Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-50171 | |
Entity Registrant Name | Travelzoo | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-4415727 | |
Entity Address, Address Line One | 590 Madison Avenue | |
Entity Address, Address Line Two | 35th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
City Area Code | 212 | |
Local Phone Number | 484-4900 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,310,431 | |
Entity Central Index Key | 0001133311 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 50,528 | $ 18,743 |
Accounts receivable, less allowance for doubtful accounts of $2,841 and $1,106 as of September 30, 2020 and December 31, 2019, respectively | 4,195 | 11,209 |
Prepaid income taxes | 304 | 989 |
Deposits | 98 | 105 |
Prepaid expenses and other | 990 | 2,288 |
Assets from discontinued operations | 454 | 3,961 |
Total current assets | 56,569 | 37,295 |
Deposits and other | 806 | 572 |
Deferred tax assets | 4,415 | 2,051 |
Restricted cash | 1,155 | 1,135 |
Investment in WeGo | 2,101 | 2,484 |
Operating lease right-of-use assets | 9,076 | 8,140 |
Property and equipment, net | 1,499 | 2,861 |
Intangible assets, net | 4,867 | 0 |
Goodwill | 10,944 | 0 |
Total assets | 91,432 | 54,538 |
Current liabilities: | ||
Accounts payable | 11,296 | 6,382 |
Merchant payable | 41,722 | 12,967 |
Accrued expenses and other | 6,953 | 6,281 |
Deferred revenue | 2,777 | 786 |
Operating lease liabilities | 3,988 | 4,847 |
Promissory notes payable | 1,700 | 0 |
Income tax payable | 373 | 914 |
Liabilities from discontinued operations | 1,509 | 3,135 |
Total current liabilities | 70,318 | 35,312 |
PPP notes payable | 3,663 | 0 |
Deferred tax liabilities | 851 | 0 |
Long-term operating lease liabilities | 11,425 | 7,920 |
Other long-term liabilities | 473 | 443 |
Total liabilities | 86,730 | 43,675 |
Commitments and contingencies | ||
Non-controlling interest | 4,633 | 0 |
Stockholders’ equity: | ||
Common stock, $0.01 par value (20,000 shares authorized; 11,310 and 11,479 shares issued and outstanding as of September 30, 2020 and December 31, 2019) | 113 | 115 |
Additional paid in capital | 5,220 | 0 |
Retained earnings (accumulated deficit) | (1,130) | 14,200 |
Accumulated other comprehensive loss | (4,134) | (3,452) |
Total stockholders’ equity | 69 | 10,863 |
Total liabilities and stockholders’ equity | $ 91,432 | $ 54,538 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,841 | $ 1,106 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 11,310,000 | 11,479,000 |
Common stock, shares outstanding (in shares) | 11,310,000 | 11,479,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | $ 13,787 | $ 23,833 | $ 41,118 | $ 79,599 |
Cost of revenues | 2,924 | 2,852 | 7,768 | 8,389 |
Gross profit | 10,863 | 20,981 | 33,350 | 71,210 |
Operating expenses: | ||||
Sales and marketing | 6,929 | 11,967 | 24,311 | 38,605 |
Product development | 592 | 1,434 | 2,586 | 4,856 |
General and administrative | 4,545 | 4,188 | 16,709 | 13,634 |
Impairment of intangible assets and goodwill | 0 | 0 | 2,920 | 0 |
Total operating expenses | 12,066 | 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 |
Income (loss) from discontinued operations, net of taxes | (230) | (2,258) | (3,944) | (5,813) |
Net income (loss) | (1,226) | 306 | (15,272) | 4,754 |
Net income (loss) attributable to non-controlling interest | 125 | 0 | (1,122) | 0 |
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 (in dollars per share) | $ (0.10) | $ 0.22 | $ (0.90) | $ 0.89 |
Discontinued operations (in dollars per share) | (0.02) | (0.19) | (0.35) | (0.49) |
Net income (loss) per share - basic (in dollars per share) | (0.12) | 0.03 | (1.25) | 0.40 |
Income (loss) per share—diluted | ||||
Continuing operations (in dollars per share) | (0.10) | 0.21 | (0.90) | 0.87 |
Discontinuing operations (in dollars per share) | (0.02) | (0.19) | (0.35) | (0.49) |
Net income (loss) per share - diluted (in dollars per share) | $ (0.12) | $ 0.03 | $ (1.25) | $ 0.39 |
Shares used in per share calculation from operations—basic (in shares) | 11,310 | 11,767 | 11,353 | 11,894 |
Shares used in per share calculation from operations—diluted (in shares) | 11,310 | 11,956 | 11,353 | 12,152 |
Continuing Operations | ||||
Income (loss) per share—diluted | ||||
Shares used in per share calculation from operations—basic (in shares) | 11,310 | 11,767 | 11,353 | 11,894 |
Shares used in per share calculation from operations—diluted (in shares) | 11,310 | 11,956 | 11,353 | 12,152 |
Discontinued Operations | ||||
Income (loss) per share—diluted | ||||
Shares used in per share calculation from operations—basic (in shares) | 11,310 | 11,767 | 11,353 | 11,894 |
Shares used in per share calculation from operations—diluted (in shares) | 11,310 | 11,767 | 11,353 | 11,894 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (1,226) | $ 306 | $ (15,272) | $ 4,754 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 532 | (221) | (682) | (236) |
Total comprehensive income (loss) | $ (694) | $ 85 | $ (15,954) | $ 4,518 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (15,272) | $ 4,754 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 1,806 | 999 |
Stock-based compensation | 5,243 | 876 |
Deferred income tax | (1,747) | 431 |
Impairment of intangible assets and goodwill | 2,920 | 0 |
Loss on long-lived assets | 437 | 0 |
Loss on equity investment in WeGo | 474 | 611 |
Gain on promissory notes payable settlement | (1,500) | 0 |
Net foreign currency effect | (542) | 59 |
Provision for loss on accounts receivable, refund reserve and other | 3,923 | 132 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 6,246 | (127) |
Prepaid income taxes | 685 | (541) |
Prepaid expenses and other | 1,626 | (3) |
Accounts payable and merchant payable | 33,241 | (3,971) |
Accrued expenses and other | (1,381) | (442) |
Deferred revenue | 1,228 | 0 |
Income tax payable | (479) | (36) |
Other liabilities | 676 | (816) |
Net cash provided by operating activities | 37,584 | 1,926 |
Cash flows from investing activities: | ||
Acquisition of business, net of cash acquired | (679) | 0 |
Other investments | (430) | (673) |
Purchases of property and equipment | (252) | (350) |
Net cash used in investing activities | (1,361) | (1,023) |
Cash flows from financing activities: | ||
Repurchase of common stock | (1,205) | (8,768) |
Payment of promissory notes payable | (7,800) | 0 |
Proceeds from PPP notes payable | 3,663 | 0 |
Proceeds from exercise of stock options, net of taxes paid for net share settlement | 0 | 1,712 |
Net cash used in financing activities | (5,342) | (7,056) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 393 | (395) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 31,274 | (6,548) |
Cash, cash equivalents and restricted cash at beginning of period | 20,710 | 19,461 |
Cash, cash equivalents and restricted cash at end of period | 51,984 | 12,913 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes, net | 1,230 | 3,776 |
Right-of-use assets obtained in exchange for lease obligations—operating leases | 3,207 | 7,578 |
Cash paid for amounts included in the measurement of lease liabilities | 3,063 | 4,084 |
Non-cash investing and financing activities: | ||
Issuance of promissory notes to the sellers of Jack's Flight Club | $ 11,000 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2018 | 11,962 | ||||
Beginning balance at Dec. 31, 2018 | $ 14,059 | $ 120 | $ 0 | $ 18,153 | $ (4,214) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 163 | 163 | |||
Repurchase and retirement of common stock (in shares) | (100) | ||||
Repurchase and retirement of common stock | (1,590) | $ (1) | (137) | (1,452) | |
Taxes paid for net share settlement of equity awards (in shares) | 3 | ||||
Taxes paid for net share settlement of equity awards | (26) | (26) | |||
Foreign currency translation adjustment | (89) | (89) | |||
Net income (loss) - Travelzoo | 3,120 | 3,120 | |||
Ending balance (in shares) at Mar. 31, 2019 | 11,865 | ||||
Ending balance at Mar. 31, 2019 | 15,637 | $ 119 | 0 | 19,821 | (4,303) |
Beginning balance (in shares) at Dec. 31, 2018 | 11,962 | ||||
Beginning balance at Dec. 31, 2018 | 14,059 | $ 120 | 0 | 18,153 | (4,214) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) - Travelzoo | 4,754 | ||||
Ending balance (in shares) at Sep. 30, 2019 | 11,679 | ||||
Ending balance at Sep. 30, 2019 | 12,398 | $ 117 | 0 | 16,731 | (4,450) |
Beginning balance (in shares) at Dec. 31, 2018 | 11,962 | ||||
Beginning balance at Dec. 31, 2018 | 14,059 | $ 120 | 0 | 18,153 | (4,214) |
Ending balance (in shares) at Dec. 31, 2019 | 11,479 | ||||
Ending balance at Dec. 31, 2019 | 10,863 | $ 115 | 0 | 14,200 | (3,452) |
Beginning balance (in shares) at Mar. 31, 2019 | 11,865 | ||||
Beginning balance at Mar. 31, 2019 | 15,637 | $ 119 | 0 | 19,821 | (4,303) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 319 | 319 | |||
Repurchase and retirement of common stock (in shares) | (250) | ||||
Repurchase and retirement of common stock | (4,869) | $ (2) | (2,055) | (2,812) | |
Exercise of stock options and taxes paid for net share settlement of equity awards (in shares) | 250 | ||||
Exercise of stock options and taxes paid for net share settlement of equity awards | 1,738 | $ 2 | 1,736 | ||
Foreign currency translation adjustment | 74 | 74 | |||
Net income (loss) - Travelzoo | 1,328 | 1,328 | |||
Ending balance (in shares) at Jun. 30, 2019 | 11,865 | ||||
Ending balance at Jun. 30, 2019 | 14,227 | $ 119 | 0 | 18,337 | (4,229) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 394 | 394 | |||
Repurchase and retirement of common stock (in shares) | (186) | ||||
Repurchase and retirement of common stock | (2,308) | $ (2) | (394) | (1,912) | |
Foreign currency translation adjustment | (221) | (221) | |||
Net income (loss) - Travelzoo | 306 | 306 | |||
Ending balance (in shares) at Sep. 30, 2019 | 11,679 | ||||
Ending balance at Sep. 30, 2019 | 12,398 | $ 117 | 0 | 16,731 | (4,450) |
Beginning balance (in shares) at Dec. 31, 2019 | 11,479 | ||||
Beginning balance at Dec. 31, 2019 | 10,863 | $ 115 | 0 | 14,200 | (3,452) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 23 | 23 | |||
Repurchase and retirement of common stock (in shares) | (169) | ||||
Repurchase and retirement of common stock | (1,205) | $ (2) | (23) | (1,180) | |
Foreign currency translation adjustment | (871) | (871) | |||
Net income (loss) - Travelzoo | (6,609) | (6,609) | |||
Ending balance (in shares) at Mar. 31, 2020 | 11,310 | ||||
Ending balance at Mar. 31, 2020 | 2,201 | $ 113 | 0 | 6,411 | (4,323) |
Beginning balance (in shares) at Dec. 31, 2019 | 11,479 | ||||
Beginning balance at Dec. 31, 2019 | 10,863 | $ 115 | 0 | 14,200 | (3,452) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) - Travelzoo | (14,150) | ||||
Ending balance (in shares) at Sep. 30, 2020 | 11,310 | ||||
Ending balance at Sep. 30, 2020 | 69 | $ 113 | 5,220 | (1,130) | (4,134) |
Beginning balance (in shares) at Mar. 31, 2020 | 11,310 | ||||
Beginning balance at Mar. 31, 2020 | 2,201 | $ 113 | 0 | 6,411 | (4,323) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 4,031 | 4,031 | |||
Foreign currency translation adjustment | (343) | (343) | |||
Net income (loss) - Travelzoo | (6,190) | (6,190) | |||
Ending balance (in shares) at Jun. 30, 2020 | 11,310 | ||||
Ending balance at Jun. 30, 2020 | (301) | $ 113 | 4,031 | 221 | (4,666) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 1,189 | 1,189 | |||
Foreign currency translation adjustment | 532 | 532 | |||
Net income (loss) - Travelzoo | (1,351) | (1,351) | |||
Ending balance (in shares) at Sep. 30, 2020 | 11,310 | ||||
Ending balance at Sep. 30, 2020 | $ 69 | $ 113 | $ 5,220 | $ (1,130) | $ (4,134) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) The Company and Basis of Presentation Travelzoo® is a global Internet media company. We provide 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. Travelzoo's revenues are generated primarily from advertising fees. Our publications and products include the Travelzoo website, the Travelzoo iPhone and Android apps, the Travelzoo Top 20® email newsletter, the Newsflash email alert service, and the Travelzoo Network , a network of third-party websites that list travel deals published by Travelzoo (“Travelzoo” or the "Company"). Our Travelzoo website includes Local Deals and Getaways listings that allow our members to purchase vouchers for deals from local businesses such as spas, hotels and restaurants. We receive a percentage of the face value of the voucher from the local businesses. APAC Exit In March 2020, Travelzoo exited its loss-making Asia Pacific business. The Company’s Asia Pacific business was classified as discontinued operations at March 31, 2020. Prior periods have been reclassified to conform with the current presentation. On June 16, 2020, in connection with its Asia Pacific exit plan, the Company completed a sale of 100% of the outstanding capital stock of Travelzoo Japan K.K, a stock company organized under the laws of Japan (“Travelzoo Japan”), to Mr. Hajime Suzuki, the former General Manager of Japan (the "Japan Buyer") for consideration of 1 Japanese Yen. The Company recorded approximately $128,000 loss upon disposal of Japan in the Condensed Consolidated Financial Statements during the nine months ended September 30, 2020. The parties also entered into a License Agreement, whereby the Travelzoo Japan obtained a license to use the intellectual property of Travelzoo exclusively in Japan in exchange for quarterly royalty payments based on net revenue over a 5 year term, with an option to renew. An interest free loan was provided to the Japan Buyer for JPY 46 million (approximately $430,000) to be repaid over 3 years which the Company recorded as other assets on the unaudited condensed consolidated balance sheet as of September 30, 2020. Additionally, on August 24, 2020, the Company completed a sale of 100% of the outstanding capital stock of Travelzoo (Singapore) Pty Ltd, a limited company organized under the laws of Singapore (“Travelzoo Singapore”), to an unaffiliated entity, Finest Hotels Pty Ltd, a limited company organized under the laws of Australia (“AUS Buyer”), which is fully owned by Mr. Julian Rembrandt, the former General Manager of South East Asia and Australia of the Company for consideration of 1 Singapore Dollar. The parties also entered into a License Agreement, whereby the AUS Buyer obtained a license to use the intellectual property of Travelzoo exclusively in Australia, New Zealand and Singapore and non-exclusively in China and Hong Kong for quarterly royalty payments based upon net revenue over a 5 year term, with an option to renew. There was no gain or loss from the sale of Travelzoo Singapore. WeGo Investment The Company has a minority investment in weekengo GmbH ("WeGo"). WeGo is a technology company which provides an app and a search engine for spontaneous travelers looking for short getaways. The Company accounts for this private company investment using the equity method of accounting by recording its share of the results of WeGo in “Other income (expense)”, net on a one-quarter lag basis. In accounting for the initial investment, the Company allocated $1.0 million of its purchase price to tangible assets and allocated approximately $485,000 of the purchase price to technology-related intangible assets to be amortized over a 3-year life. The remaining $1.5 million of the purchase price was allocated to goodwill. In February 2020, Travelzoo signed an amended investment agreement (the “Investment Agreement”) with WeGo and agreed to invest an additional $1.7 million when WeGo meets certain performance targets. The original investment agreement with WeGo was executed in April 2018 (the “Original Investment Agreement”). At that time, Travelzoo invested $3.0 million in WeGo for a 25% ownership interest. In April 2019, the Company invested an additional $673,000 in WeGo and increased the Company's ownership interest to 26.6%. As of September 30, 2020, WeGo has not met the performance targets set forth in the Investment Agreement and no additional investment has been made by the Company. In connection with the Original Investment Agreement, WeGo signed an insertion order for $2.1 million in advertising services with Travelzoo in April 2018. The Company's advertising services provided to WeGo in the three months ended September 30, 2020 and 2019 were $23,000 and $130,000, respectively. The Company's advertising services provided to WeGo in the nine months ended September 30, 2020 and 2019 were $383,000 a nd $924,000, respectively. During the three and nine months ended September 30, 2020, the Company recorded $51,000 and $384,000 for its share of WeGo losses, amortization of basis differences and currency translation adjustment. During the three and nine months ended September 30, 2019, the Company recorded $323,000 and $732,000 for its share of WeGo losses, amortization of basis differences and currency translation adjustment. This equity method investment is reported as a long-term investment on the Company's condensed consolidated balance sheets. Jack’s Flight Club In January 2020, Travelzoo acquired JFC Travel Group Co. (“Jack’s Flight Club”), which operates Jack’s Flight Club , a subscription service that provides members with information about exceptional airfares. As of September 30, 2020, Jack’s Flight Club had 1.7 million subscribers. Jack’s Flight Club’s revenues are generated by subscription fees paid by members. In June 2020, the Company renegotiated certain aspects of that certain Stock Purchase Agreement, dated as of January 13, 2020 (the “SPA”), by and among Travelzoo, Jack’s Flight Club and the sellers party thereto (the “Sellers”) with the Sellers and reached a settlement for the outstanding Promissory Notes, dated as of January 13, 2020, by and between Travelzoo and each Seller (the “Promissory Notes”). See Note 3 to the unaudited condensed consolidated financial statements for further information. PPP Loans On April 24, 2020 and May 5, 2020, the Company received $3.1 million and $535,000, respectively, pursuant to loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the Small Business Association. The loans have a maturity of two (2) years from the disbursement of the funds and an annual interest rate of 1%. The PPP loan was recorded as long-term PPP notes payabl e on t he unaudited condensed consolidated balance sheet as of September 30, 2020. Interest expense for the PPP notes payable of $9,000 and $16,000 for the three and nine months ended September 30, 2020, respectively, was recorded in Other income (loss), net. The Company intends to use the funds from these loan only for the purposes included in the PPP, including payroll, employee benefits, and rent, and to apply for forg iveness of a portion of the loans in compliance with the CARES Act. Ownership Ralph Bartel, who founded the Company and who is a Director of the Company is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc. (“Azzurro”). As of September 30, 2020, Azzurro is the Company's largest shareholder, holding approximately 39.5% of the Company's outstanding shares. As of September 30, 2020, Azzurro holds a proxy given to it by Holger Bartel that provides it with a total of 39.9% of the voting power. Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2019, included in the Company’s Form 10-K filed with the SEC on March 20, 2020. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial results of Jack’s Flight Club have been included in our consolidated financial statements from the date of acquisition. Investments in entities where the Company does not have control, but does have significant influence, are accounted for as equity method investments. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other future period, and the Company makes no representations related thereto. (b) Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which provides new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. This update is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For Smaller Reporting Companies (as such term is defined by the SEC), such as Travelzoo, the standard will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities are required to apply this update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact on its financial position and results of operations. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units' fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU is effective for fiscal years beginning after December 15, 2022 for Smaller Reporting Companies, including interim periods within those fiscal years, with early adoption permitted. The Company early adopted ASU 2017-04 as of January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The guidance is effective for calendar-year public business entities in 2020. Early adoption is permitted. The adoption did not have a material impact on the Company’s financial position, results of operations and cash flows. (c) Significant Accounting Policies Below are a summary of the Company's significant accounting policies. For a comprehensive description of our accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2019. Business Combinations The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date and adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Identifiable intangible assets Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. The carrying values of all intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The Company evaluated intangible assets in the first quarter of 2020 due to the coronavirus (COVID-19) pandemic and recorded an impairment expense of $810,000. The Company did not identify any indicators of impairment during the second and third quarters of 2020. Goodwill Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets. Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. In testing goodwill for impairment, the Company first uses a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the qualitative assessment indicates that goodwill impairment is more likely than not, the Company performs an impairment test by comparing the book value of net assets to the fair value of the reporting units. The Company evaluated goodwill in the first quarter of 2020 due to the COVID-19 pandemic and recorded an impairment expense of $2.1 million. The Company did not identify any indicators of impairment during the second and third quarters of 2020. Leases The Company determines if an arrangement contains a lease at inception. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease payments used to determine the operating lease assets may include lease incentives and stated rent increases. The Company does not include options to extend or terminate until it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The Company elected not to recognize leases with an initial term of 12 months or less on its unaudited condensed consolidated balance sheets. The Company’s leases are reflected in operating lease ROU assets, operating lease liabilities and long-term operating lease liabilities in our unaudited condensed consolidated balance sheets. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company also has a real estate lease agreement which is subleased to a third party. The Company recognizes sublease income in “Other income (expense), net”, on a straight-line basis over the lease term in its condensed consolidated statements of income. Certain Risks and Uncertainties The Company’s business is subject to risks associated with its ability to attract and retain advertisers and offer products or services on compelling terms to our members. The global outbreak of COVID-19 is having an unprecedented impact on the global travel and hospitality industries. Governmental authorities have implemented numerous measures to try to contain the virus, including restrictions on travel, quarantines, shelter-in-place orders, business restrictions and complete shut-downs. The measures implemented to contain COVID-19 have had, and are expected to continue to have, a significant negative effect on our business, financial condition, results of operations and cash flows. The Company’s cash, cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that the management believes are of high credit quality. The accounts receivables are derived from revenue earned from customers located in the U.S. and internationally. During the nine months ended September 30, 2020, the Company experienced the adverse impact of COVID-19. Many of the Company's advertising partners paused, canceled, and stopped advertising with the Company. Additionally, there has been a significant level of cancellations for the Company's hotel partners and travel package partners as well as refund requests for our vouchers with the Company’s restaurant and spa partners. The Company has modified its policies and will continue to adopt new policies as the situation evolves. However, the uncertainties of the pandemic, such as its duration and severity, will likely negatively impact and continue to negatively impact our partners and customers. As of September 30, 2020, we had negative working capital of $13.7 million primarily due to an increase in accounts payable related to merchants from the sale of vouchers. The payable to merchants is generally due upon redemption of the vouchers. The vouchers have maturities that begin in 2020 through December 2022, and we believe that redemption patterns may be delayed for international vouchers under the current environment. Based on current projections of redemption activity, we expect that cash on hand as of September 30, 2020 will be sufficient to provide for working capital needs for at least the next twelve months. However, if redemption activity is more accelerated, or if we are not able to reduce our operating losses, we may need to obtain additional financing to meet our working capital needs in the future. We believe that we could obtain additional financing if needed, but there can be no assurance that financing will be available on terms that are acceptable to us, if at all. As of September 30, 2020 and December 31, 2019, the Company did not have any customers that accounted for 10% or more of accounts receivable. Cash, Cash Equivalents and Restricted Cash Restricted cash includes cash and cash equivalents that is restricted through legal contracts, regulations or our intention to use the cash for a specific purpose. Our restricted cash primarily relates to cash held for letters of credit for real estate leases. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts shown in the unaudited condensed consolidated statements of cash flows: September 30, December 31, 2020 2019 Cash and cash equivalents $ 50,528 $ 18,743 Restricted cash 1,155 1,135 Cash, cash equivalents and restricted cash–discontinued operations 301 832 Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 51,984 $ 20,710 The Company’s restricted cash was included in noncurrent assets as of September 30, 2020 and December 31, 2019. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company's revenues are primarily advertising fees generated from the publishing of travel and entertainment deals on the Travelzoo website, in the Top 20 email newsletter, in Newsflash and through the Travelzoo Network . The Company also generates transaction-based revenues from the sale of vouchers through our Local Deals and Getaways products and operation of a hotel booking platform and limited offerings of vacation packages. The Company's disaggregated revenues are included in “Note 9: Segment Reporting and Significant Customer Information”. For fixed-fee website advertising, the Company recognizes revenues ratably over the contracted placement period. For the Top 20 email newsletter and other email products, the Company recognizes revenues when the emails are delivered to its members. The Company offers advertising on a cost-per-click basis, which means that an advertiser pays the Company only when a user clicks on an advertisement on Travelzoo properties or Travelzoo Network members’ properties. For these customers, the Company recognizes revenues each time a user clicks on the ad. The Company also offers advertising on other bases, such as cost-per-impression, which means that an advertiser pays the Company based on the number of times their advertisement is displayed on Travelzoo properties, email advertisements, Travelzoo Network properties, or social media properties. For these customers, the Company recognizes revenues each time an advertisement is shown or email delivered. For transaction based revenues, including products such as Local Deals, Getaways, hotel platform and vacation packages, the Company evaluates whether it is the principal (i.e., report revenue on a gross basis) versus an agent (i.e., report revenue on a net basis). The Company reports transaction revenue on a net basis because the supplier is primarily responsible for providing the underlying service, and we do not control the service provided by the supplier prior to its transfer to the customer. For Local Deals and Getaways products, the Company earns a fee for acting as an agent for the sale of vouchers that can be redeemed for services with third-party merchants. Revenues are presented net of the amounts due to the third-party merchants for fulfilling the underlying services and an estimated amount for future refunds. Since the second quarter of 2020, the Company expanded its vouchers refund policy in order to entice customers given the current economic climate to fully refundable until the voucher expires or is redeemed by the customer. The Company now offers fully refundable refunds for vouchers that have not been redeemed or expired. The expiration dates of vouchers range between October 2020 through December 2022. The Company estimated the refund reserve by using historical and current refund rates by product and by merchant location to calculate the estimated future refunds. As of September 30, 2020, $2.3 million were reserved for vouchers sold which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet. Certain merchant contracts allow the Company to retain the proceeds from unredeemed vouchers. With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period. Jack’s Flight Club revenue is generated from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually. We recognize the revenue on a pro-rated basis based upon the subscription option. Commission revenue related to hotel platform is recognized ratably over the period of guest stay, net of an allowance for cancellations based upon historical patterns. For arrangements for booking non-cancelable reservations where the Company’s performance obligation is deemed to be the successful booking of a hotel reservation, we record revenue for the commissions upon completion of the hotel booking. The Company’s contracts with customers may include multiple performance obligations in which the Company allocates revenues to each performance obligation based upon its standalone selling price. The Company determines standalone selling price based on its overall pricing objectives, taking into consideration the type of services, geographical region of the customers, normal rate card pricing and customary discounts. Standalone selling price is generally determined based on the prices charged to customers when the product is sold separately. The Company relies upon the following practical expedients and exemptions allowed for in the ASC 606. The Company expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded in sales and marketing expenses. In addition, the Company does not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less and (b) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services performed. Travelzoo deferred revenue primarily consists of customer prepayments and undelivered performance obligations related to the Company’s contracts with multiple performance obligations. At December 31, 2019, $786,000 was recorded as deferred revenue, of which $17,000 and $344,000 was recognized as revenue during the three and nine months ended September 30, 2020, respectively. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per ShareBasic net income (loss) per share is computed using the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed by adjusting the weighted-average number of common shares outstanding for the effect of dilutive potential common shares outstanding during the period. Potential common shares included in the diluted calculation consist of incremental shares issuable upon the exercise of outstanding stock options calculated using the treasury stock method. The following table sets forth the calculation of basic and diluted net income per share (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Numerator: 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) Denominator: Weighted average common shares—basic 11,310 11,767 11,353 11,894 Effect of dilutive securities: stock options — 189 — 258 Weighted average common shares—diluted 11,310 11,956 11,353 12,152 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 For the three and nine months ended September 30, 2020, options to purchase 3.4 million shares of common stock were not included in the computation of diluted net income per share because of the net loss. For the three and nine months ended September 30, 2019, options to purchase 1.1 million |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On January 13, 2020, Travelzoo entered into the SPA with the shareholders of Jack’s Flight Club for the purchase of up to 100% of the outstanding capital stock of Jack’s Flight Club (the “Shares”). Pursuant to the SPA, on January 13, 2020, the Sellers sold 60% of the Shares to the Company for an aggregate purchase price of $12.0 million, $1.0 million of which was paid in cash and $11.0 million of which was paid in Promissory Notes. The Promissory Notes contain an interest rate of 1.6% per annum and a due date of January 31, 2020, with a one-time right to extend the maturity date up to April 30, 2020 with a principal payment of $1.0 million on January 31, 2020, which the Company exercised. The remaining 40% of the Shares are subject to a call/put option exercisable by the Company or the Sellers, as applicable, on or around January 1, 2021, subject to the terms and conditions set forth in the SPA. On June 3, 2020, the Company renegotiated the SPA with the Sellers of Jack’s Flight Club and reached a negotiated settlement. The Company recorded adjustments accordingly, however, these adjustments are not considered measurement period adjustments to the purchase consideration since there is not a clear and direct link to the consideration transferred in the SPA entered into on January 13, 2020. The strategic rationale for the Jack’s Flight Club acquisition was to expand Jack’s Flight Club ’s membership to Travelzoo members worldwide, so the members from Travelzoo could also sign up to receive offers from Jack’s Flight Club. The acquisition has been accounted for using the acquisition method in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The acquisition related costs were not significant and were expensed as incurred. Purchase Price Allocation The purchase price allocation is based on estimates, assumptions and third-party valuations. The aggregate purchase price and allocation was as follows (in thousands): Purchase Price Jack’s Flight Club Cash paid $ 1,000 Promissory notes issued 10,931 Fair Value of Put/Call Option 183 $ 12,114 Allocation Goodwill $ 13,054 Intangible assets Customer relationships 3,500 Trade name 2,460 Non-compete agreements 660 Current assets acquired, including cash of $321 324 Current liabilities assumed (40) Deferred revenue (881) Deferred tax liabilities (1,391) Non-controlling interest (5,572) $ 12,114 The Company determined the estimated fair value of the put/call option using the Monte Carlo Simulation approach and the identifiable intangible assets acquired primarily using the income approach. Non-controlling interests represent third-party shareholders and are measured at fair value on the date acquired. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the identifiable net assets of the acquired subsidiary. Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company determined that the COVID-19 pandemic was a triggering event requiring the Company to assess its long-lived assets including goodwill for impairment. The Company performed an impairment test during the first quarter of 2020 by comparing the carrying value of Jack’s Flight Club net assets to the fair value of the Jack’s Flight Club reporting unit based on an updated discounted cash flow analysis. The fair value of the Jack’s Flight Club reporting unit was determined to be less than the carrying value, and the difference between the estimated fair value of goodwill and the carrying value was recorded as goodwill impairment. The Company also performed an ASC 360 analysis for long-lived assets noting no impairment of such assets based on the undiscounted cash flows of the Jack’s Flight Club asset group. The Company first impaired indefinite lived intangible assets (“Trade name”) before impairing goodwill. The following table summarizes the goodwill activity for the nine months ended September 30, 2020 (in thousands): Goodwill—January 1, 2020 $ — Acquisition 13,054 Impairment—March 31, 2020 (2,110) Goodwill—September 30, 2020 $ 10,944 Intangible Assets The following table represents the fair value and estimated useful lives of intangible assets (in thousands): Fair Value Estimated Life (Years) Customer relationships $ 3,500 5 Trade name 2,460 indefinite Non-compete agreements 660 4 The fair value of intangible assets of $6.6 million has been allocated to the following three asset categories: 1) customer relationships, 2) trade name, and 3) non-compete agreements. These assets are included within “Intangible assets” on our consolidated balance sheets. Customer relationships and non-compete agreements are being amortized to operating expenses over their estimated useful lives using the straight-line basis for non-compete agreements or on an accelerated basis for customer relationships. The following table represents the activities of intangible assets for the three and nine months ended September 30, 2020 (in thousands): Fair Value Intangible assets—January 1, 2020 $ — Acquisition 6,620 Impairment of trade name (810) Amortization of intangible assets with definite lives (215) Intangible assets- March 31, 2020 5,595 Amortization of intangible assets with definite lives (395) Intangible assets- June 30, 2020 5,200 Amortization of intangible assets with definite lives (333) Intangible assets- September 30, 2020 $ 4,867 Amortization expense for acquired intangibles was $333,000 and $943,000 for the three and nine months ended September 30, 2020. Expected future amortization expense of acquired intangible assets as of September 30, 2020 is as follows (in thousands): Years ending December 31, 2020 remainder $ 333 2021 1,108 2022 875 2023 641 2024 250 Thereafter 10 $ 3,217 As previously discussed in “Goodwill”, the Company's impairment test indicated that Jack’s Flight Club’s indefinite lived intangible assets (“Trade name”) was impaired for $810,000 for the first quarter of 2020. The Company did not identify any indicators of impairment during the second and third quarters of 2020. Pro Forma Information The acquired company was consolidated into our financial statements starting on the acquisition date. The unaudited financial information in the table below summarizes the combined results of operations of Travelzoo and Jack’s Flight Club, on a pro forma basis, as though the companies had been combined as of the beginning of the fiscal year presented. The debt was issued to finance the acquisition of Jack’s Flight Club. The unaudited pro forma information has been calculated after applying the Company’s accounting policies and includes adjustments to reflect the amortization charges from acquired intangible assets, adjustments to deferred revenue, interest expense and related tax effects. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the fiscal year presented. The following table summarizes the pro forma financial information (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues $ 13,787 $ 27,349 $ 41,239 $ 81,807 Net income (loss) $ (1,226) $ 1,231 $ (15,247) $ 4,626 Jack's Flight Club Settlement On June 3, 2020, the Company and the Seller renegotiated the SPA. Pursuant to the original terms of the outstanding Promissory Notes, the Company owed $10.0 million plus interest (the “Outstanding Amount”) to the Sellers on April 30, 2020. On June 3, 2020, the parties reached a negotiated settlement for the Outstanding Amount with the following terms: (a) $1.5 million was forgiven in settlement of certain outstanding indemnification claims disputed by the Sellers; (b) $6.8 million, plus accrued interest, was paid to the Sellers by Travelzoo, and (c) the remaining $1.7 million to be paid by June 2021 pursuant to new promissory notes with each of the Sellers that contain a 12% interest rate. For the three months ended June 30, 2020 , the Company recorded $1.5 million gain in “General and administrative expenses” for the partial forgiveness of the outstanding loan. Interest expense for the Promissory Notes of $52,000 and $131,000 for the three and nine months ended September 30, 2020, respectively, was recorded in Other income (loss), net. Travelzoo also agreed that the additional payment set forth in the SPA (equal to 20% of 2020 net income) would be payable to the Sellers regardless of whether EBITDA targets are achieved and the put/call is exercised in 2021. The Company estimated the total payment and recorded $448,000 expense in “General and administrative expenses” for the nine months ended September 30, 2020. The parties also agreed to a new put/call option exercisable in 2022 by the Sellers or Travelzoo, as applicable, only if the put/call option for 2021 as set forth in the SPA is not exercised, with a EBITDA threshold of $4.3 million and a purchase price equal to 40% of 2021 EBITDA multiplied by 3.5, and an additional payment equal to 20% of 2021 net income if the EBITDA threshold is achieved. The Company re-evaluated the fair value of the put/call option by using the Monte Carlo Simulation approach and the identifiable intangible assets acquired primarily by using the income approach and determined that the extension of the one year period did not change the fair value of the put/call option materially. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company was formed as a result of a combination and merger of entities founded by the Company’s principal shareholder, Ralph Bartel. In 2002, Travelzoo.com Corporation (“Netsurfers”) was merged into the Company. Under and subject to the terms of the merger agreement, holders of promotional shares of Netsurfers who established that they had satisfied certain prerequisite qualifications were allowed a period of 2 years following the effective date of the merger to receive one share of the Company in exchange for each share of common stock of Netsurfers. In 2004, two years following the effective date of the merger, certain promotional shares remained unexchanged. As the right to exchange these promotional shares expired, no additional shares were reserved for issuance. Thereafter, the Company began to offer a voluntary cash program for those who established that they had satisfied certain prerequisite qualifications for Netsurfers promotional shares as further described below. During 2010 through 2014, the Company became subject to unclaimed property audits of various states in the United States related to the above unexchanged promotional shares and completed settlements with all states. Although the Company has settled the unclaimed property claims with all states, the Company may still receive inquiries from certain potential Netsurfers promotional shareholders that had not provided their state of residence to the Company by April 25, 2004. Therefore, the Company is continuing its voluntary program under which it makes cash payments to individuals related to the promotional shares for individuals whose residence was unknown by the Company and who establish that they satisfy the original conditions required for them to receive shares of Netsurfers, and who failed to submit requests to convert their shares into shares of Travelzoo within the required time period. This voluntary program is not available for individuals whose promotional shares have been escheated to a state by the Company, except those individuals for which their residence was unknown to the Company. The Company did not make any payments for the nine months ended September 30, 2020 and 2019. The total cost of this program cannot be reliably estimated because it is based on the ultimate number of valid requests received and future levels of the Company’s common stock price. The Company’s common stock price affects the liability because the amount of cash payments under the program is based in part on the recent level of the stock price at the date valid requests are received. The Company does not know how many of the requests for shares originally received by Netsurfers in 1998 were valid, but the Company believes that only a portion of such requests were valid. In order to receive payment under this voluntary program, a person is required to establish that such person validly held shares in Netsurfers. The Company has promissory notes payable related to the acquisition of Jack’s Flight Club. The Company also has PPP notes payable for funds received under the PPP program. Refer to Note 1 and Note 3 for further information. The Company also has operating leases. Refer to Note 11for Leases as of September 30, 2020. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Ordinarily, in determining the quarterly provisions for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on our expected annual income and statutory tax rates in the U.S., Canada, and the U.K. Due to the COVID-19 pandemic, and difficulty forecasting the calendar year 2020 of income (loss) by jurisdiction, we determined the estimated annual effective rate method would not provide a reliable estimate of the Company’s overall annual effective tax rate. As such, we have calculated the tax provision using the actual effective rate for the nine months ended September 30, 2020. The Company's effective tax rate from continuing operations w as 20% and 25%, respectively, for the three months ended September 30, 2020 and 2019. The Company's effective tax rate from continuing operations was 15% and 25%, respectively, for the nine months ended September 30, 2020 and 2019. The Company's effective tax rate decreased for the three and nine months ended September 30, 2020 from the corresponding three and nine months ended September 30, 2019, primarily due to operating losses not benefited. As of September 30, 2020, the Company is permanently reinvested in certain of its non-U.S. subsidiaries and does not have a deferred tax liability related to its undistributed foreign earnings. The estimated amount of the unrecognized deferred tax liability attributed to future withholding taxes on dividend distributions of undistributed earnings for certain non-U.S. subsidiaries, which the Company intends to reinvest the related earnings indefinitely in its operations outside the U.S., is approximately $549,000. The Company maintains liabilities for uncertain tax positions. At September 30, 2020, the Company had approximately $152,000 in total unrecognized tax benefits, which if recognized, would favorably affect the Company’s effective income tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in the overall income tax provision in the period that such determination is made. At September 30, 2020 and December 31, 2019, the Company had approximately $229,000 and $207,000 in accrued interest, respectively. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. states and foreign jurisdictions. The Company is subject to U.S. federal and certain state tax examinations for certain years from 2016 and forward and is subject to California tax examinations for years from 2015 and forward. We do not know what our income taxes will be in future periods. There may be fluctuations that have a material impact on our results of operations. Our income taxes are dependent on numerous factors such as the geographic mix of our taxable income, federal and state and foreign country tax law and regulations and changes thereto, the determination of whether valuation allowances for certain tax assets are required or not, audits of prior years' tax returns resulting in adjustments, resolution of uncertain tax positions and different treatment for certain items for tax versus books. We expect fluctuations in our income taxes from year to year and from quarter to quarter. Some of the fluctuations may be significant and have a material impact on our results of operations. On March 27, 2020, President Trump signed into law the CARES Act, which, along with earlier issued IRS guidance, provides for deferral of certain taxes. The CARES Act, among other things, also contains numerous other provisions which may benefit the Company. We continue to assess the effect of the CARES Act and ongoing government guidance related to COVID-19 that may be issued. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Beginning balance $ (4,666) $ (4,229) $ (3,452) $ (4,214) Other comprehensive income (loss) due to foreign currency translation, net of tax 349 (221) (460) (236) Reclassification of amounts to income relating to APAC discontinued operations, net of tax 183 — (222) — Ending balance $ (4,134) $ (4,450) $ (4,134) $ (4,450) |
Stock-Based Compensation and St
Stock-Based Compensation and Stock Options | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation and Stock Options | Stock-Based Compensation and Stock Options The Company accounts for its employee stock options under the fair value method, which requires stock-based compensation to be estimated using the fair value on the date of grant using an option-pricing model. The value of the portion of the award that is expected to vest is recognized on a straight-line basis as expense over the related employees’ requisite service periods in the Company’s condensed consolidated stateme nts of operations. In September 2015, pursuant to an executed Option Agreement, the Company granted its Global Chief Executive Officer, Holger Bartel, options to purchase 400,000 shares of common stock of the Company, with an exercise price of $8.07 and quarterly vesting beginning on March 31, 2016 (the “2015 Option Agreement”). The 2015 Option Agreement expires in September 2025. The options are now fully vested and the stock-based compensation related to these options was fully expensed. In October 2017, pursuant to an executed Option Agreement, the Company granted Mr. Bartel options to purchase 400,000 shares of common stock, with an exercise price of $6.95 and quarterly vesting beginning on March 31, 2018 (the “2017 Option Agreement”). The 2017 Option Agreement expires in 2027. During 2019, 250,000 options granted pursuant to the 2017 Option Agreement were exercised by Mr. Bartel. The remaining 150,000 options are fully vested and the stock-based compensation related to these options was fully expensed. In September 2019, the Company granted Mr. Bartel options to purchase 400,000 shares of common stock subject to shareholder approval, with an exercise price of $10.79 and quarterly vesting beginning on March 31, 2020 and ending on December 31, 2021 (the “2019 Option Agreement” and together with the 2015 Option Agreement and the 2017 Option Agreements, the “Bartel Option Agreements”). The 2019 Option Agreement expires in 2024. On May 29, 2020, the shareholders of the Company approved certain amendments to the Bartel Option Agreements, which increased and repriced all outstanding, unexercised options granted to Mr. Bartel (the “Option Agreement Amendments”). Pursuant to the Option Agreement Amendments and subject to shareholder approval, the exercise price for the options was repriced to the official NASDAQ closing share price on March 30, 2020 (the date of execution of the Option Agreement Amendments, which immediately followed the date of approval of the grants from the Board of Directors of the Company), which was $3.49. Additionally, the Option Agreement Amendments made the following increases: (a) 400,000 additional options to purchase the Company’s common stock pursuant to the 2015 Option Agreement, (b) 150,000 additional options to purchase the Company’s common stock pursuant to the 2017 Option Agreement, and (c) 400,000 additional options to purchase the Company’s common stock pursuant to the 2019 Option Agreement, which resulted in a total of 1,900,000 options granted to Mr. Bartel pursuant to the Option Agreement Amendments. Mr. Bartel’s amended options pursuant to the 2015 Option Agreement and the 2017 Option Agreement were fully vested upon the execution of the applicable Option Agreement Amendment. Therefore, stock-based compensation related to these options was fully expensed in the three months ended June 30, 2020. Total stock-based compensation of $382,000 and $3.9 million was recorded in general and administrative expenses for the three and nine months ended September 30, 2020 . As of September 30, 2020, there was approximately $1.9 million of unrecognized stock-based compensation expense relating to the 2019 Option Agreement and applicable Option Agreement Amendment. This amount is expected to be recognized over the next 1.2 years. In May 2018, pursuant to executed Option Agreements, the Company granted an employee options to purchase 50,000 shares of common stock with an exercise price of $14.70 and annual vesting beginning in May 2019. The options expire in May 2028. During the nine months ended September 30, 2020, 25,000 unvested options were forfeited and 25,000 vested option were canceled upon the departure of the employee. Total stock-based compensation of $0 and $22,000 was recorded in sales and marketing expense for the three months ended September 30, 2020 and 2019, respectively. Total stock-based compensation of $34,000 and $67,000 was recorded in sales and marketing expense for the nine months ended September 30, 2020 and 2019, respectively. In June 2018, pursuant to an executed Option Agreement, the Company granted an employee options to purchase 50,000 shares of common stock with an exercise price of $16.65 and annual vesting beginning June 2019. The options expire in June 2023. Total stock-based compensation of $21,000 and $53,000 was recorded in product development expense for the three and nine months ended September 30, 2019, respectively. During the nine months ended September 30, 2020, 37,500 unvested options were forfeited and the compensation expense of $43,000 was reversed from product development expense upo n the employee's notification of departure. In May 2019, pursuant to an executed Option Agreement, the Company granted an employee options to purchase 100,000 shares of common stock with an exercise price of $19.28, of which 10,000 options vested and became exercisable in May 2019, 15,000 options vested and became exercisable in September 2019, and the remaining 75,000 will vest in three equal installments beginning in May 2021 and ending in May 2024. The options expire in May 2024. During the nine months ended September 30, 2020, 75,000 unvested options were forfeited, 25,000 of vested option were canceled, and the compensation expense of $107,000 was reversed fro m general and administrative expenses upon the departure of the employee. I n September 2019, pursuant to executed Option Agreements, the Company granted, subject to shareholder approval, six employees stock options to purchase 50,000 shares of common stock each ( 300,000 in the aggregate) with an exercise price of $10.79, of which 75,000 options vest and become exercisable annually starting on September 5, 2020 and ending on December 31, 2023. The options expire in September 2024. On May 29, 2020, the shareholders of the Company approved the grants, as well as certain amendments to the Option Agreements, which increased and repriced all outstanding, unexercised options granted to such employees. Pursuant to the applicable amendments, the exercise price for the options was repriced to the official NASDAQ closing share price on March 30, 2020 (the date of execution of the amendments to the Option Agreements, which immediately followed the date of approval of the grants from the Board of Directors of the Company), which was $3.49, the option grants were each increased to 100,000 each, resulting in 300,000 additional options in the aggregate. During the nine months ended September 30, 2020, 100,000 unvested options were forfeited upo n an employee's departure. Total stock-based compensation related to these option grants of $362,000 and $523,000 was recorded in general and administrative expenses for the three and nine months ended September 30, 2020, respectively. As of September 30, 2020 , there was approximately $1.4 million of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over the next 2.9 years. On May 29, 2020, pursuant to an executed Option Agreement, the shareholders of the Company approved the grant of stock options to purchase 800,000 shares of common stock to Mr. Ralph Bartel, Chairman of the Board of Directors of the Company, with an exercise price of $3.49 and quarterly vesting beginning June 30, 2020 and ending on March 31, 2022. The options expire in March 2025. This grant was approved at the 2020 Annual Meeting of the shareholders. Total stock-based compensation related to these option grants of $385,000 and $771,000 was recorded in general and administrative expenses for the three and nine months ended September 30, 2020, respectively . As of September 30, 2020, there was approximately $2.3 million of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over the next 1.5 years. On May 29, 2020, pursuant to an executed Option Agreement, the shareholders of the Company approved the grant of stock options to purchase 200,000 shares of common stock to two key employees, with an exercise price of $3.49 with annual vesting starting March 30, 2021 and ending on March 31, 2024. The options expire in March 2025. Total stock-based compensation related to these option grants of $59,000 and $79,000 was recorded in general and administrative expenses for the three and nine months ended September 30, 2020, respectively . As of September 30, 2020, there was approximately $707,000 of unrecognized stock-based compensation expense relating to these options. This amount is expected to be recognized over the next 3.5 years. |
Stock Repurchase Program
Stock Repurchase Program | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stock Repurchase Program | Stock Repurchase Program The Company's stock repurchase programs assist in offsetting the impact of dilution from employee equity compensation and assist with capital allocation. Upon approval from the Board of Directors of the Company, management is allowed discretion in the execution of the repurchase program based upon market conditions and consideration of capital allocation. In February 2019, the Company entered into a Stock Repurchase Agreement with Azzurro, a significant shareholder of the Company and repurchased 100,000 shares of the Company’s common stock for an aggregate purchase price of $1.6 million, which were retired and recorded as a reduction of additional paid-in capital until extinguished with the remaining amount reflected as a reduction of retained earnings. In May 2019, the Company announced a stock repurchase program authorizing the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock. The Company did not purchase common stock during the three months ended September 30, 2020. During the three months ended September 30, 2019, the Company repurchased 186,369 shares of common stock for an aggregate purchase price of $2.3 million. During the nine months ended September 30, 2020 and 2019, the Company repurchased 169,602 shares and 436,369 shares of common stock for an aggregate purchase price of $1.2 million and $7.2 million, respectively, under the stock repurchase program. There were 395,029 shares remaining to be repurchased under this program as of September 30, 2020. In November 2019, the Company entered into a Stock Repurchase Agreement with Mr. Holger Bartel to repurchase an aggregate of 200,000 shares of the Company’s common stock for an aggregate purchase price of $2.0 million, which were retired and recorded as a reduction of additional paid-in capital until extinguished with the remaining amount reflected as a reduction of retained earnings. |
Segment Reporting and Significa
Segment Reporting and Significant Customer Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments Reporting and Significant Customer Information | Segment Reporting and Significant Customer Information The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business. Historically, the Company managed its business geographically and operated in three reportable segments including Asia Pacific, Europe and North America. During the nine months ended September 30, 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its condensed consolidated financial statements for current and prior periods presented. On January 13, 2020, Travelzoo agreed to the SPA with the Sellers of Jack’s Flight Club to purchase 60% of the Shares. Upon acquisition, the Company's chief operating decision maker reviewed and evaluated Jack's Flight Club as a separate segment. The Company currently has three reportable operating segments: Travelzoo North America, Travelzoo Europe and Jack’s Flight Club. Travelzoo North America consists of the Company’s operations in Canada and the U.S. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the U.K. Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals from Jack’s Flight Club via email or via Android or Apple mobile applications. Management relies on an internal management reporting process that provides revenue and segment operating profit (loss) for making financial decisions and allocating resources. Management believes that segment revenues and operating profit (loss) are appropriate measures of evaluating the operational performance of the Company’s segments. The following is a summary of operating results by business segment (in thousands): Three Months Ended September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 9,002 $ 3,798 $ 987 $ — $ 13,787 Intersegment revenues (expenses) 141 (141) — — — Total net revenues 9,143 3,657 987 — 13,787 Operating profit (loss) $ (696) $ (757) $ 250 $ — $ (1,203) Three Months Ended September 30, 2019 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 14,444 $ 9,432 $ — $ (43) $ 23,833 Intersegment revenues (expenses) 895 (938) — 43 — Total net revenues 15,339 8,494 — — 23,833 Operating profit (loss) $ 2,620 $ 815 $ — $ (43) $ 3,392 Nine Months Ended September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 25,805 $ 12,706 $ 2,615 $ (8) $ 41,118 Intersegment revenues (expenses) 237 (245) — 8 — Total net revenues 26,042 12,461 2,615 — 41,118 Operating profit (loss) $ (6,374) $ (3,781) $ (3,013) $ (8) $ (13,176) Nine Months Ended September 30, 2019 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 50,074 $ 29,619 $ — $ (94) $ 79,599 Intersegment revenues (expenses) 1,776 (1,870) — 94 — Total net revenues 51,850 27,749 — — 79,599 Operating profit (loss) $ 10,673 $ 3,536 $ — $ (94) $ 14,115 Property and equipment are attributed to the geographic region in which the assets are located. Revenues from unaffiliated customers excludes intersegment revenues and represents revenue with parties unaffiliated with the Company and its wholly owned subsidiaries. The following is a summary of assets by business segment (in thousands): As of September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Long-lived assets $ 1,243 $ 256 $ — $ — $ 1,499 Total assets excluding discontinued operations $ 122,067 $ 84,361 $ 5,797 $ (121,247) $ 90,978 As of December 31, 2019 Travelzoo North Travelzoo Europe Elimination Consolidated Long-lived assets $ 2,598 $ 263 $ — $ 2,861 Total assets excluding discontinued operations $ 66,057 $ 74,604 $ (90,084) $ 50,577 For the nine months ended September 30, 2020 and 2019, the Company did not have any customers that accounted for 10% or more of revenue. As of September 30, 2020 and December 31, 2019, the Company did not have any customers that accounted for 10% or more of accounts receivable. The following table sets forth the breakdown of revenues (in thousands) by category and segment. Travel revenue includes travel publications ( Top 20 , Travelzoo website, Newsflash , Travelzoo Network ), Getaways vouchers, hotel platform and vacation packages. Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings). Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Travelzoo North America Travel $ 8,706 $ 12,899 $ 23,772 $ 44,470 Local 437 2,440 2,270 7,380 Total Travelzoo North America revenues 9,143 15,339 26,042 51,850 Travelzoo Europe Travel 3,449 7,727 11,442 24,804 Local 208 767 1,019 2,945 Total Travelzoo Europe revenues 3,657 8,494 12,461 27,749 Jack’s Flight Club 987 — 2,615 — Consolidated Travelzoo Travel 12,155 20,626 35,214 69,274 Travelzoo Local 645 3,207 3,289 10,325 Jack’s Flight Club 987 — 2,615 — Total revenues $ 13,787 $ 23,833 $ 41,118 $ 79,599 Revenue by geography is based on the billing address of the advertiser. Long-lived assets attributed to the U.S. and international geographies are based upon the country in which the asset is located or owned. The following table sets forth revenue for countries that exceed 10% of total revenue (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenue United States $ 8,345 $ 13,817 $ 23,753 $ 47,041 United Kingdom 3,095 4,335 10,189 14,930 Germany 1,386 2,830 4,148 9,262 Rest of the world 961 2,851 3,028 8,366 Total revenues $ 13,787 $ 23,833 $ 41,118 $ 79,599 The following table sets forth property and equipment by geographic area (in thousands): September 30, December 31, 2020 2019 United States $ 1,025 $ 2,359 Rest of the world 474 502 Total long-lived assets $ 1,499 $ 2,861 |
Discontinued Operation
Discontinued Operation | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operation | Discontinued OperationOn March 10, 2020, Travelzoo issued a press release announcing that it will exit its business in Asia Pacific. The decision supports the Company's strategy to focus on value creation for shareholders by focusing on growing the businesses in North America and Europe, where the Company continues to see strong interest from our members in travel deals. The Asia Pacific business shut down and ceased operations as of March 31, 2020, except for the Company's Japan unit, which was held for sale. The Company considers this decision to be a strategic shift in its strategy which will have a major effect on its operations. The Company has classified Asia Pacific as discontinued operations at March 31, 2020. Prior periods have been reclassified to conform with the current presentation. The following table provides a summary of amounts included in discontinued operations for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues $ — $ 1,672 $ 970 $ 4,915 Cost of revenues — 128 6 294 Gross profit — 1,544 964 4,621 Operating expenses: Sales and marketing — 2,266 1,712 6,591 Product development — 44 — 124 General and administrative 69 1,412 3,413 3,412 Total operating expenses 69 3,722 5,125 10,127 Loss from operations (69) (2,178) (4,161) (5,506) Other income (loss), net (161) (170) 217 (428) Loss before income taxes (230) (2,348) (3,944) (5,934) Income tax expense — (90) — (121) Net loss $ (230) $ (2,258) $ (3,944) $ (5,813) The Company recorded severance and disposal costs of $1.6 million during the first quarter of fiscal year 2020 for the shut down and such costs were classified in “general and administrative” in the table above. Certain reclassifications have been made for current and prior periods between the continued operations and the discontinued operations in accordance with U.S. GAAP. Those reclassifications included direct operating expenses and certain inter-company charges that will not continue. $0 and $64,000 of cost of revenues were reclassified from the discontinued operations to continued operations for the three and nine months ended September 30, 2020, respectively. $24,000 and $94,000 of cost of revenues were reclassified from the discontinued operations to continued operations for the three and nine months ended September 30, 2019 , respectively. In addition, $0 and $7,000 of operating expenses that were reclassified from discontinued operations to continued operations for the three and nine months ended September 30, 2020 , respectively. $150,000 and $129,000 of operating expenses that were reclassified from continued operations to discontinued operations for the three and nine months ended September 30, 2019, respectively. On June 16, 2020, in connection with its Asia Pacific exit plan, the Company completed a sale of 100% of the outstanding capital stock of Travelzoo Japan to the Japan Buyer for consideration of 1 Japanese Yen. The Company recognized a pre-tax loss of $128,000 . T he parties also entered into a License Agreement, whereby the Travelzoo Japan btained a license to use the intellectual property of Travelzoo exclusively in Japan in exchange for quarterly royalty payments based on revenue over a 5 year term, with an option to renew. However, Travelzoo Japan is only obligated to pay Travelzoo if Travelzoo Japan has a positive EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted pro forma before royalty expenses, according to Travelzoo Japan’s income statement. The Company will record royalties from Travelzoo Japan on a one-quarter lag basis. However, Travelzoo is not able to estimate whether Travelzoo Japan will generate positive EBITDA b ased on the current uncertainties, and no amount has been recorded for future royalties under this agreement. A n interest free loan was provided to the Japan Buyer for JPY 46.0 million (approximately $430,000) to be repaid over 3 years. On August 24, 2020, the Company completed a sale of 100% of the outstanding capital stock of Travelzoo Singapore, to an unaffiliated entity, AUS Buyer, which is fully owned by Mr. Julian Rembrandt, the former General Manager of South East Asia and Australia of the Company for consideration of Singapore Dollar1. The parties also entered into a License Agreement, whereby the AUS Buyer obtained a license to use the intellectual property of Travelzoo exclusively in Australia, New Zealand and Singapore and non-exclusively in China and Hong Kong for quarterly royalty payments based upon revenue over a 5 year term, with an option to renew. The Company will record royalties from the AUS Buyer on a one-quarter lag basis. However, Travelzoo is not able to estimate whether the AUS Buyer will generate revenues based on the current uncertainties, and no amount has been recorded for future royalties under this agreement. The following table presents information related to the major classes of assets and liabilities that were classified as assets and liabilities from discontinued operations in the Condensed Consolidated Balance Sheets (in thousands): September 30, December 31, ASSETS Cash, cash equivalents and restricted cash $ 301 $ 832 Accounts receivable, net 115 1,797 Deposits — 9 Prepaid expenses and other 36 208 Deposits and other 2 248 Operating lease right-of-use assets — 746 Property and equipment, net — 121 Total assets from discontinued operations $ 454 $ 3,961 LIABILITIES Accounts payable $ 729 $ 1,057 Accrued expenses and other 767 1,188 Deferred revenue 13 118 Operating lease right-of-use liabilities — 772 Total liabilities from discontinued operations $ 1,509 $ 3,135 The net cash used in operating activities and investing activities for the discontinued operations for the nine months ended September 30, 2020 and 2019, were as follows (in thousands): Nine Months Ended September 30, 2020 2019 Net cash used in operating activities $ (1,821) $ (5,324) Net cash used in investing activities $ — $ (60) |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for real estate and certain equipment. The Company leases office space in Canada, France, Germany, Spain, the U.K., and the U.S. under operating leases. Our leases have remaining lease terms ranging from less than one year up to ten years. Certain leases include one or more options to renew. In addition, we sublease real estate to a third party. All of our leases qualify as operating leases. The following table summarizes the components of lease expense for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 1,011 $ 995 $ 3,423 $ 3,337 Short-term lease cost 6 45 19 771 Variable lease cost 227 329 779 925 Sublease income (84) (84) (252) (252) Total lease cost $ 1,160 $ 1,285 $ 3,969 $ 4,781 For the nine months ended September 30, 2020 and 2019, cash payments against the operating lease liabilities total ed $3.1 million and $4.1 million, respectively. ROU assets obtained in exchange for lease obligations was $3.2 million and $7.6 million for nine months ended September 30, 2020 and 2019, respectively. The following table summarizes the presentation in our condensed consolidated balance sheets of our operating leases (in thousands): September 30, 2020 December 31, 2019 Assets: Operating lease right-of-use assets $ 9,076 $ 8,140 Liabilities: Operating lease liabilities $ 3,988 $ 4,847 Long-term operating lease liabilities 11,425 7,920 Total operating lease liabilities $ 15,413 $ 12,767 Weighted average remaining lease term (years) 7.21 4.50 Weighted average discount rate 3.7 % 3.4 % Maturities of lease liabilities were as follows (in thousands): Years ending December 31, 2020 (excluding the nine months ended September 30, 2020) $ 1,216 2021 3,642 2022 2,282 2023 1,875 2024 1,423 Thereafter 6,975 Total lease payments 17,413 Less interest (2,000) Present value of operating lease liabilities $ 15,413 |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On October 22, 2020, Azzurro, a siginficant shareholder of the Company, purchased 50,000 shares of the Company’s common stock from Mr. Holger Bartel at a price of $7.80 based on the closing price of October 21, 2020. Ralph Bartel, who founded the Company and who is a Director of the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Mr. Holger Bartel had previously granted a proxy to Azzurro with power to vote these shares. Azzurro had reported those shares as beneficially owned by it because of the voting power, although it disclaimed beneficial ownership and had no pecuniary interest in the shares. This related party transaction was reviewed and approved in advance by the Audit Committee of the Board of Directors of the Company. In October 2020, the Company paid the remaining $1.7 million of promissory notes payable, plus accrued interest of $79,000, to the Sellers of Jack's Flight Club (See Note 3: Acquisition). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which provides new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. This update is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For Smaller Reporting Companies (as such term is defined by the SEC), such as Travelzoo, the standard will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities are required to apply this update on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact on its financial position and results of operations. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units' fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU is effective for fiscal years beginning after December 15, 2022 for Smaller Reporting Companies, including interim periods within those fiscal years, with early adoption permitted. The Company early adopted ASU 2017-04 as of January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The guidance is effective for calendar-year public business entities in 2020. Early adoption is permitted. The adoption did not have a material impact on the Company’s financial position, results of operations and cash flows. |
Business Combinations | Business Combinations The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The Company records the net assets and results of operations of an acquired entity from the acquisition date and adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. |
Identifiable intangible assets | Identifiable intangible assets Upon acquisition, identifiable intangible assets are recorded at fair value and are carried at cost less accumulated amortization. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. The carrying values of all intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. |
Goodwill | GoodwillGoodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets. Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. In testing goodwill for impairment, the Company first uses a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the qualitative assessment indicates that goodwill impairment is more likely than not, the Company performs an impairment test by comparing the book value of net assets to the fair value of the reporting units. |
Leases | Leases The Company determines if an arrangement contains a lease at inception. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease payments used to determine the operating lease assets may include lease incentives and stated rent increases. The Company does not include options to extend or terminate until it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The Company elected not to recognize leases with an initial term of 12 months or less on its unaudited condensed consolidated balance sheets. The Company’s leases are reflected in operating lease ROU assets, operating lease liabilities and long-term operating lease liabilities in our unaudited condensed consolidated balance sheets. The lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company also has a real estate lease agreement which is subleased to a third party. The Company recognizes sublease income in “Other income (expense), net”, on a straight-line basis over the lease term in its condensed consolidated statements of income. |
Certain Risks and Uncertainties | Certain Risks and Uncertainties The Company’s business is subject to risks associated with its ability to attract and retain advertisers and offer products or services on compelling terms to our members. The global outbreak of COVID-19 is having an unprecedented impact on the global travel and hospitality industries. Governmental authorities have implemented numerous measures to try to contain the virus, including restrictions on travel, quarantines, shelter-in-place orders, business restrictions and complete shut-downs. The measures implemented to contain COVID-19 have had, and are expected to continue to have, a significant negative effect on our business, financial condition, results of operations and cash flows. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Restricted cash includes cash and cash equivalents that is restricted through legal contracts, regulations or our intention to use the cash for a specific purpose. Our restricted cash primarily relates to cash held for letters of credit for real estate leases. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" (Topic 606), using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company's revenues are primarily advertising fees generated from the publishing of travel and entertainment deals on the Travelzoo website, in the Top 20 email newsletter, in Newsflash and through the Travelzoo Network . The Company also generates transaction-based revenues from the sale of vouchers through our Local Deals and Getaways products and operation of a hotel booking platform and limited offerings of vacation packages. The Company's disaggregated revenues are included in “Note 9: Segment Reporting and Significant Customer Information”. For fixed-fee website advertising, the Company recognizes revenues ratably over the contracted placement period. For the Top 20 email newsletter and other email products, the Company recognizes revenues when the emails are delivered to its members. The Company offers advertising on a cost-per-click basis, which means that an advertiser pays the Company only when a user clicks on an advertisement on Travelzoo properties or Travelzoo Network members’ properties. For these customers, the Company recognizes revenues each time a user clicks on the ad. The Company also offers advertising on other bases, such as cost-per-impression, which means that an advertiser pays the Company based on the number of times their advertisement is displayed on Travelzoo properties, email advertisements, Travelzoo Network properties, or social media properties. For these customers, the Company recognizes revenues each time an advertisement is shown or email delivered. For transaction based revenues, including products such as Local Deals, Getaways, hotel platform and vacation packages, the Company evaluates whether it is the principal (i.e., report revenue on a gross basis) versus an agent (i.e., report revenue on a net basis). The Company reports transaction revenue on a net basis because the supplier is primarily responsible for providing the underlying service, and we do not control the service provided by the supplier prior to its transfer to the customer. For Local Deals and Getaways products, the Company earns a fee for acting as an agent for the sale of vouchers that can be redeemed for services with third-party merchants. Revenues are presented net of the amounts due to the third-party merchants for fulfilling the underlying services and an estimated amount for future refunds. Since the second quarter of 2020, the Company expanded its vouchers refund policy in order to entice customers given the current economic climate to fully refundable until the voucher expires or is redeemed by the customer. The Company now offers fully refundable refunds for vouchers that have not been redeemed or expired. The expiration dates of vouchers range between October 2020 through December 2022. The Company estimated the refund reserve by using historical and current refund rates by product and by merchant location to calculate the estimated future refunds. As of September 30, 2020, $2.3 million were reserved for vouchers sold which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet. Certain merchant contracts allow the Company to retain the proceeds from unredeemed vouchers. With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period. Jack’s Flight Club revenue is generated from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually. We recognize the revenue on a pro-rated basis based upon the subscription option. Commission revenue related to hotel platform is recognized ratably over the period of guest stay, net of an allowance for cancellations based upon historical patterns. For arrangements for booking non-cancelable reservations where the Company’s performance obligation is deemed to be the successful booking of a hotel reservation, we record revenue for the commissions upon completion of the hotel booking. The Company’s contracts with customers may include multiple performance obligations in which the Company allocates revenues to each performance obligation based upon its standalone selling price. The Company determines standalone selling price based on its overall pricing objectives, taking into consideration the type of services, geographical region of the customers, normal rate card pricing and customary discounts. Standalone selling price is generally determined based on the prices charged to customers when the product is sold separately. The Company relies upon the following practical expedients and exemptions allowed for in the ASC 606. The Company expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded in sales and marketing expenses. In addition, the Company does not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less and (b) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services performed. Travelzoo deferred revenue primarily consists of customer prepayments and undelivered performance obligations related to the Company’s contracts with multiple performance obligations. At December 31, 2019, $786,000 was recorded as deferred revenue, of which $17,000 and $344,000 was recognized as revenue during the three and nine months ended September 30, 2020, respectively. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts shown in the unaudited condensed consolidated statements of cash flows: September 30, December 31, 2020 2019 Cash and cash equivalents $ 50,528 $ 18,743 Restricted cash 1,155 1,135 Cash, cash equivalents and restricted cash–discontinued operations 301 832 Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 51,984 $ 20,710 |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts shown in the unaudited condensed consolidated statements of cash flows: September 30, December 31, 2020 2019 Cash and cash equivalents $ 50,528 $ 18,743 Restricted cash 1,155 1,135 Cash, cash equivalents and restricted cash–discontinued operations 301 832 Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 51,984 $ 20,710 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income per Share | The following table sets forth the calculation of basic and diluted net income per share (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Numerator: 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) Denominator: Weighted average common shares—basic 11,310 11,767 11,353 11,894 Effect of dilutive securities: stock options — 189 — 258 Weighted average common shares—diluted 11,310 11,956 11,353 12,152 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 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation | The purchase price allocation is based on estimates, assumptions and third-party valuations. The aggregate purchase price and allocation was as follows (in thousands): Purchase Price Jack’s Flight Club Cash paid $ 1,000 Promissory notes issued 10,931 Fair Value of Put/Call Option 183 $ 12,114 Allocation Goodwill $ 13,054 Intangible assets Customer relationships 3,500 Trade name 2,460 Non-compete agreements 660 Current assets acquired, including cash of $321 324 Current liabilities assumed (40) Deferred revenue (881) Deferred tax liabilities (1,391) Non-controlling interest (5,572) $ 12,114 |
Schedule of Goodwill | The following table summarizes the goodwill activity for the nine months ended September 30, 2020 (in thousands): Goodwill—January 1, 2020 $ — Acquisition 13,054 Impairment—March 31, 2020 (2,110) Goodwill—September 30, 2020 $ 10,944 |
Schedule of Intangible Assets | The following table represents the fair value and estimated useful lives of intangible assets (in thousands): Fair Value Estimated Life (Years) Customer relationships $ 3,500 5 Trade name 2,460 indefinite Non-compete agreements 660 4 The following table represents the activities of intangible assets for the three and nine months ended September 30, 2020 (in thousands): Fair Value Intangible assets—January 1, 2020 $ — Acquisition 6,620 Impairment of trade name (810) Amortization of intangible assets with definite lives (215) Intangible assets- March 31, 2020 5,595 Amortization of intangible assets with definite lives (395) Intangible assets- June 30, 2020 5,200 Amortization of intangible assets with definite lives (333) Intangible assets- September 30, 2020 $ 4,867 |
Schedule of Expected Future Amortization Expense | Expected future amortization expense of acquired intangible assets as of September 30, 2020 is as follows (in thousands): Years ending December 31, 2020 remainder $ 333 2021 1,108 2022 875 2023 641 2024 250 Thereafter 10 $ 3,217 |
Summary of Pro Forma Financial Information | The following table summarizes the pro forma financial information (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues $ 13,787 $ 27,349 $ 41,239 $ 81,807 Net income (loss) $ (1,226) $ 1,231 $ (15,247) $ 4,626 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Loss | The following table summarizes the changes in accumulated other comprehensive loss (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Beginning balance $ (4,666) $ (4,229) $ (3,452) $ (4,214) Other comprehensive income (loss) due to foreign currency translation, net of tax 349 (221) (460) (236) Reclassification of amounts to income relating to APAC discontinued operations, net of tax 183 — (222) — Ending balance $ (4,134) $ (4,450) $ (4,134) $ (4,450) |
Segment Reporting and Signifi_2
Segment Reporting and Significant Customer Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Summary of Operating Results from Continuing Operations and Assets by Business Segment | The following is a summary of operating results by business segment (in thousands): Three Months Ended September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 9,002 $ 3,798 $ 987 $ — $ 13,787 Intersegment revenues (expenses) 141 (141) — — — Total net revenues 9,143 3,657 987 — 13,787 Operating profit (loss) $ (696) $ (757) $ 250 $ — $ (1,203) Three Months Ended September 30, 2019 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 14,444 $ 9,432 $ — $ (43) $ 23,833 Intersegment revenues (expenses) 895 (938) — 43 — Total net revenues 15,339 8,494 — — 23,833 Operating profit (loss) $ 2,620 $ 815 $ — $ (43) $ 3,392 Nine Months Ended September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 25,805 $ 12,706 $ 2,615 $ (8) $ 41,118 Intersegment revenues (expenses) 237 (245) — 8 — Total net revenues 26,042 12,461 2,615 — 41,118 Operating profit (loss) $ (6,374) $ (3,781) $ (3,013) $ (8) $ (13,176) Nine Months Ended September 30, 2019 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Revenues from unaffiliated customers $ 50,074 $ 29,619 $ — $ (94) $ 79,599 Intersegment revenues (expenses) 1,776 (1,870) — 94 — Total net revenues 51,850 27,749 — — 79,599 Operating profit (loss) $ 10,673 $ 3,536 $ — $ (94) $ 14,115 |
Schedule of Revenue and Long Lived Assets by Geographical Location | The following is a summary of assets by business segment (in thousands): As of September 30, 2020 Travelzoo North Travelzoo Europe Jack’s Flight Club Elimination Consolidated Long-lived assets $ 1,243 $ 256 $ — $ — $ 1,499 Total assets excluding discontinued operations $ 122,067 $ 84,361 $ 5,797 $ (121,247) $ 90,978 As of December 31, 2019 Travelzoo North Travelzoo Europe Elimination Consolidated Long-lived assets $ 2,598 $ 263 $ — $ 2,861 Total assets excluding discontinued operations $ 66,057 $ 74,604 $ (90,084) $ 50,577 The following table sets forth the breakdown of revenues (in thousands) by category and segment. Travel revenue includes travel publications ( Top 20 , Travelzoo website, Newsflash , Travelzoo Network ), Getaways vouchers, hotel platform and vacation packages. Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings). Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Travelzoo North America Travel $ 8,706 $ 12,899 $ 23,772 $ 44,470 Local 437 2,440 2,270 7,380 Total Travelzoo North America revenues 9,143 15,339 26,042 51,850 Travelzoo Europe Travel 3,449 7,727 11,442 24,804 Local 208 767 1,019 2,945 Total Travelzoo Europe revenues 3,657 8,494 12,461 27,749 Jack’s Flight Club 987 — 2,615 — Consolidated Travelzoo Travel 12,155 20,626 35,214 69,274 Travelzoo Local 645 3,207 3,289 10,325 Jack’s Flight Club 987 — 2,615 — Total revenues $ 13,787 $ 23,833 $ 41,118 $ 79,599 Revenue by geography is based on the billing address of the advertiser. Long-lived assets attributed to the U.S. and international geographies are based upon the country in which the asset is located or owned. The following table sets forth revenue for countries that exceed 10% of total revenue (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenue United States $ 8,345 $ 13,817 $ 23,753 $ 47,041 United Kingdom 3,095 4,335 10,189 14,930 Germany 1,386 2,830 4,148 9,262 Rest of the world 961 2,851 3,028 8,366 Total revenues $ 13,787 $ 23,833 $ 41,118 $ 79,599 The following table sets forth property and equipment by geographic area (in thousands): September 30, December 31, 2020 2019 United States $ 1,025 $ 2,359 Rest of the world 474 502 Total long-lived assets $ 1,499 $ 2,861 |
Discontinued Operation (Tables)
Discontinued Operation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of Discontinued Operations | The following table provides a summary of amounts included in discontinued operations for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Revenues $ — $ 1,672 $ 970 $ 4,915 Cost of revenues — 128 6 294 Gross profit — 1,544 964 4,621 Operating expenses: Sales and marketing — 2,266 1,712 6,591 Product development — 44 — 124 General and administrative 69 1,412 3,413 3,412 Total operating expenses 69 3,722 5,125 10,127 Loss from operations (69) (2,178) (4,161) (5,506) Other income (loss), net (161) (170) 217 (428) Loss before income taxes (230) (2,348) (3,944) (5,934) Income tax expense — (90) — (121) Net loss $ (230) $ (2,258) $ (3,944) $ (5,813) The following table presents information related to the major classes of assets and liabilities that were classified as assets and liabilities from discontinued operations in the Condensed Consolidated Balance Sheets (in thousands): September 30, December 31, ASSETS Cash, cash equivalents and restricted cash $ 301 $ 832 Accounts receivable, net 115 1,797 Deposits — 9 Prepaid expenses and other 36 208 Deposits and other 2 248 Operating lease right-of-use assets — 746 Property and equipment, net — 121 Total assets from discontinued operations $ 454 $ 3,961 LIABILITIES Accounts payable $ 729 $ 1,057 Accrued expenses and other 767 1,188 Deferred revenue 13 118 Operating lease right-of-use liabilities — 772 Total liabilities from discontinued operations $ 1,509 $ 3,135 The net cash used in operating activities and investing activities for the discontinued operations for the nine months ended September 30, 2020 and 2019, were as follows (in thousands): Nine Months Ended September 30, 2020 2019 Net cash used in operating activities $ (1,821) $ (5,324) Net cash used in investing activities $ — $ (60) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Components of Lease Cost | The following table summarizes the components of lease expense for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 1,011 $ 995 $ 3,423 $ 3,337 Short-term lease cost 6 45 19 771 Variable lease cost 227 329 779 925 Sublease income (84) (84) (252) (252) Total lease cost $ 1,160 $ 1,285 $ 3,969 $ 4,781 |
Lease Assets and Liabilities | The following table summarizes the presentation in our condensed consolidated balance sheets of our operating leases (in thousands): September 30, 2020 December 31, 2019 Assets: Operating lease right-of-use assets $ 9,076 $ 8,140 Liabilities: Operating lease liabilities $ 3,988 $ 4,847 Long-term operating lease liabilities 11,425 7,920 Total operating lease liabilities $ 15,413 $ 12,767 Weighted average remaining lease term (years) 7.21 4.50 Weighted average discount rate 3.7 % 3.4 % |
Lease Liability Maturity | Maturities of lease liabilities were as follows (in thousands): Years ending December 31, 2020 (excluding the nine months ended September 30, 2020) $ 1,216 2021 3,642 2022 2,282 2023 1,875 2024 1,423 Thereafter 6,975 Total lease payments 17,413 Less interest (2,000) Present value of operating lease liabilities $ 15,413 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands, member in Millions | Aug. 24, 2020 | Jun. 16, 2020USD ($) | Jun. 16, 2020JPY (¥) | Jun. 16, 2020SGD ($) | May 05, 2020USD ($) | Apr. 24, 2020USD ($) | Jan. 13, 2020USD ($) | Feb. 29, 2020USD ($) | Apr. 30, 2019USD ($) | Apr. 30, 2018USD ($) | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)member | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction | ||||||||||||||||
Number of members | member | 30 | |||||||||||||||
Goodwill | $ 10,944 | $ 10,944 | $ 0 | |||||||||||||
Payment to acquire equity method investment | 679 | $ 0 | ||||||||||||||
Interest expense | $ 9 | $ 16 | ||||||||||||||
Ownership percentage held by related party | 39.50% | 39.50% | ||||||||||||||
Impairment of identifiable intangible assets | $ 810 | |||||||||||||||
Goodwill impairments | $ 2,100 | |||||||||||||||
Negative working capital | $ 13,700 | $ 13,700 | ||||||||||||||
Voucher liability, current | 2,300 | 2,300 | ||||||||||||||
Deferred revenue | 786 | |||||||||||||||
Deferred revenue recognized | $ 17 | $ 344 | ||||||||||||||
Including Holger Proxy | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Ownership percentage held by related party | 39.90% | 39.90% | ||||||||||||||
Jack’s Flight Club | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Number of members | member | 1.7 | |||||||||||||||
Percentage of ownership before transaction (up to) | 100.00% | |||||||||||||||
Goodwill | $ 13,054 | $ 10,944 | $ 10,944 | $ 0 | ||||||||||||
Stated interest rate | 1.60% | |||||||||||||||
Goodwill impairments | 2,110 | |||||||||||||||
Weekengo | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Equity method purchase price allocation, tangible assets | 1,000 | 1,000 | ||||||||||||||
Goodwill | 1,500 | 1,500 | ||||||||||||||
Payment to acquire equity method investment | $ 1,700 | $ 673 | $ 3,000 | |||||||||||||
Equity method investment ownership percentage | 26.60% | 25.00% | ||||||||||||||
Loss from share of equity loss and intangible asset amortization | 51 | $ 323 | 384 | 732 | ||||||||||||
Weekengo | Technology related intangible | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Equity method purchase price allocation, intangible assets | 485 | $ 485 | ||||||||||||||
Intangible assets, useful life | 3 years | |||||||||||||||
Weekengo | Equity Method Investee | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Insertion order signed to advertise with Travelzoo | $ 2,100 | |||||||||||||||
Advertising services purchased | $ 23 | $ 130 | $ 383 | $ 924 | ||||||||||||
Discontinued Operations, Disposed of by Sale | Travelzoo Japan | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Term | 3 years | 3 years | 3 years | |||||||||||||
Interest free loan amount | $ 430 | ¥ 46,000,000 | ||||||||||||||
Travelzoo Japan | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Percentage of ownership before transaction (up to) | 100.00% | 100.00% | 100.00% | |||||||||||||
Pre-tax loss | $ 128 | |||||||||||||||
Proceeds from Divestiture of Businesses | ¥ | ¥ 1 | |||||||||||||||
Travelzoo Japan | Royalty Agreement Terms | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Term | 5 years | 5 years | 5 years | |||||||||||||
Travelzoo Japan | Loan Issued to Travelzoo Japan | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Term | 3 years | 3 years | 3 years | |||||||||||||
Travelzoo Singapore | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Percentage of ownership before transaction (up to) | 100.00% | |||||||||||||||
Proceeds from Divestiture of Businesses | $ 1 | |||||||||||||||
Travelzoo Singapore | Royalty Agreement Terms | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Term | 5 years | |||||||||||||||
Small Business Administration (SBA), CARES Act, Paycheck Protection Program | ||||||||||||||||
Related Party Transaction | ||||||||||||||||
Term | 2 years | |||||||||||||||
Amount received under PPP | $ 535 | $ 3,100 | ||||||||||||||
Stated interest rate | 1.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 50,528 | $ 18,743 | ||
Restricted cash | 1,155 | 1,135 | ||
Cash, cash equivalents and restricted cash–discontinued operations | 301 | 832 | ||
Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows | $ 51,984 | $ 20,710 | $ 12,913 | $ 19,461 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||
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) |
Denominator: | ||||
Weighted average common shares - basic (in shares) | 11,310 | 11,767 | 11,353 | 11,894 |
Effect of dilutive securities: stock options (in shares) | 0 | 189 | 0 | 258 |
Weighted average common shares - diluted (in shares) | 11,310 | 11,956 | 11,353 | 12,152 |
Income (loss) per share—basic | ||||
Continuing operations (in dollars per share) | $ (0.10) | $ 0.22 | $ (0.90) | $ 0.89 |
Discontinued operations (in dollars per share) | (0.02) | (0.19) | (0.35) | (0.49) |
Net income (loss) per share - basic (in dollars per share) | (0.12) | 0.03 | (1.25) | 0.40 |
Income (loss) per share—diluted | ||||
Continuing operations (in dollars per share) | (0.10) | 0.21 | (0.90) | 0.87 |
Discontinuing operations (in dollars per share) | (0.02) | (0.19) | (0.35) | (0.49) |
Net income (loss) per share - diluted (in dollars per share) | $ (0.12) | $ 0.03 | $ (1.25) | $ 0.39 |
Anti-dilutive shares not included in computation of net income (loss) per common share (in shares) | 3,400 | 1,100 | 3,400 | 1,100 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) $ in Thousands | Jun. 03, 2020USD ($)$ / shares | Jan. 13, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($) |
Business Acquisition [Line Items] | ||||||
Amortization expense | $ 333 | $ 395 | $ 215 | $ 943 | ||
Goodwill impairments | 2,100 | |||||
Interest expense | 9 | 16 | ||||
Jack’s Flight Club | Promissory Notes | ||||||
Business Acquisition [Line Items] | ||||||
Outstanding debt amount | $ 10,000 | |||||
Amount of debt forgiven | 1,500 | $ 1,500 | ||||
Repayments of debt | 6,800 | |||||
Debt amount remaining | $ 1,700 | |||||
Interest rate during period | 12.00% | |||||
Interest expense | $ 52 | 131 | ||||
Threshold amount | $ 4,300 | |||||
EBITDA multiplier | $ / shares | 3.5 | |||||
Jack’s Flight Club | Promissory Notes | 2020 | ||||||
Business Acquisition [Line Items] | ||||||
Repayments of debt | $ 448 | |||||
Percent of net profit requirement | 20.00% | 20.00% | ||||
Jack’s Flight Club | Promissory Notes | 2021 | ||||||
Business Acquisition [Line Items] | ||||||
Percent of net profit requirement | 20.00% | |||||
Percent of EBITDA purchase price requirement | 40.00% | |||||
Jack’s Flight Club | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of ownership before transaction (up to) | 100.00% | |||||
Stock repurchased during period, value | $ 12,000 | |||||
Cash paid | 1,000 | |||||
Promissory note including interest | $ 11,000 | |||||
Stated interest rate | 1.60% | |||||
Intangible assets | $ 6,600 | |||||
Goodwill impairments | $ 2,110 | |||||
Jack’s Flight Club | Trade name | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 2,460 | |||||
Goodwill impairments | $ 810 | |||||
Jack’s Flight Club | Stock Purchase Agreement | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of ownership after transaction | 60.00% | 40.00% |
Acquisition - Schedule of Purch
Acquisition - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jan. 13, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Allocation | |||
Goodwill | $ 10,944 | $ 0 | |
Non-controlling interest | $ (5,572) | ||
Jack’s Flight Club | |||
Purchase Price | |||
Cash paid | 1,000 | ||
Promissory notes issued | 10,931 | ||
Fair Value of Put/Call Option | 183 | ||
Total purchase price | 12,114 | ||
Allocation | |||
Goodwill | 13,054 | $ 10,944 | $ 0 |
Intangible assets | 6,600 | ||
Current assets acquired, including cash of $321 | 324 | ||
Current liabilities assumed | (40) | ||
Deferred revenue | (881) | ||
Deferred tax liabilities | (1,391) | ||
Net allocation | 12,114 | ||
Cash and equivalents | 321 | ||
Jack’s Flight Club | Customer relationships | |||
Allocation | |||
Intangible assets | 3,500 | ||
Jack’s Flight Club | Trade name | |||
Allocation | |||
Intangible assets | 2,460 | ||
Jack’s Flight Club | Non-compete agreements | |||
Allocation | |||
Intangible assets | $ 660 |
Acquisition - Schedule of Goodw
Acquisition - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Mar. 31, 2020 | Sep. 30, 2020 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 0 | $ 0 |
Impairment—March 31, 2020 | (2,100) | |
Goodwill, ending balance | 10,944 | |
Jack’s Flight Club | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 0 | 0 |
Acquisition | 13,054 | |
Impairment—March 31, 2020 | (2,110) | |
Goodwill, ending balance | $ 10,944 |
Acquisition - Schedule of Intan
Acquisition - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 13, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 |
Intangible Assets, Excluding Goodwill [Roll Forward] | |||||
Intangible assets beginning | $ 5,200 | $ 5,595 | $ 0 | $ 0 | |
Acquisition | 6,620 | ||||
Impairment of trade name | (810) | ||||
Amortization of intangible assets with definite lives | (333) | (395) | (215) | (943) | |
Intangible assets ending | $ 4,867 | $ 5,200 | $ 5,595 | $ 4,867 | |
Jack’s Flight Club | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 6,600 | ||||
Jack’s Flight Club | Customer relationships | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 3,500 | ||||
Estimated Life (Years) | 5 years | ||||
Jack’s Flight Club | Trade name | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 2,460 | ||||
Jack’s Flight Club | Non-compete agreements | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Fair Value | $ 660 | ||||
Estimated Life (Years) | 4 years |
Acquisition - Schedule of Expec
Acquisition - Schedule of Expected Future Amortization Expense (Details) - Jack’s Flight Club $ in Thousands | Sep. 30, 2020USD ($) |
Business Acquisition [Line Items] | |
2020 remainder | $ 333 |
2021 | 1,108 |
2022 | 875 |
2023 | 641 |
2024 | 250 |
Thereafter | 10 |
Total | $ 3,217 |
Acquisition - Summary of Pro Fo
Acquisition - Summary of Pro Forma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Combinations [Abstract] | ||||
Revenues | $ 13,787 | $ 27,349 | $ 41,239 | $ 81,807 |
Net income (loss) | $ (1,226) | $ 1,231 | $ (15,247) | $ 4,626 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Travel Zoo Com Corporation - shares | 12 Months Ended | |
Dec. 31, 2004 | Dec. 31, 2002 | |
Business Acquisition [Line Items] | ||
Period for receiving shares under merger | 2 years | 2 years |
Number of shares exchanged under merger (in shares) | 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 20.00% | 25.00% | 15.00% | 25.00% | |
Unrecognized deferred tax liability | $ 549 | $ 549 | |||
Total unrecognized tax benefits | 152 | 152 | |||
Accrued interest and penalties | $ 229 | $ 229 | $ 207 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning balance | $ (301,000) | $ 14,227,000 | $ 10,863,000 | $ 14,059,000 |
Reclassification of amounts to income relating to APAC discontinued operations, net of tax | 183,000 | 0 | (222,000) | 0 |
Ending balance | 69,000 | 12,398,000 | 69,000 | 12,398,000 |
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Beginning balance | (4,666,000) | (4,229,000) | (3,452,000) | (4,214,000) |
Ending balance | (4,134,000) | (4,450,000) | (4,134,000) | (4,450,000) |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss) due to foreign currency translation, net of tax | $ 349,000 | $ (221,000) | $ (460,000) | $ (236,000) |
Stock-Based Compensation and _2
Stock-Based Compensation and Stock Options (Details) - Stock Options $ / shares in Units, $ in Thousands | May 29, 2020$ / sharesshares | Sep. 30, 2019$ / sharesshares | May 31, 2019installment$ / sharesshares | Jun. 30, 2018$ / sharesshares | May 31, 2018$ / sharesshares | Oct. 31, 2017$ / sharesshares | Sep. 30, 2015$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Dec. 31, 2019shares | Dec. 31, 2015shares |
September 2015 Plan | Mr. Ralph Bartel | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 400,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 8.07 | ||||||||||||
October 2017 Plan | Mr. Ralph Bartel | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 400,000 | 150,000 | |||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 6.95 | ||||||||||||
Options exercised (in shares) | 250,000 | ||||||||||||
September 2019 Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 300,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 10.79 | ||||||||||||
Options vested and become exercisable annually (in shares) | 75,000 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | $ (362) | $ (523) | |||||||||||
Unrecognized stock-based compensation expense | $ | 1,400 | $ 1,400 | |||||||||||
Expected duration for recognition of stock based compensation expense | 2 years 10 months 24 days | ||||||||||||
Options forfeited (in shares) | 100,000 | ||||||||||||
September 2019 Plan | Mr. Ralph Bartel | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 10.79 | ||||||||||||
Options vested and become exercisable annually (in shares) | 400,000 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | (382) | $ (3,900) | |||||||||||
Unrecognized stock-based compensation expense | $ | 1,900 | $ 1,900 | |||||||||||
Expected duration for recognition of stock based compensation expense | 1 year 2 months 12 days | ||||||||||||
September 2019 Plan | Key Employees | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 50,000 | ||||||||||||
May 2020 Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 100,000 | ||||||||||||
Share price (in dollars per share) | $ / shares | $ 3.49 | ||||||||||||
Shares issued upon exercise of options (in shares) | 300,000 | ||||||||||||
May 2020 Plan | Mr. Ralph Bartel | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 800,000 | 1,900,000 | |||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 3.49 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | (385) | $ (771) | |||||||||||
Unrecognized stock-based compensation expense | $ | $ 2,300 | 2,300 | |||||||||||
Expected duration for recognition of stock based compensation expense | 1 year 6 months | ||||||||||||
May 2020 Plan | Key Employees | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 200,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 3.49 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | $ (59) | (79) | |||||||||||
Unrecognized stock-based compensation expense | $ | 707 | $ 707 | |||||||||||
Expected duration for recognition of stock based compensation expense | 3 years 6 months | ||||||||||||
May 2018 Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 50,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 14.70 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | $ 0 | $ (22) | $ (34) | $ (67) | |||||||||
Options forfeited (in shares) | 25,000 | ||||||||||||
June 2018 Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 50,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 16.65 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | $ (21) | $ (43) | $ (53) | ||||||||||
Options forfeited (in shares) | 37,500 | ||||||||||||
May 2019 Plan | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Employee options granted to purchase shares of common stock (in shares) | 100,000 | ||||||||||||
Exercise price of employee option shares of common stock (in dollars per share) | $ / shares | $ 19.28 | ||||||||||||
Total stock-based compensation expense (reversal) | $ | $ (107) | ||||||||||||
Options forfeited (in shares) | 75,000 | ||||||||||||
Number of installments | installment | 3 | ||||||||||||
Options canceled (in shares) | 25,000 | ||||||||||||
May 2019 Plan | September 2019 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Options vested and exercisable in future periods (in shares) | 15,000 | ||||||||||||
May 2019 Plan | May 2019 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Options vested (in shares) | 10,000 | ||||||||||||
May 2019 Plan | Tranche One | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Options vested and exercisable in future periods (in shares) | 25,000 | ||||||||||||
May 2019 Plan | Tranche Two | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Options vested and exercisable in future periods (in shares) | 25,000 | ||||||||||||
May 2019 Plan | Tranche Three | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Options vested and exercisable in future periods (in shares) | 25,000 |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 30, 2019 | Feb. 28, 2019 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | May 31, 2019 | |
February 2019 Plan | ||||||
Class of Stock [Line Items] | ||||||
Shares repurchased and retired during period (in shares) | 100,000 | |||||
Stock repurchased during period, value | $ 1.6 | |||||
May 2019 Plan | ||||||
Class of Stock [Line Items] | ||||||
Stock repurchased during period, value | $ 2.3 | $ 1.2 | $ 7.2 | |||
Number of shares authorized for repurchase (up to) (in shares) | 1,000,000 | |||||
Shares repurchased during period (in shares) | 186,369 | 169,602 | 436,369 | |||
Remaining number of shares authorized to be repurchased (in shares) | 395,029 | |||||
November 2019 Plan | ||||||
Class of Stock [Line Items] | ||||||
Shares repurchased and retired during period (in shares) | 200,000 | |||||
Stock repurchased during period, value | $ 2 |
Segment Reporting and Signifi_3
Segment Reporting and Significant Customer Information - Narrative (Details) - segment | Jan. 13, 2020 | Sep. 30, 2020 |
Segment Reporting Information [Line Items] | ||
Number of reportable operating segments | 3 | |
Jack’s Flight Club | Stock Purchase Agreement | ||
Segment Reporting Information [Line Items] | ||
Percentage of ownership after transaction | 60.00% | 40.00% |
Segment Reporting and Signifi_4
Segment Reporting and Significant Customer Information - Operating Results from Continuing Operations and Assets by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 13,787 | $ 23,833 | $ 41,118 | $ 79,599 |
Operating profit (loss) | (1,203) | 3,392 | (13,176) | 14,115 |
Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 9,143 | 15,339 | 26,042 | 51,850 |
Operating profit (loss) | (696) | 2,620 | (6,374) | 10,673 |
Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 3,657 | 8,494 | 12,461 | 27,749 |
Operating profit (loss) | (757) | 815 | (3,781) | 3,536 |
Jack’s Flight Club | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 987 | 0 | 2,615 | 0 |
Operating profit (loss) | 250 | 0 | (3,013) | 0 |
Operating Segments | Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 9,002 | 14,444 | 25,805 | 50,074 |
Operating Segments | Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 3,798 | 9,432 | 12,706 | 29,619 |
Operating Segments | Jack’s Flight Club | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 987 | 0 | 2,615 | 0 |
Intersegment revenues (expenses) | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 0 | (43) | (8) | (94) |
Operating profit (loss) | 0 | (43) | (8) | (94) |
Intersegment revenues (expenses) | Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 141 | 895 | 237 | 1,776 |
Intersegment revenues (expenses) | Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | (141) | (938) | (245) | (1,870) |
Intersegment revenues (expenses) | Jack’s Flight Club | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Segment Reporting and Signifi_5
Segment Reporting and Significant Customer Information - Long Lived Assets by Business Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | $ 1,499 | $ 2,861 |
Total assets excluding discontinued operations | 90,978 | 50,577 |
Elimination | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | 0 | 0 |
Total assets excluding discontinued operations | (121,247) | (90,084) |
Travelzoo North America | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | 1,243 | 2,598 |
Total assets excluding discontinued operations | 122,067 | 66,057 |
Travelzoo Europe | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | 256 | 263 |
Total assets excluding discontinued operations | 84,361 | $ 74,604 |
Jack’s Flight Club | Operating Segments | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | 0 | |
Total assets excluding discontinued operations | $ 5,797 |
Segment Reporting and Signifi_6
Segment Reporting and Significant Customer Information - Revenue by Type and Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 13,787 | $ 23,833 | $ 41,118 | $ 79,599 |
Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 9,143 | 15,339 | 26,042 | 51,850 |
Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 3,657 | 8,494 | 12,461 | 27,749 |
Jack’s Flight Club | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 987 | 0 | 2,615 | 0 |
Travel | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 12,155 | 20,626 | 35,214 | 69,274 |
Travel | Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 8,706 | 12,899 | 23,772 | 44,470 |
Travel | Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 3,449 | 7,727 | 11,442 | 24,804 |
Local | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 645 | 3,207 | 3,289 | 10,325 |
Local | Travelzoo North America | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | 437 | 2,440 | 2,270 | 7,380 |
Local | Travelzoo Europe | ||||
Revenues from External Customers and Long-Lived Assets | ||||
Total revenues | $ 208 | $ 767 | $ 1,019 | $ 2,945 |
Segment Reporting and Signifi_7
Segment Reporting and Significant Customer Information - Revenue for Individual Countries that Exceed 10% of Total Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Major Customer [Line Items] | ||||
Total revenues | $ 13,787 | $ 23,833 | $ 41,118 | $ 79,599 |
United States | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 8,345 | 13,817 | 23,753 | 47,041 |
United Kingdom | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 3,095 | 4,335 | 10,189 | 14,930 |
Germany | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 1,386 | 2,830 | 4,148 | 9,262 |
Rest of the world | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | $ 961 | $ 2,851 | $ 3,028 | $ 8,366 |
Segment Reporting and Signifi_8
Segment Reporting and Significant Customer Information - Long Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | $ 1,499 | $ 2,861 |
United States | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | 1,025 | 2,359 |
Rest of the world | ||
Revenues from External Customers and Long-Lived Assets | ||
Long-lived assets | $ 474 | $ 502 |
Discontinued Operation - Summar
Discontinued Operation - Summary of Amounts Included in Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Operating expenses: | ||||
Net loss | $ (230) | $ (2,258) | $ (3,944) | $ (5,813) |
Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 0 | 1,672 | 970 | 4,915 |
Cost of revenues | 0 | 128 | 6 | 294 |
Gross profit | 0 | 1,544 | 964 | 4,621 |
Operating expenses: | ||||
Sales and marketing | 0 | 2,266 | 1,712 | 6,591 |
Product development | 0 | 44 | 0 | 124 |
General and administrative | 69 | 1,412 | 3,413 | 3,412 |
Total operating expenses | 69 | 3,722 | 5,125 | 10,127 |
Loss from operations | (69) | (2,178) | (4,161) | (5,506) |
Other income (loss), net | (161) | (170) | 217 | (428) |
Loss before income taxes | (230) | (2,348) | (3,944) | (5,934) |
Income tax expense | 0 | (90) | 0 | (121) |
Net loss | $ (230) | $ (2,258) | $ (3,944) | $ (5,813) |
Discontinued Operation - Narrat
Discontinued Operation - Narrative (Details) $ in Thousands, ¥ in Millions | Aug. 24, 2020 | Jun. 16, 2020USD ($) | Jun. 16, 2020JPY (¥) | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Severance and disposal costs | $ 1,600 | |||||||
Operating expenses | $ 12,066 | $ 17,589 | $ 46,526 | $ 57,095 | ||||
Disposal Group, Not Discontinued Operations | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Cost of revenue | 0 | 24 | 64,000 | 94 | ||||
Operating expenses | $ 0 | $ 150 | $ 7 | $ 129 | ||||
Discontinued Operations, Disposed of by Sale | Travelzoo Japan | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership percentage sold | 100.00% | 100.00% | ||||||
Gain (loss) on disposition of business | $ (128) | |||||||
Duration of royalty payments | 5 years | 5 years | ||||||
Interest free loan amount | $ 430 | ¥ 46 | ||||||
Term | 3 years | 3 years | ||||||
Discontinued Operations, Disposed of by Sale | Travelzoo Singapore | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership percentage sold | 100.00% | |||||||
Duration of royalty payments | 5 years |
Discontinued Operation - Summ_2
Discontinued Operation - Summary of Assets and Liabilities From Discontinued Operation (Details) - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash, cash equivalents and restricted cash | $ 301 | $ 832 |
Accounts receivable, net | 115 | 1,797 |
Deposits | 0 | 9 |
Prepaid expenses and other | 36 | 208 |
Deposits and other | 2 | 248 |
Operating lease right-of-use assets | 0 | 746 |
Property and equipment, net | 0 | 121 |
Total assets from discontinued operations | 454 | 3,961 |
LIABILITIES | ||
Accounts payable | 729 | 1,057 |
Accrued expenses and other | 767 | 1,188 |
Deferred revenue | 13 | 118 |
Operating lease right-of-use liabilities | 0 | 772 |
Total liabilities from discontinued operations | $ 1,509 | $ 3,135 |
Discontinued Operation - Summ_3
Discontinued Operation - Summary of Cash Flows (Details) - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net cash used in operating activities | $ (1,821) | $ (5,324) |
Net cash used in investing activities | $ 0 | $ (60) |
Leases - Narrative (Details)
Leases - Narrative (Details) | Sep. 30, 2020 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 1,011 | $ 995 | $ 3,423 | $ 3,337 |
Short-term lease cost | 6 | 45 | 19 | 771 |
Variable lease cost | 227 | 329 | 779 | 925 |
Sublease income | (84) | (84) | (252) | (252) |
Total lease cost | $ 1,160 | $ 1,285 | 3,969 | 4,781 |
Cash paid for amounts included in the measurement of lease liabilities | 3,063 | 4,084 | ||
Right-of-use assets obtained in exchange for lease obligations—operating leases | $ 3,207 | $ 7,578 |
Leases - Lease Balance Sheet In
Leases - Lease Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Operating lease right-of-use assets | $ 9,076 | $ 8,140 |
Liabilities: | ||
Operating lease liabilities | 3,988 | 4,847 |
Long-term operating lease liabilities | 11,425 | 7,920 |
Total operating lease liabilities | $ 15,413 | $ 12,767 |
Weighted average remaining lease term (years) | 7 years 2 months 15 days | 4 years 6 months |
Weighted average discount rate | 3.70% | 3.40% |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Liability Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (excluding the nine months ended September 30, 2020) | $ 1,216 | |
2021 | 3,642 | |
2022 | 2,282 | |
2023 | 1,875 | |
2024 | 1,423 | |
Thereafter | 6,975 | |
Total lease payments | 17,413 | |
Less interest | (2,000) | |
Present value of operating lease liabilities | $ 15,413 | $ 12,767 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 22, 2020 | Oct. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 21, 2020 |
Subsequent Event [Line Items] | |||||
Repayments of Notes Payable | $ 7,800 | $ 0 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Share price (in dollars per share) | $ 7.80 | ||||
Subsequent Event | Azzuro | Significant Shareholder | |||||
Subsequent Event [Line Items] | |||||
Number of shares sold | 50,000 | ||||
Subsequent Event | Jack’s Flight Club | Promissory Notes | |||||
Subsequent Event [Line Items] | |||||
Repayments of Notes Payable | $ 1,700 | ||||
Accrued interest | $ 79 |