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Travelzoo Reports Second Quarter 2021 Results

NEW YORK, July 21, 2021 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Consolidated revenue of $19.1 million, up 172% year-over-year and up 34% quarter-over-quarter
  • Non-GAAP consolidated operating profit of $4.9 million
  • Earnings per share (EPS) of $0.22 attributable to Travelzoo from continuing operations
  • Cash flow from operations of $12.8 million

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, 2021. Consolidated revenue was $19.1 million, up 172% from $7.0 million year-over-year and up 34% from $14.3 million in 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 $3.0 million for Q2 2021. At the consolidated level, including minority interests, the reported net income from continuing operations was $3.0 million. EPS from continuing operations was $0.22, compared to a loss per share of ($0.48) in the prior-year period.

Non-GAAP operating profit was $4.9 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.3 million), stock option expenses ($0.9 million), and severance-related expenses ($0.2 million). See section “Non-GAAP Financial Measures” below.

“We see continued improvement in our business. We seize the exceptional industry opportunities for providing 30 million Travelzoo members exclusive and irresistible travel, entertainment, and local offers and experiences. Travelzoo members are affluent, active, and open for new experiences. 75% say Travelzoo influences their travel destinations because they trust Travelzoo", said Holger Bartel, Global CEO.

Cash Position
As of June 30, 2021, consolidated cash, cash equivalents and restricted cash were $82.1 million. Cash flow from operations was $12.8 million. There were no significant capital expenditures.

Reserve
Reported revenues include a reserve of $3.7 million related to commissions to be earned from refundable vouchers sold. The reserve is booked as contra revenue. For Q2 2021, an adjustment to the reserve increased reported revenue by $286,000.

Travelzoo North America
North America business segment revenue increased 233% year-over-year to $14.0 million. Operating profit for Q2 2021 was $3.5 million, or 25% of revenue, compared to an operating loss of $4.7 million in the prior-year period.

Travelzoo Europe
Europe business segment revenue increased 128% year-over-year to $4.2 million. Operating loss for Q2 2021 was $227,000, compared to an operating loss of $1.7 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 9% year-over-year to $860,000. Operating income for Q2 2021 was $170,000, compared to an operating loss of $248,000 in the prior-year period. After consolidation with Travelzoo, Jack’s Flight Club's net income was $98,000, with $59,000 attributable to Travelzoo as a result of recording $275,000 of amortization of intangible assets related to the acquisition.

Licensing
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. Licensing revenue is booked with a lag of one quarter. Travelzoo did not record any licensing revenue from either subsidiary in Q2 2021.

Members and Subscribers
As of June 30, 2021, we had 31.3 million members worldwide. In North America, the unduplicated number of Travelzoo members was 17.7 million as of June 30, 2021, up 6% from June 30, 2020. In Europe, the unduplicated number of Travelzoo members was 8.5 million as of June 30, 2021, down 6% from June 30, 2020. Jack’s Flight Club had 1.7 million subscribers as of June 30, 2021, consistent with 1.7 million subscribers as of June 30, 2020.

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 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 $1.1 million in Q2 2021, compared to an income tax benefit of $1.3 million 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, 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 for Q3 2021 to report higher revenue and profitability. We see a trend of recovery of our revenue. 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 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, Top 20, and Jack's Flight Club are registered trademarks of Travelzoo.

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

 Three months ended Six months ended
 June 30, June 30,
 2021 2020 2021 2020
Revenues$19,079  $7,004  $33,363  $27,331 
Cost of revenues2,522  2,141  5,540  4,844 
Gross profit16,557  4,863  27,823  22,487 
Operating expenses:       
Sales and marketing7,340  4,288  14,130  17,382 
Product development685  566  1,368  1,994 
General and administrative5,056  6,642  9,616  12,164 
Impairment of intangible asset and goodwill      2,920 
Total operating expenses13,081  11,496  25,114  34,460 
Operating income (loss)3,476  (6,633) 2,709  (11,973)
Other income (loss), net684  (179) 518  (185)
Income (loss) from continuing operations before income taxes4,160  (6,812) 3,227  (12,158)
Income tax expense (benefit)1,136  (1,309) 1,878  (1,826)
Income (loss) from continuing operations3,024  (5,503) 1,349  (10,332)
Income (loss) from discontinued operations,
net of tax
29  (795) 14  (3,714)
Net income (loss)3,053  (6,298) 1,363  (14,046)
Net income (loss) attributable to non-controlling interest39  (108) (9) (1,247)
Net income (loss) attributable to Travelzoo$3,014  $(6,190) $1,372  $(12,799)
        
Net income (loss) attributable to Travelzoo—continuing operations$2,985  $(5,395) $1,358  $(9,085)
Net income (loss) attributable to Travelzoo—discontinued operations$29  $(795) $14  $(3,714)
        
Income (Loss) per share—basic       
Continuing operations$0.26  $(0.48) $0.12  $(0.80)
Discontinued operations$  $(0.07) $  $(0.33)
Net income (loss) per share —basic$0.26  $(0.55) $0.12  $(1.13)
        
Income (Loss) per share—diluted       
Continuing operations$0.22  $(0.48) $0.10  $(0.80)
Discontinued operations$  $(0.07) $  $(0.33)
Net income (loss) per share—diluted$0.22  $(0.55) $0.10  $(1.13)
Shares used in per share calculation from continuing operations—basic11,488  11,310  11,440  11,375 
Shares used in per share calculation from discontinued operations—basic11,488  11,310  11,440  11,375 
Shares used in per share calculation from continuing operations—diluted13,408  11,310  13,248  11,375 
Shares used in per share calculation from discontinued operations—diluted13,408  11,310  13,248  11,375 
            

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

 June 30,
2021
 December 31,
2020
Assets   
Current assets:   
Cash and cash equivalents$80,962  $63,061 
Accounts receivable, net9,905  4,519 
Prepaid income taxes1,616  931 
Deposits105  137 
Prepaid expenses and other3,253  1,166 
Assets from discontinued operations84  230 
Total current assets95,925  70,044 
Deposits and other1,552  745 
Deferred tax assets3,647  5,067 
Restricted cash1,164  1,178 
Operating lease right-of-use assets8,559  8,541 
Property and equipment, net1,034  1,347 
Intangible assets, net3,975  4,534 
Goodwill10,944  10,944 
Total assets$126,800  $102,400 
Liabilities and Stockholders’ Equity    
Current liabilities:   
Accounts payable$8,503  $6,996 
Merchant payables82,236  57,104 
Accrued expenses and other8,222  8,649 
Deferred revenue2,213  2,688 
Operating lease liabilities3,751  3,587 
PPP notes payable (current portion)3,156  2,849 
Income tax payable98  326 
Liabilities from discontinued operations482  671 
Total current liabilities108,661  82,870 
PPP notes payables  814 
Deferred tax liabilities38  357 
Long-term operating lease liabilities10,353  10,774 
Other long-term liabilities2,146  1,085 
Total liabilities121,198  95,900 
Non-controlling interest4,600  4,609 
Common stock115  114 
Treasury stock (at cost)(1,583)  
Additional paid-in capital4,988  6,239 
Retained earnings (accumulated deficit)969  (403)
Accumulated other comprehensive loss(3,487) (4,059)
Total stockholders’ equity1,002  1,891 
Total liabilities and stockholders’ equity$126,800  $102,400 
        

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

 Three months ended Six months ended
 June 30, June 30,
 2021 2020 2021 2020
Cash flows from operating activities:       
Net income (loss)$3,053  $(6,298) $1,363  $(14,046)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:       
Depreciation and amortization476  667  960  1,218 
Stock-based compensation934  4,031  1,816  4,054 
Deferred income tax599  (1,152) 1,140  (1,761)
Impairment of intangible assets and goodwill      2,920 
Gain on notes payable settlement  (1,500)   (1,500)
Loss on long-lived assets      437 
Loss on equity investment in WeGo  141    336 
Gain on PPP notes payable forgiveness(429)   (429)  
Net foreign currency effects(103) 225  (255) (456)
Provision (reversal) of loss on accounts receivable and other reserves(417) 986  (871) 2,427 
Changes in operating assets and liabilities, net of acquisitions:       
Accounts receivable(2,552) 3,674  (4,781) 6,183 
Prepaid income taxes(168)   (713) 989 
Prepaid expenses and other(418) 558  (2,775) 1,420 
Accounts payable(312) 1,602  1,415  2,149 
Merchant payables11,973  15,100  25,185  8,160 
Accrued expenses and other321  (2,084) (320) (1,380)
Income tax payable(102) 266  (228) (67)
Other liabilities(80) 263  332  2,340 
Net cash provided by operating activities12,775  16,479  21,839  13,423 
Cash flows from investing activities:       
Acquisition of business, net of cash acquired      (679)
Other investment  (430)   (430)
Purchases of property and equipment(77) (72) (84) (203)
Net cash used in investing activities(77) (502) (84) (1,312)
Cash flows from financing activities:       
Repurchase of common stock    (1,583) (1,205)
Payment of promissory notes  (6,800)   (7,800)
Proceeds from notes payable  3,663    3,663 
Exercise of stock options and taxes paid for net share settlement(3,066)   (3,066)  
Net cash used in financing activities(3,066) (3,137) (4,649) (5,342)
Effect of exchange rate on cash, cash equivalents and restricted cash427  (239) 697  (511)
Net increase in cash, cash equivalents and restricted cash10,059  12,601  17,803  6,258 
Cash, cash equivalents and restricted cash at beginning of period72,129  14,367  64,385  20,710 
Cash, cash equivalents and restricted cash at end of period$82,188  $26,968  $82,188  $26,968 
                

Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)

Three months ended June 30, 2021Travelzoo
North

America
 Travelzoo
Europe
 Jack's Flight
Club
 Elimination Consolidated
Revenue from unaffiliated customers$13,650  $4,569  $860  $   $19,079 
Intersegment revenue335  (335)       
Total net revenues13,985  4,234  860     19,079 
Operating income (loss)$3,533  $(227) $170  $   $3,476 
          
Three months ended June 30, 2020Travelzoo
North

America
 Travelzoo
Europe
 Jack's Flight
Club
 Elimination Consolidated
Revenue from unaffiliated customers$4,254  $1,805  $945  $   $7,004 
Intersegment revenue(52) 52        
Total net revenues4,202  1,857  945     7,004 
Operating loss$(4,702) $(1,683) $(248) $   $(6,633)


Six months ended
June 30, 2021
Travelzoo
North

America
 Travelzoo
Europe
 Jack's Flight
Club
 Elimination Consolidated
Revenue from unaffiliated customers$23,478  $8,138  $1,747  $  $33,363 
Intersegment revenue326  (326)      
Total net revenues23,804  7,812  1,747    33,363 
Operating income (loss)$3,572  $(923) $60  $  $2,709 
          
Six months ended
June 30, 2020
Travelzoo
North

America
 Travelzoo
Europe
 Jack's Flight
Club
 Elimination Consolidated
Revenue from unaffiliated customers$16,803  $8,908  $1,628  $(8) $27,331 
Intersegment revenue96  (104)   8   
Total net revenues16,899  8,804  1,628    27,331 
Operating loss$(5,678) $(3,024) $(3,263) $(8) $(11,973)


Travelzoo

Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)

 Three months ended Six months ended
 June 30, June 30,
 2021 2020 2021 2020
GAAP operating expense$13,081  $11,496  $25,114  $34,460 
Non-GAAP adjustments:       
Impairment of intangible and goodwill (A)      2,920 
Amortization of intangibles (B)275  396  559  611 
Stock option expenses (C)934  4,031  1,816  4,054 
Severance-related expenses (D)175  67  398  284 
Non-GAAP operating expense11,697  7,002  22,341  26,591 
        
GAAP operating income (loss)3,476  (6,633) 2,709  (11,973)
Non-GAAP adjustments (A through D)1,384  4,494  2,773  7,869 
Non-GAAP operating income (loss)4,861  (2,139) 5,482  (4,104)

Investor Relations:
Almira Pusch
ir@travelzoo.com


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