Core Viewpoint - Travelzoo reported a 13% year-over-year increase in GAAP revenue to $23.9 million for Q2 2025, exceeding analyst estimates, but GAAP EPS declined sharply to $0.12, missing expectations and reflecting profitability pressures due to increased marketing spending for its paid membership program [1][2][11]. Financial Performance - GAAP Revenue: $23.9 million, up 13.2% from $21.1 million in Q2 2024 [2] - GAAP EPS: $0.12, down 47.8% from $0.23 a year ago and missing the estimate of $0.24 [2] - Operating Profit (GAAP): $2.1 million, down 47.5% from $4.0 million in Q2 2024 [2] - Cash Flow from Operations: $1.3 million, down 60.6% from $3.3 million in Q1 2025 [2] Business Model and Strategy - Travelzoo is transitioning from a free membership model to a paid subscription model, focusing on recurring revenues through paid memberships [4] - The company aims to enhance its digital reach and partnerships with travel providers while expanding its operations in North America and Europe [4][5] Segment Performance - North America revenue increased 14% year-over-year to $16.1 million, with an operating profit of $2.8 million, but operating margin declined to 17% from 26% due to higher marketing investments [5][6] - European revenue grew 7% to $6.4 million, but the segment reported a loss of $0.88 million, attributed to increased spending on acquiring new Club Members [6] - Jack's Flight Club revenue rose 33% year-over-year to $1.4 million, with a 15% increase in premium subscribers, resulting in an operating profit of $156,000 [6] Margins and Cash Flow - Gross margin was approximately 78%, but non-GAAP operating margin fell from 19% in Q1 2025 to 10% [9] - Cash and cash equivalents totaled $10.4 million at the end of the quarter, with cash flow from operations decreasing to $1.3 million [9] Share Buybacks and Equity - The company repurchased $2.5 million worth of shares, which contributed to negative equity at the end of the quarter, a shift from a positive balance at the end of 2024 [10] Future Outlook - Management projects revenue growth to accelerate in Q3 2025 as more membership fees are recognized and free members convert to paid status [11] - Focus will be on conversion rates of free to paid members, retention trends, and profitability improvements in segments [12]

[Financial Highlights and Business Overview](index=1&type=section&id=Financial%20Highlights%20and%20Business%20Overview) Travelzoo reported increased Q2 2025 revenue but lower net income due to strategic marketing investments, focusing on growing its paid Club Members base [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Travelzoo reported a 13% year-over-year increase in consolidated revenue to $23.9 million for Q2 2025, though net income and EPS significantly declined due to strategic marketing investments Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $23.9 million | $21.1 million | +13% | | Consolidated Operating Profit | $2.1 million | $4.0 million | -48.6% | | Net Income Attributable to Travelzoo | $1.4 million | $2.9 million | -52.2% | | Earnings Per Share (EPS) | $0.12 | $0.23 | -47.8% | | Cash Flow from Operations | $1.3 million | $3.3 million | -60.7% | - The significant drop in **EPS** is a direct result of increased investment in acquiring new Club Members, with immediate expensing of marketing costs impacting **short-term profitability** while membership fee revenue is recognized ratably over 12 months[2](index=2&type=chunk) - **Non-GAAP operating profit** for Q2 2025 was **$2.4 million**, excluding $339,000 in stock option expenses, $16,000 in amortization of intangibles, and $6,000 in severance-related expenses[5](index=5&type=chunk) [Business Strategy and CEO Remarks](index=2&type=section&id=Business%20Strategy%20and%20CEO%20Remarks) The company's strategy focuses on expanding its paid 'Club Members' base through aggressive marketing, aiming for quick payback and positive ROI, while transitioning from 'Legacy Members' to a recurring revenue model - CEO Holger Bartel stated the company will continue to negotiate more **exclusive 'Club Offers'** and add new benefits, such as **complimentary airport lounge access** during flight delays, to enhance the value proposition for its affluent and active members[6](index=6&type=chunk) - In 2024, Travelzoo introduced a **paid membership model** where 'Legacy Members' have limited access, while paid 'Club Members' receive **exclusive offers and benefits**, driving conversions from the legacy base[18](index=18&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) North America revenue grew with reduced profit margins, Europe swung to a loss from marketing spend, while Jack's Flight Club showed strong growth and profitability [Travelzoo North America](index=2&type=section&id=Travelzoo%20North%20America) The North America segment, the company's largest, reported a 14% year-over-year revenue increase to $16.1 million, but operating profit declined, causing the operating margin to contract from 26% to 17% in Q2 2025 North America Segment Performance (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $16.1 | $14.1 | | Operating Profit | $2.8 | $3.7 | | Operating Margin | 17% | 26% | [Travelzoo Europe](index=2&type=section&id=Travelzoo%20Europe) The Europe segment's revenue grew 7% year-over-year to $6.4 million, but it swung to an operating loss of $883,000 from a profit of $512,000 in the prior year, primarily due to increased marketing expenditure Europe Segment Performance (Q2 2025 vs Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $6,400 | $6,000 | | Operating Profit/(Loss) | ($883) | $512 | [Jack's Flight Club](index=2&type=section&id=Jack%27s%20Flight%20Club) Jack's Flight Club, a 60%-owned subscription service, demonstrated strong growth with a 33% year-over-year revenue increase to $1.4 million and achieved profitability with a $156,000 operating profit - Revenue increased **33% YoY to $1.4 million**, and the number of premium subscribers grew by **15% YoY**[9](index=9&type=chunk) - The segment turned profitable with an operating profit of **$156,000** in Q2 2025, a significant improvement from an operating loss of **$34,000** in Q2 2024[9](index=9&type=chunk) [New Initiatives](index=2&type=section&id=New%20Initiatives) The New Initiatives segment, encompassing Licensing and Travelzoo META, generated minimal revenue of $19,000 and recorded an operating loss of $31,000 in Q2 2025, with future licensing revenue expected to increase - The segment generated **$19,000 in revenue** and an operating loss of **$31,000** for Q2 2025[10](index=10&type=chunk) - Licensing revenue for Q2 2025 included **$10,000 from Australia** and **$7,000 from Japan**[12](index=12&type=chunk) [Financial Position and Outlook](index=3&type=section&id=Financial%20Position%20and%20Outlook) The company maintains $11.2 million in cash, generated $1.3 million from operations, and anticipates accelerating revenue growth with increasing long-term profitability [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of June 30, 2025, Travelzoo's cash, cash equivalents, and restricted cash totaled $11.2 million, with $1.3 million generated from operations, and deferred revenue is expected to continue increasing - Cash, cash equivalents and restricted cash totaled **$11.2 million** as of June 30, 2025[15](index=15&type=chunk) - Cash flow from operations for Q2 2025 was **$1.3 million**[15](index=15&type=chunk) - **Deferred revenue is increasing** and is expected to continue to grow as membership fee revenue is recognized ratably over the subscription period[15](index=15&type=chunk) [Shareholder Activities](index=3&type=section&id=Shareholder%20Activities) During the second quarter of 2025, Travelzoo actively returned capital to shareholders by repurchasing 172,088 shares of its outstanding common stock - The Company repurchased **172,088 shares** of its outstanding common stock in Q2 2025[16](index=16&type=chunk) [Business Outlook](index=3&type=section&id=Business%20Outlook) Travelzoo anticipates continued year-over-year revenue growth in Q3 2025, accelerating in subsequent quarters, with long-term profitability expected to increase substantially as recurring membership revenue builds - The company expects **year-over-year revenue growth to continue** in Q3 2025 and to **accelerate in subsequent quarters**[17](index=17&type=chunk) - **Long-term profitability is expected to increase substantially** as recurring membership fees are recognized, though short-term fluctuations in net income are possible due to immediate expensing of marketing costs[17](index=17&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the detailed Q2 2025 consolidated statements of operations, balance sheets, cash flows, segment performance, and GAAP to non-GAAP reconciliations [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The income statement for Q2 2025 shows revenues of $23.9 million and a net income of $1.48 million, with revenue growth offset by increased operating expenses, leading to a decline in operating income Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $23,906 | $21,141 | | Gross Profit | $18,743 | $18,621 | | Total Operating Expenses | $16,683 | $14,610 | | Operating Income | $2,060 | $4,011 | | Net Income Attributable to Travelzoo | $1,402 | $2,927 | | Diluted EPS | $0.12 | $0.23 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $46.7 million, primarily due to reduced cash, while deferred revenue increased to $8.5 million, and the company reported a total stockholder's deficit of $2.1 million Balance Sheet Highlights (in thousands) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,441 | $17,064 | | Total Assets | $46,735 | $54,722 | | Deferred Revenue | $8,459 | $6,545 | | Total Liabilities | $48,816 | $50,369 | | Total stockholder's equity (deficit) | ($2,081) | $4,353 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended June 30, 2025, net cash provided by operating activities was $1.3 million, while financing activities, mainly share repurchases, used $2.6 million, resulting in a net decrease in cash Q2 2025 vs Q2 2024 Cash Flows (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,300 | $3,306 | | Net cash used in investing activities | ($14) | ($48) | | Net cash used in financing activities | ($2,604) | ($6,807) | | Net increase (decrease) in cash | ($1,029) | ($3,622) | [Segment Information](index=8&type=section&id=Segment%20Information) This section details Q2 2025 segment performance, with North America contributing $16.1 million in revenue and $2.8 million in operating profit, Europe reporting an operating loss, and Jack's Flight Club showing growth and profitability Q2 2025 Segment Performance (in thousands) | Segment | Total Net Revenues | Operating Profit (Loss) | | :--- | :--- | :--- | | North America | $16,132 | $2,818 | | Europe | $6,385 | ($883) | | Jack's Flight Club | $1,370 | $156 | | New Initiatives | $19 | ($31) | | **Consolidated** | **$23,906** | **$2,060** | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Travelzoo provides a reconciliation from GAAP to non-GAAP operating income, adjusting for amortization, stock option, and severance expenses, resulting in a non-GAAP operating income of $2.42 million for Q2 2025 Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | GAAP operating income | $2,060 | | Amortization of intangibles | $16 | | Stock option expenses | $339 | | Severance-related expenses | $6 | | **Non-GAAP operating income** | **$2,421** |

Financial Data and Key Metrics Changes - Travelzoo's consolidated Q2 revenue was $23.9 million, up 13% from the prior year, and $23.5 million in constant currencies, up 12% from the prior year [5] - Operating income decreased to $2.1 million or 9% of revenue, down from $4 million in the prior year [5] - Non-GAAP operating profit for Q2 was $2.4 million, or 10% of revenue, compared to $4.8 million in the prior year [12] Business Line Data and Key Metrics Changes - Revenue from Jack's Flight Club increased by 33% [10] - Advertising and commerce revenue was $20.9 million for Q2, while membership fees increased to $3 million, expected to account for about 25% of revenue next year [10] Market Data and Key Metrics Changes - Member acquisition costs increased from $28 in Q1 to $38 in Q2 [6] - The company invested heavily in the UK market due to favorable ROI on member acquisition [9] Company Strategy and Development Direction - The company aims to grow the number of paying members and accelerate revenue growth by converting legacy members and adding new club members [22] - Travelzoo plans to leverage its global reach and trusted brand to negotiate more club offers for members [16] Management Comments on Operating Environment and Future Outlook - Management expects revenue growth to continue in Q3 2025 and accelerate in subsequent quarters as membership fees revenue is recognized ratably over the subscription period [13] - The company acknowledges potential fluctuations in reported net income but anticipates substantial increases in profitability over time [13] Other Important Information - As of June 30, 2025, consolidated cash and cash equivalents were $11.2 million, with cash flow from operations at $1.3 million [13] - The company repurchased 172,088 shares during the quarter [13] Q&A Session Summary Question: Understanding profitability dynamics going forward - Management explained that profitability will improve as revenue from previously acquired members contributes without incurring new acquisition costs for those cohorts [24] Question: Pace of club offers - Management indicated that new club offers are released several times a week, not limited to monthly or quarterly [25] Question: Addressing cost of revenues - Management noted that increased costs were due to purchasing distressed inventory, which allowed for strong club offers [30] Question: Normalization of costs in the second half of the year - Management stated that future costs depend on market opportunities, particularly in a weaker travel demand environment [31] Question: Focus on acquiring subscribers in Europe - Management clarified that while there was a focus on the UK, member acquisition was strong in North America as well [35] Question: Premium subscription level prospects - Management is not currently considering a premium subscription tier but will evaluate the membership fee for potential increases in 2026 [38] Question: Travel industry conditions - Management observed that both North America and Europe are experiencing lower demand, but affluent members are not trading down in spending [54]

Financial Data and Key Metrics Changes - Travelzoo's consolidated Q2 revenue was $23.9 million, up 13% from the prior year, and $23.5 million in constant currencies, up 12% from the prior year [5] - Operating income decreased to $2.1 million, or 9% of revenue, down from $4 million in the prior year [5] - Non-GAAP operating profit for Q2 2025 was $2.4 million, or 10% of revenue, compared to $4.8 million in the prior year [12] Business Line Data and Key Metrics Changes - Revenue from Jack's Flight Club increased by 33% [21] - Advertising and commerce revenue was $20.9 million for Q2 2025, while membership fees increased to $3 million [9] - Membership fees are expected to account for about 25% of revenue next year [9] Market Data and Key Metrics Changes - Member acquisition costs increased from $28 in Q1 to $38 in Q2 [6] - The company reported a favorable return on investment (ROI) on member acquisition in the UK, leading to increased investments in that market [8] Company Strategy and Development Direction - The company aims to grow the number of paying members and accelerate revenue growth by converting legacy members and adding new club members [22] - Travelzoo plans to leverage its global reach and strong relationships with travel suppliers to negotiate more exclusive offers for club members [16] - The company is also focused on developing Travelzoo Meta and enhancing Jack's Flight Club's profitable subscription revenue [22] Management's Comments on Operating Environment and Future Outlook - Management expects revenue growth to continue in Q3 2025 and accelerate in subsequent quarters as membership fees revenue is recognized ratably over the subscription period [13] - The management noted that while there may be fluctuations in reported net income, profitability is expected to substantially increase over time [13] - The current travel industry environment is characterized by lower demand, but this allows the company to create strong offers for members [55] Other Important Information - As of June 30, 2025, consolidated cash and cash equivalents were $11.2 million, and cash flow from operations was $1.3 million [13] - The company repurchased 172,088 shares during the quarter [13] Q&A Session Summary Question: Understanding profitability dynamics going forward - Management explained that profitability will improve as revenue from acquired members increases while acquisition costs will not be incurred for those members in future quarters [24][25] Question: Pace of club offers - Management indicated that there are several new club offers released weekly, although not every offer is announced via press release [26] Question: Addressing cost of revenues - Management noted that increased costs were due to purchasing distressed inventory, which allowed for strong club offers [30] Question: Expectations for the second half of the year - Management suggested that ongoing opportunities in the travel industry may lead to continued favorable dynamics in marketing spend [33] Question: European strategy and member acquisition - Management clarified that member acquisition was strong in both North America and Europe, with significant success in the UK [36] Question: Premium subscription level prospects - Management is not currently considering a premium subscription level but will evaluate the membership fee for potential increases in 2026 [40] Question: Subscriber retention efforts - Management indicated that reliable data on renewal rates will be available starting in 2026 [50] Question: Travel industry trends - Management observed that there is currently no significant difference in travel demand between North America and Europe, with prices for flights and hotels coming down [55]

Financial Performance - Revenue growth accelerated to 13% year-over-year[5], reaching $23.9 million in Q2 2025 compared to $21.1 million in Q2 2024[6] - Operating profit decreased to $2.1 million in Q2 2025 from $4.0 million in Q2 2024 due to increased investment in member growth[5][6] - Non-GAAP operating profit was $2.4 million, representing 10% of revenue[31] - Cash flow from operations was $1.3 million[37], with a cash balance of $11.2 million at the end of Q2 2025[39] Membership & Investment - The company substantially increased investments in acquiring Club Members, observing a favorable payback[8] - The average acquisition cost of annual Club Members in the US market in Q2 2025 was -$38[9] - Direct member acquisition costs in Q2 2025 amounted to -$2.8 million, expected to generate $3.0+ million in revenue in future periods[15] - Membership fees are driving revenue growth and are expected to account for around 25% of revenue next year[19] Segment Performance - Jack's Flight Club revenue increased by 33%[17]

Core Viewpoint - Travelzoo reported quarterly earnings of $0.12 per share, missing the Zacks Consensus Estimate of $0.23 per share, representing a -47.83% earnings surprise [1][2] Financial Performance - The company posted revenues of $23.91 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.44%, compared to $21.14 million in the same quarter last year [2] - Over the last four quarters, Travelzoo has exceeded consensus revenue estimates two times [2] Stock Performance - Travelzoo shares have declined approximately 31.3% since the beginning of the year, while the S&P 500 has gained 7.3% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $24.35 million, and for the current fiscal year, it is $1.18 on revenues of $96.25 million [7] - The Internet - Commerce industry, to which Travelzoo belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8]

Financial Performance - Travelzoo reported consolidated revenue of $23.9 million for Q2 2025, representing a 13% increase from $21.1 million in the same period last year [1] - Net income attributable to Travelzoo was $1.4 million, or $0.12 per share, compared to $0.23 per share in the prior-year period [3] - Non-GAAP operating profit was $2.4 million, excluding certain expenses [3][24] Segment Performance - North America business segment revenue increased by 14% year-over-year to $16.1 million, with an operating profit of $2.8 million [5] - Europe business segment revenue rose by 7% year-over-year to $6.4 million, but reported an operating loss of $883,000 due to increased member acquisition costs [6] - Jack's Flight Club, in which Travelzoo holds a 60% ownership, saw revenue increase by 33% year-over-year to $1.4 million, with a shift from an operating loss to a profit of $156,000 [7] Membership and Marketing Strategy - The company invested significantly in acquiring new Club Members, expecting a positive return on investment within the quarter [2] - Membership fees revenue is recognized ratably over a 12-month subscription period, impacting earnings per share [2] - Travelzoo aims to leverage its global reach and relationships with travel suppliers to negotiate more offers for Club Members [4] Cash Flow and Balance Sheet - Cash flow from operations was reported at $1.3 million [12] - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled $11.2 million [12] - Deferred revenue is expected to continue increasing as membership fees are recognized over time [12] Future Outlook - For Q3 2025, Travelzoo anticipates continued year-over-year revenue growth, with expectations for accelerated growth in subsequent quarters [14] - The company expects profitability to increase over time as recurring membership fees are recognized [14] - Travelzoo is seeing a transition of Legacy Members to Club Members, which is expected to enhance revenue streams [15]

Travelzoo, the club for travel enthusiasts, will host a conference call to discuss the Company's financial results for the second quarter ended June 30, 2025. Travelzoo will issue a press release reporting its results before the market opens on July 23, 2025.HOW: A live webcast of Travelzoo's Q2 2025 earnings conference call can be accessed at http://ir.travelzoo.com/events-presentations. The webcast will be archived within 2 hours of the end of the call and will be available through the same link. ...

Group 1 - Travelzoo announces the release of Club Offers for its members in the U.S., providing rigorously vetted travel deals [1] - The company claims to reach 30 million travelers, offering exclusive deals reviewed by deal experts globally [1] - Travelzoo partners with thousands of top travel suppliers, leveraging long-standing relationships to access attractive offers [1] Group 2 - Specific offers include a Napa retreat for $299 with a 50% discount on upgraded rooms and additional perks valued at $164 [2] - An all-inclusive 4-night stay in Riviera Maya for $579, covering flights, activities, meals, and drinks [2] - An 8-night trip to Italy for $899, including roundtrip flights, train transfers, and hotel accommodations [2] - A 3-night all-inclusive retreat for two at Fairmont Mayakoba for $1999, saving members $1439 compared to regular rates [2]

Group 1: Core Insights - Investors in Travelzoo (TZOO) should monitor stock movements due to high implied volatility in the July 18, 2025 $2.50 Put option, indicating potential significant price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that a major event may be anticipated that could lead to a substantial price change [2] - Travelzoo currently holds a Zacks Rank 2 (Buy) in the Internet - Commerce industry, which is in the top 26% of the Zacks Industry Rank [3] Group 2: Analyst Perspectives - The recent high implied volatility for Travelzoo options may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4] - The Zacks Consensus Estimate for Travelzoo's current quarter has slightly decreased from 24 cents per share to 23 cents over the last 60 days, reflecting a minor adjustment in earnings expectations [3]