Release Date: October 23, 2024

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

Positive Points

• Travelzoo (NASDAQ:TZOO) reported a 30% year-over-year increase in operating profit for Q3 2024, reaching $4 million.
• The European segment showed strong performance with an increased operating margin of 17%.
• Travelzoo (NASDAQ:TZOO) maintained a solid cash position with $12.1 million in cash and equivalents as of September 30, 2024.
• Jack's Flight Club, a subsidiary, experienced an 11% increase in revenue and a 14% increase in premium subscribers year-over-year.
• The company announced a new share repurchase program, indicating confidence in its stock value.

Negative Points

• Consolidated Q3 revenue was $20.1 million, down 2% from the previous year, falling short of expectations.
• North American revenues were below expectations due to advertisers delaying their spending.
• Membership fee revenue remains small and is not expected to significantly impact Q4 2024 results.
• The company faces challenges in converting legacy members to paying members, with no specific forecasts for 2025 membership revenue.
• Travelzoo (NASDAQ:TZOO) anticipates slower revenue growth in Q4 2024 compared to 2023, with potential for unexpected fluctuations.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with TZOO.

Q: Last quarter, you mentioned travelers becoming more cost-conscious and price increases for flights and rooms moderating. Is this trend continuing? Also, can you explain the strong operating margin in Europe compared to North America? A: Yes, we continue to see less demand, better prices, and more deals from hotels and airlines. Consumers are looking for value and less crowded destinations, which aligns with our strategy of promoting unique travel experiences. Regarding Europe, we operated efficiently, leading to increased profit margins, and we expect this trend to continue. - Holger Bartel, Global CEO

Q: Can you provide insights into the anticipated revenue mix between advertising and membership fees in 2025? Are there any changes to the membership fee strategy? A: We haven't made specific forecasts for 2025 regarding the revenue mix. We expect substantial growth in membership fees next year, but existing members are exempt in 2024. We are not expecting significant membership fee revenue in Q4 due to our current strategy. - Holger Bartel, Global CEO

Q: What new benefits are you considering for paid memberships, and how do you plan to use the strong cash flows? A: We are developing benefits to enhance travel experiences for our members, which will be announced soon. Regarding cash flow, we plan to continue share repurchases and invest in marketing to grow our member base, while also improving earnings per share. - Holger Bartel, Global CEO

Q: How is Jack's Flight Club performing, and what are your expansion plans? A: Jack's Flight Club saw an 11% increase in revenue and a 14% rise in premium subscribers. We are considering expanding into more European countries and possibly offering services in additional languages. We are also exploring ways to integrate Jack's Flight Club with Travelzoo memberships. - Christina Ciocca, Chairman of the Board

Q: With the shift to a subscription model, are there areas needing additional investment, such as customer service or deal research? A: We are focusing on delivering better offers to our members, which is facilitated by the membership fee model. This allows us to negotiate exclusive deals and improve the overall travel experience for our members. We are confident in our strategy and positive about 2025. - Holger Bartel, Global CEO

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