Hello, everyone. Welcome to the Travelzoo Third Quarter 2022 financial results conference call. 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. 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 Form 10-K and Form 10-Q and other periodic filings in the SEC. Unless required by law, the company undertakes no obligation 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. An archived recording of this conference call will be made available on the Travelzoo investor relations website at travelzoo.com/ir. Now it's my pleasure to turn the floor over to Travelzoo's Global CEO, Holger Bartel, its Chief Financial Officer, Wayne Lee, and its Global Director, Travelzoo META, Arveena Ahluwalia. Wayne will start with an overview of the third quarter 2022 financial results. Thank you, Lisa, and welcome to those of you joining us today. Please open the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our investor relations website at travelzoo.com/ir. Let's begin with slide three. Our Q3 revenues were lower than expected. Consolidated Q3 revenue was $15.8 million, up 1% from $15.7 million in the previous year. In constant currencies, it was $16.7 million, which is an increase of 6% year-over-year. Our net income in Q3 was $790,000, which resulted in earnings per share of $0.06. Operating income, which we as management call operating profit, was $270,000, which is approximately 2% of revenues. As of September 30th, we had 30.5 million unduplicated members, compared to 30.7 million as of September 30th, 2021. On slide 4, we go into more details about the revenues and operating profits of our two more significant business segments, North America and Europe. North America revenue increased 9% year-over-year from $9.7 million to $10.5 million. The operating profit in North America was $812,000 in Q3, compared to an operating loss of $918,000 a year ago. Europe revenue decreased $725,000 or 14% year-over-year. At constant currencies, Europe revenue increased 2% year-over-year. Europe had an operating loss of $551,000 in Q3, compared to an operating profit of $600,000 in the prior year. On slide five, we provide information on non-GAAP operating profit, as we believe it better explains how Travelzoo evaluates performance. This slide shows the non-GAAP operating profit, which is $1.1 million in Q3. Slide six provides more information about the items that are excluded in the calculation of non-GAAP operating profit. Please turn to slide seven. As of September 30, 2022, consolidated cash equivalents, and restricted cash was $20.5 million. The cash balance reached the expected level as the number of outstanding vouchers has become smaller. Slides eight and nine detail our revenues by business segment. The North America business segment saw a year-over-year revenue increase of $800,000. Turning to slide nine, the Europe business segment, which we report in U.S. dollars, was and continues to be negatively impacted by the strong dollar. We saw revenue in Q3 decrease by $725,000, but in constant currencies, revenue increased $200,000 year-over-year. Slide 10 shows that the pandemic led to a significant reduction of fixed costs. We believe we can keep our fixed costs relatively low in the foreseeable future, while revenues are expected to grow. For Q4 2022, we currently expect substantially higher revenue and profitability. We see the demand curve in the travel industry returning to a more normal situation. We believe this allows us to negotiate and recommend more and better offers, resulting in higher revenue. However, there could be unexpected fluctuations in the short term. Now I turn over to Holger Bartel. Thank you, Wayne. In Q3, indeed, our revenue was lower than expected due to the unique travel situation in the summer of 2022. Demand jumped after the pandemic, but suppliers were still rebuilding capacity. The demand curve temporarily shifted while the supply curve remained inelastic in the short term and didn't recover quickly enough from the cutbacks during the pandemic. This pushed up prices to levels where we did not want to recommend certain overpriced travel and leisure offers to Travelzoo members anymore. In 24 years of Travelzoo history, I haven't seen a situation like this, and I believe it will not last. It was frustrating for us. While airlines, other travel suppliers, and online travel agencies benefited from overpriced travel services, our business remained flat. Now we are seeing a rapid change. Demand is returning to normal levels. Suppliers continue to build up capacity, and we have more and better offers for our members again, and revenues are accelerating. I would like to provide you a few specific examples that maybe illustrate what we are seeing. Today, for example, we are presenting to Travelzoo members the U.K. an exclusive offer at the Grove of Narberth, one of only 12 hotels the U.K. awarded five red stars and four rosettes by the British AA. For roughly GBP 400, Travelzoo members can stay here two nights in an upgraded room with lavish breakfast and a welcome gift. Just two months ago, a similar package would have cost over GBP 1,000, and the hotel was full. Another example, in Germany last week, Travelzoo members took advantage of a vacation package for EUR 279 that included flights and four days at the four-star Hotel Lisboa Plaza. Just a month ago, the hotel's occupancy was so high and flights so expensive that an offer for Travelzoo members would not have looked attractive. Now it very much does. In New York, prices at four-star hotels often exceeded $400-$500 per night or even more in summer. Now demand has flattened, hotels are further staffing up, and we were able to negotiate exclusive member offers this month for trips in fall and winter. Members have already booked over 2,000 stays just since the beginning of October. As you see on slide 11, with more than 30 million members, 7 million mobile app users, and 4 million followers on social media, Travelzoo is loved by travel enthusiasts who are both affluent, active, open to new experiences, and they trust us. The latest survey for Travelzoo members in the U.S. show 58% took 3 or more vacations in 2021, which was the time when we still were in the middle of the pandemic. 94% have valid passports compared to 43% of the U.S. population. To summarize, slide 13 provides an overview of what management and our global team are focused on. We want to increase the number of members and accelerate revenue growth to reach and then exceed pre-pandemic levels. We want to grow Jack's Flight Club's profitable subscription revenue. We want to utilize higher operating margins to significantly increase EPS, and we want to launch Travelzoo META. Speaking about Travelzoo META, at this point, I'd like to turn over to Arveena Ahluwalia, who is Travelzoo's Global Director for Travelzoo META. Thank you, Holger. I am happy to speak about Travelzoo META, Travelzoo's initiative towards a paid subscription-based service in the metaverse. In today's update, we would like to address the status and timing of Travelzoo META. Please turn to slide 16. We launched phase one in Q2 in a controlled test environment to a limited set of users and have had significant learning. We are continuing to extensively gather data and analytics and deploy these into our strategy. We plan to launch the next phase in Q4 and will provide updates as appropriate. The next slide on page 17 is what are Travelzoo META experiences. Travelzoo META experiences will be browser-enabled, entertaining travel experiences that allow members to interact with and in the metaverse. These experiences will, in many cases, overcome limitations of access, geography, economic, and physical ability, as well as provide opportunities for social connection and interaction regardless of location. Please turn to slide 18, which is consumer interest is confirmed. Travelzoo META is targeting a completely new demographic. Travelzoo META targets Gen Z. While Travelzoo META targets Gen Z, we interviewed existing Travelzoo members who represent a wide range of travel enthusiasts and real-world travelers and found they are interested in traveling in the Metaverse. 57% of those who have heard of the Metaverse want to travel in the Metaverse. In comparison, interest in shopping NFTs in the Metaverse was 2%. This is in line with a consumer survey commissioned by McKinsey & Company. Their survey confirmed that after making social connections, exploring digital worlds is the most important driver of interest in the Metaverse. With that, I am handing over to the operator for questions for Holger, Wayne, and me. Thank you. The floor is now open for questions. If you do have a question, please press the star followed by one on your touch-tone phone at this time. Once again, if you do have a question, ladies and gentlemen, that is star followed by one on your touch-tone telephone. Please hold a moment while we poll for questions. All right. We'll take our first question from Michael Kupinski with Noble Capital Markets. Thank you, and thanks for taking my questions. I have a couple. In terms of, I was wondering if you mentioned that you're seeing a significant acceleration heading into this fiscal quarter. I was wondering if maybe you can give us some sense of how October performed and whether or not you were referring to October or if you're referring to, you know, the months of November and December in terms of the acceleration in travel. I was just wondering if you can give us some framework of your comments. Hi, Mike. I was indeed speaking about October. The offers I gave examples for and the response we are seeing is happening right now in October, so it relates to October. I would call middle of July to middle or end of September more of an abnormal slowdown, where we were just not able or willing to promote as many offers to our members as we normally would do, and now we're back to normal. In fact, so far for next month, it's looking quite good. I'm not able to quantify it right now, but you heard from Wayne that we are expecting in Q4, based on what we know today, substantially higher revenues this quarter than in the year ago. Okay. In terms of gross profit margins, obviously were a little lower because of the revenues being a little soft. Do you think that the gross profit margins kinda move back towards where we were, like, maybe in Q2, where they were, like, maybe 87% or so? Do you have any sense about how gross profit margins look? Yes. As revenues continue to grow or accelerate again, we will be getting back to the same gross profit margins. Can you just describe in terms of your acceleration in travel, is that maybe if you can frame for us Europe versus the North America in terms, are we seeing similar increases and or is it one versus the other? All of the markets, we see the same trends really everywhere. What I talked about when I explained what happened in summer, we saw that in all markets. Now we are seeing the same acceleration also in our markets, both in Europe and North America. It was expected that the cash position would come down because of the, you know, the merchant payables and so forth. But it does look when you look at cash as a ratio of merchant payables, it looks like that percentage has come down. It was like 63%, I think, in the last quarter. Now it's 51%. Can you just describe to us what the cash management opportunities are here, how you view the redemptions of merchant payables, and how you look at your cash position and capability of you know fulfilling those merchant payables given your cash position? Sure. Wayne can comment on that, because we do, of course, every quarter, quite a sophisticated cash forecast. For Q4, we expect that cash will decrease again a little bit by $a few million, but merchant payables will decrease much more than that, because we have a vast number of vouchers that are expiring in this quarter. Wayne, do you have any further comments on this? Yeah. The cash movement in Q3, as Holger said, was expected, as we had expected. It's again due to a decrease in merchant payables. We're expecting the cash balances to then improve as revenues increase. In terms of the, do you have a sense of how much of those merchant payables are going to expire versus being redeemed? With regards to redemptions and expiration, you know, even after the voucher will expire, then in certain cases we would still pay the breakage amount to the merchants. So there would still be a payment. Gotcha. Okay. Okay. Our forecast actually shows that cash position will decrease again a little bit in Q4. That will be the lowest point, and we will go up from there quite significantly in Q1, Q2 next year based on our current models. Merchant payables will go down more than cash. As a result, working capital, the net working capital, will improve over the next few quarters, which is important to us. Gotcha. Okay. That's all I have for now. Thank you. Sure. You're welcome, Mike. We'll take our next question from Jim Goss with Barrington Research. All right. Thanks. Yeah, I doubt this is the same sort of situation you've lived through before, given the extreme nature of the pandemic, but I'm wondering if you could discuss that process in your role as suppliers rebuild capacity and develop travel options so you can better suit your clientele. Maybe talk about the volume of offers versus the uptake on those offers. Obviously, if the hotels are full and the flight prices are high, there would be less reason for them to want to employ an outside agent of any kind to sort of build traffic. As you move back into what you described as a lumpy process, you know, just can you talk about that. You know, what you're going through right now in trying to get there and how you're communicating that with your clientele? Yeah, it's actually quite simple, Jim. First, the world has never seen a period where for two years people could simply not travel. What happens when they can travel again, they wanna travel, and they didn't care what it costs. They were willing to pay prices that were just absurd. Some hotels became actually quite greedy. I mean, I saw cases where three-star hotels charged over $1,000 a night, but people were desperate to go. If this is your first time in two years to visit your grandmother that your grandchildren have never seen, you know, you don't care, you just go. Okay, but it's very unusual, as you said. Second, hotels, airlines, cruise lines, everybody cut their staff during the pandemic. It takes time to rehire. Some of the hotels in July, they had the demand. July, August, September, they had the demand. However, they just did not have the people. So hotels actually made only maybe 50% of their rooms available. Some of them were happy because they said, "Oh, if we sell 50% of our rooms at twice the price, we make the same amount of money with less employees, so that's good for us." So that's really what happened. It just takes time to rehire pilots, train them. It takes time to hire people to work in hotels again. It takes time to rehire people at restaurants. Anyone who has been at a hotel over the last few months sees that the level of staff and service level are just not what they used to be. That's changing. They all wanna hire back to the levels where they were before, and that's what we mean by an elastic supply. The supply in the travel industry is not coming back quickly. It just takes time. Third, how do the members respond to that? Well, first of all, as I said, and with these examples, it's changing. People are not paying these high prices any longer. They are looking for better offers. Hotels are not full anymore. Many flights are not running at full capacity any longer. Now we have fantastic offers for our members at a time when they have been used to very high prices. For us, it's actually a very good situation right now after these, you know, four or five months of summer, which have been frustrating for us. Now, members love to receive these offers. They take advantage of them. They take up on them at even higher levels than what we saw before the pandemic. In general, we are doing fine, but I just explained this today very diligently in the call because, as earnings from other travel companies will be coming out in the next few weeks, people will wonder, "Why are the OTAs doing so well? Why are the airlines reporting record revenues? And why is Travelzoo not yet back to where we were before the pandemic?" I hope we were able to explain today why this was a very unique situation this year that we just haven't seen before. Okay, thanks. Just a couple of other things. The fixed costs that you were able to contain during the pandemic, I wonder if you could talk about how much of those cost and expense levels you think could return and whether you're still able to get a benefit of the resetting of some of their cost structure during the pandemic over the next year or two. First, a lot of these expenses came from our Asia Pacific division, which we decided to close down in 2020. Second, we are not expecting these to increase significantly. We are currently operating with the resources that we believe we need to operate this business. Increases will probably come in 2023 from two factors. First, of course, like other companies, we will have to increase salaries, so there will be a few percentage points that the expenses will go up because of just the inflation that we're seeing all over the world. Second, we are planning to invest more in member acquisition. We have spent the last 6-9 months to really improve, and our efficiencies are now better than before. Q4 is generally not a quarter where it makes a lot of sense to invest in member acquisition. Q1, Q2, Q3, when that comes back, we will increase our investments. Related to that then, expenses will go up maybe by $1 million or $1.5 million. In general, it's not that we are expecting, Jim, that our fixed costs will go back to the levels we had before the pandemic. Okay, thanks. Then the last one, with regard to Meta, the notion that Gen Z might be a good target market since that's probably something ingrained in them, as they've grown up. Is this something you think is transitory or something that they will then take the lead on and sort of expand into other areas, as they move into other stages of their life? We were actually very surprised. Sorry, Arveena, you can respond, but I just wanna comment. I personally and we were very surprised when we surveyed our existing Travelzoo members, which are a little bit older, how strong their interest actually in this META offering was, so that was my surprise. Indeed, the Gen Z in which we don't have a lot of, which currently don't represent a lot of our members, that's the completely new market we are looking at. Sorry, Arveena, to interrupt you, so please go ahead. I agree with Holger. You know, as we know, it's typically the Gen Z and that audience which tends to be the early adopters of new technologies, but our survey clearly confirmed that there are other, you know, generations as well who are also super interested in the metaverse. We definitely see this, you know. We think this is gonna be a wider demographic than we imagined. All right. Well, thank you very much. Thank you. We'll take our next question from Steve Silver with Argus Research. Thanks, everybody. Thanks for taking the question. Most of my questions have now been answered. That was a very great level of detail you guys provided, so thanks for that. I guess the last question that I had related to the mention of significant learnings on Travelzoo META. Just trying to get a sense as to whether there's something more specific in terms of the learnings that you guys have acquired, whether that relates more to just the potential demographics for the offering or whether there's just something embedded in the offering itself that you guys have learned along the way as you develop. Sure. I can take that. As you know, we are proceeding with the test and run strategy, and the test launch, which was conducted in Q2, was to really determine the feasibility of a strategy. The test was conducted, you know, as mentioned previously, in a controlled manner, both internally and externally, you know, to a limited set of users. We did acquire significant data from this test, and we have tweaked our strategy accordingly. Now, also, given our attempt to be the first mover in providing travel experiences in the metaverse, please understand at this time, we can only provide limited information, but we have been following up with the data and analytics provided from that study and implemented them in our current strategy. Great. Your slide mentions, I think 57% of those members you asked had expressed interest in Meta. Just trying to get a sense as to whether, as the product is launched and you take your learnings and just improve on them further, whether you think ultimately over time that there would be an opportunity to go after or capture some of those members that did not express interest at the outset. Absolutely. That is the intention because like any early technology, the adoption rate, you know, is limited. Initially, there are the early adopters, but that grows on. Absolutely, we do plan to, at some point, go after even people and pursue people who have not yet heard of the metaverse or haven't expressed interest in the metaverse yet. Great. Thank you so much for taking the question. Thank you. We'll take our next question from Ed Woo with Ascendiant Capital Markets. Please go ahead. First, I wanna say welcome back, Wayne. It's good to hear your voice. The question I have is, you know, how demand you mentioned is beginning to return back to normal, how much of it do you think it's because of seasonality, or how much do you think it is because of the economy, or how much do you think it's because of, you know, just people already getting their travel, initial travel out of the way and may not have that kind of high demand that they had previously? Ed, I think we just see this across all industries in any country in the world. We had this pandemic, and that changed consumer behavior and they used more tech. They were at home. They went out less. They traveled less. Now everything is going back to normal, and almost see this anywhere on any front. Seasonality was different. Seasonality is going back to normal. I think we're seeing exactly the same in the travel industry. I would say also that the pandemic has probably made people in general more interested in traveling because once you're actually at home for two years and you're not going anywhere, you really realize what you have been missing. That's not only coming from me, but from other companies as well. We are hearing that generally consumers will probably after this pandemic have more interest in experiences in travel. We still see, you know, in the past, I sometimes talked about sort of bucket list experiences that people are looking for, and we still see at Travelzoo that in general, members are interested in trips, vacations, experiences that include things that go beyond what is normal, higher price points, better hotels, better trips, more activities. They wanna do something special. Today, we have an offer in the U.S. for our members for truffle hunting in Italy. We already heard from several members, "Great, I always dreamed about doing that." That's the kind of behavioral change that we've seen among consumers. Otherwise, I think in the next year and probably more quickly than expected, things will shift back to the normal patterns we had before the pandemic. Great. My last question is just on the macro environment. You mentioned that a lot of these travel suppliers, hotels, they're ramping up, but have you seen them slow down or actually cut back again because they're concerned that, you know, we have various macro issues in the U.S. and globally? No, I haven't heard about that. Great. Well, thanks for answering my question, and I wish you guys good luck. Thank you. Sure. I would now like to turn the call back to Mr. Holger Bartel. Please go ahead. Yes, thank you for your interest in today's call, and we look forward to speaking with you again next time and have a great day. Thank you, ladies and gentlemen. This concludes today's teleconference. You may disconnect your lines at this time.