What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-15 · 188 added, 95 removed, 529 unchanged (35% of the section changed)

5 unchanged sentences

Cash and cash equivalents $ 12,567 $ 15,713

Accounts receivable, less allowance for doubtful accounts of $ 1,490 and $ 1,484 as of March 31, 2024 and December 31, 2023, respectively

Accounts receivable, less allowance for doubtful accounts of $ 1,554 and $ 1,484 as of June 30, 2024 and December 31, 2023, respectively

13,220 12,965

1 unchanged sentence

Prepaid expenses and other 1,726 1,461

Assets from discontinued operations — 1

Total current assets 28,511 30,768

24 unchanged sentences

Common stock, $ 0.01 par value ( 20,000 shares authorized;

13,202 shares issued and outstanding as of March 31, 2024, 13,575 shares issued and outstanding as of December 31, 2023)

12,402 shares issued and outstanding as of June 30, 2024, 13,575 shares issued and outstanding as of December 31, 2023)

Additional paid in capital — 439

10 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Revenues $ 21,141 $ 21,128 $ 43,126 $ 42,729

11 unchanged sentences

Income from continuing operations 2,920 2,661 7,145 6,344

Loss from discontinued operations, net of taxes — ( 2 )

Income from discontinued operations, net of taxes — 2 — —

Net income 2,920 2,663 7,145 6,344

2 unchanged sentences

Net income attributable to Travelzoo—continuing operations $ 2,927 $ 2,624 $ 7,163 $ 6,299

Net loss attributable to Travelzoo—discontinued operations $ — $ ( 2 )

Net income attributable to Travelzoo—discontinued operations $ — $ 2 $ — $ —

Income per share—basic

13 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net income $ 2,920 $ 2,663 $ 7,145 $ 6,344

5 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

4 unchanged sentences

Deferred income tax ( 27 ) ( 38 )

Loss on long-lived assets — 10

Net foreign currency effect ( 11 ) ( 33 )

17 unchanged sentences

Repurchase of common stock ( 10,422 ) ( 4,870 )

Exercise of stock options, net of taxes paid for net share settlement ( 257 ) ( 299 )

Net cash used in financing activities ( 10,679 ) ( 5,169 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 311 ) 382

Net increase in cash, cash equivalents and restricted cash 476 448

Net increase (decrease) in cash, cash equivalents and restricted cash ( 3,146 ) 819

Cash, cash equivalents and restricted cash at beginning of period 16,389 19,378

1 unchanged sentence

Supplemental disclosure of cash flow information:

Cash paid for income taxes, net $ 548 $ 74

Cash paid (refund) for income taxes, net $ 1,206 $ ( 494 )

Right-of-use assets obtained in exchange for lease obligations—operating leases $ 646 $ —

2 unchanged sentences

Accrued excise tax for share repurchases $ 102 $ —

Accrued tax withholding related to option exercise $ 249 $ —

See accompanying notes to unaudited condensed consolidated financial statements.

9 unchanged sentences

Shares Amount

Balances, December 31, 2023 13,575 $ 136 $ — $ 439 $ ( 9,537 ) $ ( 1,753 ) $ 19,508 $ ( 4,607 ) $ 4,186 $ 4,697 $ 8,883

Balances, March 31, 2024 13,202 $ 132 $ — $ — $ ( 9,537 ) $ ( 1,753 ) $ 20,125 $ ( 4,861 ) $ 4,106 $ 4,686 $ 8,792

Stock-based compensation expense — — 688 — — — — 688 — 688

5 unchanged sentences

Net income — — — — — 2,927 — 2,927 ( 7 ) 2,920

Balances, June 30, 2024 12,402 $ 124 $ — $ — $ ( 9,537 ) $ ( 1,753 ) $ 17,083 $ ( 4,951 ) $ 966 $ 4,679 $ 5,645

(1) Includes a 1 % excise tax applicable to share repurchases.

Common Stock Treasury Stock Additional

Capital Tax Indemnification Note Receivable from Shareholder Retained

Earnings Accumulated

Comprehensive

Travelzoo Stockholders’

Equity Non-controlling interest Total

Stockholders’

Shares Amount

Balances, March 31, 2023 16,505 $ 165 $ ( 7,316 ) $ 23,670 $ ( 9,537 ) $ ( 4,753 ) $ 10,815 $ ( 4,825 ) $ 8,219 $ 4,603 $ 12,822

Stock-based compensation expense — — 432 — — — — 432 — 432

Repurchase of common stock — — ( 4,683 ) — — — — ( 4,683 ) — ( 4,683 )

Retirement of treasury stock ( 1,495 ) ( 14 ) 11,999 ( 11,985 ) — — — — — — —

Exercise of stock options and taxes paid for net share settlement 160 1 ( 301 ) — — — — ( 300 ) — ( 300 )

Foreign currency translation adjustment — — — — — — 135 135 — 135

Net income — — — — — 2,626 — 2,626 37 2,663

Balances, June 30, 2023 15,170 $ 152 $ — $ 11,816 $ ( 9,537 ) $ ( 4,753 ) $ 13,441 $ ( 4,690 ) $ 6,429 $ 4,640 $ 11,069

Common Stock Treasury Stock Additional

Capital Tax Indemnification Note Receivable from Shareholder Retained

Earnings Accumulated

Comprehensive

Travelzoo Stockholders’

Equity Non-controlling interest Total

Stockholders’

Shares Amount

Balances, December 31, 2023 13,575 $ 136 $ — $ 439 $ ( 9,537 ) $ ( 1,753 ) $ 19,508 $ ( 4,607 ) $ 4,186 $ 4,697 $ 8,883

Stock-based compensation expense — — — 783 — — — — 783 — 783

Repurchase of common stock (1)

— — ( 10,566 ) — — — — — ( 10,566 ) — ( 10,566 )

Retirement of treasury stock ( 1,200 ) ( 12 ) 10,566 ( 966 ) — — ( 9,588 ) — — — —

Exercise of stock options and taxes paid for net share settlement 27 — — ( 256 ) — — — — ( 256 ) — ( 256 )

Foreign currency translation adjustment — — — — — — — ( 344 ) ( 344 ) — ( 344 )

Net income — — — — — — 7,163 — 7,163 ( 18 ) 7,145

Balances, June 30, 2024 12,402 $ 124 $ — $ — $ ( 9,537 ) $ ( 1,753 ) $ 17,083 $ ( 4,951 ) $ 966 $ 4,679 $ 5,645

(1) Includes a 1 % excise tax applicable to share repurchases.

10 unchanged sentences

Repurchase of common stock — — ( 4,869 ) — — — — — ( 4,869 ) — ( 4,869 )

Retirement of treasury stock ( 1,495 ) ( 14 ) 11,999 ( 11,985 ) — — — — — — —

Exercise of stock options and taxes paid for net share settlement 160 1 — ( 301 ) — — — — ( 300 ) — ( 300 )

Foreign currency translation adjustment — — — — — — — 215 215 — 215

Net income — — — — — — 6,299 — 6,299 45 6,344

Balances, March 31, 2023 16,505 $ 165 $ ( 7,316 ) $ 23,670 $ ( 9,537 ) $ ( 4,753 ) $ 10,815 $ ( 4,825 ) $ 8,219 $ 4,603 $ 12,822

Balances, June 30, 2023 15,170 $ 152 $ — $ 11,816 $ ( 9,537 ) $ ( 4,753 ) $ 13,441 $ ( 4,690 ) $ 6,429 $ 4,640 $ 11,069

See accompanying notes to unaudited condensed consolidated financial statements.

12 unchanged sentences

In March 2020, Travelzoo exited its loss-making Asia Pacific business and pivoted to a licensing model.

The Company’s Asia Pacific business was classified as discontinued operations at March 31, 2020.

The Company’s Asia Pacific business was classified as discontinued operations as of March 31, 2020.

Travelzoo currently has license agreements covering Australia, Japan, New Zealand, Singapore, and South Korea.

The license agreements the licensees exclusive rights to use Travelzoo products, services and intellectual property quarterly royalty payments based upon net revenue over a 5 year term, with an option to renew.

The license agreements provide the licensees exclusive rights to use Travelzoo products, services and intellectual property in each jurisdiction in exchange for quarterly royalty payments based upon net revenue over a five- year term, with an option to renew.

Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc.

Azzurro Capital Inc.

is the Company’s largest shareholder, and as of March 31, 2024, holds approximately 39.6 % of the Company's outstanding shares.

Holger Bartel, the Company's Global CEO, is Ralph Bartel's brother and separately holds 3.9 % of the Company's outstanding shares as of March 31, 2024.

is the Company’s largest shareholder, and as of June 30, 2024, holds approximately 40.8 % of the Company's outstanding shares.

Holger Bartel, the Company's Global CEO, is Ralph Bartel's brother and separately holds 2.5 % of the Company's outstanding shares as of June 30, 2024.

Financial Statements

6 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

The financial results of Jack’s Flight Club have been included in our condensed consolidated financial statements from the date of acquisition.

Investments in entities where the Company does not have control, but does have significant influence, are accounted for as equity method investments.

3 unchanged sentences

Actual results could differ materially from those estimates.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other future period, and the Company makes no representations related thereto.

The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other future period, and the Company makes no representations related thereto.

(b) Recent Accounting Pronouncements

44 unchanged sentences

Deferred revenue primarily consists of deferred membership fees, customer prepayments and undelivered Company performance obligations related to contracts comprising multiple performance obligations.

As of December 31, 2023, $ 1.5 million was recorded as deferred revenue for Jack's Flight Club, of which $ 769,000 was recognized in the three months ended March 31, 2024 , $ 569,000 was recorded as deferred revenue for Travelzoo North America and Travelzoo Europe, of which $ 441,000 was recognized as revenue in the three months ended March 31, 2024 .

As of March 31, 2024, the deferred revenue balance was $ 3.2 million, of which $ 2.2 million was for Jack's Flight Club and the remaining $ 998,000 was for Travelzoo North America and Travelzoo Europe.

As of December 31, 2023, $ 1.5 million was recorded as deferred revenue for Jack's Flight Club, of which $ 1.2 million was recognized in the six months ended June 30, 2024 , $ 569,000 was recorded as deferred revenue for Travelzoo North America and Travelzoo Europe, of which $ 532,000 was recognized as revenue in the six months ended June 30, 2024 .

As of June 30, 2024, the deferred revenue balance was $ 3.2 million, of which $ 2.0 million was for Jack's Flight Club and the remaining $ 1.2 million was for Travelzoo North America and Travelzoo Europe.

Reserve for Refunds to Members

4 unchanged sentences

The Company's refund policy is a 14-day refund period from date of purchase, with an option to extend refund eligibility until voucher redemption or expiration, for a surcharge.

As of March 31, 2024 , the expiration dates of unexpired vouchers ranged from April 2024 through December 2025 ;

As of June 30, 2024, the expiration dates of unexpired vouchers ranged from July 2024 through December 2025;

provided, that expiration dates may sometimes be extended on a case-by-case basis and final payments to merchants upon expiration may not be due for up to a year later.

As of March 31, 2024, the Company had approximately $ 4.5 million of unredeemed vouchers that had been sold, representing the Company’s commission earned.

The Company estimated and recorded a refund reserve of $ 212,000 for these unredeemed vouchers as of March 31, 2024, which is recorded as a reduction of revenues on the condensed consolidated statements of operations and accrued expenses and other on the condensed consolidated balance sheet.

As of June 30, 2024, the Company had approximately $ 4.2 million of unredeemed vouchers that had been sold, representing the Company’s commission earned.

The Company estimated and recorded a refund reserve of $ 177,000 for these unredeemed vouchers as of June 30, 2024, which is recorded as a reduction of revenues on the condensed consolidated statements of operations and accrued expenses and other on the condensed consolidated balance sheet.

As of December 31, 2023, the Company had approximately $ 5.2 million of unredeemed vouchers that had been sold representing the Company’s commission earned from the sale and estimated a refund reserve of $ 268,000 for these unredeemed vouchers as of December 31, 2023, as a reduction of revenues on the condensed consolidated statements of operations and accrued expenses and other on the condensed consolidated balance sheet.

If our judgments regarding estimated member refunds are inaccurate, reported results of operations could differ from amounts previously accrued.

Merchant payables of $ 17.8 million as of March 31, 2024 is recorded on the consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed.

Merchant payables of $ 16.7 million as of June 30, 2024 is recorded on the consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed.

Identifiable intangible assets

6 unchanged sentences

The Company performed its annual impairment testing as of October 31, 2023 and no impairment charge was identified in connection with the annual impairment test .

The Company did no t identify any indicators of impairment during the three months ended March 31, 2024.

The Company did no t identify any indicators of impairment during the six months ended June 30, 2024.

Operating Leases

14 unchanged sentences

and internationally.

As of March 31, 2024 and December 31, 2023, the Company did not have any customers that accounted for 10% or more of accounts receivable.

As of March 31, 2024, the Company had merchant payables of $ 17.8 million related to the sale of vouchers.

As of June 30, 2024 and December 31, 2023, the Company did not have any customers that accounted for 10% or more of accounts receivable.

As of June 30, 2024, the Company had merchant payables of $ 16.7 million related to the sale of vouchers.

In the Company’s financial statements presented in this 10-Q report, following GAAP accounting principles, we classified all merchant payables as current.

As such, the consolidated balance sheet reflects negative net working capital (defined as current assets minus current liabilities) of $ 1.9 million at March 31, 2024.

As such, the consolidated balance sheet reflects negative net working capital (defined as current assets minus current liabilities) of $ 4.3 million at June 30, 2024.

Payables to merchants are generally due upon redemption of vouchers by members who purchased them from the Company.

As of March 31, 2024, unredeemed vouchers have maturities ranging from April 2024 through December 2025 ;

As of June 30, 2024, unredeemed vouchers have maturities ranging from July 2024 through December 2025 ;

however, expiration dates may be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year after.

Based on current projections of future redemption activity, management expects that cash on hand as of March 31, 2024 will be sufficient to provide for working capital needs for at least the next twelve months.

Based on current projections of future redemption activity, management expects that cash on hand as of June 30, 2024 will be sufficient to provide for working capital needs for at least the next twelve months.

Cash, Cash Equivalents and Restricted Cash

3 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts shown in the unaudited condensed consolidated statements of cash flows:

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 12,567 $ 15,713

2 unchanged sentences

Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 13,243 $ 16,389

The Company’s restricted cash was included in noncurrent assets as of March 31, 2024 and December 31, 2023.

The Company’s restricted cash was included in noncurrent assets as of June 30, 2024 and December 31, 2023.

Net Income Per Share

3 unchanged sentences

The following table sets forth the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net income attributable to Travelzoo—continuing operations $ 2,927 $ 2,624 $ 7,163 $ 6,299

Net loss attributable to Travelzoo—discontinued operations $ — $ ( 2 )

Net income attributable to Travelzoo—discontinued operations $ — $ 2 $ — $ —

Weighted average common shares—basic 12,895 15,275 13,191 15,485

10 unchanged sentences

Net income per share—diluted $ 0.23 $ 0.17 $ 0.54 $ 0.40

For the three months ended March 31, 2024 and 2023, options to purchas e 925,000 and 950,000 shares of common stock were not included in the computation of diluted net income per share because the effect would have been anti-dilutive.

For the three months ended June 30, 2024 and 2023, options to purchas e 850,000 and 750,000 shares of common stock, respectively, were not included in the computation of diluted net income per share because the effect would have been anti-dilutive.

For each of the six months ended June 30, 2024 and 2023, options to purchas e 750,000 shares of common stock were not included in the computation of diluted net income per share because the effect would have been anti-dilutive.

Jack’s Flight Club

2 unchanged sentences

Stock Purchase Agreement (“SPA”) between Travelzoo and Azzurro

In connection with the acquisition of MTE, formerly a wholly-owned subsidiary of Azzurro, the Company completed a private placement of newly issued shares with Azzurro.

In connection with the acquisition of Metaverse Travel Experiences (“MTE”), formerly a wholly-owned subsidiary of Azzurro, the Company completed a private placement of newly issued shares with Azzurro.

Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.

10 unchanged sentences

The remaining principal amount of $ 1.8 million promissory note is collateralized by the Shares and is expected to be paid in 2024.

Azzurro paid the interest of $ 70,000 and $ 0 in the three months ended March 31, 2024 and 2023, respectively.

Azzurro paid interest of $ 70,000 and

$ 285,000 in the three months ended June 30, 2024 and 2023 , respectively.

Azzurro paid interest of $ 140,000 and $ 285,000 in the six months ended June 30, 2024 and 2023, respectively.

Intangible Assets

4 unchanged sentences

Non-compete agreements (Jack’s Flight Club) 660 4.0

Intangible assets (Secret Escapes Spain member database) 445 3.0

Intangible assets (Secret Escapes U.S.

Secret Escapes Spain member database 445 3.0

Secret Escapes U.S.

member database 1,751 2.3

7 unchanged sentences

Amortization of Acquired Intangible Assets

The following table represents the activities of intangible assets for the three months ended March 31, 2024 and 2023 (in thousands):

The following table represents the activities of intangible assets for the three months ended June 30, 2024 and 2023 (in thousands):

Jack’s Flight Club Secret Escape Spain Secret Escape U.S.

10 unchanged sentences

Intangible assets—March 31, 2024 1,635 138 —

Amortization expense for acquired intangibles was $ 318,000 and $ 402,000 for the three months ended March 31, 2024 and 2023, respectively.

Expected future amortization expense of acquired intangible assets as of March 31, 2024 is as follows (in thousands):

Amortization of intangible assets with definite lives ( 59 ) ( 28 ) —

Intangible assets—June 30, 2024 $ 1,576 $ 110 $ —

Amortization expense for acquired intangibles was $ 87,000 and $ 388,000 for the three months ended June 30, 2024 and 2023, respectively.

Amortization expense for acquired intangibles was $ 405,000 and $ 790,000 for the six months ended June 30, 2024 and 2023, respectively.

Expected future amortization expense of acquired intangible assets as of June 30, 2024 is as follows (in thousands):

Years ending December 31,

2024 (excluding the three months ended March 31, 2024) 277

2024 (excluding the six months ended June 30, 2024) 189

The Company performed its annual impairment testing of Trade name as of October 31, 2023 using a relief from royalty method.

No impairment was identified in 2023.

As of March 31, 2024, the carrying value of the Trade name was $ 1.5 million.

The Company did not identify any indicators of impairment during the three months ended March 31, 2024.

As of June 30, 2024, the carrying value of the Trade name was $ 1.5 million.

The Company did not identify any indicators of impairment during the six months ended June 30, 2024.

Commitments and Contingencies

1 unchanged sentence

The Company accrues for legal contingencies if the Company can estimate the potential liability and believes it is probable that the matter will be ruled on adversely.

Accruals for legal contingencies were not material as of March 31, 2024 and December 31, 2023.

Accruals for legal contingencies were not material as of June 30, 2024 and December 31, 2023.

If a legal claim for which the Company did not accrue is resolved against it, the Company would record the expense in the period in which the ruling was made.

7 unchanged sentences

The LOCs are collateralized with cash which is included in the line item “Restricted cash” in the condensed consolidated balance sheets.

The Company has purchase commitments aggregating approximately $ 384,000 as of March 31, 2024, which represent the minimum obligations the Company has under agreements with certain suppliers.

The Company has purchase commitments aggregating approximately $ 256,000 as of June 30, 2024, which represent the minimum obligations the Company has under agreements with certain suppliers.

These minimum obligations are less than the Company’s projected use for those periods.

Payments may be more than the minimum obligations based on actual use.

In January 2022, July 2022 and May 2023, the Company’s German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received notification and payments of $ 1.2 million, $ 494,000 and $ 205,000 from the German Federal Government under its Bridging Aid III plan, Bridging Aid III+ and Bridging Aid IV programs, respectively.

These programs were for companies that suffered in the pandemic a decrease in sales of at least 30% in one month compared to the reference month in 2019.

Travelzoo Germany applied for the funding in 2021 and 2022, respectively, and was approved by the German government in January 2022, July of 2022, and May 2023.

In January 2022, July 2022 and May 2023, the German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received notification and payments of $ 1.2 million, $ 494,000 and $ 205,000 from the German Federal Government under its Bridging Aid III plan, Bridging Aid III+ and Bridging Aid IV programs, respectively.

These programs were for companies that suffered a decrease in sales of at least 30% in one month compared to the reference month in 2019 because of the COVID-19 pandemic.

Travelzoo Germany applied for the funding in 2021 and 2022, respectively, and was approved by the German government in January 2022, July 2022, and May 2023.

The Company is required to submit a final declaration in connection with the grants received by September 30, 2024.

2 unchanged sentences

In determining the quarterly provisions for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on our expected annual income and statutory tax rates in the U.S., Canada, and the U.K.

The Company’s effective tax rate from continuing operations was 26 % and 27 %, respectively, for the three months ended March 31, 2024 and 2023.

The Company’s effective tax rate for the three months ended March 31, 2024 changed from the three months ended March 31, 2023 primarily due to a decrease in certain non-deductible expenses in the three months ended March 31, 2024.

As of March 31, 2024, the Company is permanently reinvested in certain of its non-U.S.

The Company’s effective tax rate from continuing operations was 30 % and 29 %, respectively, for the three months ended June 30, 2024 and 2023.

The Company’s effective tax rate for the three months ended June 30, 2024 changed from the three months ended June 30, 2023 primarily due to an increase in certain non-deductible expenses in the three months ended June 30, 2024.

The Company’s effective tax rate from continuing operations was 28 % for each of the six months ended June 30, 2024 and 2023.

As of June 30, 2024, the Company is permanently reinvested in certain of its non-U.S.

subsidiaries and does not have a deferred tax liability related to its undistributed foreign earnings.

2 unchanged sentences

The Company maintains liabilities for uncertain tax positions.

As of March 31, 2024, the Company had approximately $ 23.9 million in total unrecognized tax benefits, of which up to $ 16.6 million would favorably affect the Company’s effective income tax rate if realized.

As of June 30, 2024, the Company had approximately $ 23.9 million in total unrecognized tax benefits, of which up to $ 16.6 million would favorably affect the Company’s effective income tax rate if realized.

The Company’s policy is to include interest and penalties related to unrecognized tax positions in income tax expense.

To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in the overall income tax provision in the period that such determination is made.

As of March 31, 2024 and December 31, 2023, the Company had approximately $ 825,000 and $ 803,000 in accrued interest and penalties, respectively.

As of June 30, 2024 and December 31, 2023, the Company had approximately $ 905,000 and $ 803,000 in accrued interest and penalties, respectively.

The Company files income tax returns in the U.S.

5 unchanged sentences

The following table summarizes the changes in accumulated other comprehensive loss (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Beginning balance $ ( 4,861 ) $ ( 4,825 ) $ ( 4,607 ) $ ( 4,905 )

1 unchanged sentence

Ending balance $ ( 4,951 ) $ ( 4,690 ) $ ( 4,951 ) $ ( 4,690 )

There were no amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023.

There were no amounts reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2024 and 2023.

Accumulated other comprehensive income (loss) consists of foreign currency translation gain or loss.

11 unchanged sentences

As of December 31, 2023, stock-based compensation related to these Option Agreements and applicable Option Agreement Amendments were fully expensed.

During the three months ended March 31, 2024, 75,000 options were exercised and 27,546 shares of common stock were issued as the result of the cashless exercises or net settlement with respect to the option exercise price which were approved by Travelzoo’s Board of Directors.

As of March 31, 2024, all options granted under these Option Agreements have been exercised or forfeited.

During the six months ended June 30, 2024, 75,000 options were exercised and 26,871 shares of common stock were issued as the result of the cashless exercises or net settlement with respect to the option exercise price which were approved by Travelzoo’s Board of Directors.

As of June 30, 2024, all options granted under these Option Agreements have been exercised or forfeited.

On May 29, 2020, pursu ant to an executed Option Agreement, the shareholders of the Company approved the grant of stock options to purchase 800,000 shares of common stock to Mr.

10 unchanged sentences

In 2023 , 50,000 options were exercised and 16,619 shares of common stock were issued as the result of the cashless exercises which were approved by Travelzoo’s Board of Directors.

As of March 31, 2024, 25,000 options were vested and outstanding.

Total stock-based compensation related to this option grant of $ 25,000 was recorded in general and administrative expenses for each of the three months ended March 31, 2024 and 2023, respectively.

S tock-based compensation related to this grant was fully expensed during the three months ended March 31, 2024.

As of June 30, 2024, 25,000 options were vested and outstanding.

S tock-based compensation related to this grant was fully expensed as of March 31, 2023.

Total stock-based compensation related to this option grant of $ 25,000 was recorded in general and administrative expenses for the six months ended June 30, 2024.

Total stock-based compensation related to this option grant of $ 25,000 and $ 50,000 was recorded in general and administrative expenses for the three and six months ended June 30, 2023, respectively.

On June 1, 2021, pursuant t o an executed Option Agreement, the shareholders of the Company approved the grant of stock options to purchase 50,000 shares of common stock to one employee, with an exercise price of $ 9.44 , with annual vesting starting January 1, 2022 and ending on January 1, 2025.

The options expire in January 2026.

As of March 31, 2024, 50,000 options were outstanding and 37,500 of these options were vested.

Total stock-based compensation related to this option grant of $ 36,000 was recorded in general and administrative expenses for each of the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was approximately $ 107,000 of unrecognized stock-based compensation expense relating to these options.

As of June 30, 2024, 50,000 options were outstanding and 37,500 of these options were vested.

Total stock-based compensation related to this option grant of $ 36,000 was recorded in general and administrative expenses for each of the three months ended June 30, 2024 and 2023, respectively.

Total stock-based compensation related to this option grant of $ 72,000 was recorded in general and administrative expenses for each of the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, there was approximately $ 72,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 0.5 years.

2 unchanged sentences

This grant was approved at the 2022 Annual Meeting of the shareholders.

As of March 31, 2024, 600,000 options were vested and outstanding.

During the three months ended March 31, 2023, $ 216,000 was recorded in general and administrative expenses.

As of June 30, 2024, 600,000 options were vested and outstanding.

During the three and six months ended June 30, 2023, $ 216,000 and $ 433,000 , respectively, was recorded in general and administrative expenses.

S tock-based compensation related to this grant was fully expensed in 2023.

In June 2022, the Company granted an employee options to purchase 100,000 shares of common stock with an exercise price of $ 6.78 and quarterly vesting beginning on September 30, 2022 and ending on June 30, 2025 with vesting based on both time-based service condition and also performance conditions.

In June 2022, the Company granted an employee options to purchase 100,000 shares of common stock with an exercise price of $ 6.78 and quarterly vesting beginning on September 30, 2022 and ending on June 30, 2025 with vesting based on both a time-based service condition and performance conditions.

However, if the performance targets are not met as of the first date on which the time condition is met, the time condition may be extended by one quarter up to three times.

1 unchanged sentence

The Company did not recognize stock-based compensation expense for this grant as the performance targets were not achieved and thus no shares were vested in 2022.

As of March 31, 2024, 100,000 options were outstanding and 33,333 of these options were vested.

Total stock-based compensation related to this option grant of $ 0 and $ 30,000 was recorded in sales and marketing expenses for the three months ended March 31, 2024 and 2023, respectively As of March 31, 2024, there was approximately $ 239,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 1.3 years.

As of June 30, 2024, 100,000 options were outstanding and 33,333 of these options were vested.

The Company did not record stock-based compensation related to this option grant during the six months ended June 30, 2024 and thus no shares vested in the six months ended June 30, 2024.

Total stock-based compensation related to this option grant of $ 30,000 and $ 60,000 was recorded in sales and marketing expenses for the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, there was approximately $ 239,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 1.0 year.

In March 2023, the Company granted its General Counsel and Head of Global Functions, Christina Sindoni Ciocca, options to purchase 200,000 shares of common stock of the Company, with an exercise price of $ 4.96 and vesting 12.5 % every six months over four years beginning on June 30, 2023 and ending on December 31, 2026.

1 unchanged sentence

The options expire in March 2025.

As of March 31, 2024, 200,000 options were outstanding and 50,000 of these options were vested.

Total stock-based compensation related to this option grant of $ 35,000 and $ 17,000 was recorded in general and administrative expenses for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was approximately $ 382,000 of unrecognized stock-based compensation expense relating to these options.

As of June 30, 2024, 200,000 options were outstanding and 75,000 of these options were vested.

Total stock-based compensation related to this option grant of $ 35,000 and $ 52,000 was recorded in general and administrative expenses for the three months ended June 30, 2024 and 2023, respectively.

Total stock-based compensation related to this option grant of $ 70,000 was recorded in general and administrative expenses for each of the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, there was approximately $ 348,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 2.5 years.

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The options expire in March 2029.

As of June 30, 2024, 600,000 options were outstanding and 150,000 of these options were vested.

Total stock-based compensation related to this option grant of $ 609,000 was recorded in general and administrative expenses for the three and six months ended June 30, 2024.

As of June 30, 2024, there was approximately $ 1.8 million of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 1.5 years .

In June 2024, the Company granted 100,000 stock options as inducement awards to an employee , with an exercise price of $ 7.87 , with annual vesting starting June 12, 2024 and ending on June 12, 2028.

The options expire in June 2029.

As of June 30, 2024, 100,000 options were outstanding and none of these options was vested.

Total stock-based compensation related to this option grant of $ 8,000 was recorded in general and administrative expenses for the three and six months ended June 30, 2024.

As of June 30, 2024, there was approximately $ 394,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 4.0 years .

Stock Repurchase Program

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During the three months ended March 31, 2024, the Company repurchased 400,000 shares of common stock for an aggregate purchase price of $ 3.9 million, excluding excise tax due under the Inflation Reduction Act of 2022, with such shares retired and recorded as a reduction of additional paid-in capital until extinguished with the remaining amount reflected as a reduction of retained earnings.

On April 29, 2024, Travelzoo announced that its board of directors has authorized the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock.

During the three months ended June 30, 2024, the Company repurchased 600,000 shares of common stock for an aggregate purchase price of $ 5.0 million, excluding excise tax due under the Inflation Reduction Act of 2022, with such shares retired and recorded as a reduction of additional paid-in capital until extinguished with the remaining amount reflected as a reduction of retained earnings.

As of June 30, 2024, there were 400,000 shares remaining to be repurchased under this program.

On June 15, 2024, the Company entered into a Stock Repurchase Agreement with Mr.

Holger Bartel to privately repurchase an aggregate of 200,000 shares of the Company’s common stock for an aggregate purchase price of $ 1.5 million, excluding excise tax due under the Inflation Reduction Act of 2022, with such shares retired and recorded as a reduction of additional paid-in capital until extinguished with the remaining amount reflected as a reduction of retained earnings.

This transaction was approved by the Compensation Committee of the Board of Directors.

Related Party Transactions for further information.

Segment Reporting and Significant Customer Information

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The following is a summary of operating results by business segment (in thousands):

Three Months Ended March 31, 2024 Travelzoo North

Three Months Ended June 30, 2024 Travelzoo North

America Travelzoo Europe Jack’s Flight Club New Initiatives Consolidated

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Operating profit (loss) $ 3,717 $ 512 $ ( 34 ) $ ( 184 ) $ 4,011

Three Months Ended March 31, 2023 Travelzoo North

Three Months Ended June 30, 2023 Travelzoo North

America Travelzoo Europe Jack’s Flight Club New Initiatives Consolidated

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Operating profit (loss) $ 3,753 $ ( 239 ) $ 97 $ ( 338 ) $ 3,273

Six Months Ended June 30, 2024 Travelzoo North

America Travelzoo Europe Jack’s Flight Club New Initiatives Consolidated

Revenues from unaffiliated customers $ 28,288 $ 12,584 $ 2,199 $ 55 $ 43,126

Intersegment revenues 74 29 ( 103 ) — —

Total net revenues 28,362 12,613 2,096 55 43,126

Operating profit (loss) $ 8,155 $ 1,894 $ ( 133 ) $ ( 314 ) $ 9,602

Six Months Ended June 30, 2023 Travelzoo North

America Travelzoo Europe Jack’s Flight Club New Initiatives Consolidated

Revenues from unaffiliated customers $ 28,209 $ 12,540 $ 1,959 $ 21 $ 42,729

Intersegment revenues 682 ( 766 ) 84 — —

Total net revenues 28,891 11,774 2,043 21 42,729

Operating profit (loss) $ 8,269 $ 218 $ 52 $ ( 555 ) $ 7,984

Property and equipment are attributed to the geographic region in which the assets are located.

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The following is a summary of assets by business segment (in thousands):

As of March 31, 2024 Travelzoo North

As of June 30, 2024 Travelzoo North

America Travelzoo Europe Jack’s Flight Club New Initiatives Elimination Consolidated

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Total assets excluding discontinued operations $ 96,865 $ 22,655 $ 19,472 $ 3,570 $ ( 87,181 ) $ 55,381

For the three months ended March 31, 2024 and 2023, the Company did not have any customers that accounted for 10% or more of revenue.

As of March 31, 2024 and December 31, 2023, the Company did not have any customers that accounted for 10% or more of accounts receivable.

For the three and six months ended June 30, 2024 and 2023, the Company did not have any customers that accounted for 10% or more of revenue.

As of June 30, 2024 and December 31, 2023, the Company did not have any customers that accounted for 10% or more of accounts receivable.

The following table sets forth the breakdown of revenues (in thousands) by category:

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Other includes licensing fees from license agreements and the existing retail business acquired by the Company in the MTE transaction.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Advertising $ 19,957 $ 20,020 $ 40,807 $ 40,665

Membership Fees 1,161 1,095 2,265 2,043

Other 23 13 54 21

Total revenues $ 21,141 $ 21,128 $ 43,126 $ 42,729

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The following table sets forth revenue for countries that exceed 10% of total revenue (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

United States $ 12,805 $ 12,749 $ 25,576 $ 26,222

4 unchanged sentences

The following table sets forth property and equipment by geographic area (in thousands):

March 31, December 31,

June 30, December 31,

United States $ 105 $ 115

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All of our leases qualify as operating leases.

The following table summarizes the components of lease expense for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

The following table summarizes the components of lease expense for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Operating lease cost $ 529 $ 646 $ 1,061 $ 1,320

3 unchanged sentences

Total lease cost $ 759 $ 742 $ 1,548 $ 1,496

Cash payments against the operating lease liabilities total ed $ 857,000 and $ 860,000 for the three months ended March 31, 2024 and 2023, respectively.

ROU assets obtained in exchange for lease obligations was $ 235,000 for the three months ended March 31, 2024.

There wa s no ROU asset obtained in exchange for lease obligations for three months ended March 31, 2023.

Cash payments against the operating lease liabilities total ed $ 1.7 million for each of the six months ended June 30, 2024 and 2023, respectively.

ROU assets obtained in exchange for lease obligations was $ 646,000 for the six months ended June 30, 2024.

There wa s no ROU asset obtained in exchange for lease obligations for six months ended June 30, 2023.

The following table s ummarizes the presentation in our condensed consolidated balance sheets of our operating leases (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Operating lease right-of-use assets $ 5,873 $ 6,015

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Years ending December 31,

2024 (excluding the three months ended March 31, 2024) $ 2,044

2024 (excluding the six months ended June 30, 2024) $ 1,311

Thereafter 1,679

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The Company’s consolidated financial statements include Jack’s Flight Club where the Company has operating control but owns 60 % of the equity interest.

The non-controlling interest for the three months ended March 31, 2024 and 2023 was as follows (in thousands):

The non-controlling interest for the three and six months ended June 30, 2024 and 2023 was as follows (in thousands):

Non-controlling interest—December 31, 2022 $ 4,595

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Non-controlling interest—March 31, 2024 4,686

Net income attributable to non-controlling interest ( 7 )

Non-controlling interest—June 30, 2024 $ 4,679

Related Party Transactions

7 unchanged sentences

Donoghue and Mark Rubenstein, against Ralph Bartel, the Ralph Bartel 2005 Trust and Azzurro Capital Inc.

Subsequent Event

On April 29, 2024, Travelzoo announced that its board of directors has authorized the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock.

Purchases may be made, from time to time, in the open market and will be funded from available cash.

The number of shares to be purchased and the timing of purchases will be based on the level of Travelzoo’s cash balances, general business and market conditions, and other factors, including alternative investment opportunities.

Stock Repurchase Agreement

Travelzoo, from time to time, engages in share repurchases, and on June 15, 2024, the Company entered into a Stock Repurchase Agreement (the “SRA”) with Holger Bartel, the Company's Global Chief Executive Officer, to repurchase an aggregate of 200,000 shares of the Company’s common stock at a price of $ 7.66 per share.

Travelzoo's compensation committee negotiated the purchase price with Holger Bartel after receiving advice from an independent financial adviser.

The aggregate purchase price of $ 1.5 million was paid during the three months ended June 30, 2024, following the execution of the SRA.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements