expense $ 12,066       $ 17,589     $ 46,526       $ 57,095  
Non-GAAP adjustments:              
Impairment of intangible and goodwill (A)           2,920        
Amortization of intangibles (B) 333           944        
Stock option expenses (C) 1,189       394     5,243       876  
Severance-related expenses (D) 855       35     1,139       85  
Non-GAAP operating expense 9,689       17,160     36,280       56,134  
               
GAAP operating income (loss) (1,203 )     3,392     (13,176 )     14,115  
Non-GAAP adjustments (A through D) 2,377       429     10,246       961  
Non-GAAP operating income (loss) 1,174       3,821     (2,930 )     15,076  
               

Investor Relations:
Almira Pusch
ir@travelzoo.com

 

Travelzoo-Logo 11_30_2017 (1).jpg

 

Source: Travelzoo