Travelzoo

Hello, everyone. Welcome to the Travel Zoo Third 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 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 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. The archived recording of this conference call will be made available on the company's investor relations website at TravelZoo.com forward slash IR. Now it's my pleasure to turn the floor over to TravelZoo's global CEO, Holger Bartel, its finance director, Lijun Qi, and its general manager, TravelZoo Meta Arvina Aluwalia. Li Jun will start with an overview.

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 site at trevorzoo.com slash IR. Let's begin with slide number four. Trevorzoo's revenue, operating profits, and the member count all increased year over year, our consolidated Q3 revenue was 20.6 million, up 30% from 15.8 million in the previous year. In constant currencies, revenue was 20.2 million, which is an increase of 27% year-over-year. Operating income, which weighed as management co-operating profit, increased 1,039% year-over-year. Q3 operating revenues profit was 3.1 million, or 15% of revenue, up from 273,000 in the prior year. As of September 30, 2023, we had 31.2 million unduplicated members, compared to 30.5 million as of September 30, 2022. Slide 5 shows that Travel Zoo's year-over-year revenue growth accelerated further compared to the previous quarter, as well as last year. Year-over-year growth rates were higher this quarter in all business segments when compared to growth in the previous year. On slide six, we go into more detail about the revenues and the operating profits of our two largest business segments, North America and Europe. North America segment revenue increased 2.9 million from 10.5 million to 13.4 million. The operating profit in North America was $3.0 million in Q3 compared to an operating profit of $1.0 million a year ago. Europe's segment revenue increased $1.5 million from $4.5 million to $6.0 million. Europe had an operating profit of $267,000 in Q3 compared to an operating loss of $561,000 in the prior year. On slide seven, you can see that our gap operating margin was 15% in Q3, up from 2% in the same period last year. The operating margin of 15% in Q3 is much higher than before the pandemic. Before the pandemic, TravelZoo's reported operating margin was much lower because of losses from our Asia Pacific business segment. In March 2020, TravelZoo decided to make Asia Pacific a licensing business going forward. Now, operating profit shows the true profitability of TravelZoo in North America and Europe. Slide 8 shows that in North America, the gap operating margin remained high at 22%. On slide 9, we provide information on non-gap operating profit, as we believe it better explains how TravelZoo evaluates performance. Q3 2023 non-GAAP operating profit was $3.9 million compared to a non-GAAP operating profit of $1.1 million in the prior year. Slide 10 provides more information about the items that are included in the calculation of non-GAAP operating profit. Please turn to slide 11. We maintained a solid cash position even after repurchasing 1 million Travizu shares during the quarter. As of September 30, 2023, consolidated cash, cash equivalent, and the restricted cash was 16.6 million, a decrease of 4.0 million from September 30, 2022. Merchant payables decreased 14.5 million from September 30, 2022. Slides 12 and 13 detail other revenues by business segment. The North America business segment. saw a year-over-year revenue increase of 2.9 million. It was driven by revenue from travel. Revenues from local consisting of local entertainment experiences are still expected to recover from the pandemic. Turning to slide 13, the Europe business segment saw a year-over-year revenue increase of 1.5 million. It was driven by revenue from travel. revenues from local are still expected to recover. Slide 14 shows how revenues compare to operating expenses. Most of the companies operating expenses except for marketing are fixed in the short-term or mid-term. We believe we can keep fixed costs relatively low in the foreseeable future, while revenues are expected to grow. Higher revenues would just increase margins. for Q4 2023. We currently expect growth in revenue to continue year-over-year. Now I turn over to Holger.

Thank you, Li Jun.