TZOO
$10.50
Travelzoo
$.55
5.53%
Earnings Details
3rd Quarter September 2020
Wednesday, October 21, 2020 8:32:00 AM
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Summary

Travelzoo (TZOO) Recent Earnings

Travelzoo (TZOO) reported a 3rd Quarter September 2020 loss of $0.10 per share on revenue of $13.8 million. The consensus estimate was a loss of $0.15 per share on revenue of $12.0 million. Revenue fell 45.9% compared to the same quarter a year ago.

Travelzoo Inc. is an Internet media company, which informs over 27 million subscribers, as well as millions of Web site users, about the travel and entertainment deals available from thousands of Companies.

Results
Reported Earnings
($0.10)
Earnings Whisper
-
Consensus Estimate
($0.15)
Reported Revenue
$13.8 Mil
Revenue Estimate
$12.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Travelzoo Reports Third Quarter 2020 Results

NEW YORK, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Travelzoo® (NASDAQ: TZOO):

  • Consolidated revenue of $13.8 million, down 42% from $23.8 million year-over-year
  • Net loss of $1.2 million
  • Non-GAAP consolidated operating profit of $1.2 million
  • Earnings per share (EPS) of ($0.10) attributable to Travelzoo from continuing operations

Travelzoo, a global Internet media company that publishes exclusive offers and experiences for members, today announced financial results for the third quarter ended September 30, 2020. Consolidated revenue was $13.8 million, down 42% from $23.8 million year-over-year. Revenue increased by 97% from $7.0 million in Q2 2020. 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 $1.1 million for Q3 2020. At the consolidated level, including minority interests, the reported net loss from continuing operations was $1.2 million. EPS from continuing operations was ($0.10), down from $0.21 in the prior-year period.

Non-GAAP operating profit was $1.2 million. The calculation of non-GAAP operating profit excludes amortization of intangibles ($0.3 million), stock option expenses ($1.2 million), and severance-related expenses ($0.9 million). See section “Non-GAAP Financial Measures” below.

“A strong improvement in our business is evident compared to Q2. We are seeing irresistibly priced deals coming to the market, and Travelzoo, as the most trusted media brand publishing and recommending travel deals, is telling its members about the very best deals," said Holger Bartel, Global CEO.

Cash Position
As of September 30, 2020, consolidated cash, cash equivalents and restricted cash were $51.7 million. In April 2020 and May 2020, Travelzoo received low-interest government loans under the Paycheck Protection Program (PPP) of $3.1 million and $535,000, respectively. No further applications for loans have been made since then and the company does not anticipate requiring any further loans.

Travelzoo North America
North America business segment revenue decreased 40% year-over-year to $9.1 million. North America business segment revenue increased by 118% from $4.2 million in Q2 2020. Operating loss for Q3 was $696,000, or (8%) of revenue, compared to an operating profit of $2.6 million, or 17% of revenue in the prior-year period.

Travelzoo Europe
Europe business segment revenue decreased 57% year-over-year to $3.7 million. In constant currencies, revenue decreased 62% year-over-year. Europe business segment revenue increased by 97% from $1.9 million in Q2 2020. Operating loss for Q3 was $757,000, or (21%) of revenue, compared to an operating profit of $815,000, or 10% of revenue in the prior-year period.

Jack’s Flight Club
On January 13, 2020, Travelzoo acquired 60% of Jack’s Flight Club, a subscription service. In Q3 2020, the Jack's Flight Club business segment generated $1.1 million in revenue from subscriptions with operating profit of $731,000. After consolidation with Travelzoo, Jack’s Flight Club's net income was $312,000, with $187,000 attributable to Travelzoo as a result of recording $333,000 of amortization of intangible assets related to the acquisition and a haircut of revenue (derived from deferred revenue sold prior to acquisition) of $148,000 due to purchase accounting in accordance with U.S. GAAP.

Members and Subscribers
As of September 30, 2020, we had 30.5 million members worldwide. In Europe, the unduplicated number of Travelzoo members was 8.9 million as of September 30, 2020, down 3% from September 30, 2019. In North America, the unduplicated number of Travelzoo members was 16.5 million as of September 30, 2020, down 7% from September 30, 2019. Jack’s Flight Club had 1.7 million subscribers as of September 30, 2020, up 9% from September 30, 2019. 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.

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 was classified as discontinued operations at 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 benefit was $244,000 in Q3 2020, compared to an income tax expense of $860,000 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, 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 see a trend of recovery of our revenue. We have been able to reduce our operating expenses significantly. As a result of recovery of revenue and substantially lower operating expenses, we currently expect to achieve for Q4 a result close to break-even or a profit.

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 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 and Top 20 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,
 2020 2019 2020 2019
Revenues$13,787   $23,833   $41,118   $79,599  
Cost of revenues2,924   2,852   7,768   8,389  
Gross profit10,863   20,981   33,350   71,210  
Operating expenses:       
Sales and marketing6,929   11,967   24,311   38,605  
Product development592   1,434   2,586   4,856  
General and administrative4,545   4,188   16,709   13,634  
Impairment of intangible asset and goodwill      2,920     
Total operating expenses12,066   17,589   46,526   57,095  
Operating income (loss)(1,203)  3,392   (13,176)  14,115  
Other income (loss), net(37)  32   (222)  48  
Income (loss) from continuing operations before income taxes(1,240)  3,424   (13,398)  14,163  
Income tax expense (benefit)(244)  860   (2,070)  3,596  
Income (loss) from continuing operations(996)  2,564   (11,328)  10,567  
Loss from discontinued operations, net of tax(230)  (2,258)  (3,944)  (5,813) 
Net income (loss)(1,226)  306   (15,272)  4,754  
Net income (loss) attributable to non-controlling interest125      (1,122)    
Net income (loss) attributable to Travelzoo$(1,351)  $306   $(14,150)  $4,754  
        
Net income (loss) attributable to Travelzoo—continuing operations$(1,121)  $2,564   $(10,206)  $10,567  
Net income (loss) attributable to Travelzoo—discontinued operations$(230)  $(2,258)  $(3,944)  $(5,813) 
        
Income (loss) per share—basic       
Continuing operations$(0.10)  $0.22   $(0.90)  $0.89  
Discontinued operations$(0.02)  $(0.19)  $(0.35)  $(0.49) 
Net income (loss) per share —basic$(0.12)  $0.03   $(1.25)  $0.40  
        
Income (loss) per share—diluted       
Continuing operations$(0.10)  $0.21   $(0.90)  $0.87  
Discontinued operations$(0.02)  $(0.19)  $(0.35)  $(0.49) 
Net income (loss) per share—diluted$(0.12)  $0.03   $(1.25)  $0.39  
Shares used in per share calculation from continuing operations—basic11,310   11,767   11,353   11,894  
Shares used in per share calculation from discontinued operations—basic11,310   11,767   11,353   11,894  
Shares used in per share calculation from continuing operations—diluted11,310   11,956   11,353   12,152  
Shares used in per share calculation from discontinued operations—diluted11,310   11,767   11,353   11,894  



Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)September 30,
2020
 December 31,
2019
Assets   
Current assets:   
Cash and cash equivalents$50,528   $18,743  
Accounts receivable, net4,195   11,209  
Prepaid income taxes304   989  
Deposits98   105  
Prepaid expenses and other990   2,288  
Assets from discontinued operations454   3,961  
Total current assets56,569   37,295  
Deposits and other806   572  
Deferred tax assets4,415   2,051  
Restricted cash1,155   1,135  
Investment in WeGo2,101   2,484  
Operating lease right-of-use assets9,076   8,140  
Property and equipment, net1,499   2,861  
Intangible assets, net4,867     
Goodwill10,944     
Total assets$91,432   $54,538  
Liabilities and Stockholders’ Equity    
Current liabilities:   
Accounts payable$53,018   $19,349  
Accrued expenses and other6,953   6,281  
Deferred revenue2,777   786  
Operating lease liabilities3,988   4,847  
Promissory notes payable1,700     
Income tax payable373   914  
Liabilities from discontinued operations1,509   3,135  
Total current liabilities70,318   35,312  
PPP notes payable3,663     
Deferred tax liabilities851     
Long-term operating lease liabilities11,425   7,920  
Other long-term liabilities473   443  
Total liabilities86,730   43,675  
Non-controlling interest4,633     
Common stock113   115  
Additional paid-in capital5,220     
Retained earnings (accumulated deficit)(1,130)  14,200  
Accumulated other comprehensive loss(4,134)  (3,452) 
Total stockholders’ equity69   10,863  
Total liabilities and stockholders’ equity$91,432   $54,538  
          

Travelzoo
Segment Information from Continuing Operations
(Unaudited)

(In thousands)

Three months ended September 30, 2020Travelzoo
North

America
 Travelzoo
Europe
 Jack's
Flight Club
 Elimination Consolidated
Revenue from unaffiliated customers$9,002   $3,798   $987  $   $13,787  
Intersegment revenue141   (141)         
Total net revenues9,143   3,657   987     13,787  
Operating income (loss)$(696)  $(757)  $250  $   $(1,203) 
          
Three months ended September 30, 2019Travelzoo
North

America
 Travelzoo
Europe
 Jack's
Flight Club
 Elimination Consolidated
Revenue from unaffiliated customers$14,444   $9,432   $  $(43)  $23,833  
Intersegment revenue895   (938)    43     
Total net revenues15,339   8,494       23,833  
Operating income (loss)$2,620   $815   $  $(43)  $3,392  


Nine months ended September 30, 2020Travelzoo
North

America
 Travelzoo
Europe
 Jack's
Flight Club
 Elimination Consolidated
Revenue from unaffiliated customers$25,805   $12,706   $2,615   $(8)  $41,118  
Intersegment revenue237   (245)     8     
Total net revenues26,042   12,461   2,615      41,118  
Operating loss$(6,374)  $(3,781)  $(3,013)  $(8)  $(13,176) 
          
Nine months ended September 30, 2019Travelzoo
North

America
 Travelzoo
Europe
 Jack's
Flight Club
 Elimination Consolidated
Revenue from unaffiliated customers$50,074   $29,619   $   $(94)  $79,599  
Intersegment revenue1,776   (1,870)     94     
Total net revenues51,850   27,749      0 79,599  
Operating income (loss)$10,673   $3,536   $   $(94)  $14,115  


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,
 2020 2019 2020 2019
GAAP operating expense$12,066   $17,589  $46,526   $57,095 
Non-GAAP adjustments:       
Impairment of intangible and goodwill (A)     2,920    
Amortization of intangibles (B)333     944    
Stock option expenses (C)1,189   394  5,243   876 
Severance-related expenses (D)855   35  1,139   85 
Non-GAAP operating expense9,689   17,160  36,280   56,134 
        
GAAP operating income (loss)(1,203)  3,392  (13,176)  14,115 
Non-GAAP adjustments (A through D)2,377   429  10,246   961 
Non-GAAP operating income (loss)1,174   3,821  (2,930)  15,076 
        

Investor Relations:
Almira Pusch
ir@travelzoo.com


Travelzoo-Logo 11_30_2017 (1).jpg

Source: Travelzoo