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HomeIndustriesTravelzoo Reports Fourth Quarter 2023 Results

Travelzoo Reports Fourth Quarter 2023 Results

NEW YORK, Feb. 28, 2024 /PRNewswire/ — Travelzoo® (NASDAQ: TZOO):

  • Revenue of $21.1 million, up 14% year-over-year
  • Consolidated operating profit of $4.5 million
  • Non-GAAP consolidated operating profit of $5.2 million
  • Cash flow from operations of $1.4 million
  • Earnings per share (EPS) of $0.27

Travelzoo, the club for travel enthusiasts, today announced financial results for the fourth quarter ended December 31, 2023. Consolidated revenue was $21.1 million, up 14% from $18.6 million year-over-year. In constant currencies, revenue was $20.8 million, up 12% year-over-year. Travelzoo’s reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members.

Net income attributable to Travelzoo was $3.7 million for Q4 2023, or $0.27 per share, compared with $0.20 in the prior-year period. Net income attributable to Travelzoo from continuing operations was $3.3 million for Q4 2023, or $0.24 per share, compared with $0.20 in the prior-year period.

Non-GAAP operating profit was $5.2 million. Non-GAAP operating profit excludes amortization of intangibles ($0.4 million) and stock option expenses ($0.4 million). Please refer to “Non-GAAP Financial Measures” and the tabular reconciliation below.

“Q4 concluded a strong year for Travelzoo, with each quarter achieving year-over-year revenue growth, profitability and positive cash flow from operations,” said Holger Bartel, Travelzoo’s Global CEO. “We will continue to leverage Travelzoo’s global reach, trusted brand, and strong relationships with top travel suppliers to negotiate more exclusive offers for members. It is in times of large increases in travel prices that Travelzoo is most valuable for consumers. Travelzoo members enjoy high quality travel experiences that represent outstanding value.”

“With more than 30 million members, 8 million mobile app users, and 5 million social media followers, Travelzoo is loved by travel enthusiasts who are affluent, active, and open to new experiences.”

Cash Position

As of December 31, 2023, consolidated cash, cash equivalents and restricted cash were $16.4 million. Net cash provided by operations was $1.4 million.

Travelzoo North America

North America business segment revenue increased 5% year-over-year to $13.8 million. Operating profit for Q4 2023 was $4.0 million, or 29% of revenue, compared to operating profit of $4.2 million in the prior-year period.

Travelzoo Europe

Europe business segment revenue increased 34% year-over-year to $6.3 million. In constant currencies, Europe business segment revenue increased 27% year-over-year. Operating profit for Q4 2023 was $832,000, or 13% of revenue, compared to operating profit of $42,000 in the prior-year period.

Jack’s Flight Club 

Jack’s Flight Club business segment revenue, which is impacted by the accounting for an intragroup marketing agreement, increased 11% year-over-year to $949,000. Revenue from unaffiliated customers increased 29% year-over-year to $1.1 million. Jack’s Flight Club is a membership subscription service in which Travelzoo has a 60% ownership interest. The number of premium subscribers increased 21% year-over-year. Revenue from subscriptions is recognized monthly pro rata over the subscription period (quarterly, semi-annually, annually). Non-GAAP operating loss for Q4 2023 was $61,000, compared to a non-GAAP operating profit of $220,000 in the prior-year period. Non-GAAP operating loss excludes amortization of intangibles ($0.2 million) related to the acquisition of Travelzoo’s ownership interest in Jack’s Flight Club in 2020. The Q4 2023 operating loss was caused by marketing expenses in connection with growth in members.

New Initiatives

New Initiatives business segment revenue, which includes Licensing and Travelzoo META, was $155,000. Operating loss for Q4 2023 was $104,000.

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 $23,000 in licensing revenue from the licensee in Japan in Q4 2023. Travelzoo recorded $9,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q4 2023. Licensing revenue is expected to increase going forward.

Members and Subscribers 

As of December 31, 2023, we were 31.1 million members worldwide, up from 30.4 million as of December 31, 2022. In North America, Travelzoo had 16.2 million unduplicated members as of December 31, 2023, consistent with December 31, 2022. In Europe, Travelzoo had 9.2 million unduplicated members as of December 31, 2023, up from 9.0 million as of December 31, 2022. Jack’s Flight Club had 2.4 million subscribers as of December 31, 2023, up from 1.9 million as of December 31, 2022.

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. 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

A provision of $1.6 million for income taxes was recorded for Q4 2023, compared to an income tax expense of $1.1 million in the prior-year period. Travelzoo intends to utilize available net operating losses (NOLs) to largely offset its actual tax liability for Q4 2023.

Looking Ahead 

For Q1 2024, we expect continued growth in revenue, albeit at a smaller pace than 2023. We expect higher cash flow from operations and higher profitability. In December 2023, we announced the introduction of a membership fee for Travelzoo beginning January 1, 2024. Existing members as of December 31, 2023, are exempt from the fee during 2024. Therefore, we do not anticipate to generate membership fee revenue from existing 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: impairment of intangible 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.

Conference Call

Travelzoo will host a conference call to discuss fourth quarter 2023 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

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)



Three months ended


Twelve months ended


December 31,


December 31,


2023


2022


2023


2022

Revenues

$   21,149


$   18,608


$    84,477


$    70,599

Cost of revenues

2,698


2,684


10,934


10,003

Gross profit

18,451


15,924


73,543


60,596

Operating expenses:








Sales and marketing

8,496


7,499


37,774


33,072

Product development

580


673


2,113


2,064

General and administrative

4,896


4,168


18,084


17,903

Total operating expenses

13,972


12,340


57,971


53,039

Operating income

4,479


3,584


15,572


7,557

Other income (expense), net

398


(53)


1,541


2,401

Income from continuing operations before income taxes

4,877


3,531


17,113


9,958

Income tax expense

1,618


1,057


5,105


3,270

Income from continuing operations

3,259


2,474


12,008


6,688

Income (loss) from discontinued operations, net of tax

465


(63)


460


(59)

Net income

3,724


2,411


12,468


6,629

Net income (loss) attributable to non-controlling interest

5


(41)


102


(5)

Net income attributable to Travelzoo

$     3,719


$     2,452


$    12,366


$      6,634









Net income attributable to Travelzoo—continuing operations

$     3,254


$     2,515


$    11,906


$      6,693

Net income (loss) attributable to Travelzoo—discontinued operations

$        465


$         (63)


$         460


$          (59)









Income per share—basic








Continuing operations

$       0.24


$       0.20


$        0.80


$        0.54

Discontinued operations

$       0.03


$           —


$        0.03


$            —

Net income per share—basic

$       0.27


$       0.20


$        0.83


$        0.54









Income per share—diluted








Continuing operations

$       0.24


$       0.20


$        0.80


$        0.53

Discontinued operations

$       0.03


$           —


$        0.03


$            —

Net income per share—diluted

$       0.27


$       0.20


$        0.83


$        0.53

Shares used in per share calculation from continuing operations—basic

13,873


12,425


14,897


12,372

Shares used in per share calculation from discontinued operations—basic

13,873


12,425


14,897


12,372

Shares used in per share calculation from continuing operations—diluted

13,946


12,487


14,964


12,561

Shares used in per share calculation from discontinued operations—diluted

13,946


12,487


14,964


12,561

Travelzoo

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)



December 31,
2023


December 31,
2022

Assets




Current assets:




Cash and cash equivalents

$             15,713


$            18,693

Accounts receivable, net

12,965


13,820

Prepaid income taxes

629


1,778

Prepaid expenses and other

1,460


1,289

Assets from discontinued operations

1


11

Total current assets

30,768


35,591

Deposits and other

1,115


5,094

Deferred tax assets

3,196


3,222

Restricted cash

675


675

Operating lease right-of-use assets

6,015


7,440

Property and equipment, net

578


657

Intangible assets, net

2,091


3,651

Goodwill

10,944


10,944

Total assets

$             55,382


$            67,274

Liabilities and Equity




Current liabilities:




Accounts payable

$               4,546


$              4,271

Merchant payables

20,622


32,574

Accrued expenses and other

3,658


5,049

Deferred revenue

2,044


2,216

Income tax payable

766


Operating lease liabilities

2,530


2,972

Liabilities from discontinued operations

24


452

Total current liabilities

34,190


47,534

Long-term tax liabilities

4,681


1,569

Long-term operating lease liabilities

6,717


8,326

Other long-term liabilities

911


994

Total liabilities

46,499


58,423

Common stock

136


165

Treasury stock (at cost)


(7,130)

Tax indemnification

(9,537)


(9,537)

Note receivable from shareholder

(1,753)


(4,753)

Additional paid-in capital

439


23,274

Retained earnings

19,508


7,142

Accumulated other comprehensive loss

(4,607)


(4,905)

Total Travelzoo stockholders’ equity

4,186


4,256

Non-controlling interest

4,697


4,595

Total stockholder’s equity

8,883


8,851

Total liabilities and equity

$             55,382


$            67,274

Travelzoo

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



Three months ended


Twelve months ended


December 31,


December 31,


2023


2022


2023


2022

Cash flows from operating activities:








Net income

$     3,724


$     2,411


$   12,468


$     6,629

Adjustments to reconcile net income to net cash provided by (used in) operating activities:








Depreciation and amortization

476


537


1,893


2,189

Stock-based compensation

380


349


1,567


1,805

Deferred income tax

169


73


58


774

Impairment of intangible assets and goodwill


200



200

Loss on long-lived assets


9


10


47

Gain on sale of equity investment in WeGo




(196)

Net foreign currency effects

(115)


198


(62)


232

Reversal of reserves on accounts receivable and other reserves

(72)


(965)


(1,016)


(4,367)

Changes in operating assets and liabilities:








Accounts receivable

(2,231)


(1,223)


1,086


1,317

Prepaid income taxes

61


1,098


1,189


1,452

Prepaid expenses, deposits and other

1,603


1,586


3,835


1,627

Accounts payable

1,181


501


(523)


902

Merchant payables

(3,338)


(6,334)


(12,095)


(35,228)

Accrued expenses and other

(1,450)


(649)


(876)


(496)

Income tax payable

456


23


749


(162)

Other liabilities

547


(86)


2,401


154

Net cash provided by (used in) operating activities

1,391


(2,272)


10,684


(23,121)

Cash flows from investing activities:








Proceeds from repayment of note receivable

103



216


Purchases of intangible assets




(1,049)

Proceeds from sale of equity investment in WeGo




196

Purchases of property and equipment

(38)


(226)


(255)


(462)

Net cash (provided by) used in investing activities

65


(226)


(39)


(1,315)

Cash flows from financing activities:








Repurchase of common stock

(5,016)


(472)


(16,782)


(1,642)

Proceeds from short swing settlement




46

Proceeds from issuance of common stock



1,006




1,006

Proceeds from note receivable from shareholder

3,000



3,000


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

(69)


(13)


(368)


1,872

Net cash provided by (used in) financing activities

(2,085)


521


(14,150)


1,282

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

436


810


516


(2,457)

Net decrease in cash, cash equivalents and restricted cash

(193)


(1,167)


(2,989)


(25,611)

Cash, cash equivalents and restricted cash at beginning of period

16,582


20,545


19,378


44,989

Cash, cash equivalents and restricted cash at end of period

$   16,389


$   19,378


$   16,389


$   19,378

Travelzoo

Segment Information from Continuing Operations

(Unaudited)

(In thousands)

 


Three months ended December 31, 2023

Travelzoo
North

America


Travelzoo
Europe


Jack’s
Flight Club


New
Initiatives


Consolidated

Revenue from unaffiliated customers

$       13,534


$         6,354


$         1,106


$            155


$          21,149

Intersegment revenue (loss)

247


(90)


(157)



Total net revenues

13,781


6,264


949


155


21,149

Operating income (loss)

$         3,970


$            832


$          (219)


$          (104)


$            4,479











Three months ended December 31, 2022

Travelzoo
North

America


Travelzoo
Europe


Jack’s
Flight Club


New
Initiatives


Consolidated

Revenue from unaffiliated customers

$       12,921


$         4,825


$            855


$                7


$          18,608

Intersegment revenue (loss)

162


(162)




Total net revenues

13,083


4,663


855


7


18,608

Operating income (loss)

$         4,235


$              42


$          (196)


$          (497)


$            3,584











Twelve months ended December 31, 2023

Travelzoo
North

America


Travelzoo
Europe


Jack’s
Flight Club


New
Initiatives


Consolidated

Revenue from unaffiliated customers

$       54,837


$       25,291


$         4,145


$            204


$           84,477

Intersegment revenue (loss)

1,243


(1,270)


27



Total net revenues

56,080


24,021


4,172


204


84,477

Operating income (loss)

$       15,254


$         1,317


$             (23)


$          (976)


$           15,572











Twelve months ended December 31, 2022

Travelzoo
North

America


Travelzoo
Europe


Jack’s
Flight Club


New
Initiatives


Consolidated

Revenue from unaffiliated customers

$       47,029


$       20,068


$         3,477


$              25


$           70,599

Intersegment revenue (loss)

613


(613)




Total net revenues

47,642


19,455


3,477


25


70,599

Operating income (loss)

$       10,348


$        (1,803)


$               —


$          (988)


$             7,557

Travelzoo

Reconciliation of GAAP to Non-GAAP Information

(Unaudited)

(In thousands, except per share amounts)



Three months ended


Twelve months ended


December 31,


December 31,


2023


2022


2023


2022

GAAP operating expense

$        13,972


$        12,340


$        57,971


$        53,039

Non-GAAP adjustments:








Impairment of intangible and goodwill (A)


200



200

Amortization of intangibles (A)

389


453


1,560


1,771

Stock option expenses (B)

380


349


1,566


1,805

Severance-related expenses (C)


200


56


336

Non-GAAP operating expense

13,203


11,138


54,789


48,927









GAAP operating income

4,479


3,584


15,572


7,557

Non-GAAP adjustments (A through C)

769


1,202


3,182


4,112

Non-GAAP operating income

5,248


4,786


18,754


11,669

Investor Relations:
[email protected]  

SOURCE Travelzoo

Originally published at https://www.prnewswire.com/news-releases/travelzoo-reports-fourth-quarter-2023-results-302074068.html
Images courtesy of https://pixabay.com

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