Travelzoo(US:TZOO)2021-07-21 18:03Financial Data and Key Metrics Changes - Q2 2021 revenue was $19.1 million, showing continued improvement and expected upward trend for the rest of 2021 [5][6] - The company returned to profitability with an operating profit of $3.5 million [6] - Non-GAAP operating income improved from a loss of $2.1 million to a profit of $4.9 million year-over-year [9] - Consolidated cash and cash equivalents increased to $82.1 million, up by $10.1 million from $72 million as of March 31 [10] Business Segment Data and Key Metrics Changes - North America segment revenue is at 78% of 2019 levels, with operating income nearly equal to 2019 [7] - Europe segment revenue is at only 48% of 2019 levels but has narrowed the gap on operating income [8] - North America recorded a revenue increase of 188% year-over-year, while Europe recorded a 105% increase when neutralizing FX changes [11] Market Data and Key Metrics Changes - The company noted a significant recovery in advertising revenue as advertisers returned [11] - Vaccination rates among Travelzoo members are roughly twice the country average, indicating a strong readiness to travel [16] Company Strategy and Development Direction - The company aims to provide exclusive travel offers and experiences to its members, focusing on flexible and worry-free deals for future travel [17] - Plans to grow Jack's Flight Club's profitable subscription revenue and increase EPS and profits as travel demand returns [18] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in Europe, noting strong interest among members despite political restrictions [22] - The company expects Q3 revenue in the range of $20 million to $21 million and to remain profitable [13] - Operating expenses are expected to remain around the current percentage of revenue going forward [12] Other Important Information - The company has seen a slight decline in members from 31.8 million to 31.3 million [6] - The interest in vouchers remains strong, although their percentage of overall revenue is expected to decrease [39] Q&A Session Summary Question: Thoughts on Europe's recovery compared to North America - Management noted that interest among members in Europe is strong, but political restrictions are currently holding back travel [22] Question: Status of travel restrictions in Europe - Restrictions are becoming less severe, but coordination among EU countries remains a challenge [23] Question: Drivers of higher gross margins - Higher gross margins were influenced by a decrease in voucher sales as a portion of revenue [24] Question: Recovery of Jack's Flight Club - The service is increasing in the U.S., but flight restrictions in the U.K. are currently holding back growth [26] Question: Cash position and merchant payables - Management is comfortable with the cash position, noting that not all vouchers will be redeemed immediately [30][31] Question: Impact of Delta variant on travel decisions - Management has not seen significant impacts from the Delta variant on member travel decisions [37] Question: Future importance of vouchers - Vouchers remain popular due to their flexibility, although their revenue percentage is expected to decrease [39] Question: Operating expenses and profitability - Operating expenses are expected to remain stable as a percentage of revenue, with potential increases in marketing spend [41]