Q1 2024 Travelzoo Earnings Call
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Operator: Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Travelzoo first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Christine: Thank you for standing by my name is Christine and I'll be your conference operator today at this time I would like to welcome everyone to the travel do first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Lijun Qi, Principal Accounting Officer. You may begin your conference.
Speaker Change: To ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again press star one. Thank you I would now like to turn the conference over to Lee Janet Chi Principal Accounting Officer, you May begin your conference.
Speaker Change: Thank you operator and welcome to those of you joining us today. Please refer to the management presentation to follow along with our pay prior to remark.
Lijun Qi: 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 travelzoo.com. Let's begin with slide number four.
Speaker Change: The presentation in PDF format is available on our Investor Relations site at trouble do Dot com Slash I are less.
Speaker Change: Let's begin with slide number four.
Lijun Qi: Travelzoo's revenue, operating profit, and member count all increased year over year. Our consolidated Q1 revenue was $22.0 million, up 2% from $21.6 million in the prior year. In constant currencies, revenue was $21.8 million, an increase of 1% year-over-year. Operating income, which we as management call operating profit, increased 19% year-over-year to $5.6 million, or 25% of revenue, up from $4.7 million in the prior year. As of March 31, 2024, we had 31.0 million unduplicated members, compared to $30.5 million as of March 31, 2023.
Speaker Change: Hello, Booth revenue operating profit and member count all increased year over year.
Speaker Change: Our consolidated Q1 revenue was 22.0 million up 2% from 21 6 million in the prior year.
Speaker Change: In constant currency revenue was 21.8 million, an increase of 1% year over year.
Speaker Change: Operating income, which way as management call operating profit increased 19% year over year.
Speaker Change: Q1, operating profit was by $46 million or 25% of revenue up from four planes 7 million in the prior year.
Speaker Change: As of March 31, 2024, we had 31.0 million until predicated members.
Speaker Change: Compared to 30.5 million as of March 31, 2023.
Lijun Qi: Slide 5 shows that revenue growth in our Europe segment more than offsets a slight decline in North America. On slide six, we break down our categories of revenue: Advertising, Membership Fees, and others.
Speaker Change: Slide five shows that revenue growth in our Europe segment more than offset a slight delay decline in North America.
Speaker Change: On slide six we breakdown our categories of revenue.
Speaker Change: Advertising membership fees and other.
Lijun Qi: Advertising revenue increased 1% year-over-year to $20.9 million from the prior year period. Revenue from membership fees increased 16% year-over-year to $1.1 million from the prior year period. On a consolidated level, we expect revenue from membership fees to grow over time. During 2024, membership fees will be waived for legacy Travelzoo members.
Speaker Change: Advertising revenue increased 1% year over year to 20.9 million from the prior year period.
Speaker Change: Revenue from membership fees increased 16% year over year to 1.1 million from the prior year period.
On a consolidated level, we expect the revenue from membership fees to grow over time.
Speaker Change: During 2020 for membership fees have believed for legacy troubled dual members.
Lijun Qi: Slide 7 shows an example of revenue recognition from membership fees. Revenue from membership fees is recognized readily over the period of the subscription. Member acquisition costs, on the other hand, are recognized in full at the time of the expense.
Slide seven shows an example of membership fee revenue recognition.
Speaker Change: Revenue from membership fees is recognized ratably over the period of the subscription.
Speaker Change: Member acquisition cost on the other hand I recognized in full at the time of the expense.
On slide eight you can see that our GAAP operating margin increased to 25% in Q1 2024.
Lijun Qi: On slide 8, you can see that our gap operating margin increased to 25% in Q1 2024. Slide 9 shows that in North America, the gap operating margin remained high at 31% for Q1 2024. We provide information on non-GAAP operating profit as we believe it better explains how Travelzoo's management evaluates financial performance. For example, in 2024, non-capital operating profit was $6.0 million. That's 27% of revenue compared to non-GAAP operating profit of $5.5 million in the prior year period. Slide 11 provides information about the items that are included in the calculation of non-GAAP operating profit. Please refer to slide 12.
Speaker Change: Slide nine shows that a north America. The GAAP operating margin remained high at 31% for Q1 'twenty 'twenty four.
Speaker Change: On slide 10, we provide information on non-GAAP operating profit as we believe a better explains how travel Duke management evaluate financial performance.
Speaker Change: Q1, 2024, non-GAAP operating profit was 6.0 money.
Speaker Change: It's 27% of revenue compared to non-GAAP operating profit of $5 5 million in the prior year period.
Speaker Change: Slide 11 provide information about the item that excluded in the calculation of non-GAAP operating profit.
Speaker Change: Please turn to slide 12, we maintained a solid cash position, even after repurchasing 400000 travel do shares during the quarter.
Lijun Qi: We maintained a solid cash position even after repurchasing 400,000 Travelzoo shares during the quarter. As of March 31st, 2024, consolidated cash, cash equivalents, and restricted cash was $16.9 million. An increase of $476,000 from December 31, 2023. However, temporarily, merchant payables, which are future payments that we have to make to partners when vouchers are redeemed, decreased by $2.8 million over the same period. Slide 13 shows how revenues are compared to operating expenses.
Speaker Change: As of March 31, 2024, consolidated cash cash equivalents and restricted cash was $16 9 million.
An increase of 476000 from December 31, 2023 Kemper.
Speaker Change: Some purposely merchant payables, which are future payments that we have to make to partner when vouchers redeemed decreased by $2 8 million over the same period.
Speaker Change: Slide 13 shows total revenues compared to operating expenses.
Lijun Qi: Most of the company's operating expenses, except for marketing, are relatively fixed in the short to mid-term. We believe we can keep fixed costs relatively low in the foreseeable future, and higher revenues with a just increased operating margin. For Q2 2024, we expect continued growth in revenue year over year, albeit at a slower pace than in 2023. We also expect higher profitability year over year. We recognize.
Speaker Change: Most of the company's operating expenses, except for marketing are relatively fixed in the short to mid term.
Speaker Change: We believe we can keep fixed costs relatively low in the foreseeable future.
Speaker Change: Our revenues would adjust increase operating margin.
Speaker Change: Well Q2, 'twenty 'twenty four we expect continued growth in revenue year over year.
Speaker Change: Albeit at a slower pace than in 2023.
We also expect for Q2, 'twenty 'twenty four higher profitability year over year.
Speaker Change: We recognized.
Lijun Qi: Membership fee revenue relatively over the subscription period. Legacy Travelzoo members as of December 31, 2023 are exempt from the fees during 2024. Therefore, we do not anticipate generating membership fee revenue from these members before 2025. Now I turn the discussion over to Holger.
Speaker Change: Membership fee revenue Ratably over does the truth in period.
Speaker Change: Legacy troubled zoom members as of December 31, 2023 exempt from the fee due in 'twenty 'twenty four therefore.
Speaker Change: Therefore, we do not anticipate generating membership fee revenue from these members before 2025 now.
Speaker Change: Now I turn the discussion over to holder.
Holder: Thank you Edwin.
Holger Bartel: We will continue to leverage Travelzoo's global reach, our trusted brand, and strong relationships with top travel suppliers to negotiate more exclusive offers for members. It is in times of large increases in travel prices that Travelzoo is most valuable for consumers. Travelzoo members enjoy high-quality travel experiences that represent outstanding values. With more than 30 million members, 8 million mobile app users, and 4 million social media followers.
Holder: We will continue to leverage travels with global reach or trusted brands and strong relationships with top travel suppliers to negotiate more exclusive offers for members.
Holder: It is in times of large increases in travel prices that travels who is most valuable for consumers.
Holder: Travelers, who members enjoy high quality travel experiences that.
That represent outstanding value.
Holder: With more than 30 million members eight.
Holder: 8 million mobile App users and 4 million social media followers.
Holger Bartel: Travelzoo is loved by travel enthusiasts who are affluent, active, and open to new experiences. Slide 15 provides more information about Travelzoo members. 91% say they are open to new destinations and travel ideas. We are a club of travel enthusiasts. Slide 17 provides an overview of what management and our global team are focused on.
Holder: <unk>, who is loved by travel enthusiasts who are affluent.
Holder: Active and.
Holder: And open to new experiences.
Holder: Slide 15 provides more information about travelers remembers 91%.
Holder: They are open to new destinations and travel ideas, we are the club of travel enthusiasts.
Holder: Slide 17 provides an overview of what management and alcohol. The team are focused on.
Holger Bartel: We want to grow the number of Travelzoo members. We want to leverage strong existing relationships with top travel suppliers and add new relationships to negotiate more exclusive offers. Utilize higher operating margins to increase EPS. Go check Flight Club's profitable subscription revenue, and develop Travelzoo Meta with Discipline. At this point, I'd like to turn it over to Christina for an update on both Czech's Flight Club and Travelzoo MEDA.
Holder: We want to grow the number of travelers who members.
Holder: We want to leverage strong existing relationships with top travel suppliers and add new relationships to negotiate more exclusive offers.
Holder: Utilize higher operating margins to increase EPS.
Holder: Gross check slide clubs profitable subscription revenue.
Holder: And develop travelers, who mirror with discipline.
Holder: At this point I'd like to turn over to Christina for an update on both kicks flight club and travelers who matter.
Christina Sindoni Ciocca: Thank you, Holger. In Q1, Jack's Flight Club subscription revenue increased 16% year-over-year to $1.1 million. The number of premium subscribers increased 11% year-over-year. In 2024, we want to keep up this momentum with continued investment and member growth, including in new markets like Canada, further refine Jack's Flight Club's strong value proposition, and optimize marketing. Now I'd like to speak about Travelzoo Meta. We are making progress with the production of the first Metaverse travel experience.
Christina: Thank you again.
Christina: In Q1, Jack's flight club subscription revenue increased 16% year over year to 1.1 million.
Christina: Number of premium subscribers increased 11% year over year.
Christina: In 2024, we want to keep up this momentum with continued investment in member growth, including in new markets like Canada further refine Jack's flight club strong value proposition and optimize marketing.
Christina: Now I'd like to speak about travel do matter.
We're making progress with the production of the first Matt averse travel experience.
Christina Sindoni Ciocca: It will be browser-enabled. As stated in previous earnings calls, we're conscious of developing Travelzoo Meta in a financially disciplined way. We will provide additional updates in due time. I'm now handing over to the operator for questions from Holger, Lijun, and me.
Christina: It will be browser enabled stated in previous earnings calls, we're conscious of developing travel meta in a financially disciplined way.
Christina: We will provide additional updates in due time.
Speaker Change: I'm now handing over to the operator for questions for hunger lithium at me.
Speaker Change: Thank you.
Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: We will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure.
Speaker Change: That your phone is not on mute when asking your question.
Michael A. Kupinski: Your first question comes from Michael Kupinski from Noble Capital Markets. Please go ahead. Thank you.
Speaker Change: Your first question comes from Michael Kopinski from Noble capital markets. Please go ahead.
Michael A. Kupinski: Thank you and thanks for taking my questions.
Michael A. Kupinski: Thank you. Thanks for taking my questions. I was wondering if you could talk a little bit about Jack's Flight Club.
Michael A. Kupinski: I was wondering if you could talk a little bit about Jack's flight club, where is the growth coming from is it coming from mostly North America in terms of the number of subscribers and then of that growth. How many of those are new subscribers are actually paid subscribers and I was just wondering if you can kind of give us a little color on the growth there.
Michael A. Kupinski: Where is the growth coming from? Is it coming mostly from North America in terms of the number of subscribers? And then, of that growth, how many of those new subscribers are actually paid subscribers? And I was just wondering if you could kind of give us a little color on the growth there.
Speaker Change: Sure I can take that question.
Christina Sindoni Ciocca: Sure, I can take that question. We have been investing more in member acquisition in the US specifically over the past quarter and year. So a lot of the growth is coming from the US, but we still see significant member acquisition in the UK. It's our largest market and will continue to be our largest market. But we're starting to see the US creep up a bit more to be a larger proportion of our paying members.
Speaker Change: We have been investing more into our member acquisition in the U S specifically over the past quarter and year.
Speaker Change: So a lot of the growth is coming from the U S. But we still see significant member acquisition in the U K S largest marketing continues to be our largest market, but we're starting to see the U S creep up a bit more to be a larger proportion of our paying members.
Christina Sindoni Ciocca: And in general, we have been increasing our premium subscriber numbers, year-over-year, as we said, and it's becoming a larger proportion of our free members, but we don't disclose the exact number of our premium subscribers at this time.
Speaker Change: And then in general.
We have been increasing our premiums.
Speaker Change: Subscriber numbers.
Speaker Change: Year over year as we said.
Speaker Change: And it.
Speaker Change: It's a proportion at us, it's becoming a larger proportion of our free members, but we don't disclose the exact number of the premium subscribers at this time.
Michael A. Kupinski: And the next question is, in terms of Europe versus the United States or North America, obviously, you have some disparity in the performance. So I was just wondering, what is driving the growth in Europe and then what do you see happening in the United States? And maybe if you could just give us some color on the current market environment on both continents.
Speaker Change: And our next question is in terms of Europe versus the United States or North America. Obviously, you had some disparity in the performance I was just wondering what is driving the growth in Europe first and then what what do you see happening in New York, The United States and maybe if you could just give us some color on the current market environment in both.
Speaker Change: Continents.
Speaker Change: Sure look Michael we said that Europe is catching up after COVID-19 a little bit.
Holger Bartel: Sure. Look, Michael, we said that Europe is catching up after COVID a little bit more slowly than North America. That's exactly what we are seeing now. We're still seeing good growth in Europe.
Speaker Change: More slowly than North America, that's exactly what we are seeing now.
Speaker Change: We are still seeing good growth in Europe.
Holger Bartel: We're not happy that revenues in North America came in lower this quarter than last year. But look, advertising revenues always fluctuate, and there are different reasons. Sometimes offers from advertisers are not that strong. We don't feel comfortable recommending them to our members, so we lose some advertising revenue. But look, overall, we do not want to compromise on content quality and offer quality. That's most important to us.
Speaker Change: We're not happy that revenues in North America came ignore this quarter than last year, but look advertising revenue was always fluctuate and there's different different reasons. Sometimes offers format for tires that are not that strong.
Speaker Change: We don't feel comfortable recommending them to our members and we lose some advertising revenue, but look overall, we do not want to compromise on content quality and offer quality. That's most important to us sometimes April tigers reduced their spend temporarily or even put it on hold.
Holger Bartel: Sometimes advertisers reduce their spend temporarily or even put it on hold. So we had a couple of advertiser partners that are revamping their websites, changing them, so they put their advertising campaigns on hold temporarily while they are changing their strategies. But that's why we are now transforming to add subscription revenue to the revenue mix because this will increase revenues overall and also make them more stable because subscription revenue is something that will not fluctuate as much from one quarter to the next.
Speaker Change: So we had that we had a couple of advertisers partners that are revamping their website changing them. So they put their advertising competes on hold temporarily.
Speaker Change: While they are changing their strategy.
Speaker Change: But thats why we are now transforming to add subscription revenue grew the revenue mix.
Speaker Change: Because this will increase revenues overall and also meet the more stable because subscription revenue assumptions that will not fluctuate as much from one quarter to the mix.
James Charles Goss: Your next question comes from James Goss from Barrington Research. Please go ahead.
Speaker Change: Your next question comes from James Goss from Barrington Research. Please go ahead.
Holger Bartel: Okay, thank you. Just to go on a little with that, Holger. So the reason for the slippage in North American revenues was fewer deals being advertised to the client base. And that's primarily the reason for the North American revenue slippage.
James Charles Goss: Okay. Thank you.
James Charles Goss: Just to go on a little with that holder.
James Charles Goss: So the reason for the slippage in North American revenues.
James Goss: Was.
James Charles Goss: Fewer deals being advertised to the client base and that's primarily the reason for the North American revenue slippage.
Holger Bartel: What I said, Jim, there are a whole bunch of reasons, and they all come together. That's why advertising revenues fluctuate, and that's why revenues came in lower in North America than the previous year. But, as I said, there are a few different reasons. Sometimes it's advertising partners who just put their campaigns on hold for a quarter or two. So, as I said, there are lots of different reasons.
Speaker Change: What I said, Jim its a whole bunch of reasons.
Speaker Change: All come together.
Speaker Change: That's why advertising revenues fluctuate and that's why revenue was came in lower in North America than the previous year.
Speaker Change: But as I said, there is a few different reasons, sometimes its advertising partners, who just put.
Campaigns on hold for quarter or two so.
Speaker Change: As I said, there's lots of different reasons.
Holger Bartel: Okay, I think the guidance also pointed to better profitability again in the second quarter. Yeah, I believe in both North America and Europe, but it didn't mention revenues. Are you thinking revenues are still going to be fairly sluggish, particularly in North America? in the current quarter?
Speaker Change: Okay I think the guidance also pointed to.
Speaker Change: Better profitability again in the second quarter.
Speaker Change: I think believe in both North America, and Europe, but it didn't mention revenues it will or use thinking revenues are still going to be fairly sluggish, particularly in North America.
Speaker Change: And in the current quarter.
Holger Bartel: Our press release and Lijun said, I believe, that we are expecting revenues in Q2 to also grow versus the prior year, but not quite at the same rate as we saw in 2023.
Speaker Change: Our press release and issuing shipped I believe that we are expecting in Q2 revenue was two also grew versus the prior year, but.
Speaker Change: But modest quarry does the same rate that we saw in 2023.
Speaker Change: Your next question comes from the line of Steve Silver from Rguest Research. Please go ahead.
Steven Silver: Your next question comes from the line of Steve Silver from Argus Research. Please go ahead.
Steven Silver: Good morning, and thanks for taking my question as well. Holger, I was hoping to talk a little bit about the balance sheet. It looks like the balance sheet is continuing to make improvements, and it looks like the company might be on the verge of reclaiming a net positive cash position compared to the merchant payables as early as next quarter. And you mentioned that the company did buy back shares in the most recent quarter.
Steven Silver: Good morning, and thanks for taking my question as well.
Steven Silver: I was hoping to talk a little bit about the balance sheet. It looks like the balance sheet is continuing to make improvements and it looks like the <unk>.
Speaker Change: He might be on the verge of.
Steven Silver: Reclaiming a net positive cash position compared to the merchant payables as early as next quarter.
Steven Silver: And you mentioned that the company did buy back shares in the most recent quarter.
Steven Silver: Just trying to get your current thinking on the use of cash in an environment where the company is well-funded. Just trying to get a sense as to whether the mix will start to shift towards using capital for some growth initiatives like Meta. Just trying to get your overall thoughts in terms of the use of cash as the balance sheet continues to improve.
Steven Silver: Just wanted to get your current thinking on the use of cash in a.
Steven Silver: In an environment, where the company is well funded.
Steven Silver: Trying to get a sense as to whether the mix will start to shift towards using capital for some growth initiatives like meta just trying to get your overall thoughts in terms of use of cash as the as the balance sheet continues to improve.
Speaker Change: Yes, Steve we are happy with the improvement in the balance sheet.
Holger Bartel: Yes, Steve, we are happy with the improvement in the balance sheet. Merchant payables are probably now at a level where they will remain quite stable over the next few quarters, which should be positive for operating cash flow. So we expect this to go higher over the next few quarters.
Speaker Change:
Speaker Change: Merchant payables are probably now at a level, where they will go with median.
Speaker Change: Quite stable over the next few quarters, which should be positive for.
Speaker Change:
Speaker Change: Operating cash flow so.
Speaker Change: We expect this to go higher over the next few quarters.
Holger Bartel: Now, use of cash. We used some of it in the last year for share repurchases. That was attractive.
Speaker Change: Now use of cash.
Speaker Change: We used in the last year some of it for share repurchases that was attractive to share count has gone down quite a bit.
Holger Bartel: The share count has gone down quite a bit. We are, of course, always looking at opportunities to acquire, whether it's parts of businesses like we acquired a couple of times, membership deals from other companies, and also looking to see if there are opportunities to acquire competitors that are not doing that well. And lastly, we're in this transition now to a club model with a paid membership, and... We also believe that at some point in time, we will increase our marketing spend, and member acquisition spend, in order to drive that growth.
Speaker Change: We are of course always looking at opportunities.
Speaker Change: Acquirer, whether it's parts of businesses like we acquired a couple of times a member should be useful in other companies also looking to see if there are opportunities to acquire.
Speaker Change: Justin I'm not doing that well.
Speaker Change: And lastly.
We're in this transition now to a club model with a paid membership and.
Speaker Change: We also believe that.
Speaker Change: Some point of time, we will increase our marketing spend.
Speaker Change: Member acquisition spend in order to drive that growth.
Steven Silver: Okay, great. Thank you for that extra color.
Speaker Change: Okay, great. Thank you for the extra color.
Speaker Change: Your next question comes from Ed Woo from Ascendant capital. Please go ahead.
Edward Moon Woo: Our next question comes from Ed Woo from Ascendant Capital. Please go ahead. Yeah, thank you. Thank you, Michael.
Edward Moon Woo: Yeah, thank you for taking my question and congratulations on the quarter. My question is, you know, as we're approaching the, you know, summer travel season, what are you seeing out there both in Europe and the U.S. in terms of, you know, the consumers as well as the suppliers and how they feel the summer travel season is going to be?
Edward Moon Woo: Yes. Thank you for taking my question and congratulations on the quarter. My question is you know as we're approaching the summer travel season, what are you seeing out there both in Europe and the U S. In terms of the consumers as well as the suppliers of how they view the summer travel season is going to be.
Speaker Change: No large changes at versus what we have seen last year, if anything I can probably report that what we are hearing from travel partners is that.
Holger Bartel: No large changes, Ed, versus what we saw last year. If anything, I can probably report that what we are hearing from travel partners is that while last year was the year where, in particular, Americans wanted to venture out, wanted to travel more internationally, wanted to go to more exotic destinations. They are now seeing an increase in demand for staying closer to home, so in general, more interest in vacations in the U.S., and less interest in exotic vacations.
Speaker Change: While last year was the year. We are in particular Americans wanted to Renshaw with wanted to travel more internationally you wanted to go to more exotic destinations.
Speaker Change: They are now seeing.
Speaker Change: Increased demand for staying closer to home so in general a more interest in vacations in there yes.
Speaker Change: Less interesting exotic vacations and also.
Holger Bartel: And also, we are hearing that, generally, people are looking for vacations and trips where they can just relax and recover. So, I would say 2023 seems to have been the..., a year of activity, and now 2024 may be one where we are seeing more a trend back to vacations being trips that are just really allowing people to recover, relax, and Come Back Home refreshed.
Speaker Change: We are hearing that.
Speaker Change: Generally people are looking for vacations and trips where they can just relax and recover.
Speaker Change: So I would say 2023, you seem to have been the.
Speaker Change: Year of activity and.
Speaker Change: Now 2024 may be one where we are seeing more.
Speaker Change: <unk> to vacations being.
Speaker Change: Trips that.
Speaker Change: Just really.
Speaker Change: Lowering people to recover remix.
Speaker Change: And come back home <unk>.
Speaker Change: Refreshed.
Holger Bartel: One thing we are seeing, by the way, with our paid membership. And this is, of course, one of the reasons why we moved to a club model is that now we are, indeed, what the industry is calling a closed user group, which means that not everyone is a Travelzoo member. Only those who are joining and who are paying are Travelzoo members; offers from Travelzoo are not open to the public any longer. It's not sufficient to just enter an email address and purchase that offer. Now that we're in that state, we are seeing that we can source better offers. We can source offers from companies that we didn't work with before. Why is that?
One thing we are seeing by the way with our paid membership.
Speaker Change: And this is of course, one of the reasons why we moved to a cloud model is now that we are.
Speaker Change: Indeed, what are the industry's calling a closed user group, which means.
Speaker Change: Not everyone is a travelers who remember only those who are joining well gee, our travelers who members.
Speaker Change: All sorts of travelers, who are not open to the public any longer it's not sufficient purchased entered E mail address and purchased at all for now.
Speaker Change: Now that we're in that state.
Speaker Change: We are seeing that became source better offers we can source all force from companies that we didn't work with before why is that.
Holger Bartel: Since you know quite a bit about the travel industry, as you probably know, price parity is a very important issue, particularly for hotels, particularly for cruise lines. So hotels don't want to show a different price, a lower price, a better offer to the public. Now, however, that Travelzoo is a club, and only those who are in can see these offers, we are obtaining better offers, and that, in return, is making the Travelzoo membership more valuable, more attractive, and that's going to be a big component of what's going to drive the growth in membership and paid memberships going forward.
Speaker Change: Since you know quite a bit about the travel industry as you probably know that price parity is a very important issue, particularly for hotels, particularly for cruise lines.
Speaker Change: <unk> hotels don't want to show a different price a lower price a better offer to the public now however that travelers who is a club.
Speaker Change: Only those who are in can see these offers.
Speaker Change: We are obtaining better offers and getting return is making the fabulous who membership.
Speaker Change: More valuable more attractive and that's going to be a big component of what's going to drive to.
Speaker Change: Growth in membership impede memberships going forward.
Speaker Change: Great.
Edward Moon Woo: Great. Just going a little bit further into the, you know, the summer travel season, have you noticed any changes in people spending, whether they're spending less, traveling, fewer number of days, any macro issues? Are you seeing any of that either in the U.S. or Europe?
Speaker Change: Going a little bit further into the summer travel season have you noticed any changes in people's spending whether they're spending less travelling fewer amount of days any macro issues are you seeing any of that either in your U S or Europe.
Speaker Change: No we have not debt seems to be pretty similar to 2023, both in North America.
Holger Bartel: No, we have not. That seems to be pretty similar to 2023, both in North America as well.
Speaker Change: Your next question comes from Michael Kopinski from Noble capital markets. Please go ahead.
Michael A. Kupinski: Your next question comes from Michael Kupinski from Noble Capital Markets. Please go ahead.
Michael A. Kupinski: Yeah, just a couple of quick follow-up call questions here. I was just wondering in terms of what your experience has been so far in terms of the conversion over to the membership fees for your registered members. Are you seeing any variance from what you had seen before and at this juncture? Do you have an estimate of how much of those registered registered members will convert to a membership subscription fee?
Michael A. Kupinski: Just a couple of quick follow up call questions here of the I was just wondering in terms of what your experience has been so far in terms of the conversion over to the membership fee.
Michael A. Kupinski: <unk> of the registered members are you seeing any variance from what you had seen before and at this juncture do you have an estimate of what how much of those registered registered members will convert to a membership subscription fee.
Michael A. Kupinski: So all is going according to plan and according to our expectations.
Holger Bartel: So all is going according to plan and according to our expectations, new members since January 1st, 2024. New members that join have to pay the advertising fee, sorry, the membership fee. And we see members coming in at a rate that's actually what we expected. And the ones that joined before January 1st, 2024, as we said, won't have to pay in 2024.
Michael A. Kupinski: Newer members seems to without since January one 2024, new members that join have to Pee dee advertising fee sorry, the memberships the membership fee.
Michael A. Kupinski: And we see members coming in.
Michael A. Kupinski: Right that's what.
Michael A. Kupinski: What we expected.
Michael A. Kupinski: And.
Michael A. Kupinski: The one step joined before January one 2024, as we shipped the.
Michael A. Kupinski: Someone has to pay in 2024.
Michael A. Kupinski: We have a plan for how we are.
Holger Bartel: We have a plan for how we are converting them, or at least a portion of them, from this status into paying members. We certainly don't want to give up our entire advertising business. So we have a plan for that. We'll see at the end of the year what we're gonna do. And then we also, as you saw in today's presentation, we are now breaking out revenues into advertising, membership fees, and others because we wanna give you, the analysts, as well as investors, an opportunity to track the progress of how our PEAT membership is growing.
Michael A. Kupinski: Converting them or at least a portion of them from.
Michael A. Kupinski: The companys status into paying members, we certainly don't want to give.
Michael A. Kupinski: Keep up our entire advertising business. So we have a plan for that.
Michael A. Kupinski: We'll see at the end of the year, what are we going to do.
Michael A. Kupinski: And then we also as you saw in today's presentation. We are now breaking out revenues into advertising membership fees and odder.
Michael A. Kupinski: Because we wanted to give you the analysts as well as investors an opportunity to track the progress.
Michael A. Kupinski: In how our Piedmont will ship is growing and then as I said.
Holger Bartel: And then, as I said... Just responding to Ed. We are now creating offers that are stronger. We need to communicate, and we are communicating to our existing members, the legacy members, that the offering is getting stronger because that's going to be an important component to turn them into paying members.
Speaker Change: Just responding to add.
Speaker Change: We are now creating offers that are stronger we need to communicate and we are communicating to our existing members to legacy members that the offering is getting stronger because that's going to be an important component to turn them into <unk>.
Speaker Change: Members next year.
Michael A. Kupinski: And Holger, to that end, it was a little surprising to see sales and marketing expenses down in the quarter. I was just wondering if that was an anomaly or if you could just kind of give us your thoughts on what affected that in the first quarter or if that is a good runway that we should be using for 2024. That's all I have. Thank you.
Speaker Change: And hunger to that end.
Speaker Change: So surprising to see sales and marketing expenses down in the quarter. I was just wondering if that was an anomaly or if you can just kind of give us your thoughts at what what what affected that in the first quarter or if that is a good run rate that we should be using for 2024.
Speaker Change: All I have thank you.
Holger Bartel: Very good observation. Indeed, yes, we didn't spend as much on marketing and member acquisition in Q1 compared to previous quarters. We expect this to change and go up in subsequent quarters.
Speaker Change: Very good observation in Dts, we didn't spend as much on marketing and member acquisition in Q1 versus previous quarters. We expect this to change and go up in subsequent quarters.
Speaker Change: Okay. Thank you.
Speaker Change: Your next question comes from James Goss from Barrington Research. Please go ahead.
James Charles Goss: Your next question comes from James Goss from Barrington Research. Please go ahead.
James Charles Goss: Hi, thank you. I had a follow-up question as well. In terms of reaching new potential paying subscribers, I wonder if you might talk a little about the marketing plans you have underway, like how you're doing it, where and what tools you're trying to use. If you might provide a little color along those lines.
James Charles Goss: Hi, Thank you I had a follow up as well.
James Charles Goss: In terms of reaching new potential of paying subscribers I Wonder if you might talk a little about the marketing plans you have underway.
James Charles Goss: How youre doing it where what tools you are trying to use yes.
James Charles Goss: You might provide a little color along those lines.
Speaker Change: So it's a very wide wide range of marketing activities are mostly focused on online, but I really cannot go into all the details Jim because we use quite a few techniques some of it's around the world.
Holger Bartel: Well, it's a very wide range of marketing activities, mostly focused on the internet, but I really cannot go into all the details, Jim, because we use quite a few tactics. Some of it is around specific offers, and some of it is around communicating to non-members what the benefits are of joining. So all of it is really focused on communicating to those who are not yet part of the club that once you join the club of travel enthusiasts, you can expect to obtain extraordinary offers and benefits, and it's a worthwhile investment.
Speaker Change: Some of it is around specific offers.
Some of it.
Speaker Change: And communicating to.
Speaker Change: Non members what the benefits are of joining so all of it is really focused on communicating to dose while I'm not yet part of the club that ones, who joined the club of travel enthusiasts you can expect to obtain.
Speaker Change: Extra ordinary offers and benefits and it's worth it's a worth investment.
Speaker Change: Okay and the other the other one you might have alluded to this a little with Michael's question, but.
James Charles Goss: Okay, and the other one, and I think you might have alluded to this a little with Michael's question, but you do have plans underway to try to address the current individuals who are getting your emails but who choose not to subscribe. You'll be rolling out or providing us with more information later in the year, is that what you're suggesting? Yes. Thank you. Thank you.
Speaker Change: You do have plans underway to try to address the current.
Speaker Change: Individuals who are getting your emails better choose not to subscribe.
Speaker Change: Right.
Speaker Change: You'll you'll be rolling aerie, providing us with more information later in the year that would.
Holger Bartel: Yes, we have a plan for that. It's not going to be a change from one day to the next where things will change drastically. We have a plan for how we are converting them into paying members.
Speaker Change: Suggesting.
Speaker Change: Yes, we have a plan for that.
Speaker Change: It is not going to be a change from one day to the next where things where Jim stressed if you will we have a plan for how we are converting them into paying members.
Speaker Change: You can just alright. Thank you.
James Charles Goss: Okay, sure. Thank you very much.
Okay sure. Thank you very much.
Holger Bartel: That concludes our question and answer session. I will now turn the call over to Holger Bartel for his closing remarks.
Speaker Change: That concludes our question and answer session I will now turn the call over to Hygge Park Barco for closing remarks.
Holger Bartel: Dear Investors, thank you again for your time and support. We look forward to speaking with you again next quarter. Have a great day.
Speaker Change: Yes, you investors. Thank you again for your time and support we look forward to speaking with you again next quarter have a great day.
Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.