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NEW YORK, Oct. 26, 2022 /PRNewswire/ -- Travelzoo® (NASDAQ: TZOO):
Travelzoo, a global Internet media company that provides exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2022. Consolidated revenue was $15.8 million, up 1% from $15.7 million year-over-year. In constant currencies, revenue was $16.7 million. 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 $790,000 for Q3 2022. At the consolidated level, including minority interests, the reported net income from continuing operations was $792,000. EPS from continuing operations was $0.06. A comparison with EPS of $0.22 in the prior-year period should consider that Q3 2021 EPS included the effect of $3.3 million other income.
Non-GAAP operating profit was $1.1 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($440,000), stock option expenses ($325,000) and severance-related expenses ($74,000). GAAP operating profit was $273,000 million. See section "Non-GAAP Financial Measures" below.
"In Q3, our revenue was lower than expected due to the unique travel situation in the summer of 2022. Demand jumped after the pandemic while suppliers were still rebuilding capacity. The demand curve temporarily shifted, while the supply curve remained inelastic in the short-term. This pushed up prices to levels where we did not want to recommend certain overpriced travel services to Travelzoo members", said Holger Bartel, Global CEO.
"While airlines, other travel suppliers, and online travel agencies (OTAs) benefited from overpriced travel services, our business remained flat. But we are seeing a rapid change in Q4: Demand is returning to normal levels. Suppliers continue to build up capacity. We have more and better offers for our members again, and revenues are accelerating."
Cash Position
As of September 30, 2022, consolidated cash, cash equivalents and restricted cash were $20.5 million. Net cash used in operations was $3.9 million for the three months ended September 30, 2022. Cash was used primarily in connection with a decrease of merchant payables by $9.1 million.
Reserve
Reported revenues include a reserve of $1.9 million related to commissions to be earned from vouchers sold. The reserve is booked as contra revenue.
Travelzoo North America
North America business segment revenue increased 9% year-over-year to $10.5 million. Operating profit for Q3 2022 was $812.000, or 8% of revenue, compared to an operating loss of $918,000 in the prior-year period.
Travelzoo Europe
Europe business segment revenue decreased 14% year-over-year to $4.5 million. At constant currencies, Europe business segment revenue increased 2% year-over-year. Operating loss for Q3 2022 was $551,000, compared to an operating profit of $600,000 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 increased 6% year-over-year to $847,000. Non-GAAP operating profit for Q3 2022 was $228,000, compared to a non-GAAP operating profit of $331,000 in the prior-year period. After consolidation with Travelzoo, Jack's Flight Club's net income was $4,000, with $2,000 attributable to Travelzoo as a result of recording $216,000 of amortization of intangible assets related to the acquisition.
Licensing
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. Licensing revenue is booked with a lag of one quarter. Travelzoo recorded $8,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q3 2022. Licensing revenue is expected to increase going forward.
Members and Subscribers
As of September 30, 2022, we had 30.5 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.4 million as of September 30, 2022, down 5% from September 30, 2021. In Europe, the unduplicated number of Travelzoo members was 9.1 million as of September 30, 2022, up 8% from September 30, 2021. Jack's Flight Club had 1.9 million subscribers as of September 30, 2022, up 10% from September 30, 2021.
Discontinued Operations
As 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 Taxes
Income tax expense was $317,000 in Q3 2022, compared to an income tax expense of $233,000 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
For Q4 2022, we currently expect substantially higher revenue and profitability. We see the demand curve in the travel industry returning to a more normal situation. We believe this allows us to negotiate and recommend more and better offers, resulting in higher revenue. However, there could be unexpected fluctuations in the short term. During the pandemic, we have been able to lower our fixed costs. We believe we can keep our fixed costs relatively low in the foreseeable future.
Conference Call
Travelzoo 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 Travelzoo
Travelzoo® provides its 30 million members with 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, 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 | Nine months ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues | $ 15,849 | $ 15,688 | $ 51,991 | $ 49,051 | |||
Cost of revenues | 2,324 | 2,992 | 7,319 | 8,532 | |||
Gross profit | 13,525 | 12,696 | 44,672 | 40,519 | |||
Operating expenses: | |||||||
Sales and marketing | 8,512 | 7,709 | 25,573 | 21,839 | |||
Product development | 484 | 684 | 1,391 | 2,052 | |||
General and administrative | 4,256 | 4,564 | 13,735 | 14,180 | |||
Total operating expenses | 13,252 | 12,957 | 40,699 | 38,071 | |||
Operating income (loss) | 273 | (261) | 3,973 | 2,448 | |||
Other income, net | 836 | 3,344 | 2,454 | 3,862 | |||
Income from continuing operations before income taxes | 1,109 | 3,083 | 6,427 | 6,310 | |||
Income tax expense | 317 | 233 | 2,213 | 2,111 | |||
Income from continuing operations | 792 | 2,850 | 4,214 | 4,199 | |||
Income (loss) from discontinued operations, net of tax | 5 | (19) | 4 | (5) | |||
Net income | 797 | 2,831 | 4,218 | 4,194 | |||
Net income (loss) attributable to non-controlling interest | 2 | 8 | 36 | (1) | |||
Net income attributable to Travelzoo | $ 795 | $ 2,823 | $ 4,182 | $ 4,195 | |||
Net income attributable to Travelzoo—continuing operations | $ 790 | $ 2,842 | $ 4,178 | $ 4,200 | |||
Net income (loss) attributable to Travelzoo—discontinued operations | $ 5 | $ (19) | $ 4 | $ (5) | |||
Income (loss) per share—basic | |||||||
Continuing operations | $ 0.06 | $ 0.24 | $ 0.34 | $ 0.36 | |||
Discontinued operations | $ — | $ — | $ — | $ — | |||
Net income (loss) per share—basic | $ 0.06 | $ 0.24 | $ 0.34 | $ 0.36 | |||
Income (loss) per share—diluted | |||||||
Continuing operations | $ 0.06 | $ 0.22 | $ 0.33 | $ 0.32 | |||
Discontinued operations | $ — | $ — | $ — | $ — | |||
Net income (loss) per share—diluted | $ 0.06 | $ 0.22 | $ 0.33 | $ 0.32 | |||
Shares used in per share calculation from continuing operations—basic | 12,489 | 11,648 | 12,354 | 11,510 | |||
Shares used in per share calculation from discontinued operations—basic | 12,489 | 11,648 | 12,354 | 11,510 | |||
Shares used in per share calculation from continuing operations—diluted | 12,578 | 12,904 | 12,659 | 13,132 | |||
Shares used in per share calculation from discontinued operations—diluted | 12,578 | 11,648 | 12,659 | 11,510 |
Travelzoo | |||
Condensed Consolidated Balance Sheets | |||
(Unaudited) | |||
(In thousands) | |||
September 30, | December 31, | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 19,494 | $ 43,815 | |
Accounts receivable, net | 11,835 | 14,871 | |
Prepaid income taxes | 2,763 | 3,325 | |
Prepaid expenses and other | 1,381 | 1,891 | |
Prepaid expenses—related party | — | 1,150 | |
Assets from discontinued operations | 35 | 71 | |
Total current assets | 35,508 | 65,123 | |
Deposits and other | 6,778 | 6,784 | |
Deferred tax assets | 3,445 | 3,949 | |
Restricted cash | 1,037 | 1,142 | |
Operating lease right-of-use assets | 5,799 | 7,700 | |
Property and equipment, net | 505 | 659 | |
Intangible assets, net | 4,304 | 3,426 | |
Goodwill | 10,944 | 10,944 | |
Total assets | $ 68,320 | $ 99,727 | |
Liabilities and Stockholders' Equity (Deficit) | |||
Current liabilities: | |||
Accounts payable | $ 3,557 | $ 3,411 | |
Merchant payables | 38,175 | 68,678 | |
Accrued expenses and other | 5,857 | 10,212 | |
Deferred revenue | 2,537 | 1,733 | |
Operating lease liabilities | 2,332 | 3,180 | |
Income tax payable | — | 185 | |
Liabilities from discontinued operations | 413 | 485 | |
Total current liabilities | 52,871 | 87,884 | |
Long-term operating lease liabilities | 7,723 | 9,111 | |
Other long-term liabilities | 2,474 | 2,364 | |
Total liabilities | 63,068 | 99,359 | |
Non-controlling interest | 4,636 | 4,600 | |
Common stock | 131 | 126 | |
Treasury stock (at cost) | (6,658) | (5,488) | |
Additional paid-in capital | 7,797 | 4,415 | |
Retained earnings | 4,690 | 508 | |
Accumulated other comprehensive loss | (5,344) | (3,793) | |
Total stockholders' equity (deficit) | 616 | (4,232) | |
Total liabilities and stockholders' equity (deficit) | $ 68,320 | $ 99,727 |
Travelzoo | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Three months ended | Nine months ended | ||||||
September 30, | September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities: | |||||||
Net income | $ 797 | $ 2,831 | $ 4,218 | $ 4,194 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 534 | 448 | 1,652 | 1,408 | |||
Stock-based compensation | 325 | 971 | 1,456 | 2,788 | |||
Deferred income tax | 151 | (67) | 701 | 1,073 | |||
Loss on long-lived assets | — | — | 38 | — | |||
Gain on sale of equity investment in WeGo | — | — | (196) | — | |||
Gain on PPP notes payable forgiveness | — | (3,159) | — | (3,588) | |||
Net foreign currency effects | (180) | (45) | 34 | (300) | |||
Reversal of reserves on accounts receivable and other reserves | (1,156) | (854) | (3,402) | (1,725) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 2,671 | 933 | 2,540 | (3,848) | |||
Income tax receivable | (316) | (1,294) | 354 | (2,007) | |||
Prepaid expenses and other | 179 | (6,698) | 41 | (9,473) | |||
Accounts payable | 2,458 | 3,609 | 402 | 5,024 | |||
Merchant payables | (9,110) | (8,699) | (28,894) | 16,486 | |||
Accrued expenses and other | (19) | (132) | 153 | (452) | |||
Income tax payable | — | (35) | (186) | (263) | |||
Other liabilities | (193) | (476) | 240 | (34) | |||
Net cash provided by (used in) operating activities | (3,859) | (12,667) | (20,849) | 9,283 | |||
Cash flows from investing activities: | |||||||
Purchases of intangible assets | — | — | (1,049) | — | |||
Proceeds from sale of equity investment in WeGo | — | — | 196 | — | |||
Purchases of property and equipment | (61) | 60 | (236) | (24) | |||
Net cash provided by (used in) investing activities | (61) | 60 | (1,089) | (24) | |||
Cash flows from financing activities: | |||||||
Repurchase of common stock | (1,170) | — | (1,170) | (1,583) | |||
Payment of promissory notes | — | — | — | (110) | |||
Short swing settlement | 46 | — | — | — | |||
Exercise of stock options and taxes paid for net share settlement of equity awards | — | (2,357) | 1,931 | (5,424) | |||
Net cash provided by (used in) financing activities | (1,124) | (2,357) | 761 | (7,117) | |||
Effect of exchange rate on cash, cash equivalents and restricted cash | (1,091) | (823) | (3,267) | (126) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | (6,135) | (15,787) | (24,444) | 2,016 | |||
Cash, cash equivalents and restricted cash at beginning of period | 26,680 | 82,188 | 44,989 | 64,385 | |||
Cash, cash equivalents and restricted cash at end of period | $ 20,545 | $ 66,401 | $ 20,545 | $ 66,401 |
Travelzoo | |||||||||
Segment Information from Continuing Operations | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Three months ended | Travelzoo America | Travelzoo | Jack's | Elimination | Consolidated | ||||
Revenue from unaffiliated customers | $ 10,281 | $ 4,721 | $ 847 | $ — | $ 15,849 | ||||
Intersegment revenue | 217 | (217) | — | — | — | ||||
Total net revenues | 10,498 | 4,504 | 847 | — | 15,849 | ||||
Operating income (loss) | $ 812 | $ (551) | $ 12 | $ — | $ 273 | ||||
Three months ended | Travelzoo America | Travelzoo | Jack's | Elimination | Consolidated | ||||
Revenue from unaffiliated customers | $ 9,527 | $ 5,365 | $ 796 | $ — | $ 15,688 | ||||
Intersegment revenue | 136 | (136) | — | — | — | ||||
Total net revenues | 9,663 | 5,229 | 796 | — | 15,688 | ||||
Operating income (loss) | $ (918) | $ 600 | $ 57 | $ — | $ (261) | ||||
Nine months ended | Travelzoo North America | Travelzoo | Jack's | Elimination | Consolidated | ||||
Revenue from unaffiliated customers | $ 34,126 | $ 15,243 | $ 2,622 | $ — | $ 51,991 | ||||
Intersegment revenue | 451 | (451) | — | — | — | ||||
Total net revenues | 34,577 | 14,792 | 2,622 | — | 51,991 | ||||
Operating income (loss) | $ 5,622 | $ (1,845) | $ 196 | $ — | $ 3,973 | ||||
Nine months ended | Travelzoo North America | Travelzoo | Jack's | Elimination | Consolidated | ||||
Revenue from unaffiliated customers | $ 33,005 | $ 13,503 | $ 2,543 | $ — | $ 49,051 | ||||
Intersegment revenue | 462 | (462) | — | — | — | ||||
Total net revenues | 33,467 | 13,041 | 2,543 | — | 49,051 | ||||
Operating income (loss) | $ 2,654 | $ (323) | $ 117 | $ — | $ 2,448 |
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, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
GAAP operating expense | $ 13,252 | $ 12,957 | $ 40,699 | $ 38,071 | |||
Non-GAAP adjustments: | |||||||
Amortization of intangibles (A) | 440 | 274 | 1,318 | 833 | |||
Stock option expenses (B) | 325 | 971 | 1,456 | 2,788 | |||
Severance-related expenses (C) | 74 | 95 | 136 | 493 | |||
Non-GAAP operating expense | 12,413 | 11,617 | 37,789 | 33,957 | |||
GAAP operating income (loss) | 273 | (261) | 3,973 | 2,448 | |||
Non-GAAP adjustments (A through D) | 839 | 1,340 | 2,910 | 4,114 | |||
Non-GAAP operating income | 1,112 | 1,079 | 6,883 | 6,562 |
Investor Relations:
ir@travelzoo.com
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SOURCE Travelzoo