10q10k10q10k.net

What changed in TRAVELZOO's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of TRAVELZOO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+390 added−459 removedSource: 10-K (2024-03-22) vs 10-K (2023-03-31)

Top changes in TRAVELZOO's 2023 10-K

390 paragraphs added · 459 removed · 287 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

53 edited+40 added−36 removed3 unchanged
Biggest changeWe believe that newspaper, TV and radio advertising, with respect to advertising excess inventory, suffers from a number of limitations which do not apply to digital advertising and media: • typically, ads must be submitted 2 to 5 days prior to the publication or airing date, which makes it difficult to advertise last-minute inventory; • once an ad is published, it cannot be updated or deleted when an offer is sold out; • once an ad is published, the company cannot change a price or offer; • in many markets, the small number of newspapers, television companies, radio stations and other print media reduces competition, resulting in high rates for traditional advertising; • offline advertising does not allow for detailed performance tracking; • creative content can be very expensive to develop; and • delivery of traditional media can be slow, with limited touchpoints to a consumer.
Biggest changeIn contrast, we believe that traditional media formats (print, TV and radio advertising) suffer from a number of limitations with respect to advertising excess inventory, which do not apply to digital advertising and media: • Advance commitments and scheduling are typically required prior to publication or airing dates, making it difficult to advertise last-minute inventory; • Ads often cannot be updated (e.g., change price or offer) once published, or deleted when an offer is sold out; • A small number of traditional media outlets can reduce competition in many markets, resulting in relatively high rates for traditional advertising; • Detailed performance tracking is often not available for offline advertising in a manner that enables optimization; • Creative content can be expensive to develop; and • Delivery of traditional media can be slow , with limited touchpoints to a consumer.
Internet Access to Other Information We make available free of charge, on or through our Investor Relations website (ir.travelzoo.com), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Access to Other Information We make available free of charge, on or through our Investor Relations website (ir.travelzoo.com), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We believe that travel, entertainment and local businesses often face the challenge of being able to effectively and quickly market and sell their excess inventory (i.e. airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled) and therefore need a fast, flexible, and cost-effective solution for marketing excess inventory.
We believe that travel, entertainment and local businesses often face the challenge of being able to quickly and effectively market and sell their excess inventory (i.e., airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled) and, therefore, need a fast, flexible, and cost-effective solution for marketing 6 excess inventory.
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.
The closing price of Travelzoo’s common stock on December 30, 2022 was $4.45 per share, resulting in an aggregate fair value of the Shares of $15.2 million.
Travelzoo's production servers are hosted by Microsoft Azure, a cloud base computing service operated by Microsoft. Microsoft Azure's data center facilities and services include robust high availability, reliability and scalability features. We believe our arrangements with Microsoft Azure will allow us to grow without being limited by our own physical and technological capacity.
Travelzoo's production servers are hosted by Microsoft Azure, a cloud-based computing service operated by Microsoft. Microsoft Azure's data center facilities and services include robust high availability, reliability and scalability features. We believe our arrangements with Microsoft Azure will allow us to grow without being limited by our own physical and technological capacity.
Because of the design of our websites, our users are not required to download or upload large files from or to our websites, which allows us to continue increasing the number of our visitors and page views without adversely affecting our performance or requiring us to make significant additional capital expenditures.
Because of the design of our websites, our users are not required to download or upload large files from or to our websites, which allows us to continue increasing the number of our visitors and pageviews without adversely affecting our performance or requiring us to make significant additional capital expenditures.
Newsletter includes paid and unpaid subscribers 1–12 per week depending on membership level and region 3 million emails a week to 1.9 million subscribers N/A Breaking news offers and travel advice * For the Travelzoo website, reach information is based on data from Google Analytics.
Newsletter includes paid and unpaid subscribers 1–12 per week depending on membership level and region 3 million emails per week to 2.4 million subscribers N/A Breaking news flight offers and travel advice * For the Travelzoo website, reach information is based on data from Google Analytics.
Item 1. Business Overview Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) 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. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences.
Item 1. Business Overview Travelzoo® (including its subsidiaries and affiliates, the “Company” or “we”), 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. We have our finger on the pulse of outstanding travel, entertainment and local experiences.
Ability to change user settings Jack's Flight Club mobile application App available in the U.S, UK, Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date cheap airfares to paying members 1–12 per week depending on membership level and region 155,000 sessions a month.
Ability to change user settings Jack's Flight Club mobile application App available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 1–12 per week depending on membership level and region 155,000 sessions per month.
Although traditional media outlets such as newspapers, television and radio continue to be another medium for travel, entertainment and local businesses to advertise offers, the percentage spent on advertising in these traditional media outlets has been decreasing.
Although traditional media outlets such as print (magazines and newspapers), television and radio continue to be another medium for travel, entertainment and local providers to advertise offers, the percentage spent on advertising in these traditional media outlets has been decreasing.
We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers. Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications. The Travelzoo website is visited by 5.4 million to 6.6 million unique visitors each month.
We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers. Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications. The Travelzoo website is visit ed by over 6 million unique visitors monthly.
Information included on our website does not constitute part of this report. 12
Information included on our website does not constitute part of this report. 11
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. Jack’s Flight Club revenue is generated from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually. We recognize the revenue monthly pro rata over the subscription 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. 4 Jack’s Flight Club revenue is generated from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually.
Our acquisition of MTE, a business focused on scouting creators of Metaverse experiences, will allow us to build a collection of high quality, exclusive experiences for members. 8 Our Products and Services The following table presents an overview of our products and services: Product Content Publication Schedule Reach/Usage* Advertiser Benefits Consumer Benefits Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia and Japan, listing thousands of outstanding offers from more than 5,000 travel, entertainment and local businesses 24/7 5.4 million to 6.6 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to offers, ability to search and browse by destination or keyword Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding offers Weekly 26.6 million members Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked offers chosen by our internal deal experts from among thousands Standalone Travelzoo emails Regionally targeted email newsletter service, usually with a single newsworthy travel and entertainment offer, which can include Local Deals and Getaways offers As needed 25.7 million members Regional targeting, 100% share of voice for advertiser, flexible publication schedule Breaking news offers delivered just-in-time Travelzoo Network A network of third-party websites that list outstanding offers published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel offers that have been handpicked and professionally reviewed by our internal experts Travelzoo mobile applications iPhone and Android applications that allow users to discover the best travel, entertainment and local offers On-demand 7.4 million downloads Allows travel, entertainment and local offers advertisers to reach our audience that is on the go 24/7 access to travel, entertainment and local offers for consumers that are on the go Jack's Flight Club website Website available in the U.S, UK, Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date cheap airfares to paying members 24/7 316,000 visitors per month N/A 24/7 access to alerts, travel advice and guides.
We believe developing a service for Metaverse travel experiences will enable us to be a first-mover in this fast-growing space. 7 Our Products and Services The following table presents an overview of our products and services: Product Content Publication Schedule Reach/Usage* Advertiser Benefits Consumer Benefits Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia and Japan, listing thousands of outstanding offers from more than 5,000 travel, entertainment and local businesses 24/7 over 6 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to offers, ability to search and browse by destination or keyword Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding offers Weekly 27.0 million members Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked offers chosen by our internal deal experts from among thousands Standalone emails Regionally targeted email newsletter service, usually with a single newsworthy travel and entertainment offer, which can include Local Deals and Getaways offers As needed 27.0 million members Regional targeting, 100% share of voice for advertiser, flexible publication schedule Daily travel and local offers and ideas Travelzoo Network A network of third-party websites that list outstanding offers published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel offers that have been handpicked and professionally reviewed by our internal experts Travelzoo mobile applications iOS and Android applications that allow users to discover the best travel, entertainment and local offers On-demand 7.5 million downloads Allows travel, entertainment and local offers advertisers to reach our audience that is on the go 24/7 access to travel, entertainment and local offers for consumers that are on the go Jack's Flight Club website Website available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 24/7 316,000 visitors per month N/A 24/7 access to alerts, travel advice and guides.
The Jack’s Flight Club flight alert newsletters are not sponsored by third parties and Jack’s Flight Club does not receive any commissions or payments for any content within the flight alert newsletters.
To maintain their independence, flight alert newsletters are not sponsored by third parties and Jack’s Flight Club does not receive any commissions or payments for content published within the newsletters.
The solution must be fast, because such travel-related services are a quickly expiring commodity. The solution must be flexible, because the demand for excess inventory is difficult to forecast. The marketing must be cost-effective, because excess inventory is often sold at highly discounted prices, which lowers margins.
The solution must be fast because such travel-related services (e.g., flash sales, mistake fares or rates, etc.) are a quickly expiring commodity. The solution must be flexible because the demand for excess inventory is difficult to forecast. The marketing must be cost-effective because excess inventory is often sold at highly discounted prices, which lowers margins.
With a majority of consumers transacting on their computers, tablets and phones on a daily basis, we believe digital advertising is the best way for businesses to quickly provide relevant information and enter into a consumer’s decision set.
With a majority of consumers researching, shopping and transacting on their mobile devices, tablets and computers on a daily basis, we believe digital advertising is the most effective way for businesses to quickly provide relevant information and enter into a consumer’s decision set. • Other Benefits of Digital Advertising.
In Europe, the unduplicated number of Travelzoo members was 9.0 million as of December 31, 2022, up 8% from December 31, 2021. Jack’s Flight Club had 1.9 million subscribers as of December 31, 2022, up 8% from December 31, 2021.
In Europe, Travelzoo had 9.2 million unduplicated members as of December 31, 2023, up from 9.0 million as of December 31, 2022. Jack’s Flight Club had 2.4 million subscribers as of December 31, 2023, up from 1.9 million as of December 31, 2022.
Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro is the Company’s largest shareholder, and as of December 31, 2022 together with Ralph Bartel, in his individual capacity (together, the “Azzurro Parties"), holds approximately 50.3% of the Company’s outstanding shares.
Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro was the Company’s largest shareholder at the time of the MTE acquisition and, as of December 31, 2022, Azzurro and Ralph Bartel, in his individual capacity, owned approximately 50.3% the Company's outstanding shares.
DH Travel Services Jetline Travel Entertainment Benefits Group KLM Royal Dutch Airlines Exoticca Shutterfly Fairmont Mayakoba Silversea Cruises Fiji Airways Stunning Tours Gate 1 Travel Superchina Holidays Globus Family of Brands Tourism Ireland Holland America Line Travel Discounters Icelandair (US) Vacation Express USA Corp Imagine Cruising Wingbuddy.com As discussed in Note 12 to the accompanying consolidated financial statements, we did not have any advertisers that accounted for 10% or more of our total revenues during the years ended December 31, 2022 and 2021.
DH Travel Services Jetline Travel Entertainment Benefits Group KLM Royal Dutch Airlines Exoticca Myrtle Beach Area Conventions & Visitors Bureau Fairmont Mayakoba Stunning Tours Fiji Airways Swan Hellenic Gate 1 Travel Tourism Ireland Globus Family of Brands Travel Discounters Holland America Line TraveloDeals Icelandair (US) Vacation Express USA Corp Imagine Cruising Wingbuddy.com As discussed in Note 12 – Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report and incorporated herein by refer ence, we did not have any advertisers that accounted for 10% or more of our total revenues during the years ended December 31, 2023 and 2022.
We believe that several factors are causing and will continue to cause travel, entertainment and local businesses to focus a majority of their spending on the digital advertising of offers: The Internet Is Consumers' Preferred Information Source . Market research shows that the Internet is consumers' preferred information source for travel. Benefits of Internet Advertising vs.
We believe that several factors are motivating and will continue to motivate travel, entertainment and local providers to focus a majority of their spending on the digital advertising of offers: • Digital Media Is Consumers' Preferred Information Source . Market research shows that digital media formats are consumers' preferred information source for travel. • Broad and Timely Audience Reach.
Additionally, there were significant levels of cancellations for the Company's hotel partners and travel package partners and refund requests for our vouchers. As airlines were unable to complete or cancelled flights and routes, and people were significantly restricted from traveling, the need for flight alert services was greatly reduced, and consequently the premium membership of Jack’s Flight Club declined.
As airlines were unable to complete or cancelled flights and routes, and people were significantly restricted from traveling, the need for flight alert services was greatly reduced, and consequently premium membership in Jack’s Flight Club declined.
This includes the acquisition of Jack's Flight Club and the creation of Travelzoo META. Advertisers As of December 31, 2022, our advertiser base included more than 5,000 travel, entertainment and local businesses, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies.
Advertisers As of December 31, 2023, our advertiser base included more than 5,000 travel, entertainment and local providers, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Some of our advertisers are: Alaska Airlines Indus Travels Inc.
For Top 20, standalone Travelzoo e mails, Local Deals and Getaway, Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2022.
For Top 20, Standalone e mails ( which can include Local Deals and Getaways), Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2023. For Jack’s Flight Club , reach/usage information is based on data from Google Analytics and internal Jack’s Flight Club statistics as of December 31, 2023.
(“MTE”), which transfer was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date. 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.
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.
The flight alert newsletters provide consumers with the best airfares for their chosen departure airports, found by an expert team of flight finders utilizing technology to search thousands of data points each day. Jack’s Flight Club will only send flight alerts for cheap airfares that meet certain quality standards.
Jack’s Flight Club’s flight alert newsletters provide members with the best airfares for their chosen departure airports, as sourced by our expert team of flight finders, utilizing technology to search thousands of data points each day and meeting our rigorous quality standards.
The Purchase Price was paid as follows: (a) $1.0 million in cash paid on the Closing Date; (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%; and (c) the transfer to the Company of all outstanding capital stock of Metaverse Travel Experiences, Inc.
The consideration for the Shares consisted of the following: (a) $1.0 million in cash paid on the Closing Date; (b) $4.8 million paid in the form of a promissory note, carrying a 12% interest rate per annum, issued on the Closing Date and payable by June 30, 2023; and (c) the transfer to the Company of all outstanding capital stock of MTE, which was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date.
As the Company and many of our advertisers are part of the global travel and hospitality industries, the measures implemented to contain COVID-19 had a significant negative effect on our business. Many of the Company's advertising partners paused, canceled, and/or stopped advertising.
The measures implemented to contain COVID-19 correspondingly had a significant negative effect on our business, as many of the Company’s advertising partners paused, canceled, and/or stopped advertising during the global pandemic. Additionally, there were significant levels of cancellations for the Company's hotel partners and travel package partners and refund requests for our vouchers.
We believe the core Travelzoo business is well positioned to continue to assist travel partners with advertising their excess inventory, in a way that traditional newspaper, TV and radio advertising cannot, particularly as the demand for travel readjusts to normal levels post-pandemic. 7 Subscription Services and the Metaverse Since its inception, Travelzoo has provided free subscription services to its members.
We believe Travelzoo is well-positioned to continue assisting travel partners with advertising their excess inventory, in ways that traditional print, TV and radio advertising cannot, particularly as the demand for travel returns to pre-pandemic levels. Subscription Services and the Metaverse Historically, Travelzoo has provided free membership for consumers, while generating revenue from advertising fees and commissions.
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. Listing fees are based on audience reach, placement, number of listings, number of impressions, number of clicks, and actual sales.
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) commissions generated from operation of our hotel booking platform and the sale of Getaways vouchers.
Print, TV and Radio Advertising. Internet advertising provides advertisers advantages compared to traditional advertising. These advantages include real-time listings, real-time updates, and performance tracking. The Internet also allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner. Suppliers Selling Directly.
Other benefits to advertisers of digital compared to traditional media include more precise audience targeting, real-time listings, real-time updates and performance tracking. Digital media also allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner.
The Company also has licensing arrangements with licensees in (a) Australia, New Zealand, and Southeast Asia 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.
We also license Travelzoo products, services and intellectual property to licensees in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to quarterly royalty payments based on a percentage of net revenue. The Company recognized $71,000 and $25,000 in royalties in 2023 and 2022, respectively.
Financial information with respect t o our business segments and certain financial information about geographic areas appea rs in Note 12 to th e accompanying consolidated financial statements. Our principal business office is located at 590 Madison Avenue, 35th Floor, New York, New York 10022.
Financial information with respect to our business segments and 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 and is incorporated herein by refer ence. Our principal business office is located at 590 Madison Avenue, 35th Floor, New York, New York 10022.
It also gives the consumer piece of mind that the offers provided by Travelzoo are best-in-market. • Current Information. Compared to newspaper, TV or radio advertisements, we provide consumers more current information, since our technology enables travel, entertainment and local businesses to update their listings on a real-time basis. • Reliable Information.
Compared to print, TV or radio advertisements, we provide consumers more current information, since our technology enables suppliers to update their listings on a real-time basis. • Reliable Information. We operate a Test Booking Center to check the availability of travel, entertainment and local deals before publishing offers to our members. • Dedicated Member Service.
Airlines began adding flights and routes back, increasing inventory, and with the returning demand for travel, the need for flight alert services returned. Consumer demand in many ways outpaced the readiness of airlines, hotels and restaurants, who had drastically cut staff to save costs in response to the pandemic.
With the returning demand for travel, the need for flight alert services also resumed. Consumer demand in many ways outpaced the readiness of airlines, hotels and restaurants, which had reduced staff to save costs in response to the pandemic. This, in some cases, resulted in an under-supply, causing airline and hotel room prices to increase.
In 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its consolidated financial statements for all periods presented. On January 13, 2020, Travelzoo purchased 60% of the outstanding shares of JFC Travel Group Co. ( “ Jack’s Flight Club ” ).
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 operations comprised 5% of revenues. In 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its consolidated financial statements for all periods presented.
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. 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 ® .
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 ® .
Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals from Jack’s Flight Club via email or via Android or Apple mobile applications. 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 operations were 5% of revenues.
Travelzoo North America consists of the Company’s operations in the U.S. and Canada. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK. Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, Travelzoo META and MTE.
The Travelzoo website and our Travelzoo Top 20 email newsletters aggregate information on current offers specially negotiated by our Travelzoo experts for Travelzoo members from more than 5,000 travel, entertainment and local businesses. This saves the consumer time when searching for travel, entertainment and local deals, sales and specials.
Through our multiple digital products and services, Travelzoo alerts our members to current offers carefully selected by our deal experts from more than 5,000 travel, entertainment and local providers. This saves consumers time when searching for deals, sales and specials. • Best-in-Market Offers.
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. For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon the sale of the vouchers.
For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon sale, net of an allowance for future refunds.
Employees As of December 31, 2022, we had 237 employees. None of our employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.
In addition, the application and interpretation of these laws, rules, and regulations are often uncertain, particularly in the rapidly evolving industry in which we operate. Employees As of December 31, 2023, we had 223 employees. Non e of our employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.
In connection with the development of Travelzoo META, the Company acquired MTE, a wholly owned subsidiary of Azzurro Capital Inc. ("Azzurro"), and also completed a private placement of newly issued shares. Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.
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. In connection with the acquisition of MTE, formerly a wholly-owned subsidiary of Azzurro Capital Inc. ("Azzurro"), the Company completed a private placement of newly issued shares with Azzurro.
We believe that we build brand awareness by product excellence that is promoted by word-of-mouth. We utilize sponsorships at industry conferences and public relations to promote our brands. 11 Technology We have designed our technology to serve a large volume of Web traffic and send a large volume of emails in an efficient and scalable manner.
We also source members organically, by word-of-mouth and through our reputation for quality and value. 10 Technology We have designed our technology infrastructure to send a large volume of emails, serve a large volume of web traffic and track activity in an efficient and scalable manner.
In 2021, we also started to see the way that the pandemic impacted the economies of various countries, resulting in many cases in significant inflation and decreases in discretionary spending by consumers While some of these trends continued into 2022, as airlines, hotels and restaurants returned to normal operations, we have seen an increase in supply, resulting in many of our partners working with us again to provide exclusive offers for our members.
In 2022, the industry continued its rebound, growing by 22% to $7.7 trillion, according to WTTC. As supply and capacity resumed for airlines and hotels, and restaurants returned to normal operations, we experienced increased supply, with many of our partners working with us again to provide exclusive offers for our members.
We provide travel and entertainment companies with real-time tracking of the performance of their advertising campaigns. Our solution enables travel and entertainment companies to optimize their campaigns by removing or updating unsuccessful listings and further promote successful listings. • Access to Millions of Consumers and Access to Local Consumers for Local Businesses.
Our services enable clients to advertise special offers on a real-time basis and update offers as their supply and demand conditions change. • Real-Time Performance Reports. We provide clients with real-time tracking of the performance of their advertising campaigns, helping them to optimize their spend, by removing or updating unsuccessful listings and further promoting successful listings. • Global Reach.
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. As of December 31, 2022, we had 30.4 million members worldwide. In North America, the unduplicated number of Travelzoo members was 16.3 million as of December 31, 2022, down 4% from December 31, 2021.
As of December 31, 2023, we had 31.1 million members worldwide, up from 30.4 million as of December 31, 2022. In North America, Travelzoo had 16.2 million unduplicated members as of December 31, 2023, consistent with December 31, 2022.
However, in 2021, we saw many of the effects of the pandemic start to subside, as countries began to accept tourists, travel opened up again and travel demand in general started to return to pre-pandemic levels. Advertising clients who had previously paused or cancelled placements with us began to return and ramp up spending again.
In 2021, the effects of the pandemic started to subside and travel in general started to recover, with the industry growing by 24.7%, according to WTTC. Advertising clients who had previously paused or canceled placements with us began to resume their spending and airlines began adding flights and routes back, increasing inventory.
Additionally, a new and potentially large market in which we are starting to operate is that of the Metaverse and specifically, Metaverse travel experiences. According to a report published by ReportLinker in February 2022, the U.S. Metaverse market in 2021 was estimated at approximately $58.5 billion, which accounted for 41% of global market share.
In 2023 we launched Travelzoo META, a paid membership service, to extend the range of travel, entertainment and local experiences we offer to consumers to the Metaverse. According to Precedence Research, the U.S. Metaverse market in 2023 was estimated at approximately $34.2 billion of revenue, which accounted for 37% of global market share.
Benefits to Travel, Entertainment and Local Businesses Our advertisers benefit from accessing our large high-quality audience. Due to the nature of our content, we attract an older, wealthier demographic who have a strong interest in travel and leisure. With Jack's Flight Club, we have started to attract a slightly younger demographic.
Benefits to Travel, Entertainment and Local Businesses Through the quality of our offer content and longstanding trust established in our brand, we attract an active and engaged audience of enthusiasts who our advertisers benefit from accessing. Key features of our services for advertisers include: • Real-Time Offer Listings and Updates.
We reach an audience of millions of Internet users each month via the Travelzoo Network, a network of websites that syndicate our deal content, including CNN and The Chicago Tribune. We have over 4.0 million followers on Facebook and Twitter. Our mobile applications have been downloaded 7.4 million times.
We have over 4.5 million social media followers on Facebook, Instagram, and Twitter and, to date, our iOS and An droid mobile applications have been downloaded 7.5 million times.
Azzurro was the Company’s largest shareholder as of the time of this transaction and Azzurro and Ralph Bartel owned as of December 31, 2022 approximately 50.3% the Company's outstanding shares.
Holger Bartel, the Company's Global CEO, is Ralph Bartel's brother and separately holds 3.8% of the Company's outstanding shares as of December 31, 2023 .
With free subscription services to consumers, revenue is generated from advertising fees and commissions. Upon the acquisition of Jack’s Flight Club, we entered the market for paid subscription services and added an additional revenue stream to our business.
Upon the acquisition of 60% of Jack’s Flight Club in 2020, we entered the market for paid subscription services, adding another revenue stream to our business. Beginning in 2024, new Travelzoo members are charged an annual fee of $40 (or similar amount in their local currency), with the 2024 annual fee waived for existing members as of December 31, 2023.
The agreements with certain advertisers are in the form of multiple insertion orders and merchant agreements from groups of entities under common control. In 2022, Travelzoo North America operations were 67% of revenues, Travelzoo Europe operations were 28% of revenues and Jack’s Flight Club operations were 5% of revenues. See Note 12 to the accompanying consolidated financial statements.
Our agreements with certain advertisers are in the form of multiple insertion orders and merchant agreements from groups of entities under common control. Sales and Marketing As of December 31, 2023, our advertising salesforce and sales support staff consisted of 68 employees worldwide.
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. 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.
Added
More th an 5,000 travel and local providers use o ur advertising and marketing services, including Alaska Airlines, DH Travel Services, Entertainment Benefits Group, Exoticca, Fairmont Mayakoba, Fiji Airways, Gate 1 Travel, Globus Family of Brands, Holland America Line, Icelandair (US), Imagine Cruising, Indus Travels Inc., Jetline Travel, KLM Royal Dutch Airlines, Myrtle Beach Area Conventions & Visitors Bureau, Stunning Tours, Swan Hellenic, Tourism Ireland, TraveloDeals, Vacation Express USA Corp and Wingbuddy.com.
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. 4 Revenues from the Travelzoo brand and business are generated primarily from advertising fees from two categories of revenue: Travel and Local.
Added
We generate revenues from the Travelzoo brand and business primarily from advertising fees from two categories of revenue: Travel and Local.
Removed
The Company records royalties on a one-quarter lag basis and recognized $25,000 and $12,000 in royalties in 2022 and 2021, respectively. Under the licensing agreements, Travelzoo's existing members in the applicable territories will continue to be owned by the Company as the licensor.
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. We typically recognize advertising revenue upon delivery of emails or clicks, as tracked by our internal platform or third-party platforms, in the period of the applicable insertion orders.
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+.
Added
We recognize revenues monthly pro rata over the respective subscription period. 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.
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. 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.
Added
For any subscription revenue derived from paid memberships, we recognize revenue monthly pro rata over the subscription periods.
Removed
The Company has to submit a final declaration in connection with this grant by June 30, 2023. 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.
Added
Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company. 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.
Removed
The Company recorded $1.2 million and $494,000 gains in Other income, net in the first and third quarters of 2022.
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. On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC, to support Travelzoo META in sourcing prospective travel experiences .
Removed
In April 2020 and May 2020, the Company 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.
Added
In October 2023, the Company and Azzurro agreed to a payment plan for payment of the promissory note in five installments, ending in February 2024, with interest on the outstanding principal accruing at 16% per annum beginning on July 1, 2023. The Company has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives.
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 a gain and the remaining outstanding balance of the loan and interest of $111,000 was paid off in 2021. 5 Historically, the Company managed its business geographically and operated in three reportable segments including Asia Pacific, Europe and North America.
Added
As of December 31, 2023, there wer e 13,574,774 sh ares of common stock outstanding. Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro is the Company’s largest shareholder and, as of December 31, 2023, holds approximately 40.2% of the Company's outstanding shares.
Removed
Upon acquisition, the Company reviewed and evaluated Jack's Flight Club as a separate segment. The Company currently has three reportable operating segments: Travelzoo North America, Travelzoo Europe and Jack’s Flight Club. Travelzoo North America consists of the Company’s operations in Canada and the U.S. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK.
Added
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.” 5 Our Industry The global Travel & Tourism industry, at its peak in 2019, reached $10 trillion of value, representing 10.4% of global GDP, according to the World Travel & Tourism Council (WTTC).
Removed
As of December 31, 2022, there wer e 15,704,063 sh ares of common stock outstanding.
Added
The outbreak of the coronavirus (COVID-19) in 2020, however, had a material impact on the industry, including severe restrictions on and reductions in travel, dining and in-person activities, with the industry size declining by approximately one-half, according to WTTC.
Removed
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.” Our Industry The outbreak of coronavirus (COVID-19) in 2020 had a material impact on the global travel and hospitality industries, including severe restrictions on travel, dining and in-person activities (through border closures, quarantine and stay-at-home requirements, travel restrictions, limited operations of restaurants, spas, hotels, airlines and travel agencies, etc.), as well as on the level of economic activity around the globe.
Added
In 2023, the WTTC anticipates that, despite geo-political disruptions, the global Travel & Tourism industry continued its recovery, growing 23.3% over 2022 and achieving a value of $9.5 trillion, only five percent below the industry’s pre-pandemic peak.
Removed
This, in some cases, resulted in an under-supply, causing airline and hotel room prices to increase.
Added
The WTTC forecasts that the global value of travel & tourism will grow by over 50% in the coming decade, expanding the industry’s value, contribution to GDP and employment. Our mission, as the club for travel enthusiasts, is to provide our members with the highest quality information about the best travel, entertainment and local offers.
Removed
According to the World Trade & Tourism Council (WTTC), the global Travel & Tourism industry produ ced $5.8 trillion in value for the total global economy in 2021 c ompared to $4.7 trillion in 2020.

… 49 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

123 edited+22 added−29 removed113 unchanged
Biggest changeA party that is able to circumvent our security systems could steal proprietary information. A security breach at any third-party supplier could result in negative publicity and exposure. While we strive to use commercially acceptable means to protect personal data, no method of transmission over the Internet, or method of electronic storage, is 100% secure.
Biggest changeOutside parties may attempt to fraudulently induce disclosure of sensitive information in order to gain access to our secure networks or to take over customer accounts. A party that is able to circumvent our security systems could steal proprietary or other sensitive information. A security breach at any third-party supplier could result in negative publicity and exposure.
If revenues fall below our expectations in any quarter and we are unable to quickly reduce our operating expenses in response, our operating results would be lower than expected and our stock price may fall. Expansion of product offerings may result in additional costs that exceed revenue and may trigger additional stock volatility.
If revenues fall below our expectations in any quarter and we are unable to quickly reduce our operating expenses in response, our operating results would be lower than expected and our stock price may fall. Expansion of product offerings may result in additional costs that exceed revenue and may trigger additional stock price volatility.
We may have exposure to additional tax liabilities . As a global business, we are subject to income taxes as well as non-income based tax, in the U.S. and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities.
We may have exposure to additional tax liabilities . As a global business, we are subject to income taxes as well as non-income based taxes, in the U.S. and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities.
Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in member willingness to receive messages could adversely affect our revenue and business. Our business is highly dependent upon email and other messaging services.
Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or a decrease in member willingness to receive emails or messages could adversely affect our revenue and business. Our business is highly dependent upon email and other messaging services.
Some of states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between 1 and 5 years) and impose certain reporting and record keeping obligations.
Some states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws, which require companies to remit to the government the value of the unredeemed balance on the gift cards after a specified period of time (generally between 1 and 5 years) and impose certain reporting and record keeping obligations.
The Company already has in place applicable corporate governance processes and procedures necessary for a controlled company to ensure independence (e.g., board of directors with majority independent directors, committees comprised solely of independent directors, etc.). Holger Bartel, the Company’s Global Chief Executive Officer, is Ralph Bartel’s brother and holds approximately 3.3% of the Company’s outstanding shares.
The Company already has in place applicable corporate governance processes and procedures necessary for a controlled company to ensure independence (e.g., board of directors with majority independent directors, committees comprised solely of independent directors, etc.). Holger Bartel, the Company’s Global Chief Executive Officer, is Ralph Bartel’s brother and holds approximately 3.8% of the Company’s outstanding shares.
Although we believe that our tax estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals. Changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.
Although we believe that our tax estimates are reasonable, there is no assurance that the final determination of any tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals. Changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.
Additionally, we could also experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale and productivity and adverse effects on our ability to attract and retain highly skilled employees. Any of these consequences could adversely impact our business. We may not be able to continue developing awareness of our brand names.
Additionally, we could also experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale and productivity and adverse effects on our ability to attract and retain highly skilled employees. Any of these consequences could adversely impact our business. 18 We may not be able to continue developing awareness of our brand names.
While we are striving to improve functionality, usability and design in our products, the ongoing enhancements on 20 web and mobile and investment in packaging and other technology may not achieve the desired results we anticipate, and if unsuccessful, could result in a decline in revenues, an increase in costs, and a negative impact on our business.
While we are striving to improve functionality, usability and design in our products, the ongoing enhancements on web and mobile and investment in packaging and other technology may not achieve the desired results we anticipate, and if unsuccessful, could result in a decline in revenues, an increase in costs, and a negative impact on our business.
Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive regulates the business of electronic money institutions. Many of these laws contain provisions governing the use of gift cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees.
Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive 21 regulates the business of electronic money institutions. Many of these laws contain provisions governing the use of gift cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees.
In addition, the costs for third parties to sell vouchers would increase, which may restrict our ability to enlist third parties to issue vouchers. Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission.
In addition, the costs for third parties to sell vouchers would increase, which may restrict our ability to enlist third parties to issue vouchers. 23 Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission.
The SEC approved amendments in 2018 that raised the cap for status as a “smaller reporting company” . Travelzoo qualified as a smaller reporting company in 2020 meaning it is not subject to the SOX 404(b) requirement of having an auditor attestation report on internal control over financial reporting.
The SEC approved amendments in 2018 that raised the cap for status as a “smaller reporting company” . Travelzoo qualified as a smaller reporting company since 2020, meaning it is not subject to the SOX 404(b) requirement of having an auditor attestation report on internal control over financial reporting.
This could hinder our existing product offerings, cause delays in our development and introduction of new services and related products or enhancements of existing products until equivalent or replacement technology can be accessed, if available, or developed internally, if feasible. If we 21 experience these delays, our business could be materially adversely affected.
This could hinder our existing product offerings, cause delays in our development and introduction of new services and related products or enhancements of existing products until equivalent or replacement technology can be accessed, if available, or developed internally, if feasible. If we experience these delays, our business could be materially adversely affected.
Risks Related to Legal Uncertainty We may become subject to shareholder lawsuits over securities violations due to volatile stock price. Shareholder lawsuits for securities violations are often launched against companies whose stock price is volatile. Such lawsuits involving the Company would require management’s attention to defend, which may distract attention from operating the Company.
Risks Related to Legal Uncertainty We may become subject to shareholder lawsuits over alleged securities violations due to volatile stock price. Shareholder lawsuits for securities violations are often launched against companies whose stock price is volatile. Such lawsuits involving the Company would require management’s attention to defend, which may distract attention from operating the Company.
In addition, the number of members we report includes the total number of individuals that have completed registration through a specific date, less individuals who have unsubscribed. Those numbers of members may include individuals who do not receive our emails because our emails have been blocked or are otherwise undeliverable.
In addition, the number of members we report includes the total number of individuals that have completed registration through a specific date, less individuals who have fully unsubscribed. Those numbers of members may include individuals who do not receive our emails because our emails have been blocked or are otherwise undeliverable.
The fact that we distribute information via email may subject us to additional potential risks, such as liabilities or claims resulting from unsolicited email or spamming, security breaches, illegal or fraudulent use of email or 23 interruptions or delays in email or mobile service, etc..
The fact that we distribute information via email may subject us to additional potential risks, such as liabilities or claims resulting from unsolicited email or spamming, security breaches, illegal or fraudulent use of email or interruptions or delays in email or mobile service, etc.
In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall. 18 Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.
In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall. Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.
However, the Financial Crimes Enforcement Network previously issued final rules regarding the scope and requirements for non-bank parties involved in stored value or 24 prepaid access cards, including obligations on sellers or providers of “prepaid access”.
However, the Financial Crimes Enforcement Network previously issued final rules regarding the scope and requirements for non-bank parties involved in stored value or prepaid access cards, including obligations on sellers or providers of “prepaid access”.
Our stock price may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control. In the event that our operating results fall below expectations, the trading price of our common shares may decline significantly.
Our stock price 24 may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control. In the event that our operating results fall below expectations, the trading price of our common shares may decline significantly.
If we are unable to acquire new members who purchase our deals in numbers sufficient to grow our business, or if members cease to purchase our deals, the revenue we generate may decrease and our operating results will be adversely affected.
If we are unable to acquire new members who purchase our membership and deals in numbers sufficient to grow our business, or if members cease to purchase, the revenue we generate may decrease and our operating results will be adversely affected.
If our key management personnel are not able to work together effectively, our business could be materially adversely affected. Intense competition may adversely affect our ability to achieve or maintain market share and operate profitably.
If our key management personnel are not able to work together effectively, our business could be materially adversely affected. 19 Intense competition may adversely affect our ability to achieve or maintain market share and operate profitably.
Our reported financial results may be adversely affected by changes in United States generally accepted accounting principles, and we may incur significant costs to adjust our accounting systems and processes to comply.
Our financial results may be adversely affected by changes in United States generally accepted accounting principles, and we may incur significant costs to adjust our accounting systems and processes to comply.
Moreover, fluctuations in currency exchange rates can impact our revenues. Foreign 19 currency movements relative to the U.S. dollar have negatively impacted our revenues from our operations in Europe.
Moreover, fluctuations in currency exchange rates can impact our revenues. Foreign currency movements relative to the U.S. dollar have negatively impacted our revenues from our operations in Europe.
Compliance with these laws, regulations and similar requirements may be onerous and 22 expensive, and they may be inconsistent across jurisdictions, further increasing the costs of compliance and doing business.
Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent across jurisdictions, further increasing the costs of compliance and doing business.
In March 2020, the Company expanded its voucher products to include fully refundable vouchers, which allow the consumer to request a refund through the expiration date of the voucher. This shift increased the rate at which our existing customers purchased vouchers. However, as market conditions have continued to shift, we have seen a decline in demand for vouchers again.
In March 2020, the Company expanded its voucher products to include fully refundable vouchers, which allowed the consumer to request a refund through the expiration date of the voucher. This shift increased the rate at which our existing customers purchased vouchers. However, as market conditions have continued to shift, we have seen a decline in demand for vouchers again.
Under the final rule, providers or sellers of closed loop vouchers, such as those offered through the Local Deals and Getaways programs, would only be subject to registration if the vouchers exceed $2,000 in total value or if they are sold in aggregate amounts exceeding $10,000 to any single person in one day.
Under the final rule, providers of closed loop vouchers, such as those offered through the Local Deals and Getaways , would only be subject to registration if the vouchers exceed $2,000 in total value or if they are sold in aggregate amounts exceeding $10,000 to any single person in one day.
This format may require additional investments to maintain and grow the business including the hiring of additional sales force and additional spend on customer service, marketing, technology tracking systems and payment processing. Such vouchers had been typically non-refundable or refundable by the Company within 7-14 days of purchase.
This format may require additional investments to maintain and grow the business including the hiring of additional sales personnel and additional spend on customer service, marketing, technology tracking systems and payment processing. Such vouchers had been typically non-refundable or refundable by the Company within 7-14 days of purchase.
Our other stockholders will therefore have limited influence and control on matters requiring stockholder approval and this controlling ownership position could discourage others from initiating any potential merger, or takeover that may otherwise be beneficial to Travelzoo stockholders. Item 1B. Unresolved Staff Comments None.
Our other stockholders will therefore have limited influence and control on matters requiring stockholder approval and this significant ownership position could discourage others from initiating any potential merger or takeover that may otherwise be beneficial to Travelzoo stockholders. Item 1B. Unresolved Staff Comments None.
Factors that may affect quarterly results include: consumer refund rate; mismatches between resource allocation and client demand due to difficulties in predicting client demand; changes in general economic conditions (perceived or actual) that could impair consumer spending; the magnitude and timing of marketing initiatives, including member acquisition and expansion efforts; the introduction, development, timing, competitive pricing and market acceptance of our products and services and those of our competitors; our ability to attract, hire and retain key personnel; our ability to maintain merchant and member satisfaction such that we are able to continue to attract high quality merchants and members; our ability to manage our planned growth; our ability to encourage our existing members to engage with our products and services and to convert them to revenue-generating users; technical difficulties or system downtime affecting the Internet or our products and services; and volatility of our operating results in new markets.
Factors that may affect quarterly results include: consumer refund rate; mismatches between resource allocation and client demand due to difficulties in predicting client demand; changes in general economic conditions (perceived or actual) that could impair consumer spending; the magnitude and timing of marketing initiatives, including member acquisition and expansion efforts; the introduction, development, timing, competitive pricing and market acceptance of our products and services (including our move to a paid membership model) and those of our competitors; our ability to attract, hire and retain key personnel; our ability to maintain merchant and member satisfaction such that we are able to continue to attract high-quality merchants and members; our ability to manage our planned growth; our ability to encourage our existing members to engage with our products and services and to convert them to revenue-generating users; technical difficulties or system downtime affecting the Internet or our products and services; and volatility of our operating results in new markets.
The implementation of new information technology, payment, enterprise resource planning, or other systems could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.
The implementation of new information technology, payment, enterprise resource planning, or other systems (including AI) could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.
The Company did not make any material payments under this program in 2022 and 2021. The total cost of this voluntary program is not reliably estimable because it is based on the ultimate number of valid requests received and future levels of the Company’s common stock price.
The Company did not make any material payments under this program in 2023 and 2022. The total cost of this voluntary program is not reliably estimable because it is based on the ultimate number of valid requests received and future levels of the Company’s common stock price.
We may in the future invest in the technology for our email products or invest in completely new products. Such product modifications and expansions may result in an increase in costs in the near-term and an increase in cost structure in the long-term, which may be in excess of incremental revenue.
We may in the future invest in upgraded technology for our email 12 products or invest in completely new technology or products. Such product modifications and expansions may result in an increase in costs in the near-term and an increase in cost structure in the long-term, which may be in excess of incremental revenue.
The analysis of the potential application of the unclaimed and abandoned property laws to our vouchers is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationship with members and merchants and our role as it relates to the issuance and delivery of a voucher.
The analysis of the potential application of the unclaimed and abandoned property laws to our vouchers is complex, involving an analysis of constitutional and statutory provisions and factual issues, including our relationships with members and merchants and our role as it relates to the issuance and delivery of a voucher.
Laws and regulations regulating the sending of commercial emails, including those enacted in foreign jurisdictions (such as Canada and Europe), may affect our ability to deliver emails or messages and may also result in increased compliance costs.
Laws and regulations regulating the sending of commercial emails, including those enacted in foreign jurisdictions (such as Canada, the U.K. and Europe), may affect our ability to deliver emails or messages and may also result in increased compliance costs.
Also, the anticipated benefit of an acquisition may not materialize. As licensing arrangements typically involve third parties unrelated to the Company operating under our brand name in foreign jurisdictions, we risk, among other things, damage to our reputation or brand image if such third parties are unsuccessful or behave in a way that is contrary to Travelzoo.
Also, the anticipated benefit of an acquisition may not materialize. As licensing arrangements typically involve third parties unrelated to the Company operating under our brand name in foreign jurisdictions, we risk, among other things, damage to our reputation or brand image if such third parties are unsuccessful or behave in a way that is contrary to Travelz oo.
The markets for the services we offer are intensely competitive, constantly evolving and subject to rapid change, and current and new competitors can launch new services at a relatively low cost. We compete for advertising dollars with large Internet portal sites, such as Trip Advisor, that offer listings or other advertising opportunities to travel, entertainment and local businesses.
The markets for the services we offer are intensely competitive, constantly evolving and subject to rapid change, and current and new competitors can launch new services at a relatively low cost. We compete for advertising dollars with large Internet portal sites, such as Tripadvisor, that offer listings or other advertising opportunities to travel, entertainment and local businesses.
Many of these regions have different customs, currencies, levels of consumer acceptance and use of the Internet for commerce, legislation, regulatory environments, tax laws and levels of political stability. International markets may have strong local competitors with an established brand that may make expansion in that market difficult and costly and take more time than anticipated.
Many of these regions have different customs, currencies, levels of consumer acceptance and use of the Internet for commerce, legislation, regulatory environments, tax laws and levels of political stability. International markets may have strong local competitors with established brands that may make expansion in that market difficult and costly and take more time than anticipated.
If we fail to successfully promote and maintain our brand consistently across numerous jurisdictions and channels, incur significant expenses in promoting our brands and fail to generate a corresponding increase in revenue as a result of our branding efforts, or encounter legal obstacles which prevent our continued use of our brand names, our business could be materially adversely affected.
If we fail to successfully promote and maintain our brand consistently across numerous jurisdictions and channels, incur significant expenses in promoting our brands and fail to generate a corresponding increase in revenues as a result of our efforts, or encounter legal obstacles which prevent our continued use of our brand names, our business could be materially adversely affected.
United States generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board ("FASB"), the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. We may need to change our accounting processes if we are required to adopt future or proposed changes in principles.
United States generally accepted accounting principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the American Institute of Certified Public Accountants (“AICPA”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. We may need to change our accounting processes if we are required to adopt future or proposed changes in principles.
For example, effective in January 2021, Spain began taxing digital services at 3% for companies that operate globally and have a significant digital footprint in Spain. Many questions remain regarding these digital services taxes.
For example, effective in January 2021, Spain began taxing digital services at 3% of revenues for companies that operate globally and have a significant digital footprint in Spain. Many questions remain regarding these digital services taxes.
We pay interchange and other fees, which may increase over time, raise our operating expenses, and lower profitability. We rely on third parties to provide payment processing services and it could disrupt our business if these companies become unwilling or unable to provide these services to us.
We pay interchange and other fees, which may increase over time, raise our operating expenses, and lower profitability. We rely on third parties to provide payment processing services and it could disrupt our business if these companies become unwilling (on favorable terms or otherwise) or unable to provide these services to us.
If the level of usage by our member base declines or does not grow as expected, we may suffer a decline in member growth or revenue. A significant decrease in the level of usage or member growth would have an adverse effect on our business, financial condition and results of operations.
If the level of usage by our members declines or does not grow as expected, we may suffer a decline in growth or revenue. A significant decrease in the level of usage or growth would have an adverse effect on our business, financial condition and results of operations.
Certain gift card laws could require us to materially increase the estimated liability recorded in our financial statements and our operating result could be materially and adversely affected.
Certain gift card laws could require us to materially increase the estimated liability recorded in our financial statements and our operating results could be materially and adversely affected.
It is also possible that travel restrictions may change again, resulting in consumers being unable to utilize their vouchers in the near-term or at all, meaning we would need to again work with partners to extend travel windows and expirations dates or implement again full refundability without a surcharge.
It is also possible that travel restrictions may change again, resulting in consumers being unable to utilize their vouchers in the near-term or at all, meaning we would need to again work with partners to extend travel windows and expiration dates or reinstate full refundability without a surcharge.
We may continue to invest in marketing as well as additional employees to support our operations (including licensing arrangements) o r develop new products, such as Travelzoo META, whic h may generate operating losses. Furthermore, operating losses in certain jurisdictions may not have any recognizable tax benefit.
We may continue to invest in marketing as well as additional employees to support our operations (including licensing arrangements) o r develop new products, such as Travelzoo META or the new Travelzoo paid membership, whic h may generate operating losses. Furthermore, operating losses in certain jurisdictions may not have any recognizable tax benefit.
In the event that we become subject to these requirements or any other anti-money laundering law or regulation imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.
In the event that we become subject to these requirements or any other anti-money laundering laws or regulations imposing obligations on us as a money services business, our regulatory compliance costs to meet these obligations would likely increase which could reduce our net income.
From time to time, merchants and advertisers risk the insolvency, bankruptcy or closure of their business and can face regulatory issues (including losing their licenses), which can result in the cancellation of services booked by consumers through the advertiser.
From time to time, merchants and advertisers experience insolvency, bankruptcy or closure of their businesses and can face regulatory issues (including losing their licenses), which can result in the cancellation of services booked by consumers through the advertiser.
Maintain adequate internal qualified personnel to properly supervise and review the information provided by outside subject matter experts and specialists. We cannot assure you that these planned measures will be sufficient to avoid potential future material weaknesses. We are unable to predict the time when we will again have a non-routine, non-recurring, unusual and complex transaction.
Maintain adequate internal qualified personnel to properly supervise and review the information provided by outside experts. We cannot assure you that these planned measures will be sufficient to avoid potential future material weaknesses. We are unable to predict the time when we will again have a non-routine, non-recurring, unusual and complex transactio n.
Nevertheless, to the extent that any tax authority succeeds in asserting that we have a tax collection responsibility (for hotel bookings, packaging or any other aspects of our business, including Jack’s Flight Club), or we determine that we have one, with respect to future transactions, we may collect any such additional tax obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions.
Nevertheless, to the extent that any tax authority succeeds in asserting that we have a tax collection responsibility (for hotel bookings, packaging or any other aspects of our business, including Jack’s Flight Club and/or the new paid membership), or we determine that we have one, with respect to future transactions, we may collect any such additional tax 14 obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions and with respect to past transactions, we could have a liability for tax that we did not collect from our customers.
Given our hotel booking platform and packaging technology consist of an agency model whereby we will facilitate reservations on behalf of a hotel or other supplier, the payment of hotel occupancy taxes and other taxes should be the responsibility of the applicable hotel or packaging partner, which are typically responsible for remitting applicable taxes to the various tax authorities.
We operate our hotel booking platform and packaging technology as an agency model, whereby we facilitate reservations on behalf of a hotel or other supplier, therefore the payment of hotel occupancy taxes and other taxes should be the responsibility of the applicable hotel or packaging partner, which are typically responsible for remitting applicable taxes to the various tax authorities.
In the future, depending on various factors, including but not limited to, market conditions, the improvement of the economy and the return of the travel industry, we may need to continue to cut expenses to preserve profitability or alternatively we may find it necessary to significantly accelerate expenditures to meet increased demand or to maintain brand awareness.
In the future, depending on various factors, including but not limited to, market conditions, changes in the general economy and the travel industry, we may need to cut expenses to preserve profitability or, alternatively, we may find it necessary to significantly accelerate expenditures to meet increased demand or to maintain brand awareness.
Risks Related to Investment in our Shares Our stock price has been volatile historically and may continue to be volatile. The trading price of our common stock has been and may continue to be subject to wide fluctuations. During the twelve months ended December 31, 2022, the closing price of our common stock on NASDAQ ranged from $4.11 to $10.33.
Risks Related to Investment in our Shares Our stock price has been volatile historically and may continue to be volatile. The trading price of our common stock has been and may continue to be subject to wide fluctuations. During the twelve months ended December 31, 2023, the closing price of our common stock on NASDAQ ranged from $4.51 to $10.45.
Negative market conditions could adversely affect our ability to raise additional capital or the value of our stock in connection with merger and acquisition activities. We are a controlled company. 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”).
Negative market conditions could adversely affect our ability to raise additional capital or the value of our stock in connection with merger and acquisition activities. We have a significant shareholder. Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro.
For these purposes, financial institutions are broadly defined to include money services businesses such as money transmitters, check cashers and providers of prepaid access cards. Examples of anti-money laundering requirements imposed on financial institutions include customer identification and verification programs, suspicious activity monitoring and reporting, record retention policies and procedures and transaction reporting.
For these purposes, financial institutions are broadly defined to include money services businesses such as providers of prepaid access cards. Examples of requirements imposed include customer identification and verification programs, suspicious activity monitoring and reporting, record retention policies and transaction reporting.
Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations. We perform our impairment test annually in October unless there are events that trigger the need for an interim test.
Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations. We perform our impairment test annually in October unless there are events that trigger the need for an interim test. No impairment was identified in connection with the annual impairment test for 2023.
In addition, a significant amount of traffic is directed to our websites through our participation in pay-per-click and display advertising campaigns on search engines, travel metasearch engines, and Internet media properties. Pricing and operating dynamics for these traffic sources can experience rapid change, both technically and competitively.
In addition, a significant amount of traffic is directed to our websites through our participation in pay-per-click and display advertising campaigns on search engines, travel metasearch engines, and Internet media properties. Pricing and operating dynamics for these traffic sources can experience rapid change, both technically and competitively. Also, we may scale back our expenditures at any time.
However, we may be obligated to evaluate our internal control over financial reporting if we are no longer smaller reporting company and we may identify areas of internal control that may need improvement or require remediation efforts.
However, we may be obligated to evaluate our internal control over financial reporting if we were no longer a s maller reporting company and if we identify areas of internal control that may need improvement or require remediation efforts.
To comply with this standard, we estimated future refunds and refund rates utilizing a sophisticated model that incorporates qualitative and quantitative factors, including but not limited to, historical refund rates based on deal category, relative risk of refund based on voucher type, and changing business and market conditions.
To comply with this standard, we estimate future refunds and refund rates for Local Deals and Getaways vouchers utilizing a model that incorporates qualitative and quantitative factors, including but not limited to, historical refund rates based on deal category, relative risk of refund based on voucher type, and changing business and market conditions.
In turn, that could have a negative impact on demand for our services. We are not in a position to evaluate the net effect of these circumstances as many of these events and developments cannot be reliably forecasted; however, we believe there has been negative impact to our business by such events and developments.
In turn, that could have a negative impact on demand for our services. We are not in a position to evaluate the net effect of these circumstances as many of these events and developments cannot be reliably forecasted.
If new advertisers do not find our marketing and promotional services effective, or if existing advertisers do not believe that utilizing our products provides them with a long-term increase in customers, revenue or profit, they may stop making offers through our marketplace.
We must continue to attract and retain advertisers in order to increase revenue and maintain profitability. If new advertisers do not find our marketing and promotional services effective, or if existing advertisers do not believe that utilizing our products provides them with a long-term increase in customers, revenue or profit, they may stop making offers through our marketplace.
Events like war or other conflicts (including the war in Ukraine), terrorist attacks, mass shooting incidents, natural disasters, plane crashes, travel-related health events, such as the pandemic, and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.
Events like war, political instability or other conflicts (including the war in Ukraine and the Israel-Hamas war), terrorist attacks, mass shooting incidents, strikes, natural disasters and extreme weather situations, plane crashes, major public health events, such as the COVID pandemic, and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.
In response to the global pandemic, we expanded our voucher product offering to include fully refundable vouchers and have now added a surcharge option where members can pay extra for full refundability. We have also historically invested in packaging technology and expansion of our hotel booking platform.
We previously expanded our voucher offering to include fully refundable vouchers and later added a surcharge option where members can pay extra for full refundability. We have historically invested in packaging technology and expansion of our hotel booking platform.
Our 25 stock price may fluctuate in response to a number of factors, such as quarterly variations in operating results; announcements by us or our competitors; changes in financial estimates and recommendations by securities analysts; the operating and stock price performance of comparable companies; news reports relating to trends in our markets or general economic conditions; the level of demand for our stock, including the amount of short interest in our stock; stockholder collateral arrangements, and cash requirement on funds or stockholders that result in stockholder trades.
Our stock price may fluctuate in response to a number of factors, such as quarterly variations in operating results; announcements by us or our competitors; changes in financial estimates and recommendations by securities analysts; the operating and stock price performance of comparable companies; news reports relating to trends in our markets or general economic conditions; the level of demand for our stock, including the amount of short interest in our stock; stockholder collateral arrangements, and cash requirement on funds or stockholders that result in stockholder trades; and repurchases of our common stock, including failure to meet internal or external expectations around the timing or price of share repurchases and any reductions or discontinuances of repurchase activities.
Many jurisdictions, including the European Union and more recently, California, have adopted regulations governing the use of "cookies." To the extent any such regulations require "opt-in" consent before certain cookies can be placed on a user's computer or mobile device, our ability to serve certain customers in the manner we currently do might be adversely 17 affected and our ability to continue to improve and optimize performance on our website might be impaired, either of which could negatively affect a consumer's experience using our services and our business, market share and results of operations.
To the extent any such regulations require "opt-in" consent before certain cookies can be placed on a user's computer or mobile device, our ability to serve certain consumers in the manner we currently do might be adversely affected and our ability to continue to improve and optimize performance on our website might be impaired, either of which could negatively affect a consumer's experience using our services and our business, market share and results of operations.
Our marketing spend is influenced by the marketing spend of our competitors as we seek to maintain and increase our brand recognition and to maintain and grow traffic to our platforms through performance marketing channels.
In order to maintain and build brand awareness, we must succeed in our marketing efforts. Our marketing spend is influenced by the marketing spend of our competitors as we seek to maintain and increase our brand recognition and to maintain and grow traffic to our platforms through performance marketing channels.
In March of 2022, we announced the creation of our new Metaverse business and our plans to launch Travelzoo META, a subscription membership service that provides members with exclusive access to Metaverse travel experiences.
In March of 2022, we announced the creation of our new Metaverse business and in 2023, we launched Travelzoo META Founding Membership, following a test and learn strategy, with plans for the launch of a subscription membership service that provides members with exclusive access to Metaverse travel experiences to follow.
For the year ended December 31, 2022, our cash and cash equivalents was $18.7 million, of which $10.7 million was held outside the U.S. in our foreign subsidiaries. As of December 31, 2022, we had negative working capital of $11.9 million. Merchant payables was $32.6 million as of December 31, 2022.
For the year ended December 31, 2023, our cash and cash equivalents was $15.7 million, of which $10.7 million was held outside the U.S. in our foreign subsidiaries. As of December 31, 2023, we had negative working capital of $3.4 million. Merchant payables was $20.6 million as of December 31, 2023.
If we are unable to protect our rights, a key element of our strategy could be disrupted and our business could be adversely affected. We may not always be able to detect unauthorized use or take appropriate steps to enforce our IP rights.
We have registered the Travelzoo and Jack’s Flight Club trademarks in various jurisdictions. If we are unable to protect our rights, a key element of our strategy could be disrupted and our business could be adversely affected. We may not always be able to detect unauthorized use or take appropriate steps to enforce our IP rights.
We spent $5.3 million and $2.9 million on marketing initiatives relating to member acquisition for the years ended December 31, 2022 and 2021, respectively, and expect to continue to spend significant amounts to acquire members. Our long-term success depends on our continued ability to increase the overall number of members and engage those members.
We spent $7.0 million and $5.3 million on marketing initiatives relating to member acquisition for the years ended December 31, 2023 and 2022, respectively, and expect to continue to spend significant amounts to acquire members. Our long-term success depends on our continued ability to attract, retain and engage members.
In addition, we must attract sufficient Internet users with attractive demographic characteristics to our products. It is possible that we will be required to further adapt our business model and products in response to changes in the online advertising market or travel industry or if our current business model is not successful.
It is possible that we will be required to further adapt our business model and products in response to changes in the online advertising market or travel industry or if our current or planned business model is not successful.
We may be sensitive to recessions or other macroeconomic circumstances or events effecting the travel industry generally. The demand for online advertising may be linked to the level of economic activity and employment in the U.S. and abroad. Specifically, our business is primarily dependent on the demand for online advertising from travel and entertainment companies.
The demand for online advertising may be linked to the level of economic activity and employment in the U.S. and abroad. Specifically, our business is primarily dependent on the demand for online advertising from travel and entertainment companies.
Our previous policy allowed refunds for only 7-14 days after purchase with no limitations. According to accounting standards for revenue recognition, revenue that is subject to refunds or returns is considered variable consideration and must be constrained so that it is probable that a significant reversal will not occur in the future as the uncertainty is resolved.
According to accounting standards for revenue recognition, revenue that is subject to refunds or returns is considered variable consideration and must be constrained so that it is probable that a significant reversal will not occur in the future as the uncertainty is resolved.
The total number of members we report may be higher than the number of our actual individual members because some members have multiple registrations, other members have died or become incapacitated and others may have registered under fictitious names.
The total number of members we report may be higher than the number of our actual individual members because some members have multiple registrations, other members have died or become incapacitated and others may have registered under fictitious names or with email addresses they no longer use, and different members may have selected different preferences for email communications.
We recorded a $200,000 impairment charge in connection with the indefinite lived intangible assets (JFC Trade name) in the annual impairment test for 2022. No impairment charge was identified in connection with the annual impairment test for 2021. The determination of the fair value reflects numerous assumptions that are subject to various risks and uncertainties.
For the annual impairment test in 2022, we recorded a $200,000 impairment charge in connection with the indefinite lived intangible assets (JFC Trade name). The determination of fair value reflects numerous assumptions that are subject to various risks and uncertainties. It requires significant judgments and estimates and actual results could be materially different.
We believe that continuing to build awareness of the Travelzoo and Jack’s Flight Club brand names, and starting to build awareness of the Travelzoo META brand name, are critical to achieving widespread acceptance of our business.
We believe that continuing to build awareness of the Travelzoo and Jack’s Flight Club brand names, and starting to build awareness of the Travelzoo META brand name, are critical to achieving widespread acceptance of our business. Brand recognition is a key differentiating factor among providers of online advertising opportunities.
If bidding restrictions are held to be illegal or otherwise unenforceable, our performance marketing costs may increase if bidding on affected key words (especially those related to us) becomes more expensive, which could adversely affect our marketing efficiency and results of operations. Trends in consumer use of mobile devices continue to create challenges.
Additionally, in some of our contracts we or the other party have agreed to bidding restrictions. If bidding restrictions are held to be illegal or otherwise unenforceable, our performance marketing costs may increase if bidding on affected key words (especially those related to us) becomes more expensive, which could adversely affect our marketing efficiency and results of operations.
Continued widespread use of mobile devices, smart phones, and tablets, coupled with improved web browsing functionality and development of thousands of useful “apps” available on these devices, has been driving substantial traffic and commerce activity to mobile. We have experienced a significant shift of both business and traffic to mobile.
Trends in consumer use of mobile devices continue to create challenges. Continued widespread use of mobile devices, smart phones, and tablets, coupled with improved web browsing functionality and development of thousands of useful “apps” available on these devices, has been driving substantial traffic and commerce activity to mobile.
Additionally, certain search engines have increased their focus on acquiring or launching travel products, such as Google Flights. We compete with newspapers, magazines and other traditional media companies that operate websites which provide online advertising opportunities. We compete with travel metasearch engines like Kayak.com (owned by Booking Holdings) and online travel and entertainment deal publishers (including online restaurant reservation services).
We compete with newspapers, magazines and other traditional media companies that operate websites which provide online advertising opportunities. We compete with travel metasearch engines like Kayak.com (owned by Booking Holdings) and online travel and entertainment deal publishers (including online restaurant reservation services).
While we are continually evolving our strategy, we may not always be successful in doing so and the demand for our vouchers may decline or refund rates may increase and may adversely impact revenues. Our business could be negatively affected by changes in search engine algorithms or other traffic-generating arrangements.
While we are continually evolving our strategy, we may not always be successful in doing so and the demand for our vouchers may decline or refund rates may increase and may adversely impact revenues.
Email offers sent by us, or on our behalf by our affiliates, generate a substantial portion of our revenue. Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open our emails or messages, our revenue and profitability could be adversely affected.
Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open our emails or messages, or purchase 15 any of our advertised offers, our revenue and profitability could be adversely affected.

… 94 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeIn addition to our New York office, we have several leased offices throughout the U.S. and Canada for our North America operations, including offices in Chicago, Illinois; Miami, Florida; Mountain View, California and Toronto, Ontario.
Biggest changeItem 2. Properties We are headquartered in New York, New York, where we occupy approximately 13,500 square feet of leased office space. In addition to our New York office, we have several leased offices throughout the U.S. and Canada for our North America operations, including offices in Chicago, Illinois; Miami, Florida and Toronto, Ontario.
We believe that our leased facilities are adequate to meet our current needs; however, we intend to expand our operations and therefore may require additional facilities in the future. We believe that such additional facilities are available.
We also have leased offices for our Europe operations in Germany, Spain, and the U.K., including offices in Barcelona, Berlin, London, and Munich. We believe that our leased facilities are adequate to meet our current needs; however, we intend to expand our operations and therefore may require additional facilities in the future. We believe that such additional facilities are available.
Removed
Item 2. Properties We are headquartered in New York, New York, where we occupy approximately 13,500 square feet of leased office space. We also have leased offices for our Europe operations in France, Germany, Spain, and the U.K., including offices in Barcelona, Berlin, London, Munich, and Paris.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed2 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Shares that May Yet be Purchased Under the Programs October 1, 2022 - October 31, 2022 699 $ 4.91 699 799,301 November 1, 2022 - November 30, 2022 30 $ 5.02 30 799,271 December 1, 2022 - December 31, 2022 105,646 $ 4.43 105,646 693,625 106,375 106,375 27 Performance Graph The following graph compares, for the dates specified, the cumulative total stockholder return for Travelzoo, the NASDAQ Stock Market (U.S. companies) Index (the “NASDAQ Market Index”), and the Standard & Poor's 500 Publishing Index (the “S&P 500 Publishing”).
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Shares that May Yet be Purchased Under the Programs October 1, 2023 - October 31, 2023 107,065 $ 7.04 107,065 892,935 November 1, 2023 - November 30, 2023 377,527 $ 8.25 377,527 515,408 December 1, 2023 - December 31, 2023 115,408 $ 9.95 115,408 400,000 600,000 600,000 27 Performance Graph The following graph compares, for the dates specified, the cumulative total stockholder return for Travelzoo, the NASDAQ Composite Index (the “NASDAQ Market Index”), and the Russell 2000 Index.
Sales of Unregistered Securities In connection with that certain Stock Purchase Agreement, by and between Azzurro Capital Inc. and the Company, dated as of December 30, 2022, the Company issued 3,410,000 shares of common stock (the “Shares”) of the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”) or another available exemption from the Securities Act.
Sales of Unregistered Securities In connection with that certain Stock Purchase Agreement, by and between Azzurro and the Company, dated as of December 30, 2022, the Company issued 3,410,000 shares of common stock of the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”) or another available exemption from the Securities Act.
Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2018, December 31, 2019, December 31, 2020, December 31, 2021 and December 31, 2022.
Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023.
The Shares were registered by the Company pursuant to an S-3 registration statement made effective on February 15, 2023. Repurchases of Equity Securities We repurchased 106,375 of our equity securities during the quarter ended December 31, 2022.
The Shares were registered by the Company pursuant to an S-3 registration statement made effective on February 15, 2023. Repurchases of Equity Securities We repurchased 600,000 of our equity securities during the quarter ended December 31, 2023.
As of March 29, 2023, there were approximately 177 stockholders of record of our shares. Dividend Policy Travelzoo has not declared or paid any cash dividends since inception and does not expect to pay cash dividends for the foreseeable future.
As of March 18, 2024, there were approximately 175 stockholders of record of our shares. Dividend Policy Travelzoo has not declared or paid any cash dividends since inception and does not expect to pay cash dividends for the foreseeable future.
The graph assumes that $100 was invested on December 31, 2017 in the Common Stock of the Company, the NASDAQ Market Index and the S&P 500 Publishing and assumes reinvestment of any dividends. The stock price performance on the following graph is not indicative of future stock price performance.
The graph assumes that $100 was invested on December 31, 2018 in the Common Stock of the Company, the NASDAQ Market Index and the Russell 2000 Index and assumes reinvestment of any dividends. The stock price performance on the following graph is not indicative of future stock price performance.
High Low 2022: Fourth Quarter $ 6.35 $ 4.11 Third Quarter $ 6.80 $ 4.43 Second Quarter $ 8.04 $ 5.71 First Quarter $ 10.33 $ 5.30 2021: Fourth Quarter $ 13.32 $ 9.10 Third Quarter $ 15.42 $ 10.64 Second Quarter $ 18.34 $ 14.04 First Quarter $ 17.88 $ 8.71 O n March 29, 2023, the last reported sales price of our common stock on the NASDAQ Global Select Market was $5.31 per share.
High Low 2023: Fourth Quarter $ 10.45 $ 5.08 Third Quarter $ 8.83 $ 5.83 Second Quarter $ 10.42 $ 5.64 First Quarter $ 6.04 $ 4.51 2022: Fourth Quarter $ 6.35 $ 4.11 Third Quarter $ 6.80 $ 4.43 Second Quarter $ 8.04 $ 5.71 First Quarter $ 10.33 $ 5.30 O n March 18, 2024, the last reported sales price of our common stock on the NASDAQ Global Select Market was $10.35 per share.
Measurement Point 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Travelzoo $ 100 $ 152 $ 166 $ 146 $ 146 $ 69 NASDAQ Market Index $ 100 $ 96 $ 130 $ 187 $ 227 $ 152 Russell 2000 Index $ 100 $ 88 $ 109 $ 129 $ 146 $ 115 Item 6. Reserved 28
Measurement Point 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Travelzoo $ 100 $ 109 $ 96 $ 96 $ 45 $ 97 NASDAQ Market Index $ 100 $ 135 $ 194 $ 236 $ 158 $ 226 Russell 2000 Index $ 100 $ 124 $ 146 $ 167 $ 131 $ 150

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+41 added−106 removed12 unchanged
Biggest changeWe do not know if we will have market acceptance of our new products or whether the market will continue to accept our existing products. 34 Results of Operations The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated. 2022 2021 Revenues 100.0 % 100.0 % Cost of revenues 14.2 18.2 Gross profit 85.8 81.8 Operating expenses: Sales and marketing 46.8 48.3 Product development 2.9 4.1 General and administrative 25.4 31.5 Total operating expenses 75.1 83.9 Operating income (loss) 10.7 (2.1) Other income, net 3.4 6.4 Income from continuing operations before income taxes 14.1 4.3 Income tax expense 4.6 2.8 Income from continuing operations 9.5 1.5 Loss from discontinued operations, net of tax (0.1) — Net income 9.4 1.5 Net loss attributable to non-controlling interest — — Net income attributable to Travelzoo 9.4 % 1.5 % Net income attributable to Travelzoo—continuing operations 9.5 % 1.5 % Net loss attributable to Travelzoo—discontinued operations (0.1) % — % 35 Operating Metrics The following table sets forth operating metrics in Travelzoo North America, Travelzoo Europe, and Jack's Flight Club: Years Ended December 31, 2022 2021 Travelzoo North America Total members (1) 16,251,000 17,241,000 Average cost per acquisition of a new member $ 2.81 $ 4.99 Revenue per member (2) $ 2.82 $ 2.59 Revenue per employee (3) $ 381 $ 370 Mobile application downloads 4,126,000 3,902,000 Social media followers 3,185,000 3,254,000 Travelzoo Europe Total members (1) 9,029,000 8,387,000 Average cost per acquisition of a new member $ 2.08 $ 2.50 Revenue per member (2) $ 2.32 $ 2.04 Revenue per employee (3) $ 193 $ 178 Mobile application downloads 2,335,000 2,188,000 Social media followers 938,000 897,000 Jack's Flight Club Total members 1,905,000 1,757,000 Consolidated Total members (1) 30,404,000 30,312,000 Average cost per acquisition of a new member $ 2.36 $ 4.05 Revenue per member (2) $ 2.32 $ 2.40 Revenue per employee (3) $ 297 $ 280 Mobile application downloads 6,461,000 6,090,000 Social media followers 4,123,000 4,151,000 (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.
Biggest changeWe do not know if we will have market acceptance of our new products or whether the market will continue to accept our existing products. 33 Results of Operations The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated. 2023 2022 Revenues 100.0 % 100.0 % Cost of revenues 12.9 14.2 Gross profit 87.1 85.8 Operating expenses: Sales and marketing 44.7 46.8 Product development 2.5 2.9 General and administrative 21.4 25.4 Total operating expenses 68.6 75.1 Operating income 18.5 10.7 Other income, net 1.7 3.4 Income from continuing operations before income taxes 20.2 14.1 Income tax expense 6.0 4.6 Income from continuing operations 14.2 9.5 Income (loss) from discontinued operations, net of tax 0.5 (0.1) Net income 14.7 9.4 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 % Net income (loss) attributable to Travelzoo—discontinued operations 0.5 % (0.1) % 34 Operating Metrics The following table sets forth operating metrics in Travelzoo North America, Travelzoo Europe, and Jack's Flight Club: Years Ended December 31, 2023 2022 Travelzoo North America Total members (1) 16,238,000 16,251,000 Average cost per acquisition of a new member $ 2.81 $ 2.81 Revenue per member (2) $ 3.45 $ 2.82 Revenue per employee (3) $ 456 $ 381 Mobile application downloads 4,158,000 4,126,000 Social media followers 3,300,000 3,185,000 Travelzoo Europe Total members (1) 9,225,000 9,029,000 Average cost per acquisition of a new member $ 3.32 $ 2.08 Revenue per member (2) $ 2.66 $ 2.32 Revenue per employee (3) $ 240 $ 193 Mobile application downloads 2,356,000 2,335,000 Social media followers 981,000 938,000 Jack's Flight Club Total members 2,407,000 1,905,000 Consolidated Total members (1) 31,097,000 30,404,000 Average cost per acquisition of a new member $ 3.02 $ 2.36 Revenue per member (2) $ 2.78 $ 2.32 Revenue per employee (3) $ 359 $ 297 Mobile application downloads 7,524,000 6,461,000 Social media followers 4,499,000 4,123,000 (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.
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.
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.
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.
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.
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. We believe cash on hand will be sufficient to pay such costs for at least the next twelve months.
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.
If we sell additional equity or convertible debt securities, the 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.
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.
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. We recognize revenue upon the sale of the vouchers, upon notification of the amount of direct bookings or upon delivery of the emails.
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. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails.
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.
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.
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.
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 39 items.
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.
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.
We cannot be sure that any such financing will be available in amounts or on terms acceptable to us. 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.
We cannot be sure that any such financing will be available in amounts or on terms acceptable to us. 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.
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 40 Netsurfers, and who failed to submit requests to convert their shares into shares of Travelzoo within the required time period.
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.
Local revenues have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand. 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.
Local revenues have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand. 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.
We expect fluctuations in cost of revenues as a percentage of 33 revenues from quarter to quarter. Some of the fluctuations may be significant and may have a material impact on our results of operations. We do not know that our sales and marketing expenses as a percentage of revenue will be in future periods.
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. We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods.
Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with more than 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.
Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment and local experiences. We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.
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.
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.
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.
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.
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.
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.
Travel revenue includes travel publications ( Top 20, Website, Travelzoo emails, Travelzoo Network ), Getaways vouchers, and hotel platform and vacation packages. Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).
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).
The forward-looking statements included in this report reflect the beliefs of our management on the date of this report. 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. Overview We are a global Internet media company.
The forward-looking statements included in this report reflect the beliefs of our management on the date of this report. 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. Overview Travelzoo, the club for travel enthusiasts, is a global Internet media company.
When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $11.9 million. Payables to merchants are generally due upon redemption of vouchers.
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.
General and Administrative 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. General and administrative expenses were $17.9 million and $19.8 million for the years ended 2022 and 2021, respectively.
General and Administrative 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.
For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers. Insertion orders and merchant agreements for Local Deals are typically for periods between one month and twelve months and are not automatically renewed.
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. Insertion orders and merchant agreements for Local Deals are typically for periods between one and twelve months and are not automatically renewed.
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.
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.
(2) Annual revenue divided by number of members at the beginning of the year. (3) Annual revenue divided by number of employees at the end of the year (in thousands). 36 Revenues The following table sets forth the breakdown of revenues (in thousands) by category and segment.
Consolidated includes retained APAC members. (2) Annual revenue divided by number of members at the beginning of the year. (3) Annual revenue divided by number of employees at the end of the year (in thousands). 35 Revenues The following table sets forth the breakdown of revenues (in thousands) by category and segment.
We do not know if we will be able to maintain or increase our market share. We do not know if we will be able to increase the number of our advertisers in the future.
We do not know if we will be able to increase the number of our advertisers in the future.
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.
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. Cash refunds received for income tax, net of payment made, in 2023 was $1,000.
For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon the sale of the vouchers. Merchant agreements for Getaways advertisers are typically for periods between twelve months and twenty-four months and are not automatically renewed.
For Getaways vouchers, we recognize a percentage of the face value of vouchers upon sale as commission, net of an allowance for future refunds. Merchant agreements for Getaways advertisers are typically for periods between twelve and twenty-four months and are not automatically renewed.
For the years ended December 31, 2022 and 2021, advertising expenses accounted for 21% and 12%, respectively, of total sales and marketing expenses. 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.
For the years ended December 31, 2023 and 2022, advertising expenses accounted for 26% and 21%, respectively, of total sales and marketing expenses. 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.
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. 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.
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. The Company estimates a refund reserve using historical and current refund rates by product and by merchant location to calculate estimated future refunds.
There may be fluctuations that have a material impact on our results of operations. We do not know what our income taxes will be in future periods. There may be fluctuations that have a material impact on our results of operations.
We do not know what our general and administrative 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. We do not know what our income taxes will be in future periods.
Liquidity and Capital Resources 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. in our foreign operations. We also had $675,000 in restricted cash held in the U.S. as of December 31, 2022.
Liquidity and Capital Resources 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.
Sales and marketing expenses were $33.1 million and $30.3 million for the years ended December 31, 2022 and 2021, respectively. Advertising expenses consist primarily of online advertising which we refer to as traffic acquisition cost and member acquisition costs.
Sales and marketing expenses were $37.8 million and $33.1 million for the years ended December 31, 2023 and 2022, respectively. Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs.
As of December 31, 2022 , we had m erchant payables of $32.6 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-K report, following GAAP accounting principles, we classified all merchant payables as current.
As of December 31, 2023 , we had m erchant payables of $20.6 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-K report, following U.S. generally accepted accounting principles (“GAAP”), we classified all merchant payables as current.
This increase was primarily due to $5.6 million increase in Travel revenues, offset partially by $16,000 decrease in Local revenues.
This increase was primarily due to a $9.0 million increase in Travel revenues, offset partially by a $564,000 decrease in Local revenues.
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.
There may be fluctuations that have a material impact on our results of operations. 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.
Travelzoo currently has license agreements in Japan and South Korea, as well as Australia, New Zealand and Singapore. 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.
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.
We expect to continue our efforts to grow; however, we may not grow or we may experience slower growth. 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. We believe that the market for advertising continues to shift from offline to online.
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. 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.
Local Deals and Getaways ). 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.
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. Factors relating to competitors include the willingness of certain competitors to grow their business unprofitably.
We may see a unique opportunity for a brand marketing campaign that will result in an increase of marketing expenses. 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.
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.
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.
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.
Cost of Revenues 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.
For 2023 and 2022, none of our customers accounted for 10% or more of our revenue. 36 Cost of Revenues 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.
Operating Expenses Sales and Marketing 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.
Cost of revenues as a percent of revenues declined from 14.2% in 2022 to 12.9% in 2023. Operating Expenses Sales and Marketing 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.
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.
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.
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).
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. 30 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).
Europe expenses increased $1.9 million from 2021 to 2022 primarily due to $2.2 million increase in member acquisition costs. Foreign currency movement s relative to the U.S. dollar negatively impacted our local currency income from our operations in Europe by approximately $246,000 and $33,000 for 2022 and 2021, respectively.
Foreign currency movement s relative to the U.S. dollar negatively impacted local currency income from our operations in Europe by approximately $40,000 and $246,000 in 2023 and 2022, respectively.
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.
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.
Upon the acquisition, the Company's chief operating decision maker reviewed and evaluated Jack’s Flight Club as a separate segment. Travelzoo currently has three reportable operating segments: Travelzoo North America, Travelzoo Europe and Jack’s Flight Club. Travelzoo North America consists of the Company’s operations in Canada and the U.S.
Reportable Segments The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business. The Company currently has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada.
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.
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.
We monitor our members 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.
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.
The Company also renegotiated many of its outstanding contractual obligations with vendors and closed some ancillary office locations in order to reduce capital expenditures. We do not anticipate that any additional cost-cutting measures will be necessary at this time.
For example, in 2020, the Company ceased operations in Asia Pacific, conducted employee furloughs and restructured its operations significantly. The Company also renegotiated many of its outstanding contractual obligations with vendors and closed some ancillary office locations. We do not currently anticipate that additional cost-cutting measures will be necessary.
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.
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 .
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. Insertion orders for publishing revenue are typically for periods between one month and twelve months and are not automatically renewed.
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.
Other Income, net 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.
Other Income, net 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.
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. Listing fees are based on audience reach, placement, number of listings, number of impressions, number of clicks, and actual sales.
How We Generate Revenues Travelzoo Revenues from the Travelzoo brand and business are generated primarily from advertising fees from two categories of revenue: Travel and Local. 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.
The expiration dates of vouchers range between January 2023 through December 2025 with the majority of vouchers expiring in 2023; provided, that these expiration dates may sometimes be extended on a case-by-case basis.
The expiration dates of vouchers range between January 2024 through December 2025; 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.
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. This trend has appeared to reverse again, particularly as we move away from full refundability on our vouchers.
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).
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. dollar.
Travelzoo Europe Europe revenues increased $4.6 million, or 23.5%, in 2023 as compared to 2022. 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. dollar.
Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK. 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.
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.
We expect fluctuations in our income taxes 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.
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. 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.
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 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.
One significant factor that impacts our advertising expenses is the average cost per acquisition of a new member. Increases in the average cost of acquiring new members may result in an increase of sales and marketing expenses as a percentage of revenue.
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.
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. 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.
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. 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 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. 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.
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. Product development changes may lead to reductions of revenue based on changes in receptivity of our offerings to our member audience and advertiser clients.
We expect increased marketing expense to spur continued growth in members and revenue in future periods; however, we cannot be assured of this due to the many factors that impact our growth in members and revenue.
We expect increased marketing expenses to spur continued growth in revenue in future periods; however, we cannot be assured of this due to the many factors that impact our growth. 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.
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. The decrease in Local revenues of $571,000 was primarily due to the decrease in number of Local Deals vouchers sold.
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. The decrease in Local revenues of $564,000 was primarily due to a reduction in Local Deals voucher commissions.
Product development expenses were $2.1 million and $2.6 million for the years ended December 31, 2022 and 2021, respectively. 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.
Product development expenses were $2.1 million for each of the years ended December 31, 2023 and 2022, respectively. 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. Product development expenses as a percent of revenues declined from 2.9% in 2022 to 2.4% in 2023.
Travelzoo Europe Year Ended December 31, 2022 2021 (In thousands) Revenues $ 19,455 $ 17,320 Loss from operations $ (1,803) $ (1,997) Loss from operations as a % of revenues (9) % (12) % 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).
Travelzoo Europe Year Ended December 31, 2023 2022 (In thousands) Revenues $ 24,021 $ 19,455 Income (loss) from operations $ 1,317 $ (1,803) Income (loss) from operations as a % of revenues 5 % (9) % Europe revenues increased $4.6 million, or 23.5%, in 2023 as compared to 2022.
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®. 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.
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.
Jack's Flight Club Year Ended December 31, 2022 2021 (In thousands) Revenues $ 3,477 $ 3,346 Income from operations $ — $ 134 Income from operations as a % of revenues — % 4 % 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).
Jack's Flight Club Year Ended December 31, 2023 2022 (In thousands) Revenues 4,172 $ 3,477 Loss from operations $ (23) $ — Loss from operations as a % of revenues (1) % — % 38 Jack’s Flight Club revenues in creased $695,000, or 20.0%, in 2023 as compared to 2022 .
Other income was $2.4 million and $4.0 million for the years ended December 31, 2022 and 2021, respectively.
Cost of revenues was $10.9 million and $10.0 million for the years ended December 31, 2023 and 2022, respectively.
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. We do not know what our general and administrative expenses as a percentage of revenue will be in future periods.
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. Increases in expense may result from costs related to third-party technology service providers and software licenses, headcount and the use of professional services.
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.
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.
Year Ended December 31, 2022 2021 (In thousands) Net cash used in operating activities $ (23,121) $ (8,083) Net cash provided by (used in) investing activities (1,315) 104 Net cash provided by (used in) financing activities 1,282 (11,158) Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,457) (259) Net decrease in cash, cash equivalents and restricted cash $ (25,611) $ (19,396) Net cash used in operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
The following table provides a summary of our cash flows from operating, investing and financing activities: Year Ended December 31, 2023 2022 (In thousands) Net cash provided by (used in) operating activities $ 10,675 $ (23,121) Net cash used in investing activities (39) (1,315) Net cash provided by (used in) financing activities (14,150) 1,282 Effect of exchange rate changes on cash, cash equivalents and restricted cash 525 (2,457) Net decrease in cash, cash equivalents and restricted cash $ (2,989) $ (25,611) 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.
Those fundings were recorded against salary and related expenses. APAC Exit and Pivot to Licensing Model 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. Prior periods have been reclassified to conform with the current presentation.
APAC Exit and Pivot to Licensing Model 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. Travelzoo currently has license agreements covering Australia, New Zealand and Singapore, as well as Japan and South Korea.
The territory subject to the license was amended to also include South Korea. 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.
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. The Company recognized royalties of $36,000 and $0 from the licensee for the years ended December 31, 2023 and 2022, respectively.
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. Product Development 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.
Sales and marketing expenses as a percent of revenues declined from 46.8% in 2022 to 44.7% in 2023. Product Development 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.
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.. Net cash provided by investing activities for 2021 was $104,000 which consisted of $133,000 proceeds from repayment of investment Japan loan.
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. 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.
Segment Information Travelzoo North America Year Ended December 31, 2022 2021 (In thousands) Revenues $ 47,667 $ 42,046 Income from operations $ 9,360 $ 550 Income from operations as a % of revenues 20 % 1 % 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).
Segment Information Travelzoo North America Year Ended December 31, 2023 2022 (In thousands) Revenues $ 56,080 $ 47,642 Income from operations $ 15,254 $ 10,348 Income from operations as a % of revenues 27 % 22 % North America revenues increased $8.4 million, or 17.7%, in 2023 as compared to 2022 (see “Revenues” above).
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. The Company records royalties for its licensing arrangements on a one-quarter lag basis.
The Company recognized royalties of $35,000 and $25,000 from the licensee for the years ended December 31, 2023 and 2022, respectively. 29 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.
Our effective tax rate was 33% and 66% for 2022 and 2021, respectively. 38 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.
Income tax expense was $5.1 million and $3.3 million, respectively, for the years ended December 31, 2023 and 2022. Our effective tax rate was 30% and 33% for 2023 and 2022, respectively. Our effective tax rate decreased for 2023 as compared to 2022, primarily due to a decrease in non-deductible stock compensation .

… 168 more changes not shown on this page.

Other TZOO 10-K year-over-year comparisons