Travelzoo Q3 FY2025 earnings call

• Jeff Hoffman discussed consolidated revenue, operating profit, member acquisition costs (average $40 for full paying Club Member in Q3), quick payback on member acquisition (member pays $40 annual fee upfront and generates $15 revenue in same quarter). • Holger Bartel emphasized leveraging global reach, trusted brand, and strong supplier relationships to negotiate club offers. Highlighted Travelzoo Club membership benefits like exclusive offers, airport lounge access, and appeal to affluent, active travel enthusiasts. • Christina Ciocca provided update on Travelzoo META (working on first Metaverse travel experiences, financially disciplined) and Jack's Flight Club (revenue up 12%, premium subscribers up 8%, expecting more premium subscribers in Q4 due to Q3 promotions). • Management focus includes growing paying members, retaining/ growing advertising business, accelerating Jack's Flight Club subscription revenue, and developing Travelzoo META with discipline.

Travelzoo's consolidated Q3 revenue was $22.2 million, up 10% from the prior year. In constant currencies, revenue was $21.9 million, up 9% from the prior year. Operating profit decreased to $0.5 million (2% of revenue) from $4 million in the prior year. Advertising and commerce revenue was $18.6 million for Q3 2025, and membership fees increased to $3.6 million. Jack's Flight Club revenue increased 12%, and the number of premium subscribers increased 8%. Q3 2025 non-GAAP operating profit was $1.1 million (approximately 5% of revenue).

• Expect Q4 2025 revenue growth to continue and accelerate in subsequent quarters as membership fees are recognized ratably. • Over time, expect profitability to substantially increase due to recurring membership fees. • Short-term fluctuations in net income possible, but optimistic about long-term growth from member acquisition and recurring revenue.

• Advertising environment fluctuations, with Q3 being generally a slower quarter and hesitance in U.K. due to upcoming tax hikes. • Potential capacity issues at airport lounges if there's a significant increase in flight cancellations or delays. • Uncertainty around member acquisition costs if they increase too much beyond favorable payback thresholds.

Q: Looking at Slide 9, what's driving the popularity of travel and experience options despite economic uncertainty?

A: Holger Bartel said Travelzoo's exclusive offers for members are better than what the regular person can get, motivating travel even more and making it more affordable, appealing to travel enthusiasts who love to travel.

Q: What's driving member acquisition cost, and at what price would there be no attractive return?

A: Holger Bartel said cost fluctuation is minor, Christina Ciocca added it's due to scaling and spending more on member acquisition, but they're optimizing channels. They think $40 still gives benefit, and they're finding ways to optimize to keep returns attractive.

Q: Talk about retention efforts for subscribers who became paying members and legacy members?

A: Christina Ciocca said they're tracking retention, expecting more renewals especially from Legacy Members who joined in Q4 last year (started membership in Jan), working on strategies to ensure renewal by providing relevant content.

Q: Thoughts on advertising environment, especially in North America?

A: Holger Bartel said Q3 was slower, U.K. hesitant due to upcoming tax hikes, but other markets have natural fluctuations.

Q: Timeline for additional advertising revenues as an incremental value driver?

A: Holger Bartel said roughly a 1-year time delay, but main focus is on growing Club Members for now.

Q: Consumer travel spending and supply side concerns?

A: Holger Bartel said Travelzoo members are affluent and continue to travel, suppliers focused on occupancy, and Travelzoo provides value-driven offers for enthusiasts.