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Travelzoo
ISIN: US89421Q2057
WKN: A1W8DE
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Travelzoo · ISIN: US89421Q2057 · PR Newswire (ID: 20241023NY38136)
23 October 2024 02:20PM

Travelzoo Reports Third Quarter 2024 Results


NEW YORK, Oct. 23, 2024 /PRNewswire/ -- Travelzoo® (NASDAQ: TZOO):

  • Revenue of $20.1 million, down 2% year-over-year
  • Consolidated operating profit of $4.0 million
  • Non-GAAP consolidated operating profit of $4.9 million
  • Cash flow from operations of $5.3 million
  • Earnings per share (EPS) of $0.26

Travelzoo, the club for travel enthusiasts, today announced financial results for the third quarter ended September 30, 2024. Consolidated revenue was $20.1 million, down 2% year-over-year. In constant currencies, revenue was $20.0 million. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members, and membership fees.

Net income attributable to Travelzoo was $3.2 million for Q3 2024, or $0.26 per share, compared with $0.16 in the prior-year period. Net income attributable to Travelzoo from continuing operations was $3.2 million for Q3 2024, or $0.26 per share, compared with $0.16 in the prior-year period.

Non-GAAP operating profit was $4.9 million. Non-GAAP operating profit excludes amortization of intangibles ($95,000), stock option expenses ($0.5 million) and severance-related expenses ($0.3 million). Please refer to "Non-GAAP Financial Measures" and the tabular reconciliation below.

"We will continue to leverage Travelzoo's global reach, trusted brand, and strong relationships with top travel suppliers to negotiate more Club Offers for members," said Holger Bartel, Travelzoo's Global CEO. "Travelzoo members are affluent, active, and open to new experiences. We inspire members to travel to places they never imagined they could. Travelzoo is the must-have membership for those who love to travel as much as we do."

Cash Position

As of September 30, 2024, consolidated cash, cash equivalents and restricted cash were $12.1 million. Net cash provided by operations was $5.3 million.

Travelzoo North America

North America business segment revenue decreased 4% year-over-year to $12.8 million. Operating profit for Q3 2024 was $3.2 million, or 25% of revenue, compared to operating profit of $3.0 million in the prior-year period.

Travelzoo Europe

Europe business segment revenue increased 1% year-over-year to $6.1 million. In constant currencies, Europe business segment revenue was $5.9 million. Operating profit for Q3 2024 was $1.0 million, or 17% of revenue, compared to operating profit of $267,000 in the prior-year period.

Jack's Flight Club

Jack's Flight Club is a membership subscription service in which Travelzoo has a 60% ownership interest. Revenue from unaffiliated customers increased 11% year-over-year to $1.2 million. The number of premium subscribers increased 14% year-over-year. Jack's Flight Club's revenue from subscriptions is recognized ratably over the subscription period (quarterly, semi-annually, annually). Non-GAAP operating profit for Q3 2024 was $85,000. Non-GAAP operating profit excludes amortization of intangibles ($58,000) related to the acquisition of Travelzoo's ownership interest in Jack's Flight Club in 2020.

New Initiatives

New Initiatives business segment revenue, which includes Licensing and Travelzoo META, was $33,000. Operating loss for Q3 2024 was $160,000.

In June 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoo's 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 Travelzoo's brand, business models, and members in Australia, New Zealand, and Singapore. Under these arrangements, Travelzoo's existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor. Travelzoo recorded $7,000 in licensing revenue from the licensee in Japan in Q3 2024. Travelzoo recorded $10,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q3 2024. Licensing revenue is expected to increase going forward.

Members and Subscribers

As of September 30, 2024, we had 30.1 million members and subscribers worldwide. In North America, Travelzoo had 15.8 million unduplicated members as of September 30, 2024. In Europe, Travelzoo had 9.1 million unduplicated members as of September 30, 2024. Jack's Flight Club had 2.1 million subscribers, including premium subscribers, as of September 30, 2024. Comparisons to prior periods are no longer meaningful due to strategic developments of the Travelzoo membership and Jack's Flight Club premium subscriber acquisition. For Travelzoo, the average activity of members is increasing. For Jack's Flight Club, the premium subscribers are increasing.

Discontinued Operations

In March 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.

Income Taxes

A provision of $1.1 million for income taxes was recorded for Q3 2024, compared to an income tax expense of $1.0 million in the prior-year period. Travelzoo intends to utilize available net operating losses (NOLs) to largely offset its actual tax liability for Q3 2024.

Share Repurchase Program

During Q3 2024, the Company repurchased 552,679 shares of its outstanding common stock.

Looking Ahead

For Q4 2024, we expect growth in revenue year-over-year, albeit at a smaller pace than in 2023. However, there could be unexpected fluctuations. We also expect for Q4 2024 higher profitability year-over-year and quarter-over-quarter. For 2025, we expect substantial growth in revenue as a result of additional revenue from membership fees.

In December 2023, we announced the introduction of a membership fee for Travelzoo beginning January 1, 2024. We recognize membership fee revenue ratably over the subscription period. Legacy Travelzoo members as of December 31, 2023, which represent more than 95% of members, are exempt from the fee during 2024. Therefore, we do not anticipate membership fee revenue from these members before 2025.

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: 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.

Conference Call

Travelzoo will host a conference call to discuss third quarter 2024 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
  • access the webcast

About Travelzoo

We, Travelzoo®, are the club for travel enthusiasts. Our 30 million members receive 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 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 

590 Madison Avenue

35th Floor

New York, NY 10022

Investor Relations:

ir@travelzoo.com  

 

Travelzoo

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)





Three months ended



Nine months ended



September 30,



September 30,



2024



2023



2024



2023

Revenues

$         20,098



$         20,599



$    63,224



$    63,328

Cost of revenues

2,548



2,665



7,708



8,236

Gross profit

17,550



17,934



55,516



55,092

Operating expenses:















Sales and marketing

8,247



9,840



26,231



29,278

Product development

594



525



1,763



1,533

General and administrative

4,664



4,460



13,875



13,188

Total operating expenses

13,505



14,825



41,869



43,999

Operating income

4,045



3,109



13,647



11,093

Other income, net

359



314



674



1,143

Income from continuing operations before income taxes

4,404



3,423



14,321



12,236

Income tax expense

1,148



1,018



3,920



3,487

Income from continuing operations

3,256



2,405



10,401



8,749

Loss from discontinued operations, net of tax



(5)





(5)

Net income

3,256



2,400



10,401



8,744

Net income attributable to non-controlling interest

72



52



54



97

Net income attributable to Travelzoo

$           3,184



$           2,348



$    10,347



$      8,647

















Net income attributable to Travelzoo—continuing operations

$           3,184



$           2,353



$    10,347



$      8,652

Net loss attributable to Travelzoo—discontinued operations

$                —



$                (5)



$            —



$            (5)

















Income per share—basic















Continuing operations

$             0.26



$             0.16



$        0.81



$        0.57

Discontinued operations

$                —



$                —



$            —



$            —

Net income per share—basic

$             0.26



$             0.16



$        0.81



$        0.57

















Income per share—diluted















Continuing operations

$             0.26



$             0.16



$        0.79



$        0.57

Discontinued operations

$                —



$                —



$            —



$            —

Net income per share—diluted

$             0.26



$             0.16



$        0.79



$        0.56

Shares used in per share calculation from continuing operations—basic

12,176



14,769



12,851



15,242

Shares used in per share calculation from discontinued operations—basic

12,176



14,769



12,851



15,242

Shares used in per share calculation from continuing operations—diluted

12,386



14,821



13,035



15,307

Shares used in per share calculation from discontinued operations—diluted

12,386



14,821



13,035



15,307

 

Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)





September 30,

2024



December 31,

2023

Assets







Current assets:







Cash and cash equivalents

$             11,429



$            15,713

Accounts receivable, net

13,167



12,965

Prepaid income taxes

1,132



629

Prepaid expenses and other

1,619



1,461

Total current assets

27,347



30,768

Deposits and other

230



1,115

Deferred tax assets

3,193



3,196

Restricted cash

675



675

Operating lease right-of-use assets

6,080



6,015

Property and equipment, net

470



578

Intangible assets, net

1,591



2,091

Goodwill

10,944



10,944

Total assets

$             50,530



$            55,382

Liabilities and Equity







Current liabilities:







Accounts payable

$               4,984



$              4,546

Merchant payables

17,321



20,622

Accrued expenses and other

4,124



3,658

Deferred revenue

3,854



2,044

Income tax payable

1,450



766

Operating lease liabilities

2,624



2,530

Liabilities from discontinued operations

24



24

Total current liabilities

34,381



34,190

Long-term tax liabilities

7,028



4,681

Long-term operating lease liabilities

6,225



6,717

Other long-term liabilities

376



911

Total liabilities

48,010



46,499

Common stock

119



136

Tax indemnification

(9,537)



(9,537)

Note receivable and account receivable from shareholder

(1,929)



(1,753)

Additional paid-in capital



439

Retained earnings

14,195



19,508

Accumulated other comprehensive loss

(5,079)



(4,607)

Total Travelzoo stockholders' equity (deficit)

(2,231)



4,186

Non-controlling interest

4,751



4,697

Total stockholder's equity

2,520



8,883

Total liabilities and Equity

$             50,530



$            55,382

 

Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)





Three months ended



Nine months ended



September 30,



September 30,



2024



2023



2024



2023

Cash flows from operating activities:















Net income

$            3,256



$            2,400



$   10,401



$     8,744

Adjustments to reconcile net income to net cash provided by operating activities:















Depreciation and amortization

179



472



737



1,417

Stock-based compensation

457



359



1,240



1,187

Deferred income tax

(12)



(73)



(39)



(111)

Loss on long-lived assets







10

Net foreign currency effects

(154)



86



(165)



53

Provision of loss (net recoveries) on accounts receivable and refund reserves

128



(115)



121



(944)

Changes in operating assets and liabilities:















Accounts receivable

127



(571)



(258)



3,317

Prepaid income taxes

(134)



111



(461)



1,128

Prepaid expenses, deposits and other

(69)



(253)



464



2,232

Accounts payable

(284)



689



430



(1,704)

Merchant payables

431



(153)



(3,348)



(8,757)

Accrued expenses and other

463



197



2,162



574

Income tax payable

315



59



593



293

Other liabilities

628



435



1,381



1,854

Net cash provided by operating activities

5,331



3,643



13,258



9,293

Cash flows from investing activities:















Proceeds from repayment of note receivable







113

Purchases of property and equipment

(46)



(60)



(129)



(217)

Net cash used in investing activities

(46)



(60)



(129)



(104)

Cash flows from financing activities:















Repurchase of common stock

(6,183)



(6,896)



(16,605)



(11,766)

Exercise of stock options and taxes paid for net share settlement of equity awards

(335)





(592)



(299)

Net cash used in financing activities

(6,518)



(6,896)



(17,197)



(12,065)

Effect of exchange rate on cash, cash equivalents and restricted cash

96



(302)



(215)



80

Net decrease in cash, cash equivalents and restricted cash

(1,137)



(3,615)



(4,283)



(2,796)

Cash, cash equivalents and restricted cash at beginning of period

13,243



20,197



16,389



19,378

Cash, cash equivalents and restricted cash at end of period

$          12,106



$          16,582



$   12,106



$   16,582

 

Travelzoo

Segment Information from Continuing Operations

(Unaudited)

(In thousands) 



Three months ended September 30, 2024

Travelzoo North

America



Travelzoo

Europe



Jack's

Flight Club



New

Initiatives



Consolidated

Revenues from unaffiliated customers

$       12,846



$         6,021



$         1,198



$              33



$          20,098

Intersegment revenues

(24)



34



(10)





Total net revenues

12,822



6,055



1,188



33



20,098

Operating profit (loss)

$         3,150



$         1,028



$              27



$          (160)



$            4,045





















Three months ended September 30, 2023

Travelzoo North

America



Travelzoo

Europe



Jack's

Flight Club



New

Initiatives



Consolidated

Revenues from unaffiliated customers

$       13,094



$         6,397



$         1,080



$              28



$          20,599

Intersegment revenues

314



(414)



100





Total net revenues

13,408



5,983



1,180



28



20,599

Operating profit (loss)

$         3,015



$            267



$            144



$          (317)



$            3,109





Nine months ended September 30, 2024

Travelzoo North

America



Travelzoo

Europe



Jack's

Flight Club



New

Initiatives



Consolidated

Revenues from unaffiliated customers

$       41,134



$       18,605



$         3,397



$              88



$          63,224

Intersegment revenues

50



63



(113)





Total net revenues

41,184



18,668



3,284



88



63,224

Operating profit (loss)

$       11,305



$         2,922



$          (106)



$          (474)



$          13,647





















Nine months ended September 30, 2023

Travelzoo North

America



Travelzoo

Europe



Jack's

Flight Club



New

Initiatives



Consolidated

Revenues from unaffiliated customers

$       41,303



$       18,937



$         3,039



$              49



$          63,328

Intersegment revenues

996



(1,180)



184





Total net revenues

42,299



17,757



3,223



49



63,328

Operating profit (loss)

$       11,284



$            485



$            196



$          (872)



$          11,093

 

Travelzoo

Reconciliation of GAAP to Non-GAAP Information

(Unaudited)

(In thousands, except per share amounts)





Three months ended



Nine months ended



September 30,



September 30,



2024



2023



2024



2023

GAAP operating expense

$   13,505



$   14,825



$   41,869



$   43,999

Non-GAAP adjustments:















Amortization of intangibles (A)

95



384



500



1,171

Stock option expenses (B)

456



359



1,239



1,186

Severance-related expenses (C)

330





360



95

Non-GAAP operating expense

12,624



14,082



39,770



41,547

















GAAP operating profit

4,045



3,109



13,647



11,093

Non-GAAP adjustments (A through C)

881



743



2,099



2,452

Non-GAAP operating profit

4,926



3,852



15,746



13,545

 

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