TZOO - Earnings call transcript Q3 2020

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Operator

Hello everyone. Welcome to the Travelzoo Third Quarter 2020 Financial Results Conference Call. All participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. Today's call is being recorded. The company would like to remind you that all statements made during this conference call and presented in the slides, that are not statements of historical facts constitute forward-looking statements, and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. materially contained vary statements. the could results from in those forward-looking Actual company's XX-Q that to the statements the the results cause SEC. are XX-K materially in Factors actual in differ could filings other and periodic from those described Form with and forward-looking forward-looking information, Unless any future otherwise. the events update law, a as by undertakes no or whether required to result obligation company publicly statements, of new important information, issued Please including company's refer website to release morning. the earnings earlier for this company's press the this will call of available made website Travelzoo travelzoo.com/ir. the recording on archived An conference at be Relations Investor

Now Travelzoo's overview Su. an it's my pleasure Lisa and to Holger Lisa turn with results. the start of call the Global over Executive its to will Officer, third Chief Chief quarter Accounting Bartel; financial Officer, XXXX

Lisa Su

to Please those us Investor on follow welcome joining Relations presentation remarks. to presentation available at and open management with PDF travelzoo.com/ir. you today. our along prepared our website in The of operator, you, is the format Thank

operating provide management year-over-year to non-GAAP shows going to better explains expenses. able decided it On of only We you operating the growing our That reduce revenues Page first to evaluates slide $XX.X income, forward, recovery. The revenue, trend the We almost by have shows which Travelzoo cutting XX%. as to performance. compared QX, to begun doubling four, that of from by has business revenue and loss the million said, curb we non-GAAP EPS believe QX QX. the also strong path the were on increasing from QX. with also to to able three, how not compared decreased see quickly can operating the we QX QX. in in were on QX losses QX Page number but improvement by information to income

income. non-GAAP turn voucher in five, QX by This that million. calculation to $XX.X and year-over-year XX%. QX by effect presented revenue in eight effects business of a than versus of on grew business were ongoing income cash the year-over-year, decrease the of North decrease and driven the we the to Slide America seven due is able gives FX the and of items six, it the XX%, segment are On a balance with Slide clearly excluded operating result business million pandemic. However, positive, detail doubled segment sales. the of recorded neutralizing detail to our in Slides $X.X more segments. by almost recorded revenue changes, When XX% revenue of Europe a the

still the nine, stagnated picked adjustments, in headcount make or the profit as areas increasing most efficiency to to have close shows regaining to stay well-positioned if a in currently are of expect advertising QX, compared optimization, and use have towards and that of presented show reduction current off. expenses process we We While breakeven from local XX%, efficiency paid efforts receive across year-over-year maintain Travelzoo's XX profitability a in the mostly coming Slide up run. operating coming revenues of recovery. The to long in our sales marketing to path advertisers revenue reach. believe, from started and can Slide company. of and result We non-GAAP previous on we QX, back quarter, the

update Now our on and number Holger, provide please to Slide an turn will XX. members focus. management

Holger Bartel

adjusting Today, year. actually often our how environment. are members a considered we the by last industry. Travelzoo by members emphasize plus following minded. travel are forward influenced. than quickly Travelzoo enthusiasts. Travelzoo established. members including brand's and days more be members, open With pivoting X.X is trips I'd to changing our is more more success. high to and Many receiving importance are users, destination. app They or they more higher XX million Travelzoo's these from media XX Well, are and Lisa. have followers, and and Travelzoo XX% the spending are and growing ideas million vital mobile X the active. XX% deals they disposable social And quality segment This to leisure million loved took to look say members to travel, about talk like in spend age in a at on the group. of is emphasize income fastest you, the travel. Thank And the three

members believe are We large the Travel success unique Travelzoo Travelzoo selling Lastly, and a and XX% and trust the month's have asset. brand in future, vouchers last really this our love female. is for of shown Travelzoo. The members

Finally, unchanged please same page because turn the QX. quarter, last focus to page this from for XX. management's We remains left

operator the Q&A to our for back Now session.

Operator

Instructions]. [Operator

Our of first Goss line Barrington Research. the comes from Jim from question

Your question please.

Jim Goss

does just of recovery distance? those some willingness rely thank right seeing number Holger? into thing irresistibly willingness to. morning, characterizing and market the they have to don't great a of greater you up you. the and or how deals And couple. are to trips have it coming the just a have for always you to right seem are Good is returning I'm match the with as flexibility that How you're that in like, Are of things, to it wondering you about they I now, now. there's you consumer on travel. One the with travel a be priced of able to shape attention issues talk But those past if contrasting draw deals, that

Holger Bartel

Jim. Hi,

that A domestic trips. members, do few we them lot now half prepare right among of when the next So surveys in about in interest travel to of our is are months. or

I right seeing the because about is that's going of that falls a characterize next for deals believe somewhere year. what our I category of travel dreamers. would The voucher future. And now They members other into model we why lock today into dream are in can half successful,

wanting to demand go to people again, As and people of a soon trips. on as travel go are anticipate significant wanting still to ready we pent-up

Jim Goss

fourth I shape that about profitable. of talked that of So quarter safe, potentially Is in will that better, just rebound? that in quarter you even that know the and be fairly of being terms first recovery, terms of timing

Holger Bartel

So far a also month now seen over recovery. is better. very right very, last getting six Every steady months looks better. we've QX the

You QX. we trend are us. will recovery QX But to never Right now, expecting revenues an the we this saw what that of this increase confident from trend we in that for will that very world are bring travel - continue. know

Jim Goss

the A the think renewed worse recent European do will couple was doing North others. and disparity? some for American seem Europe, to seemed better, of be at that was that Europe Why the of that it than intrigued you of was that lockdowns. side account until numbers from pond least this - the numbers, I it

Holger Bartel

Europeans tend to be more cautious.

is generally But same, more European more think America. we a I that's, a think, I optimistic say. in than of the started American the recovery hesitant. they're would bit I is consumer. speed much The consumer reflected what's in the North And Americans, data. little in than Europe, later

Jim Goss

pretty on Okay. other or a Flight start not any certainly Are with had to immediate you. experience extend terms your business, if its try subscription of a And Jack's to it's model in good lastly, the to areas to plan the forward? Clubs, you even planning to but closer

Holger Bartel

revenues not Jack's Flight Right any growing the Clubs business. to changes is make Travelzoo on now and our focus

Jim Goss

Thanks Okay. very much.

Holger Bartel

Sure, Jim.

You're welcome.

Operator

Thank you.

of line comes Kupinski question the Capital from Markets. Michael Noble next Our from

please. question, Your

Michael Kupinski

much the beat been it's quarter, at you expectation. hard a quarter my like to And through you. work I second Thank but know and least

So that. congratulations on

are in seeing most you up March. would since people or So haven't as is the international travelling first are domestic I largest gotten first that question Airlines of of international. of that know my travel, the some of number the versus picking starting pandemic all, the travel began I is see like, U.S. in to domestic well? big distinction I between assume that

Holger Bartel

Yes.

now. general, most You're domestic That's members in Right are interested much absolutely and revenue more correct. now, our generating consumers travel. what's our in right

story And earnings that we what international because end in thank expect travel Michael, in of a will QX last quite actually XXXX. predicted in better our you, we we than happy the more be feel call. are also We

end our that even So quite came the in, expectations. higher of we happy are above we

Michael Kupinski

that - things recently other you're that to of we countries, - Are of about kind is of company - I hear I that backwards terms Union countries that? those that their follow off or European of to close of I terms economy. is - you're in And guess went And we're like - - kind has of what lockdowns not and likely Great. shutting of down in type pattern, like sense starting was if market? wondering what Ireland see since one Ireland kind other know is kind your in that to just going

Holger Bartel

Look, these are political all decisions.

change to rapidly. very second, quite fragmented and tend First, they are their mind politicians

why I is it a even do voucher So hard The also it's suppliers they of and it today. lock-in will that like allows to that's beauty to the model, much, so our what predict the member travel trip. the from very week basically think

if the So with Ireland, so to they your lock-in take trip can example I Ireland.

which Ireland voucher as airline hotel very and to soon be They the resuming. is at As nothing allowed to just flights ticket are cheap again, to flight their they the are and beginning call likely turn they needs done, trip. book able into they the when a

consumers an working who members we actually we a a with. increasing that suppliers these it's are the for for vouchers. truly It's So win-win, been haven't of we travel members and non-members buying developed. share win-win model seeing or this have that before And

So even we this member it's see to allows quite base expand us beyond reach had. nice the that product that to

Michael Kupinski

can QX us type as what's such of a go kind terms roughly in In a that indicating trends I flat maybe moderating know of you're revenue progression are in improvement expecting be earnings we number Are you that into fourth a terms of QX? how you give But expecting you sense to trends, you the both revenue to sequential and the particular, U.S. baked similar for from into of Europe? quarter. of QX that - of in revenues. saw terms

Holger Bartel

Sure. Slide We on in included XX presentation. the information some

not XXXX. start that basis a will spending bit in costs this up We remain more on cost marketing. It probably will in expect stable, we QX, only but go in we will relatively because are roughly

example, side, advertising have earlier. to give advertising for the QX. QX, from we to booked as that to U.S. On we roughly all XX% QX increases in delivered QX said above the are agreements expect in now, Right that we revenue an XX% we just

So that optimistic. us makes very

to course, or see no of what the knew one will of - back be to year. their February world the However, it are recovery clearly are in campaign. mind now, is sometimes they changes the of trend right that their we Maybe seeing that continuing. But light of prudent January have predict. and in and But revenues cautious in to we sales strong. all still positivity, advertiser difficult because Voucher want postpone spite advertising in this

Michael Kupinski

that QX. know plan you you that into I see Or that I QX? off think kind very happened business? do that likely a sales getting of little sales. Do And see think the How yourself had wean strong voucher of so you have think that to going you're bit to hoped maybe predominant, in you of to would do that back in you're like you QX as well? voucher kind normalized more,

Holger Bartel

Revenues increasing quarters. these are over

from So coming sales as percentage revenue again. this the is overall revenues. percentage are of of a - part because decreasing as advertising growing voucher because of - mostly I is as said, the And of percentage revenues voucher

Michael Kupinski

us through other quarter next flow in as optimization place. kind well. little year. was the next into these kind I one into you a processes you just that, if see bit optimization then And improving kind these as how of important likely will you. kind you you do wondering of you processes put year as give of of of go are you And the And of look XXXX? kind to how that of was Got as go can aspect margins

Holger Bartel

tend percentage will fixed a these In are as revenues costs. decrease because costs to cost some as revenues are still increasing, general of of of revenues,

are where service, costs are quite productive are said, right at these dramatically into them obviously the as of the becoming customer QX see as again, we Some member and remain services, And more efficient increase to or we them then, level expenses, decreasing, we operating like and in XXXX. there. not stable we call now I

basis. We cost have made our significant adjustments to

that to crisis. we XXXX, levels quarter staff been we COVID And are this compared expense not before reduced. to get last to saw You has back where in our were planning

Operator

you. Thank

comes question of Silver Steve the next from Argus Research. Our from line

Your question please.

Steve Silver

on everybody, morning congratulations Good and the progress.

you coming voucher payable to see any or exciting strong main be showing sales. of times. think I it's now, of vouchers are challenging mostly the revenues and being more really being the is of is guess could voucher that there whether provide I these Is the these trend redeemed the at activity, going execution cash the voucher my sheet. given would in this positive question revenues of the vouchers the they're fact a But or commentary I because some terms story? are in very the balance bringing right on as a in, XXXX are stage? redemption know redeemed, in

Holger Bartel

are of XXXX. can You see sheet and balance that for the vouchers XXXX in a from lot use

you But wouldn't say revenue. the [ph] seeing I of based is But for refund vouchers have with against estimate. comes of that majority of vouchers estimate future So we on the increase this are expect, a we this redeemed. being are we vouchers rate. we course extra when can We making expired are we that to charged then are refunds they that that yes, that redeemed and cannot actual expired, refunds, then as then get data those course it reserve actually

as said, quarter. we create as revenue we're more every the reserve net the revenue as reserve can for obviously, future the So actually voucher It's increasing And also revenue that seeing a the refunds not vouchers revenue you after the significantly. sell we're we refund of the is seeing, is sales. expect, I full

Steve Silver

Great, again. helpful. really that's Congratulations

Operator

Thank you.

of comes question Woo Ascendiant next the Ed Capital. Our line from from

please. question Your

Edward Woo

congratulations the thank on you and Yes, quarter.

vouchers, the are dates any on expiration On there them?

Holger Bartel

many we of vouchers Yes, The improve more they date. things supplier voucher these in expiration quickly. Once we will travel has the validity expire XXXX. expiration on speak we every when vouchers, close sold they and then extending with in and XXXX cases agree the to in year, the the of because the an date, get majority vouchers were hoping early

are little Now bit a for things maybe them. more slowly improving

So and they them people we are local businesses. hotels into bring their happy, the more

Edward Woo

do who guys gets suppliers the do benefit? get When you the the expire, or Do get benefit? hotel vouchers the it

Holger Bartel

vouchers For back. of refunded, that the money the course, get member gets

our are merchant their share out that we gets share. retaining or are vouchers redeemed, paid For and hotel the

country - For the that different one vouchers that are the other based countries, up countries being to used you not In to entitled not the from are regulations. state. are from rules retain sometimes local next breakage, even you end differs in some state to really on even

Edward Woo

Okay, think or see other it Or late the XXXX? is, do early great. a in travel, terms your do part you in Then be strong recovery, of you half XXXX? think my will question outlook middle of in for of the you

Holger Bartel

Mexico, almost don't really Caribbean. on do are we Right soon what maybe redemptions so, for now, travel, ago. But to hearing Atlantic to look, as to at more because fly Canada. they trend these the this we the allow looked three Yes, trips. U.S. traveling are domestic to as so international And see, are where companies before they is crisis, Europe the space, of the to I much members space. some in strong seeing in we example, last our I've to of clearly XX% travel let's now months of want travel. some same destinations where, or to year. mean, is It's the very to as XX% leisure to Americans levels the much redemptions, And focused from Mexico, were, definitely fly comfortable We that take at revenue other Europeans across and cannot like see the but cannot Americans there's

to And We of took paying ago aggressive very I reduce off. can being to now I and we is to space. are that the are this in fastest, we proper we some a costs actually few of in of compared best happy and strategies mean, May, we'll April our think positions back see are that as other the one recovery, what - we and actually in but company as really We other are report, products getting probably actions revenue the - I then see in implemented companies months the that well companies feel terms are the both recovering that we profitability.

Edward Woo

you local very travel business, on strong it last definitely as Yes, rebounding. as rebound is returning voucher question do My a good the business. see done your of job as

Holger Bartel

entertainment, the category recovers not simply Actually, is slowly there right as a now. because more that events. lot It's more of slowly

are the advertised not recovering, events but virtual than members, Local clearly hotel but business. our to being is Some slower much. it's

Operator

Thank you.

Okay, I'll Holger now to turn the Mr. call go back Bartel. ahead. Please

Holger Bartel

so day. Have and thanks you much, again a gentlemen. time look Well, ladies your with quarter. Appreciate and forward to nice support Bye. speaking and next we

Operator

ladies concludes you, gentlemen. Thank and today's This teleconference.

You may a disconnect now and have your day. nice lines

Travelzoo (TZOO) 21 Oct 202020 Q3 Earnings call transcript