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 PositionAs 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 AmericaNorth 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 EuropeEurope 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 ClubJack'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 InitiativesNew 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 SubscribersAs 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 OperationsIn 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 TaxesA 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 ProgramDuring Q3 2024, the Company repurchased 552,679 shares of its outstanding common stock.
Looking AheadFor 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 MeasuresManagement 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 CallTravelzoo 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 TravelzooWe, 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 Avenue35th FloorNew York, NY 10022
Investor
TravelzooCondensed 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)
$ ,
