Q2 2021 Travelzoo Earnings Call
[music].
Hello, and welcome to the travel group second quarter 2021 financial results Conference call.
All participants are placed in a listen only mode and the pool on the open for questions. Following the presentation.
This 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 fact constitute forward looking statements and are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
Actual results could differ materially from the contained in the forward looking statements.
Doctors that could cause actual results to differ materially from both in the forward looking statements are described in the company's form 10-K and 10-Q.
And other periodic filings on the SEC electric car by law on the comedies undertakes no obligation to update publicly.
Any forward looking statements, whether as a result on new information future of adult future events or otherwise.
Please refer to the company's website for important information, including the Companys earnings press release issued earlier this morning.
An archived recording on other comedies call conference call will be made available on the travel travel do Investor Relations website and travel do that complex I R.
Now, it's my pleasure to turn the floor over to travelers as global CEO I'll go Martell, and as Chief accounting officer and leases to at least we will start with an overview on our second quarter 2021, I don't have to resolve.
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 travel Zoo Dot Com Slash I R.
Let's begin with slide number 3.
Here you can see that our Q2 revenue was $19.1 million.
We see continued improvement in our business.
We expect revenue to continue trending upward for the rest of 2021.
We also returned to profitability in Q2 with an operating profit of $3.5 million.
We had a slight decline in members from $31.8 million at the end of March down to $31.3 million at the end of June.
Yeah.
On slide 4 we wanted to go into more details about our 2 more significant business segments, North America and Europe.
We are showing the revenue and operating income for the last 3 years for Q2.
Both of these segments had significant revenue decline in 2020 due to the pandemic.
But has now recovered some of those losses.
Our North America business segment is at 78 per cent of the 2019 levels.
But we are already at almost the equal to 2019 operating income.
Our Europe business segment has been slower to recover and is that only 48% of 2019 revenues, but has narrowed the gap on the operating income.
Yeah.
On slide 5 travel for you has decided to provide information on non-GAAP operating income as we believe it better explains how travel to evaluate performance.
This slide shows the non-GAAP operating income, which improved year over year from a loss of $2.1 million to an operating profit of $4.9 million.
We believe the financial performance of the company is in line with our expectations.
Slide 6 provides details on the items that are excluded in the calculation of non-GAAP operating income.
Please turn to slide 7.
Our continued success in voucher sales keeps pushing the positive development in cash balance.
As of June 30, consolidated cash cash equivalents and restricted cash were 80, $82.1 million, which is an increase of $10.1 million from 72 million as of March 31.
Slides 8 and 9 detail our revenues by business segment.
When neutralizing FX changes the North America business segment recorded an increase in revenue of 188% year over year.
And the Europe business segment recorded an increase in revenue of 105% year over year.
Advertising revenue has picked up significantly compared to prior quarters as advertisers have started coming back to make use of our reach.
Yeah.
On Slide 10, you can see that the quick adjustment of our cost structure at the beginning of the pandemic has continued.
And resulted in lower fixed costs.
Non-GAAP operating expenses were reduced mostly coming from head count adjustments throughout the entire organization and from reduction of overhead costs.
We expect that our operating expenses will continue to be around the current percentage of revenue and.
In Q2, 2021 going forward.
Yeah.
In summary, as you see on slide 11.
Q2 exceeded our expectations with how quickly revenue has increased from Q1.
Looking forward, we expect for Q3 revenue in the range of $20 million to $21 million.
And for operating expenses and cost of revenues, we expect approximately $16.5 million.
We also expect for Q3 to remain profitable.
Now Holger will provide additional information and insights.
Yeah.
So let's go to slide growth.
Remind us of your 30 million members 6.
Well if he was on.
Yes.
And 4 million social media followers.
We are.
<unk> debt be lost by traveling with yes, well affluent.
Active and they opened 2 new experiences on.
I would also smoothed out influenza revenue growth.
When it comes to triple.
Automation rates among travelers who members in all the countries, where we operate.
Roughly twice as high as per country leverage and a whopping 87% of U S. Members tell us we are ready to go on vacation. So that's great and.
In the U S 71% of our members.
The travelers who influences their travel destinations because they trust us.
The next slide gives an overview of what management and our global team is focused on.
Of course, we will see is the exceptional industry opportunities, we're having right now for providing our travelers who members with exclusive and irresistible travel entertainment and local offers and experiences.
We see them to be continue to offer travelers, who members flexible and worry free deals for future travel.
That's most important for them right now and it's a format that's working well.
We're looking to grow Jack's flight club profitable subscription revenue.
And we're looking to grow EPS in profits as the demand for travel Richards.
Now back to the operator.
The floor is now open for question and you do have a question. Please press the star.
<unk> followed by the 1 on your Touchtone telephone at this time.
Once again, if you do have a question, ladies and gentlemen debt as star followed by 1 on you touched on the telephone please.
Please hold while we poll for questions.
Yeah.
Yeah.
Our first question comes from Michael Kaplinsky on Noble capital. Your line is open.
Thank you and congratulations on your quarter.
On a couple of questions. Obviously, you highlighted the fact that North America looks like it's recovering faster than Europe was wondering if you can give us your thoughts about.
Europe, and how you see that recovery do you think it might.
Start reflecting recovery as fast as North America. If you can just give us some thoughts on what youre seeing in Europe at this point.
So Michael the interest among our members in Europe is actually equally strong or is in North America. They are ready to go there.
Vaccinated. They are looking to plan international trips, what's holding you back right now is just a lot of the.
Lisa political restrictions on where and when they can travel and when does that stop so it gets better.
The members will travel and I think in our business in Europe will recover as well like you've seen in America.
Are you seeing restrictions being lifted or do you see a restriction is still being implemented or kind of reversing from.
Opening up.
I guess do you have any flavor on what youre seeing overall.
Generally it's getting better it just seems that Europe, particularly the European Union and the U K you have difficulties of coordinating Goldman strategy and I think that will happen in the next few months. So its debt Hipness, then things will get better but in general restrictions in Europe, becoming less as well just not as speedily as.
In the U S.
Gotcha and then in terms of the gross margins were significantly higher than I expected can you talk about what drove the gross margin in the quarter on your thoughts on gross margins going forward.
Part of what influences gross margins as well as for sales and volatility does make us more of a portion of revenues this quarter than in previous quarter recent debt will continue going on.
So that's what the boost in the gross margins.
Gotcha.
<unk> like club.
It looks like it's been adversely affected by by travel, particularly in Europe, I would assume but can you give us your thoughts about Jack's flight club, how that we can recover and I know that you were thinking about on.
Expanding service offerings to Jack's flight club outside of just offering flights and other travel related services and then expanding in other markets. I was wondering can you give us some thoughts on on Jack's flight club at this point on how you see revenues recovering there.
The service is actually increasing our service the service is increasing in the U S. But right now most of the subscribers on the U K and Youre absolutely right.
And someone for flight restrictions in the U K are holding it back.
Hope that that would change in the next couple of quarters.
And in the U S. We're also thinking of maybe intruding.
Scriptural part of the subscription are paid membership that we are looking to introduce at some point of time on device.
And then.
Just talk about your cash position per second you have $80.9 million on cash, but your merchant payables or $82.2 million can you provide some color on your thoughts about the cash position and your ability to pay your merchants for the vouchers over the next year.
Just kind of give us your thoughts about cash position as you look out over the next several quarters as well.
Yeah. That's why we are holding their cash because at some point of time, we ex cookies on multi vault to the merchants and we are seeking pre street and she loves to borrowers.
In the last year.
So I think the cash position likely will still increase for a couple of quarters metric slip knowledge. It really depends on how quick the ela members on everything you need of ultra's.
But in terms of the cash position being lower than your merchant payables without a concern.
Yeah.
I can actually speak to a little bit of this lift the merchant payable not all of those outages will actually get redeemed. We also are able to recognize breakage in Europe.
And so right now with all of the merchant payable you cant really expect that we're going to pay all of that out.
And with with all of those vouchers, they don't expire until 2022 and 2023.
So we would not expect to have to pay out all of the merchant payable.
Over the next next year got.
Got you at least though do you think debt so youre feeling fairly comfortable with the cash balance at this point and it's something as you kind of go forward Youre looking at your free cash flow should be improving so.
From that standpoint, you would expect that the cash position would be higher than the merchant payables. As you go into subsequent quarters I would assume yes.
Yes, that's what we would expect.
Alright. Thank you that's all I have.
Thanks, Michael.
Yeah.
Thank you. Our next question comes from Jim Goss of Barrington Research. Your line is open.
Uh huh.
First 1.
1 clarification.
1 on Michael's questions.
With the within Europe.
Is it.
Does the European Union.
Predominate in terms of regulations or will it be on a country by country basis, and somewhat more uneven and on a related basis.
Related note.
A return to travel would be more in terms of those restrictions then.
Consumer attitude is that what I'm reading from you.
In the European Union.
On the European Union decision authority for ease Trevor restrictions lies with the country, sometimes even with 50 equal Karnes County and city call. It there.
I'd just like to coordinate your white, but.
Scott Goldman corporate debt easy and as I said the appetite among the members to travel in Europe is the same in fact, just I just looked at some numbers we received from on your survey yesterday in Phoenix.
At the same level as the traveling foods he hasn't BBC in the U S. All day.
Equally ready to go when we are also seeing that the.
Wanted to do more special trip longer true so they're willing to spend more so.
On the all good signs for 2020 to travel.
Okay and could you provide some insight both on your U S and Europe in terms of the.
The Delta variant and whether that's a.
Creating a.
Renewed challenge.
And within Europe.
I know you said they were quite quite well vaccinated.
That also uneven depending on the country in which vaccines were available on H.
Can't really comment much on the Delta very young group, probably I don't know I don't know more than what's in the news that you will find yourself everywhere.
But we havent heard it from our members that it significantly impacting their decisions right now I think that the.
Debt.
Our members are prices vaccine need it just shows that they just want to go with them.
Ex you need a person with more comfortable traveling doesn't have 1 non index. So.
It's just a sign of that enthusiasm on the interest of travelling against the wind.
Okay. Thank you on a couple of other things.
Boucher.
I think you talked about them, becoming a more important part of your mix as we went into the pandemic could you.
Say, whether they will sustain that greater relative importance going forward.
Yeah.
Uh huh.
Interest of all members involved is still very strong price hasn't really changed over the last 4 or 5 quarters, it's roughly to see them every quarter, but as a percentage of overall revenue, it's going down and I think in this quarter Q2 with west Colby.
Slightly below 40% in Q3, as we get to see advertising revenue was it will probably go down to about 30%.
But it's still an important element of our business because what the members tell us the number 1 and number 1 factor for making decisions on booking travel is flexibility and the ability that if something changes they can change their travel plans. They can maybe go somewhere else. They can do with it later.
And that's exactly what these launches are offering and that's why it becomes so popular.
I still see them to remain quite popular ex couple of quarters.
Okay.
And 1 final thing.
I think Lisa mentioned that the operating expense would be a similar percentage of revenue in Q3 and going forward.
I was wondering about that because it seems that.
You talked last year.
And the depth of it depend on like about cutting back on some of the fixed costs.
And people costs, especially.
And that it seems that not only what did you get a benefit right away and sort of maintaining profitability, but you'd get a continuing improvement in the rate of profitability, but the operating leverage from maintaining those cost levels as revenues improved could you talk about that dynamic a little bit EBIT here either.
Yeah.
I think what he's a man with debt roughly as a percentage of revenue it will be.
B B to C would probably go down a little bit in absolute terms.
As revenues increase our profit in absolute terms on our operating profit was 30 increase that doesn't really change.
On the 1 thing we could at this day.
We'll probably spend a little bit more on marketing going forward. So that's a debt.
So what it was it has to be considered but.
In general yes.
The.
The slides that you are referring to talks about it shows that as revenues go up.
Operating expenses are not expected to go up at the Cmp's, which makes.
It makes our business overall more profitable for the future.
Alright, Thank you holger.
Thanks, Jim here.
Our next question comes from seeing yourselves on the Argus Research Your line is open.
Thank you and congratulations on the strong profitability in the quarter, it's great to see.
Most of my questions have been answered.
I had a quick question about the member count.
The current quarter I noticed a little bit of a contraction.
And the overall member count mostly in Europe.
Just trying to get a sense as to as.
Even if Europe is a little slower to rebound just in terms of operations.
Given the fact that the.
Activation rate across the globe is progressing the way it is.
Would you expect that these lost European members over the last quarter or even in the last couple of quarters would be quicker to bounce back really as the as the low hold on the vaccination program expands globally.
Yes, Steve it's clearly not a trend that's what we saw this quarter.
We also have to have we also have to see that consumers more confidence again on traveling and all that we see debt. We are planning to sign up new subscribers and we also see debt.
Scribe us who didn't really.
Read the news letters in the last Ah.
6.8 months 12 months, they are coming back and they're clicking on FIC.
The click rates on the newsletters debt, we have been out this quarter.
Now on the highest that we've seen since the pandemic started so on.
That's 1 thing on the other thing is we're seeing a lot of referrals coming in.
It might not show up as strongly on the on the on.
On the whole number but.
It's a very much increases the amount of people that are actually using us buying and planning and booking trips and that's what's what share with the with the increase in revenues that we have seen this quarter.
Okay, Great and then.
On the press release mentioned debt the number of members for Jack's Flight club has remained steady and constant at $1.7 million I'm, just trying to get a sense as to whether there is a catalyst beyond what we just discussed in terms of.
Gaining more attention to the membership per user jacks or whether it's just subject to the same.
Conditions that we just discussed.
Okay.
Alright, yes, the same can be said here.
That trend and as you heard with the clear priority 4 minutes to quote that number please.
Describing that.
Sure.
Okay, great Thanks, and congratulations again.
Okay.
Thank you. Our next question comes from Ed Woo <unk> capital Your line is open.
Yes, congratulations on the quarter again.
You will know has we're hearing about some.
Big travel destinations, having some issues with capacity, particularly in either air travel our rental cars how much of that has affected your business and do you think debt that's gonna be holding you back on our holding of the travel industry back from getting back to.
Full growth again.
Look with quite simple, yes, you are right on growth.
On a quite busy other growth removed.
1 of our lamp pumped up from a trip to the mountains in the pre recorded it was almost a bird the only person on the island.
Look raise liquidity problem look our members on another 30 million members. We worked through on lots to do I'm not typical consumer Redeveloped, we just talked with them. That's what makes us strong because these numbers quite a lot.
Gross profit product with good Cross province liquid sales on welcome will still find value. So if I compare these numbers look weapons.
On the Edr hoops instead of going through all of our price is a higher 1 deposits going to places like Korea started on Monday era.
First you heard 71 per cent of the numbers are willing to go to different destinations just because the cloud on the public with them but.
Important role with political the clever industry interest, we probably will help these numbers.
That is 1 time with a very flexible we will help them find leaves with wherever you find good deals on the same time, the destinations, but without the travel suppliers.
What we've got with people, who are Robert went on and not to diminish as we are.
Where they're already enough people come so let's.
That's in essence, what covers there was about him on what I think we will play an important role in this interest recovery on for Terry.
No.
Great well. Thank you for answering my questions on I wish you guys. Good luck.
So it's a good day.
Okay on there I just had a call back to Mr. Hold on my Pal.
Ladies and gentlemen, thank you so much for your time on support to do it.
And we look forward to speaking with you again next quarter have a great deal.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect. Your lines at this time have a nice day.
[music].
[music].
[music].
Hello, and welcome to the travel group second quarter 2021 financial result conference call on.
All the customers in place on listen only mode on the pool on the open for questions. Following the presentation.
Today's call is being recorded.
The company would like to remind you that all statements made during the conference call and presented in the slides that are not statements of.
Historical fact constitute forward looking statements and are not made pursuant to the safe Harbor and other private Securities Litigation Reform Act 1995.
Actual results could differ materially from the 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 on the SBC unless required by law. The company undertakes no obligation to update publicly.
Any forward looking statements, whether as a result on new information future of adult future events or otherwise.
Please refer to the company's website for important information, including the Companys earnings press release issued earlier this morning.
An archived recording on the Companys call conference call will be made available on the travel traveled on Investor Relations website at travel do that complex I R.
Now, it's my pleasure to turn the floor over to travel the global CEO I'll go back, though and as Chief Accounting Officer Lisa.
At least we will start with an overview on the second quarter 2021 Fahrenheit to resolve.
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 travel day Dot Com Bosch I R.
Yeah.
Let's begin with slide number 3.
Here you can see that our Q2 revenue was $19.1 million.
We see continued improvement in our business.
We expect revenue to continue trending upward for the rest of 2021.
We also returned to profitability in Q2 with an operating profit of $3.5 million.
We had a slight decline of members from $31.8 million at the end of March down to $31.3 million at the end of June.
Oh.
Yeah.
On slide 4 we wanted to go into more details about our 2 more significant business segments, North America and Europe.
We are showing the revenue on operating income for the last 3 years for Q2.
Both of these segments had significant revenue decline in 2020 due to the pandemic.
But has now recovered some of those losses.
Our North America business segment is at 78 per cent of the 2019 levels.
But we are already at almost the equal to 2019 operating income.
Our Europe business segment has been slower to recover and is that only 48% of 2019 revenues, but has narrowed the gap on the operating income.
Yes.
On slide 5 traveled to you has decided to provide information on non-GAAP operating income as we believe it better explains how travel to evaluate performance.
This slide shows the non-GAAP operating income, which improved year over year from a loss of $2.1 million to an operating profit of $4.9 million.
We believe the financial performance of the company is in line with our expectations.
Slide 6 provides details on the items that are excluded in the calculation of non-GAAP operating income.
Please turn to slide 7.
Our continued success in voucher sales keeps pushing the positive development in cash balance.
As of June 30, consolidated cash cash equivalents and restricted cash were <unk> $82.1 million, which is an increase of $10.1 million from 72 million as of March 31.
Slides 8 and 9 detail our revenues by business segment.
When utilizing FX changes the North American business segment recorded an increase in revenue of 188% year over year.
And the Europe business segment recorded an increase in revenue of 105% year over year.
Advertising revenue has picked up significantly compared to prior quarters as advertisers have started coming back to make use of our reach.
On Slide 10, you can see that the quick adjustment of our cost structure at the beginning of the pandemic has continued.
And resulted in lower fixed cost.
Non-GAAP operating expenses were reduced mostly coming from head count adjustments throughout the entire organization and from reduction of overhead costs.
We expect that our operating expenses will continue to be around the current percentage of revenue in.
In Q2, 2021 going forward.
Yeah.
In summary, as you see on slide 11.
Q2 exceeded our expectations with how quickly revenue has increased from Q1.
Looking forward, we expect for Q3 revenue in the range of $20 million to $21 million.
And for operating expenses and cost of revenues, we expect approximately $16.5 million.
We also expect for Q3 to remain profitable.
Now Holger will provide additional information and insights.
Yeah.
So let's go to slide 12.
Remind us of your 30 million members 6.
Well, if you're with us.
And 4 million social media followers.
We are.
Brand beloved by traveling with US who are affluent ex.
Dave and they opened 2 new experiences.
And I would also smoothed out influenza.
When it comes to travel.
Nathan rates among travelers to members in all the countries, where we operate.
Roughly twice as high as the country average.
And a whopping 87% of U S members.
We are ready to go on vacation so that's good.
Right.
In the U S, 71% of our members see the travelers who influences their travel destinations because they trust us.
Yeah.
The next slide gives an overview of what management and our global team is focused on.
Of course, we will see is the exceptional industry opportunities, we're having right now for providing our travelers who members with exclusive.
And irresistible travel entertainment and local offers and experiences.
We see and we continue to offer travelers, who members flexible and worry free deals for future travel.
That's most important for them right now and it's a format that's working well.
We're looking to grow Jack's flight club profitable subscription revenue.
And we're looking to grow EPS in profits as the demand for travel Richards.
Now back to the operator.
The floor is now open for question and you do have a question. Please press the star followed by the 1 on you touched on telephone at this time.
Once again, if you do have a question, ladies and gentlemen debt as star followed by 1 on your touch tone telephone.
Please hold while we poll for questions.
Yeah.
Our first question comes from Michael Kaplinsky on Noble capital. Your line is open.
Thank you and congratulations on your quarter.
On a couple of questions. Obviously, you highlighted the fact that North America looks like it's recovering faster than Europe was wondering if you can give us your thoughts about.
On Europe, and how you see that recovery do you think it might.
Start reflecting on recovery as fast as North America. If you can just give us some thoughts on what youre seeing in Europe at this point.
So Michael the interest our moral remembers in Europe is actually equally strong as in North America. They are ready to go there.
Vaccinated. They are looking to plan international trips, what's holding back right now is just a lot of the.
These are political restrictions on where and when they can travel and as soon as debt stops or gets better.
The members were traveling I think on our business in Europe will recover as well like you've seen in America.
Are you seeing restrictions being lifted or do you see restricts will still being implemented or kind of reversing from.
Opening up.
I guess do you have any flavor on what youre seeing overall.
Generally it's getting better it just seems that Europe, particularly for the European Union and the UK have difficulties of coordinating our common strategy and I think that will happen in the next few months. So that's happening and things will get better but in general restrictions in Europe are becoming less as well just not as speedily as.
Typically in the U S.
Gotcha and then in terms of gross margins were significantly higher than I expected can you talk about what drove the gross margin in the quarter on your thoughts on gross margins going forward.
Part of what influences gross margins as well as for 3 years, and what you'll see us make us more of a portion of revenues this quarter than in previous quarter recent debt will continue the gold zone.
That's what boosting your gross margins.
Got you and then in Jack's flight club.
It looks like it's been adversely affected by by travel, particularly in Europe I would assume.
Can you give us your thoughts about Jack's.
Jack's flight club, how that we can recover and I know that you were thinking about on mix.
Spanning service offerings to Jack's flight club outside of just operating whites and other travel related services and then expanding in other markets. I was wondering can you give us some thoughts on on Jack's flight club at this point on how you see revenues recovering there.
The service is actually increasing so the service is increasing in the U S. But right now on most of the subscribers on the UK and Youre absolutely right.
And some of the flight restrictions in the UK are holding it back on the hope that that will change in the next couple of quarters.
And in the U S. We're also thinking of maybe into <unk>.
Scriptural part of the subscription are paid membership that we are looking to introduce at some point of time on device.
And then.
Just talk about your cash position per second you have $89 million on cash, but your merchant payables or $82.2 million can you provide some color on your thoughts about the cash position and your ability to pay your merchants for the vouchers over the next year.
Just kind of give us your thoughts about the cash position as you look out over the next several quarters as well.
Yes, that's why we are holding their cash because at some point of time, we have cookies on multiple tools to merchants and we are seeing increased interest in both the borrower just that you have to work in the last year.
I think the cash position likely will still increase for a couple of quarters snap Chick flick now it really depends on how quickly our members are receiving the vouchers.
But in terms of the cash position being lower than your merchant payables without a concern.
Yeah.
I can actually speak to a little bit of this lift the merchant payable not all of those vouchers will actually get redeemed. We also are able to recognize breakage in Europe.
And so right now with all of the merchant payable you cant really expect that we're going to pay all of that out.
And with with all of those vouchers, they don't expire until 2022 and 2023.
So we would not expect to have to pay out all of the merchant payable.
Over the next next year.
Got you at least though do you think debt.
So youre feeling fairly comfortable with the cash balance at this point and it's <unk>.
Are you kind of go forward Youre looking at your free cash flow should be improving so from that standpoint, you would expect that the cash position would be higher than the merchant payables. As you go into subsequent quarters I would assume.
Yes, that's what we would expect.
Alright. Thank you that's all I have.
Thanks, Michael.
Yeah.
Thank you. Our next question comes from Jim Goss of Barrington Research. Your line is open.
Thanks.
First 1 clarification on.
1 on Michael's questions.
With the within Europe.
Is it.
Does the European Union.
Predominate in terms of regulations or will it be on a country by country basis, and somewhat more uneven and on a related basis.
To note.
Well our.
A return to travel would be more in terms of gross restrictions then.
Consumer attitudes is that what I'm reading from you.
In the European Union in the European Union decision authority for.
Trevor restrictions lies with the country, sometimes even with 50 vehicles.
On T S day call it there.
Did just like to coordinate Uruguay, but.
Scott Goldman corporate debt easy and as I said the appetite among the members to travel in Europe is the same in fact just.
Looked at the numbers, we received per monitor survey yesterday in Phoenix.
Uh huh.
The same level as the traveling foods, you're asking do we see in the U S. So.
Debt equals the ready to go on real also seeing that day.
Wanted to do more special trip longer true.
They're willing to spend more so.
On the all good signs for 2020 to travel.
Okay and could you provide some insight both on your U S and Europe in terms of.
The Delta variant and whether that's.
Creating a.
Renewed challenge.
And within Europe.
I know you said they were quite quite well are vaccinated.
That also uneven depending on the country and which vaccines were available in H.
Can't really comment much on the Delta vary on good probably I don't know I don't know more than what's in the news that you will find yourself everywhere.
But we havent heard it from our members started significantly impacting their decisions right now I think the fight.
Debt.
All women was that price is actually made it just shows that Dave just wanted to go with some weird.
Ex you need that person with more comfortable traveling doesn't have 1 non index. So.
It's just a sign of that enthusiasm on the interest of travelling against the wind.
Okay. Thank you on a couple of other things.
Boucher.
I think you talked about them, becoming a more important part of your mix as we went into the pandemic could you.
Say, whether they will sustain a greater relative importance going forward.
Uh huh.
Interest of all members involved is still very strong, but it hasn't really changed over the last 4 or 5 quarters. It's roughly the same every quarter, but as a percentage of overall revenue, it's going down and I think in this quarter Q2 was probably flat.
Finally below 40% in Q3 as we have for you.
Advertising revenue was it will probably go down to about 30%.
But it's still an important element of our business because what the members tell us the number 1 and number 1 factor for making decisions on booking travel is flexibility and the ability that if something changes can change their travel plans. They can maybe go somewhere else. They can do with it later and.
And that's exactly what the swap which is our offering and that's why it becomes so popular.
I still see them to remain quite popular with ex couple of quarters.
Okay.
And 1 final thing.
I think Lisa mentioned that the operating expense would be a similar percentage of revenue on the Q3 and going forward.
I was wondering about that because it seems that.
You had talked last year.
And the depth of it depend on like about cutting back on some of the fixed costs.
And people costs, especially.
And that it seems that not only what did you get a benefit right away and sort of maintaining profitability, but you'd get a continuing improvement in the rate of profitability, but the operating leverage from maintaining those cost levels as revenues improved could you talk about that dynamic a little bit EBIT here either.
Yeah.
I think what Lisa men with debt roughly as a percentage of revenue.
B B to C would probably go down a little bit in absolute terms.
As revenues increase our coffee in absolute terms, our operating profit was third increase that doesn't really change.
On the 1 thing we could add this debt.
We'll probably spend a little bit more on marketing going forward. So.
That's a that's a reported.
It has to be considered but.
In general yes.
Uh huh.
The slides that you are referring to talks about it shows that as revenues go up.
Operating expenses are not expected to go up at the Cmp's, which mix.
It makes our business oval on more profitable for the future.
Alright, Thank you holger.
Thanks, Jim here.
Our next question comes from Steve Silver on August Research. Your line is open.
Thank you and congratulations on the strong profitability in the quarter, it's great to see.
Most of my questions have been answered.
I had a quick question about the member count.
The current quarter I noticed a little bit of a contraction.
And the overall member count mostly in Europe.
Just wanted to get a sense as to as.
Even if Europe is a little slower to rebound just in terms of operations.
Given the fact that the.
<unk> right across the globe is progressing the way it is.
Would you expect that these lost European members over the last quarter or even the last couple of quarters would be quicker to bounce back really as the.
On.
The hold on the vaccination program expands globally.
Yes, Steve it's clearly not a trend that's what we saw this quarter.
Also have to have we also have to see that consumers more confidence again on traveling and all that we see debt. We are planning to sign up new subscribers and we also see debt.
On subscribers, who didn't really.
Read the news letters in the loss.
6.8 months 12 months, they are coming back in depth taking effect.
The click rates on the newsletters debt, we have been this quarter.
Right now on the highest that we have seen since day.
<unk> so on.
That's 1 thing on the other thing is we're seeing a lot of referrals coming in that might not show up as strongly on the on the.
On the whole number but.
It's a very much increases the amount of people that are actually using us buying and planning and the booking trips and thats whats what.
What share with the with the increase in revenues that we have seen this quarter.
Okay, Great and then.
The press release mentioned debt the number of members for Jack's Flight club has remained steady and constant at $1.7 million.
Just trying to get a sense as to whether there is a catalyst beyond what we just discussed in terms of <unk>.
Gaining more attention to the membership piece of jacks or whether it's just subject to the same.
Additionally, that we just discussed.
Okay.
But yes, the same can be said here, it's not a trend.
And as you heard it's a clear priority for management to grow that number please.
Subscribing complex that's comfortable.
Okay, great Thanks, and congratulations again.
Yeah.
Right.
Thank you. Our next question comes from Ed Woo <unk> capital Your line is open.
Yes, congratulations on the quarter again.
We're hearing about some.
Big travel destinations, having some issues of capacity, particularly in either air travel our rental cars.
How much of that has affected your business and do you think that that's going to be holding you back our holding of the travel industry back from getting back to.
Full growth again.
Look its quite simple, yes, you are right on course.
On a quite a busy other growth.
And even.
With 1 of our lamp pumped up from a trip to the Maldives.
We reported it was almost a bird the only person on the island. So it looks like exactly the problem.
Look our members and another 30 million members, we have lots to do on not.
Typical consumer.
You just talked about and that's what makes us strong because.
These numbers tell us.
A good profit products are a good proxy pregnant liquid plug on welcome will still find value. So Isabelle kocher are these numbers look weapon.
Instead of going through all of our price is a higher why don't you think about going to places like Korea Madeira.
You heard 71 per firm off the numbers.
Willing to go to different destinations just because the cloud on the policy.
Important role with Blue coat, the clever industry interest, we probably will help these numbers.
Well that is 1 terminal.
We will help them find leaf with will be fine because he wasn't at the same time.
Emotions, but without the travel suppliers.
What we've got with people, who already worked them or not really because we are.
Were they already know people come so let's.
And that's in essence, what travelers there was about a month, what I think we will play an important role in this interest recovery or whatever.
No.
Great well. Thank you for answering my question is on I wish you guys. Good luck.
Things are cool.
Okay on there I just had a call back to Mr hold on Bipap.
Ladies and gentlemen, thank you so much for the time on support to do it.
And we look forward to speaking with you again next quarter have a great deal.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect. Your lines at this time have a nice day.