GlobeNewswire Inc | Apr 22, 2021 08:22AM EDT

April 22, 2021

NEW YORK, April 22, 2021 (GLOBE NEWSWIRE) -- Travelzoo (NASDAQ: TZOO):

-- Consolidated revenue of $14.3 million, down 30% year-over-year and up 14% quarter-over-quarter -- Non-GAAP consolidated operating profit of $0.6 million -- Earnings per share (EPS) of ($0.14) attributable to Travelzoo from continuing operations -- Cash flow from operations of $11.9 million

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the first quarter ended March 31, 2021. Consolidated revenue was $14.3 million, down 30% from $20.3 million year-over-year and up 14% from $12.5 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 loss attributable to Travelzoo from continuing operations was $1.6 million for Q1 2021. At the consolidated level, including minority interests, the reported net loss from continuing operations was $1.7 million. EPS from continuing operations was ($0.14), compared to ($0.32) in the prior-year period.

Non-GAAP operating profit was $0.6 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. Travelzoo is loved by travel enthusiasts who look for quality offers. Travelzoo members are affluent, active, and open for new experiences. 75% say Travelzoo influences their travel destinations because they trust Travelzoo. We believe that trust is becoming an important competitive advantage for Travelzoo, said Holger Bartel, Global CEO.

Cash PositionAs of March 31, 2021, consolidated cash, cash equivalents and restricted cash were $72.0 million. Cash flow from operations was $11.9 million. There were no significant capital expenditures.

ReserveReported revenues include a reserve of $4.0 million related to commissions to be earned from vouchers sold. The reserve is booked as contra revenue. For Q1 2021, an adjustment to the reserve reduced reported revenue by $56,000.

Travelzoo North AmericaNorth America business segment revenue decreased 23% year-over-year to $9.8 million. Operating profit for Q1 2021 was $39,000, or 0.4% of revenue, compared to an operating loss of $976,000 in the prior-year period.

Travelzoo EuropeEurope business segment revenue decreased 48% year-over-year to $3.6 million. Operating loss for Q1 2021 was $696,000, compared to an operating loss of $1.3 million in the prior-year period.

Jacks Flight Club On January 13, 2020, Travelzoo acquired 60% of Jacks Flight Club, a membership subscription service. Jacks Flight Club revenue increased 30% year-over-year to $887,000. Operating loss for Q1 2021 was $110,000, compared to an operating loss of $3.0 million in the prior-year period. After consolidation with Travelzoo, Jacks Flight Club's net loss was $121,000, with $73,000 attributable to Travelzoo as a result of recording $284,000 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. Licensing revenue from Japan of $9,000 generated in Q4 2020 was recognized in Q1 2021.

Members and SubscribersAs of March 31, 2021, we had 31.8 million members worldwide. In North America, the unduplicated number of Travelzoo members was 18.1 million as of March 31, 2021, up 7% from March 31, 2020. In Europe, the unduplicated number of Travelzoo members was 8.6 million as of March 31, 2021, down 6% from March 31, 2020. 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 1.6 million subscribers as of March 31, 2021, down from 1.7 million subscribers as of March 31, 2020.

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 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 TaxesIncome tax expense was $742,000 in Q1 2021, compared to an income tax benefit of $517,000 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, 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 Q2 2021 to report significantly 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 contain many of the lower costs in the foreseeable future.

Conference CallTravelzoo will host a conference call to discuss first 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 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, Top 20, and Jack's Flight Club are registered trademarks of Travelzoo.

TravelzooCondensed Consolidated Statements of Operations(Unaudited)(In thousands, except per share amounts) Three months ended March 31, 2021 2020Revenues $ 14,284 $ 20,327 Cost of revenues 3,018 2,703 Gross profit 11,266 17,624 Operating expenses: Sales and marketing 6,790 13,094 Product development 683 1,428 General and administrative 4,560 5,522 Impairment of intangible asset and goodwill ? 2,920 Total operating expenses 12,033 22,964 Operating loss (767 ) (5,340 )Other income (loss), net (166 ) (6 )Loss from continuing operations before income taxes (933 ) (5,346 )Income tax expense (benefit) 742 (517 )Loss from continuing operations (1,675 ) (4,829 )Loss from discontinued operations, net of tax (15 ) (2,919 )Net loss (1,690 ) (7,748 )Net loss attributable to non-controlling interest (48 ) (1,139 )Net loss attributable to Travelzoo $ (1,642 ) $ (6,609 ) Net loss attributable to Travelzoo?continuing operations $ (1,627 ) $ (3,690 )Net loss attributable to Travelzoo?discontinued $ (15 ) $ (2,919 )operations Loss per share?basic Continuing operations $ (0.14 ) $ (0.32 )Discontinued operations $ ? $ (0.26 )Net loss per share ?basic $ (0.14 ) $ (0.58 ) Loss per share?diluted Continuing operations $ (0.14 ) $ (0.32 )Discontinued operations $ ? $ (0.26 )Net loss per share?diluted $ (0.14 ) $ (0.58 )Shares used in per share calculation from continuing 11,391 11,439 operations?basicShares used in per share calculation from discontinued 11,391 11,439 operations?basicShares used in per share calculation from continuing 11,391 11,439 operations?dilutedShares used in per share calculation from discontinued 11,391 11,439 operations?diluted

TravelzooCondensed Consolidated Balance Sheets(Unaudited)(In thousands) March 31, March 31, 2021 2020Assets Current assets: Cash and cash equivalents $ 70,862 $ 63,061 Accounts receivable, net 7,293 4,519 Prepaid income taxes 1,443 931 Deposits 101 137 Prepaid expenses and other 3,275 1,166 Assets from discontinued operations 123 230 Total current assets 83,097 70,044 Deposits and other 1,351 745 Deferred tax assets 4,400 5,067 Restricted cash 1,157 1,178 Operating lease right-of-use assets 8,474 8,541 Property and equipment, net 1,152 1,347 Intangible assets, net 4,250 4,534 Goodwill 10,944 10,944 Total assets $ 114,825 $ 102,400 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 8,750 $ 6,996 Merchant payables 70,094 57,104 Accrued expenses and other 10,827 8,649 Deferred revenue 2,417 2,688 Operating lease liabilities 3,796 3,587 PPP notes payable (current portion) 3,460 2,849 Income tax payable 201 326 Liabilities from discontinued operations 580 671 Total current liabilities 100,124 82,870 PPP notes payable 204 814 Deferred tax liabilities 235 357 Long-term operating lease liabilities 10,558 10,774 Other long-term liabilities 2,027 1,085 Total liabilities 113,148 95,900 Non-controlling interest 4,560 4,609 Common stock 115 114 Treasury stock (at cost) (1,583 ) ? Additional paid-in capital 4,279 6,239 Retained earnings (accumulated deficit) (2,045 ) (403 )Accumulated other comprehensive loss (3,649 ) (4,059 )Total stockholders? equity (2,883 ) 1,891 Total liabilities and stockholders? equity $ 114,825 $ 102,400

TravelzooCondensed Consolidated Statements of Cash Flows(Unaudited)(In thousands) Three months ended March 31, 2021 2020Cash flows from operating activities: Net income (loss) $ (1,690 ) $ (7,748 )Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation and amortization 484 551 Stock-based compensation 882 23 Deferred income tax 541 (609 )Impairment of intangible assets and goodwill ? 2,920 Loss on long-lived assets ? 437 Loss on equity investment in WeGo ? 195 Net foreign currency effects (152 ) (681 )Provision of loss on accounts receivable and other (454 ) 1,441 Changes in operating assets and liabilities, net of acquisitions:Accounts receivable (2,229 ) 2,509 Income tax receivable (545 ) 989 Prepaid expenses and other (2,357 ) 862 Accounts payable 1,727 547 Merchant payables 13,212 (6,940 )Accrued expenses and other 2,199 704 Income tax payable (126 ) (333 )Other liabilities 412 2,077 Net cash provided by operating activities 11,904 (3,056 )Cash flows from investing activities: Acquisition of business, net of cash acquired ? (679 )Purchases of property and equipment (7 ) (131 )Net cash provided by (used in) investing activities (7 ) (810 )Cash flows from financing activities: Repurchase of common stock (1,583 ) (1,205 )Payment of promissory notes ? (1,000 )Proceeds from exercise of stock options, net of taxes (2,840 ) ? for net share settlementNet cash used in financing activities (4,423 ) (2,205 )Effect of exchange rate on cash, cash equivalents and 270 (272 )restricted cashNet increase in cash, cash equivalents and restricted 7,744 (6,343 )cashCash, cash equivalents and restricted cash at beginning 64,385 20,710 of periodCash, cash equivalents and restricted cash at end of $ 72,129 $ 14,367 period

TravelzooSegment Information from Continuing Operations(Unaudited)(In thousands) Three months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedMarch 31, America Europe Club2021Revenue fromunaffiliated $ 9,828 $ 3,569 $ 887 $ ? $ 14,284 customersIntersegment (9 ) 9 ? ? ? revenueTotal net 9,819 3,578 887 ? 14,284 revenuesOperating $ 39 $ (696 ) $ (110 ) $ ? $ (767 )income (loss) Three months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedMarch 31, America Europe Club2020Revenue fromunaffiliated $ 12,549 $ 7,103 $ 683 $ (8 ) $ 20,327 customersIntersegment 148 (156 ) ? 8 ? revenueTotal net 12,697 6,947 683 ? 20,327 revenuesOperating $ (976 ) $ (1,341 ) $ (3,015 ) $ (8 ) $ (5,340 )loss

TravelzooReconciliation of GAAP to Non-GAAP Information(Unaudited)(In thousands, except per share amounts) Three months ended March 31 2021 2020GAAP operating expense $ 12,033 $ 22,964 Non-GAAP adjustments: Impairment of intangible and goodwill (A) ? 2,920 Amortization of intangibles (B) 284 215 Stock option expenses (C) 882 23 Severance-related expenses (D) 223 217 Non-GAAP operating expense 10,644 19,589 GAAP operating income (loss) (767 ) (5,340 )Non-GAAP adjustments (A through D) 1,389 3,375 Non-GAAP operating income (loss) 622 (1,965 )

Investor Relations:Almira Puschir@travelzoo.com