Fourth Quarter 2024 Performance February 25, 2025 Important Notice to Investors Please read this management presentation together with the Company's press release issued earlier today announcing the Company's fourth quarter 2024 financial results and in conjunction with the Company's recent Annual Report and Quarterly Reports as filed with the Securities and Exchange Commission (SEC). Certain statements contained in this presentation that are not historical facts may be forward looking statements within the ...

Group 1: Earnings Performance - Travelzoo reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.31 per share, but showing an increase from $0.24 per share a year ago, resulting in an earnings surprise of -16.13% [1] - The company posted revenues of $20.68 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 6.27% and down from $21.15 million year-over-year [2] - Over the last four quarters, Travelzoo has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Group 2: Stock Performance and Outlook - Travelzoo shares have declined approximately 14.9% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at $0.28 on revenues of $23.73 million, and $1.21 on revenues of $97.66 million for the current fiscal year [7] - The Zacks Rank for Travelzoo is currently 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Group 3: Industry Context - The Internet - Commerce industry, to which Travelzoo belongs, is currently in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Solo Brands, Inc., is expected to report quarterly earnings of $0.12 per share, reflecting a year-over-year change of -7.7% [9]

Financial Performance - Travelzoo reported consolidated revenue of $20.7 million for Q4 2024, a decrease of 2% year-over-year [1] - Net income attributable to Travelzoo was $3.2 million, or $0.26 per share, compared to $0.27 in the prior-year period [2] - Non-GAAP operating profit was $5.3 million, excluding amortization of intangibles and stock option expenses [3] Business Segments - North America segment revenue increased by 1% year-over-year to $13.9 million, with an operating profit of $4.6 million, representing 33% of revenue [5] - Europe segment revenue decreased by 13% year-over-year to $5.4 million, with an operating profit of $159,000, or 3% of revenue [6] - Jack's Flight Club, in which Travelzoo holds a 60% interest, saw revenue increase by 19% year-over-year to $1.3 million [7] Cash Position and Operations - As of December 31, 2024, consolidated cash and cash equivalents were $17.7 million, with net cash provided by operations at $7.7 million [4] - A provision of $1.5 million for income taxes was recorded for Q4 2024, compared to $1.6 million in the prior-year period [12] Future Outlook - For Q1 2025, Travelzoo expects revenue to increase at a higher pace, with membership fee revenue contributing to incremental growth [14] - The company anticipates substantially higher revenue growth for the whole year, driven by recurring membership fee revenue [15] Membership and Reach - Travelzoo reaches 30 million travelers, including members of Jack's Flight Club [10] - In 2024, Travelzoo introduced a membership fee, with Legacy Members exempt during the year, representing over 95% of Travelzoo's reach [16]

Core Viewpoint - Travelzoo (TZOO) is expected to report slower revenue growth in Q4 2024 compared to 2023, with a Zacks Consensus Estimate for revenues at $22.06 million, reflecting a 4.3% year-over-year increase [1][2] Revenue and Earnings Estimates - The earnings estimate is set at 31 cents per share, indicating a 29.17% year-over-year growth, remaining unchanged over the past 30 days [2] - The company delivered a 30% earnings surprise in the last reported quarter, beating the Zacks Consensus Estimate in three of the last four quarters, with an average positive surprise of 11.71% [4] Factors Impacting Performance - North American revenues declined by 4% year over year to $12.8 million in Q3 2024 due to postponed advertiser spending and website launch delays, although management expects normalization in Q4 [7] - Competition from major players like Expedia and Booking.com, as well as specialized platforms, poses significant challenges to Travelzoo's market position [8] Regional Performance - European operations showed resilience with a 1% revenue increase and a significant margin improvement to 17% in Q3, which may support overall results in Q4 [9][10] Membership Fee Model Transition - The transition to a membership fee model presents both opportunities and risks, with management expecting substantial revenue growth in 2025, but early conversion indicators will be crucial [11] Profitability and Cash Flow - Travelzoo maintained a strong operating margin of 20% in Q3 and generated an operating cash flow of $5.3 million, indicating healthy profitability [12] Stock Performance and Valuation - Travelzoo's stock surged 122.2% over the past year, outperforming the broader Zacks Retail-Wholesale sector, which returned 23.9% [13] - The forward P/E ratio of 12.5 suggests the market may undervalue the company's growth potential compared to the Zacks Internet - Commerce industry's 23.98 [16] Investment Considerations - Investors are advised to maintain a Hold position or wait for a better entry point due to mixed near-term outlook, despite the company's strengths in European operations and Jack's Flight Club growth [19] - The execution risks associated with the membership fee strategy and competitive pressures in the online travel space warrant careful consideration before making investment decisions [20]

Core Viewpoint - Travelzoo will host a conference call to discuss its financial results for Q4 2024, with a press release to be issued before the market opens on February 25, 2025 [1] Group 1 - The conference call will provide insights into Travelzoo's financial performance for the fourth quarter ended December 31, 2024 [1] - A live webcast of the earnings conference call will be accessible online, and it will be archived for later viewing [1]

Core Insights - Travelzoo (TZOO) is positioned to continue its earnings-beat streak, having achieved an average surprise of 25.53% over the last two quarters [1][3] Earnings Performance - In the most recent quarter, Travelzoo reported earnings of $0.26 per share, exceeding the expected $0.20 per share, resulting in a surprise of 30% [2] - For the previous quarter, the company reported $0.23 per share against an expectation of $0.19 per share, leading to a surprise of 21.05% [2] Earnings Estimates and Predictions - Analysts have been revising their estimates upward for Travelzoo, contributing to a positive Earnings ESP of +12.90%, indicating bullish sentiment regarding the company's earnings prospects [3][6] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat [6] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [4] - The Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [5] Investment Strategy - It is crucial for investors to check a company's Earnings ESP prior to quarterly releases to enhance the probability of successful investment decisions [7]

Core Viewpoint - Travelzoo (TZOO) has experienced significant stock appreciation of 136.8% over the past year, outperforming both the Zacks Retail and Wholesale sector and the Zacks Internet – Commerce industry [1] Company Overview - Travelzoo is a global Internet media company with over 30 million members, providing exclusive travel deals and experiences [2] - The company operates through various platforms, including its website, mobile apps, and newsletters, targeting travel enthusiasts [9] Financial Performance - TZOO shares are benefiting from the introduction of a membership fee, expected to enhance revenue and profit starting in 2025, with legacy members contributing from January 2025 [3] - The Zacks Consensus Estimate for TZOO's 2025 earnings is $1.21 per share, reflecting a year-over-year growth of 10.78%, while revenues are estimated at $97.66 million, indicating a growth of 14.56% [13] Market Position - TZOO shares are currently trading above both the 50-day and 200-day moving averages, indicating a bullish trend [6] - The company has a strong partner network of over 5,000 travel partners, allowing it to offer exclusive deals on various travel experiences [11][12] Growth Prospects - Travelzoo's innovative offerings, such as Jack's Fight Club and Travelzoo META, diversify its portfolio and cater to different traveler segments [10] - The company’s Growth Score of A suggests it is attractive for growth-oriented investors [17] Valuation Concerns - Despite its strengths, TZOO's valuation appears stretched, with a forward 12-month price/sales ratio of 2.49X, higher than its median of 1.45X and the broader sector's 1.55X [15][14] - The company's growth expectations for 2025 heavily depend on converting legacy members into paid memberships, which poses a risk if there are delays or resistance [18]

Group 1 - Travelzoo (TZOO) is currently outperforming the Retail-Wholesale sector, with a year-to-date gain of approximately 106.2%, compared to the sector's average gain of 34.6% [4] - The Zacks Rank system indicates that Travelzoo has a Zacks Rank of 2 (Buy), reflecting improving earnings outlooks, with a consensus estimate for full-year earnings moving 12.4% higher in the past quarter [3] - Travelzoo belongs to the Internet - Commerce industry, which has seen an average gain of 46.8% this year, indicating that TZOO is performing better than its industry peers [5] Group 2 - The Retail-Wholesale group consists of 212 companies and is currently ranked 8 within the Zacks Sector Rank, which evaluates the strength of various groups based on the average Zacks Rank of individual stocks [2] - Another notable stock in the Retail-Wholesale sector, Williams-Sonoma (WSM), has also shown strong performance with a year-to-date return of 92.3% and a Zacks Rank of 2 (Buy) [4][5] - The Retail - Home Furnishings industry, to which Williams-Sonoma belongs, is ranked 201 and has gained 18.2% this year, indicating a weaker performance compared to Travelzoo and the Internet - Commerce industry [6]

Core Viewpoint - Travelzoo has experienced a significant stock price increase of 39.7% following its third-quarter 2024 results, indicating a strong investment case despite a slight revenue decline [1]. Financial Performance - The company's consolidated revenues for Q3 2024 decreased by 2% year-over-year to $20.1 million, while operating profit increased by 30% to $4 million, representing 20% of revenues, up from $3.1 million the previous year [4]. - Non-GAAP operating profit reached $4.9 million, constituting 25% of revenues, showing improvement from $3.9 million in the prior year [4]. Geographic Performance - The European segment showed strong performance with operating margins rising to 17% in Q3 2024, while North American revenues fell by 4% to $12.8 million but maintained a robust operating margin of 25% [5]. Strategic Initiatives - The introduction of a membership-fee model at the beginning of 2024 is expected to drive significant revenue and profit growth in 2025, with legacy members exempt from fees until January 2025 [6]. - The company's 60% ownership in Jack's Flight Club saw an 11% revenue increase year-over-year to $1.2 million in Q3, with premium subscribers growing by 14% [7]. Financial Position - Travelzoo reported $12.1 million in cash and cash equivalents as of September 30, 2024, and generated an operating cash flow of $5.3 million during the quarter, alongside significant share repurchases [9]. Valuation Metrics - The stock's forward P/E ratio stands at 16.85, suggesting potential undervaluation compared to the Zacks Internet - Commerce industry's average of 25.25, indicating an opportunity for value-oriented investors [10]. Investment Outlook - The anticipated revenue growth in 2025, driven by the membership fee implementation, positions Travelzoo favorably in the premium travel market segment, targeting affluent travelers [17]. - The Zacks Consensus Estimate for Travelzoo's 2024 revenues is $85.57 million, reflecting a year-over-year growth of 1.3%, with earnings expected to grow by 36.25% to $1.09 per share [18]. Conclusion - Current investors are advised to hold onto Travelzoo shares due to strong fundamentals and growth catalysts, while potential investors may find an attractive entry point following the recent stock surge [20][21].

Core Viewpoint - Travelzoo (TZOO) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Travelzoo's earnings estimate for the fiscal year ending December 2024 is projected at $1.09 per share, reflecting a year-over-year increase of 36.3% [8]. - Over the past three months, the Zacks Consensus Estimate for Travelzoo has risen by 14.7%, indicating a positive trend in earnings expectations [8]. Investment Implications - The upgrade to Zacks Rank 2 suggests that Travelzoo is positioned in the top 20% of Zacks-covered stocks, which may lead to increased buying pressure and a potential rise in stock price [11][10]. - The Zacks Rank system has a proven track record, with Zacks Rank 1 stocks averaging an annual return of +25% since 1988, highlighting the effectiveness of earnings estimate revisions in driving investment decisions [7][9].