Travelzoo

Welcome to the Travel Zoo second quarter 2023 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 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. Actual results could vary materially from those contained in one of the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements are described in the company's forms 10-K and 10-Q and other SEC filings. 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 today. An archived recording of this conference call will be made available on the TravelZoo Investor Relations website at TravelZoo.com forward slash IR. Now it is my pleasure to turn the floor over to TravelZoo's global CEO, Holger Bartel, its finance director, Lejun Chee, and its general manager, TravelZoo Meta, Arvina Aluwali. Lejun, we'll start with an overview of the second quarter 2023 financial results.

Thank you, operator, and welcome to those of you joining us today. please refer to 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 forward slash IR. Let's begin with slide number three. Our consolidated Q2 revenue was 21.1 million, up 19% from 17.7 million in the previous year. In constant currencies, revenue was $21.2 million, which is an increase of 20% year-over-year. Operating income, which weighed as management call operating profit, increased 84% year-over-year. Future operating profit was $3.3 million, or 15% of revenues, up from $1.8 million in the prior year. As of June 30, 2023, We had 30.8 million unduplicated members compared to 30.7 million as of June 30, 2022. Slide 4 shows that revenue growth accelerated, particularly in Europe and at Jaxx Flight Club. Year-over-year growth rates were higher this quarter in all business segments when compared to growth in the previous year. On slide five, we go into more detail about the revenues and the operating profits of our two largest business segments, North America and Europe. South America segment revenue increased 1.8 million from 12.4 million to 14.1 million. The operating profit in North America was 3.8 million in Q2 compared to an operating profit of 3.3 million a year ago. Europe segment revenue increased 1.5 million from 4.4 million to 5.9 million. Europe had an operating loss of 239,000 in Q2 compared to an operating loss of 1.5 million in the prior year. On slide six, you can see that our operating margin reached 15% in Q2, up from 10% in the same period last year. The operating margin of 15% in Q2 2023 is much higher than before the pandemic. Before the pandemic, Travel Zoo's reported operating margin was much lower because of losses from our Asia-Pacific business segment. In March 2020, Travel Zoo decided to make Asia-Pacific a licensing business going forward. Now the operating margin shows the true profitability of Travel Zoo in North America and Europe. Slide 7 shows that in North America, the operating margin reached 27% for Q2. On slide 8, we provided information on non-GAAP operating profit, as we believe it better explains how Tribal Zoo evaluates performance. Q2 2023, non-GAAP operating profit was $4.1 million, compared to a non-GAAP operating profit of $2.6 million in the prior year. Slide 9 provides more information about the items that are included in the calculation of non-GAAP operating profits. Please turn to slide 10. As of June 30, 2023, consolidated cash, cash equivalents, and restricted cash was $20.2 million. Our cash balance remains unchanged. Merchant payables decreased by 4.0 million. Slide 1112, Detail of Revenues by Business Segment.

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