Good morning, everyone. And welcome to the Travelzoo Third 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 third 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’d 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. Unless required by law we undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. 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 of 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 third quarter financial results and then Chris will provide an update on our strategy. Thereafter, we will open the call for 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. We achieved revenue of $37.3 million this quarter representing 5% year-over-year growth. Our non-GAAP earnings per share this quarter was $0.19, which is lower than prior year’s earnings per share due primarily to our investments in sales force and…

Thank you, Glen, and hello again everybody. Please allow me to start by highlighting on slide 14, how our business grows. On the X axis, you can see that we are growing our audience and on the Y axis, we are increasing our revenue per subscriber over time. Our current investment strategy falls into two areas, first, we are investing in audience growth, not just by expanding our traditional email base, but increasingly we are adding Facebook fans, Twitter followers and downloads to our iPhone and Android apps and second, we are investing in product development. We are focused on improving our engagement in conversion levels through better visual presentation and simplified ease of use. We are also expanding our product portfolio to allow users to search for what they need, where they need it and when they need it. Our focus is primarily on mobile and hotels. So let’s turn to the next slides to review how we are doing. On slide 15 you can see that over time audience growth has been a key driver of our revenue growth. We added 200,000 net new email subscribers during the quarter and net new email subscribers are old subscribers or new subscribers net of unsubscribes. In this quarter we saw a larger than normal number of technical unsubscribes particularly from Yahoo. Technical unsubscribes normally occur when an ISP shut its email boxes and due to this larger than normal technical unsubscribed rate, our net new subscribers is somewhat disappointing this quarter, compared to the actual number of new subscribers we welcome to Travelzoo. In addition to email subscribers, we are focused on building our mobile and social audiences. We ended the quarter with 2.2 million app downloads or installs on iPhone and Android, and 1.8 million fans across Facebook and…

Thank you. (Operator Instructions) And our first question comes from the line of Dan Kurnos of The Benchmark Company. Your line is open.

Hey. Great. Thanks. Good morning. Thanks for taking my questions, guys. Chris, if we were having this conversation a year ago and it would have been all about reaccelerating subscriber growth and investing to get to that goal. We saw deceleration this quarter. I know you called out some email unsubs, but you guys pulled back about $1 million quarter-over-quarter in marketing spend. So, I’m just wondering if there is sort of a change in strategy. You did talk about more towards Twitter and Facebook, and I’d like to hear your thoughts on how you plan on pursuing subscribers and what the overall strategy is going forward there?

First of all, Glen, can you clarify, Dan’s …

Yeah.

… points on the spend, because I’m not sure that’s quite right?

Yeah. We’ll do, we’ll do. Hi, Dan. Yeah, the marketing pull back that you see is related to our search -- reduced search spending. It’s not related to our subscriber marketing. But having said that, we didn’t accelerate our subscriber marketing, and to your point, I agree, last year at this time we would have said we wanted to spend more, but I think we are just balancing. Last year at this time, we weren’t also making a pretty big investment in our hotel booking platform either. So, I think we are just trying to balance those needs, so with that decrease that you see, it is primarily due to the reduced spend on the search.

And so, would it be fair to say that based on your Q4 guide on the expense front, it sounds like you’re still focused on the hotel booking platform and re-accelerating that subscriber growth is not necessarily a top priority at this time?

Well…

Yeah. Let me -- go ahead, Chris.

No. Please go ahead.

Okay. I think we are going to do the same thing. We are going to balance what we need to spend on hotel booking, and I wouldn’t expect a significant increase in subscriber spend from the levels that we are looking at now, but we spend it when we can, right, so it helps, right. It’s not going to be a dramatic increase in Q4. We are a bit more cautious in the second half of the year because of the seasonality of our business.

Got you.

Dan, just to give you a flavor there, Dan, we were -- in Q3 we were spending all the way to the end of the quarter. We didn’t pull back on the subscriber marketing. It’s certainly one of our key strategic initiatives to grow that subscriber base overtime, but as Glen pointed out, we balanced that with a need to invest in products. You have to balance the audience growth versus audience engagement. We’ve done a really good job on audience engagement. We’ve got almost a million more subscribers active this quarter compared to a year ago in the same quarter. That’s without spending on marketing. It’s thinking about how we can engage the folks we have already got and we do balance the need to grow with the desire to get them engaged.

Okay. That’s helpful, Chris. I appreciate the extra color on that. Let me ask to you speaking of caution, just a macro question on travel. We heard from eBay last night that there is a pretty big deterioration in e-commerce growth rate from Q2 to Q3 and then subsequently into Q4. I’m wondering if you are seeing any domestic weakness or signs of domestic weakness early on in the Q4 travel season.

No evidence so far, Dan.

Okay. Great. And then, Glen, maybe if you have this number, would you be able to give us what Getaways growth was in the quarter?

It was strong, right. I think we were -- we continue to be pleased about that performance in both Europe and in North America, particularly in Europe, I think with the good weather and the U.K. really saw strong Getaway performance there, so double-digit similar to last quarter.

Yeah. Dan that really does embolden us on this hotel booking strategy. And if you think about it today, if you go to the Travelzoo website and you say I would like to have a hotel in Sonoma this weekend, it’s very difficult for you to find that even though I’m staring right now at a fantastic deal that have been -- that it is available. And when we see those travel numbers this quarter, in particular the Getaways, we’re absolutely involved in around this idea of making our deals date searchable and bookable and expanding hotel offering to us subscribers.

Okay. Let’s jump over to research and local vendors real quickly. On the local side, you had some pretty easy comparisons. Clearly, there is some competitive pressures in that market. Were there any disruptions from the website changes in terms of conversion rates, was there something else behind the scenes that drove the weakness and really how do we think about search and local going forward here?

Well, let me address both of these for you. First of all on Search, Search was predominately the Fly.com product where we saw some weakness. There are two things happening. One is we are seeing an increase in mobile traffic and monetization on mobile is not a strong as WAP. I think you will also see that over a kayak in that public numbers. And we have to figure that out. The second is that we simply weren’t able to spend as much on marketing efficiently. So we have to rethink how we’re going to market. And if you look at lot of dramatic players what they did early on is they acquired a lot of free traffic through SEO. Fly.com didn’t do a particularly good job of that because we were relying on Travelzoo traffic. And I think we just have to -- we have to rethink how we’re going to get awareness onto that product over time. Those are the two key things there in Search. In local, the story that is actually quite interesting not just sold overall was up, conversions on our pages are up. The filtering definitely had an impact. It was plus 10% impact on conversions. So all the stuff we’re doing on the sites were really very positive. In fact, new buyers was up year-on-year and constant with last -- the previous quarter repeat buyers was at an all-time high and mobile was up 40%. So all of those things are really good. And it seems that there is no problem with the format what is concerning is that the number of voucher sold per DO particular for spa deals and the activity deals was significantly lower. In Gateways, we don’t see that as much, as we do on the low cost side. So that’s the key, one of the key trends. The other thing is on the local sides and not so much the hotel side is the take rate pressure that we see. So we have to address those. On the -- what can we do here is, one is I think reinforcing the quality as soon as we put out a quality deal itself. That’s never changed. I am staring at a deal right now in Chicago that sold 600 vouchers for brunch deal. So I mean, that works. So rethinking quality, we are coming into a gifting period. And I think we need to improve our gifting experience. Mobile, it still quite difficult to find what you need on Travelzoo’s mobile experience. The mapping function we recently put out is definitely a positive but we’re filtering and someone’s needs to be able to open map and say I need a restaurant in San Francisco tonight. And we’ve got that content, we just need to make it easy to find. And then just in general growing our mobile usage and mobile downloads will drive it too. Today that’s what’s going on in those two areas right now.

Yeah. That’s really helpful Chris. Thanks. And just one last one for me and I will step aside. You talked about the booking platform. I think you mentioned in your remarks that it would go live in Q1. I don’t know if that was something you said specifically but I am curious when you think it will actually see impact what your results and then Glen maybe you could update us on -- if there has been any change to what the actual incremental quarterly spend is on the platform from what you had previously announced?

Glen, why don’t you go ahead and answer both of those questions?

Sure. Sure. Yeah. The incremental is -- we’re expecting is about $300,000 incremental on the spend compared to this quarter. And Dan, I wanted to get back to you on this and answer you more directly on the Gateways, total Gateways overall was over 50% growth.

And the timing of when you guys think the booking platform might be incremental results?

So we’re looking at beta testing towards the end of this quarter beginning in next year. So when it becomes impactful, I would say with that lag, if remember the rev rack is based on when the stay occurs and not the booking. So we’re probably looking at more like late second half of next year.

All right. Great. Thanks very much guys.

Thank you.

Great. Thanks Dan.

Thank you. And I would now like to turn the program back to Mr. Loughlin.

Okay. Well, thank you, Operator. Ladies and gentlemen, thank you very much for your time and support. We look forward to speaking with you again next quarter. Have a nice day.

Thank you, ladies and gentlemen. This concludes today’s conference. You may disconnect your lines at this time and have a pleasant day.