Hello, everyone. Welcome to the Travelzoo First Quarter 2018 Financial Results Conference Call. All participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. Today’s call is being recorded. The company would like to remind you that all statements made during this conference call and presented in the 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 the company’s Forms 10-K and 10-Q and other periodic filings with the SEC. Unless required by law, the company undertakes no obligations to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Please refer to the company’s website for important information, including the company’s earnings press release issued earlier this morning and archive recording of the conference call will be made available on the Travelzoo Investor Relations website at www.travelzoo.com/ir. Travelzoo’s CFO, Glen Ceremony, he will start an overview analysis of quarter one financial results.

Thank you. Please open our management presentation, which is available on our Investor Relations website to follow along with our prepared remarks. To begin, let’s turn to Slide 3, which provides the key financial highlights for the quarter. Our revenue for the quarter grew to $30.9 million, up 9% year-over-year in nominal terms and up 4% in constant currencies. Our diluted earnings per share from continuing operations for the quarter was $0.20. That’s up $0.14 year-over-year, driven by the growth in revenue and despite our continued investments in Asia Pacific. Our members remain stable at $29.7 million and our social media followers and mobile app downloads continue to increase. Slide 4 illustrates our significant improvement over the last 12 months. Revenue is now growing year-over-year, which is driving profitability in North America and Europe. In Asia Pacific, we continue to invest and build scale. Slide 5 highlights our revenue by segment. Revenue in North America was $18.6 million, representing a year-over-year increase of 6% in nominal terms and on a constant currency basis. Revenue in Europe was $10.3 million, representing year-over-year increase of 13%, or flat on a constant currency basis. And revenue in Asia Pacific was $2 million, representing a year-over-year increase of 12%, or up 4% on a constant currency basis. The next few slides cover further detail of our revenue for each of our three segments. Slide 6 shows North America year-over-year revenue of $18.6 million. Revenues from our core products increased year-over-year due to increasing activity of our members, advertisers and partners. Turning to Slide 7. Europe revenue was $10.3 million. Revenue from our core products grew, the FX impact was positive and local revenue was flat. On Slide 8, Asia Pacific revenue was $2 million, which is higher than the prior year period due to…

Hello, everyone. As our results from the first quarter show, we are pleased with the progress we’re making in our goal to build Travelzoo into a much larger, global and highly profitable travel membership organization and community. Revenue growth has resumed or accelerated in almost all markets that we’re operating in, and our focused investments in product and technology start paying off. With solid operating margins in North America and Europe, we will continue to invest into our franchise in China and other countries in Asia Pacific, and we’re looking to grow revenues even faster in the second-half of 2018 and the years beyond. On Slide 15, I just like to highlight two initiatives that are underway, which we believe will grow member activity and revenue. Over the past nine months, we have been working on technology to offer our members, who live around the world the ability to book the hundreds of exclusive hotel deals that we negotiate every month also as package offers. We have found that when, for example, a member in Berlin receives a special offer for hotel in Rome. They are several times more likely to book if the offer is not just the hotel-only rate, but a package that includes hotels, airfare and local activities. We have also found that hotels and airlines are willing to give us better rates if we bundle them in package offerings. We are planning to roll this technology out in select markets in Europe towards the end of Q2. And I’d like to note that we are not looking to become a tour operate ourselves, but we are working instead in various markets with established and experienced partners in the local travel industry. We are merely leveraging these partnerships and global technology to create a better offering for our members. On the marketing side, we have started to beef up our marketing teams around the world. Our research shows that we still have a large opportunity to core Travelzoo beyond our current member base, as many consumers eat or do not know about us, or don’t know exactly what we do. Many of our existing members are highly loyal, but we need to further build visibility and scale. We are finding that partnerships with strong brands are an effective and cost-efficient way to reach new audiences and build our franchise. So to summarize on Slide 16. As we maintain quality leadership, we are aiming to increase the number of exclusive offers for our members that are available on demand. We want to accelerate top line growth and at least double the size of the company in the next few years. This will require some investments. But as we have done in the past, we will do it in a smart way, while maintaining or even increasing profit margins. Now back to the operator.

Thank you. The floor is now open for questions. [Operator Instructions] And our first question will come from the line of Dan Kurnos from Benchmark. You may begin.

Great. Thanks. Good morning, and congratulations on a good quarter, guys. I – just a few things, Holger, high-level here. Look, I mean, Asia grew, I know there has been some discussion. Obviously, we’re still loss there. Are you seeing some traction in some areas. I know, you’ve kind of revamped the internal heads of the businesses there. So can you just give me your thoughts on, now that you’ve, at least, for a quarter gotten this thing to growth. What the long-term trajectory is? Are you still looking for partnerships? Are you – how do you get that to profitability? And just generally, sort of your outlook for that business segment?

Yes. Hi, Dan. Yes, we’re happy that revenues are growing again in Asia Pacific. We have increased marketing and product development in these markets in this quarter, which you clearly see by the loss that it’s generating these investments. The most important markets in Asia are, of course, China – Greater China for us. And yes, this is a market where we are looking to work with partners. We feel we have just start to begin build the Travelzoo brand in China, and it’s not going to be a market where we can just do it ourselves. So it will be a market where we were looking with partners. In the other countries we’re operating in, we have brought really strong and great general managers in place. We are seeing more than double-digit growth in several of these markets. And as we continue to build scale, we believe we can bring them to profitability, yes, in the next couple of years.

Got it. That’s helpful. And then on Europe couple of things, so nice uptick in subs. I know that you’ve called out kind of two drivers in your prepared remarks although the shift towards more packaged products at the end of Q2 sounds like that’s more of a longer-term tailwind than near-term. So is there anything else to kind of call out? Beginning of year can always be a little bit volatile from the sub perspective, but it was a nice uptick there even sequentially a little bit more, I think, than you were seeing previous, is there anything to call out there?

Well, the travel industry is strong and continues to be strong and hotels are becoming busier than ever. In Europe, travel is – has been picking up quite a bit. But as we see, this is still an environment in which we can continue to grow ourselves as better deal hotels or airlines. All the suppliers always have certain periods and needs when they are looking to sell more of their product. And as more people are traveling and as we are increasing our offerings that are available to our members when they need them, where they want to go, we’re benefiting from this strong growth. And the travel industry is certainly an industry that is likely to continue to grow for many years and decades to come, because more and more people will just be traveling all over the world.

On that front just in terms of hotel since you brought it up. I don’t know that you explicitly talked too much about the booking platform. I know, it’s kind of part and parcel of the new strategy. But can you just give us an update on how roll out is pacing? How many customers you’re touching with it now? I doubt you’ll give a percentage of revenue? How fast it’s growing? Just any granularity around that the new products will be helpful?

Look, the hotel platform is an essential part, not only for hotel bookings, but also for the package offering. So in that respect it was one of the pieces that we needed in order to really build a product that we ultimately want to offer to our members. Members join us, because they want to receive exclusive highly attractive offers to take trips around the world to destinations they haven’t been to. And I feel towards the end of this year, we’re able to offer this to our members and the hotel platform is an important part and integral part of the strategy.

And then just finishing up here, I mean, you talked about sort of accelerating growth in the back-half of the year and then longer-term doubling the size of the company. Just my final questions would effectively be, first of all, I assume that will be FX neutral, because I don’t know what your guys assumptions are for currency, obviously, Europe was aided by currency in Q1. So I’m going to assume that FX neutral and so you’re seeing a path to accelerating FX neutral growth in 2018, is that a fair statement? And then sort of doubling the size of the company, are you – do you think you’ll be able to do that organically or are you going to have to – do you think that if things improve, you’ll take the opportunity to either sign partnerships or make some acquisitions in order to get to your goal?

Yes, correct, and we are looking to accelerate growth on a nominal, sorry, on a constant currency basis, correct. Right now FX is extra tailwind for us, because most of our expenses are in U.S. dollars, but revenues come from currencies all across the world. And second, yes, we have a lot of opportunity to double or even triple the size of the company. It’s something that we are looking to do. I have a vision for this company to be, as I said, a very large, global, highly profitable travel membership organization. We can build scale. We can build visibility. We’re expanding our product. I cannot comment, of course, on all the strategic initiatives that we have. But yes, we are very keen on making Travelzoo a much, much bigger company in the future.

All right. Well, thanks for all the color and congrats, again.

Great. Thanks, Dan.

Thank you. And our next question comes from the line of Ed Woo from Ascendiant Capital. You may begin.

Great. Thank you for taking my questions and congratulations on the quarter. My question is more on the industry. I know you mentioned that you obviously need to be stronger. How do you feel heading into the summer travel season this year versus the past couple of years in terms of what do you think the outlook is around the world? Thank you.

Hi, Ed, this year is a little bit stronger even than last year. But in general, the trends are still the same that we have seen in the last few years. For example, in Europe, we still see a high concentration of demand in countries that are regarded as relatively safe. Hotel rates are increasing in places like Spain, Portugal, but it shows we can still thrive in this environment. And just generally, in North America, the economy in the U.S. and Canada are very good. People are traveling more and last, but not least. China, the more you travel around the world, the more Chinese travelers you see, it’s still although China is now the largest outbound travel market. This will just continue to grow in the next few years. And Chinese travelers, as you’ve seen by some of the press releases that we did, are now interested in exploring destinations that are just beyond the typical places like Paris or Rome or New York. They’re looking to venture into a destinations that are not – that well-known. And this is a great opportunity for us, because we are sourcing offers and trips in these destinations and can introduce members, for example, a country like China into destinations that they’re not so familiar with.

Talking about the economy are good commerce sometimes that could be a mixed bag. Are you seeing some pushback from some of your travel suppliers to, say, hey we don’t need to advertise as much, because businesses are so strong or what do you see as the competitive outlook right now, especially with either alternative accommodations or with direct suppliers are trying to bring more stuff in-house?

Look, what our travel suppliers are providing often very unique products and trips that are little bit more different and just very standard. Okay, here’s a flight in [indiscernible] to Maui. What we have learned is our members are really appreciating experiences more than just simple deals. So, for example, they want to travel to Italy to participate in a cooking class. They want to go to Hawaii to learn how to serve. So – and or they want to go to Europe on a river cruise instead of just traveling to one destination. So the product and the trips that our members are most interested in are not so standard. And I think this is something that we continue to see that our suppliers, our travel partners want to offer and promote actually even more so than in the last few years, because as I just mentioned, not the only way with regards to destinations, but with regards to trips themselves, travelers are becoming much more sophisticated. It’s not anymore, only about just going to a place at the cheapest price. It’s about what you actually do there when you get there.

And any impacts on alternative accommodations like Airbnb?

No, we haven’t seen that. I think Airbnb and similar companies are providing additional places, where tourists can stay. I mean, if you think about a place like Paris hotel, the loan can probably not accommodate in the future anymore all the tourists that are coming. So I think that’s just adding supply to the industry. But it’s probably more companies like Expedia or Booking.com that are affected by these changes, not so much us.

Great. Well, thank you. Good luck.

Thanks, Ed.

Thank you. Now I’ll turn it back – I’ll now turn it back to Mr. Holger Bartel.

Well, thanks, ladies and gentlemen. Thanks, again, for your time and support, and we speak with you, again, next quarter. Thanks. Bye.

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