Travelzoo : Q3 2020 Earnings Conference Call presentation

Third Quarter 2020 Performance

October 21, 2020

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Important Notice to Investors

Please read this management presentation together with the Company's press release issued earlier today announcing the Company's third 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.

Third Quarter 2020 Performance

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Part 1:

Third Quarter 2020 Performance

Part 2:

Management Focus

Third Quarter 2020 Performance

After a significant decline in Q2 due to the effects of the pandemic,	3
we see a strong improvement of the business in Q3.

Financial Performance (Continuing Operations)
Revenue	Operating Income/Loss	EPS
$ millions	$ millions	$ per share
23.8

					13.8
		7.0																	0.21
											Q2 2020	Q3 2020				Q2 2020	Q3 2020
									3.4
Q3 2019	Q2 2020	Q3 2020		Q3 2019								Q3 2019		(0.48)			(0.10)
		(6.8)		(1.2)

Third Quarter 2020 Performance

Going forward, we will provide information on Non-GAAP operating	4
income* which better explains how we evaluate performance.

Non-GAAPOperating Income* $ millions

GAAP Operating Income

Adjustments

Non-GAAP Operating Income*

	0.4	3.8
3.4
				Q2 2020	2.4	1.2
	Q3 2019	(6.7)	(2.1)		(1.2)
						Q3 2020

4.6

4.6

• GAAP operating income + impairment of intangibles and goodwill + amortization of intangibles + stock option expenses + severance-related expenses
• • Non-GAAPoperating income

Third Quarter 2020 Performance

Here are the details on the items that are excluded in the calculation	5
of Non-GAAP operating income.

$ millions	Q3 2019	Q2 2020	Q3 2020
Adjustments	0.4	4.6	2.4
Impairment of intangibles	0	0	0
and goodwill
Amortization of intangibles	0	0.5	0.3
Stock option expense	0.3	4.1	1.2
Severance-related expenses	0.1	0	0.9

Third Quarter 2020 Performance

Our success in voucher sales is driving the positive development	6
in cash balance.

Cash Balance at End of Quarter* $ millions

51.7

26.7

19.9

13.3

Q4 2019

Q1 2020

Q2 2020

Q3 2020

* Includes cash, cash equivalents and restricted cash

Third Quarter 2020 Performance

North America business segment revenue

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North America Revenue by Type $ millions

15.3

2.4

9.1

0.4

12.9

8.7

Q3 2019Q3 2020

at constant F/X*

Local

Travel

YOY %	YOY %*
change	change
(as reported)	(constant F/X)
-82%	-82%
-33%	-32%

Highlights

• Local - YOY 82% decrease due to lockdowns in many countries, which closed most restaurants, spas, local busi- nesses and entertainment.
• Travel - YOY 32% decrease due to smaller advertising revenue, partially offset by strong voucher sales.

* Based on constant F/X rates for CAD

Third Quarter 2020 Performance

Europe business segment revenue

Europe Revenue by Type

$ millions

8.5

0.7

								YOY %	YOY %*
		3.7				change	change
					(as reported)	(constant F/X)
	7.7
			0.2
						-73%	-74%
			3.5			-55%	-57%
	Q3 2019		Q3 2020
		at constant F/X*

Local

Travel

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

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Highlights

• Local - YOY 73% decrease due to lockdowns in many countries, which closed most restaurants, spas, local busi- nesses and entertainment.
• Travel - YOY 55% decrease due to smaller advertising revenue, partially offset by strong voucher sales.

Third Quarter 2020 Performance

We believe we will permanently benefit from the quick adjustment of	9
our cost structure in Q2.

Non-GAAP Operating Expenses*
$ millions and as percentage of revenue
	72%	17.2
General &	18%	4.3
Administrative
Product	5%	1.3
Development
			9.8	71%	Savings across
					most areas come
			3.8	28%	from process
			optimizations.
Sales &	49%	11.6	0.6	4%
Marketing
				Headcount
				39%	adjustments have the
			5.4	most significant impact
					on Sales & Marketing
					expenses.
		Q3 2019	Q3 2020

All business segments

* Excluding amortization of intangibles, stock option expenses, severance-related expenses

Third Quarter 2020 Performance

As expected, we almost regained profitability in Q3. We will see a result 10 close to break-even or profit in Q4 if we can stay on the current

path of recovery.

Financial Performance (Continuing Operations)
Revenue				Operating Expenses and Cost of Revenues
$ millions				$ millions
23.8				20.4
				0.4
			∼14-15	20.0
				13.7	15.1	~14.5
					2.4	∼1.5*
		13.8
				4.6		∼
						12.7	13
					9.1
	7.0
Q3 2019	Q2 2020	Q3 2020	Q4 2020	Q3 2019	Q2 2020	Q3 2020	Q4 2020
			(Forecast)				(Forecast)
				Non-GAAP Adjustments
					OPEX and Cost of Revenues

* This amount could possibly increase as a result of a regular impairment review of Jack's Flight Club

Third Quarter 2020 Performance

With more than 30 million members, 6.5 million mobile app users,

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and 4 million social media followers, Travelzoo is loved by high-quality travel enthusiasts.

Travelzoo's Global Reach

Members (Email Subscribers)

Millions

30.3 30.5

Q3 2019

Q3 2020*

High-Quality Users, Followers and Subscribers

Travelzoo U.S. Member Survey

December 2019

AFFLUENTACTIVE

54%71%

$100K+	took 3+ trips
HHI**	last year

ESTABLISHED	EDUCATED
48%
91%
ages 45-64
with college
30% ages 65+
22% ages 25-44	background
and younger

OPEN

75%

let Travelzoo influence their destination

CONSUMERS

67%

female

• Including members of Jack's Flight Club
• As a reference point: Of the total U.S. population, 20% have an HHI of $100K+

Third Quarter 2020 Performance

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Part 1:

Third Quarter 2020 Performance

Part 2:

Management Focus

Third Quarter 2020 Performance

Management Focus	13

• 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.
• After getting close to break-even in Q3, our goal for Q4 is to regain profitability.
• Grow Jack's Flight Club's profitable subscription revenue.
• Further push the positive cash flow development.

Third Quarter 2020 Performance

THANK YOU

For questions please contact Travelzoo Investor Relations:

[e-mail]

travelzoo.com