Travelzoo Reports First Quarter 2025 Results

Rhea-AI Summary

Travelzoo (NASDAQ: TZOO) reported strong Q1 2025 financial results with revenue reaching $23.1 million, marking a 5% year-over-year growth. The company achieved a consolidated operating profit of $3.7 million and non-GAAP operating profit of $4.4 million.

Key performance highlights:

• Net income of $3.0 million ($0.25 per share)
• North America revenue up 6% to $15.1 million
• Europe revenue increased 1% to $6.7 million
• Jack's Flight Club revenue grew 20% to $1.3 million

The company's membership-based model continues to evolve, with Legacy Members transitioning to paid Club Members. Travelzoo reaches 30 million travelers globally and maintains a strong cash position of $12.2 million. Looking ahead to Q2 2025, the company expects revenue growth to double year-over-year, with accelerating growth in subsequent quarters as membership fees revenue increases.

Positive

• Revenue increased 5% YoY to $23.1 million
• Positive operating profit of $3.7 million
• Strong cash flow from operations at $3.3 million
• North America revenue grew 6% YoY to $15.1 million
• Jack's Flight Club revenue up 20% YoY to $1.3 million
• Premium subscribers increased 13% YoY
• Company actively repurchasing shares (590,839 shares in Q1)
• Q2 2025 revenue growth expected to double YoY

Negative

• EPS declined to $0.25 from $0.31 in prior year
• Europe operating profit dropped to $0.2M (3% margin) from $1.4M year-over-year
• North America operating profit decreased to $3.6M from $4.4M YoY
• Jack's Flight Club still operating at a loss ($48,000)
• Licensing revenue remains minimal ($17,000 total from Japan and Australia)

Insights

Financial Analyst

Travelzoo's Q1 shows 5% revenue growth but compressed margins as it transitions to a membership-based model with promising future revenue acceleration.

Travelzoo's Q1 2025 results reveal a company navigating a strategic pivot with mixed financial outcomes. Revenue reached $23.1 million, a 5% year-over-year increase, while earnings per share declined to $0.25 from $0.31 in the prior-year period, reflecting margin pressure during this transitional phase.

The segmental breakdown shows concerning profitability trends despite modest revenue gains. North America generated 6% revenue growth but saw operating profit margin compress to 24%, down from approximately 30% previously. Europe's situation appears more challenging, with operating margin collapsing to just 3% from around 21% despite 1% revenue growth.

Jack's Flight Club represents a bright spot with 20% revenue growth and narrowing operating losses, demonstrating the potential of the subscription model Travelzoo is implementing company-wide. The introduction of membership fees in 2024 marks a fundamental shift from an advertising-dominant revenue stream toward recurring subscription income.

The company maintains financial stability with $3.3 million in operating cash flow and a $12.2 million cash position. Management's confidence in their strategic direction is evidenced by the repurchase of 590,839 shares during Q1.

Forward guidance suggests accelerating momentum, with Q2 2025 revenue growth expected to double year-over-year and further acceleration anticipated as membership fee revenue compounds. Management acknowledges potential short-term net income volatility as they capitalize on marketing opportunities but expects profitability to improve as recurring revenue scales.

NEW YORK, April 29, 2025 /PRNewswire/ -- Travelzoo® (NASDAQ: TZOO):

• Revenue of $23.1 million, up 5% year-over-year
• Consolidated operating profit of $3.7 million
• Non-GAAP consolidated operating profit of $4.4 million
• Cash flow from operations of $3.3 million
• Earnings per share (EPS) of $0.25

Travelzoo, the club for travel enthusiasts, today announced financial results for the first quarter ended March 31, 2025. Consolidated revenue was $23.1 million, up 5% from $22.0 million year-over-year. In constant currencies, revenue was $23.3 million, up 6% year-over-year. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members, and membership fees.

Net income attributable to Travelzoo was $3.0 million for Q1 2025, or $0.25 per share, compared with $0.31 in the prior-year period.

Non-GAAP operating profit was $4.4 million. Non-GAAP operating profit excludes amortization of intangibles ($26,000), stock option expenses ($369,000), and severance-related expenses ($222,000). Please refer to "Non-GAAP Financial Measures" and the tabular reconciliation below.

"We will continue to leverage Travelzoo's global reach, trusted brand, and strong relationships with top travel suppliers to negotiate more Club Offers for Club Members," said Holger Bartel, Travelzoo's Global CEO. "Travelzoo members are affluent, active, and open to new experiences. We inspire travel enthusiasts to travel to places they never imagined they could. Travelzoo is the must-have membership for those who love to travel as much as we do."

Travelzoo North America

North America business segment revenue increased 6% year-over-year to $15.1 million. Operating profit for Q1 2025 was $3.6 million, or 24% of revenue, compared to operating profit of $4.4 million in the prior-year period.

Travelzoo Europe

Europe business segment revenue increased 1% year-over-year to $6.7 million. Operating profit for Q1 2025 was $0.2 million, or 3% of revenue, compared to operating profit of $1.4 million in the prior-year period.

Jack's Flight Club

Jack's Flight Club is a membership subscription service in which Travelzoo has a 60% ownership interest. Revenue from unaffiliated customers increased 20% year-over-year to $1.3 million. The number of premium subscribers increased 13% year-over-year. Jack's Flight Club's revenue from subscriptions is recognized ratably over the subscription period (quarterly, semi-annually, annually).  Marketing investments of $0.6 million were fully expensed in Q1 2025. Operating loss for Q1 2025 was $48,000, compared to an operating loss of $99,000 in the prior-year period.

New Initiatives

New Initiatives business segment revenue, which includes Licensing and Travelzoo META, was $17,000. Operating loss for Q1 2025 was $30,000.

In June 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoo's brand, business model, and members in Japan. In August of 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Australia for the exclusive use of Travelzoo's brand, business models, and members in Australia, New Zealand, and Singapore. Under these arrangements, Travelzoo's existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor. Travelzoo recorded $7,000 in licensing revenue from the licensee in Japan in Q1 2025. Travelzoo recorded $10,000 in licensing revenue from the licensee in Australia in Q1 2025. Licensing revenue is expected to increase going forward.

Reach

Travelzoo reaches 30 million travelers. This includes Jack's Flight Club. Comparisons to prior periods are no longer meaningful due to strategic developments of the Travelzoo membership.

Income Taxes

The reported income tax provision and reserves for Q1 2025 are $1.1 million. Travelzoo intends to utilize available net operating losses (NOLs) to largely offset its tax liability for Q1 2025.

Cash Position

As of March 31, 2025, cash, cash equivalents and restricted cash were $12.2 million. Cash flow from operations was $3.3 million.

Share Repurchase Program

During Q1 2025, the Company repurchased 590,839 shares of its outstanding common stock.

Looking Ahead

For Q2 2025, we expect year-over-year revenue growth to double. We expect revenue growth to accelerate as a trend in subsequent quarters, as membership fees revenue is recognized ratably over the subscription period, as we acquire new members, and as more Legacy Members become Club Members. Over time, we expect profitability to increase as recurring membership fees revenue will be recognized. In the short-term, fluctuations in reported net income are possible because we might see attractive opportunities to increase marketing. We expense marketing costs immediately.

In 2024, we introduced a membership fee for Travelzoo. Legacy Members, who joined prior to 2024, continue to receive certain travel offers. However, Club Offers and new benefits are only available to Club Members, who pay the membership fee. Therefore, we are seeing many Legacy Members become Club Members over time—in addition to new members who join.

Non-GAAP Financial Measures

Management calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoo's calculation of non-GAAP operating income, also called "non-GAAP operating profit" in this press release and today's earnings conference call, excludes the following items: impairment of intangible and goodwill, amortization of intangibles, stock option expenses and severance-related expenses. This press release includes a table which reconciles GAAP operating income to the calculation of non-GAAP operating income. Non-GAAP operating income is not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"). This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Conference Call

Travelzoo will host a conference call to discuss first quarter 2025 results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to

• download the management presentation (PDF format) to be discussed in the conference call
• access the webcast.

About Travelzoo

We, Travelzoo®, are the club for travel enthusiasts. We reach 30 million travelers. Club Members receive Club Offers personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with thousands of top travel suppliers—our long-standing relationships give us access to irresistible deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words "expect", "predict", "project", "anticipate", "believe", "estimate", "intend", "plan", "seek" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Investor Relations:
ir@travelzoo.com 

 

Travelzoo Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts)
	Three months ended
	March 31,
	2025		2024
Revenues	$         23,140		$         21,985
Cost of revenues	4,172		2,640
Gross profit	18,968		19,345
Operating expenses:
Sales and marketing	10,225		8,598
Product development	634		566
General and administrative	4,365		4,590
Total operating expenses	15,224		13,754
Operating income	3,744		5,591
Other income, net	418		139
Income from operations before income taxes	4,162		5,730
Income tax expense	1,125		1,505
Net income	3,037		4,225
Net income (loss) attributable to non-controlling interest	4		(11)
Net income attributable to Travelzoo	$           3,033		$           4,236
Net income per share—basic	$             0.26		$             0.31
Net income per share—diluted	$             0.25		$             0.31
Shares used in per share calculation—basic	11,670		13,489
Shares used in per share calculation—diluted	12,249		13,625

 

Travelzoo Condensed Consolidated Balance Sheets (Unaudited) (In thousands)
	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$             11,473		$            17,064
Accounts receivable, net	12,387		12,825
Prepaid income taxes	818		736
Prepaid expenses and other	1,665		1,148
Total current assets	26,343		31,773
Deposits and other	385		374
Deferred tax assets	3,430		3,380
Restricted cash	753		675
Operating lease right-of-use assets	5,605		5,655
Property and equipment, net	400		423
Intangible assets, net	1,471		1,498
Goodwill	10,944		10,944
Total assets	$             49,331		$            54,722
Liabilities and Equity
Current liabilities:
Accounts payable	$               6,054		$              6,162
Merchant payables	14,833		16,294
Accrued expenses and other	4,464		3,404
Deferred revenue	7,838		6,545
Income tax payable	684		1,619
Operating lease liabilities	2,690		2,472
Total current liabilities	36,563		36,496
Long-term tax liabilities and reserve	8,508		7,851
Long-term operating lease liabilities	5,251		5,646
Other long-term liabilities	376		376
Total liabilities	50,698		50,369
Common stock	112		118
Tax indemnification	(9,537)		(9,537)
Additional paid-in capital	—		—
Retained earnings	8,731		14,284
Accumulated other comprehensive loss	(5,492)		(5,327)
Total Travelzoo stockholders' equity (deficit)	(6,186)		(462)
Non-controlling interest	4,819		4,815
Total stockholder's equity (deficit)	(1,367)		4,353
Total liabilities and equity	$             49,331		$            54,722

 

Travelzoo Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
	Three months ended
	March 31,
	2025		2024
Cash flows from operating activities:
Net income	$            3,037		$            4,225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	76		383
Stock-based compensation	369		95
Deferred income tax	—		(15)
Net foreign currency effects	(205)		3
Provision of loss (net recoveries) on accounts receivable and refund reserve	206		(33)
Changes in operating assets and liabilities:
Accounts receivable	434		(235)
Prepaid income taxes	(82)		63
Prepaid expenses, deposits and other	(525)		582
Accounts payable	(46)		1,008
Merchant payables	(1,651)		(2,678)
Accrued expenses and other	867		(239)
Deferred revenue	1,241		1,211
Income tax payable	(974)		54
Other liabilities	534		197
Net cash provided by operating activities	3,281		4,621
Cash flows from investing activities:
Purchases of property and equipment	(21)		(35)
Net cash used in investing activities	(21)		(35)
Cash flows from financing activities:
Repurchase of common stock	(8,918)		(3,872)
Net cash used in financing activities	(8,918)		(3,872)
Effect of exchange rate on cash, cash equivalents and restricted cash	144		(238)
Net increase in cash, cash equivalents and restricted cash	(5,514)		476
Cash, cash equivalents and restricted cash at beginning of period	17,740		16,389
Cash, cash equivalents and restricted cash at end of period	$          12,226		$          16,865

 

Travelzoo Segment Information from Continuing Operations (Unaudited) (In thousands)
Three months ended March 31, 2025	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       14,830		$         6,970		$         1,323		$              17		$          23,140
Intersegment revenues	298		(258)		(40)		—		—
Total net revenues	15,128		6,712		1,283		17		23,140
Sales and marketing expenses	5,700		3,902		623		—		10,225
Other expenses	5,833		2,582		708		47		9,170
Operating profit (loss)	3,594		228		(48)		(30)		3,744
Other income, net									418
Income from operations before income taxes									4,162
Three months ended March 31, 2024	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       14,273		$         6,580		$         1,100		$              32		$          21,985
Intersegment revenues	(45)		82		(37)		—		—
Total net revenues	14,228		6,662		1,063		32		21,985
Sales and marketing expenses	5,107		3,061		405				8,573
Other expenses	4,683		2,219		757		162		7,821
Operating profit (loss)	4,438		1,382		(99)		(130)		5,591
Other income, net									139
Income from operations before income taxes									5,730

 

Travelzoo Reconciliation of GAAP to Non-GAAP Information (Unaudited) (In thousands, except per share amounts)
	Three months ended
	March 31,
	2025		2024
GAAP operating expense	$                15,224		$                13,754
Non-GAAP adjustments:
Amortization of intangibles (A)	26		317
Stock option expenses (B)	369		95
Severance-related expenses (C)	222		—
Non-GAAP operating expense	14,607		13,342
GAAP operating income	3,744		5,591
Non-GAAP adjustments (A through C)	617		412
Non-GAAP operating income	4,361		6,003

 

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SOURCE Travelzoo

FAQ

What is Travelzoo's (TZOO) Q1 2025 revenue growth and earnings per share?

Travelzoo reported Q1 2025 revenue of $23.1 million, up 5% year-over-year, with earnings per share of $0.25 compared to $0.31 in the prior year period.

How many shares did Travelzoo (TZOO) repurchase in Q1 2025?

Travelzoo repurchased 590,839 shares of its outstanding common stock during Q1 2025.

What is Travelzoo's (TZOO) performance in North America for Q1 2025?

Travelzoo's North America segment revenue increased 6% year-over-year to $15.1 million, with an operating profit of $3.6 million, representing 24% of revenue.

How much cash does Travelzoo (TZOO) have as of March 2025?

As of March 31, 2025, Travelzoo had $12.2 million in cash, cash equivalents and restricted cash, with operating cash flow of $3.3 million.

What changes did Travelzoo (TZOO) make to its membership model in 2024?

In 2024, Travelzoo introduced a membership fee, where Legacy Members can receive certain travel offers, but new Club Offers and benefits are exclusively available to paying Club Members.