tzoo-20220303
0001133311FALSETravelzoo00011333112021-10-292021-10-29


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________________________________________
FORM 8-K
____________________________________________________
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  March 3, 2022
____________________________________________________

https://cdn.kscope.io/578aef8d74cc65dc5c5422f91ef4ad12-tzoo-20220303_g1.jpg
(Exact name of registrant as specified in its charter)
____________________________________________________
Delaware000-5017136-4415727
(State or Other
Jurisdiction of
Incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
590 Madison Avenue, 35th Floor
New York, New York
10022
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code (212) 484-4900
(Former Name or Former Address, if Changed Since Last Report)
____________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueTZOOThe NASDAQ Stock Market




Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
                                         Emerging growth company        

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  




Item 2.02.         Results of Operations and Financial Condition.
 
On March 3, 2022, Travelzoo (the "Company") reported its fourth quarter 2021 financial results. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this report on Form 8-K and is incorporated herein by reference.
 
The information furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
 

Item 9.01.        Financial Statements and Exhibits.
(d)           Exhibits.  See Exhibit Index




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRAVELZOO
Date:March 4, 2022By:/s/ Lisa Su
Lisa Su
Chief Accounting Officer




EXHIBIT INDEX
ExhibitDescription
Press Release, dated March 3, 2022.


Document

Exhibit 99.1
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Travelzoo
590 Madison Avenue
35th Floor
New York, NY 10022

Investor Relations:
Almira Pusch
ir@travelzoo.com


FOR IMMEDIATE RELEASE

Travelzoo Reports Fourth Quarter 2021 Results

NEW YORK, March 3, 2022 — Travelzoo® (NASDAQ: TZOO):

Consolidated revenue of $14.1 million, up 13% year-over-year
Non-GAAP consolidated operating loss of $2.1 million
Earnings per share (EPS) of ($0.25) 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 fourth quarter ended December 31, 2021. Consolidated revenue was $14.1 million, up 13% from $12.5 million year-over-year and down 10% from the prior quarter. 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 $3.0 million for Q4 2021. At the consolidated level, including minority interests, the reported net loss from continuing operations was $3.0 million. EPS from continuing operations was ($0.25), compared to $0.02 in the prior-year period. GAAP operating loss was $3.4 million.

Non-GAAP operating loss was $2.1 million. The calculation of non-GAAP operating profit (loss) excludes amortization of intangibles ($0.3 million), stock option expenses ($1.0 million), and severance-related expenses ($0.1 million). See section “Non-GAAP Financial Measures” below.
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“The surge of the Omicron variant and related increased safety measures during Q4 2021 affected our reported revenue and operating income,” said Holger Bartel, Global CEO. "We believe this to be a short-term effect. We expect the Company’s financial performance to significantly improve in 2022.”

Cash Position
As of December 31, 2021, consolidated cash, cash equivalents and restricted cash were $45.0 million. Net cash used in operations was $17.4 million. Cash was used primarily in connection with the payment of accounts payable and merchant payables as well an increase in accounts receivables of $8.8 million related to switching to a more efficient payment processor. The switch also increased deposits by $5.5 million during a transition period. There were no significant capital expenditures.

Reserve
Reported revenues are net of a reserve of $4.7 million related to commissions earned from refundable vouchers sold. The reserve is booked as contra revenue, which lowered revenue and operating income by $1.6 million for the quarter.

Travelzoo North America
North America business segment revenue decreased 3% year-over-year to $8.6 million. Operating loss for Q4 2021 was $2.2 million, compared to an operating profit of $1.3 million in the prior-year period.

Travelzoo Europe
Europe business segment revenue increased 77% year-over-year to $4.8 million. Operating loss for Q4 2021 was $1.2 million, compared to an operating loss of $2.4 million 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 decreased 13% year-over-year to $803,000. Non-GAAP operating income for Q4 2021 was $292,000, compared to Non-GAAP operating income of $532,000 in the prior-year period. After consolidation with Travelzoo, which includes $275,000 in amortization of intangible assets related to the accounting of the acquisition, Jack’s Flight Club's reported net loss was $19,000, with $11,000 attributable to Travelzoo.



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Licensing
In June of 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 $1,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q4 2021. Licensing revenue is expected to increase going forward.

Members and Subscribers
As of December 31, 2021, we had 30.3 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.9 million as of December 31, 2021, up 4% from December 31, 2020. In Europe, the unduplicated number of Travelzoo members was 8.4 million as of December 31, 2021, down 4% from December 31, 2020. Jack’s Flight Club had 1.8 million subscribers as of December 31, 2021, up 6% from December 31, 2020.

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 benefit was $248,000 in Q4 2021, compared to an income tax benefit of $368,000 in the prior-year period.
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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 (loss)” 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
We currently expect substantially higher revenue and a return to profitability in Q1 2022. 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 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.



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About Travelzoo
Travelzoo® provides its 30 million members 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.

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Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 Three months endedTwelve months ended
 December 31,December 31,
 2021202020212020
Revenues$14,139 $12,483 $63,190 $53,601 
Cost of revenues2,993 2,795 11,525 10,563 
Gross profit11,146 9,688 51,665 43,038 
Operating expenses:
Sales and marketing8,455 6,305 30,294 30,616 
Product development 538 495 2,590 3,081 
General and administrative5,573 3,785 19,753 20,494 
Impairment of intangible asset and goodwill— — — 2,920 
Total operating expenses14,566 10,585 52,637 57,111 
Operating loss(3,420)(897)(972)(14,073)
Other income, net144 677 4,006 455 
Income (loss) from continuing operations before income taxes(3,276)(220)3,034 (13,618)
Income tax expense (benefit)(248)(368)1,863 (2,438)
Income (loss) from continuing operations(3,028)148 1,171 (11,180)
Income (loss) from discontinued operations, net of tax(8)554 (13)(3,390)
Net income (loss)(3,036)702 1,158 (14,570)
Net loss attributable to non-controlling interest(8)(25)(9)(1,147)
Net income (loss) attributable to Travelzoo$(3,028)$727 $1,167 $(13,423)
Net income (loss) attributable to Travelzoo—continuing operations$(3,020)$173 $1,180 $(10,033)
Net income (loss) attributable to Travelzoo—discontinued operations$(8)$554 $(13)$(3,390)
Income (Loss) per share—basic
Continuing operations$(0.25)$0.01 $0.10 $(0.88)
Discontinued operations$— $0.05 $— $(0.30)
Net income (loss) per share —basic$(0.25)$0.06 $0.10 $(1.18)
Income (Loss) per share—diluted
Continuing operations$(0.25)$0.01 $0.09 $(0.88)
Discontinued operations$— $0.05 $— $(0.30)
Net income (loss) per share—diluted$(0.25)$0.06 $0.09 $(1.18)
Shares used in per share calculation from continuing operations—basic12,050 11,315 11,646 11,344 
Shares used in per share calculation from discontinued operations—basic12,050 11,315 11,646 11,344 
Shares used in per share calculation from continuing operations—diluted12,050 12,605 12,991 11,344 
Shares used in per share calculation from discontinued operations—diluted12,050 12,605 11,646 11,344 
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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$43,815 $63,061 
Accounts receivable, net15,305 4,519 
Prepaid income taxes3,239 931 
Deposits190 137 
Prepaid expenses and other2,851 1,166 
Assets from discontinued operations71 230 
Total current assets65,471 70,044 
Deposits and other6,784 745 
Deferred tax assets3,949 5,067 
Restricted cash1,142 1,178 
Operating lease right-of-use assets7,700 8,541 
Property and equipment, net659 1,347 
Intangible assets, net3,426 4,534 
Goodwill10,944 10,944 
Total assets$100,075 $102,400 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable$3,981 $6,996 
Merchant payables68,678 57,104 
Accrued expenses and other 9,734 8,649 
Deferred revenue1,733 2,688 
Operating lease liabilities3,180 3,587 
PPP notes payable (current portion)— 2,849 
Income tax payable 185 326 
Liabilities from discontinued operations485 671 
Total current liabilities87,976 82,870 
PPP notes payables— 814 
Deferred tax liabilities— 357 
Long-term operating lease liabilities9,111 10,774 
Other long-term liabilities2,364 1,085 
Total liabilities99,451 95,900 
Non-controlling interest4,600 4,609 
Common stock126 114 
Treasury stock (at cost)(5,488)— 
Additional paid-in capital4,415 6,239 
Retained earnings (accumulated deficit)764 (403)
Accumulated other comprehensive loss(3,793)(4,059)
Total stockholders’ equity (deficit)(3,976)1,891 
Total liabilities and stockholders’ equity (deficit)$100,075 $102,400 

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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 Three months endedTwelve months ended
 December 31,December 31,
 2021202020212020
Cash flows from operating activities:
Net income (loss)$(3,036)$702 $1,158 $(14,570)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization412 508 1,820 2,314 
Stock-based compensation960 960 3,748 6,203 
Deferred income tax(259)(1,666)813 (3,413)
Impairment of intangible assets and goodwill — — — 2,920 
Gain on notes payable settlement
— — — (1,500)
Gain on long-lived assets— (822)— (385)
Loss on equity investment in WeGo— — — 474 
Gain on sale of equity investment in WeGo— (468)— (468)
Gain on PPP notes payable forgiveness— — (3,588)— 
Net foreign currency effects(73)(143)(373)(685)
Provision for (reversal of)loss on accounts receivable and other reserves1,667 1,452 (58)5,375 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(6,321)(50)(10,169)6,196 
Prepaid income taxes(366)(610)(2,373)75 
Prepaid expenses and other 1,381 (443)(8,092)1,183 
Accounts payable(7,765)(13,457)(2,740)(748)
Merchant payables(4,307)23,604 12,179 44,136 
Accrued expenses and other785 (731)333 (2,112)
Income tax payable125 (61)(138)(540)
Other liabilities(563)660 (597)2,564 
Net cash provided by (used in) operating activities(17,360)9,435 (8,077)47,019 
Cash flows from investing activities:
Acquisition of business, net of cash acquired— — — (679)
Other investment— — — (430)
Proceeds from investment133 — 133 — 
Proceeds from sale of equity investment in WeGo— 2,607 — 2,607 
Purchases of property and equipment(5)(1)(29)(253)
Proceeds from sale of long-lived assets— 822 — 822 
Net cash provided by investing activities128 3,428 104 2,067 
Cash flows from financing activities:
Repurchase of common stock(3,905)— (5,488)(1,205)
Payment of promissory notes— (1,700)(110)(9,500)
Proceeds from notes payable— — — 3,663 
Exercise of stock options and taxes paid for net share settlement(148)60 (5,572)60 
Net cash used in financing activities(4,053)(1,640)(11,170)(6,982)
Effect of exchange rate on cash, cash equivalents and restricted cash(127)1,178 (253)1,571 
Net increase (decrease) in cash, cash equivalents and restricted cash(21,412)12,401 (19,396)43,675 
Cash, cash equivalents and restricted cash at beginning of period66,401 51,984 64,385 20,710 
Cash, cash equivalents and restricted cash at end of period$44,989 $64,385 $44,989 $64,385 
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Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)
Three months ended December 31, 2021Travelzoo North
America
Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$8,678 $4,658 $803 $— $14,139 
Intersegment revenue(99)99 — — — 
Total net revenues8,579 4,757 803 — 14,139 
Operating income (loss)$(2,240)$(1,197)$17 $— $(3,420)
Three months ended December 31, 2020Travelzoo North
America
Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$8,858 $2,703 $922 $— $12,483 
Intersegment revenue12 (12)— — — 
Total net revenues8,870 2,691 922 — 12,483 
Operating income (loss)$1,318 $(2,414)$199 $— $(897)
Twelve months ended December 31, 2021Travelzoo North
America
Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$41,683 $18,161 $3,346 $— $63,190 
Intersegment revenue363 (363)— — — 
Total net revenues42,046 17,798 3,346 — 63,190 
Operating income (loss)$414 $(1,520)$134 $— $(972)
Twelve months ended December 31, 2020Travelzoo North
America
Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$34,663 $15,409 $3,537 $(8)$53,601 
Intersegment revenue249 (257)— — 
Total net revenues34,912 15,152 3,537 — 53,601 
Operating loss$(5,056)$(6,195)$(2,814)$(8)$(14,073)







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Travelzoo
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)
 Three months endedTwelve months ended
 December 31,December 31,
 2021202020212020
GAAP operating expense$14,566 $10,585 $52,637 $57,111 
Non-GAAP adjustments:
Impairment of intangible and goodwill (A)— — — 2,920 
Amortization of intangibles (B)275 333 1,108 1,277 
Stock option expenses (C)960 958 3,747 6,201 
Severance-related expenses (D)87 153 580 1,292 
Non-GAAP operating expense13,244 9,141 47,202 45,421 
GAAP operating loss(3,420)(897)(972)(14,073)
Non-GAAP adjustments (A through D)1,322 1,444 5,435 11,690 
Non-GAAP operating income (loss)(2,098)547 4,463 (2,383)





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