9 unchanged sentences
Travelzoo undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other circumstances occur in the future.
−Removed: We are a global Internet media company.
+Added: Travelzoo, the club for travel enthusiasts, is a global Internet media company.
Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe.
−Removed: We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences.
−Removed: We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.
−Removed: Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications.
−Removed: The Travelzoo website is visited by 5.4 million to 6.6 million unique visitors each month.
−Removed: We have over 4.5 million followers on Facebook, Instagram, and Twitter, Our Apple and Android mobile applications have been downloaded 7.4 million times.
−Removed: Our most important products and services are the Travelzoo website (travelzoo.com), the Travelzoo iPhone and Android apps, the Top 20 ® email newsletter, the Travelzoo Network , and Jack's Flight Club®.
+Added: We have our finger on the pulse of outstanding travel, entertainment and local experiences.
+Added: We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.
+Added: Our most important products and services are the Travelzoo website (travelzoo.com), the Travelzoo iOS and Android apps, the Top 20® email newsletter, Standalone email newsletters, the Travelzoo Network , and Jack's Flight Club® .
Our Travelzoo website and newsletters include Local Deals and Getaways listings that allow our members to purchase vouchers for offers from local businesses such as spas, hotels and restaurants.
Jack's Flight Club is a subscription service that provides members with information about exceptional airfares.
−Removed: We also license Travelzoo products and our intellectual property to licensees in various countries in Asia Pacific, including but not limited to Australia, Japan and Southeast Asia.
−Removed: In March 2022, we announced the development of Travelzoo META, a subscription service that intends to provide members with exclusive access to innovative, high quality Metaverse travel experiences.
−Removed: On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), a Metaverse experience scouting business to support Travelzoo META.
−Removed: As of December 31, 2022, we had 30.4 million members worldwide.
−Removed: In North America, the unduplicated number of Travelzoo members was 16.3 million as of December 31, 2022, down 4% from December 31, 2021.
−Removed: In Europe, the unduplicated number of Travelzoo members was 9.0 million as of December 31, 2022, up 8% from December 31, 2021.
−Removed: Jack’s Flight Club had 1.9 million subscribers as of December 31, 2022, up 8% from December 31, 2021.
−Removed: More th an 5,000 travel and local providers use o ur advertising and marketing services, including Air France, Air New Zealand, Air Tahiti Nui, Alaska Airlines, Cathay Pacific Airways, Club Med, Emirates, Etihad, Exoticca, Fairmont Hotels and Resorts, Fiji Airways, Gate 1 Travel, Hilton Hotels & Resorts, Hyatt Corporation, Icelandair, InterContinental Hotels Group, Lion World Travel, Myrtle Beach Area Conventions & Visitors Bureau, Princess Cruises, Royal Caribbean, Singapore Airlines, Starwood Hotels & Resorts and United Airlines.
−Removed: Stock Purchase Agreement between Travelzoo and Azzurro Capital Inc., a Related-Party
−Removed: In connection with the development of Travelzoo META, the Company acquired MTE, a wholly owned subsidiary of Azzurro, and also completed a private placement of newly issued shares.
−Removed: Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.
−Removed: Azzurro was the Company’s largest shareholder as of the time of this transaction and as of December 31, 2022 owned approximately 50.3% the Company's outstanding shares.
−Removed: On December 28, 2022, the stockholders of Travelzoo approved the issuance and sale of 3.4 million shares
−Removed: of common stock (the “Shares”) of Travelzoo to Azzurro, in exchange for certain consideration, and on December 30, 2022 (the “Closing Date”), the transaction was consummated.
−Removed: The closing price of Travelzoo’s common stock on December 30, 2022 was $4.45 per share, resulting in an aggregate fair value $15.2 million.
−Removed: The Purchase Price was paid as follows:
−Removed: (a) $1.0 million in cash paid on the Closing Date;
−Removed: (b) $4.8 million paid in the form of a promissory note issued on the Closing Date and payable by June 30, 2023 with accrued interest of 12%;
−Removed: and (c) the transfer to the Company of all outstanding capital stock of Metaverse Travel Experiences, Inc.
−Removed: (“MTE”), which transfer was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date.
−Removed: The Company recorded the $4.8 million promissory note as Note receivable from shareholder in the stockholders' equity section on the consolidated balance sheet as of December 31, 2022.
−Removed: Government funding
−Removed: In January 2022 and July 2022, the Com pany’s German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received the notification and payment of approximately $1.2 million and $494,000, respectively, from the German Federal Government Bridging Aid III plan and Bridging Aid III+.
−Removed: This program was for companies that suffered a pandemic-related decrease in sales of at least 30% in one month compared to the reference month in 2019.
−Removed: Travelzoo Germany applied for the funding in 2021 and 2022, respectively, and was approved by the German government in January 2022 and July of 2022.
−Removed: The Company has to submit a final declaration in connection with this grant by June 30, 2023.
−Removed: The Company believes it was eligible to participate in the plan and is entitled to the payment and does not expect significant changes to the amount already received from the final submission.
−Removed: The Company recorded $1.2 million and $494,000 gains in Other income, net in the first and third quarters of 2022.
−Removed: In 2020, we received $3.1 million and $535,000, respectively, pursuant to loans under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the Small Business Association.
−Removed: In 2021, the principal and the interest of the $3.1 million PPP loan were forgiven and a gain was recorded, the Company also settled the $535,000 PPP loan, $429,000 was forgiven which was recorded as gain and the remaining outstanding balance of the loan and interest of $111,000 was paid off.
−Removed: The Company also received job retention related government funding in 2022 and 2021.
−Removed: Job retention related funding from Canada location was approximately $164,000 and $400,000 for 2022 and 2021, respectively.
−Removed: The Company did not receive retention related funding from European locations in 2022.
−Removed: Job retention related funding from European locations was approximately $31,000 for 2021.
−Removed: Those fundings were recorded against salary and related expenses.
+Added: Travelzoo membership has historically been free, however, beginning in 2024, new members in the United States, Canada, United Kingdom and Germany are charged an annual fee of $40 (or local equivalent), with the 2024 annual fee waived for existing members as of December 31, 2023.
+Added: For any subscription revenue derived from the paid membership, we recognize revenue monthly pro rata over the subscription period.
+Added: We also license Travelzoo products, services and intellectual property to licenses in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to a quarterly royalty payment based on a percentage of net revenue.
+Added: The Company recognized $71,000 and $25,000 in royalties in 2023 and 2022, respectively.
+Added: Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company.
+Added: In March 2022 we announced the development of, and in May 2023 we launched Travelzoo META, to extend the range of experiences we offer consumers to the emerging metaverse.
+Added: This paid membership service currently provides founding members with a limited edition “Travel Companion” non-fungible token (“NFT”) and future access to beta version metaverse travel experiences, as developed.
+Added: On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), to support Travelzoo META in sourcing prospective travel experiences.
+Added: MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results.
+Added: See Note 3– Acquisitions to the accompanying consolidated financial statements included in Part II, Item 8 of this report, which is incorporated herein by refer ence for further information regarding the acquisition of MTE.
APAC Exit and Pivot to Licensing Model
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The Company’s Asia Pacific business was classified as discontinued operations at March 31, 2020.
−Removed: Prior periods have been reclassified to conform with the current presentation.
−Removed: Travelzoo currently has license agreements in Japan and South Korea, as well as Australia, New Zealand and Singapore.
−Removed: The license agreement for Japan provides a license to the licensee to use the intellectual property of Travelzoo exclusively in Japan in exchange for quarterly royalty payments based on net revenue over a 5 year term, with an option to renew.
−Removed: The territory subject to the license was amended to also include South Korea.
−Removed: An interest free loan was provided to the licensee to be repaid over 3 years for JPY 46 million (approximately $430,000), of which $133,000 was repaid in 2021 and the remaining is expected to be paid off in 2023.
−Removed: The Company recorded this loan as short-term prepaid expense and other on the consolidated balance sheet as of December 31, 2022.
−Removed: The license agreement for Australia, New Zealand and Singapore provides a license to the licensee to use the intellectual property of Travelzoo exclusively in Australia, New Zealand and Singapore for quarterly royalty payments based upon net revenue over a 5 year term, with an option to renew.
−Removed: The Company records royalties for its licensing arrangements on a one-quarter lag basis.
−Removed: The Company recognized royalties of $25,000 and $3,000 for its licensing arrangements from AUS Buyer for the years ended December 31, 2022 and 2021.
−Removed: The Company did not record royalties from Travelzoo Japan for the year ended December 31, 2022.
−Removed: The Company recognized royalties of $9,000 from Travelzoo Japan for the year ended December 31, 2021.
−Removed: We expect the royalty payments to increase over time as the effects of the pandemic subside.
−Removed: WeGo Investment
−Removed: In April 2018, we entered into an agreement with WeekenGO (“WeGo”), a start-up company in Germany.
−Removed: WeGo uses new technology to promote vacation packages.
−Removed: We held a minority share equal to 33.7% in weekengo GmbH ("WeGo"), which the Company sold to trivago N.V.
−Removed: (“trivago”) on December 23, 2020.
−Removed: Per the Share Purchase Agreement, by and among Travelzoo (Europe) Limited, trivago, and the other shareholders of WeGo (the “trivago SPA”), the Company sold all of its shares in WeGo to trivago for a total purchase price of approximately $2.9 million , of which $196,000 was placed in escrow for one year.
−Removed: The Company recorded $468,000 gain in Other income (loss), net for the sale of WeGo shares in 2020.
−Removed: The Company received the full escrow payment in January 2022 and recorded the gain in Other income (loss), net for the year ended December 31, 2022.
−Removed: WeGo agreed to pay in a lump sum the remaining amount outstanding pursuant to the Insertion Order
−Removed: equal to approximately $200,000 .
−Removed: The payment was made and recorded in the first quarter of 2021.
−Removed: The Second Insertion Order and any obligation for additional payments from WeGo for marketing were terminated.
−Removed: Acquisition of Jack's Flight Club
−Removed: In January 2020, Travelzoo acquired JFC Travel Group Co.
−Removed: (“Jack’s Flight Club”), which operates Jack’s Flight Club , a subscription service that provides members with information about exceptional airfares.
−Removed: As of December 31, 2022, Jack’s Flight Club had 1.9 million subscribers.
−Removed: J ack’s Flight Club’s revenues are generated by subscription fees paid by members.
−Removed: In June 2020, the Company renegotiated certain aspects of that certain Stock Purchase Agreement, dated as of January 13, 2020 (the “SPA”), by and among Travelzoo, Jack’s Flight Club and the sellers party thereto (the “Sellers”) with the Sellers and reached a settlement for the outstanding Promissory Notes, dated as of January 13, 2020, by and between Travelzoo and each Seller (the “Promissory Notes”).
−Removed: Acquisition" to the accompanying consolidated financial statements for further information.
−Removed: Historically, the Company managed its business geographically and operated in three reportable segments including Asia Pacific, Europe and North America.
−Removed: In the first quarter of 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its consolidated financial statements for current and prior periods presented.
−Removed: On January 13, 2020, Travelzoo entered into a Sales Purchase Agreement with the Sellers of Jack’s Flight Club to purchase 60% of the Shares.
−Removed: Upon the acquisition, the Company's chief operating decision maker reviewed and evaluated Jack’s Flight Club as a separate segment.
−Removed: Travelzoo currently has three reportable operating segments:
−Removed: Travelzoo North America, Travelzoo Europe and Jack’s Flight Club.
−Removed: Travelzoo North America consists of the Company’s operations in Canada and the U.S.
−Removed: Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK.
−Removed: For the year ended December 31, 2022, Travelzoo North America operations were 67% of revenues, Travelzoo Europe operations were 28% of revenues and Jack's Flight Club were 5% of revenues.
−Removed: Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 12 to the accompanying consolidated financial statements.
+Added: Travelzoo currently has license agreements covering Australia, New Zealand and Singapore, as well as Japan and South Korea.
+Added: The license agreement for Australia, New Zealand and Singapore provides the licensee exclusive rights to use the Travelzoo products, services and intellectual property in Australia, New Zealand and Singapore in exchange for quarterly royalty payments based upon net revenue over a 5 year term, with an option to renew.
+Added: The Company recognized royalties of $35,000 and $25,000 from the licensee for the years ended December 31, 2023 and 2022, respectively.
+Added: The license agreement for Japan and South Korea provides the licensee exclusive rights to use Travelzoo products, services, and intellectual property in exchange for quarterly royalty payments based on net revenue over a 5 year term, with an option to renew.
+Added: An interest free loan was provided to the licensee for JPY 46 million (approximately $430,000), of which $133,000 was repaid in 2021 and the remaining amount repaid in 2023.
+Added: The Company recognized royalties of $36,000 and $0 from the licensee for the years ended December 31, 2023 and 2022, respectively.
+Added: Reportable Segments
+Added: The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business.
+Added: The Company currently has four reportable operating segments:
+Added: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives.
+Added: Travelzoo North America consists of the Company’s operations in the U.S.
+Added: Travelzoo Europe consists of the Company’s operations in France, Germany, Spain and the U.K.
+Added: Jack’s Flight Club consists of subscription revenues from premium members to access and receive flight deals from Jack’s Flight Club via email or mobile applications.
+Added: New Initiatives consists of Travelzoo’s licensing business, the Travelzoo META subscription service and MTE.
+Added: For the year ended December 31, 2023, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack's Flight Club comprised 5% of revenues.
+Added: Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 12– Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein .
When evaluating the financial condition and operating performance of the Company, management focuses on financial and non-financial indicators such as growth in the number of members to the Company’s newsletters, operating margin, growth in revenues in the absolute and relative to the growth in reach of the Company’s publications measured as revenue per member and revenue per employee as a measure of productivity.
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Travel and Local.
−Removed: The “Travel” category consists of advertising or publishing revenues, primarily (a) listing fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties and (b) commission from the sale of Getaways vouchers.
−Removed: Listing fees are based on audience reach, placement, number of listings, number of impressions, number of clicks, and actual sales.
−Removed: For publishing revenue, we recognize revenue upon delivery of the emails and delivery of the clicks, over the period of the placement of the advertising.
−Removed: Insertion orders for publishing revenue are typically for periods between one month and twelve months and are not automatically renewed.
−Removed: For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon the sale of the vouchers.
−Removed: Merchant agreements for Getaways advertisers are typically for periods between twelve months and twenty-four months and are not automatically renewed.
−Removed: In the second quarter of 2020, the Company expanded its vouchers refund policy in order to entice customers given the economic climate at that time to fully refundable until the voucher expires or is redeemed by the customer.
−Removed: This policy has been adjusted starting April 1, 2022, back to fully refundable within fourteen days of purchase unless a surcharge is paid at the time of the voucher purchase for the right to be fully refundable.
−Removed: The expiration dates of vouchers range between January 2023 through December 2025 with the majority of vouchers expiring in 2023;
−Removed: provided, that these expiration dates may sometimes be extended on a case-by-case basis.
−Removed: The revenues generated from Local Deals vouchers and entertainment offers are based upon a percentage of the face value of the vouchers, commission on actual sales or a listing fee based on audience reach.
−Removed: For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers.
−Removed: The Company estimated the refund reserve by using historical and current refund rates by product and by merchant location to calculate the estimated future refunds.
−Removed: As of December 31, 2022, the Company had approximately $8.1 million of unredeemed vouchers that had been sold through December 31, 2022 representing the Company’s commission earned from the sale.
−Removed: The Company had estimated a refund liability of $1.3 million for these unredeemed vouchers as of December 31, 2022 which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the consolidated balance sheet.
−Removed: The Company has recorded merchant payables of
−Removed: $32.6 million as of December 31, 2022 related to unredeemed vouchers.
+Added: The “Travel” category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties and (b) commission generated from the sale of Getaways vouchers.
+Added: Advertising fees may be based on audience reach, placement in email newsletters or on media properties, number of listings, number of clicks, and/or actual sales.
+Added: We typically recognize advertising revenues upon delivery of emails or clicks, as tracked by our internal platform or third-party platforms, in the period of the applicable insertion orders, which are typically for periods between one month and twelve months and are not automatically renewed.
+Added: For Getaways vouchers, we recognize a percentage of the face value of vouchers upon sale as commission, net of an allowance for future refunds.
+Added: Merchant agreements for Getaways advertisers are typically for periods between twelve and twenty-four months and are not automatically renewed.
+Added: In the second quarter of 2020, due to the pandemic and various stay-at-home protocols, the Company expanded its voucher refund policy to fully refundable until the voucher expires or is redeemed by the customer.
+Added: This refund policy was reverted in April 2022 to a 14-day refund period from date of purchase, with a newly introduced option to extend refund eligibility until voucher redemption or expiration, for a surcharge.
+Added: The expiration dates of vouchers range between January 2024 through December 2025;
+Added: provided, that these expiration dates may sometimes be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year later.
+Added: As of December 31, 2023 and 2022, the Company had approximately $5.2 million and $8.1 million of unredeemed vouchers that had been sold, respectively, representing the Company’s commission.
+Added: The Company estimates a refund reserve using historical and current refund rates by product and by merchant location to calculate estimated future refunds.
+Added: The Company estimated and recorded a refund reserve of $268,000 and $1.3 million as of December 31, 2023 and 2022for these unredeemed vouchers which is recorded as a reduction of revenues on the consolidated statements of operations, and accrued expense and other on the consolidated balance sheet.
+Added: Merchant payables of $20.6 million as of December 31, 2023 related to unredeemed vouchers is recorded on the consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed.
+Added: Certain merchant contracts, typically in foreign locations, allow the Company to retain the proceeds from unredeemed vouchers upon expiration.
With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period.
The "Local" category consists of publishing revenue for negotiated high-quality offers from local businesses, such as restaurants, spas, shows, and other activities and includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).
−Removed: The revenues generated from these products are based upon a percentage of the face value of the vouchers, commission on actual sales or a listing fee based on audience reach.
−Removed: We recognize revenue upon the sale of the vouchers, upon notification of the amount of direct bookings or upon delivery of the emails.
−Removed: For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers.
−Removed: Insertion orders and merchant agreements for Local Deals are typically for periods between one month and twelve months and are not automatically renewed.
−Removed: Certain merchant contracts in foreign locations allow us to retain fees related to vouchers sold that are not redeemed by purchasers upon expiration, which we recognize as revenue based upon estimates at the time of sale.
+Added: Revenues generated from these products are based upon a percentage of the face value of the vouchers sold, commission on actual sales or a listing fee based on audience reach.
+Added: We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails.
+Added: For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers, net of an allowance for refunds.
+Added: Insertion orders and merchant agreements for Local Deals are typically for periods between one and twelve months and are not automatically renewed.
Jack's Flight Club
−Removed: Jack’s Flight Club revenue is generated from paid subscriptions by members.
+Added: Jack’s Flight Club generates revenues from paid subscriptions by members.
Subscription options are quarterly, semi-annually, and annually.
−Removed: We recognize the revenue monthly pro rata over the subscription period.
+Added: We recognize subscription revenues monthly pro rata over the respective subscription periods.
Trends in Our Business
−Removed: Our ability to generate revenues in the future depends on numerous factors such as our ability to sell more advertising to existing and new advertisers, our ability to increase our audience reach and advertising rates, our ability to have sufficient supply of hotels offered at competitive rates, our ability to develop and launch new products and our ability to continue to service our members without interruption.
−Removed: Our ability to generate revenues is also dependent on trends impacting the travel industry and online advertising businesses more broadly.
−Removed: Our current revenue model primarily depends on advertising fees paid primarily by travel, entertainment and local businesses.
−Removed: A number of factors can influence whether current and new advertisers decide to advertise their offers with us.
−Removed: We have been impacted and expect to continue to be impacted by external factors such as the shift from offline to online advertising, the relative condition of the economy, competition and the introduction of new methods of advertising, and the decline in consumer demand for vouchers and travel more generally.
−Removed: A number of factors will have impact on our revenue, such as the reduction in spending by travel intermediaries due to their focus on improving profitability, the trend towards mobile usage by consumers, the willingness of consumers to purchase the deals we advertise, and the willingness of certain competitors to grow their business unprofitably.
−Removed: In addition, we have been impacted and expect to continue to be impacted by internal factors such as introduction of new technologies and advertising products, hiring and relying on key employees for the continued maintenance and growth of our business and ensuring our advertising products continue to attract the audience that advertisers desire.
−Removed: We also have been impacted and expect to continue to be impacted by external factors, such as the global pandemic, which decreased the demand for travel and entertainment and increasing cybersecurity risks due to increased dependence on digital technologies.
−Removed: We also could be indirectly impacted by climate change and related legislation to the extent such legislation impacts the businesses of our advertisers such as airlines and cruise ship operators, which have come under increasing scrutiny for their carbon footprints.
−Removed: Additionally, existing advertisers may shift from one advertising service (e.g.
+Added: Our ability to generate revenues in the future depends on numerous factors, including those relating to members, advertisers, competitors, the travel industry, the online advertising business, internal factors and external factors.
+Added: Factors relating to members include their willingness to purchase the deals we advertise, their demand for vouchers as a promotional format, and with the introduction of membership fees for new members in 2024 and existing members in 2025, our ability to enroll new paying members and transition existing members to paid membership, without adversely affecting our membership base and existing advertising revenue streams.
+Added: Factors relating to advertisers include our ability to sell more advertising to existing and new advertisers, our ability to enhance our audience reach and advertising rates, spending controls by travel intermediaries to focus on improving profitability, and advertiser shifts from one advertising service (e.g.
Top 20 ) to another (e.g.
Local Deals and Getaways ).
−Removed: These shifts between advertising services by advertisers could result in no incremental revenue or less revenue than in previous periods depending on the amount purchased by the advertisers, and in particular with Local Deals and Getaways , depending on how many vouchers are purchased by members.
+Added: Advertiser shifts between advertising services could result in no incremental revenue or less revenue than in previous periods, depending on amounts purchased, and in particular with Local Deals and Getaways , depending on how many vouchers are purchased by members.
+Added: Factors relating to competitors include the willingness of certain competitors to grow their business unprofitably.
+Added: Factors relating to the travel industry include lingering effects of the global pandemic, geopolitical tensions affecting consumer travel to certain regions, and risk of future unforeseeable macro events that impact travel, while factors relating to the online advertising business include shifts in consumer use of different digital media formats such as from desktop to mobile, from mobile web to mobile app, and from email to push notifications and SMS text messaging.
+Added: Internal factors include risks relating to our ability to continue to service members without interruption, our ability to develop and launch new products members will utilize and advertisers will adopt, and hiring and relying on key employees for the continued maintenance and growth of our business.
+Added: External factors include the introduction of new methods of advertising, the relative condition of the economy, cybersecurity risks due to increased dependence on digital technologies, and climate change and related legislation, to the extent such legislation impacts the businesses of our advertisers such as airlines and cruise ship operators, which have come under increasing scrutiny for their carbon footprints.
Local revenues have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand.
−Removed: In the last several years, we have seen a decline in the number of vouchers sold and a decrease in the average take rate earned by us from the merchants for voucher sold.
−Removed: However, due to the global pandemic and the increase in demand by consumers for fully refundable travel options, we saw a slight reversal of this trend and an increase in the sale of Getaways hotel vouchers.
−Removed: This trend has appeared to reverse again, particularly as we move away from full refundability on our vouchers.
−Removed: However, demand for restaurants and spas was low due to the global pandemic but in recent quarters has started to increase as restrictions have been lifted.
−Removed: Our ability to continue to generate advertising revenue and generate subscription revenue through Jack’s Flight Club depends heavily upon our ability to maintain and grow an attractive audience for our publications.
−Removed: We monitor our members to assess our efforts to maintain and grow our audience reach.
+Added: In the last several years, we have seen a decline in the number of vouchers sold and a decrease in the average commission rate earned by us from the merchants for vouchers sold.
+Added: However, during the global pandemic, we saw an increase in demand by consumers for fully refundable travel options, which led to a slight reversal of this trend and an increase in the sale of Getaways hotel vouchers (although demand for restaurants and spas continued to be low).
+Added: With the ending of the pandemic, the importance of fully refundable travel options has decreased (and we also shifted to offering a surcharge for full refundability), and the trend is therefore returning to pre-pandemic patterns.
+Added: Our ability to continue generating revenues through advertising, commissions and subscriptions depends heavily upon our ability to maintain and grow an attractive audience for our publications.
+Added: We monitor our membership base to assess our efforts to maintain and grow our audience reach.
We obtain additional members and activity on our websites by acquiring traffic from Internet search companies.
The costs to grow our audience have had, and we expect will continue to have, a significant impact on our financial results and can vary from period to period.
−Removed: We may have to increase our expenditures on acquiring traffic to continue to grow or maintain our reach of our publications due to competition.
−Removed: We continue to see a shift in the audience to accessing our services through mobile devices and social media.
−Removed: When funds are available for marketing spend, we are addressing this growing channel of our audience through increased marketing on social media channels.
−Removed: However, we will need to keep pace with technological change and this trend to further address this shift in the audience behavior in order to offset any related declines in revenue.
−Removed: We believe that we can increase our advertising rates only if the reach of our publications increases.
−Removed: We do not know if we will be able to increase the reach of our publications.
−Removed: If we are able to increase the reach of our publications, we still may not be able to or want to increase rates given market conditions such as intense competition in our industry.
−Removed: We have not had any significant rate increase in recent years due to intense competition in our industry.
−Removed: Even if we increase our rates, the increased price may reduce the number of advertisers willing to advertise with us and, therefore, decrease our revenue.
+Added: With the introduction of membership fees in 2024, our former user acquisition strategies and marketing tactics are no longer applicable for the Travelzoo membership base, and we are developing new user acquisition strategies whose timeframes to become effective are inherently uncertain.
+Added: While we are initially reducing our expenditures on acquiring traffic as we test new strategies for efficacy, in time we may need to increase these expenditures to maintain or grow our audience and reach of our publications.
+Added: We continue to see a shift in users accessing our services through mobile devices and social media and, therefore, anticipate continuing to address this growing channel through increased marketing on social media channels.
+Added: We believe that an important factor for our advertising rates is the reach of our publications, however, we also believe that there are other important factors, such as the engagement of our membership base with our content.
+Added: We do not know if we will be able to increase the reach of our publications, particularly with the introduction of membership fees in 2024.
+Added: We do not know if by increasing the reach of our publications, we will also be able to increase engagement and other key metrics of importance to our advertisers.
+Added: If we are able to increase the reach of our publications, we still may not be able to or want to increase rates given market conditions, including intense competition in our industry.
+Added: Even if we increase our rates, the increased price may reduce the number of advertisers willing to advertise with us and could, therefore, decrease our revenue.
We may need to decrease our rates based on competitive market conditions and the performance of our audience in order to maintain or grow our revenue.
We do not know what our cost of revenues as a percentage of revenues will be in future periods.
−Removed: Our cost of revenues may increase if the face value of vouchers that we sell for Local Deals and Getaways increases or the total number of vouchers sold increases because we have credit card fees based upon face value of vouchers sold, due to customer service costs related to vouchers sold and due to refunds to members on vouchers sold.
−Removed: We expect fluctuations in cost of revenues as a percentage of
−Removed: revenues from quarter to quarter.
+Added: Our cost of revenues may change in relation to volume and terms with third-party partners of the Travelzoo network, the incurrence of merchant processing fees from the sale of vouchers for Local Deals and Getaways and payment of membership fees, changes in refund request trends and provisioning of customer service.
+Added: We expect fluctuations in cost of revenues as a percentage of revenues from quarter to quarter.
Some of the fluctuations may be significant and may have a material impact on our results of operations.
−Removed: We do not know that our sales and marketing expenses as a percentage of revenue will be in future periods.
−Removed: Increased competition in our industry may require us to increase advertising for our brand and for our products.
−Removed: In order to increase the reach of our publications, we have to acquire a significant number of new members in every quarter and continue to promote our brand.
−Removed: One significant factor that impacts our advertising expenses is the average cost per acquisition of a new member.
−Removed: Increases in the average cost of acquiring new members may result in an increase of sales and marketing expenses as a percentage of revenue.
−Removed: We believe that the average cost per acquisition depends mainly on the advertising rates which we pay for media buys, our ability to manage our member acquisition efforts successfully, the regions we choose to acquire new members and the relative costs for that region, and the degree of competition in our industry.
−Removed: We may decide to accelerate our member acquisition, including through merger and acquisition activity, for various strategic and tactical reasons and, as a result, increase our marketing and other expenses.
−Removed: We expect the average cost per acquisition to increase with our increased expectations for the quality of the members we acquire.
−Removed: We may see a unique opportunity for a brand marketing campaign that will result in an increase of marketing expenses.
−Removed: In addition, there may be a significant number of members that cancel or we may cancel their subscription for various reasons, which may drive us to spend more on member acquisition in order to replace the lost members.
+Added: We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods.
+Added: Changes in the average cost per acquisition of new members impacts our advertising expenses and sales and marketing expenses as a percentage of revenue, and are not readily predictable.
+Added: With the introduction of membership fees in 2024, we expect the cost of acquiring new paying members to increase significantly, as compared with the cost of acquiring non-paying members prior to 2024.
+Added: Initially, we are reducing our advertising expenditures, as we are no longer offering free memberships for new members and, accordingly, prior user acquisition strategies are not in use.
+Added: Further, we are early in the development of new strategies to acquire paying members, so our test budgets have not yet fully scaled.
+Added: However, as we test new strategies and gain more learnings as to acquiring paying members, our expenditures may increase significantly.
+Added: In addition, there may be a significant number of members that cancel or we may cancel their subscriptions for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.
+Added: In addition to the type of membership offered, we believe the average cost per acquisition depends mainly on the advertising rates we pay for media buys, the quality of the members we acquire, our ability to manage our member acquisition efforts successfully, the regions we target to acquire new members and the relative costs for that region, and the degree of competition in our industry.
+Added: All else equal, increased competition may require us to increase advertising for our brand and advertisers’ deals.
+Added: Beside member acquisition costs, we may see a unique opportunity for a brand marketing campaign, experience increases in the cost of retaining or sourcing new advertiser clients, or change the number of personnel or compensation structure for the Sales and marketing function, any of which would result in an increase in sales and marketing expenses.
We expect fluctuations in sales and marketing expenses as a percentage of revenue from year to year and from quarter to quarter.
Some of the fluctuations may be significant and have a material impact on our results of operations.
−Removed: We expect increased marketing expense to spur continued growth in members and revenue in future periods;
−Removed: however, we cannot be assured of this due to the many factors that impact our growth in members and revenue.
−Removed: We expect to adjust the level of such incremental spending during any given quarter based upon market conditions, as well as our performance in each quarter.
+Added: We expect increased marketing expenses to spur continued growth in revenue in future periods;
+Added: however, we cannot be assured of this due to the many factors that impact our growth.
+Added: We expect to adjust the level of such incremental spending dynamically during any given quarter based upon market conditions, as well as our performance in each quarter.
We do not know what our product development expenses as a percentage of revenue will be in future periods.
There may be fluctuations that have a material impact on our results of operations.
−Removed: Product development changes may lead to reductions of revenue based on changes in presentation of our offerings to our audience.
−Removed: We expect our efforts on developing our product and services will continue to be a focus in the future, which may lead to increased product development expenses.
−Removed: This increase in expense may be the result of an increase in costs related to third party technology service providers and software licenses, headcount, the compensation related to existing headcount and the increased use of professional services.
+Added: Product development changes may lead to reductions of revenue based on changes in receptivity of our offerings to our member audience and advertiser clients.
+Added: We expect our efforts in developing products and services will continue to be a focus in the future, which may lead to increased product development expenses.
+Added: Increases in expense may result from costs related to third-party technology service providers and software licenses, headcount and the use of professional services.
We do not know what our general and administrative expenses as a percentage of revenue will be in future periods.
3 unchanged sentences
Our income taxes are dependent on numerous factors such as the geographic mix of our taxable income, foreign, federal, state and local tax law and regulations and changes thereto.
−Removed: Our income taxes are also dependent on the determination of whether valuation allowances for certain tax assets are required or not, audits of prior years' tax returns that result in adjustments, resolution of uncertain tax positions and different treatments for certain items for tax versus books.
−Removed: We expect fluctuations in our income taxes from year to year and from quarter to quarter.
−Removed: Some of the fluctuations may be significant and have a material impact on our results of operations.
−Removed: With the impact to revenues caused by the global pandemic, spending by the Company in many areas within the business was slowed or stopped, including but not limited to, marketing, technology and human resources.
−Removed: For example, in 2020, the Company ceased operations in Asia Pacific, conducted employee furloughs and restructured its employees significantly.
−Removed: The Company also renegotiated many of its outstanding contractual obligations with vendors and closed some ancillary office locations in order to reduce capital expenditures.
−Removed: We do not anticipate that any additional cost-cutting measures will be necessary at this time.
−Removed: Instead, the Company is beginning to invest again in marketing, technology and human resources in line with the recovery of its revenue from the effects of the pandemic.
−Removed: The key elements of our growth strategy include building a travel and lifestyle brand with a large, high-quality user base and offering our users products that keep pace with consumer preference and technology, such as the trend toward mobile usage by consumers and toward fully refundable travel deals which was a result of the global pandemic.
+Added: Our income taxes are also dependent on the determination of whether valuation allowances for certain tax assets are required or not, any audits of prior years' tax returns that result in adjustments, resolution of uncertain tax positions and different treatments for certain items for tax versus book purposes.
+Added: We expect fluctuations in our income taxes from year to year and from quarter to quarter, which may be significant and have a material impact on our results of operations.
+Added: Due to the adverse effects of the global pandemic, the Company reduced expenditures in many areas, including but not limited to, marketing, technology and human resources.
+Added: For example, in 2020, the Company ceased operations in Asia Pacific, conducted employee furloughs and restructured its operations significantly.
+Added: The Company also renegotiated many of its outstanding contractual obligations with vendors and closed some ancillary office locations.
+Added: We do not currently anticipate that additional cost-cutting measures will be necessary.
+Added: We anticipate incurring limited growth in fixed costs for our existing business, while investing in new initiatives where we see opportunities to expand our business, in aggregate, in-line with the trend of our revenues.
+Added: The key elements of our growth strategy include building our trusted travel, entertainment and local brands, increasing the value and engagement of our membership base, sourcing more exclusive and compelling offers from advertisers, and innovating with new experiences and revenue streams.
We expect to continue our efforts to grow;
1 unchanged sentence
We believe that we can sell more advertising if the market for online advertising continues to grow and if we can maintain or increase our market share.
−Removed: We believe that the market for advertising continues to shift from offline to online.
+Added: We believe the market for advertising continues to shift from offline to online.
We do not know if we will be able to maintain or increase our market share.
11 unchanged sentences
Total operating expenses 68.6 75.1
−Removed: Operating income (loss) 10.7 (2.1)
+Added: Operating income 18.5 10.7
Other income, net 1.7 3.4
2 unchanged sentences
Income from continuing operations 14.2 9.5
−Removed: Loss from discontinued operations, net of tax (0.1) —
+Added: Income (loss) from discontinued operations, net of tax 0.5 (0.1)
Net income 14.7 9.4
−Removed: Net loss attributable to non-controlling interest — —
+Added: Net income attributable to non-controlling interest 0.1 —
Net income attributable to Travelzoo 14.6 % 9.4 %
Net income attributable to Travelzoo—continuing operations 14.1 % 9.5 %
−Removed: Net loss attributable to Travelzoo—discontinued operations (0.1) % — %
+Added: Net income (loss) attributable to Travelzoo—discontinued operations 0.5 % (0.1) %
Operating Metrics
24 unchanged sentences
(1) Members represent individuals who are signed up to receive one or more of our email publications that present our travel, entertainment and local deals.
+Added: Consolidated includes retained APAC members.
(2) Annual revenue divided by number of members at the beginning of the year.
1 unchanged sentence
The following table sets forth the breakdown of revenues (in thousands) by category and segment.
−Removed: Travel revenue includes travel publications ( Top 20, Website, Travelzoo emails, Travelzoo Network ), Getaways vouchers, and hotel platform and vacation packages.
+Added: Travel revenue includes travel publications ( Top 20, Standalone emails, Website, Travelzoo Network ), Getaways vouchers, and hotel platform and vacation package bookings.
Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).
9 unchanged sentences
Jack's Flight Club 4,172 3,477
+Added: New Initiatives 204 25
Travel 75,863 62,499
1 unchanged sentence
Jack's Flight Club 4,172 3,477
+Added: New Initiatives 204 25
Total revenues $ 84,477 $ 70,599
Travelzoo North America
−Removed: North America revenues increa sed $5.6 million or 13% in 2022 compared to 2021.
−Removed: This increase was primarily due to $5.6 million increase in Travel revenues, offset partially by $16,000 decrease in Local revenues.
−Removed: The increase in Travel revenue of $5.6 million was primarily due to $11.4 million increase in revenues from Top 20 and Standalone, offset partially by $5.8 million decrease in Getaways revenue due to a decrease in the number of vouchers sold.
−Removed: The decrease in Local revenues of $16,000 was primarily due to the decrease in the number of Local Deals vouchers sold.
+Added: North America revenues increa sed $8.4 million, or 17.7%, in 2023 as compared to 2022.
+Added: This increase was primarily due to a $9.0 million increase in Travel revenues, offset partially by a $564,000 decrease in Local revenues.
+Added: The increase in Travel revenue of $9.0 million was attributable to a $4.5 million increase in advertising fees from Top 20 and Standalone emails , a $2.4 million increase in hotel booking commissions and a $1.4 million increase in Getaways voucher commissions.
+Added: The decrease in Local revenues of $564,000 was primarily due to a reduction in Local Deals voucher commissions.
Travelzoo Europe
−Removed: Europe revenues increased $2.1 million or 12% in 2022 compared to 2021.
−Removed: This increase was primarily due to $5.1 million increase in Travel revenues, offset partially by $571,000 decrease in Local revenues and $2.4 million negative impact from foreign currency movements relative to the U.S.
−Removed: The increase in Travel revenue was primarily due to $5.1 million increase in revenues from Top 20 and Standalone , offset partially by $3.3 million decrease in Getaways revenue due to a decrease in number of vouchers sold.
−Removed: The decrease in Local revenues of $571,000 was primarily due to the decrease in number of Local Deals vouchers sold.
+Added: Europe revenues increased $4.6 million, or 23.5%, in 2023 as compared to 2022.
+Added: This increase was primarily due to a $4.1 million increase in Travel revenues, a $175,000 increase in Local revenues and a $343,000 positive impact from foreign currency movements relative to the U.S.
+Added: The increase in Travel revenues was primarily due to a $3.2 million increase in revenues from Top 20 and Standalone emails and a $709,000 increase in Hotel booking commissions.
+Added: The increase in Local revenues of $175,000 was primarily due to an increase in Local Deals voucher commissions.
Jack’s Flight Club
−Removed: Travelzoo acquired 60% of the shares of Jack’s Flight Club on January 13, 2020.
−Removed: Jack’s Flight Club's premium members pay subscription fees quarterly, semi-annually or annually to receive emails or app notifications of flight deals.
−Removed: Jack’s Flight Club’s revenue increased $131,000 or 4% in 2022 compared to 2021 due to the increase in premium members.
+Added: Jack’s Flight Club's premium members pay for quarterly, semi-annual or annual subscriptions to emails or app notifications of flight deals.
+Added: Jack’s Flight Club’s revenues increased $695,000, or 20.0%, in 2023 as compared to 2022, primarily due to an increase in premium members.
+Added: New Initiatives
+Added: New Initiatives’ revenues increased by $179,000 in 2023 as compared to 2022, due to a $46,000 increase in royalties from licensees operating in the territories of Japan, South Korea, Australia, New Zealand and Singapore, and $133,000 primarily attributable to activities of MTE, which was acquired on December 30, 2022, including a license fee, founding membership subscription fees to Travelzoo META, and various other items.
For 2023 and 2022, none of our customers accounted for 10% or more of our revenue.
Cost of Revenues
−Removed: Cost of revenues consists primarily of network expenses, including fees we pay for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network , amortization of capitalized website development costs, software license expenses, credit card fees, certain estimated refunds to members and customer service costs associated with vouchers we sell and hotel bookings, and salary expenses associated with network operations and customer service staff.
+Added: Cost of revenues consists primarily of network expenses, including fees for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network , amortization of capitalized website development costs, software license expenses, merchant processing fees, certain estimated refunds for member purchases of vouchers, customer service costs and salary expenses associated with network operations and customer service employees.
Cost of revenues was $10.9 million and $10.0 million for the years ended December 31, 2023 and 2022, respectively.
−Removed: Cost of revenues decreased $1.4 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to $975,000 decrease in credit card fees as a result of decreased voucher sales and $596,000 decrease in network expenses.
+Added: Cost of revenues increased $931,000 for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to a $532,000 increase in expenses from third-party partners of the Travelzoo Network and a $320,000 increase in salary related expenses .
+Added: Cost of revenues as a percent of revenues declined from 14.2% in 2022 to 12.9% in 2023.
Operating Expenses
Sales and Marketing
−Removed: Sales and marketing expenses consist primarily of advertising and promotional expenses, salary and headcount related expenses associated with sales, marketing and production employees, expenses related to our participation in industry conferences, public relations expenses and facilities costs.
+Added: Sales and marketing expenses consist primarily of advertising and promotional expenses, salary and related expenses associated with sales, marketing and production employees, expenses related to participation in industry conferences, public relations expenses and facilities costs.
Sales and marketing expenses were $37.8 million and $33.1 million for the years ended December 31, 2023 and 2022, respectively.
−Removed: Advertising expenses consist primarily of online advertising which we refer to as traffic acquisition cost and member acquisition costs.
+Added: Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs.
For the years ended December 31, 2023 and 2022, advertising expenses accounted for 26% and 21%, respectively, of total sales and marketing expenses.
−Removed: The goal of our advertising was to acquire new members to our email products, increase the traffic to our websites, increase brand awareness and increase our audience through mobile and social media channels.
−Removed: Sales and marketing expenses increased $2.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to $2.4 million increase in member acquisition costs.
+Added: The goal of our advertising is to acquire new members, increase our audience through mobile and social media channels, drive traffic to our websites and increase brand awareness.
+Added: Sales and marketing expenses increased $4.7 million, or 14.2%, in 2023 as compared to 2022, primarily due to a $1.8 million increase in member acquisition costs, a $1.8 million increase in salary and related expenses, and a $1.2 million increase in trade and brand marketing expenses.
+Added: Sales and marketing expenses as a percent of revenues declined from 46.8% in 2022 to 44.7% in 2023.
Product Development
−Removed: Product development expenses consist primarily of salary and related expenses associated with software development staff, fees for professional services, software maintenance, amortization and facilities costs.
−Removed: Product development expenses were $2.1 million and $2.6 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: Product development expenses decreased $526,000 for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to a decrease in salary and headcount related expenses.
+Added: Product development expenses consist primarily of salary and related expenses associated with software development employees, fees for professional services, software maintenance, amortization and facilities costs.
+Added: Product development expenses were $2.1 million for each of the years ended December 31, 2023 and 2022, respectively.
+Added: Product development expenses increased modestly by $49,000, or 2.4%, in 2023 as compared to 2022, primarily due to increased salary and related expenses.
+Added: Product development expenses as a percent of revenues declined from 2.9% in 2022 to 2.4% in 2023.
General and Administrative
−Removed: General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, bad debt expense, professional service expenses, legal expenses, amortization of intangible assets, general office expense and facilities costs.
+Added: General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, professional service expenses, legal expenses, amortization of intangible assets, general office expense, facilities costs and bad debt expense.
General and administrative expenses were $18.1 million and $17.9 million for the years ended 2023 and 2022, respectively.
−Removed: General and administrative expenses decreased $1.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to $1.8 million decrease in salary and headcount related expenses which mainly related to the $1.9 million decrease o f stock-based compensation expense.
−Removed: The annual impairment test indicated that Jack’s Flight Club’s indefinite lived intangible assets (“Trade name”) was impaired for $200,000 in 2022 and the Company recorded this impairment in the General and administrative expenses in 2022.
+Added: General and administrative expenses increased modestly by $181,000, or 1.1%, in 2023 as compared to 2022 , primarily due to a $942,000 increase in travel-related expenses, largely offset by a $808,000 decrease in stock-based compensation expense.
Other Income, net
−Removed: Other income, net consisted primarily of foreign exchange transactions gains and losses, our share of investment gains and losses, su blease income, gains from PPP loan forgiveness, German federal government funding for Corona-related pandemic relief, interest income earned on cash, cash equivalents and restricted cash as well as interest expense.
+Added: Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for Corona-related pandemic relief, interest income and interest expense.
Other income was $1.5 million and $2.4 million for the years ended December 31, 2023 and 2022, respectively.
−Removed: Other income decreased for the year ended December 31, 2022 compared to the year ended December 31, 2021 was due primarily to $3.6 million gain recorded as the result of PPP loan forgiveness in 2021 offset partially by the $1.7 million German federal government funding for COVID pandemic relief and the $196,000 escrow payment for WeGo sale the Company received in 2022.
+Added: Other income decreased $860,000, or 35.8%, in 2023 as compared to 2022, primarily due to a $1.5 million reduction in German federal government funding for COVID pandemic relief, offset partially by $604,000 interest income on note receivable from stockholder.
Our income is generally taxed in the U.S., Canada and U.K.
2 unchanged sentences
Our effective tax rate was 30% and 33% for 2023 and 2022, respectively.
−Removed: Our effective tax rate decreased for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to disallowed excess compensation of officers in 2021.
+Added: Our effective tax rate decreased for 2023 as compared to 2022, primarily due to a decrease in non-deductible stock compensation .
We expect our effective tax rate to fluctuate in future periods depending on the geographic mix of our worldwide income or losses mainly incurred by our operations, statutory tax rate changes that may occur, existing or new uncertain tax matters that may arise and require changes in tax reserves and the need for valuation allowances on certain tax assets, if any.
−Removed: Inc ome Taxes” to the accompanying consolidated financial statements for further information.
+Added: See Note 7– Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence.
Segment Information
5 unchanged sentences
Income from operations as a % of revenues 27 % 22 %
−Removed: North America revenues increased by $5.6 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 (see “Revenues” above).
−Removed: North America expenses decreased by $3.2 million from 2021 to 2022 primarily due to $1.4 million decrease in salary and headcount related expenses, $820,000 decrease in credit card fee as a result of decreased voucher sales, $597,000 decrease in network expenses and $477,000 decrease in legal expenses.
+Added: North America revenues increased $8.4 million, or 17.7%, in 2023 as compared to 2022 (see “Revenues” above).
+Added: North America cost of sales and operating expenses increased by $3.5 million in 2023 as compared to 2022, primarily due to a $1.5 million increase in member acquisition costs, $1.2 million increase in salary and related expenses and $943,000 increase in member acquisition costs.
Travelzoo Europe
2 unchanged sentences
Revenues $ 24,021 $ 19,455
−Removed: Loss from operations $ (1,803) $ (1,997)
−Removed: Loss from operations as a % of revenues (9) % (12) %
−Removed: Europe net revenues increased $2.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 (see “Revenues” above).
−Removed: Europe expenses increased $1.9 million from 2021 to 2022 primarily due to $2.2 million increase in member acquisition costs.
+Added: Income (loss) from operations $ 1,317 $ (1,803)
+Added: Income (loss) from operations as a % of revenues 5 % (9) %
+Added: Europe revenues increased $4.6 million, or 23.5%, in 2023 as compared to 2022.
+Added: Europe cost of sales and operating expenses increased $1.4 million in 2023 as compared to 2022, primarily due to $403,000 increase in travel-related expenses, $242,000 increase in professional service expenses, $233,000 increase in member acquisition costs and $175,000 increase in bad debt expense.
Foreign currency movement s relative to the U.S.
−Removed: dollar negatively impacted our local currency income from our operations in Europe by approximately $246,000 and $33,000 for 2022 and 2021, respectively.
+Added: dollar negatively impacted local currency income from our operations in Europe by approximately $40,000 and $246,000 in 2023 and 2022, respectively.
Jack's Flight Club
2 unchanged sentences
Revenues 4,172 $ 3,477
+Added: Loss from operations $ (23) $ —
+Added: Loss from operations as a % of revenues (1) % — %
+Added: Jack’s Flight Club revenues in creased $695,000, or 20.0%, in 2023 as compared to 2022 .
+Added: Jack’s Flight Club cost of sales and operating expenses increased $718,000 in 2023 as compared to 2022, primarily due to an increase in advertising and marketing expenses.
+Added: New Initiatives
+Added: Year Ended December 31,
+Added: (In thousands)
+Added: Revenues $ 204 $ 25
Income from operations $ (976) $ (988)
−Removed: Income from operations as a % of revenues — % 4 %
−Removed: Jack’s Flight Club revenues in creased by $131,000 for the year ended December 31, 2022 compared to the year ended December 31, 2021 (see “Revenues” above).
−Removed: Jack’s Flight Club expenses increased by $265,000 for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase in advertising and marketing expenses.
+Added: New Initiatives revenues increased $179,000 in 2023 as compared to 2022 .
+Added: New Initiatives cost of sales and operating expenses increased $167,000 in 2023 as compared to 2022, primarily due to increased product advertising and marketing expenses.
Liquidity and Capital Resources
−Removed: As of December 31, 2022, we had $18.7 million in cash and cash equivalents , of which $10.7 million was held outside the U.S.
−Removed: in our foreign operations.
−Removed: We also had $675,000 in restricted cash held in the U.S.
−Removed: as of December 31, 2022.
−Removed: If the assets held outside the U.S.
−Removed: are distributed to the U.S., we may be subject to additional U.S.
+Added: As of December 31, 2023, we had $15.7 million of cash and cash equivalents , of which $10.7 million was held outside the U.S., and we had $675,000 in restricted cash held in the U.S.
+Added: If our cash and cash equivalents held outside the U.S.
+Added: were distributed to the U.S., we may be subject to additional U.S.
taxes in certain circumstances.
−Removed: Cash, cash equivalents and restricted cash decreased $25.6 million from $45.0 million as of December 31, 2021 primarily due to $23.1 million cash used in operating activities and $1.3 million cash used in investing activities primarily for purchase of intangible assets.
+Added: Cash, cash equivalents and restricted cash decreased by $3.0 million to $16.4 million as of December 31, 2023 from $19.4 million as of December 31, 2022, primarily due to $16.8 million of cash used to repurchase common stock, offset partially by $10.7 million of cash provided by operating activities and $3.0 million payment of promissory notes.
As of December 31, 2023 , we had m erchant payables of $20.6 million related to unredeemed vouchers.
−Removed: In the Company’s financial statements presented in this 10-K report, following GAAP accounting principles, we classified all merchant payables as current.
+Added: In the Company’s financial statements presented in this 10-K report, following U.S.
+Added: generally accepted accounting principles (“GAAP”), we classified all merchant payables as current.
When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $3.4 million .
Payables to merchants are generally due upon redemption of vouchers.
−Removed: The vouchers have maturities from January 2023 through December 2025 with the majority of vouchers expiring in 2023;
−Removed: provided, that these expiration dates may sometimes be extended on a case-by-case basis.
−Removed: Management believes that redemptions may be delayed for international vouchers in the current environment.
−Removed: Based on current projections of redemption activity, we expect that cash on hand as of December 31, 2022 will be sufficient to provide for working capital needs for at least the next twelve months.
−Removed: However, if redemption activity is more accelerated, if our business is not profitable, or if our planned targets for cash flows from operations are not met, we may need to obtain additional financing to meet our working capital needs in the future.
−Removed: We believe that we could obtain additional financing if needed, but there can be no assurance that financing will be available on terms that are acceptable to us, if at all.
+Added: The vouchers expire between January 2024 through December 2025;
+Added: however these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration.
+Added: Based on current projections of redemption activity, we expect that cash and cash equivalents on hand as of December 31, 2023 will be sufficient to provide for working capital needs for at least the next twelve months.
+Added: The following table provides a summary of our cash flows from operating, investing and financing activities:
Year Ended December 31,
(In thousands)
−Removed: Net cash used in operating activities $ (23,121) $ (8,083)
−Removed: Net cash provided by (used in) investing activities (1,315) 104
+Added: Net cash provided by (used in) operating activities $ 10,675 $ (23,121)
+Added: Net cash used in investing activities (39) (1,315)
Net cash provided by (used in) financing activities (14,150) 1,282
1 unchanged sentence
Net decrease in cash, cash equivalents and restricted cash $ (2,989) $ (25,611)
−Removed: Net cash used in operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
−Removed: Net cash used in operating activities for 2022 was $23.1 million, which consisted of $30.4 million decrease in cash from changes in operating assets and liabilities, offset partially by net income of $6.6 million and $684,000 increase in non-cash items.
+Added: Net cash provided by operating activities for 2023 was $10.7 million, consisting of net income of $12.5 million and $2.4 million adjustments for non-cash items, offset partially by $4.2 million used in changes in operating assets and liabilities.
+Added: Adjustments for non-cash items primarily consist of $1.9 million for depreciation and amortization and $1.6 million for stock-based compensation, offset partially by a $1.0 million reversal of reserve for accounts receivable and refunds.
+Added: Cash used in operating assets and liabilities was primarily due to a $12.1 million decrease in merchant payables, offset partially by a $3.8 million decrease in prepaid expenses and other, $2.4 million increase in other liabilities and $1.2 million decrease in prepaid income taxes.
+Added: Net cash used in operating activities for 2022 was $23.1 million, which consisted of $30.4 million decrease in cash from changes in operating assets and liabilities, offset partially by net income of $6.6 million and $684,000 increase in non-cash
The decrease in cash from changes in operating assets and liabilities was primarily due to $35.2 million decrease in merchant payables, offset partially by $1.6 million decrease in prepaid expenses and other, $1.5 million decrease in prepaid income tax and $1.3 million decrease in accounts receivables.
Adjustments for non-cash items primarily consisted of $2.2 million for depreciation and amortization, $1.8 million for stock-based compensation and $774,000 for deferred income tax, offset partially by $4.4 million reversal of reserves from accounts receivable and other reserves.
−Removed: Net cash used in operating activities was $8.1 million for 2021, which consisted of $11.8 million decrease in cash from changes in operating assets and liabilities, offset partially by $2.8 million non-cash items and net income of $902,000.
−Removed: The decrease in cash from changes in operating assets and liabilities primarily consisted of $9.7 million increase in accounts receivable, $8.1 million increase in prepaid expenses and other, $3.3 million decrease in accounts payable and $2.5 million increase in prepaid income taxes, offset partially by $12.2 million increase in merchant payables.
−Removed: Adjustments for non-cash items primarily consisted of $3.7 million of stock-based compensation and $1.8 million depreciation and amortization, offset partially by $3.6 million gain on PPP notes payable forgiveness.
−Removed: Cash paid for income taxes, net of refunds received in 2022 and 2021, was $1.1 million and $3.1 million, respectively.
+Added: Cash refunds received for income tax, net of payment made, in 2023 was $1,000.
+Added: Cash paid for income tax, net of refunds received, in 2022 was $1.1 million.
+Added: Net cash used in investing activities for 2023 was $39,000 which consisted of $255,000 for purchases of property and equipment and $216,000 proceeds from repayment of note receivable from a licensee.
Net cash used in investing activities for 2022 was $1.3 million, which consisted of $1.0 million for purchases of intangible assets and $462,000 for purchases of property and equipment.
−Removed: Net cash provided by investing activities for 2021 was $104,000 which consisted of $133,000 proceeds from repayment of investment Japan loan.
+Added: Net cash used in financing activities for 2023 was $14.2 million, which primarily consisted of $16.8 million for the repurchase of common stock and $3.0 million payment of promissory notes.
Net cash provided by financing activities for 2022 was $1.3 million, which primarily consisted of $1.9 million proceeds from the exercise of stock options and $1.0 million proceeds from the issuance of common stock in a private placement, offset partially by $1.6 million for the repurchase of common stock.
−Removed: Net cash used in financing activities for 2021 was $11.2 million which primarily consisted of taxes paid for net share settlement of $5.6 million and stock repurchases of $5.5 million.
−Removed: Although we have settled the states unclaimed property claims with all states, we may still receive inquiries from certain potential Netsurfers promotional stockholders that had not provided their state of residence to us by April 25, 2004.
−Removed: Therefore, we are continuing our voluntary program under which we make cash payments to individuals related to the promotional shares for individuals whose residence was unknown by us and who establish that they satisfied the conditions to receive shares of
−Removed: Netsurfers, and who failed to submit requests to convert their shares into shares of Travelzoo within the required time period.
+Added: Although we have settled unclaimed property claims with all states, we may still receive inquiries from certain potential Netsurfers promotional stockholders that had not provided their state of residence to us by April 25, 2004.
+Added: Therefore, we are continuing our voluntary program under which we make cash payments related to promotional shares held by individuals whose residence was unknown by us and who establish that they satisfied the conditions to receive shares of Netsurfers, and who failed to submit requests to convert their shares into shares of Travelzoo within the required time period.
This voluntary program is not available for individuals whose promotional shares have been escheated to a state by us.
−Removed: Our capital requirements depend on a number of factors, including market acceptance of our products and services, the amount of our resources we devote to the development of new products, cash payments related to former shareholders of Netsurfers, expansion of our operations, and the amount of resources we devote to promoting awareness of the Travelzoo brand.
−Removed: Since the inception of the voluntary program under which we make cash payments to people who establish that they were former shareholders of Netsurfers, and who failed to submit requests to convert their shares into shares of Travelzoo within the required time period, we have incurred expenses of $2.9 million.
+Added: Our capital requirements depend on a number of factors, including market acceptance of our products and services, the amount of resources we devote to the development of new products, cash payments related to former shareholders of Netsurfers, expansion of our operations, and the amount of resources we devote to promoting awareness of the Travelzoo brand.
+Added: Since the inception of the voluntary program under which we make cash payments to people who establish they are qualifying former shareholders of Netsurfers, we have incurred expenses of $2.9 million.
While future payments for this program are expected to decrease, the total cost of this voluntary program is still undeterminable because it is dependent on our stock price and on the number of valid requests ultimately received.
−Removed: Consistent with our growth, we have experienced fluctuations in our cost of revenues, sales and marketing expenses and our general and administrative expenses, including increases in product development costs, and we anticipate that these increases will continue for the foreseeable future.
+Added: Consistent with our growth, we have experienced fluctuations in our cost of revenues, sales and marketing expenses, product development expenses and general and administrative expenses, and we anticipate that these increases will continue for the foreseeable future.
We believe cash on hand will be sufficient to pay such costs for at least the next twelve months.
−Removed: In addition, we will continue to evaluate possible investments in businesses, products and technologies, the consummation of any of which would increase our capital requirements.
−Removed: Although we currently believe that we have sufficient capital resources to meet our anticipated working capital and capital expenditure requirements for at least the next twelve months, unanticipated events and opportunities or a less favorable than expected development of our business with one or more of advertising formats may require us to sell additional equity or debt securities or establish new credit facilities to raise capital in order to meet our capital requirements.
−Removed: If we sell additional equity or convertible debt securities, the sale could dilute the ownership of our existing stockholders.
+Added: In addition, we will continue to evaluate possible investments in businesses and products and technologies, the consummation of any of which would increase our capital requirements.
+Added: Although we currently believe we have sufficient capital resources to meet our anticipated working capital and capital expenditure requirements for at least the next twelve months, unanticipated events and opportunities or a less favorable than expected development of our business with one or more advertising formats may require us to sell additional equity or debt securities or establish credit facilities to raise capital in order to meet our capital requirements.
+Added: If we sell additional equity or convertible debt securities, such sale could dilute the ownership of our existing stockholders.
If we issue debt securities or establish a new credit facility, our fixed obligations could increase and we may be required to agree to operating covenants that would restrict our operations.
We cannot be sure that any such financing will be available in amounts or on terms acceptable to us.
−Removed: If the development of our business is less favorable than expected, we may decide to significantly reduce the size of our operations and marketing expenses in certain markets with the objective of reducing cash outflow.
−Removed: The information set forth unde r “Note 6—Commitments and Contingencies” and “Note 14:
−Removed: Leases” to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein by refer ence.
+Added: If the development of our business is less favorable than expected, we may decide to significantly reduce the size of our operations and marketing expenses in certain markets with the objective of reducing cash outflows.
+Added: The information set forth unde r “Note 6— Commitments and Contingencies ” and “Note 14— Leases ” to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein by refer ence.
Litigation and claims against the Company may result in legal defense costs, settlements or judgments that could have a material impact on our financial condition.
The following summarizes our principal contractual commitments as of December 31, 2023 (in thousands):
−Removed: Gross Operating Lease Commitments Sublease Income Net Operating Lease Commitments Purchase Obligations Total Commitments
+Added: Operating Lease Commitments Long-term Operating Lease Commitments Short-term Total Operating Lease Commitments Purchase Obligations Total Commitments
2024 $ 2,701 $ 381 $ 3,082 $ 492 $ 3,574
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We also have contingencies related to net unrecognized tax benefits, including interest, of approximately $24.7 million as of December 31, 2023.
−Removed: See Note 7 to the accompanying consolidated financial statements for further information.
+Added: See Note 7— Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence for further information.
Critical Accounting Policies and Estimates
−Removed: We believe that there are a number of accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amounts of revenue and the more significant areas involving management’s judgments and estimates.
−Removed: These significant accounting policies relate to revenue recognition, reserve for member refunds, allowance for doubtful accounts, income taxes and loss contingencies.
−Removed: These policies, and our procedures related to these policies, are described in detail below.
−Removed: Revenue Recognition
−Removed: The Company follows Accounting Standards Update No.
−Removed: 2014-09, "Revenue from Contracts with Customers" (Topic 606).
−Removed: Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
−Removed: The Company's revenues are primarily advertising fees generated from the publishing of travel and entertainment deals on the Travelzoo website, in the Top 20 email newsletter, in the Standalone email newsletter and through the Travelzoo Network .
−Removed: The Company also generates transaction-based revenues from the sale of vouchers through our Local Deals and Getaways products and operation of a hotel booking platform, limited offerings of vacation packages and subscription revenues from Jack's Flight Club.
−Removed: The Company's disaggregated revenues are included in “Note 12:
−Removed: Segment Reporting and Significant Customer Information”.
−Removed: For fixed-fee website advertising, the Company recognizes revenues ratably over the contracted placement period.
−Removed: For Top 20 email newsletter and other email products, the Company recognizes revenues when the emails are delivered to its members.
−Removed: The Company offers advertising on a cost-per-click basis, which means that an advertiser pays the Company only when a user clicks on an ad on Travelzoo properties or Travelzoo Network members’ properties.
−Removed: For these customers, the Company recognizes revenues each time a user clicks on the ad.
−Removed: The Company also offers advertising on other basis, such as cost-per-impression, which means that an advertiser pays the Company based on the number of times their advertisement is displayed on Travelzoo properties, email advertisement, Travelzoo Network properties, or social media properties.
−Removed: For these customers, the Company recognizes revenues each time an ad is displayed or email delivered.
−Removed: For transaction based revenues, including products such as Local Deals, Getaways , hotel platform and vacation packages, the Company evaluates whether it is the principal (i.e., report revenue on a gross basis) versus an agent (i.e., report revenue on a net basis).
−Removed: The Company reports transaction revenue on a net basis because the supplier is primarily responsible for providing the underlying service and we do not control the service provided by the supplier prior to its transfer to the customer.
−Removed: For Local Deals and Getaways products, the Company earns a fee for acting as an agent for the sale of vouchers that can be redeemed for services with third-party merchants.
−Removed: Revenues are presented net of the amounts due to the third-party merchants for fulfilling the underlying services and an estimated amount for future refunds.
−Removed: Since the second quarter of 2020, the Company expanded its vouchers refund policy in order to entice customers given the economic climate at that time to fully refundable until the voucher expires or is redeemed by the customer.
−Removed: This refund policy has been adjusted starting April 1, 2022, back to fully refundable within fourteen days of purchase unless a surcharge is paid at the time of the voucher purchase for the right to be fully refundable.
−Removed: Certain merchant contracts allow the Company to retain the proceeds from unredeemed vouchers.
−Removed: With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period.
−Removed: Jack’s Flight Club revenue is generated from paid subscriptions by members.
−Removed: Subscription options are quarterly, semi-annually, and annually.
−Removed: We recognize the revenue monthly pro rata over the subscription period.
−Removed: Commission revenue related to our hotel platform is recognized ratably over the period of guest stay, net of an allowance for cancellations based upon historical patterns.
−Removed: For arrangements for booking non-cancelable reservations where the Company’s performance obligation is deemed to be the successful booking of a hotel reservation, the Company records revenue for the commissions upon completion of the hotel booking.
−Removed: The Company’s contracts with customers may include multiple performance obligations in which the Company allocates revenues to each performance obligation based on its standalone selling price.
−Removed: The Company determines standalone selling price based on its overall pricing objectives, taking into consideration the type of services, geographical region of the customers, normal rate card pricing and customary discounts.
−Removed: Standalone selling price is generally determined based on the prices charged to customers when the product is sold separately.
−Removed: The Company relies upon the following practical expedients and exemptions allowed for in the Topic 606.
−Removed: The Company expenses sales commissions when incurred because the amortization period would be one year or less.
−Removed: These costs are recorded in sales and marketing expenses.
−Removed: In addition, the Company does not disclose the value of unsatisfied performance obligations
−Removed: for (a) contracts with an original expected length of one year or less and (b) contracts for which it recognizes revenues at the amount to which it has the right to invoice for services performed.
−Removed: Reserve for Member Refunds
−Removed: The Company records an estimated reserve for refunds to members based on our historical experience at the time revenue is recorded for Local Deals and Getaways voucher sales.
−Removed: We consider many key factors such as the historical refunds based upon the time lag since the sale, historical reasons for refunds, time period that remains until the deal expiration date, any changes in refund procedures and estimates of redemptions and breakage.
−Removed: For publishing revenue, we recognize revenue upon delivery of the emails and delivery of the clicks, over the period of the placement of the advertising.
−Removed: Insertion orders for publishing revenue are typically for periods between one month and twelve months and are not automatically renewed.
−Removed: For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon the sale of the vouchers.
−Removed: Merchant agreements for Getaways advertisers are typically for periods between twelve months and twenty-four months and are not automatically renewed.
−Removed: Since the second quarter of 2020, the Company expanded its vouchers refund policy in order to entice customers given the economic climate at that time to fully refundable until the voucher expires or is redeemed by the customer.
−Removed: This refund policy has been adjusted starting April 1, 2022, back to fully refundable within fourteen days of purchase unless a surcharge is paid at the time of the voucher purchase for the right to be fully refundable.
−Removed: The expiration dates of vouchers range between January 2023 through December 2025 with the majority of vouchers expiring in 2023;
−Removed: provided, that these expiration dates may sometimes be extended on a case-by-case basis.
−Removed: The revenues generated from Local Deals vouchers and entertainment offers are based upon a percentage of the face value of the vouchers, commission on actual sales or a listing fee based on audience reach.
−Removed: For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers.
−Removed: The Company estimated the refund reserve by using historical and current refund rates by product and by merchant location to calculate the estimated future refunds.
−Removed: As of December 31, 2022, the Company had approximately $8.1 million of unredeemed vouchers that had been sold through December 31, 2022 representing the Company’s commission earned from the sale.
−Removed: The Company had estimated a refund liability of $1.3 million for these unredeemed vouchers as of December 31, 2022 which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the consolidated balance sheet.
−Removed: The Company has recorded merchant payables of $32.6 million as of December 31, 2022 related to unredeemed vouchers.
−Removed: Insertion orders and merchant agreements for Travelzoo Local are typically for periods between one month and twelve months and are not automatically renewed except for merchant contracts in foreign locations.
−Removed: Should any of these factors change, the estimates made by management will also change, which could impact the level of our future reserve for refunds to member.
−Removed: Specifically, if the financial condition of our advertisers, the business that is providing the vouchered service, were to deteriorate, affecting their ability to provide the services to our members, additional reserves for refunds to members may be required and may adversely affect future revenue as the liability is recorded against revenue.
−Removed: We record a liability associated with estimated future refunds in accrued expenses on the consolidated balance sheets.
−Removed: Estimated member refunds that are determined to be recoverable from the merchant are recorded in the consolidated statements of operations as a reduction to revenue.
−Removed: Estimated member refunds that are determined not to be recoverable from the merchant are presented as a cost of revenue.
−Removed: If our judgments regarding estimated member refunds are inaccurate, reported results of operations could differ from the amount we previously accrued.
−Removed: Business Combinations
−Removed: The purchase price of an acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.
−Removed: To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill.
−Removed: The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management.
−Removed: The Company records the net assets and results of operations of an acquired entity from the acquisition date and adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances existing at the acquisition date impacting asset valuations and liabilities assumed.
−Removed: Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
−Removed: Allowance for Doubtful Accounts
−Removed: We record a provision for doubtful accounts based on our historical experience of write-offs and a detailed assessment of our accounts receivable and allowance for doubtful accounts.
−Removed: In estimating the provision for doubtful accounts, management considers the age of the accounts receivable, historical write-offs, the creditworthiness of the advertiser, the economic conditions of the advertiser’s industry, and general economic conditions, among other factors.
−Removed: Should any of these factors
−Removed: change, the estimates made by management will also change, which could impact the level of the future provision for doubtful accounts.
−Removed: Specifically, if the financial condition of our advertisers were to deteriorate, affecting their ability to make payments, additional provision for doubtful accounts may be required.
−Removed: We are subject to income taxes in the U.S.
−Removed: and numerous foreign jurisdictions.
−Removed: Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes.
−Removed: Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different.
−Removed: We adjust these reserves in light of changing facts and circumstances, such as the progress or closing of a tax audit or the refinement of an estimate.
−Removed: To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
−Removed: The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest.
−Removed: In addition to local country tax laws and regulations, our income tax rate depends on the extent that our foreign earnings are taxed by the U.S.
−Removed: through new provisions under the Tax Act such as the new CARES Act, GILTI tax and BEAT or as a result of our indefinite reinvestment assertion.
−Removed: Indefinite reinvestment is determined by management’s judgment about and intentions concerning our future operations.
−Removed: Our effective tax rates have differed from the statutory rate primarily due to the tax impac t of foreign operations, state taxes, certain benefits realized related to stock option activities, credits, the extent that our earnings are indefinitely reinvested outside the U.S.
−Removed: and tax asset valuation allowance determinations, including on certain loss carryforwards.
−Removed: For the years ended December 31, 2022 and 2021, our effective tax rates were 33% and 66%, respectively.
−Removed: Our future effective tax rates could be materially impacted by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, changes in the deferred tax assets or liabilities, existing or new uncertain tax matters that may arise and require changes in tax reserves, changes in tax asset valuation allowance determinations, changes in our judgment about whether certain foreign earnings are indefinitely reinvested outside the U.S., or changes in tax laws, regulations, and accounting principles.
−Removed: In addition, we are subject to the continuous examination of our income tax returns by the IRS and other tax authorities.
−Removed: We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
−Removed: See Note 7 to the accompanying consolidated financial statements for further information.
−Removed: Loss Contingencies
−Removed: We are involved in claims, suits, and proceedings arising from the ordinary course of our business.
−Removed: We record a provision for a liability when we believe that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.
−Removed: Significant judgment is required to determine both probability and the estimated amount.
−Removed: Such claim proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control.
−Removed: Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and cash flows.
−Removed: Please refer to Note 6 to the accompanying consolidated financial statements for further information regarding our loss contingencies.
−Removed: Recent Accounting Pronouncements
−Removed: See “Note 1 — Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included in this report, regarding our significant accounting policies and any impact of certain recent accounting pronouncements on our consolidated financial statements.
+Added: We prepare our consolidated financial statements and accompanying notes in accordance with GAAP .
+Added: Preparation of the consolidated financial statements and accompanying notes requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the consolidated financial statements and amounts of revenue and expenses reported during the period.
+Added: We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
+Added: Actual results may differ significantly from those estimates under different assumptions and conditions and may be material.
+Added: Refer to Note 1 — Basis of Presentation and Summary of Significant Accounting Policies of the notes to consolidated financial statements in Part II Item 8 of this Annual Report on Form 10-K for an overview of our significant accounting policies .
+Added: There are certain critical estimates employed in the preparation of our consolidated financial statements that we believe require management to use significant judgment.
+Added: We consider an accounting estimate to be critical if:
+Added: • It requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the time we were making the estimate;
+Added: • Changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations.
+Added: A discussion of information about the nature and rationale for our critical accounting estimates is below:
+Added: We utilize the asset and liability method of accounting for income taxes.
+Added: Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
+Added: Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more likely than not that the tax benefits will be realized.
+Added: To the extent a deferred tax asset cannot be recognized under the preceding criteria, valuation allowances are established.
+Added: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled.
+Added: Significant judgment is required in evaluating the Company's uncertain tax positions and determining the Company's provision for income taxes.
+Added: We record liabilities to address uncertain tax positions we have taken in previously filed tax returns or that we expect to take in a future tax return.
+Added: Although the Company believes it has adequately reserved for its uncertain tax positions, no assurance can be given that the final outcomes of these matters will not be different.
+Added: The Company adjusts its reserves in light of changing facts and circumstances, such as the progress or closing of a tax audit or the refinement of an estimate.
+Added: To the extent the final tax outcomes of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
+Added: The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as related net interest.
Recent Accounting Pronouncements
−Removed: For a discussion of the recent accounting pronouncements, see Note 1 of the consolidated financial statements
+Added: For a discussion of the recent accounting pronouncements, see Note 1 — Basis of Presentation and Summary of Significant Accounting Policies of the notes to consolidated financial statements in Part II Item 8 of this Annual Report on Form 10-K.
Quantitative and Qualitative Disclosures About Market Risk
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