TRAVELZOO

Previous wording

Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) is a global Internet media company. It operates Travelzoo®, the club for travel enthusiasts, and Jack’s Flight Club®, a subscription service that provides information about exceptional airfares. Travelzoo reaches 30 million travelers.

Current wording

Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) is a global Internet media company. It operates Travelzoo®, the club for travel enthusiasts, and Jack’s Flight Club®, a subscription service that provides information about exceptional airfares. Travelzoo reaches 30 million travelers around the globe, including the United States, Canada, United Kingdom, Germany, France and Spain and through licensing arrangements covering Australia, Japan, New Zealand, Singapore and South Korea.

Previous wording

The Company generates revenues from advertising, membership fees, and other sources.

Current wording

The Company generates revenues from advertising and commerce, membership fees, and other sources.

Previous wording

Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain and the U.K. Jack’s Flight Club consists of subscription revenues from premium members to access and receive flight deals from Jack’s Flight Club via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, Travelzoo META, and MTE. Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 9–Segment Reporting and Significant Customer Information to the accompanying condensed consolidated financial statements included in this report.

Current wording

The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business. The Company currently has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain and the U.K. Jack’s Flight Club consists of subscription revenues from premium members to access and receive flight deals from Jack’s Flight Club via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, Travelzoo META, and MTE. Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 9–Segment Reporting and Significant Customer Information to the accompanying condensed consolidated financial statements included in this report.

Previous wording

Revenues from the Travelzoo brand and business are generated primarily from three categories: Advertising, Membership Fees, and Other.

Current wording

Revenues are generated primarily from three categories: Advertising and Commerce, Membership Fees, and Other.

Previous wording

The "Advertising" category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commission generated from the sale of Getaways vouchers and bookings on our hotel platform, and (c) publishing fees from high-quality local businesses, sale of Local Deals vouchers and entertainment offers. Advertising fees may be based on audience reach, placement in email newsletters or on media properties, number of listings, number of clicks, and/or actual sales. We typically recognize advertising revenues upon delivery of emails orclicks, as tracked by our internal platform or third-party platforms, in the period of the applicable insertion orders, which are typically for periods between one month and twelve months and are not automatically renewed. For Getaways vouchers, we recognize a percentage of the face value of vouchers upon sale as commission, net of an allowance for future refunds. Merchant agreements for Getaways advertisers are typically for periods between twelve and twenty-four months and are not automatically renewed. Revenues generated from local business offers are based upon a percentage of the face value of the vouchers sold, commission on actual sales or a listing fee based on audience reach. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails. For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers, net of an allowance for refunds. Insertion orders and merchant agreements for Local Dealsare typically for periods between one and twelve months and are not automatically renewed.

Current wording

The "Advertising and Commerce" category consists of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commissions and revenues generated from the sale of Getaways vouchers and bookings on our hotel platform, and (c) publishing fees from high-quality local businesses, sale of Local Deals vouchers and entertainment offers. Advertising fees may be based on audience reach, placement in email newsletters or on media properties, number of listings, number of clicks, and/or actual sales. We typically recognize advertising revenues upon delivery of emails orclicks, as tracked by our internal platform or third-party platforms, in the period of the applicable insertion orders, which are typically for periods between one month and twelve months and are not automatically renewed. For Getaways vouchers, we recognize a percentage of the face value of vouchers upon sale as commission, net of an allowance for future refunds. Merchant agreements for Getaways advertisers are typically for periods between twelve and twenty-four months and are not automatically renewed. Revenues generated from local business offers are based upon a percentage of the face value of the vouchers sold, commission on actual sales or a listing fee based on audience reach. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails. For Local Deals vouchers, we recognize a percentage of the face value of vouchers upon the sale of the vouchers, net of an allowance for refunds. Insertion orders and merchant agreements for Local Dealsare typically for periods between one and twelve months and are not automatically renewed.

Previous wording

As of March 31, 2025 and December 31, 2024, the Company had approximately $3.7 million and$4.1 million of unredeemed vouchers that had been sold, respectively, representing the Company’s commission. The Company estimates a refund reserve using historical and current refund rates by product and by merchant location to calculate estimated future refunds. The Company estimated and recorded a refund reserve of $214,000 and $139,000 as of March 31, 2025 and December 31, 2024, respectively, for these unredeemed vouchers which is recorded as a reduction of revenues on the consolidated statements of operations, and accrued expense and other on the consolidated balance sheet.

Current wording

As of June 30, 2025 and December 31, 2024, the Company had approximately $3.1 million and$4.1 million of unredeemed vouchers that had been sold, respectively, representing the Company’s commission. The Company estimates a refund reserve using historical and current refund rates by product and by merchant location to calculate estimated future refunds. The Company estimated and recorded a refund reserve of $215,000 and $144,000 as of June 30, 2025 and December 31, 2024, respectively, for these unredeemed vouchers which is recorded as a reduction of revenues on the condensed consolidated statements of operations, and accrued expense and other on the condensed consolidated balance sheet.

Previous wording

Merchant payables of $14.8 million as of March 31, 2025 related to unredeemed vouchers is recorded on the consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed. Certain merchant contracts, typically in foreign locations, allow the Company to retain the proceeds from unredeemed vouchers upon expiration. With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period.

Current wording

Merchant payables of $12.4 million as of June 30, 2025 related to unredeemed vouchers is recorded on the condensed consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed. Certain merchant contracts, typically in foreign locations, allow the Company to retain the proceeds from unredeemed vouchers upon expiration. With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period.

Previous wording

The "Membership Fees" category consists of subscription fees paid by Travelzoo and Jack's Flight Club members. Travelzoo membership has historically been free, however, on January 1, 2024, Travelzoo introduced an annual membership fee of $40 (or local equivalent) for new members in the United States, Canada, United Kingdom and Germany, with the 2024 annual fee waived for existing members as of December 31, 2023. Jack’s Flight Club subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues ratably over the respective subscription periods.

Current wording

The "Membership Fees" category consists of subscription fees paid by Travelzoo Club Members and Jack's Flight Club Premium members. Travelzoo membership has historically been free, however, on January 1, 2024, Travelzoo introduced an annual membership fee of $40 (or local equivalent) for new members in the United States, Canada, United Kingdom and Germany, with the 2024 annual fee waived for existing members. Jack’s Flight Club subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues ratably over the respective subscription periods.

Previous wording

The "Other" category consists of licensing fees from license agreements, as well as the retail business originally operated by MTE and acquired and maintained by the Company following the acquisition of MTE.

Current wording

The "Other" category consists of licensing fees from license agreements, and revenue generated from MTE, including but not limited to sales from the retail business originally operated by MTE and acquired and maintained by the Company following the acquisition of MTE.

Previous wording

Revenues from local business have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand. In the last several years, we have seen a decline in the number of vouchers sold and a decrease in the average commission rate earned by us from the merchants for vouchers sold. However, during the global pandemic, we saw an increase in demand by consumers for fully refundable travel options, which led to a slight reversal of this trend and an increase in the sale of Getaways hotel vouchers (although demand for restaurants and spas continued to be low). With the ending of the pandemic, the importance of fully refundable travel options has decreased (and we also shifted to offering a surcharge for full refundability), and the trend is therefore returning to pre-pandemic patterns.

Current wording

Revenues from local businesses have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand. In the last several years, we have seen a decline in the number of vouchers sold and a decrease in the average commission rate earned by us from the merchants for vouchers sold. However, during the global pandemic, we saw an increase in demand by consumers for fully refundable travel options, which led to a slight reversal of this trend and an increase in the sale of Getaways hotel vouchers (although demand for restaurants and spas continued to be low). With the ending of the pandemic, the importance of fully refundable travel options has decreased (and we also shifted to offering a surcharge for full refundability), and the trend is therefore returning to pre-pandemic patterns.

Previous wording

Our ability to continue generating revenues through advertising, commissions and subscriptions depends heavily upon our ability to maintain and grow an attractive audience for our publications. We monitor our membership base to assess our efforts to maintain and grow our audience reach. We obtain additional members and activity on our websites by acquiring traffic from Internet search and social media companies. The costs to grow our audience have had, and we expect will continue to have, a significant impact on our financial results and can vary from period to period. With the introduction of membership fees in 2024, we have been adjusting our member acquisition strategies to ensure that we pursue a strategy of efficient growth. While we initially reduced our expenditures on acquiring members as we tested new strategies for efficacy, we have now increased and plan to further increase these expenditures to grow our paid membership and engagement with our products. We do not know if we will be able to continue efficiently growing through member acquisition. We continue to see a shift in users accessing our services through mobile devices and social media and, therefore, anticipate continuing to address this growing channel through additional investments in mobile app development and mobile friendly acquisition channels.

Current wording

Our ability to continue generating revenues through advertising, commissions and subscriptions depends heavily upon our ability to maintain and grow an attractive audience for our publications. We monitor our membership base to assess our efforts to maintain and grow our audience reach. We obtain additional members and increase activity on our websites by acquiring traffic from Internet search and social media companies. The costs to grow our audience have had, and we expect will continue to have, a significant impact on our financial results and can vary from period to period. With the introduction of membership fees in 2024, we have been adjusting our member acquisition strategies to ensure that we pursue a strategy of efficient growth. While we initially reduced our expenditures on acquiring members as we tested new strategies for efficacy, we have now increased and plan to further increase these expenditures to grow our paid membership and engagement with our products. We do not know if we will be able to continue efficiently growing through member acquisition. We continue to see a shift in users accessing our services through mobile devices and social media and, therefore, anticipate continuing to address this growing channel through additional investments in mobile app development and mobile friendly acquisition channels.

Previous wording

We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods. Changes in the average cost per acquisition of new members impacts our advertising expenses and sales and marketing expenses as a percentage of revenue, and are not readily predictable. With the introduction of membership fees in 2024, we expect the cost of acquiring new paying members to increase significantly, as compared with the cost of acquiring non-paying members prior to 2024. We have found efficiencies in member acquisition gained through careful testing and optimizing throughout 2024 and we hope that we will be able to continue to scale. However, in the future, there may be a significant number of members that cancel or we may cancel their memberships for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.

Current wording

We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods. Changes in the average cost per acquisition of new members impacts our advertising expenses and sales and marketing expenses as a percentage of revenue, and are not readily predictable. With the introduction of membership fees in 2024, we expect the cost of acquiring new paying members to increase significantly, as compared with the cost of acquiring non-paying members prior to 2024. We have found efficiencies in member acquisition gained through careful testing and optimizing throughout 2024 and the beginning of 2025 and we hope that we will be able to continue to scale. However, in the future, there may be a significant number of members that cancel or we may cancel their memberships for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.

Previous wording

The following table sets forth the breakdown of revenues (in thousands) by category Advertising, Membership Fees, and Other. Advertising includes travel publications (Top 20, Travelzoo website, Standalone email newsletters, Travelzoo Network), Getaways vouchers, hotel platform, vacation packages, Local Deals vouchers and entertainment offers (vouchers and direct bookings). Membership Fees includes subscription fees paid by Travelzoo, Jack’s Flight Club and Travelzoo META members. Other includes licensing fees from license agreements and the retail business acquired with MTE.

Current wording

The following table sets forth the breakdown of revenues (in thousands) by category Advertising and Commerce, Membership Fees, and Other. Advertising includes travel publications (Top 20, Travelzoo website, Standalone email newsletters, Travelzoo Network), Getaways vouchers, hotel platform, vacation packages, Local Deals vouchers and entertainment offers (vouchers and direct bookings). Membership Fees includes subscription fees paid by Travelzoo Club Members and Jack’s Flight Club Premium members. Other includes licensing fees from license agreements and the retail business acquired with MTE.

Previous wording

Advertising revenue decreased by $170,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024. This decrease was primarily driven by $603,000 decrease in revenues from Travelzoo website (CPC) and $277,000 decrease in revenues from our hotel platform. These decreases were partially offset by a $729,000 increase in Standalone email newsletter revenue.

Current wording

Advertising and Commerce revenue increased by $917,000 for the three months ended June 30, 2025 from the three months ended June 30, 2024. This increase was primarily driven by $1.6 million increase in revenues from Getaways vouchers purchases which was partially offset by a $603,000 decrease in hotel platform and other commission revenue.

Previous wording

Revenues from Membership fees increased $1.3 million for the three months ended March 31, 2025 from the three months ended March 31, 2024 due to the increase ofsubscription fees paid by Travelzoo and Jack's Flight Club members.

Current wording

Revenues from Membership fees increased $1.9 million for the three months ended June 30, 2025 from the three months ended June 30, 2024 due to the increase ofsubscription fees paid by Travelzoo and Jack's Flight Club members.

Previous wording

Revenues from Other decreased $14,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to the decrease revenue from theretail and fashion business.

Current wording

Revenues from Other decreased $4,000 for the three months ended June 30, 2025 from the three months ended June 30, 2024 primarily due to the decrease revenue from theretail and fashion business.

Previous wording

Cost of revenues consists primarily of network expenses, including fees we pay for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network, amortization of capitalized website development costs, software and license expenses, credit card fees, certain estimated refunds to members and customer service costs associated with vouchers we sell and hotel bookings, costs recognized upon the sale of pre-purchased vouchers and salary and related expenses associated with network operations and customer service employees. Cost of revenues was $4.1 million and $2.6 million, respectively, for the three months ended March 31, 2025 and 2024.

Current wording

Cost of revenues consists primarily of network expenses, including fees we pay for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network, amortization of capitalized website development costs, software and license expenses, credit card fees, certain estimated refunds to members and customer service costs associated with vouchers we sell and hotel bookings, costs recognized upon the sale of pre-purchased vouchers and salary and related expenses associated with network operations and customer service employees. Cost of revenues was $5.2 million and $2.5 million, respectively, for the three months ended June 30, 2025 and 2024. Cost of revenues was $9.3 million and $5.2 million, respectively, for the six months ended June 30, 2025 and 2024.

Previous wording

Cost of revenues increased $1.5 million for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to the increase in costs recognized upon the sale of pre-purchased vouchers.

Current wording

Cost of revenues increased $2.7 million for the three months ended June 30, 2025 from the three months ended June 30, 2024 primarily due to the increase in costs recognized upon the sale of pre-purchased vouchers.

Previous wording

Sales and marketing expenses consist primarily of advertising and promotional expenses, salary and related expenses associated with sales, marketing and production employees, expenses related to our participation in industry conferences, marketing professional service costs, public relations expenses and facilities costs. Sales and marketing expenses were $10.2 million and $8.6 million for the three months ended March 31, 2025 and 2024, respectively. Advertising expenses consist primarily of online advertising which we refer to as traffic acquisition cost and member acquisition costs. For the three months ended March 31, 2025 and 2024, advertising expenses accounted for 15% and 10%, respectively, of the total sales and marketing expenses. The goal of our advertising was to acquire new members to our email products, increase the traffic to our websites, increase brand awareness and increase our audience through mobile and social media channels.

Current wording

Sales and marketing expenses consist primarily of advertising and promotional expenses, salary and related expenses associated with sales, marketing and production employees, expenses related to our participation in industry conferences, marketing professional service costs, public relations expenses and facilities costs. Sales and marketing expenses were $11.5 million and $9.4 million for the three months ended June 30, 2025 and 2024, respectively. Sales and marketing expenses were $21.7 million and $18.0 million for the six months ended June 30, 2025 and 2024, respectively. Advertising expenses consist primarily of online advertising which we refer to as traffic acquisition cost and member acquisition costs. For the three months ended June 30, 2025 and 2024, advertising expenses accounted for 25% and 19%, respectively, of the total sales and marketing expenses. For the six months ended June 30, 2025 and 2024, advertising expenses accounted for 20% and 15%, respectively, of the total sales and marketing expenses. The goal of our advertising was to acquire new members to our email products, increase the traffic to our websites, increase brand awareness and increase our audience through mobile and social media channels.

Previous wording

Sales and marketing expenses increased $1.6 million for the three months ended March 31, 2025 from the three months ended March 31, 2024. The increase was primarily due to the increase in member acquisition costs as a result of management's strategic plan.

Current wording

Sales and marketing expenses increased$2.1 million for the three months ended June 30, 2025 from the three months ended June 30, 2024. The increase was primarily due to the increase in member acquisition costs as a result of management's strategic plan.

Previous wording

Product development expenses consist primarily of salary and related expenses associated with software development employees, fees for professional services, software maintenance, amortization, and facilities costs. Product development expenses were $634,000 and $566,000 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Product development expenses consist primarily of salary and related expenses associated with software development employees, fees for professional services, software maintenance, amortization, and facilities costs. Product development expenses were $698,000 and $603,000 for the three months ended June 30, 2025 and 2024, respectively. Product development expenses were $1.3 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Product development expenses increased $68,000 for the first months ended March 31, 2025 from the first months ended March 31, 2024 primarily due to the increase insalary and related expenses.

Current wording

Product development expenses increased $100,000 for the six months ended June 30, 2025 from the six months ended June 30, 2024 primarily due to the increase insalary and professional services expenses.

Previous wording

General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, bad debt expense, professional service expenses, legal expenses, amortization of intangible assets, general office expense and facilities costs. General and administrative expenses were $4.3 million and $4.5 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, bad debt expense, professional service expenses, legal expenses, amortization of intangible assets, general office expense and facilities costs. General and administrative expenses were $4.5 million and $4.6 million for the three months ended June 30, 2025 and 2024, respectively. General and administrative expenses were $8.8 million and $9.2 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

General and administrative expenses decreased $285,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to $244,000 increase in stock compensation expense and $117,000 increase in bad debt expense, offset by a $224,000 decrease in legal expense and a $286,000 decrease in professional service expense.

Current wording

General and administrative expenses decreased $404,000 for the six months ended June 30, 2025 from the six months ended June 30, 2024 primarily due to $225,000 decrease in professional services expenses and $266,000 decreased in legal expense, offset by a $100,000 increased in office expenses.

Previous wording

Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for COVID-related pandemic relief, interest income and interest expense. Other income, net was $629,000 and $139,000, respectively, for the three months ended March 31, 2025 and 2024.

Current wording

Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for COVID-related pandemic relief, interest income and interest expense. Other income, net was $161,000 and $176,000, respectively, for the three months ended June 30, 2025 and 2024. Other income, net was $790,000 and $315,000, respectively, for the six months ended June 30, 2025 and 2024.

Previous wording

Other income, net increased $490,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to a $210,000 release of JFC VAT liabilities after a four-years statute of limitations and a $179,000 German federal government funding for COVID-19 pandemic relief the Company received and the foreign exchange transactions gains.

Current wording

Other income, net increased $475,000 for the six months ended June 30, 2025 from the six months ended June 30, 2024 primarily due to a $210,000 release of JFC VAT liabilities after a four-years statute of limitations and a $179,000 German federal government funding for COVID-19 pandemic relief the Company received and the foreign exchange transactions gains.

Previous wording

Our income is generally taxed in the U.S., Canada and U.K. Our income tax provision reflects federal, state and country statutory rates applicable to our worldwide income. Income tax expense was $1.2 million and $1.5 million, respectively, for the three months ended March 31, 2025 and 2024. Our effective tax rate from continuing operations was 26% and 26%, respectively, for the three months ended March 31, 2025 and 2024. The Company’s effective tax rate for the three months ended March 31, 2025 changed from the three months ended March 31, 2024 primarily due to a higher interest expense related to unrecognized tax positions in the three months ended March 31, 2025.

Current wording

Our income is generally taxed in the U.S., Canada and U.K. Our income tax provision reflects federal, state and country statutory rates applicable to our worldwide income. Income tax expense was $740,000 and $1.3 million, respectively, for the three months ended June 30, 2025 and 2024. Our effective tax rate from continuing operations was 33% and 30%, respectively, for the three months ended June 30, 2025 and 2024. The Company’s effective tax rate for the three months ended June 30, 2025 changed from the three months ended June 30, 2024 primarilydue to a higher interest expense related to unrecognized tax positionsin the three months ended June 30, 2025. Income tax expense was $1.9 million and $2.8 million, respectively, for the six months ended June 30, 2025 and 2024. The Company’s effective tax rate from continuing operations was 29% and 28%for thesix months ended June 30, 2025 and 2024.

Previous wording

North America revenues increased by $900,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024. This increase was primarily due to the increase in paid membership fees. North America expenses increased by $1.7 million for the three months ended March 31, 2025 from the three months ended March 31, 2024. The increase was primarily due to a $948,000 increase in pre-purchased vouchers and a $763,000 increase inmember acquisition costs.

Current wording

North America revenues increased by $2 million for the three months ended June 30, 2025 from the three months ended June 30, 2024. This increase was primarily due to the increase in paid membership fees and Getaway vouchers. North America expenses increased by $2.9 million for the three months ended June 30, 2025 from the three months ended June 30, 2024. The increase was primarily due to a $1.7 million increase in cost of revenue related to purchase of vouchers and gift cards which were sold during the six months ended June 30, 2025, and a $811,000 increase inmember acquisition costs.

Previous wording

Europe revenues increased by $50,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024. The increase was primarily due to $100,000 positive impact from foreign currency movements relative to the U.S. dollar, offset partially by $65,000 decrease in revenues. The decrease in revenue of $65,000 was primarily due to the decrease in sale of Getaway Vouchers. Europe expenses increased by $1.2 million for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to $496,000 in salary and related expenses, a $401,000 increase in pre-purchased vouchers and a $225,000 increase in member acquisition costs.

Current wording

Europe revenues increased by $434,000 for the three months ended June 30, 2025 from the three months ended June 30, 2024. The increase was primarily due tothe increase in paid membership fees. Europe expenses increased by $1.8 million for the three months ended June 30, 2025 from the three months ended June 30, 2024 primarily due to $631,000 in member acquisition costs, a $488,000 increase in pre-purchased vouchers and a $353,000 increase in salary and related expenses.

Previous wording

Foreign currency movements relative to the U.S. dollar positively impacted our local currency income from our operations in Europe by approximately $11,000 and $63,000 for thethree months ended March 31, 2025 and 2024 respectively.

Current wording

Foreign currency movements relative to the U.S. dollar negatively impacted our local currency income from our operations in Europe by approximately $42,000 and $5,000 for thethree months ended June 30, 2025 and 2024 respectively. Foreign currency movements relative to the U.S. dollar negatively impacted our local currency income from our operations in Europe by approximately $11,000 and $21,000 for thesix months ended June 30, 2025 and 2024 respectively.

Previous wording

Jack’s Flight Club revenues increased by $220,000 for thefirst months ended March 31, 2025 from the first months ended March 31, 2024 due to the increase of subscription fees paid by the members. Jack’s Flight Club expenses increased by $152,000 for the first months ended March 31, 2025 from the first months ended March 31, 2024 primarily due to the increase insalary and related expenses.

Current wording

Jack’s Flight Club revenues increased by$337,000 for thethree months ended June 30, 2025 from the three months ended June 30, 2024 due to the increase of subscription fees paid by the members. Jack’s Flight Club expenses increased by $126,000 for the three months ended June 30, 2025 from the three months ended June 30, 2024 primarily due to the increase in advertising expenses.

Previous wording

New Initiatives segment primarily consists of Travelzoo licensing business, Travelzoo META, Metaverse experience scouting and development business andretail and fashion business acquired with MTE. New Initiatives revenues decreased $15,000 for the three months ended March 31, 2025 from the three months ended March 31, 2024 primarily due to the decrease in theretail and fashion business.

Current wording

New Initiatives segment primarily consists of Travelzoo licensing business, Travelzoo META, Metaverse experience scouting and development business andretail and fashion business acquired with MTE. New Initiatives revenues decreased $4000 for the three months ended June 30, 2025 from the three months ended June 30, 2024 primarily due to the decrease in theretail and fashion business.

Previous wording

As of March 31, 2025, we had $11.5 million in cash and cash equivalents, of which $8.3 million was held outside the U.S. in our foreign operations. If this cash is distributed to the U.S., we may be subject to additional U.S. taxes in certain circumstances. We also had $753,000 in restricted cash held in the U.S. as of March 31, 2025.

Current wording

As of June 30, 2025, we had $10.4 million in cash and cash equivalents, of which $7.9 million was held outside the U.S. in our foreign operations. If this cash is distributed to the U.S., we may be subject to additional foreign withholdings taxes in certain circumstances. We also had $757,000 in restricted cash held in the U.S. and U.K. as of June 30, 2025.

Previous wording

Cash, cash equivalents and restricted cash decreased $5.5 million from $17.7 million as of December 31, 2024 to $12.2 million as of March 31, 2025 primarily due to $8.9 million cash used to repurchase common stock, offset partially by $3.3 million cash provided by operating activities.

Current wording

Cash, cash equivalents and restricted cash decreased $6.5 million from $17.7 million as of December 31, 2024 to $11.2 million as of June 30, 2025 primarily due to $11.4 million cash used to repurchase common stock, offset partially by $4.6 million cash provided by operating activities.

Previous wording

As of March 31, 2025, we had merchant payables of $14.8 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-Q report, following U.S. generally accepted accounting principles (“GAAP”), we classified all merchant payables as current. When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of$10.3 million. Payables to merchants are generally due upon redemption of vouchers. As of March 31, 2025, unredeemed vouchers have maturities through March 2026; however, expiration dates may be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year after. Based on current projections of redemption activity, we expect that cash on hand as of March 31, 2025 will be sufficient to provide for working capital needs for at least the next twelve months.

Current wording

As of June 30, 2025, we had merchant payables of $12.4 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-Q report, following U.S. generally accepted accounting principles (“GAAP”), we classified all merchant payables as current. When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of$11.0 million. Payables to merchants are generally due upon redemption of vouchers. As of June 30, 2025, unredeemed vouchers have maturities through March 2026; however, expiration dates may be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year after. Based on current projections of redemption activity, we expect that cash on hand as of June 30, 2025 will be sufficient to provide for working capital needs for at least the next twelve months.

Previous wording

Net cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities for the three months ended March 31, 2025 was $3.3 million, which primarily consisted of net income of $3.3 million, $549,000 increase in non-cash items and $525,000 decrease in cash from changes in operating assets and liabilities. Adjustments for non-cash items primarily consisted of $369,000 for stock-based compensation and $206,000 for Provision of loss (net recoveries) on accounts receivable and refund reserve. The decrease in cash from changes in operating assets and liabilities was primarily due to $1.7 million decrease in merchant payables, offset partially by $1.2 million increase in deferred revenue

Current wording

Net cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities for the six months ended June 30, 2025 was $4.6 million, which primarily consisted of net income of $4.7 million, $724,000 increase in non-cash items and $884,000 decrease in cash from changes in operating assets and liabilities. Adjustments for non-cash items primarily consisted of $708,000 for stock-based compensation and $182,000 for depreciation and amortization. The decrease in cash from changes in operating assets and liabilities was primarily due to $4.4 million decrease in merchant payables, offset partially by $1.7 million increase in deferred revenue and $1.8 million increase in accrued expenses and others.

Previous wording

Cash paid for income tax, net of refunds received, during the three months ended March 31, 2025 and 2024 was $1.5 million and $548,000, respectively.

Current wording

Cash paid for income tax, net of refunds received, during the six months ended June 30, 2025 and 2024 was $2.7 million and $1.2 million, respectively.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $21,000 and $35,000, respectively. The cash used in investing activities for the three months ended March 31, 2025 was consisted of purchases of property and equipment.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $34,000 and $83,000, respectively. The cash used in investing activities for the six months ended June 30, 2025 was consisted of purchases of property and equipment.

Previous wording

Net cash used for financing activities forthe three months ended March 31, 2025 was $8.9 million which primarily consisted of the repurchase of common stock of $8.9 million. Net cash used for financing activities forthe three months ended March 31, 2024 was $3.9 million which primarily consisted of the repurchase of common stock.

Current wording

Net cash used for financing activities forthe six months ended June 30, 2025 was $11.5 million which primarily consisted of the repurchase of common stock of $11.4 million. Net cash used for financing activities forthe six months ended June 30, 2024 was $10.4 million which primarily consisted of the repurchase of common stock.

Previous wording

Critical accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they require that we use judgment and estimates in applying those policies. Preparation of the consolidated financial statements and accompanying notes requires that we make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as revenue and expenses during the periods reported. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. Our critical accounting policies include income taxes. For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2024 as well as updates in the current fiscal year provided in “Note 1 Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements.

Current wording

Critical accounting policies and estimates are those that we believe are important in the preparation of ourcondensed consolidated financial statements because they require that we use judgment and estimates in applying those policies. Preparation of thecondensed consolidated financial statements and accompanying notes requires that we make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of thecondensed consolidated financial statements as well as revenue and expenses during the periods reported. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. Our critical accounting policies include income taxes. For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2024 as well as updates in the current fiscal year provided in “Note 1 Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements.