TRAVELZOO
For the period ended Mar 31, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
TZOO$5.030.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001133311-24-000037
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001628280-25-024964
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 122 previous paragraphs and 102 current paragraphs.
53 unchanged; 40 reworded; 8 added; 26 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
APAC Licensing
Current report
In certain scenarios, the Company will pre-purchase vouchers or hotel inventory (in the form of credit amounts,vouchers or gift cards) in bulk from clients and partners (e.g. hotel or spa partners). In those scenarios, the Company is not acting as the agent, but rather as the principal. The pre-purchased vouchers are recorded as inventory, within prepaid expenses and otheron the condensed consolidated balance sheet until sold to and purchased by Travelzoo members, at which point, the amount for which the vouchers were sold to Travelzoo members is recognized fully as revenue and the amount for which the vouchers were purchased from the hotel or spa partners is recognized as cost of revenues.
Current report
Factors relating to advertisers include our ability to sell more advertising to existing and new advertisers, our ability to enhance our audience reach, engagement and advertising rates (particularly as we transition to a paid membership model) and spending controls by travel intermediaries to focus on improving profitability. As we build out our offering of Club Offers (offers available only to Club Members, or members who have paid the membership fee), we must balance maintaining the advertising business while working with our advertisers to also provide us these offers exclusively for paying members.
Current report
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 report
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 report
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 report
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 report
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.
Removed paragraphs (26)
Previous report
APAC Exit and Pivot to Licensing Model
Previous report
In March 2020, Travelzoo exited its loss-making Asia Pacific business and pivoted to a licensing model. The Company’s Asia Pacific business was classified as discontinued operations as of March 31, 2020.
Previous report
In the second quarter of 2020, due to the global pandemic and various stay-at-home protocols, the Company expanded its voucher refund policy to fully refundable until the voucher expires or is redeemed by the customer. This refund policy was reverted in April 2022 to a 14-day refund period from date of purchase, with a newly introduced option to extend refund eligibility until voucher redemption or expiration, for a surcharge. The expiration dates of vouchers range between October 2024 through December 2025; provided, that these expiration dates may sometimes be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year later.
Previous report
Factors relating to advertisers include our ability to sell more advertising to existing and new advertisers, our ability to enhance our audience reach and advertising rates, spending controls by travel intermediaries to focus on improving profitability, and advertiser shifts from one advertising service (e.g. Top 20) to another (e.g. Local Deals and Getaways). Advertiser shifts between advertising services could result in no incremental revenue or less revenue than in previous periods, depending on amounts purchased, and in particular with Local Dealsand Getaways, depending on how many vouchers are purchased by members.
Previous report
Due to the adverse effects of the global pandemic, the Company reduced expenditures in many areas, including but not limited to, marketing, technology and human resources. For example, in 2020, the Company ceased operations in Asia Pacific, conducted employee furloughs and restructured its operations significantly. The Company also renegotiated many of its outstanding contractual obligations with vendors and closed some ancillary office locations. We do not currently anticipate that additional cost-cutting measures will be necessary. In the foreseeable future, we anticipate relatively slow growth in fixed costs for our existing business, while investing in new initiatives where we see opportunities to expand our business, in aggregate, in-line with the trend of our revenues.
Previous report
Operating Metrics
Previous report
(1)Members represent individuals who receive one or more of our email publications.
Previous report
(2)Annualized revenue divided by number of members at the beginning of the year.
Previous report
(3)Annualized revenue divided by number of employees at the end of the quarter.
Previous report
Advertising revenue decreased $772,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023. This decrease was primarily due to $447,000 decrease in revenues from Top 20 and Standaloneand $221,000 decrease in revenues from the sale of Getaways vouchers.
Previous report
Advertising revenue decreased $630,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023. This decrease was primarily due to $1.9 million decrease in revenues from Top 20 and Standalone, offset partially by $1.1 million increase in Hotel commission.
Previous report
Revenues from Other increased $48,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the increase in licensing revenue.
Previous report
Cost of revenues decreased $117,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the decrease in software and license costs.
Previous report
Cost of revenues decreased $528,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the decrease in software and license costs.
Previous report
Sales and marketing expenses decreased $3.0 million for thenine months ended September 30, 2024 from the nine months ended September 30, 2023. The decrease was primarily due to $3.9 million decrease in member acquisition costs as a result of management's strategic plan, offset partially by $919,000 increase in salary and related expenses.
Previous report
Product development expenses increased $69,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the increase insalary and related expenses.
Previous report
Product development expenses increased $230,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the increase in salary and related expenses.
Previous report
General and administrative expenses increased $204,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to $433,000 increase in salary and related expenses, offset partially by $116,000 decrease in legal expenses and $80,000 decrease in professional service expenses.
Previous report
General and administrative expenses increased $687,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to $343,000 increase in salary and related expenses and $272,000 increase in professional service expenses.
Previous report
Other income, net increased $45,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to $249,000 increase in foreign exchange transactions gains and losses, offset partially by $120,000 decrease in interest income as the result of Azzurro's repayment of $3.0 million principal of its Notes Receivable in 2023 and $90,000 decrease in sublease income as the result of the sublease term expiration in 2023.
Previous report
Other income, net decreased $469,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to $205,000 German federal government funding for COVID-19 pandemic relief the Company received in the nine months ended September 30, 2023, $270,000 decrease in sublease income as the result of the sublease term expiration in 2023 and $265,000 decrease in interest income as the result of Azzurro's repayment of $3.0 million principal of its Notes Receivable in 2023, offset partially by $267,000 increase in foreign exchange transactions gains and losses for the nine months ended September 30, 2024.
Previous report
North America revenues decreased by $1.1 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023. This decrease was primarily due to $2.4 million decrease in revenues from Top 20 and Standalone, offset partially by $807,000 increase in hotel commission and $599,000 increase in revenues from Travelzoo Network. North America expenses decreased by $1.1 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023. The decrease was primarily due to $2.3 million decrease inmember acquisition costs, offset partially by$864,000 increase in salary and related expenses and$560,000 increase in professional service expenses.
Previous report
Europe revenues increased by $874,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023. The increase was primarily due to $506,000 increase in revenues and $368,000 positive impact from foreign currency movements relative to the U.S. dollar. The increase in revenue of $506,000 was primarily due to theincrease in Hotel commission. Europe expenses decreased by $1.6 million for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the decrease inmember acquisition costs.
Previous report
Jack’s Flight Club revenues increased by $98,000 for thenine months ended September 30, 2024 from the nine months ended September 30, 2023 due to the increase of premium members. Jack’s Flight Club expenses increased by $400,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the increase insalary and related expenses.
Previous report
New Initiatives revenues increased $39,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 primarily due to the increase in licensing revenue. New Initiatives segment expenses decreased by $359,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the decrease insalary and related expenses.
Previous report
Net cash provided by operating activities for the nine months ended September 30, 2023 was $9.3 million, which primarily consisted of net income of $8.7 million and $1.6 million increase in non-cash items, offset partially by $1.1 million decrease in cash from changes in operating assets and liabilities. Adjustments for non-cash items primarily consisted of $1.4 million for depreciation and amortization and $1.2 million for stock-based compensation, offset partially by $944,000 reversal of reserves from accounts receivable and other. The decrease in cash from changes in operating assets and liabilities was primarily due to $8.8 million decrease in merchant payables and $1.7 million decrease in accounts payable, offset partially by $3.3 million decrease in accounts receivable, $2.3 million decrease in prepaid expenses and other, $1.9 million increase in other liabilities and $1.1 million decrease in prepaid income taxes.
Reworded paragraphs (40)
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 has more than 30 million members.
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.
Previous wording
We also license Travelzoo products, services and intellectual property to licenses in Australia, Japan, New Zealand, Singapore, and South Korea. In each case, the Company is entitled to a quarterly royalty payment based on a percentage of net revenue. The Company recognized $18,000 in royalties in each of the three months ended September 30, 2024 and 2023. The Company recognized $53,000 and $39,000 in royalties in the nine months ended September 30, 2024 and 2023, respectively. Under the licensing agreements, Travelzoo's existing member list in the applicable territories continues to be owned by the Company.
Current wording
We also license Travelzoo products, services and intellectual property to licenses in Australia, Japan, New Zealand, Singapore, and South Korea. In each case, the Company is entitled to a quarterly royalty payment based on a percentage of net revenue. The Company recognized $17,000 in royalties in each of the three months ended March 31, 2025 and 2024. Under the licensing agreements, Travelzoo's existing member list in the applicable territories continues to be owned by the Company.
Previous wording
In May 2023 we launched Travelzoo META, to extend the range of experiences we offer consumers in the emerging metaverse. This paid membership service currently provides founding members with a limited edition “Travel Companion” non-fungible token (“NFT”) and future access to beta version metaverse travel experiences, as developed. In December 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), to support Travelzoo META in sourcing prospective metaverse travel experiences. MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results. See Note 3—Acquisitions to the accompanying condensed consolidated financial statements included in this report for further information regarding the acquisition of MTE.
Current wording
In May 2023 we launched Travelzoo META, to extend the range of experiences we offer consumers in the emerging metaverse. In December 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), to support Travelzoo META in sourcing prospective metaverse travel experiences. MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results. See Note 3—Acquisitions to the accompanying condensed consolidated financial statements included in this report for further information regarding the acquisition of MTE.
Previous wording
Travelzoo currently has license agreements covering Australia, Japan, New Zealand, Singapore, and South Korea. The license agreement for Australia, New Zealand and Singapore provides the licensee exclusive rights to use Travelzoo products, services and intellectual property in each jurisdiction in exchange for quarterly royalty payments based upon net revenue over a five-year term, with an option to renew. The Company recognized royalties of $11,000 and $9,000 from the licensee for the three months ended September 30, 2024 and 2023, respectively. The Company recognized royalties of $32,000 and $26,000 from the licensee for thenine months ended September 30, 2024 and 2023, respectively.
Current wording
Travelzoo currently has license agreements covering Australia, Japan, New Zealand, Singapore, and South Korea. The license agreement for Australia, New Zealand and Singapore provides the licensee exclusive rights to use Travelzoo products, services and intellectual property in each jurisdiction in exchange for quarterly royalty payments based upon net revenue over a five-year term, with an option to renew. The Company recognized royalties of $10,000 from the licensee for each of the three months ended March 31, 2025 and 2024, respectively.
Previous wording
The license agreement for Japan and South Korea provides the licensee exclusive rights to use Travelzoo products, services, and intellectual property in exchange for quarterly royalty payments based on net revenue over a five-year term, with an option to renew. An interest free loan was provided to the licensee for JPY 46 million (approximately$430,000), of which$133,000 was repaid in 2021 and the remaining amount repaid in 2023. The Company recognized royalties of $7,000 and $9,000 from the licensee for the three months ended September 30, 2024 and 2023, respectively. The Company recognized royalties of $21,000 and $13,000 from the licensee for thenine months ended September 30, 2024 and 2023, respectively.
Current wording
The license agreement for Japan and South Korea provides the licensee exclusive rights to use Travelzoo products, services, and intellectual property in exchange for quarterly royalty payments based on net revenue over a five-year term, with an option to renew. The Company recognized royalties of $7,000 from the licensee for each of the three months ended March 31, 2025 and 2024, respectively.
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. 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
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
As of September 30, 2024 and December 31, 2023, the Company had approximately $4.3 million and $5.2 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 $142,000 and $268,000 as of September 30, 2024 and December 31, 2023, 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 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.
Previous wording
Merchant payables of $17.3 million as of September 30, 2024 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 $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.
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. 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. 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 and willingness to utilize new technologies such as artificial intelligence (“AI”) to provide lower quality content at greater volumes. Factors relating to the travel industry include geopolitical tensions affecting consumer travel to certain regions, the imposition or threat of tariffs, immigration issues, 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.
Previous wording
Internal factors include risks relating to our ability to continue to service members without interruption, our ability to develop and launch new products members will utilize and advertisers will adopt, and hiring and relying on key employees for the continued maintenance and growth of our business.
Current wording
Internal factors include risks relating to our ability to continue to service members without interruption, our ability to develop and launch new products that members will utilize and advertisers will adopt (such as Club Offers), and hiring and relying on key employees for the continued maintenance and growth of our business.
Previous wording
External factors include the introduction of new methods of advertising, the relative condition of the economy, cybersecurity risks due to increased dependence on digital technologies, and climate change and related legislation, to the extent such legislation impacts the businesses of our advertisers such as airlines and cruise ship operators, which have come under increasing scrutiny for their carbon footprints.
Current wording
External factors include the introduction of new methods of advertising, the relative condition of the economy (including risks of recession), cybersecurity risks due to increased dependence on digital technologies, and climate change and related legislation, to the extent such legislation impacts the businesses of our advertisers such as airlines and cruise ship operators, which have come under increasing scrutiny for their carbon footprints.
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 user acquisition strategies whose timeframes to become effective are uncertain. While we are initially reducing our expenditures on acquiring traffic as we test new strategies for efficacy, in time we plan to increase these expenditures to maintain or grow our membership, audience and the 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 additional investments in mobile app development.
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 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 believe that an important factor for our advertising rates is the reach of our publications, however, we also believe that there are other important factors, such as the engagement of our membership base with our content. We do not know if we will be able to increase the reach of our publications, particularly with the introduction of membership fees in 2024. We do not know if by increasing the reach of our publications, we will also be able to increase engagement and other key metrics of importance to our advertisers. If we are able to increase the reach of our publications, we still may not be able to or want to increase rates given market conditions, including intense competition in our industry. Even if we increase our rates, the increased price may reduce the number of advertisers willing to advertise with us and could, therefore, decrease our revenue. We may need to decrease our rates based on competitive market conditions and the performance of our audience in order to maintain or grow our revenue.
Current wording
We believe that an important factor for our advertising rates is the reach of our publications, however, we also believe, particularly as we transition to paid membership, that there are other more important factors, such as the engagement of our membership base with our content. We do not know if we will be able to increase engagement, however, early signs indicate that on average paying members are more engaged than members who have not paid a fee. We do not know if by increasing engagement, we will also be able to increase other key metrics of importance to our advertisers. As we make this transition, we may need to decrease our rates based on competitive market conditions and the performance of our audience. However, as we increase member acquisition, we expect that a greater proportion of our revenue will be driven by membership revenue, as opposed to advertising revenue.
Previous wording
We do not know what our cost of revenues as a percentage of revenues will be in future periods. Our cost of revenues may change in relation to volume and terms with third-party partners of the Travelzoo network, the incurrence of merchant processing fees from the sale of vouchers for Local Deals and Getaways and payment of membership fees, changes in refund request trends and provisioning of customer service. We expect fluctuations in cost of revenues as a percentage of revenues from quarter to quarter. Some of the fluctuations may be significant and may have a material impact on our results of operations.
Current wording
We do not know what our cost of revenues as a percentage of revenues will be in future periods. Our cost of revenues may change in relation to volume and terms with third-party partners of the Travelzoo network, the incurrence of merchant processing fees from the sale of vouchers for Local Deals and Getaways and payment of membership fees, changes in refund request trends, pre-purchasing of voucher inventory and provisioning of customer service. We expect fluctuations in cost of revenues as a percentage of revenues from quarter to quarter. Some of the fluctuations may be significant and may have a material impact on our results of operations.
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 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. We hope efficiencies we have gained through our testing will scale as well. In addition, 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 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
In addition to the type of membership offered, we believe the average cost per acquisition depends mainly on the advertising rates we pay for media buys, the quality of the members we acquire, our ability to manage our member acquisition efforts successfully, the regions we target to acquire new members and the relative costs for that region, and the degree of competition in our industry. All else equal, increased competition may require us to increase advertising for our brand and advertisers’ deals.
Current wording
In addition to the type of membership offered, we believe the average cost per acquisition depends mainly on the advertising rates we pay for media buys, the quality of the members we acquire (based on both clicks and purchases through Travelzoo), our ability to manage our member acquisition efforts successfully, the regions we target to acquire new members and the relative costs for that region, and the degree of competition in our industry. All else equal, increased competition may require us to increase advertising for our brand and advertisers’ deals.
Previous wording
Revenues from Membership fees increased $256,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 due to the increase ofsubscription fees paid by Travelzoo and Jack's Flight Club members.
Current 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.
Previous wording
Revenues from Other increased $15,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the increase from theretail and fashion business.
Current 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.
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, and salary and related expenses associated with network operations and customer service employees. Cost of revenues was $2.5 million and $2.7 million, respectively, for thethree months ended September 30, 2024 and 2023. Cost of revenues was $7.7 million and $8.2 million, respectively, for thenine months ended September 30, 2024 and 2023.
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 $4.1 million and $2.6 million, respectively, for the three months ended March 31, 2025 and 2024.
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 $8.2 million and $9.8 million for the three months ended September 30, 2024 and 2023, respectively. Sales and marketing expenses were $26.2 million and $29.3 million for the nine months ended September 30, 2024 and 2023, 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 September 30, 2024 and 2023, advertising expenses accounted for 14% and 29%, respectively, of the total sales and marketing expenses. For the nine months ended September 30, 2024 and 2023, advertising expenses accounted for 12% and 28%, 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 $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.
Previous wording
Sales and marketing expenses decreased $1.6 million for the three months ended September 30, 2024 from the three months ended September 30, 2023. The decrease was primarily due to the decrease in member acquisition costs as a result of management's strategic plan.
Current 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.
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 $594,000 and $525,000 for the three months ended September 30, 2024 and 2023, respectively. Product development expenses were $1.8 million and $1.5 million for the nine months ended September 30, 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 $634,000 and $566,000 for the three months ended March 31, 2025 and 2024, respectively.
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 $4.7 million and $4.5 million for the three months ended September 30, 2024 and 2023, respectively. General and administrative expenses were $13.9 million and $13.2 million for the nine months ended September 30, 2024 and 2023, 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 $4.3 million and $4.5 million for the three months ended March 31, 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 COVID-19 pandemic relief, interest income earned on cash, cash equivalents and restricted cash as well as interest expense. Other income, net was $359,000 and $314,000, respectively, for the three months ended September 30, 2024 and 2023. Other income, net was $674,000 and $1.1 million, respectively, for the nine months ended September 30, 2024 and 2023.
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 $629,000 and $139,000, respectively, for the three months ended March 31, 2025 and 2024.
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 $1.1 million and $1.0 million, respectively, for the three months ended September 30, 2024 and 2023. Our effective tax rate from continuing operations was 26% and 30%, respectively, for the three months ended September 30, 2024 and 2023. The Company’s effective tax rate for the three months ended September 30, 2024 changed from the three months ended September 30, 2023 primarily due to a decrease of non-deductible expenses in certain jurisdictions in the three months ended September 30, 2024. Income tax expense was $3.9 million and $3.5 million, respectively, for the nine months ended September 30, 2024 and 2023. Our effective tax rate from continuing operations was 27% and 28%for thenine months ended September 30, 2024 and 2023, respectively. The Company’s effective tax rate for the three months ended September 30, 2024 changed from the three months ended September 30, 2023 primarily due to a decrease of non-deductible expenses in certain jurisdictions in thenine months ended September 30, 2024 and 2023. The Company’s effective tax rate for thenine months ended September 30, 2024 changed from thenine months ended September 30, 2023 primarily due to a decrease of non-deductible expenses in certain jurisdictions in thenine months ended September 30, 2024.
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 $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.
Previous wording
North America revenues decreased by $586,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023. This decrease was primarily due to the decrease in revenues from Top 20 and Standalone. North America expenses decreased by $721,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023. The decrease was primarily due to the decrease inmember acquisition costs.
Current 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.
Previous wording
Europe revenues increased by $35,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023. 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 decreased by $726,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the decrease inmember acquisition costs.
Current 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.
Previous wording
Foreign currency movements relative to the U.S. dollar positively impacted our local currency income from our operations in Europe by approximately $31,000 and $13,000 for thethree months ended September 30, 2024 and 2023 respectively. Foreign currency movements relative to the U.S. dollar positively impacted our local currency income from our operations in Europe by approximately $84,000 for thenine months ended September 30, 2024. Foreign currency movements relative to the U.S. dollar negatively impacted our local currency income from our operations in Europe by approximately $66,000 for the nine months ended September 30, 2023.
Current 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.
Previous wording
Jack’s Flight Club revenues increased by $45,000 for thethree months ended September 30, 2024 from the three months ended September 30, 2023 due to the increase of subscription fees paid by the members. Jack’s Flight Club expenses increased by $162,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the increase insalary and related expenses.
Current 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.
Previous wording
New Initiatives segment primarily consists of Travelzoo licensing business, Travelzoo META subscription service, Metaverse experience scouting and development business andretail and fashion business acquired with MTE. New Initiatives revenues increased $5,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the increase from theretail and fashion business. New Initiatives segment expenses decreased by $152,000 for the three months ended September 30, 2024 from the three months ended September 30, 2023 primarily due to the decrease insalary and related expenses.
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 $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.
Previous wording
As of September 30, 2024, we had $11.4 million in cash and cash equivalents, of which $7.5 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 $675,000 in restricted cash held in the U.S. as of September 30, 2024.
Current 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.
Previous wording
Cash, cash equivalents and restricted cash decreased $4.3 million from $16.4 million as of December 31, 2023 to $12.1 million as of September 30, 2024 primarily due to $16.6 million cash used to repurchase common stock, offset partially by $13.3 million cash provided by operating activities.
Current 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.
Previous wording
As of September 30, 2024, we had merchant payables of $17.3 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$7.0 million. Payables to merchants are generally due upon redemption of vouchers. The vouchers expire between October 2024 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 cash on hand as of September 30, 2024 will be sufficient to provide for working capital needs for at least the next twelve months.
Current 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.
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 nine months ended September 30, 2024 was $13.3 million, which primarily consisted of net income of $10.4 million, $1.9 million increase in non-cash items and $963,000 increase in cash from changes in operating assets and liabilities. Adjustments for non-cash items primarily consisted of $1.2 million for stock-based compensation and $737,000 for depreciation and amortization. The increase in cash from changes in operating assets and liabilities was primarily due to $1.8 million increase in deferred revenue, $1.4 million increase in other non-current liabilities and $802,000 increase in accounts payable and accrued expenses, offset partially by $3.3 million decrease in merchant payables.
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 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
Previous wording
Cash paid for income tax, net of refunds received, during the nine months ended September 30, 2024 was $1.5 million. Cash refunds for income tax, net of payment made, during the nine months ended September 30, 2023 was $228,000.
Current 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.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $129,000 and $104,000, respectively. The cash used in investing activities for the nine months ended September 30, 2024 was consisted of purchases of property and equipment. The cash used in investing activities for the nine months ended September 30, 2023 was primarily consisted of the $217,000 purchases of property and equipment, offset partially by $113,000 proceeds from repayment of the Japan loan.
Current 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.
Previous wording
Net cash used for financing activities forthe nine months ended September 30, 2024 was $17.2 million which primarily consisted of the repurchase of common stock of $16.6 million and taxes paid for net share settlement of $592,000. Net cash used for financing activities forthe nine months ended September 30, 2023 was $12.1 million which primarily consisted of the repurchase of common stock of $11.8 million and taxes paid for net share settlement of $299,000.
Current 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.
Previous wording
We also have contingencies related to net unrecognized tax benefits, including interest and penalties, of approximately $24.9 million as of September 30, 2024. See “Note 5: Income Taxes” to the accompanying unaudited condensed consolidated financial statements for further information.
Current wording
We also have contingencies related to net unrecognized tax benefits, including interest and penalties, of approximately $23.9 million as of March 31, 2025. See “Note 5: Income Taxes” to the accompanying unaudited condensed consolidated financial statements for further information.
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
Current 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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,
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated.
Previous report — wording carried elsewhere
Revenues from Membership fees increased $478,000 for the nine months ended September 30, 2024 from the nine months ended September 30, 2023 due to the increase ofsubscription fees paid by Travelzoo and Jack's Flight Club members.
Previous report — wording carried elsewhere
Report on Form 10-K for the year ended December 31, 2023 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.