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]