Good morning everyone and welcome to the Travelzoo First Quarter 2013 Financial Results Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. Today’s call is being recorded. It is now my pleasure to turn the floor over to your host Chris Loughlin, Travelzoo’s Chief Executive Officer. Sir, you may begin.

Thank you, operator. Good morning and thank you for joining us today for Travelzoo’s first quarter 2013 financial results conference call. I’m Chris Loughlin, Chief Executive Officer. With me today is Glen Ceremony the company’s Chief Financial Officer. Glen will walk you through today’s format.

Thank you, Chris and good morning everyone. Thank you for joining us. Before we begin our presentation, we would like to remind you that all statements made during this conference call and presented in our slides that are not statements of historical facts constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our Forms 10-K and 10-Q and other periodic filings with the SEC. Please note that this call is being webcast from our Investor Relations website at www.travelzoo.com/earnings. Please refer to our website for important information including our earnings press release issued earlier this morning along with the slides that accompany today’s prepared remarks. An archive recording in this conference call will be available on the Travelzoo Investor Relations website at www.travelzoo.com/ir beginning approximately 90 minutes after the conclusion of this call. For the format of today’s call, I will review our first quarter financial results and then Chris will provide an update on our strategy. Thereafter we will open the call for our question-and-answer session. Now, please open our management presentation to follow along with our prepared remarks. The presentation is available at www.travelzoo.com/earnings. Slide 3 provides the key financial highlights for the quarter. Our revenue came in at $42.2 million this quarter representing 7% year-over-year growth. Our earnings per share this quarter was $0.36 which is lower than prior years due to our investments in sales force expansion marketing and our hotel booking platform. In addition, we saw growth in new subscribers. Slide 4 highlights our revenue by segments. Revenue in North America was $29.9…

Thank you, Glen, and hello everyone. As Glen highlighted we are very pleased with the quarter results, the testament to our outstanding team through robust business model that we have created and our focused investment strategy. For those of you who are new to the Travelzoo story, the chart on the left of this slide outlines how our business grows. On the X-axis, you will see we are growing our audience and on the Y-axis, we are increasing our revenue per subscriber over time. Our current investment strategy is focused on three areas. First, we are growing our sales force. This allows us to work with more businesses and publish more deals. Second, we are investing in our audience not just by expanding our traditional email subscriber base, but increasingly we are adding Facebook fans, Twitter followers and download to our iPhone and Android apps. And third, we are investing in product development. We are focused on improving our engagement and conversion levels and enhancing our hotel and mobile products to provide more utility and ease of use. Let’s turn to the next slide to review how we are doing. Slide 15, highlights our progress against our sales force expansion plans. Last year, we set a goal of hiring 50 additional sales staff worldwide to drive future revenue growth. On the left, you can see that we’ve made good progress through Q1 adding 29 sales staff net of attrition. We continued to ramp up to our goal of 171 sales staff but we will moderate our pace based upon our desire to achieve our short-term revenue goals also. On the right, you can see how our investment in sales forces paying off over time. At the top, we show, we published significantly more deals in both North America and Europe.…

Thank you. (Operator Instructions) Thank you. Our first question comes from Dan Kurnos of The Benchmark Company.

Yes good morning. You know, Chris you’ve seen some nice acceleration in the subscriber growth. I’m just curious maybe dig down a little bit more for us, what part of your marketing strategy or which channel is proving the most successful and besides changing mobile what’s not working or what would you do differently and do you expect sub growth will accelerate through the balance of the year?

Hi, Dan, good morning. Well, we don’t necessarily disclose what’s working because other people copy us. But in general we are pleased with the results. We did spend more on subscriber marketing, so that one input that’s driving growth. But we are focused on optimizing the sign-up process. We are optimizing on our placements. I also mentioned the marketed remarks that we did see a significant jump in traffic from mobile -- from social media. It was quite sizeable indeed. And I can’t say hand on we are crack the code on that yet. But we are very, very pleased with the amount of traffic we are able to bring in from social media. On -- well, for the second half of your question was what’s not working? Well, we can always improve, right? I mean it’s not that we got a perfect chap. We have a team in place at a very, very smart who will continue to optimize and hopefully improve.

Would it be fair to say that with some of the scale you are seeing you are getting improving return on investment through the marketing channel?

Well, return on investment is a metric that we measure internally. And what we see is, if we spend heavily, of course, return on investment drops because your balance of organic subscribers decreases and advertising drives more subscribers. So that is a balancing act to do on ROI around spend. But what is true is that, we seem to have come through the fog a lot more people now understand Travelzoo, understand the quality of the offering that we have, they may have tried us first time with a restaurant deal, and now they are trying us first time with the Getaway or travel deal. And that virtuous circle is clearly having a positive impact on the business and I think the best way you can view that is just look at the comments in social media for our brand compared to other brands we just -- we do a significantly better job for the people who use our service.

Shifting over to the Getaways portion it seems like competition has picked up from the OTAs and the airlines and sales and I’m just wondering have you seen any impact on the business for the addressable market, I mean you grown the business pretty nicely so far.

I mean, its always competition out there and we continue to face competition, but we are owning our products now for example, a hotel can run a Getaway with us and we can provide them with reviews when people are checking out and that helps the hotel understand the quality of our audience and the experience we can show percentages of consumers who stayed and plan to return. We can also show demographic information. So our product is improving as the competition continues. So -- but our main competition has been part of our life from the beginning, so I would not say significantly different from the past.

We have also seen some recent signs of softening demand in Europe and the UK and particular in the e-commerce market. And I am wondering if you could share any thoughts as to whether you are seeing that going forward on the travel side?

Well, in travel, I mean in the UK and Germany we saw a strong demand for our products particularly, from cruise operators and from vacation packages. We did enter the year with very optimistic news in general in travel, right. So I think a lot of these operators went as fast and hard as they could. There is sort of I think a general feeling in the UK in particular where people are fed up of bad news and a slowing economy and they are going ahead and booking the vacation Getaway anyway. In the U.S., the situation was a little different and we ended with very good news. Real estate prices are going up both business and consumers are feeling confident and we obviously were beneficiary of that.

And then, just lastly, on the daily deals fronts just a couple questions here. You seem to be getting modestly better traction with some of the larger cities but may be limited traction some of the secondary market, despite all of the headcount ramp. I am curious what you are long-term view of the daily deals market is and why it was that you saw customers buying fewer vouchers in this quarter?

Well, actually overall, we sold more vouchers but when I say that it is a combination of the Getaways and the local deals. So we saw -- we had more purchases, we had more new purchases, we had more repeat purchases and we sold more vouchers in general. So that is an aggregate sense. We are -- we did send, we did increase the volume of Getaways that we sent, so one reason that could be the consumers are deciding that they do restaurant, or do they do a Getaway and not everyone will do both. The second thing is that we are seeing in general fewer vouchers purchased per deal and yes that could be because we are a little further along now, two and a half years into the model, so some people like it. And the second thing we are seeing is a slight decrease in take rate on the restaurant and spa type deals.

Just a follow-up on that because that was the second half of my question. How much was the take rate impact in the quarter? If you can provide that, and was that directly related to Groupon cutting its take rate they did in Q4?

I didn't hear that it was directly related to Groupon, but we're subject to competition and businesses now restaurants and spas now have this as part of their central marketing plan, right, so they -- this is now a staple for many of these businesses. And prices or rate changed or came down a little, it was as Groupon or Ida, I couldn't tell you. Sorry, what was the second half of your question?

Well, I was just curious how much the take rate was impacted in the quarter? And then, secondarily, how much of the decline in growth that you saw this quarter was reflecting the reduced take rate versus lower vouchers per deal?

Yeah, I'm not sure we disclosed the full take rate but it came down. Glen slightly --

Yeah, just Dan, that relatively speaking, I think the biggest impact is from a year-over-year perspective the bigger impact is less vouchers sold per deal. And like Chris said, we are pleased with overall we produced more deals compared to last year but that trend definitely impacted us. The take rate, I would think of it as, from a year-over-year perspective, it’s a couple of points. And we've been pretty selective. I would say its more – it’s less about overall competition and more about selective thinking about how we get the deals that we really want to have the quality in the portfolio that we'd like to see.

Thank you. Our next question comes from Ed Woo of Ascendiant Capital. You may begin.

I had a housekeeping question. Did you say that next quarter you're going to see a $0.04 legal charge in addition to the $0.04 investment in your vacation packagers?

Yes, Ed.

And then the other question is, obviously, you had a very good first quarter. Was there anything specifically that changed in the market? I noticed you got a little bit more revenue from vacation packagers. Is that something that is some kind of a mental shift in your product focus?

No, I don't think anything changed in the market per se. What we did do is we hired people through the course of last year. Some of those people are becoming productive now. For example, we have a chap in Manchester in the UK who did a fantastic job in the cruise area and brought a lot clients with him from his previous role. So those are things that we hope to see and we are seeing them. And obviously Getaways is up significantly and as I mentioned before to Dan, we did enter the year particularly in the U.S. with a great deal of confidence. So those vacation and cruise advertises cease the moment to get the forward bookings into the summer.

Okay. And have you mentioned when you would have that hotel booking, you mentioned fully rolled out?

No. We haven’t mentioned we will have it fully rolled out. We expect to be able to get the hotel booking engine live towards the back of the year and we have outlined it in the slide. I’m not sure which number the slide is. But, we are testing right now through our Perfect Escapes website to learn and understand the model and get the organization ready. And of course, it’s like a balancing act because we certainly don’t want to impact the great progress we are making with existing products such as Getaways.

Great. Then my last question is on the Getaways, you mentioned that overall your take rate have come down a little bit, does that include the take rate for Getaways? And how was the pricing environment, you are going to raises prices for the listed email newsletters?

Glen, would you like to answer the question?

Sure, yeah. Just as a reminder, take rate since the beginning has been a bit lower on the Getaways, you know they are higher priced and it’s just a different sector. But as far as the decline, I would say there was a bit of decline less than in local deals.

Great. And were you guys able to raise prices this year, I know you guys completed in the first quarter?

On our core business –

Yes.

I would characterize it, as there weren’t any significant price increases.

Thank you. I will turn back now to Mr. Loughlin.

Ladies and gentlemen, thank you for your time and your support, we look forward to speaking with you in the next quarter. Have a nice day. Thanks. Bye-bye.