Q3 2023 Travelzoo Earnings Call
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Speaker 2: Hello everyone, welcome to the Travel to the third quarter, 2023 Financial Results Conference call.
Hello, everyone and welcome to the travel to the third quarter 2023 financial results Conference call.
Speaker 2: All participants have been placed in a listen only mode and the floor will be open for questions following the presentation.
All participants have been placed in a listen only mode and the floor will be opened for questions. Following the presentation.
Today's call is being recorded.
Speaker 2: 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. 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.
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 Safe Harbor provisions of the private Securities Litigation Reform Act of 995.
Speaker 2: Private Securities Litigation Reform Act of 1995.
Speaker 2: actual results could vary materially from those contained in the forward-looking...
Actual results could vary materially from those contained in the forward looking statements.
Speaker 2: Actors that could cause actual results to differ materially from those in the forward looking statements are described in the company's forms 10K and 10Q and other SEC violence.
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.
And other SEC filings.
Speaker 2: Unless required by law, the company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information or as a result of new information.
Unless required by law the company undertakes no obligation to update publicly any forward looking statements.
As a result of new information future events or otherwise.
Speaker 2: Please refer to the company's website for important information, including the company's earnings press release issued earlier today.
Please refer to the company's website for important information, including the Companys earnings press release issued earlier today.
Speaker 2: The archived recording of this conference call will be made available on the company's investor relations website at travelzoo.com forward slash ir.
An archived recording of this conference call will be made available on the company's Investor Relations website at <unk> Dot com forward Slash IR.
Speaker 2: Now it's my pleasure to turn the floor over to Travelzoo's Global CEO , Holger Bartel, Finance Director.
Now it's my pleasure during the floor over to travels even as global CEO Holger Bartel.
Finance director Legion cheat and.
Speaker 2: And it's General Manager, Travel Zimeta, Irvina, Aluwalia. We June will start with no-
And as general manager travels meta our vena <unk> region will start with an overview.
Speaker 3: 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 trevadoo.com slash IR. Let's begin with slide...
Thank you operator, and then 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.
Mr Relations site at <unk> Dot Com Slash IR.
Let's begin with slide number four.
Speaker 3: Chalazoo'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.
<unk> revenue operating profit and the member count all increased year over year.
Operator: Band-Dance Oh yeah, one day you come together and it beats the pressure We need all the day We need all the day, we need all the day, we need all the day, we need all the day Hello everyone, welcome to the Travelzoo 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 The day'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 security's litigation or form act of 1995 Actual results could vary materially from those contained in the forward-looking statements Actors that could cause actual results to differ materially from those in the forward-looking statements are described in the company's forms 10K and 10Q 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 archive recording of this conference call will be made available on the company's Invest Relations website at Travelzoo.com-4-IR Now it's my pleasure during the floor over to Travelzoo's global CEO, Holger Bartell, Finance Director, Lee Joon-cheat And it's General Manager Travelzoo Meta, Irvina Aluwalia.
Our consolidated Q3 revenue was $26 million.
30% from 15 8 million in the previous year in constant currency revenue was $20 2 million, which is an increase of 27% year over year.
Speaker 3: operating income, which way as management called operating profit increased 1,039% year over year.
Operating income, which we as management call operating profit increased 1039% year over year.
Speaker 3: 2-3 operating profit was 3.1 million, all 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.
Q3, operating profit was $3 1 million.
15% of revenue up from 273000 in the prior year.
As of September 32023, we had $31 2 million and duplicate it members compared to $35 million as of September 32022.
Speaker 3: side five shows that Chavuzuz' 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 the business segment, North America and Europe .
Slide five shows that troubled with year over year revenue growth accelerated further compared to the previous quarter as well as last year.
Although growth rates were higher this quarter in all of business segment, when compared to growth in the previous year.
On slide six we go into more detail about their revenue and their operating profit of our two largest the business segment.
North America and Europe .
Speaker 3: North America's second-minute revenue increased 2.9 million from 10.5 million to 13.4 million.
North America segment revenue increased $2 9 million from 10 5 million to $13 4 million.
Speaker 3: So operating profit in North America was 3.0 million Q3 compared to an operating profit of 1.0 million a year ago.
Operating profit in North America, with three <unk> million in Q3 compared to an operating profit of 1.0 million a year ago.
Speaker 3: Europe's second-term 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.
Europe segment revenue increased $1 5 million from $4 five to six claim zero mainly.
Europe had an operating profit of 267000 in Q3 compared to an operating loss of 551000 in the prior year.
Speaker 3: On slide seven, you can see that our gap operating margin was 15% in Q3, up from 2% in the same period last year.
On slide seven you can see that our GAAP operating margin was 15% in Q3 up from 2% in the same period last year.
Speaker 3: The operating margin of 15% in Q3 is much higher than before the pandemic. Before the pandemic, TravelZoo reported our pretty 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.
<unk> margin of 15% in Q3 is much higher than before the pandemic before the pandemic shallow dose the reported operating margin was much lower because of losses from our Asia Pacific business segment in March 2020, travel decided to make Asia Pacific our licensing business.
Lijun Qi: Lee Joon will start with an overview Thank you, operator, and then 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-IR Let's begin with site number four Travelzoo'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 way as management called operating profit increased 1039% year over year Q3 operating 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 Side 5 shows that Travelzoo'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.
Moving forward.
Speaker 3: Now our trading profit shows the true profitability of TravelGoo in North America and Europe .
Now operating profit shows the true profitability of travel do in North America and Europe .
Speaker 3: 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 Trevago evaluates performance.
Slide eight shows that in North America, the GAAP operating margin remained high at 22%.
On slide nine we put wide information on non-GAAP operating profit as we believe it better explains how travelers will evaluate performance.
Speaker 3: 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.
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.
Speaker 3: slide 10 provides more information about the items that are included in the calculation of non-depth operating profits.
Slide 10 provides more information about the items that are excluded in the calculation of non-GAAP operating profit.
Speaker 3: Please tend to slide 11. We maintained a solid cash position even after repurchasing 1 million travel-through shares during the quarter. As of September 30, 2023, consolidated cash, cash equivalents, and 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.
Please turn to slide 11.
<unk> maintained a solid cash position, even after repurchasing 1 million <unk> shares during the quarter.
As of September 32023, consolidated cash cash equivalents and the restricted cash was $16 6 million a day.
Decrease of 4.0 million from September 32022.
Merchant payables decreased to $14 5 million from September 32022.
Speaker 3: July 12 and 13, detail of a 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 trouble. Revenues from local consisting of local entertainment experiences are still expected to recover from the pandemic.
Right.
And 13 detail of our revenue by business segment, the North America business segment saw a year over year revenue increase up $2 9 million. It was driven by revenue from trouble.
Lijun Qi: On slide 6, we go into more detail about the revenues and the operating profits of our two largest business segments, North America and Europe. North America's segment revenue increased 2.9 million from 10.5 million to 13.4 million. So our 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 credit operating profit of 267,000 in Q3 compared to an operating loss of 561,000 in the prior year.
Revenues from local consisting of local entertainment experiences.
<unk> expected to recover from the pandemic.
Speaker 3: Turning to slide 13, the Euro Business Segment saw a year over your revenue increase of 1.5 million. It was driven by revenue from travel. Revenues from local are still expected to recover.
Turning to slide 13, the Europe business segment saw a year over year revenue increase of one 5 million. It was driven by revenue from travel revenues from local still expect it to recover.
Speaker 3: By 14 show called revenues compared to operating expenses. Most of the companies of pretty expenses except for marketing are fixed in a short term or mid term. We believe we can keep fixed log costs.
Slide 14 show call revenues compared to operating expenses.
Most of the companies.
<unk> expenses, except for marketing.
In the short term or midterm, where believe we can keep fixed cost.
Speaker 3: relatively low in the foreseeable future, while revenues are expected to grow.
Relatively low in the foreseeable future while revenues expected to grow.
Lijun Qi: On slide 7, you can see that our gap operating margin was 15% in Q3 up from 2% in the same period last year. So operating margin of 15% in Q3 is much higher than before the pandemic. Before the pandemic, Travelzoo's reported our 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, our operating profit shows the true profitability of Travelzoo in North America and Europe.
Speaker 3: Higher revenues will adjust increased margins. For Q4 2023, we currently expect growth in revenue to continue year over year. Now I turn over to Hogueur.
Here revenues would adjust increased margin for Q4 2023, we currently expect growth in revenue to continue year over year.
Now I turn over to Hilger.
Thank you Alicia.
Speaker 4: Year over year, revenue growth accelerated from Q2 to Q3 again.
Year over year revenue growth accelerated from Q2 to Q3 again.
Speaker 4: We will continue to leverage travels with global reach.
We will continue to leverage travels with global reach.
Speaker 4: our trusted brand and the strong relationships with top travel suppliers to negotiate more exclusive offers for our men.
Trusted brand and our strong relationships with top travel suppliers to negotiate more exclusive offers for our members.
Lijun Qi: 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-gap operating profit was 3.9 million compared to a non-gap 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-gap operating profit.
Speaker 4: It is in times of large increases in travel prices that travel to is most valuable for consumers.
It is in times of large increases in travel prices.
Yet travelers, who is most valuable for consumers.
Speaker 4: Travels who members enjoy high quality travel experiences at 3% outstanding value.
Two members enjoy high quality travel experiences.
Okay.
And I would standing values.
With more than 30 million members eight.
Speaker 4: 8 million mobile app users and 4 million social media followers travel through its love by travel enthusiasts who are effluent, active and open to new experience.
8 million mobile App users.
4 million social media followers travels with loved by travel enthusiasts.
<unk>.
Hey, Dave.
And open to new experiences.
Speaker 4: Slide 15 provides more information about travel zoom.
Lijun Qi: Please tend to slide 11. We maintained a solid cash position even after repurchasing 1 million Travelzoo shares during the quarter. As of September 30, 2023, consolidated cash, cash 10.30, 2022. Merchant Pable decreased 14.5 million from September 30, 2022.
Slide 15 provides more information about travelers who members.
Speaker 4: You see that 87% say they are open to new destinations and travel ideas.
At 87% and safety are open to new destinations and travel ideas.
Speaker 4: Travel to members are too traveled into with you.
Travel to members.
Sure travel enthusiasts.
Speaker 4: Slide 17 provides an overview of what management and our global team are focused on.
Slide 17 provides an overview of.
What management and our global team are focused on.
Speaker 4: We want to reach and surpass pre-pandemic number of members and accelerate revenue growth.
We wanted to reach and surpass pre pandemic number members and accelerate revenue growth.
Lijun Qi: Slide 12 and 13, detail of a 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 Euro 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.
Speaker 4: add more innovative exclusive benefits for travel enthusiasts to make the travel through membership even more valuable.
And more innovative exclusive benefits for travelers with CFS, who make the travelers through membership even more valuable.
Speaker 4: Utilize the higher operating margins to significantly increase EPS.
Utilize the higher operating margins to a significant increase EPS.
Speaker 4: Pro! Check slide clips! Profedable subscription revenue
Wrote checks slide clubs profitable subscription revenue.
Speaker 4: and develop travel to meta with discipline. At this point,
And develop travel to mete.
With discipline.
At this point I'd like to turn it over to <unk>.
Speaker 3: Hello everyone. At this time, we do not have any significant updates for travel Zoom Meta. That said, we started accepting payments from founding members in Q3 2023.
Hello, everyone.
At this time, we do not have any significant updates for travel group matter.
Lijun Qi: Slide 14 show called revenues compared to operating expenses. Most of the companies of pretty expenses except for marketing are fixed in a short term or midterm. We believe we can keep fixed log costs relatively low in the foreseeable future, while revenues are expected to grow. Higher revenues would just increase margin. For Q4 2023, we currently expect growth in revenue to continue year over year.
That said, we started accepting payment from founding members in Q3 2023.
Speaker 3: In addition, we are collaborating with best-in-class Metaverse content creators on innovators rather enables Metaverse experiences for founding members.
In addition, we are collaborating with best in class metals content creators on <unk> Rob.
Browser enabled reservoir experiences for founding members.
Speaker 3: Given the mueness of this industry, we have been testing various content, member acquisition, and marketing strategies to determine the channel that used optimal results.
Given the newness of this industry, we have been testing various content member acquisition and marketing strategy.
Holger Bartel: Now I turn over to Holger. Thank you, Lijun. Year over year revenue goes accelerated from Q2 to Q3 again. We will continue to leverage Travelzoo's global reach, our trusted brand, and the strong relationships with top travel suppliers to negotiate more exclusive offers for our members. It is in times of large increases in travel prices that travelzoo is most valuable for consumers. Travelzoo members enjoy high quality travel experiences and represent outstanding values. With more than 30 million members, 8 million mobile app users and 4 million social media followers travelzoo is loved by travel enthusiasts who are effluent, active, and open to new experiences.
Determine the channel that's yield optimal results.
Speaker 3: We continue to use data to make important decisions and be strategic with the deployment of our investment as we build the service.
We continue to use data to make important decisions.
The strategic with the deployment of our investment as we built the service.
Speaker 5: I look forward to providing additional updates in due time.
I look forward to providing additional updates in due time.
Speaker 5: I am handing over to the operator for questions for Holger, Region and me.
I am handing over to the operator for questions, both <unk> and <unk>.
Thank you the floor is now open for questions. If you do have a question. Please press star followed by one on your Touchtone phone at this time.
Once again, if you do have a question, ladies and gentlemen that a star followed by one on your Touchtone phone.
Please hold while we poll for questions.
Speaker 2: Our first question comes from Michael Kupinski with Noble Capital Markets, your line.
Our first question comes from Michal Krupinski with noble capital markets. Your line is open.
I just have a couple of questions here first of all congratulations on your good quarter.
Holger Bartel: Slide 15 provides more information about travelzoo members. You see that 87% state they are open to new destinations and travel ideas. Travelzoo members are two travel enthusiasts.
The gross profit margins were better than expected in a seasonally slow quarter. I was just wondering if you had thoughts on the trajectory for gross margins going forward.
Hi, Michael Yes, you are right across margins looked a little bit due to seasonality.
Holger Bartel: Slide 17 provides an overview of what management and our global team are focused on. We want to reach and surpass pre-pandemic number of members and accelerate revenue growth, add more innovative exclusive benefits for travel enthusiasts to make the travelzoo membership even more valuable. Utilize the higher operating margins to significantly increase EPS, grow check flight clubs profitable subscription revenue, and develop travelzoo meta with discipline.
And in the next few quarters or next year, you will see similar gross margins.
As we have seen earlier this year.
Speaker 6: And then you've shown an increase in the number of subscribers for Jack's light club. And I know that this was an area that you thought had some significant growth potential. I know that the business started at slight deals, but have you and you indicated plans to kind of transition that to more of a travel model? Has that happened? And what are you doing to reflect that strong subscriber growth? Can you add some color on what you're doing in that segment?
Gotcha, and then have shown an increase in the number of subscribers for Jack's flight club and I know that this was an area that we thought had some significant growth potential.
I know that the business started its quite deals, but have you and you indicated plans to kind of transition that to more of a travel model has that happened and what are you doing to reflect that strong subscriber growth can you add some color on what youre doing in that segment.
Arveena Ahluwalia: At this point, I'd like to turn over to Arvina. Hello, everyone.
Speaker 4: X-Light Club continues to focus on alerting its members and subscribers about great airfare offers.
Next slide club continues to focus on alert.
And then verse subscribers about create LCL or force.
Arveena Ahluwalia: At this time, we do not have any significant updates for travelzoo meta. That said, we started accepting payments from founding members in Q3 2023. In addition, we are collaborating with best-in-class metaverse content creators on innovative browser-enabled metaverse experiences for founding members. Given the units of this industry, we have been testing various content, member acquisition, and marketing strategies to determine the channel that yields optimal results. We continue to use data to make important decisions and be strategic with the deployment of our investment as we build the service.
Speaker 4: And that's what we continue to do. Now that we've recently fly its and airline prices has gone up so much.
And that's what we continue to do it now.
Recently slides.
<unk> prices have gone up so much.
Speaker 4: There's an interest as we have expected after the pandemic is over. There's increased interest in people hearing about great fly ideas. And that's probably the probably. But that's the main reason why the subscribers for CheckSlide Club are up. And we are also happy that revenues are up even more.
Yes.
Just as we had expected after the pandemic is over there is increased interest in people hearing about great slide deals and that's probably the.
Probably but that's the main reason why the subscriber <unk> slide.
And we are also happy that revenues are up even more so.
Speaker 4: Finally, we are seeing stronger momentum with Check Slide Club, which was the main reason why we invested in this business.
Finally, we are seeing stronger momentum with Chegg slide 12, which was the main reason why we invested in this business.
Speaker 6: Yes, and you at this point you have an introduced that to the North America yet because that was originally the plan is to expand that.
Yes.
At this point, you have and introduce that to the.
North America, yet because that was originally the plan is to expand that.
Speaker 4: But we have, but only to a certain region, not all of North America yet.
But we have but only to a certain regions not all of North America targets.
Arveena Ahluwalia: I look forward to providing additional updates in due time.
Speaker 6: Gotcha. The ratio of your cash to merchant liabilities continue to improve in the latest quarter. And I know that you repurchase some stock which affected the cash position. But when do you anticipate the cash will start to increase?
Got you the ratio of your cash to merchant liabilities continue to improve in the latest quarter and I know that you repurchased some stock.
Operator: I am handing over to the operator for questions for Holger, Lijun and me. Thank you. The floor is now open for questions. If you do have a question, please press star followed by one on your touch on phone at this time. Once again, if you do have a question, ladies and gentlemen, that is star followed by one on your touch on phones.
The cash position, but when do you anticipate the cash will start to increase.
Speaker 4: We expect cash to increase this quarter and again next year.
We expect cash to increase this quarter and again next year.
Speaker 4: Okay, and recently the US put a travel advisory for US citizens traveling abroad. Have you seen any impacts on this at this point? No, we have not seen any impact on it.
Okay and recently the U S put a travel advisory for U S. Citizens traveling abroad have you seen any impact from this at this point.
Operator: Please hold while we bowl for questions.
Michael Kupinski: Our first question comes from Michael Kupinski with noble capital markets. Your line is open. Thank you. I just have a couple of questions here. First of all, congratulations on your good quarter. The gross profit margins were better than expected in a seasonally slow quarter. I was just wondering if you have thoughts on the trajectory for gross margins going forward. I might go, yes, you are right across margins. Look through it a little bit due to seasonality.
No we have not seen any impact on it.
Okay. That's all I have thank you.
Youre welcome Michael.
Speaker 2: The next question is from Ed Wu with Asine Capital, your line.
The next question is from Ed Woo with <unk> capital. Your line is open.
Speaker 7: Yeah, thank you for taking my question. What are you seeing out there, you know, in terms of hearing from your travel suppliers, the outlook for travel, you know, it seems like they held up pretty well during the summer, even with some of the macro issues. What are they're outlook heading into the holidays in 2024?
Yes. Thank you for taking my question what are you seeing out there.
So hearing from your travel suppliers the outlook for travel it seems like.
They held up pretty well during the summer even with some of the macro issues what are their outlook heading into the holidays in 2024.
Michael Kupinski: I think in the next two quarters and next year we'll see some similar cross margins as we have seen earlier this year. And then you've shown an increase in the number of subscribers for Jack's life club. And I know that this was an area that you thought had some significant growth potential. I know that the business started as flight deals, but have you and you indicated plans to kind of transition that to more of a travel model?
Hi, Ed.
Speaker 4: people continue to be interested in traveling after pandemic, but that big surge of travel interest that we saw last year is dissipating a little bit. We are hearing particularly from hotels and airlines in North America that demand is slowing down and normalizing.
People continue to be interested in traveling after.
The pandemic.
But that big surge of <unk>.
Travel interests that we saw last year.
Taking a little bit we are hearing, particularly from hotels and airlines in North America that demand is slowing down and then normalizing.
Michael Kupinski: Has that happened? And what are you doing to reflect that strong subscriber growth? Can you add some color on what you're doing in that segment? That flight club continues to focus on alerting its members and subscribers about great airfare offers. And that's what we continue to do. Now that's recently flights and airline prices has gone up so much. There's an interest as we have expected after the pandemic is over there's increased interest in people hearing about great flight deals and that's probably the probably but that's the main reason why to subscribe us for Jack's life club up.
Speaker 4: Also, probably results of the higher prices, because prices for hotels and flights had gone up tremendous to you over the last two years. And that's of course one of the reasons why our service, which helps people find great deals, is in
It's also probably a result of the higher price because price is for hotels and slides has gone up tremendously over the last two years.
And that's of course, one of the reasons why.
Our service, which helps people find great deals.
Gaming.
Speaker 4: great demand at this time. And we think that we'll continue. In Europe , we see generally particularly in the UK, we see consumers be a bit more cautious, also looking for more values. And so I would say to get back to your question, the demand for the upcoming holiday season is still strong, but slower than what the Travis suppliers have seen last year.
It demands at this time.
We think that will continue in Europe .
We see generally, particularly in the UK, we sequence you must be.
A bit more cautious.
So looking for more value.
So I would say.
Get back to your question, but in the <unk>.
<unk> for the upcoming holiday season.
Strong, but slower than what sort of track with suppliers have seen last year.
Michael Kupinski: And we are also happy that revenues are even more so finally we are seeing stronger momentum with Jack's life club which was the main reason why we invested in this business. Yes and you at this point you haven't introduced that to the North America yet because that was originally the plan is to expand that but behave but only to certain regions and not the oil of the North America yet.
Speaker 7: A follow up question, have you seen any noticeable trends in people downgrading hotels from five-star to four-star or instead of taking, you know, one week vacation, taking five days, short and interrogation, just to, you know, get the budget lower. Have you seen any noticeable trends in that?
A follow up question have you seen any notice both France and people downgrading Your hotel from five start of course Star <unk>.
Instead of taking.
One week vacation, taking five days shortening verification.
Just to get the budget lower have you seen any noticeable trends in that.
Speaker 4: We have not seen that really, but what we have seen is a higher number of five staff hotels that are looking to work with us because they are not as big as they were last year or in summer. So that offers great opportunities for our members because we then negotiate with these hotels exclusive offers and that allows our members to continue to enjoy, for example, five staff hotels.
We have not seen that really but what we have seen was a higher number of five star hotels that are looking to work with us because they are not as <unk> last year or in summer.
Michael Kupinski: Gotcha. The ratio of your cash to merchant liabilities continued to improve in the latest quarter and I know that you repurchased some stock which affected the cash position but when do you anticipate the cash will start to increase? We expect cash to increase this quarter and again next year. Okay, and recently the US put a travel advisory for US citizens traveling abroad. Have you seen any impacts on this at this point? No, we have not seen any impact on it. Okay, that's all I have.
Michael Kupinski: Thank you.
So that also has great opportunities for our members because we then negotiate with these hotels exclusive of course.
It allows our members to continue to enjoy it for example, a five star hotels.
Speaker 4: what they would normally pay when they went to a four-star hotel. But we have not seen any indication that there's left demand for upscale property.
What they would normally paid when they went to a four star hotel.
We have not seen any indication that there is less demand for ups.
Upscale properties.
Speaker 6: Great, well thank you for answering my questions and I wish you guys good luck. Thank you. Thank you. Thanks, Ed.
Great well. Thank you for answering my questions and I wish you guys. Good luck. Thank you. Thank you.
Thanks, Ed.
The next question is from Steve Silver with Argus Research Your line is open.
Thank you operator, and let me offer my congratulations on the quarter as well.
Michael Kupinski: You know, in terms of hearing from your travel suppliers, the outlook for travel, you know, it seems like they held up pretty well during the summer, even with some of the macro issues.
My first question I guess is related to the matter.
You've mentioned that this quarter was a little light in terms of movement in the in the launch and tracking those types of metrics I'm, just trying to get a sense as to whether we should be thinking about.
Michael Kupinski: What are they're outlook heading into the holidays in 2024? I had people continue to be interested in traveling after pandemic, but that big surge of travel interest that we saw last year is dissipating a little bit. We are hearing particularly from hotels and airlines in North America that demand is slowing down and normalizing. Also probably result of the higher prices because prices for hotels and flights has gone up tremendously over the last two years.
Just looking for statistics on on how the launch is going.
Really thinking in terms of quarter over quarter basis or are we looking at maybe something a little geared towards next year just in terms of.
The signals that Youre looking for in order to invest in the business a little bit more aggressively.
Yes, hi, and thanks for the question.
Yes, we are looking for more data and quarter over quarter data at this point like I mentioned earlier, what we have been working on is testing various strategies.
Michael Kupinski: And that's of course one of the reasons why our service which helps people find great deals is in great demand at this time and we think that we'll continue. So in Europe, we see generally particularly in the UK, we see consumers be a bit more cautious, also looking for more values.
Which strategy yields similar.
Optima without question, but.
But ideally, yes, we're tracking everything on a monthly and even quarterly data.
Given the newness of the product and service.
It will take some time until we acquire meaningful data.
Okay, Great and then one on the balance sheet.
Michael Kupinski: And so I would say to get back to your question, the demand for the upcoming holiday season is still strong, but slower than what the travel suppliers have seen last year.
Just trying to get a sense as to given the fact that there was a little bit of pay down over the last quarter on the merchants payable just trying to get a sense as to.
Whether those are a little bit more longer term in terms of coming due or.
Michael Kupinski: A follow up question, have you seen any noticeable trends in people downgrading hotels from five star to four star, or instead of taking, you know, one week vacation, taking five days, short and intervocation, just to, you know, get the budget lower. Have you seen any noticeable trends in that? We have not seen that really, but what we have seen is a higher number of five star hotels that are looking to work with us because they are not as busy as they were last year or in summer.
Do you think that does it.
We're looking at maybe 2020 for taking more significant reduction in whatever payables will come due.
Hi, good observation, Steve merchant payables were indeed down less than what we had expected the reason for that is that.
Michael Kupinski: So that also screened opportunities for our members because we then negotiate with these hotels exclusive offers and that allows our members to continue to enjoy, for example, five star hotels, what they would normally pay when they went to a four star hotel. But we have not seen any indication that there's less demand for upscale properties.
Voucher.
Sales and purchases in Q3 were higher than we expected.
So that led to new merchant payables.
While the merchant payables from previous historic vouchers, Indeed went down as we had expected but net net the decrease was not quite as high.
Resolved that helped of course with higher revenues in Q3, because revenues came in better.
Then what we had forecast so that was quite good.
And as a reminder.
Most of the Volte just it doesn't all purchased.
Our non refundable.
Michael Kupinski: Great. Well, thank you for answering my questions, and I wish you guys good luck. Thank you. Thanks, Ed.
Members can refunds than in the first two weeks, but after two weeks they become nonrefundable.
Steven Silver: The next question is from Steve Silver with August Research. Your line is open. Thank you, operator, and let me offer my congratulations on the quarter as well. My first question, I guess, is related to the meta. Or if any, you'd mention that this quarter was a little light in terms of movement in the launch and tracking those types of metrics. Just trying to get a sense as to whether we should be thinking about just looking for statistics on how the launch is going.
So the merchant payables to be a little bit different than what they were a year ago.
We expect over the next few quarters merchant payables to decrease further.
As I said earlier, we also expect cash to increase over the next few quarters, so that gap between the two sure.
Become tier or it should become positive.
More meeting well cashed in merchant payables, that's what we really expect in the next couple of quarters to happen.
Arveena Ahluwalia: Are you really thinking in terms of a quarter over quarter basis, or are we looking at maybe something a little geared towards next year, just in terms of the signal that you're looking for in order to invest in the business a little bit more aggressively. Yeah, hi, and thanks for the question. So, yes, we are looking for more data and quarter of a quarter data. At this point, like I mentioned earlier, what we've been working on is testing various strategies and seeing which strategies yield the most optimal result, so as to see. But ideally, for tracking everything on a monthly and even quarterly data, but you know, given the use of the product and service, it will take some time to reacquire meaningful data.
Great that's very helpful and congratulations again.
The next question is from Jim Goss with Barrington Research Your line is open.
Hi, Good morning, this is Pat on for Jim.
Arveena Ahluwalia: Okay, great.
Instead, a question with regards to the size of the member base.
As you mentioned the potential increase in interest in finding and deals just because of.
Price pressure I'm, just wondering if that if you guys. How you guys see.
The benefits of marketing activity to try to drive.
Membership growth and sort of what I guess challenges you might be facing in terms of attracting members.
It is indeed, both on one hand pad.
We are seeing more members coming to us because.
Lijun Qi: And then one on the balance sheet, just trying to get a census to given the fact that there was a little bit of p down over the last quarter on the Merkins Pable, just trying to get a census to whether those are a little bit more longer term in terms of coming due, or if you think that we're looking at maybe 2024, signal more significant reduction in whatever payables will come due. Thanks.
Yes.
Upset on La <unk> with the.
<unk> four hotels in the alliance.
And at the same time, we also.
Increased our member acquisition during the third quarter.
To do that while still maintaining overall cost and expenses flips versus the previous quarter. So that was quite good but we did invest more in member acquisition and as a result, do you see that member growth.
Lijun Qi: Good observations. The merchant payables were indeed down less than what we had expected. The reason for that is that rule voucher sales and purchases in Q3 were higher than we expected. So that led to new merchant payables, while the merchant payables from previously sold vouchers indeed went down as we had expected. But net net, the decrease was not quite as high as a result that helped, of course, with higher revenues in Q3 because revenues came in better than what we had forecast.
After over quarter and year over year.
It was actually quite good this quarter better than in previous periods.
Okay, and then with I.
I guess.
<unk> still relatively high but maybe no slackening.
What extent do you guys.
Feel that you guys that you have the capacity within your existing sales force to continue to kind of evaluate or negotiate deals and kind of continuing to like do you feel any need to increase staffing to make sure that you are still presenting a high quality offers to your numbers.
Lijun Qi: So that was quite good. And as a reminder, most of the vouchers that are now purchased are non-refundable. Members can refund them in the first two weeks, but after two weeks, they become non-refundable. So the merchant payables today are a little bit different than what they were a year ago, but we expect over the next few quarters merchant payables to decrease further. And as I said earlier, we also expect cash to increase over the next few quarters. So that gap between the two should become zero or actually become positive, more meaning more cash than merchant payables. That's what we really expect in the next couple of quarters to happen.
Lijun Qi: Great. That's very helpful.
Yes.
Over the last two years.
Strong travel demands in hotels and flights that are full or not very good for us, but now things are slowing down potentially economy is slowing down.
Lijun Qi: And congratulations again.
That is good because now more of the travel suppliers come to us and work with us.
They want.
They want them to.
<unk> offers to our members and get more guests into Deb hotel rooms on the cruise ships and.
That doesn't mean, we need more people to negotiate his office and research them. It just makes it easier.
More competition among them.
It's easier to negotiate a better offer that trends lead standing bandwidth yields for our members and of course more interest than on the side of our members to take them to take advantage of these offers.
James Goss: The next question is from Jim Goss with Barrington Research. Your line is open. Good morning.
<unk>.
The expense as we said over the last couple of years the expense we have for the team for.
Patrick Sholl: This is Pat on for Jim. If you have a question with regards to the size of the number base, you know, as you mentioned, the potential increase in interest in finding and deals just because of price pressure. I'm just wondering if that if you guys, how you guys see the benefits of marketing activity to try to drive membership growth and sort of what, I guess, challenges you might be facing in terms of attracting numbers.
Selling negotiating put towards the accomplishing and so forth is relatively flat with <unk>.
More or less remember so as the member base increases and revenues increase.
That doesn't affect the expense side, but it makes it.
Before us to increase margins or to invest more in member acquisition to increase the member base forever.
Okay, and then I guess the last question I had kind of similar to Mike's question I was just wondering what sort of.
Patrick Sholl: It is indeed both on one hand, Pat. We are seeing more members coming to us because They are upset or not happy with the prices they are seeing for hotels and airlines. And at the same time, we also increased our member acquisition during the third quarter. We were able to do that while still maintaining overall costs and expenses flat versus the previous quarter. So that was quite good. But we did invest more in member acquisition. And as a result, you see that that member grows quarter over quarter and year over year was actually quite good this quarter better than in previous periods.
Share of revenue too like travel deals from.
To the middle East generally contribute to.
Quarterly revenue and I realize it would it be like completely.
Uh huh.
Hi.
A complete absence of that revenue if it went away because there would be some offset but I'm just wondering what sort of impact.
Kind of geopolitical tensions Kenneth.
Potentially have.
It is actually quite slim because offers to the middle East where they don't represent a very large portion of the deals or the offers we make to our members.
Part from countries like Israel of course people may be more hesitant to travel to Egypt I would see that you made this year, a very very small impact in Europe .
Holger Bartel: Okay. And then with, you know, I guess demand still relatively high, but maybe, you know, flattening to what extent do you guys feel that you guys that you have the capacity within your existing sales force to continue to kind of evaluate or negotiate deals and kind of continue to, or do you know, do you feel any need to increase staffing to make sure you're still presenting high quality offers to your numbers?
But in the in North America.
It's the impact is close to zero.
Also keep in mind, what I said earlier 80.
Over 80% of our members are completely open to destination. So.
If they cannot go to a certain destination then they just look to go somewhere else and Thats the beauty about travel to that.
Holger Bartel: Yes. As I said over the last two years, strong travel demands and hotels and flights that are full are not very good for us, but now things are slowing down. Potentially economy is slowing down. That is good because now more of the travel suppliers come to us and work with us. They want them to put offers to our members and get more guests into their hotel rooms or on their cruise ships.
We are able to show our members and motivate them to go to destinations that they didn't see golf. So if they can't travel to the middle East He will find some other place where they can go to and maybe some place to having thought about.
And that's how it's sort of competency itself.
No.
In nutshell, it really doesn't affect us yet in any meaningful way.
Okay. Thank you.
Holger Bartel: And that doesn't mean we need more people to negotiate these offers and research them. It just makes it easier. There's more competition among them. It's easier to negotiate a better offer that translates than in better deals for our members. And of course, more interest than on the side of our members to take advantage of these offers. So the expense, as we said over the last couple of years, the expense we have for the team for selling, negotiating, producing, publishing and so forth is relatively flat, whether we have more or less members.
Okay, I'll turn it back now over to Mr. Holger Bartel.
Great. Thank you.
Dear investors again.
Thanks for your time and support and we look forward to speaking with you again next quarter have a great day.
Thank you, ladies and gentlemen that does conclude today's teleconference. You may now disconnect your lines have a nice day.
[music].
Holger Bartel: So as the member base increases and revenues increase, that doesn't affect the expense side, but it makes it possible for us to increase margins or to invest more in member acquisition. To increase the member base further.
Okay.
Okay.
Yes.
Thank you.
Alright.
Holger Bartel: Okay. And then I guess the last question I had, kind of similar to Mike's question, I was just wondering what sort of chair of revenue do like travel deals from to the Middle East generally contribute to quarterly revenue. And I realize it wouldn't be like, you know, completely, a complete absence of that revenue if it went away because there would be some offset, but there's wondering what sort of impact kind of the geopolitical tensions kind of potentially have.
Okay.
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Yes.
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Yes.
Okay.
Yes.
Okay.
Okay.
Hi.
Okay.
Yes.
Okay.
Thanks.
Great.
Good morning.
Yes.
Yeah.
Holger Bartel: It is actually quite slim because offers to the Middle East were they don't represent a very large portion of the deals or the offers we make to our members, but apart from countries like Israel, of course, people may be more hesitant to travel to Egypt. I would say that you maybe see a very, very small impact in Europe, but in North America, it's the impact is close to zero also keep in mind what I said earlier, you know, 80 over 80% of our members are completely open to destination.
Yes.
Yes.
Yes.
Thanks.
Okay.
Holger Bartel: So if they cannot go to a certain destination, then they just look to go somewhere else and that's the beauty about travel zoo that we are able to show our members and motivate them to go to destination that it didn't think of. So if they can travel to the Middle East, they will find some other place where they can go to and maybe some place they haven't thought about. And that's how it sort of compensate itself and so in a nutshell, it really doesn't affect us yet in any meaningful way.
Holger Bartel: Okay, I'll turn it back now over to Mr. Holger Bartel.
Holger Bartel: Great, thank you and the investors, again, thanks for your time and support and we look forward to speaking with you again next quarter.
Operator: Have a great day. Thank you, ladies and gentlemen.
Operator: This concludes today's teleconference. You may now disconnect your lines. Have a nice day.
Operator: Okay.
Holger Bartel: Just one day, I don't lie.
Holger Bartel: Just one day, all the day, everybody said the word.