Travelzoo

Hello, everyone, and welcome to the TravelSoup First Quarter 2022 Financial Results Conference Call. At this time, 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 are presented in the slides. There are not statements of historical facts conducive to 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 Form 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 TravelSue Investor Relations website at TravelSue.com. Now it's my pleasure to turn the floor over to TravelSue's Global CEO, Olga Bartel, its Chief Accounting Officer, Lisa Su, and its Global Director Premium Membership, Arvina Aluwalia. Lisa will start with an overview of the first quarter 2022 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 TravelZoo.com backslash IR. Let's begin with slide number three. Revenues continue to recover from the pandemic and earnings turned positive again. You can see that our Q1 revenue was 18.5 million, up 30% from 14.3 million year over year. Our net income in Q1 was 3.4 million, which resulted in earnings per share of 19 cents. Compared to the previous quarter, the number of members in Q1 increased by half a million to a total of 30.7 million, mainly due to the acquisition of a competitor's European subscriber base who decided to leave the market during the pandemic. On slide four, we go into more details about the revenues and operating income of our two more significant business segments, North America and Europe. Both of these segments had substantial revenue growth year over year, and compared to the previous quarter which reflects the expected path of recovery. North America revenue grew 22% year-over-year and 36% compared to Q4 2021. The operating income in North America turned positive with an operating income of $1.7 million in Q1 compared to Q4. Europe revenue grew 75% year-over-year and 39% compared to Q4 2021. With an operating income of $200,000 in Europe, the operating income turned positive in Q1 compared to the previous quarter and year. On slide 5, we decided to provide information on non-GAAP operating profit as we believe it better explains how TravelView evaluates performance. This slide shows the non-GAAP operating income, which was $2.7 million in Q1, which is at the highest level in two years. Slide 6 provides details on the items that are excluded in the calculation of non-GAAP operating profit. Please turn to slide 7. As of March 31, 2022, consolidated cash, cash equivalents, and restricted cash were $36.7 million. The cash balance reached the expected level. In the quarter, more members traveled and redeemed their vouchers. As we make payments to hotels, the cash balance decreases, but so do our payables. As of April 1 this year, we changed the refund policy on vouchers, and a majority of vouchers that are now purchased are non-refundable. Slides eight and nine detail our revenues by business segment. When neutralizing FX changes, the North America business segment saw a year-over-year increase of 1.9 million, and the Europe business segment increased by 2.4 million year-over-year. Slides eight and nine detail our revenues by business segment. When neutralizing FX changes, the North America business segment saw a year-over-year increase of 1.9 million, and a Europe business segment increased by 2.4 million year over year. Compared to the prior year period, the travel segment has picked up significantly as advertisers and partners have started coming back. On slide 10, we have been able to lower our fixed costs during the pandemic. 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 ahead, we currently expect higher revenue and profitability in Q2. We continue to see a trend of recovery in 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 improve significantly in 2022. That's because we see more interest from TravelZoo members. We know travel and entertainment companies want to work with us as the industry recovers. If you turn to slide 11, you can see that with over 30 million members and 7 million mobile app users and 4 million social media followers, TravelZoo is loved by travel enthusiasts who are affluent, they're active, and they're open to new experiences. The latest survey results for TravelZoom members in the US show that 58%, in spite of the pandemic, took three or more vacations in 2021. 94% have a valid passport in the US, and that compares to 43% of the US population. Slide 13. gives you an overview of what our management and global team are focused on. We want to seize the exceptional opportunity we have right now for providing our 30 million TravelZoom members with exclusive and irresistible travel offers, entertainment offers and local offers and experiences. We want to increase members more significantly in 2022 and we want to accelerate revenue growth. We want to increase Chex's flight club's profitable subscription revenue, and we want to continue to grow profitability as the demand for travel returns. Now I'm going to turn over to Arvina, who is TravelZoo's global director of premium membership, and she's the executive oversees the launch of TravelZoo NetA, and she will provide us an update.