Re suggests that Image source: The Motley Fool. On the other hand, DATEWednesday, July 23, 2025, at 11 a, amid market uncertainty.
EDTCALL PARTICIPANTSInterim CAO — Jeff HoffmanGlobal CEO — Holger BartelChief Operating Officer — Christina CioccaNeed a quote from one of our analysts. [ tected]TAKEAWAYSConsolidated Revenue: $23.
9 million in revenue for Q2 2025, reflecting a 13% increase and a 12% constant-currency increase. GAAP Operating fit: $2.
1 million in operating fit for Q2 2025, representing 9% of revenue, given current economic conditions. Non-GAAP Operating fit: $2.
4 million in non-GAAP operating fit for Q2 2025, or 10% of revenue, compared to $4. 8 million in the prior year.
Member Acquisition Costs: Average acquisition cost per full-paying member rose from $28 (Q1) to $38 (Q2). Additionally, At the same time, Immediate Member Revenue: New U, in this volatile climate.
Members paid a $40 annual fee plus $18 in same-quarter transaction revenue.
Marketing Investments: Higher marketing spend was cited as the main reason for reduced operating fit and EPS (an important development) (which is quite significant).
Furthermore, Ad & Commerce Revenue: $20. Moreover, 9 million for the quarter (noteworthy indeed).
Moreover, Membership Fee Revenue: Increased to $3 million, with an expectation to comprise 25% of revenue next year.
Additionally, Jack's Flight Revenue: Up 33%; segment operating fit increased slightly, in light of current trends. Moreover, However, Jack's Flight Premium rs: Grew 15%. However, Cash Position: $11.
2 million in cash, cash equivalents, and restricted cash as of 06/30/2025. Cash Flow from Operations: Cash flow from operations was $1 (which is quite significant). Furthermore, 3 million in Q2 2025.
Repurchases: 172,088 s were repurchased in Q2 2025.
Operating Margin Outlook: Margin reduction expected to persist near term as member acquisition accelerates, with management stating that GAAP operating margins are expected to eventually return to or exceed prior levels (quite telling).
Geographic Emphasis: Member acquisition heavily targeted at the U (something worth watching) (something worth watching).
Additionally, Due to favorable ROI, but even more members acquired in North America; losses in Europe attributed to increased U. Acquisition efforts, amid market uncertainty.
Nevertheless, Cost of Revenue: Increased in Q2 2025 due to opportunistic purchasing of distressed travel inventory to create strong offers supporting member conversion and acquisition.
Revenue Guidance: Management expects year-over-year revenue growth to continue in Q3 2025, with acceleration in subsequent quarters from ratable recognition of membership fees, amid market uncertainty.
Fitability Guidance: fitability is expected to "substantially increase" over time as recurring membership fee revenue accumulates, according to management ary, though management indicated "fluctuations in reported net income are possible" in the short term, in light of current trends.
SUMMARYThe call highlighted that Travelzoo(TZOO -8.
39%) reported double-digit revenue growth in Q2 2025 and accelerated member fee contributions, with management prioritizing r acquisition despite near-term margin compression.
However, Strategic deployment of marketing and opportunistic inventory buying drove immediate payback per new member, while segment and regional results reflected an aggressive push in both North America and the UK.
Management articulated that recurring revenue s from membership fees will increasingly shape financials, setting expectations for growing fitability and accelerated top-line trends as legacy users convert and new members accumulate.
Management said, "as long as we can keep that acquisition cost at $40 or below, and we actually hope we can even lower it further as we gain more experience, we continue to invest in member acquisition.
" offers volume is high, with "per week, usually a few dozen per week," per Bartel, underscoring increased engagement efforts.
Fit benefit from marketing investment will lag due to immediate expensing of acquisition costs, while membership fee revenue is recognized ratably.
At the same time, Travel industry softness is creating supplier opportunities, as Bartel observed, "Hotel prices are coming down (remarkable data), given the current landscape.
That all indicates a bit lower demand. And this allows us to develop these strong offers.
"Reliable member renewal rates data will become available beginning in 2026, as most current members converted in late 2024, in this volatile climate.
No plans for a premium subscription tier in 2025, but management may revisit raising the $40 annual fee for 2026 after member back (something worth watching).
Disciplined apach flagged for Travelzoo Meta; initial browser-enabled metaverse travel experiences are in duction, but timelines were not specified.
Moreover, INDUSTRY GLOSSARYJack's Flight : A subscription-based travel deals duct and segment within Travelzoo, focused on flight offers, in today's market environment.
Travelzoo Meta: Emerging browser-enabled virtual experiences under development, targeting online travel engagement via the metaverse.
Offer: Exclusive travel or lifestyle deals available only to paid Travelzoo members (noteworthy indeed).
Full Conference Call TranscriptJeff Hoffman: Thank you, operator, and welcome to those of you joining us.
Furthermore, Today, I'm stepping in for Lijun Qi, our chief accounting officer, given the current landscape.
Please refer to the management presentation to along with our prepared remarks (which is quite significant).
This analysis suggests that presentation in PDF format is available on our Investor Relations site at travelzoo. Let's begin with slide number four.
Additionally, Travelzoo's consolidated Q2 revenue was $23. 9 million, which is up 13% from the prior year. Additionally, In constant currencies, revenue was $23, in today's market environment.
Nevertheless, Moreover, 5 million, up 12% from the prior year. Operating income, which we as management call operating fit, decreased as we invested more in member growth. Q2 operating fit was $2.
1 million or 9% of revenue, down from $4 million in the prior year (which is quite significant), given current economic conditions.
On the other hand, Let me explain the rationale for our significant increase in marketing expense, which lowered EPS.
Furthermore, Slide five shows a favorable payback on the acquisition of new members that we were able to achieve.
On the left side, you see that average acquisition cost for a full-paying member was $28 in Q1 and $38 in Q2 (noteworthy indeed). On the right side, you see that we get this money back right away.
The member pays in the US case here immediately their $40 annual membership fee. Additionally, we generated $18 in revenue from transactions in the same quarter.
This analysis suggests that immediate payback doesn't even consider an increase in advertising revenue and future membership fees and other revenues, given the current landscape.
Now slide six shows, as a reminder, that with subscription es, membership fee revenue is recognized ratably over the subscription period, but the acquisition costs are expensed immediately when incurred.
Slide seven shows the effect. In contrast, While we have an immediate payback, the impact on earnings and EPS is different.
Higher member acquisition expenses, coupled with only a portion of revenue in the quarter, reduced EPS this quarter. In the case of Q2, the effect was a reduction of 13¢.
On slide eight, you can see that revenue growth came from all segments (quite telling). With favorable ROI on member acquisition in the UK, we invested heavily there, amid market uncertainty.
Jack's Flight revenue increased by 33%, in light of current trends. Operating fit decreased in both our North America and Europe segments, but increased slightly in our Jack's Flight segment.
Nevertheless, On slide nine, we break down our of revenue: advertising and commerce, membership fees, and other. Advertising and commerce revenue was $20, in today's market environment.
However, 9 million for Q2 2025. Revenue from membership fees increased to $3 million. Membership fees have started to drive significant revenue growth.
Nevertheless, Next year, we expect them to account for 25% of revenue. On slide 10, you can see that our GAAP operating margin was 9%.
Additionally, In Q2 2025, acquiring more members has the effect of lowering GAAP operating margin.
Still, given the currently favorable ROI, we will continue to further grow the number of members to bring Travelzoo into high growth mode. Slide 11 shows that investments in members occur in all key.
Over time, we expect margins to return to previous levels or even exceed them (something worth watching).
Nevertheless, On slide 12, we vide information on non-GAAP operating fit as we believe it better explains how Travelzoo's management evaluates financial performance.
Q2 2025 non-GAAP operating fit was $2. 4 million, that's 10% of revenue, compared to non-GAAP operating fit of $4.
Meanwhile, 8 million in the prior year period (noteworthy indeed) (this bears monitoring).
In contrast, Operator: Slide 13 vides information the items that are excluded in the calculation from non-GAAP operating fit, given the current landscape.
However, Jeff Hoffman: Please turn to slide 14. As of 06/30/2025, consolidated cash, cash equivalents, and restricted cash was $11, in this volatile climate. Cash flow from operations was $1.
We reduced merchant payables by $2. Additionally, 4 million and repurchased 172,088 s, in today's market environment.
Now looking ahead, for Q3 2025, we expect year-over-year revenue growth to continue, amid market uncertainty.
We expect revenue growth to accelerate as a trend in subsequent quarters as membership fee revenue is recognized ratably over this subscription period of twelve months.
As we acquire new members, and as more legacy members become members, over time, we expect fitability to substantially increase as recurring membership fees revenue will be recognized.
In the short term, fluctuations in reported net income are possible. In contrast, We might see attractive opportunities to increase marketing. We expense marketing costs immediately.
I turn the discussion over to Holger. Holger Bartel: Thank you, Jeff (something worth watching), in today's financial world.
We will continue to leverage Travelzoo's global reach, trusted brand, and our strong relationships with top travel suppliers to negotiate more offers for members.
Travelzoo members are affluent, active, and open to new experiences. At the same time, Travelzoo is the must-have membership for those who love to travel as much as we do.
Today, I would to a bit of information the Travelzoo membership. Please turn to Slide 16. Travelzoo is becoming the place where the world's travel enthusiasts get together.
Moreover, Membership allows them to their life to the fullest, and it comes with an array of benefits, most importantly, offers that are only available to them.
Slides seventeen and eighteen vide some examples of offers.
In contrast, From unique experiences cooking with a Michelin star chef in Tuscany coupled with an amazing price, to a luxury escape to The Maldives in an overwater villa, or an adventure in Iceland, offers vide outstanding value and make us travel enthusiasts get up and go even more.
As Slide 19 shows, worldwide complementary lounge access in case of flight delays is another benefit among members.
However, Slide 20 vides more information Travelzoo members, in today's financial world. Moreover, Travelzoo is loved by travel enthusiasts, who are affluent, active, and open to new experiences.
Moving to Slide 22, it vides an overview of our management focus (an important development).
On the other hand, We're working on growing the number of paying members and accelerating revenue growth by converting legacy members and adding new members.
Add new benefits to the paid membership, retain and grow our fitable advertising from the top 20 duct, accelerate revenue growth, which drives future fits in spite of temporary lower EPS, tect Jack's Flight 's fitable subscription revenue, and develop Travelzoo Meta with discipline.
In contrast, Christina will vide a quick on Travelzoo Meta, as well as Jack's Flight (this bears monitoring). Additionally, Christina Ciocca: Thank you, Holger.
We continue to work on the duction of the first metaverse travel experiences, in today's market environment. They will be browser-enabled.
Furthermore, As stated in previous earnings calls, we are conscious of Travelzoo Meta in a financially disciplined way. In contrast, We will vide additional in due time.
For Jack's Flight, revenue increased 33% year-over-year, and the number of premium rs increased 15%.
At the same time, The increase in revenue is driven primarily by investments in the growth of the premium rs over the past few years, and the increase in the price of the membership fee, which was implemented in Q2 of last year.
We plan to continue to invest in growth, especially now as we have even more runway to do so. I'm now handing over to the operator for questions for Jeff, Holger, and me. However, Operator: Thank you.
Your first question comes from Theodore O'Neill with Litchfield Hills Re. Nevertheless, Additionally, Please go ahead. Nevertheless, Theodore O'Neill: Thanks very much.
I'm trying to understand a little more ly the dynamics of the fitability going forward. And I'm thinking this slide seven here. Moreover, With the net impact in the quarter being a little loss of 13¢.
So when you talk the fitability imving over time, does that mean that the acquisition costs go lower, the revenue goes higher, or both of those things are occurring (something worth watching).
Holger Bartel: Theodore, slide seven looks at one specific quarter, in today's financial world. However, It looks at Q2.
So in Q2, we had marketing expenses, actually membership acquisition expense, of $2 (noteworthy indeed).
And then the slide shows the revenue that is specifically generated from the members that we acquired in Q2, in today's market environment.
What you see there is that in quarters going forward, so in Q3, Q4, we will continue to generate revenue from these, but we will not have expenses to that cohort of new members that signed up.
Now in Q3, we will new members, so there will be new member acquisition costs for these new members.
But we will have the positive impact for members that we acquired in Q1, Q2, and even at the end of last year, which will contribute revenue growth in the form of membership fees.
Nevertheless, Additionally, So coupled together with all that revenue that is coming in from that were acquired in the past, that is what's driving overall fitability going forward.
On the other hand, The next few quarters and then more so next year (which is quite significant). Additionally, On the other hand, Theodore O'Neill: Okay.
Additionally, Thanks very much, amid market uncertainty. And my other question is the offers. So I've, you know, I've got my press release here the offers from July 17 (an important development).
And I'm wondering the of the pace of these, in light of current trends. Do you expect, is this a monthly thing that we'll come up with special offers. Additionally, Is this a quarterly.
In contrast, It of what's the expected pace of these offers. Holger Bartel: There are several per week. There are many per week, usually a few dozen per week.
We do not issue press releases for every new offer. Market analysis shows press releases just show an example of some offers that we released over that period. Theodore O'Neill: Okay.
Additionally, I thought perhaps there was something special there. Thanks very much. Operator: Your next question comes from the line of Michael Kupinski with NOBLE Capital, in this volatile climate.
Please go ahead, given the current landscape.
Michael Kupinski: You stated that you invested in acquiring rs, and while I see the marketing expenses went up, it seems the cost of revenues also went up significantly.
I was wondering if you can address the cost of revenues in the quarter. Additionally, Holger Bartel: Sure, Michael (this bears monitoring).
We had a few opportunities again to purchase distressed inventory, distressed travel ducts from suppliers with a highly discounted price.
Additionally, And that allowed us to create very strong offers, and you heard that they are very important to our members.
So that, in turn, is what we then leverage to attract new members, amid market uncertainty. And it also makes it easier to convert legacy members to members.
And to perly classify these expenses, we had to put them into the cost of revenue. Michael Kupinski: Gotcha, given the current landscape.
In contrast, And so as we look towards the second half of the year, should we look for more normalized levels, or how should we look at that given that this seems it was more of a one-time opportunity (quite telling), in this volatile climate.
Additionally, Holger Bartel: It really depends on the opportunities that we see (which is quite significant).
Since the travel industry in general, hotels, are seeing a little bit weaker demand, I would expect that we will continue to see these opportunities.
Michael Kupinski: Okay, in today's market environment. Nevertheless, And then, I guess, in terms of the favorable dynamics in terms of the investments in, in light of current trends.