• Revenue: $23.1 million, up 5% year over year; $23.3 million in constant currencies, up 6%.
• Operating Profit: $3.7 million, 16% of revenue, down 34% from the prior year.
• Advertising Revenue: $20.7 million for Q1 2025.
• Membership Fees Revenue: Increased to $2.4 million.
• GAAP Operating Margin: 16% in Q1 2025.
• Non-GAAP Operating Profit: $4.3 million, 19% of revenue, compared to $6 million in the prior year.
• Share Repurchase: 590,839 shares repurchased.
• Cash and Equivalents: $12.2 million as of March 31, 2025.
• Jack's Flight Club Revenue: Increased 20% year over year.
• Premium Subscribers for Jack's Flight Club: Increased 13%.

• Warning! GuruFocus has detected 2 Warning Sign with TZOO.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Travelzoo (NASDAQ:TZOO) reported a 5% increase in consolidated Q1 revenue, reaching the highest quarterly revenue since the pandemic.
• Revenue from membership fees increased to $2.4 million, indicating significant and incremental revenue growth.
• Jack's Flight Club segment showed strong performance with a 20% increase in revenue and a 13% rise in premium subscribers.
• The company repurchased 590,839 shares, demonstrating confidence in its business and financial stability.
• Travelzoo (NASDAQ:TZOO) expects year-over-year revenue growth to double in Q2 2025, with further acceleration in subsequent quarters.

Negative Points

• Operating income decreased by 34% year-over-year due to increased investments in member growth.
• GAAP operating margin decreased to 16% in Q1 2025, reflecting higher investments in member acquisition.
• North America and Europe segments experienced a decrease in operating profit, despite revenue growth.
• Gross margins were lower than expected, partly due to the classification of distressed travel products in cost of revenue.
• Short-term fluctuations in net income are possible due to immediate expensing of marketing costs and investments in member growth.

Q & A Highlights

Q: There's been a lot of discussion about foreign travelers not wanting to come to the US. How do you see this affecting travel plans from Europe, Canada, and other regions? A: Holger Bartel, Global CEO: While this trend is noted, our members are flexible and open to new destinations. 91% of our members are willing to travel wherever they find a great offer, so this trend does not negatively impact us as our members simply choose other destinations.

Q: North America performed better than Europe in the latest quarter. Was this driven by domestic or international travel, and were there other factors like currency at play? A: Holger Bartel, Global CEO: There are natural fluctuations in global markets. For instance, Germany had a strong quarter with double-digit revenue growth, while the UK was slightly lower compared to a strong Q1 last year. We expect Europe to catch up in growth in the coming quarters.

Q: Gross margins were lower than expected. Is this due to the company's efforts to develop a subscription business, or were there other factors? A: Holger Bartel, Global CEO: We had opportunities to purchase distressed travel products at discounted prices, which we used to create strong club offers. This is classified under cost of revenue. Additionally, customer service costs increased temporarily due to more legacy members signing up for club membership.

Q: Can you discuss the main drivers for consumers deciding to become members? A: Christina Ciocca, Chairman of the Board: Our club offers and travel deals are the biggest draw for converting people into club members. We also offer benefits like lounge access and giveaways, but the club offers are the main driver.

Q: With less demand for people to come to the US, are you seeing similar dynamics for US residents traveling internationally? A: Holger Bartel, Global CEO: We see hesitation from Canadians traveling to the US, but not the other way around. Americans still enjoy traveling to Europe.

Q: The company was aggressive in repurchasing shares. What are your thoughts on the balance sheet and capacity for further buybacks if market volatility continues? A: Holger Bartel, Global CEO: We took advantage of attractive opportunities last quarter. We expect our cash balance to increase due to membership fees and our profitable, cash flow-positive business. We plan to invest in member growth with the positive cash generated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.