Travelzoo

Thank you for standing by. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Travel Zoo first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Lijian Qi, Principal Accounting Officer. You may begin your conference.

Thank you, operator. 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 travelzoo.com slash IR. Let's begin with slide number four. TravelZoo's revenue, operating profit, and member count all increased year over year. Our consolidated Q1 revenue was 22.0 million, up 2% from 21.6 million in the prior year. In constant currencies, revenue was 21.8 million, an increase of 1% year over year. Operating income, which we as management call operating profit, increased 19% year over year. Q1 operating profit was 5.6 million, or 25% of revenue, up from 4.7 million in the prior year. As of March 31, 2024, we had 31.0 million unduplicated members, compared to 30.5 million as of March 31, 2023. Slide five shows that revenue growth in our Europe segment more than outside a slight decline in North America. On slide six, we break down our categories of revenue, advertising, membership fees, and other. Advertising revenue increased 1% year-over-year, to 20.9 million from the prior year period. Revenue from membership fees increased 16% year-over-year to 1.1 million from the prior year period. On a consolidated level, we expect the revenue from membership fees to grow over time. During 2024, membership fees have been waived for Legacy Travel Zoo members. Slide seven shows an example of membership fee revenue recognition. Revenue from membership fees is recognized readily over the period of the subscription. Member acquisition costs, on the other hand, are recognized in full at the time of the expense. On slide eight, you can see that our gap operating margins increased to 25% in Q1 2024. Slide 9 shows that in North America, the gap operating margin remained high at 31% for Q1 2024. On slide 10, we provide information on non-gap operating profit as we believe it better explains how Tribal Zoo's management evaluates financial performance. Q1 2024 non-gap operating profit was 6.0 million. That's 27% of revenue. compared to non-GAAP operating profit of $5.5 million in the prior year period. Slide 11 provides information about the items that excluded in the calculation of non-GAAP operating profit. Please turn to slide 12. We maintained a solid cash position even after repurchasing 400,000 Tribal Zoo shares during the quarter. As of March 31, 2024, consolidated cash cash equivalents and restricted cash was $16.9 million, an increase of $476,000 from December 31, 2023. Comparably, merchant payables, which are future payments that we have to make to partners when vouchers are redeemed, decreased by $2.8 million over the same period. Slide 13 shows how revenues compared to operating expenses Most of the company's operating expenses, except for marketing, are relatively fixed in the short to mid-term. We believe we can keep fixed costs relatively low in the foreseeable future. Higher revenues would just increase operating margins. For Q2 2024, we expect continued growth in revenue year over year, albeit at a slower pace than in 2023. We also expect for Q2, 2024 higher profitability year over year. We recognize membership fee revenue relatively over the period. Legacy Travel Zoo members as of December 31st, 2023 exempt from the fee during 2024. Therefore, we do not anticipate generating membership fee revenue from these members before 2025. Now, I turn the discussion over to Holger.

Thank you, Lejeune. We will continue to leverage TravelZoo's global reach or trusted brand and strong relationships with top travel suppliers to negotiate more exclusive offers for members. It is in times of large increases in travel prices that TravelZoo is most valuable for consumers. Travel Zoo members enjoy high-quality travel experiences that represent outstanding value. With more than 30 million members, 8 million mobile app users, and 4 million social media followers, Travel Zoo is loved by travel enthusiasts who are affluent, active, and open to new experiences. Slide 15 provides more information about Travel Zoo members. 91% say they are open to new destinations and travel ideas. We are the club of travel enthusiasts. Slide 17 provides an overview of what management and our global team are focused on. We want to grow the number of Travel Zoo members. We want to leverage strong existing relationships with top travel suppliers. and add new relationships to negotiate more exclusive offers, utilize higher operating margins to increase EPS, grow ChexFlightClub's profitable subscription revenue, and develop TravelZoom Meta with discipline. At this point, I'd like to turn it over to Christina for an update on both ChexFlightClub and TravelZoom Meta.