Travelzoo

Hello, everyone. Welcome to the TravelZoom 4th Quarter 2021 Financial Results Conference Call. All participants have been placed in a listen-only mode, and the floor will be open for 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 the presented in these slides are not statements of historical facts. Constitute for... Oh, pardon me. The company would like me to remind you that all statements made during this conference call and presented in these 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. Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in the company's Forms 10-K and 10-Q and other periodic filings with the SEC. Unless required by law, the company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. Please refer to the company's website for important information including the company's earnings press release issued earlier this morning. An archived recording of this conference call will be made available on the TravelZoo Investor Relations website at TravelZoo.com. Now it is my pleasure to turn the floor over to TravelZoo's Global CEO, Holger Bartel, and its Chief Accounting Officer, Lisa Su. Lisa will start with an overview of the fourth quarter 2021 financial results.

Thank you, Operator. And welcome to those of you joining us today. Please open the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our investor relations website at TravelView.com backslash IR. Let's begin with slide number three. Here you can see that our Q4 revenue was $14.1 million up 13% from $12.5 million year-over-year. Our operating loss in Q4 was $3.4 million due to the surge of the Omicron variant and related increased safety measures and travel restrictions during Q4 2021, which resulted in a loss per share of 25 cents. We believe that this was a short-term effect as many countries have recently started lifting the COVID-19 related restrictions. We saw a slight increase in members year over year from 30.2 million to 30.3 million. On slide four, we go into more details about our two more significant business segments, North America and Europe. we are showing the revenue and operating income for the last three years for Q4. Both of these segments had significant revenue decline in 2020, but are on the expected path of recovery. Our North America business segment is at 53% of the 2019 levels, and the operating loss is 2.2 million. North America revenues and operating income are net of a cautionary increase in reserves which in Q4 lowered our reported revenue and operating income by 1.6 million. With Q4 2021 showing 53% of Q4 2019 revenues, our Europe business segment has now recovered to the same level as North America has with an operating loss of 1.2 million, which is an improvement from a 2.4 million loss in 2020. On slide five, we decided to provide information on our non-GAAP operating profit as we believe it better explains how TravelZoo evaluates performance. This slide shows the non-GAAP operating loss, which was 2.1 million. Slide six provides details on the items that are excluded in the calculation of non-GAAP operating profit or loss. Please turn to slide seven. As of December 31st, 2021, consolidated cash, cash equivalents, and restricted cash were $45 million. The cash balance reached the expected level as merchant payables decreased and receivables and deposits combined increased by $14 million in a transition of switching to a more efficient payment processor. Slides 8 and 9 detail our revenues by business segment. When neutralizing FX changes, the North America business segment had a slight decline of $400,000, and the Europe business segment increased by almost $2 million year over year. Compared to the prior year period, both revenue types, travel and local, have both picked up as advertisers and partners have started coming back. On slide nine, you can see that during the pandemic, we have been able to lower our fixed costs. We believe we can keep fixed costs relatively low in the foreseeable future, while revenue is expected to grow. We believe this should result in higher profitability going forward. Looking forward, we currently expect substantially higher revenue and a return to profitability in Q1. We continue to see a trend of recovery of our revenue. However, there could be unexpected fluctuations in the short term. Now I turn it over to Holger.

Thanks, Lisa. So we expect the company's financial performance to really improve, significantly improve in 2022. We see more interest from TravelZoo members. Activity levels are up, and we know also that travel and entertainment companies want to work with us as the industry continues its recovery. So as you see on slide 11, we have over 30 million members, 6.8 million mobile app users, and 4 million followers on social media. We're really loved by travel enthusiasts who are affluent, they're active, They travel quite a bit and they are open to new experiences. Slide 13 shows you what we as a management team are focused on. First, we want to take advantage of the exceptional industry opportunity during this time to provide our 30 million members with offers that are exclusive, that are irresistible in the area of travel, entertainment, local offers and experiences. We want to grow members in 2022 and accelerate revenue growth. We will also put more focus on growing Czech flight clubs' profitable subscription revenue. And, of course, we want to return to profitability and increase profitability as demand for travel returns as we're coming out of this pandemic. Back to the operator, and we're looking forward to questions.