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 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 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]

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]

Financial Performance - Revenue increased by 5% year-over-year, reaching $23.1 million in Q1 2025, the highest quarterly revenue since the pandemic[5][6] - Operating profit decreased from $5.6 million in Q1 2024 to $3.7 million in Q1 2025, due to increased investment in member growth[5][6] - Non-GAAP operating profit was $4.3 million, representing 19% of revenue in Q1 2025[28] - Cash flow from operations was $3.3 million, and the company repurchased 590,839 shares, decreasing cash to $12.2 million[33] Segment Performance - North America segment revenue increased from $4.4 million in Q1 2024 to $6.7 million in Q1 2025[9] - Europe segment revenue increased from $3.3 million in Q1 2024 to $6.7 million in Q1 2025[9] - Jack's Flight Club segment revenue increased from $14.2 million in Q1 2024 to $15.1 million in Q1 2025[9] Revenue Streams - Membership fees increased from $1.6 million to $2.4 million, driving significant and incremental revenue growth[15] - Total revenue increased from $20.7 million in Q1 2024 to $23.1 million in Q1 2025[38] Investments and Expenses - Operating expenses and cost of revenues increased from $16.4 million in Q1 2024 to $19.4 million in Q1 2025[40] - The company is investing more in member growth, which is expected to accelerate revenue growth in coming quarters[5][37]