GlobeNewswire Inc | Mar 17, 2021 12:53PM EDT

March 17, 2021

NEW YORK, March 17, 2021 (GLOBE NEWSWIRE) -- A correction has been issued for the release disseminated today at 8:43 AM ET. Figures for EPS for prior periods have been corrected in the Condensed Consolidated Statements of Operations. The complete and corrected release follows:

Travelzoo (NASDAQ: TZOO):

-- Consolidated revenue of $12.5 million, down 51% from $25.3 million year-over-year -- Net income of $702,000 -- Non-GAAP consolidated operating profit of $547,000 -- Earnings per share (EPS) of $0.02 attributable to Travelzoo from continuing operations -- Cash flow from operations of $9.2 million

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the fourth quarter ended December31, 2020. Consolidated revenue was $12.5 million, down 51% from $25.3 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 reported net income attributable to Travelzoo from continuing operations was $173,000 for Q4 2020. At the consolidated level, including minority interests, the reported net income from continuing operations was $702,000. EPS from continuing operations was $0.02, down from $0.15 in the prior-year period.

Non-GAAP operating profit was $547,000. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.3 million), stock option expenses ($1.0 million), and severance-related expenses ($0.2 million). See section Non-GAAP Financial Measures below.

"We see continued improvement in our business. We are seeing irresistibly priced deals from travel companies, and Travelzoo, as the most trusted media brand publishing and recommending deals, is bringing the very best deals to its members," said Holger Bartel, Global CEO.

"In March 2021, we saw the strongest activity from Travelzoo members in the U.S. since March 2020, as measured by user sessions on the Travelzoo site and app."

Cash PositionAs of December 31, 2020, consolidated cash, cash equivalents and restricted cash were $64.2 million.

ReserveReported revenues include a reserve of $3.9 million related to commissions to be earned from vouchers sold. The reserve was booked contra revenue and reduced reported Q4 2020 revenue by $1.6 million.

Travelzoo North AmericaNorth America business segment revenue decreased 45% year-over-year to $8.9 million. Operating profit for Q4 2020 was $1.3 million, or 15% of revenue, compared to an operating profit of $2.0 million, or 12% of revenue in the prior-year period.

Travelzoo EuropeEurope business segment revenue decreased 71% year-over-year to $2.7 million. Operating loss for Q4 2020 was $2.4 million, compared to an operating profit of $925,000, or 10% of revenue in the prior-year period.

Jacks Flight Club On January 13, 2020, Travelzoo acquired 60% of Jacks Flight Club, a membership subscription service. In Q4 2020, the Jack's Flight Club business segment generated $971,000 in revenue from subscriptions with operating profit of $582,000. After consolidation with Travelzoo, Jacks Flight Club's net loss was $62,000, with $37,000 attributable to Travelzoo as a result of recording $333,000 of amortization of intangible assets related to the acquisition and haircut of revenue (derived from deferred revenue sold prior to acquisition) of $49,000 due to purchase accounting in accordance with U.S. GAAP.

LicensingIn 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 from Japan was $9,000 in Q4 2020. However, licensing revenue is booked with a lag of one quarter.

Members and SubscribersAs of December 31, 2020, we had 30.2 million members worldwide. In Europe, the unduplicated number of Travelzoo members was 8.7 million as of December 31, 2020, down 4% from December 31, 2019. In North America, the unduplicated number of Travelzoo members was 16.3 million as of December 31, 2020, down 8% from December 31, 2019. On March 15, 2021, Travelzoo added more than 2 million new members in the U.S. in connection with a direct competitor from Europe exiting the U.S. market. Jacks Flight Club had 1.7 million subscribers as of December 31, 2020, up 6% from December 31, 2019.

Discontinued OperationsAs 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 TaxesIncome tax benefit was $368,000 in Q4 2020, compared to an income tax expense of $1.1 million in the prior-year period.

Non-GAAP Financial MeasuresManagement calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoos calculation of non-GAAP operating income, also called non-GAAP operating profit in this press release and todays 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 Q1 a result close to break-even or a profit.

Conference CallTravelzoo will host a conference call to discuss fourth 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 TravelzooTravelzoo 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 suppliersour 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.

TravelzooCondensed Consolidated Statements of Operations (Unaudited) Three months ended Twelve months ended(In thousands, except per December 31, December 31,share amounts) 2020 2019 2020 2019Revenues $ 12,483 $ 25,326 $ 53,601 $ 104,925 Cost of revenues 2,795 3,046 10,563 11,435 Gross profit 9,688 22,280 43,038 93,490 Operating expenses: Sales and marketing 6,305 12,737 30,616 51,342 Product development 495 1,853 3,081 6,709 General and administrative 3,785 4,764 20,494 18,398 Impairment of intangible ? ? 2,920 ? asset and goodwillTotal operating expenses 10,585 19,354 57,111 76,449 Operating income (loss) (897 ) 2,926 (14,073 ) 17,041 Other income (loss), net 677 (90 ) 455 (42 )Income (loss) fromcontinuing operations (220 ) 2,836 (13,618 ) 16,999 before income taxesIncome tax expense (368 ) 1,116 (2,438 ) 4,712 (benefit)Income (loss) from 148 1,720 (11,180 ) 12,287 continuing operationsIncome (loss) fromdiscontinued operations, 554 (2,319 ) (3,390 ) (8,132 )net of taxNet income (loss) 702 (599 ) (14,570 ) 4,155 Net income (loss)attributable to (25 ) ? (1,147 ) ? non-controlling interestNet income (loss) $ 727 $ (599 ) $ (13,423 ) $ 4,155 attributable to Travelzoo Net income (loss)attributable to Travelzoo? $ 173 $ 1,720 $ (10,033 ) $ 12,287 continuing operationsNet income (loss)attributable to Travelzoo? $ 554 $ (2,319 ) $ (3,390 ) $ (8,132 )discontinued operations Income (loss) per share?basicContinuing operations $ 0.02 $ 0.15 $ (0.88 ) $ 1.04 Discontinued operations $ 0.05 $ (0.20 ) $ (0.30 ) $ (0.69 )Net income (loss) per share $ 0.06 $ (0.05 ) $ (1.18 ) $ 0.35 ?basic Income (loss) per share?dilutedContinuing operations $ 0.01 $ 0.15 $ (0.88 ) $ 1.02 Discontinued operations $ 0.04 $ (0.20 ) $ (0.30 ) $ (0.69 )Net income (loss) per $ 0.06 $ (0.05 ) $ (1.18 ) $ 0.35 share?diluted Shares used in per sharecalculation from continuing 11,315 11,559 11,344 11,809 operations?basicShares used in per sharecalculation from 11,315 11,559 11,344 11,809 discontinuedoperations?basicShares used in per sharecalculation from continuing 12,605 11,691 11,344 12,035 operations?dilutedShares used in per sharecalculation from 12,605 11,559 11,344 11,809 discontinuedoperations?diluted

TravelzooCondensed Consolidated Balance Sheets (Unaudited) December 31, December 31,(In thousands) 2020 2019Assets Current assets: Cash and cash equivalents $ 63,061 $ 18,743 Accounts receivable, net 4,519 11,209 Prepaid income taxes 931 989 Deposits 137 105 Prepaid expenses and other 1,166 2,288 Assets from discontinued operations 230 3,961 Total current assets 70,044 37,295 Deposits and other 745 572 Deferred tax assets 5,067 2,051 Restricted cash 1,178 1,135 Investment in WeGo ? 2,484 Operating lease right-of-use assets 8,541 8,140 Property and equipment, net 1,347 2,861 Intangible assets, net 4,534 ? Goodwill 10,944 ? Total assets $ 102,400 $ 54,538 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 6,996 $ 6,382 Merchant payables 57,104 12,967 Accrued expenses and other 8,649 6,281 Deferred revenue 2,688 786 Operating lease liabilities 3,587 4,847 PPP notes payable (current portion) 2,849 ? Income tax payable 326 914 Liabilities from discontinued operations 671 3,135 Total current liabilities 82,870 35,312 PPP notes payable 814 ? Deferred tax liabilities 357 ? Long-term operating lease liabilities 10,774 7,920 Other long-term liabilities 1,085 443 Total liabilities 95,900 43,675 Non-controlling interest 4,608 ? Common stock 114 115 Additional paid-in capital 6,240 ? Retained earnings (accumulated deficit) (406 ) 14,200 Accumulated other comprehensive loss (4,056 ) (3,452 )Total stockholders? equity 1,892 10,863 Total liabilities and stockholders? equity $ 102,400 $ 54,538

TravelzooCondensed Consolidated Statements of Cash Flows (Unaudited) Three months ended Twelve months ended(In thousands) December 31, December 31, 2020 2019 2020 2019Cash flows from operating activities:Net income (loss) $ 702 $ (599 ) $ (14,570 ) $ 4,155 Adjustments to reconcile netincome (loss) to net cash provided by (used in) operatingactivities:Depreciation and amortization 508 319 2,314 1,318 Stock-based compensation 958 117 6,201 993 Deferred income tax (813 ) (173 ) (2,560 ) 258 Impairment of intangible assets ? ? 2,920 ? and goodwillGain on notes payable settlement ? ? (1,500 ) ? Net gain on disposal of (822 ) ? (385 ) ? long-lived assetsLoss on equity investment in WeGo ? 210 474 821 Gain on sale of equity investment (468 ) ? (468 ) ? in WeGoNet foreign currency effects (143 ) 21 (685 ) 80 Provision of loss on accounts 1,452 193 5,375 325 receivable and otherChanges in operating assets and liabilities, net of acquisitions:Accounts receivable (50 ) (601 ) 6,196 (728 )Income tax receivable (610 ) (59 ) 75 (600 )Prepaid expenses and other (443 ) (623 ) 1,183 (626 )Accounts payable (5,234 ) 410 (748 ) 1,104 Merchant payables 15,381 6,622 44,136 1,957 Accrued expenses and other (931 ) 200 (2,312 ) (242 )Income tax payable (61 ) 409 (540 ) 373 Other liabilities (193 ) 2,864 1,711 2,048 Net cash provided by operating 9,233 9,310 46,817 11,236 activitiesCash flows from investing activities:Acquisition of business, net of ? ? (679 ) (673 )cash acquiredOther investment ? ? (430 ) ? Proceeds from sale of investment 2,607 ? 2,607 ? in WeGoPurchases of property and (1 ) (124 ) (253 ) (474 )equipmentProceeds from sale of fixed 822 822 assetsNet cash provided by (used in) 2,606 (124 ) 1,245 (1,147 )investing activitiesCash flows from financing activities:Repurchase of common stock ? (2,048 ) (1,205 ) (10,816 )Payment of promissory notes (1,700 ) ? (9,500 ) ? Proceeds from notes payable ? ? 3,663 ? Proceeds from exercise of stockoptions, net of taxes for net 262 ? 262 1,710 share settlementNet cash used in financing (1,438 ) (2,048 ) (6,780 ) (9,106 )activitiesEffect of exchange rate on cash,cash equivalents and restricted 1,178 659 1,571 266 cashNet increase in cash, cash 12,401 7,797 43,675 1,249 equivalents and restricted cashCash, cash equivalents andrestricted cash at beginning of 51,984 12,913 20,710 19,461 periodCash, cash equivalents and 64,385 20,710 64,385 20,710 restricted cash at end of period

TravelzooSegment Information from Continuing Operations(Unaudited)(In thousands)

Three months Travelzoo Travelzoo Jack'sended North Europe Flight Elimination ConsolidatedDecember 31, 2020 America ClubRevenue fromunaffiliated $ 8,858 $ 2,703 $ 922 $ ? $ 12,483 customersIntersegment 12 (12 ) ? ? ? revenueTotal net 8,870 2,691 922 ? 12,483 revenuesOperating income $ 1,318 $ (2,414 ) $ 199 $ ? $ (897 )(loss) Three months Travelzoo Travelzoo Jack'sended North Europe Flight Elimination ConsolidatedDecember 31, 2019 America ClubRevenue fromunaffiliated $ 15,381 $ 9,937 $ ? $ 8 $ 25,326 customersIntersegment 796 (788 ) ? (8 ) ? revenueTotal net 16,177 9,149 ? ? 25,326 revenuesOperating income $ 1,993 $ 925 $ ? $ 8 $ 2,926

Twelve months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedDecember 31, America Europe Club2020Revenue fromunaffiliated $ 34,663 $ 15,409 $ 3,537 $ (8 ) $ 53,601 customersIntersegment 249 (257 ) ? 8 ? revenueTotal net 34,912 15,152 3,537 ? 53,601 revenuesOperating $ (5,056 ) $ (6,195 ) $ (2,814 ) $ (8 ) $ (14,073 )loss Twelve months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedDecember 31, America Europe Club2019Revenue fromunaffiliated $ 65,455 $ 39,556 $ ? $ (86 ) $ 104,925 customersIntersegment 2,572 (2,658 ) ? 86 ? revenueTotal net 68,027 36,898 ? ? 104,925 revenuesOperating $ 12,666 $ 4,461 $ ? $ (86 ) $ 17,041 income

TravelzooReconciliation of GAAP to Non-GAAP Information(Unaudited)(In thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, 2020 2019 2020 2019GAAP operating expense $ 10,585 $ 19,354 $ 57,111 $ 76,449 Non-GAAP adjustments: Impairment of intangible and ? ? 2,920 ? goodwill (A)Amortization of intangibles (B) 333 ? 1,277 ? Stock option expenses (C) 958 117 6,201 993 Severance-related expenses (D) 153 63 1,292 148 Non-GAAP operating expense 9,141 19,174 45,421 75,308 GAAP operating income (loss) (897 ) 2,926 (14,073 ) 17,041 Non-GAAP adjustments (A through 1,444 180 11,690 1,141 D)Non-GAAP operating income (loss) 547 3,106 (2,383 ) 18,182

Investor Relations:Almira Puschir@travelzoo.com