Travelzoo : Second Quarter 2020 Performance

Second Quarter 2020 Performance

July 30, 2020

1

Important Notice to Investors

Please read this management presentation together with the Company's press release issued earlier today announcing the Company's second quarter 2020 financial results and in conjunction with the Company's recent Annual Report and Quarterly Results as filed with the Securities and Exchange Commission (SEC).

Certain statements contained in this presentation that are not historical facts may be forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These forward looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects, expected future financial guidance and intentions, markets in which we participate and other statements contained in this presentation that are not historical facts. When used in this presentation, the words "expect," "predict," "project," "anticipate," "believe," "estimate," "intend," "plan," "seek" and similar expressions are generally intended to identify forward looking statements. Because these forward looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this presentation.

Second Quarter 2020 Performance

2

Part 1:

Second Quarter 2020 Performance

Part 2:

Management Focus

Second Quarter 2020 Performance

Lower revenues due to the pandemic led to a loss, which

3

we were able to keep limited as we also reduced expenses.

Q2 2020 Financial Performance (Continuing Operations)

Revenue	Net Income	Members**
$ millions	$ millions	Millions
			31.6
				31.0
$26.6

$7.0

$3.1

Q2 2020

Q2 2019

Q2 2020

Q2 2019

($2.1)*

Q2 2019

Q2 2020

($5.4)

($0.05)

• Adjusted loss per share without one-time expenses related to stock options repricing and issuance
• Including members of Travelzoo and Jack's Flight Club

Second Quarter 2020 Performance

Travelzoo as a global Internet media company is faring better	4
in the pandemic in Q2 than the severely impacted travel and
	entertainment companies.
Q2 2020 Revenues Compared to Q2 2019
Shown as Percent of Last Year
Travel and Entertainment		Online Travel Agents	Travel and Entertainment
Suppliers		(OTAs)	Media

																				26%
										21%
												15%
	12%						12%
						8%												7%
				4%
	Delta	Carnival*	Live			Expedia* Booking			Trip-	Trivago Travelzoo
Air Lines				Nation*					Holdings*	Advisor*

* Based on current analyst estimates, as actual results have not been released yet (source: Yahoo! Finance)

Second Quarter 2020 Performance

North America business segment revenue	5

North America Revenue by Type

$ millions

$17.9

$2.7

	$15.3							YOY %	YOY %*
							change	change
		$4.2				(as reported)	(constant F/X)
				$0.3			-89%	-89%
			$3.9			-74%	-74%
	Q2 2019		Q2 2020
		at constant F/X*

Local

Travel

* Based on constant F/X rates for CAD

Highlights

• Local - YOY 89% decrease due to lockdowns in many countries, which closed most restaurants, spas, local busi- nesses and entertainment.
• Travel - YOY 74% decrease due to smaller advertising revenue, partly offset by strong hotel voucher sales.

Second Quarter 2020 Performance

Europe business segment revenue	6

Europe Revenue by Type

$ millions

$8.7

$1.1

$7.6

$1.9

$0.1 $1.7

Q2 2019Q2 2020

at constant F/X*

Local

Travel

* Based on constant F/X rates for GBP and EUR

YOY %	YOY %*
change	change
(as reported)	(constant F/X)
-91%	-90%
-77%	-76%

Highlights

• Local - YOY 90% decrease due to lockdowns in many countries, which closed most restaurants, spas, local busi- nesses and entertainment.
• Travel - YOY 76% decrease due to smaller advertising revenue, partly offset by strong hotel voucher sales.

Second Quarter 2020 Performance

We adjusted our cost structure quickly in Q2.	7

Operating Expenses

(Excluding stock option expense and one-time credit related to Jack's Flight Club acquisition)

$ millions and as percentage of revenue

	69%	$12.2
General &	18%	$3.2
Administrative
Product	5%	$0.9
Development
			$5.1	122%
Sales &	46%	$8.2	$1.8	43%
Marketing
		$0.4	11%
			$2.8	68%
		Q2 2019	Q2 2020

North America

business segment

83%	$7.6
17%	$1.9
8%	$0.7
		$2.7	143%
58%	$5.0	$1.2	63%
		$0.1	6%
		$1.4	74%
	Q2 2019	Q2 2020
	Europe
	business segment

Second Quarter 2020 Performance

Our cash balance increased versus last quarter and the end of last year,	8
even after paying $6.8 million to the sellers of Jack's Flight Club.

Cash Balance at End of Quarter* $ millions

$27.0

$20.9

$14.4

Q4 2019

Q1 2020

Q2 2020

* Includes cash, cash equivalents and restricted cash

Second Quarter 2020 Performance

Beyond Q2, we have permanently adjusted our cost structure,

9

so we expect to achieve profitability even with much lower

revenues-possibly as soon as this quarter (Q3).

Q2 2020 Financial Performance (Continuing Operations)

Revenue $ millions

$26.6

		$12-$13
	$7.0
Q2 2019	Q2 2020	Q3 2020
		(forecast)

Operating Expenses and Cost of Sales* $ millions

$22.8
		~ $13
	$10.4
Q2 2019	Q2 2020	Q3 2020
		(forecast)

* Excluding stock option expense and one-time items

Second Quarter 2020 Performance

10

Second Quarter 2020 Performance

Part 2:

Management Focus

Second Quarter 2020 Performance

Management Focus	11

• Take advantage of an exceptional industry opportunity for sourcing travel, entertainment, and local deals.
• Continue to offer members flexible and worry-free deals for future travel-a format that is working well.
• Take the crisis as an opportunity to permanently optimize cost structure and profitability.
• Achieve a break-even or small profit in terms of non-GAAP operating income for Q3 and a non-GAAP operating profit for Q4 2020.
• Grow Jack's Flight Club's profitable subscription revenue.
• Continue to generate positive cash flow.

Second Quarter 2020 Performance

THANK YOU

For questions please contact Travelzoo Investor Relations:

[e-mail]

travelzoo.com