Travelzoo Reports Fourth Quarter 2024 Results

Rhea-AI Summary

Travelzoo (NASDAQ: TZOO) reported its Q4 2024 results with revenue of $20.7 million, down 2% year-over-year, while consolidated operating profit increased 8% to $4.9 million. The company achieved earnings per share of $0.26 and generated $7.7 million in cash flow from operations.

By segment, North America revenue grew 1% to $13.9 million with $4.6 million operating profit, while Europe revenue decreased 13% to $5.4 million. Jack's Flight Club saw 19% revenue growth to $1.3 million. The company ended the quarter with $17.7 million in cash and repurchased 135,792 shares.

For 2025, Travelzoo expects higher revenue growth, with Q1 projected to increase at a higher pace, including 5% incremental growth from membership fees. The company introduced membership fees in 2024, with Legacy Members (who joined before 2024) now receiving only certain travel offers, while Club Offers and new benefits are exclusive to paying Club Members.

Positive

• Operating profit increased 8% year-over-year to $4.9 million
• Cash flow from operations of $7.7 million
• North America segment operating profit increased to $4.6 million (33% of revenue)
• Jack's Flight Club revenue grew 19% year-over-year to $1.3 million
• Company projects higher revenue growth for Q1 2025 and substantially higher growth for full year

Negative

• Revenue decreased 2% year-over-year to $20.7 million
• Europe segment revenue declined 13% year-over-year
• Europe operating profit decreased from $832,000 to $159,000
• EPS declined from $0.27 to $0.26 compared to prior-year period

Insights

Financial Analyst

Travelzoo's Q4 2024 results reveal a company in strategic transition, shifting from a primarily advertising-based model to a subscription-based membership business. While revenue dipped 2% year-over-year to $20.7 million, operating profit increased 8% to $4.9 million, demonstrating effective cost management during this pivotal transformation period.

The regional performance shows notable divergence. North America remains robust with 1% revenue growth and an impressive 33% operating margin. In contrast, Europe experienced a concerning 13% revenue decline with operating profit plummeting to just 3% of revenue, primarily attributed to German market fluctuations. This regional disparity warrants investor attention as European operations represent about a quarter of total revenue.

Jack's Flight Club emerged as the growth engine with 19% revenue increase, validating Travelzoo's subscription-based strategy. This performance foreshadows the potential of the company's broader membership transition.

The most significant development is Travelzoo's strategic pivot to a membership fee model. In 2024, Legacy Members (pre-2024 joiners) were exempt from fees but will now have access unless they convert to paid Club Memberships. This transition represents both opportunity and risk – the opportunity for stable, recurring revenue streams that could significantly enhance business predictability and valuation multiples, balanced against the risk of member attrition if the value proposition isn't compelling enough to drive conversions.

Management projects accelerated growth in 2025, with membership fees adding 5% incremental growth in Q1 alone, expected to increase in subsequent quarters. This forecast seems reasonable given the ratable recognition of subscription revenue, but investors should closely monitor conversion rates of Legacy Members to paid subscriptions as the key performance indicator.

The strong cash flow generation of $7.7 million and continued share repurchases (135,792 shares in Q4) demonstrate management's confidence in the business transformation and commitment to shareholder returns during this transition period.

Travelzoo's licensing strategy in Japan, Australia, New Zealand, and Singapore represents an asset-light approach to global expansion that could drive incremental high-margin revenue without significant capital investment – a prudent strategy during this business model transition.

Business Model Transformation Specialist

Travelzoo's Q4 results underscore a pivotal transformation from an advertising-dependent model to a subscription-based membership business – a shift that could fundamentally alter the company's financial profile and investor perception. While the 2% revenue decline might appear concerning on the surface, it actually masks the early stages of what could be a powerful business model evolution.

The introduction of paid Club Memberships represents Travelzoo's strategic bet on predictable, recurring revenue streams over volatile advertising income. This transition follows the SaaS playbook that has created tremendous shareholder value across multiple industries. The initial 5% incremental growth expected from membership fees in Q1 2025 is just the beginning of a potential compounding effect as the subscription base grows and revenue is recognized ratably.

Jack's Flight Club provides an instructive case study within Travelzoo's own portfolio. Its 19% year-over-year growth demonstrates the scalability and margin potential of travel-focused subscription services. The critical question is whether Travelzoo can replicate this success with its broader membership strategy, which targets a different customer segment with distinct value propositions.

The regional performance divergence is telling. North America's resilience (growing 1% with 33% margins) versus Europe's struggles (declining 13% with margins collapsing to 3%) suggests the membership transition may progress at different rates across markets. European operations, particularly in Germany, appear vulnerable and could become a drag on overall performance if not stabilized.

Travelzoo's membership conversion strategy faces a delicate balancing act. With over 95% of their reach coming from Legacy Members who now face a choice between free access or paid membership, the company risks potential audience erosion if the value proposition isn't compelling enough. However, even modest conversion rates could drive significant revenue growth given the size of their existing user base.

The company's strong cash position ($17.7 million) and robust cash flow ($7.7 million) provide a safety net during this transition. The continued share repurchases signal management confidence, though investors might question whether these funds could be better deployed toward accelerating the membership transition through enhanced marketing or value-added acquisitions.

For investors, this transition potentially transforms Travelzoo from a traditional media company valued on EBITDA multiples to a subscription business that could command SaaS-like valuation metrics based on recurring revenue growth and retention rates. The key metrics to watch in coming quarters will be Legacy Member conversion rates, Club Member acquisition costs, retention/churn metrics, and the evolving revenue mix between subscription and advertising income.

NEW YORK, Feb. 25, 2025 /PRNewswire/ -- Travelzoo® (NASDAQ: TZOO):

• Revenue of $20.7 million, down 2% year-over-year
• Consolidated operating profit of $4.9 million, up 8% year-over-year
• Non-GAAP consolidated operating profit of $5.3 million
• Cash flow from operations of $7.7 million
• Earnings per share (EPS) of $0.26

Travelzoo, the club for travel enthusiasts, today announced financial results for the fourth quarter ended December 31, 2024. Consolidated revenue was $20.7 million, down 2% year-over-year. In constant currencies, revenue was $20.6 million. Travelzoo's reported revenue consists of advertising revenues and commissions, derived from and generated in connection with purchases made by Travelzoo members, and membership fees.

Net income attributable to Travelzoo was $3.2 million for Q4 2024, or $0.26 per share, compared with $0.27 in the prior-year period. Net income attributable to Travelzoo from continuing operations was $3.2 million for Q4 2024, or $0.26 per share, compared with $0.24 in the prior-year period.

Non-GAAP operating profit was $5.3 million. Non-GAAP operating profit excludes amortization of intangibles ($93,000), stock option expenses ($0.4 million). Please refer to "Non-GAAP Financial Measures" and the tabular reconciliation below.

"We will continue to leverage Travelzoo's global reach, trusted brand, and strong relationships with top travel suppliers to negotiate more Club Offers for Club Members," said Holger Bartel, Travelzoo's Global CEO. "Travelzoo members are affluent, active, and open to new experiences. We inspire travel enthusiasts to travel to places they never imagined they could. Travelzoo is the must-have membership for those who love to travel as much as we do."

Cash Position
As of December 31, 2024, consolidated cash, cash equivalents and restricted cash were $17.7 million. Net cash provided by operations was $7.7 million.

Travelzoo North America
North America business segment revenue increased 1% year-over-year to $13.9 million. Operating profit for Q4 2024 was $4.6 million, or 33% of revenue, compared to operating profit of $4.0 million in the prior-year period.

Travelzoo Europe
Europe business segment revenue decreased 13% year-over-year to $5.4 million, caused primarily by fluctuations in Germany. In constant currencies, Europe business segment revenue was $5.3 million. Operating profit for Q4 2024 was $159,000, or 3% of revenue, compared to operating profit of $832,000 in the prior-year period.

Jack's Flight Club
Jack's Flight Club is a membership subscription service in which Travelzoo has a 60% ownership interest. As the number of premium subscribers continues to grow, revenue increased 19% year-over-year to $1.3 million. Jack's Flight Club's revenue from subscriptions is recognized ratably over the subscription period (quarterly, semi-annually, annually). Non-GAAP operating profit for Q4 2024 was $208,000. Non-GAAP operating profit excludes amortization of intangibles ($58,000) related to the acquisition of Travelzoo's ownership interest in Jack's Flight Club in 2020.

New Initiatives
New Initiatives business segment revenue, which includes Licensing and Travelzoo META, was $19,000. Operating loss for Q4 2024 was $36,000.

In June 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Japan for the exclusive use of Travelzoo's brand, business model, and members in Japan. In August of 2020, Travelzoo entered into a royalty-bearing licensing agreement with a local licensee in Australia for the exclusive use of Travelzoo's brand, business models, and members in Australia, New Zealand, and Singapore. Under these arrangements, Travelzoo's existing members in Australia, Japan, New Zealand, and Singapore will continue to be owned by Travelzoo as the licensor. Travelzoo recorded $7,000 in licensing revenue from the licensee in Japan in Q4 2024. Travelzoo recorded $12,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore in Q4 2024. Licensing revenue is expected to increase in the future.

Reach
Travelzoo reaches 30 million travelers. This includes Jack's Flight Club. Comparisons to prior periods are no longer meaningful due to strategic developments of the Travelzoo membership.

Discontinued Operations
In March 2020, Travelzoo decided to exit its Asia Pacific business and operate it as a licensing business going forward. Consequently, the Asia Pacific business has been classified as discontinued operations.

Income Taxes
A provision of $1.5 million for income taxes was recorded for Q4 2024, compared to an income tax expense of $1.6 million in the prior-year period. Travelzoo intends to utilize available net operating losses (NOLs) to largely offset its actual tax liability for 2024.

Share Repurchase Program
During Q4 2024, the Company repurchased 135,792 shares of its outstanding common stock.

Looking Ahead
For Q1 2025, we expect revenue to increase at a higher pace. The pro rata portion of membership fee revenue will already add 5% incremental growth this quarter. This percentage is expected to increase over subsequent quarters, as membership fee revenue is recognized ratably over the subscription period, we acquire new members, and more Legacy Members become Club Members. For the whole year, we expect substantially higher revenue growth. Over time, we expect profitability to further increase as recurring membership fee revenue will be recognized.

In 2024, we introduced a membership fee for Travelzoo. Legacy Members, who joined before 2024, were exempt from the fee during 2024. Legacy Members represent more than 95% of Travelzoo's reach. In 2025, Legacy Members continue to receive certain travel offers. But Club Offers and new benefits are only available to Club Members. We generally see Legacy Members being excited to become Club Members.

Non-GAAP Financial Measures
Management calculates non-GAAP operating income when evaluating the financial performance of the business. Travelzoo's calculation of non-GAAP operating income, also called "non-GAAP operating profit" in this press release and today's earnings conference call, excludes the following items: amortization of intangibles, stock option expenses and severance-related expenses. This press release includes a table which reconciles GAAP operating income to the calculation of non-GAAP operating income. Non-GAAP operating income is not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"). This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Conference Call
Travelzoo will host a conference call to discuss fourth quarter 2024 results today at 11:00 a.m. ET. Please visit http://ir.travelzoo.com/events-presentations to

• download the management presentation (PDF format) to be discussed in the conference call
• access the webcast

About Travelzoo
We, Travelzoo®, are the club for travel enthusiasts. We reach 30 million travelers. Club Members receive Club Offers personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment, and lifestyle experiences. We work in partnership with thousands of top travel suppliers—our long-standing relationships give us access to irresistible deals.

Certain statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations, prospects and intentions, markets in which we participate and other statements contained in this press release that are not historical facts. When used in this press release, the words "expect", "predict", "project", "anticipate", "believe", "estimate", "intend", "plan", "seek" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including changes in our plans, objectives, expectations, prospects and intentions and other factors discussed in our filings with the SEC. We cannot guarantee any future levels of activity, performance or achievements. Travelzoo undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Travelzoo
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
	Three months ended				Twelve months ended
	December 31,				December 31,
	2024		2023		2024		2023
Revenues	$         20,678		$         21,149		$    83,902		$    84,477
Cost of revenues	2,761		2,698		10,469		10,934
Gross profit	17,917		18,451		73,433		73,543
Operating expenses:
Sales and marketing	8,256		8,496		34,466		37,774
Product development	644		580		2,407		2,113
General and administrative	4,183		4,896		18,058		18,084
Total operating expenses	13,083		13,972		54,931		57,971
Operating income	4,834		4,479		18,502		15,572
Other income (expense), net	(86)		398		588		1,541
Income from continuing operations before income taxes	4,748		4,877		19,090		17,113
Income tax expense	1,484		1,618		5,404		5,105
Income from continuing operations	3,264		3,259		13,686		12,008
Income from discontinued operations, net of tax	—		465		—		460
Net income	3,264		3,724		13,686		12,468
Net income attributable to non-controlling interest	64		5		118		102
Net income attributable to Travelzoo	$           3,200		$           3,719		$    13,568		$    12,366
Net income attributable to Travelzoo—continuing operations	$           3,200		$           3,254		$    13,568		$    11,906
Net income attributable to Travelzoo—discontinued operations	$                —		$              465		$            —		$         460
Income per share—basic
Continuing operations	$             0.27		$             0.24		$        1.08		$        0.80
Discontinued operations	$                —		$             0.03		$            —		$        0.03
Net income per share—basic	$             0.27		$             0.27		$        1.08		$        0.83
Income per share—diluted
Continuing operations	$             0.26		$             0.24		$        1.06		$        0.80
Discontinued operations	$                —		$             0.03		$            —		$        0.03
Net income per share—diluted	$             0.26		$             0.27		$        1.06		$        0.83
Shares used in per share calculation from continuing operations—basic	11,831		13,873		12,594		14,897
Shares used in per share calculation from discontinued operations—basic	11,831		13,873		12,594		14,897
Shares used in per share calculation from continuing operations—diluted	12,358		13,946		12,852		14,964
Shares used in per share calculation from discontinued operations—diluted	12,358		13,946		12,852		14,964

 

Travelzoo
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
	December 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$             17,064		$            15,713
Accounts receivable, net	12,825		12,965
Prepaid income taxes	736		629
Prepaid expenses and other	1,148		1,461
Total current assets	31,773		30,768
Deposits and other	374		1,115
Deferred tax assets	3,380		3,196
Restricted cash	675		675
Operating lease right-of-use assets	5,655		6,015
Property and equipment, net	423		578
Intangible assets, net	1,498		2,091
Goodwill	10,944		10,944
Total assets	$             54,722		$            55,382
Liabilities and Equity
Current liabilities:
Accounts payable	$               6,134		$              4,546
Merchant payables	16,294		20,622
Accrued expenses and other	3,404		3,658
Deferred revenue	6,545		2,044
Income tax payable	1,619		766
Operating lease liabilities	2,472		2,530
Liabilities from discontinued operations	28		24
Total current liabilities	36,496		34,190
Long-term tax liabilities	7,851		4,681
Long-term operating lease liabilities	5,646		6,717
Other long-term liabilities	376		911
Total liabilities	50,369		46,499
Common stock	118		136
Tax indemnification	(9,537)		(9,537)
Note receivable from shareholder	—		(1,753)
Additional paid-in capital	—		439
Retained earnings	14,284		19,508
Accumulated other comprehensive loss	(5,327)		(4,607)
Total Travelzoo stockholders' equity (deficit)	(462)		4,186
Non-controlling interest	4,815		4,697
Total stockholder's equity	4,353		8,883
Total liabilities and equity	$             54,722		$            55,382

 

Travelzoo
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
	Three months ended				Twelve months ended
	December 31,				December 31,
	2024		2023		2024		2023
Cash flows from operating activities:
Net income	$            3,264		$            3,724		$   13,686		$   12,468
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	170		476		907		1,893
Stock-based compensation	405		381		1,645		1,568
Deferred income tax	(476)		159		(515)		48
Loss on long-lived assets	—		—		—		10
Net foreign currency effects	132		(115)		(33)		(62)
Provision of loss (net recoveries) on accounts receivable and refund reserves	(81)		(72)		40		(1,016)
Changes in operating assets and liabilities:
Accounts receivable	113		(2,231)		(145)		1,086
Prepaid income taxes	354		61		(107)		1,189
Prepaid expenses, deposits and other	319		1,603		950		3,835
Accounts payable	1,286		1,181		1,716		(523)
Merchant payables	(709)		(3,338)		(4,057)		(12,095)
Accrued expenses and other	(661)		(665)		(289)		(685)
Deferred revenue	2,767		(785)		4,557		(191)
Income tax payable	264		456		857		749
Other liabilities	507		547		1,888		2,401
Net cash provided by operating activities	7,654		1,382		21,100		10,675
Cash flows from investing activities:
Proceeds from note receivable	—		103		—		216
Purchases of property and equipment	(48)		(38)		(177)		(255)
Net cash used in investing activities	(48)		65		(177)		(39)
Cash flows from financing activities:
Repurchase of common stock	(2,324)		(5,015)		(18,929)		(16,781)
Proceeds from note receivable and account receivable from shareholder	1,920		3,000		1,753		3,000
Exercise of stock options and taxes paid for net share settlement of equity awards	(1,195)		(70)		(1,787)		(369)
Net cash used in financing activities	(1,599)		(2,085)		(18,963)		(14,150)
Effect of exchange rate on cash, cash equivalents and restricted cash	(390)		445		(605)		525
Net increase (decrease) in cash, cash equivalents and restricted cash	5,617		(193)		1,355		(2,989)
Cash, cash equivalents and restricted cash at beginning of period	12,106		16,582		16,389		19,378
Cash, cash equivalents and restricted cash at end of period	$          17,723		$          16,389		$   17,744		$   16,389

 

Travelzoo
Segment Information from Continuing Operations
(Unaudited)
(In thousands)
Three months ended December 31, 2024	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       13,834		$         5,508		$         1,317		$              19		$          20,678
Intersegment revenues	74		(68)		(6)		—		—
Total net revenues	13,908		5,440		1,311		19		20,678
Sales and marketing expenses	4,641		3,110		505		—		8,256
Other expenses	4,689		2,171		656		55		7,571
Operating profit (loss)	$         4,578		$            159		$            150		$            (36)		4,851
Other loss, net									(86)
Income from continuing operations before income taxes									$            4,765
Three months ended December 31, 2023	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       13,534		$         6,354		$         1,106		$            155		$          21,149
Intersegment revenues	247		(90)		(157)		—		—
Total net revenues	13,781		6,264		949		155		21,149
Sales and marketing expenses	4,899		3,111		423		63		8,496
Other expenses	4,912		2,321		745		196		8,174
Operating profit (loss)	$         3,970		$            832		$          (219)		$          (104)		4,479
Other income, net									398
Income from continuing operations before income taxes									$            4,877
Twelve months ended December 31, 2024	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       54,968		$       24,113		$         4,714		$            107		$          83,902
Intersegment revenues	124		(42)		(82)		—		—
Total net revenues	55,092		24,071		4,632		107		83,902
Sales and marketing expenses	19,748		12,539		1,898		280		34,465
Other expenses	19,461		8,451		2,690		337		30,939
Operating profit (loss)	$       15,883		$         3,081		$              44		$          (510)		18,498
Other income, net									588
Income from continuing operations before income taxes									$          19,086
Twelve months ended December 31, 2023	Travelzoo North America		Travelzoo Europe		Jack's Flight Club		New Initiatives		Consolidated
Revenues from unaffiliated customers	$       54,837		$       25,291		$         4,145		$            204		$          84,477
Intersegment revenues	1,243		(1,270)		27		—		—
Total net revenues	56,080		24,021		4,172		204		84,477
Sales and marketing expenses	22,029		13,636		1,788		321		37,774
Other expenses	18,797		9,068		2,407		859		31,131
Operating profit (loss)	$       15,254		$         1,317		$            (23)		$          (976)		15,572
Other income, net									1,541
Income from continuing operations before income taxes									$          17,113

 

Travelzoo
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
(In thousands, except per share amounts)
	Three months ended				Twelve months ended
	December 31,				December 31,
	2024		2023		2024		2023
GAAP operating expense	$     13,083		$     13,972		$     54,931		$     57,971
Non-GAAP adjustments:
Amortization of intangibles (A)	93		389		593		1,560
Stock option expenses (B)	405		380		1,644		1,566
Severance-related expenses (C)	—		—		360		56
Non-GAAP operating expense	12,585		13,203		52,334		54,789
GAAP operating profit	4,834		4,479		18,502		15,572
Non-GAAP adjustments (A through C)	498		769		2,597		3,182
Non-GAAP operating profit	5,332		5,248		21,099		18,754

Investor Relations:
ir@travelzoo.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/travelzoo-reports-fourth-quarter-2024-results-302384633.html

SOURCE Travelzoo

FAQ

What were Travelzoo's (TZOO) Q4 2024 earnings per share?

Travelzoo reported earnings per share (EPS) of $0.26 for Q4 2024, compared to $0.27 in the prior-year period.

How much revenue did Travelzoo (TZOO) generate in Q4 2024?

Travelzoo generated $20.7 million in revenue for Q4 2024, representing a 2% decrease year-over-year.

How did Travelzoo's (TZOO) North America segment perform in Q4 2024?

Travelzoo's North America segment saw revenue increase 1% year-over-year to $13.9 million with an operating profit of $4.6 million (33% of revenue).

What is Travelzoo's (TZOO) new membership structure for 2025?

In 2025, Travelzoo's Legacy Members (who joined before 2024) will receive only certain travel offers, while Club Offers and new benefits are exclusive to paying Club Members.

How much cash did Travelzoo (TZOO) have at the end of Q4 2024?

As of December 31, 2024, Travelzoo had $17.7 million in consolidated cash, cash equivalents and restricted cash.

Did Travelzoo (TZOO) repurchase shares in Q4 2024?

Yes, Travelzoo repurchased 135,792 shares of its outstanding common stock during Q4 2024.

What is Travelzoo's (TZOO) revenue outlook for 2025?

Travelzoo expects revenue to increase at a higher pace in Q1 2025 with 5% incremental growth from membership fees, and substantially higher revenue growth for the full year 2025.