TRAVELZOO

Previous wording

Travelzoo, the club for travel enthusiasts, is a global Internet media company. We reach 30 million travelers. Club Members receive Club Offers personally reviewed by our deal experts around the globe. We work in partnership with thousands of toptravel suppliers—our long-standing relationships give us access to irresistible deals.

Current wording

Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) is a global Internet media company. We operate Travelzoo®, the club for travel enthusiasts, Jack’s Flight Club®, and Travelzoo META. We reach 30 million travelers. Club Members, who pay a membership fee, receive Club Offers negotiated and rigorously vetted by our deal experts around the globe. Our relationships with thousands of top travel suppliers—give us access to irresistible deals. Our club and its benefits are built around the lifestyle of a travel enthusiast.

Previous wording

Travelzoo membership has historically been free, however, beginning in 2024, new members in the United States, Canada, United Kingdom and Germany are charged an annual fee of $40 (or local equivalent), with the 2024 annual fee waived for existing members as of December 31, 2023. For any subscription revenue derived from the paid membership, we recognize revenue monthly pro rata over the subscription period.

Current wording

Travelzoo membership has historically been free, however, beginning in 2024, new members in the United States, Canada, United Kingdom and Germany are charged an annual fee of $40 (or local equivalent), with the 2024 annual fee waived for existing members as of December 31, 2023. On January 1, 2026, we increased the annual membership fee to $50 in the United States for new members, For existing members, the new pricing will apply from the next renewal of their membership after February 1, 2026. For any subscription revenue derived from the paid membership, we recognize revenue monthly pro rata over the subscription period.

Previous wording

We also license Travelzoo products, services and intellectual property to licenses in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to a quarterly royalty payment based on a percentage of net revenue. The Company recognized $71,000 and $71,000 in royalties in 2024 and 2023, respectively. Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company.

Current wording

We also license Travelzoo products, services and intellectual property to licenses in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to a quarterly royalty payment based on a percentage of net revenue. The Company recognized $68,000 and $71,000 in royalties in 2025 and 2024, respectively. Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company.

Previous 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, the Travelzoo META subscription service and MTE. For the year ended December 31, 2024, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack's Flight Club comprised 5% of revenues. Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 11–Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein.

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, the Travelzoo META subscription service and MTE. For the year ended December 31, 2025, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 28% of revenues and Jack's Flight Club comprised 6% of revenues. Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 11–Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein.

Previous wording

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

Current wording

Revenues from the Travelzoo brand and business 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 or clicks, 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 Deals are typically for periods between one and twelve months and are not automatically renewed.

Current wording

The "Advertising and Commerce" category consists primarily 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 or clicks, 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

The "Membership Fees" category consists of subscription fees paid by Travelzoo, Jack's Flight Club, and Travelzoo META 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. We recognize subscription revenues ratably over the respective subscription periods. Jack’s Flight Club subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues ratably over the respective subscription periods. For Travelzoo META, a founding membership was launched in 2022 following a test-and-learn strategy.

Current 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. On January 1, 2026, we increased the annual membership fee to $50 for new members in the United States only. For existing members, the new pricing will apply from the next renewal of their membership after February 1, 2026. We recognize subscription revenues ratably over the respective subscription periods. Jack’s Flight Club subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues ratably over the respective subscription periods.

Previous wording

Factors relating to competitors include the willingness of certain competitors to grow their business unprofitably. Factors relating to the travel industry include lingering effects of the global pandemic, geopolitical tensions affecting consumer travel to certain regions, and risk of future unforeseeable macro events that impact travel, while factors relating to the online advertising business include shifts in consumer use of different digital media formats such as from desktop to mobile, from mobile web to mobile app, and from email to push notifications and SMS text messaging.

Current wording

Factors relating to competitors include the willingness of certain competitors to grow their business unprofitably. Factors relating to the travel industry include lingering effects of the global pandemic, geopolitical tensions affecting consumer travel to certain regions, and risk of future unforeseeable macro events that impact travel, while factors relating to the online advertising business include shifts in consumer use of different digital media formats such as from desktop to mobile, from mobile web to mobile app, and from email to push notifications and text messaging.

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 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, our former user acquisition strategies and marketing tactics are no longer applicable for the Travelzoo membership base, and we are developing new user acquisition strategies whose timeframes to become effective are inherently uncertain. While we are initially reducing our expenditures on acquiring traffic as we test new strategies for efficacy, in time we may need to increase these expenditures to maintain or grow our audience and reach of our publications. 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 increased marketing on social media 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 activity on our websites by acquiring traffic from Internet search 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, our former user acquisition strategies and marketing tactics are no longer applicable for the Travelzoo membership base, and we are developing new member acquisition strategies whose timeframes to become effective are inherently uncertain. While we are initially reducing our expenditures on acquiring traffic as we test new strategies for efficacy, in time we may need to increase these expenditures to maintain or grow our audience and reach of our publications. We continue to see a shift in members accessing our services through mobile devices and social media and, therefore, anticipate continuing to address this growing channel through increased marketing on social media 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. Initially, we are reducing our advertising expenditures, as we are no longer offering free memberships for new members and, accordingly, prior user acquisition strategies are not in use. Further, we are early in the development of new strategies to acquire paying members, so our test budgets have not yet fully scaled. However, as we test new strategies and gain more learnings as to acquiring paying members, our expenditures may increase significantly. In addition, there may be a significant number of members that cancel or we may cancel their subscriptions 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 expected the cost of acquiring new paying members to increase significantly, as compared with the cost of acquiring non-paying members prior to 2024. In 2025, advertising expenditures increased significantly as we implemented new strategies to acquire Club Members. However, as we test new strategies and gain more learnings as to acquiring paying members, our expenditures may fluctuate. In addition, there may be a significant number of members that cancel or we may cancel their subscriptions 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, 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 and Jack’s Flight Club members. Other includes licensing fees from license agreements and the retail business acquired with MTE.

Previous wording

General and administrative expenses remained flat year-over-year.

Current wording

Advertising and Commerce revenue remained flat year over year.

Previous wording

Revenues from Membership fees increased $1.3 million, or 30%, from 2023 to 2024 due to the increase of members paying subscription fees for both Travelzoo and Jack's Flight Club.

Current wording

Revenues from Membership fees increased $7.8 million, or 144%, from 2024 to 2025 due to the increase of members paying subscription fees for both Travelzoo and Jack's Flight Club.

Previous wording

Revenues from Other decreased $97,000 due to decrease in activities attributable to MTE.

Current wording

Revenues from Other decreased $27,000 due to decrease in activities attributable to MTE.

Previous wording

Cost of revenues decreased $465,000 for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to a decrease in software and license costs. Cost of revenues as a percent of revenues declined from 12.9% in 2023 to 12.5% in 2024.

Current wording

Cost of revenues increased$7.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to an increase in costs recognized upon the sale of pre-purchased vouchers. Cost of revenues as a percent of revenues increased from 12.5% in 2024 to 19.7% in 2025.

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 participation in industry conferences, public relations expenses and facilities costs. Sales and marketing expenses were $34.5 million and $37.8 million for the years ended December 31, 2024 and 2023, respectively. Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs. For the years ended December 31, 2024 and 2023, advertising expenses accounted for 13% and 26%, respectively, of total sales and marketing expenses. The goal of our advertising is to acquire new members, increase our audience through mobile and social media channels, drive traffic to our websites and increase brand awareness.

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 participation in industry conferences, public relations expenses and facilities costs. Sales and marketing expenses were $45.3 million and $34.5 million for the years ended December 31, 2025 and 2024, respectively. Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs. For the years ended December 31, 2025 and 2024, advertising expenses accounted for 26% and 11%, respectively, of total sales and marketing expenses. The goal of our advertising is to acquire new members, increase our audience through mobile and social media channels, drive traffic to our websites and increase brand awareness.

Previous wording

Sales and marketing expenses decreased $3.3 million, or 9%, in 2024 as compared to 2023, primarily due to decrease in member acquisition. Sales and marketing expensesas a percent of revenues declined from 44.7% in 2023 to 41.1% in 2024.

Current wording

Sales and marketing expenses increased $10.8 million, or 31%, in 2025 as compared to 2024, primarily due to increase in member acquisition. Sales and marketing expensesas a percent of revenues increased from 41% in 2024 to 49.4% in 2025.

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 $2.4 million and $2.1 million for each of the years ended December 31, 2024 and 2023, 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 $2.6 million and $2.4 million for each of the years ended December 31, 2025 and 2024, respectively.

Previous wording

Product development expenses increased by $300,000, or 14%, in 2024 as compared to 2023, primarily due to increased salary and related expenses. Product development expenses as a percent of revenues were 2.9% and 2.5% in 2024 and 2023, respectively.

Current wording

Product development expenses increased by $144,000, or 6%, in 2025 as compared to 2024, primarily due to increase in salary and related expenses. Product development expenses as a percent of revenues were 2.8% and 2.9% in 2025 and 2024, respectively.

Previous wording

General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, professional service expenses, legal expenses, amortization of intangible assets, general office expense, facilities costs and bad debt expense. General and administrative expenses were $18.1 million and $18.1 million for the years ended 2024 and 2023, respectively.

Current wording

General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, professional service expenses, legal expenses, amortization of intangible assets, general office expense, facilities costs and bad debt expense. General and administrative expenses were $18.9 million and $18.1 million for the years ended 2025 and 2024, respectively.

Previous wording

Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for Corona-related pandemic relief, interest income and interest expense. Other income was $588,000 and $1.5 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for Corona-related pandemic relief, interest income and interest expense. Other income was $753,000 and $588,000 for the years ended December 31, 2025 and 2024, respectively.

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, adjusted to take into account expenses that are treated as having no recognizable tax benefit. Income tax expense was $5.4 million and $5.1 million, respectively, for the years ended December 31, 2024 and 2023. Our effective tax rate was 28.3% and 30% for 2024 and 2023, respectively.

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, adjusted to take into account expenses that are treated as having no recognizable tax benefit. Income tax expense was $2.7 million and $5.4 million, respectively, for the years ended December 31, 2025 and 2024. Our effective tax rate was 35% and 28.3% for 2025 and 2024, respectively.

Previous wording

Our effective tax rate decreased for 2024 as compared to 2023, primarily due to a decrease in non-deductible stock compensation. We expect our effective tax rate to fluctuate in future periods depending on the geographic mix of our worldwide income or losses mainly incurred by our operations, statutory tax rate changes that may occur, existing or new uncertain tax matters that may arise and require changes in tax reserves and the need for valuation allowances on certain tax assets, if any. See Note 6–Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence.

Current wording

Our effective tax rate increased for 2025 as compared to 2024, primarily due to higher interest expense related to uncertain tax positions. We expect our effective tax rate to fluctuate in future periods depending on the geographic mix of our worldwide income or losses mainly incurred by our operations, statutory tax rate changes that may occur, existing or new uncertain tax matters that may arise and require changes in tax reserves and the need for valuation allowances on certain tax assets, if any. See Note 6–Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence.

Previous wording

Foreign currency movements relative to the U.S. dollar impacted local currency income from our operations in Europe by approximately $106,000 and negatively $40,000 in 2024 and 2023, respectively.

Current wording

Foreign currency movements relative to the U.S. dollar impacted local currency income from our operations in Europe by approximately negatively $97,000 and positively $106,000 in 2025 and 2024, respectively.

Previous wording

Jack’s Flight Club revenues increased $460,000, or 11%, in 2024 as compared to 2023 due to increase of subscription fees and increase of premium members. Jack’s Flight Club cost of sales and operating expenses increased $690,000 in 2024 as compared to 2023, primarily due to an increase in headcount to support Canadian expansion and advertising and marketing expenses.

Current wording

Jack’s Flight Club revenues increased $739,000, or 16%, in 2025 as compared to 2024 due to increase ofsubscription fees paid by the members. Jack’s Flight Club cost of sales and operating expenses increased $446,000 in 2025 as compared to 2024, primarily due to an increase in advertising and marketing expenses.

Previous wording

New Initiatives revenues decreased $97,000 in 2024 as compared to 2023. New Initiatives cost of sales and operating expenses decreased $604,000 in 2024 as compared to 2023, primarily due to decreases in sales and marketing and headcount.

Current wording

New Initiatives revenues decreased $27,000 in 2025 as compared to 2024. New Initiatives cost of sales and operating expenses decreased $422,000 in 2025 as compared to 2024, primarily due to decreases in sales and marketing and headcount.

Previous wording

As of December 31, 2024, we had$17.1 million of cash and cash equivalents, of which $13.8 million was held outside the U.S., and we had $675,000 in restricted cash held in the U.S. If our cash and cash equivalents held outside the U.S. were distributed to the U.S., we may be subject to additional U.S. taxes in certain circumstances.

Current wording

As of December 31, 2025, we had $10 million of cash and cash equivalents, of which$7.8 million was held outside the U.S., and we had $756,000 in restricted cash held in the U.S. If our cash and cash equivalents held outside the U.S. were distributed to the U.S., we may be subject to additional U.S. taxes in certain circumstances.

Previous wording

Cash, cash equivalents and restricted cash increased by $1.3 million to $17.7 million as of December 31, 2024 from $16.4 million as of December 31, 2023, primarily due to cash provided by operating activities, offset partially by cash used to repurchase common stock.

Current wording

Cash, cash equivalents and restricted cash decreased by $7.0 million to $10.8 million as of December 31, 2025 from $17.7 million as of December 31, 2024, primarily due to cash used to repurchase common stock, offset partially by cash provided by operating activities.

Previous wording

As of December 31, 2024, we had merchant payables of $16.3 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-K 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$4.7 million. Payables to merchants are generally due upon redemption of vouchers. The vouchers expire through December 2025; however these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration. Based on current projections of redemption activity, we expect that cashand cash equivalentson hand as of December 31, 2024 will be sufficient to provide for working capital needs for at least the next twelve months.

Current wording

As of December 31, 2025, we had merchant payables of $11.7 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-K 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$10.8 million. Payables to merchants are generally due upon redemption of vouchers. The vouchers expire through December 2026; however these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration. Based on current projections of redemption activity, we expect that cashand cash equivalentson hand as of December 31, 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 for 2023 was $10.7 million, consisting of net income of $12.5 million and $2.4 million adjustments for non-cash items, offset partially by $4.2 million used in changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of $1.9 million for depreciation and amortization and $1.6 million for stock-based compensation, offset partially by a $1.0 million reversal of reserve for accounts receivable and refunds. Cash used in operating assets and liabilities was primarily due to a $12.1 million decrease in merchant payables, offset partially by a $3.8 million decrease in prepaid expenses and other, $2.4 million increase in other liabilities and $1.2 million decrease in prepaid income taxes.

Current wording

Net cash provided by operating activities for 2025 was $5.7 million, as compared to $21.1 million in 2024, consisting of net income of $5 million, $1.2 million of adjustments for non-cash items and $478,000 used in changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of $305,000 for depreciation and amortization and $1.4 million for stock-based compensation, offset partially by $558,000 of deferred income tax change. Cash used in operating assets and liabilities was primarily due to a $5.2 million decrease in merchant payables, offset partially by a $2.4 million increase in accounts receivable and a $2 million increase in deferred revenue.

Previous wording

Net cash provided by operating activities for 2024 was $21 million, as compared to $10.7 million in 2023, consisting of net income of $13.7 million, $2 million of adjustments for non-cash items and $5.4 million used in changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of $907,000 for depreciation and amortization and $1.6 million for stock-based compensation, offset partially by $518,000 of deferred income tax change. Cash used in operating assets and liabilities was primarily due to a $4.1 million decrease in merchant payables, offset partially by a $950,000 decrease in prepaid expenses and other and $1.9 million increase in other liabilities.

Current wording

Net cash provided by operating activities for 2024 was $21 million, consisting of net income of $13.7 million, $2 million of adjustments for non-cash items and $5.4 million used in changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of $907,000 for depreciation and amortization and $1.6 million for stock-based compensation, offset partially by $518,000 of deferred income tax change. Cash used in operating assets and liabilities was primarily due to a $4.1 million decrease in merchant payables, offset partially by a $950,000 decrease in prepaid expenses and other and $1.9 million increase in other liabilities.

Previous wording

Cash paid for income tax, net of refunds received, in 2024, was $1.9 million. Cash received for income tax refunds, net of paymentsin 2023, was $1,000.

Current wording

Cash paid for income tax, net of refunds received, in 2025, was $3.8 million. Cash received for income tax refunds, net of paymentsin 2024, was $1.9 million.

Previous wording

Net cash used in investing activities for 2024 was $177,000 for purchases of property and equipment. Net cash used in investing activities for 2023 was $39,000 which consisted of $255,000 for purchases of property and equipment and $216,000 proceeds from repayment of note receivable from a licensee.

Current wording

Net cash used in investing activities for 2025 was $65,000 for purchases of property and equipment. Net cash used in investing activities for 2024 was $177,000 for purchases of property and equipment.

Previous wording

Net cash used in financing activities for 2024 was $19 million primarily for the repurchase of common stock. Net cash used in financing activities for 2023 was $14.2 million, which primarily consisted of $16.8 million for the repurchase of common stock and $3.0 million payment of promissory notes.

Current wording

Net cash used in financing activities for 2025 was $13 million primarily for the repurchase of common stock. Net cash used in financing activities for 2024 was $18.9 million primarily for the repurchase of common stock.

Previous wording

We also have contingencies related to net unrecognized tax benefits, including interest, of approximately $25 million as of December 31, 2024. See Note 6—Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence for further information.

Current wording

We also have contingencies related to net unrecognized tax benefits, including interest, of approximately $23.9 million as of December 31, 2025. See Note 6—Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence for further information.