PR Newswire | Jul 21, 2021 09:41AM EDT

07/21 08:40 CDT

Travelzoo Reports Second Quarter 2021 Results NEW YORK, July 21, 2021

NEW YORK, July 21, 2021 /PRNewswire/ -- Travelzoo(r) (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 to 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(r) 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 revenues 2,522 2,141 5,540 4,844

Gross profit 16,557 4,863 27,823 22,487

Operating expenses:

Sales and marketing 7,340 4,288 14,130 17,382

Product development 685 566 1,368 1,994

General and administrative 5,056 6,642 9,616 12,164

Impairment of intangible asset and goodwill - - - 2,920

Total operating expenses 13,081 11,496 25,114 34,460

Operating income (loss) 3,476 (6,633) 2,709 (11,973)

Other income (loss), net 684 (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 operations 3,024 (5,503) 1,349 (10,332)

Income (loss) from discontinued operations, 29 (795) 14 (3,714) net of tax

Net income (loss) 3,053 (6,298) 1,363 (14,046)

Net income (loss) attributable to non-controlling interest 39 (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 $2,985 $(5,395)$1,358 $(9,085) operations

Net income (loss) attributable to Travelzoo-discontinued $29 $(795) $14 $(3,714) operations



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 11,488 11,310 11,440 11,375 operations-basic

Shares used in per share calculation from discontinued 11,488 11,310 11,440 11,375 operations-basic

Shares used in per share calculation from continuing 13,408 11,310 13,248 11,375 operations-diluted

Shares used in per share calculation from discontinued 13,408 11,310 13,248 11,375 operations-diluted

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



June 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $80,962 $ 63,061

Accounts receivable, net 9,905 4,519

Prepaid income taxes 1,616 931

Deposits 105 137

Prepaid expenses and other 3,253 1,166

Assets from discontinued operations 84 230

Total current assets 95,925 70,044

Deposits and other 1,552 745

Deferred tax assets 3,647 5,067

Restricted cash 1,164 1,178

Operating lease right-of-use assets 8,559 8,541

Property and equipment, net 1,034 1,347

Intangible assets, net 3,975 4,534

Goodwill 10,944 10,944

Total assets $126,800$ 102,400

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $8,503 $ 6,996

Merchant payables 82,236 57,104

Accrued expenses and other 8,222 8,649

Deferred revenue 2,213 2,688

Operating lease liabilities 3,751 3,587

PPP notes payable (current portion) 3,156 2,849

Income tax payable 98 326

Liabilities from discontinued operations 482 671

Total current liabilities 108,661 82,870

PPP notes payables - 814

Deferred tax liabilities 38 357

Long-term operating lease liabilities 10,353 10,774

Other long-term liabilities 2,146 1,085

Total liabilities 121,198 95,900

Non-controlling interest 4,600 4,609

Common stock 115 114

Treasury stock (at cost) (1,583) -

Additional paid-in capital 4,988 6,239

Retained earnings (accumulated deficit) 969 (403)

Accumulated other comprehensive loss (3,487) (4,059)

Total stockholders' equity 1,002 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 amortization 476 667 960 1,218

Stock-based compensation 934 4,031 1,816 4,054

Deferred income tax 599 (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 (417) 986 (871) 2,427 receivable and other reserves

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 payables 11,973 15,100 25,185 8,160

Accrued expenses and other 321 (2,084) (320) (1,380)

Income tax payable (102) 266 (228) (67)

Other liabilities (80) 263 332 2,340

Net cash provided by operating activities 12,775 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 (3,066) - (3,066) - net share settlement

Net cash used in financing activities (3,066) (3,137) (4,649) (5,342)

Effect of exchange rate on cash, cash 427 (239) 697 (511) equivalents and restricted cash

Net increase in cash, cash equivalents and 10,059 12,601 17,803 6,258 restricted cash

Cash, cash equivalents and restricted cash at72,129 14,367 64,385 20,710 beginning of period

Cash, cash equivalents and restricted cash at$82,188$26,968 $82,188$26,968 end of period

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



Travelzoo Three months ended June 30, 2021 North Travelzoo Jack's FlightEliminationConsolidated Europe Club America

Revenue from unaffiliated customers$13,650 $4,569 $ 860 $- $ 19,079

Intersegment revenue 335 (335) - - -

Total net revenues 13,985 4,234 860 - 19,079

Operating income (loss) $3,533 $(227) $ 170 $- $ 3,476



Travelzoo Three months ended June 30, 2020 North Travelzoo Jack's FlightEliminationConsolidated Europe Club America

Revenue from unaffiliated customers$4,254 $1,805 $ 945 $- $ 7,004

Intersegment revenue (52) 52 - - -

Total net revenues 4,202 1,857 945 - 7,004

Operating loss $(4,702)$(1,683)$ (248) $- $ (6,633)



Travelzoo Six months ended North Travelzoo Jack's FlightEliminationConsolidatedJune 30, 2021 Europe Club America

Revenue from unaffiliated customers$23,478 $8,138 $ 1,747 $- $ 33,363

Intersegment revenue 326 (326) - - -

Total net revenues 23,804 7,812 1,747 - 33,363

Operating income (loss) $3,572 $(923) $ 60 $- $ 2,709



Travelzoo Six months ended North Travelzoo Jack's FlightEliminationConsolidatedJune 30, 2020 Europe Club America

Revenue from unaffiliated customers$16,803 $8,908 $ 1,628 $(8) $ 27,331

Intersegment revenue 96 (104) - 8 -

Total net revenues 16,899 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 expense 11,697 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 Puschir@travelzoo.com

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SOURCE Travelzoo