EX-99.1 2 ex-99109x30x20218xk.htm EX-99.1 Document

Exhibit 99.1
travellogo11062017a13.jpg
Travelzoo
590 Madison Avenue
35th Floor
New York, NY 10022

Investor Relations:
Almira Pusch
ir@travelzoo.com


FOR IMMEDIATE RELEASE

Travelzoo Reports Third Quarter 2021 Results

NEW YORK, October 29, 2021 — Travelzoo® (NASDAQ: TZOO):

•Consolidated revenue of $15.7 million, up 14% year-over-year
•Non-GAAP consolidated operating profit of $1.1 million
•Earnings per share (EPS) of $0.22 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, 2021.
Consolidated revenue was $15.7 million, up 14% from $13.8 million year-over-year and down 18% 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 income attributable to Travelzoo from continuing operations was $2.8 million for Q3 2021. At the consolidated level, including minority interests, the reported net income from continuing operations was $2.9 million. EPS from continuing operations was $0.22, compared to a loss per share of ($0.10) in the prior-year period. GAAP operating loss was $261,000.

Non-GAAP operating profit was $1.1 million. The calculation of non-GAAP operating profit 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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“We saw robust growth in our revenue and operating profit from Travelzoo in Europe,” said Holger Bartel, Global CEO. “Unfortunately, revenue from Travelzoo in North America was negatively impacted by press coverage about the COVID-19 Delta variant and Do Not Travel advisories for nearly 100 countries. We believe this to be a short-term effect. We see strong pent-up demand from Travelzoo members to get away as soon as possible.”

Cash Position
As of September 30, 2021, consolidated cash, cash equivalents and restricted cash were $66.4 million. Net cash used in operations was $12.7 million. Cash was used primarily in connection with the switch to a more efficient merchant payment processing solution. There were no significant capital expenditures.

Reserve
Reported revenues include a reserve of $3.1 million related to commissions to be earned from refundable vouchers sold. The reserve is booked as contra revenue.

Travelzoo North America
North America business segment revenue increased 6% year-over-year to $9.7 million. Operating loss for Q3 2021 was $918,000, compared to an operating loss of $696,000 in the prior-year period.

Travelzoo Europe
Europe business segment revenue increased 43% year-over-year to $5.2 million. Operating profit for Q3 2021 was $600,000, or 11% of revenue, compared to an operating loss of $757,000 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 decreased 19% year-over-year to $796,000. Operating income for Q3 2021 was $57,000, compared to an operating income of $250,000 in the prior-year period. After consolidation with Travelzoo, Jack’s Flight Club's net income was $20,000 with $12,000 attributable to Travelzoo as a result of recording $274,000 of amortization of intangible assets related to the acquisition.


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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 $2,000 in licensing revenue from the licensee in Australia, New Zealand and Singapore in Q3 2021. Licensing revenue is expected to increase as the licensees develop their business and effects of the pandemic subside.

Members and Subscribers
As of September 30, 2021, we had 30.7 million members worldwide. In North America, the unduplicated number of Travelzoo members was 17.2 million as of September 30, 2021, up 5% from September 30, 2020. In Europe, the unduplicated number of Travelzoo members was 8.4 million as of September 30, 2021, down 5% from September 30, 2020. Jack’s Flight Club had 1.7 million subscribers as of September 30, 2021, consistent with 1.7 million subscribers as of September 30, 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 expense was $233,000 in Q3 2021, compared to an income tax benefit of $244,000 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” 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 to achieve profitability in Q4 2021. We continue to see a trend of recovery of our revenue. However, there could be unexpected fluctuations in the short-term. We have been able to reduce our operating expenses, and we believe we can continue the trend of lower fixed costs 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.



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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 endedNine months ended
 September 30,September 30,
 2021202020212020
Revenues$15,688 $13,787 $49,051 $41,118 
Cost of revenues2,992 2,924 8,532 7,768 
Gross profit12,696 10,863 40,519 33,350 
Operating expenses:
Sales and marketing7,709 6,929 21,839 24,311 
Product development 684 592 2,052 2,586 
General and administrative4,564 4,545 14,180 16,709 
Impairment of intangible asset and goodwill— — — 2,920 
Total operating expenses12,957 12,066 38,071 46,526 
Operating income (loss)(261)(1,203)2,448 (13,176)
Other income (loss), net3,344 (37)3,862 (222)
Income (loss) from continuing operations before income taxes3,083 (1,240)6,310 (13,398)
Income tax expense (benefit)233 (244)2,111 (2,070)
Income (loss) from continuing operations2,850 (996)4,199 (11,328)
Income (loss) from discontinued operations, net of tax(19)(230)(5)(3,944)
Net income (loss)2,831 (1,226)4,194 (15,272)
Net income (loss) attributable to non-controlling interest8 125 (1)(1,122)
Net income (loss) attributable to Travelzoo$2,823 $(1,351)$4,195 $(14,150)
Net income (loss) attributable to Travelzoo—continuing operations$2,842 $(1,121)$4,200 $(10,206)
Net income (loss) attributable to Travelzoo—discontinued operations$(19)$(230)$(5)$(3,944)
Income (Loss) per share—basic
Continuing operations$0.24 $(0.10)$0.36 $(0.90)
Discontinued operations$— $(0.02)$— $(0.35)
Net income (loss) per share —basic$0.24 $(0.12)$0.36 $(1.25)
Income (Loss) per share—diluted
Continuing operations$0.22 $(0.10)$0.32 $(0.90)
Discontinued operations$— $(0.02)$— $(0.35)
Net income (loss) per share—diluted$0.22 $(0.12)$0.32 $(1.25)
Shares used in per share calculation from continuing operations—basic11,648 11,310 11,510 11,353 
Shares used in per share calculation from discontinued operations—basic11,648 11,310 11,510 11,353 
Shares used in per share calculation from continuing operations—diluted12,904 11,310 13,132 11,353 
Shares used in per share calculation from discontinued operations—diluted11,648 11,310 11,510 11,353 
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Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30,
2021		December 31,
2020
Assets
Current assets:
Cash and cash equivalents$65,204 $63,061 
Accounts receivable, net9,084 4,519 
Prepaid income taxes2,882 931 
Deposits104 137 
Prepaid expenses and other3,080 1,166 
Assets from discontinued operations63 230 
Total current assets80,417 70,044 
Deposits and other8,219 745 
Deferred tax assets3,637 5,067 
Restricted cash1,154 1,178 
Operating lease right-of-use assets8,005 8,541 
Property and equipment, net794 1,347 
Intangible assets, net3,700 4,534 
Goodwill10,944 10,944 
Total assets$116,870 $102,400 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$11,875 $6,996 
Merchant payables73,183 57,104 
Accrued expenses and other 7,546 8,649 
Deferred revenue1,805 2,688 
Operating lease liabilities3,482 3,587 
PPP notes payable (current portion)— 2,849 
Income tax payable 61 326 
Liabilities from discontinued operations469 671 
Total current liabilities98,421 82,870 
PPP notes payables— 814 
Deferred tax liabilities— 357 
Long-term operating lease liabilities9,721 10,774 
Other long-term liabilities2,249 1,085 
Total liabilities110,391 95,900 
Non-controlling interest4,608 4,609 
Common stock118 114 
Treasury stock (at cost)(1,583)— 
Additional paid-in capital3,432 6,239 
Retained earnings (accumulated deficit)3,792 (403)
Accumulated other comprehensive loss(3,888)(4,059)
Total stockholders’ equity1,871 1,891 
Total liabilities and stockholders’ equity $116,870 $102,400 

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Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 Three months endedNine months ended
 September 30,September 30,
 2021202020212020
Cash flows from operating activities:
Net income (loss)$2,831 $(1,226)$4,194 $(15,272)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization448 588 1,408 1,806 
Stock-based compensation971 1,189 2,788 5,243 
Deferred income tax(68)14 1,073 (1,747)
Impairment of intangible assets and goodwill — — — 2,920 
Gain on notes payable settlement
— — — (1,500)
Loss on long-lived assets— — — 437 
Loss on equity investment in WeGo— 138 — 474 
Gain on PPP notes payable forgiveness(3,159)— (3,588)— 
Net foreign currency effects(45)(86)(300)(542)
Provision (reversal) of loss on accounts receivable and other reserves(854)1,496 (1,725)3,923 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable933 63 (3,848)6,246 
Prepaid income taxes(1,294)(304)(2,007)685 
Prepaid expenses and other (6,698)206 (9,473)1,626 
Accounts payable3,610 10,560 5,025 12,709 
Merchant payables(8,699)12,372 16,486 20,532 
Accrued expenses and other(132)(1)(452)(1,381)
Income tax payable(35)(412)(263)(479)
Other liabilities(476)(436)(34)1,904 
Net cash provided by (used in) operating activities(12,667)24,161 9,283 37,584 
Cash flows from investing activities:
Acquisition of business, net of cash acquired— — — (679)
Other investment— — — (430)
Purchases of property and equipment60 (49)(24)(252)
Net cash provided by (used in) investing activities60 (49)(24)(1,361)
Cash flows from financing activities:
Repurchase of common stock— — (1,583)(1,205)
Payment of promissory notes— — (110)(7,800)
Proceeds from notes payable— — — 3,663 
Exercise of stock options and taxes paid for net share settlement(2,357)— (5,424)— 
Net cash used in financing activities(2,357)— (7,117)(5,342)
Effect of exchange rate on cash, cash equivalents and restricted cash(823)904 (126)393 
Net increase (decrease) in cash, cash equivalents and restricted cash(15,787)25,016 2,016 31,274 
Cash, cash equivalents and restricted cash at beginning of period82,188 26,968 64,385 20,710 
Cash, cash equivalents and restricted cash at end of period$66,401 $51,984 $66,401 $51,984 
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Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)
Three months ended September 30, 2021Travelzoo North
America		Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$9,527 $5,365 $796 $— $15,688 
Intersegment revenue136 (136)— — — 
Total net revenues9,663 5,229 796 — 15,688 
Operating income (loss)$(918)$600 $57 $— $(261)
Three months ended September 30, 2020Travelzoo North
America		Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$9,002 $3,798 $987 $— $13,787 
Intersegment revenue141 (141)— — — 
Total net revenues9,143 3,657 987 — 13,787 
Operating loss$(696)$(757)$250 $— $(1,203)
Nine months ended September 30, 2021Travelzoo North
America		Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$33,005 $13,503 $2,543 $— $49,051 
Intersegment revenue462 (462)— — — 
Total net revenues33,467 13,041 2,543 — 49,051 
Operating income (loss)$2,654 $(323)$117 $— $2,448 
Nine months ended September 30, 2020Travelzoo North
America		Travelzoo EuropeJack's Flight ClubEliminationConsolidated
Revenue from unaffiliated customers$25,805 $12,706 $2,615 $(8)$41,118 
Intersegment revenue237 (245)— 8 — 
Total net revenues26,042 12,461 2,615 — 41,118 
Operating loss$(6,374)$(3,781)$(3,013)$(8)$(13,176)







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Travelzoo
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)
 Three months endedNine months ended
 September 30,September 30,
 2021202020212020
GAAP operating expense$12,957 $12,066 $38,071 $46,526 
Non-GAAP adjustments:
Impairment of intangible and goodwill (A)— — — 2,920 
Amortization of intangibles (B)274 333 833 944 
Stock option expenses (C)971 1,189 2,788 5,243 
Severance-related expenses (D)95 855 493 1,139 
Non-GAAP operating expense11,617 9,689 33,957 36,280 
GAAP operating income (loss)(261)(1,203)2,448 (13,176)
Non-GAAP adjustments (A through D)1,340 2,377 4,114 10,246 
Non-GAAP operating income (loss)1,079 1,174 6,562 (2,930)





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