Travelzoo (NASDAQ:TZOO) Q1 2024 Earnings Conference Call April 24, 2024 11:00 AM ET

Company Participants

Lijun Qi - Principal Accounting Officer
Holger Bartel - Global Chief Executive Officer
Christina Ciocca - General Counsel & Head of Global Functions

Conference Call Participants

Michael Kupinski - Noble Capital Markets
James Goss - Barrington Research
Steve Silver - Argus Research
Ed Woo - Ascendiant Capital

Operator

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Travelzoo First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

I would now like to turn the conference over to Lijun Qi, Principal Accounting Officer. You may begin your conference.

Lijun Qi

Thank you, operator, and welcome to those of you joining us today.

Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our Investor Relations site at travelzoo.com/ir.

Let's begin with Slide #4. Travelzoo's revenue, operating profit and member count all increased year-over-year. Our consolidated Q1 revenue was $22.0 million, up 2% from $21.6 million in the prior year. In constant currency, revenue was $21.8 million, an increase of 1% year-over-year. Operating income, which weigh as management core operating profit, increased 19% year-over-year. Q1 operating profit was $5.6 million or 25% of revenue, up from $4.7 million in the prior year. As of March 31, 2024, we had 31.0 million unduplicated members, compared to 30.5 million as of March 31, 2023.

Slide 5 shows that revenue growth in our Europe segment more than offset a slight decline in North America.

On Slide 6, we break down our categories of revenue: advertising, membership fees and other. Advertising revenue increased 1% year-over-year to $20.9 million from the prior-year period. Revenue from membership fees increased 16% year-over-year to $1.1 million from the prior-year period. On a consolidated level, we expect revenue from membership fees to grow over time. During 2024, membership fees have been made for legacy Travelzoo members.

Slide 7 shows an example of membership fee revenue recognition. Revenue from membership fees is recognized ratably over the period of the subscription. Member acquisition costs, on the other hand, are recognized in full at the time of the expense.