GlobeNewswire Inc | Oct 29, 2021 07:30AM EDT

October 29, 2021

NEW YORK, Oct. 29, 2021 (GLOBE NEWSWIRE) -- 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 September30, 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, derivedfrom 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.

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 PositionAs of September30, 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 AmericaNorth 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 EuropeEurope 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.

Jacks Flight Club On January 13, 2020, Travelzoo acquired 60% of Jacks Flight Club, a membership subscription service. Jacks 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, Jacks 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.LicensingIn June of 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoos 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 Travelzoos brand, business models, and members in Australia, New Zealand and Singapore. Under these arrangements, Travelzoos 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 SubscribersAs of September30, 2021, we had 30.7 million members worldwide. In North America, the unduplicated number of Travelzoo members was 17.2 million as of September30, 2021, up 5% from September30, 2020. In Europe, the unduplicated number of Travelzoo members was 8.4 million as of September30, 2021, down 5% from September30, 2020. Jacks Flight Club had 1.7 million subscribers as of September30, 2021, consistent with 1.7 million subscribers as of September30, 2020.

Discontinued OperationsAs 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 TaxesIncome tax expense was $233,000 in Q3 2021, compared to an income tax benefit of $244,000 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 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 CallTravelzoo 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.

About TravelzooTravelzoo 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 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 Nine months ended September 30, September 30, 2021 2020 2021 2020Revenues $ 15,688 $ 13,787 $ 49,051 $ 41,118 Cost of revenues 2,992 2,924 8,532 7,768 Gross profit 12,696 10,863 40,519 33,350 Operating expenses:Sales and 7,709 6,929 21,839 24,311 marketingProduct 684 592 2,052 2,586 developmentGeneral and 4,564 4,545 14,180 16,709 administrativeImpairment ofintangible asset ? ? ? 2,920 and goodwillTotal operating 12,957 12,066 38,071 46,526 expensesOperating income (261 ) (1,203 ) 2,448 (13,176 ) (loss)Other income 3,344 (37 ) 3,862 (222 ) (loss), netIncome (loss) fromcontinuing 3,083 (1,240 ) 6,310 (13,398 ) operations beforeincome taxesIncome tax expense 233 (244 ) 2,111 (2,070 ) (benefit)Income (loss) fromcontinuing 2,850 (996 ) 4,199 (11,328 ) operationsIncome (loss) fromdiscontinued (19 ) (230 ) (5 ) (3,944 ) operations,net of taxNet income (loss) 2,831 (1,226 ) 4,194 (15,272 ) Net income (loss)attributable to 8 125 (1 ) (1,122 ) non-controllinginterestNet income (loss)attributable to $ 2,823 $ (1,351 ) $ 4,195 $ (14,150 ) Travelzoo Net income (loss)attributable toTravelzoo? $ 2,842 $ (1,121 ) $ 4,200 $ (10,206 ) continuingoperationsNet income (loss)attributable toTravelzoo? $ (19 ) $ (230 ) $ (5 ) $ (3,944 ) discontinuedoperations Income (Loss) per share?basicContinuing $ 0.24 $ (0.10 ) $ 0.36 $ (0.90 ) operationsDiscontinued $ ? $ (0.02 ) $ ? $ (0.35 ) operationsNet income (loss) $ 0.24 $ (0.12 ) $ 0.36 $ (1.25 ) per share ?basic Income (Loss) per share?dilutedContinuing $ 0.22 $ (0.10 ) $ 0.32 $ (0.90 ) operationsDiscontinued $ ? $ (0.02 ) $ ? $ (0.35 ) operationsNet income (loss) $ 0.22 $ (0.12 ) $ 0.32 $ (1.25 ) per share?dilutedShares used in pershare calculation 11,648 11,310 11,510 11,353 from continuingoperations?basicShares used in pershare calculationfrom 11,648 11,310 11,510 11,353 discontinuedoperations?basicShares used in pershare calculation 12,904 11,310 13,132 11,353 from continuingoperations?dilutedShares used in pershare calculationfrom 11,648 11,310 11,510 11,353 discontinuedoperations?diluted

TravelzooCondensed Consolidated Balance Sheets(Unaudited)(In thousands)

September 30, December 31, 2021 2020Assets Current assets: Cash and cash equivalents $ 65,204 $ 63,061 Accounts receivable, net 9,084 4,519 Prepaid income taxes 2,882 931 Deposits 104 137 Prepaid expenses and other 3,080 1,166 Assets from discontinued operations 63 230 Total current assets 80,417 70,044 Deposits and other 8,219 745 Deferred tax assets 3,637 5,067 Restricted cash 1,154 1,178 Operating lease right-of-use assets 8,005 8,541 Property and equipment, net 794 1,347 Intangible assets, net 3,700 4,534 Goodwill 10,944 10,944 Total assets $ 116,870 $ 102,400 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 11,875 $ 6,996 Merchant payables 73,183 57,104 Accrued expenses and other 7,546 8,649 Deferred revenue 1,805 2,688 Operating lease liabilities 3,482 3,587 PPP notes payable (current portion) ? 2,849 Income tax payable 61 326 Liabilities from discontinued operations 469 671 Total current liabilities 98,421 82,870 PPP notes payables ? 814 Deferred tax liabilities ? 357 Long-term operating lease liabilities 9,721 10,774 Other long-term liabilities 2,249 1,085 Total liabilities 110,391 95,900 Non-controlling interest 4,608 4,609 Common stock 118 114 Treasury stock (at cost) (1,583 ) ? Additional paid-in capital 3,432 6,239 Retained earnings (accumulated deficit) 3,792 (403 ) Accumulated other comprehensive loss (3,888 ) (4,059 ) Total stockholders? equity 1,871 1,891 Total liabilities and stockholders? equity $ 116,870 $ 102,400

TravelzooCondensed Consolidated Statements of Cash Flows(Unaudited)(In thousands)

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020Cash flows fromoperating activities:Net income (loss) $ 2,831 $ (1,226 ) $ 4,194 $ (15,272 ) Adjustments toreconcile netincome (loss) tonet cash provided by(used in)operatingactivities:Depreciation and 448 588 1,408 1,806 amortizationStock-based 971 1,189 2,788 5,243 compensationDeferred income (68 ) 14 1,073 (1,747 ) taxImpairment ofintangible assets ? ? ? 2,920 and goodwillGain on notespayable ? ? ? (1,500 ) settlementLoss on ? ? ? 437 long-lived assetsLoss on equityinvestment in ? 138 ? 474 WeGoGain on PPP notespayable (3,159 ) ? (3,588 ) ? forgivenessNet foreign (45 ) (86 ) (300 ) (542 ) currency effectsProvision(reversal) ofloss on accounts (854 ) 1,496 (1,725 ) 3,923 receivable andother reservesChanges inoperating assetsand liabilities, net ofacquisitions:Accounts 933 63 (3,848 ) 6,246 receivablePrepaid income (1,294 ) (304 ) (2,007 ) 685 taxesPrepaid expenses (6,698 ) 206 (9,473 ) 1,626 and otherAccounts payable 3,610 10,560 5,025 12,709 Merchant payables (8,699 ) 12,372 16,486 20,532 Accrued expenses (132 ) (1 ) (452 ) (1,381 ) and otherIncome tax (35 ) (412 ) (263 ) (479 ) payableOther liabilities (476 ) (436 ) (34 ) 1,904 Net cash providedby (used in) (12,667 ) 24,161 9,283 37,584 operatingactivitiesCash flows frominvesting activities:Acquisition ofbusiness, net of ? ? ? (679 ) cash acquiredOther investment ? ? ? (430 ) Purchases ofproperty and 60 (49 ) (24 ) (252 ) equipmentNet cash providedby (used in) 60 (49 ) (24 ) (1,361 ) investingactivitiesCash flows fromfinancing activities:Repurchase of ? ? (1,583 ) (1,205 ) common stockPayment of ? ? (110 ) (7,800 ) promissory notesProceeds from ? ? ? 3,663 notes payableExercise of stockoptions and taxespaid for net (2,357 ) ? (5,424 ) ? sharesettlementNet cash used infinancing (2,357 ) ? (7,117 ) (5,342 ) activitiesEffect ofexchange rate oncash, cash (823 ) 904 (126 ) 393 equivalents andrestricted cashNet increase(decrease) incash, cash (15,787 ) 25,016 2,016 31,274 equivalents andrestricted cashCash, cashequivalents andrestricted cash 82,188 26,968 64,385 20,710 at beginning ofperiodCash, cashequivalents and $ 66,401 $ 51,984 $ 66,401 $ 51,984 restricted cashat end of period

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

Three months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedSeptember America Europe Club30, 2021Revenue fromunaffiliated $ 9,527 $ 5,365 $ 796 $ ? $ 15,688 customersIntersegment 136 (136 ) ? ? ? revenueTotal net 9,663 5,229 796 ? 15,688 revenuesOperating 600income $ (918 ) $ $ 57 $ ? $ (261 ) (loss) Three months Travelzoo Jack'sended North Travelzoo Flight Elimination ConsolidatedSeptember America Europe Club30, 2020Revenue fromunaffiliated $ 9,002 $ 3,798 $ 987 $ ? $ 13,787 customersIntersegment 141 (141 ) ? ? ? revenueTotal net 9,143 3,657 987 ? 13,787 revenuesOperatingincome $ (696 ) $ (757 ) $ 250 $ ? $ (1,203 ) (loss)

Nine months Travelzooended North Travelzoo Jack's Elimination ConsolidatedSeptember America Europe Flight Club30, 2021Revenue fromunaffiliated $ 33,005 $ 13,503 $ 2,543 $ ? $ 49,051 customersIntersegment 462 (462 ) ? ? ? revenueTotal net 33,467 13,041 2,543 ? 49,051 revenuesOperatingincome $ 2,654 $ (323 ) $ 117 $ ? $ 2,448 (loss) Nine months Travelzooended North Travelzoo Jack's Elimination ConsolidatedSeptember America Europe Flight Club30, 2020Revenue fromunaffiliated $ 25,805 $ 12,706 $ 2,615 $ (8 ) $ 41,118 customersIntersegment 237 (245 ) ? 8 ? revenueTotal net 26,042 12,461 2,615 ? 41,118 revenuesOperatingincome $ (6,374 ) $ (3,781 ) $ (3,013 ) $ (8 ) $ (13,176 ) (loss)

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

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020GAAP operating $ 12,957 $ 12,066 $ 38,071 $ 46,526 expenseNon-GAAP adjustments:Impairment ofintangible and ? ? ? 2,920 goodwill (A)Amortization of 274 333 833 944 intangibles (B)Stock option 971 1,189 2,788 5,243 expenses (C)Severance-related 95 855 493 1,139 expenses (D)Non-GAAP operating 11,617 9,689 33,957 36,280 expense GAAP operating (261 ) (1,203 ) 2,448 (13,176 ) income (loss)Non-GAAPadjustments (A 1,340 2,377 4,114 10,246 through D)Non-GAAP operating 1,079 1,174 6,562 (2,930 ) income (loss)



Investor Relations:Almira Puschir@travelzoo.com