Q3 2025 Travelzoo Earnings Call
And following management's prepared remarks, the call will be opened for your questions.
If you would like to ask a question at that time. Please press star one on your telephone keypad.
If you need to remove yourself from the queue. Please press star one again.
At any time, if you should need to need an operator's assistance. Please press star zero.
The company would like to remind you that all statements made during this conference call and presented in the slides are not statements of historical facts constitute forward looking statements and are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Actual results could vary materially from those contained in the forward looking statements.
Factors that should that could cause actual results to differ materially from those in the forward looking statements are described in the company's forms 10-K and 10-Q.
And other SEC filings.
Unless required by law the company undertakes no obligation to update publicly any forward looking statements, whether as a result of new information future events or otherwise.
Please refer to the company's website for important information, including the company's earnings press release issued earlier today.
An archived recording of this conference call will be made available on the company's Investor Relations website at travel do dot com forward Slash IR.
Now it is my pleasure to turn the floor over to travel juice Global CEO Holger Bartel, It's Ter General counsel and CEO of Jack's Flight Club proceed a choker and its financial controller North America, Jeff Hoffman.
I'll start and I'll give an overview.
Thank you operator, and welcome to those of you joining us today I'm stepping in for Lucien Our Chief Accounting Officer.
Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our Investor Relations site at Travelocity Dot com forward Slash IR.
Jeff Hoffman: It is no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to the company's website for important information, including the company's earnings press release issued earlier today. An archived recording of this conference call will be made available on the company's investor relations website at travelzoo.com/ir. Now, it is my pleasure to turn the floor over to Travelzoo's Global CEO, Holger Bartel, its Chair, General Counsel, and CEO of DAX Flight Club, Christina Ciocca, and its Financial Controller, North America, Jeff Hoffman. Jeff, we'll start now with an overview.
Let's begin with slide four <unk>.
<unk> consolidated Q3 revenue was $22 2 million up 10% from the prior year.
In constant currencies revenue was $21 9 million up 9% from the prior year.
Operating income, which we as management call operating profit decreased as we invested more in growth of club members.
Now it is my pleasure to turn the floor over to travel juice Global CEO Holger Bartel, It's Ter General counsel and CEO of Jack's flight club scene, a choker and its financial controller North America, Jeff Hoffman, Jeff will start now for an overview.
Q3, operating profit was <unk> 5 million or 2% of revenue down from $4 million in the prior year.
Let me explain the rationale for a significant increase in marketing expense, which lowered EPS slide five shows that investments and the acquisition of club members are attractive because I have a quick payback on.
Thank you operator, and welcome to those of you joining us today I'm stepping in for vision, our Chief Accounting Officer.
[Company Representative]: Thank you, operator, and welcome to those of you joining us. Today, I'm stepping in for Li Zhun, our Chief Accounting Officer. Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our investor relations site at travelzoo.com/ir. Let's begin with slide four. Travelzoo's consolidated Q3 revenue was $22.2 million, up 10% from the prior year. In constant currency, revenue was $21.9 million, up 9% from the prior year. Operating income, which we as management call operating profit, decreased as we invested more in growth of club members. Q3 operating profit was $0.5 million, or 2% of revenue, down from $4 million in the prior year. Let me explain the rationale for a significant increase in marketing expense, which lowered EPS.
On the left side you see that the average acquisition cost for full paying club member was $28 in Q1.
Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our Investor Relations site at Travelocity Dot com forward Slash IR.
$38 in Q2 and $40 in Q3.
On the right side, you see that we get this money back stops the member pays in the U S case here there are $40 annual membership fee right at the beginning of the membership period.
Let's begin with slide four.
<unk> consolidated Q3 revenue was $22 2 million up 10% from the prior year.
Additionally, we generated $15 and revenue from transactions in the same quarter.
In constant currencies revenue was $21 9 million up 9% from the prior year.
This full payback doesn't even consider an increase in advertising revenue and future membership fees and other revenues.
Operating income, which we as management call operating profit decreased as we invested more in growth of club members Q.
Now slide six shows as a reminder.
With subscription businesses membership fee is is recognized ratably over the subscription period, whereas the acquisition costs are expensed immediately when incurred.
Q3, operating profit was <unk> 5 million or 2% of revenue down from $4 million in the prior year.
Let me explain the rationale for a significant increase in marketing expense, which lowered EPS slide five shows that investments and the acquisition of club members are attractive because I have a quick payback.
Slide seven shows the effect, while we have a quick payback reporting the reported EPS is different higher member acquisition expenses, coupled with only a portion of revenue recognized in the quarter reduced EPS this quarter.
[Company Representative]: Slide five shows that investments in the acquisition of club members are attractive, as they have a quick payback. On the left side, you see that the average acquisition cost for a full-paying club member was $28 in Q1, $38 in Q2, and $40 in Q3. On the right side, you see that we get this money back fast. The member pays, in the U.S. case here, their $40 annual membership fee right at the beginning of the membership period. Additionally, we generated $15 in revenue from transactions in the same quarter. This full payback doesn't even consider an increase in advertising revenue and future membership fees and other revenues. Now, slide six shows, as a reminder, that with subscription businesses, membership fee is recognized ratably over the subscription period, whereas acquisition costs are expensed immediately when incurred. Slide seven shows the effect.
On the left side you see that the average acquisition cost for full paying club member was $28 in Q1.
In the case of Q3 that effect was a reduction of 15%.
$38 in Q2 and $40 in Q3.
As shown on slide eight our strategy is fueling member growth at a rate of 135% year over year to date.
On the right side, you see that we get this money back fast the member pays in the U S case here there are $40 annual membership fee right at the beginning of the membership period.
New club members come roughly half from legacy members and half from those new troublesome.
Additionally, we generated $15 and revenue from transactions in the same quarter.
On slide nine we break down our make our main categories of revenues advertising and commerce and membership fees.
This full payback doesn't even consider an increase in advertising revenue and future membership fees and other revenues.
However, pleasant ecommerce revenue was $18 6 million for Q3 2025.
Now slide six shows as a reminder.
Revenue from membership fees increased to $3 6 million.
With subscription businesses membership fee is is recognized ratably over the subscription period, whereas acquisition costs are expensed immediately when incurred.
Membership fees, which are more stable and predictable are adding revenue and are becoming a larger share.
Next year, we expect them to account for about 25% of revenue.
Slide seven shows the effect, while we have a quick payback reporting the reported EPS is different higher member acquisition expenses, coupled with only a portion of revenue recognized in the quarter reduced EPS this quarter.
On Slide 10, you can see that revenue growth came from all reporting segments.
[Company Representative]: While we have a quick payback, the reported EPS is different. Higher member acquisition expenses, coupled with only a portion of revenue recognized in the quarter, reduced EPS this quarter. In the case of Q3, that effect was a reduction of 15%. As shown on slide eight, our strategy is fueling member growth at a rate of 135% year to date. New club members come roughly half from legacy members and half from those new to Travelzoo. On slide nine, we break down our main categories of revenues: advertising and commerce, and membership fees. Advertising and commerce revenue was $18.6 million for Q3 2025. Revenue from membership fees increased to $3.6 million. Membership fees, which are more stable and predictable, are adding revenue and are becoming a larger share. Next year, we expect them to account for about 25% of revenue.
With favorable ROI on member acquisition in the UK, we invested heavily there.
Jack's flight club revenue increased 12%.
In the case of Q3 that effect was a reduction of 15%.
Operating profit was lower in both our North America, and Europe segments, and slightly less than our Jack's flight club segment.
As shown on slide eight our strategy is fueling member growth at a rate of 135% year over year to date.
On Slide 11, you can see the GAAP operating margin was 2% in Q3 2025.
New club members come roughly half from legacy members and half from those new <unk> travels.
Acquiring more club members has the effect of lowering GAAP operating margin.
On slide nine we break down our make our main categories of revenues advertising and commerce and membership fees.
Still given the favorable ROI. Our goal is to further grow the number of club members to excel and to accelerate travels is growth.
Pleasant ecommerce revenue was $18 6 million for Q3 2025.
Slide 12 shows the investment in club members occur in all key markets over time, we expect margins to return to previous levels or even exceed them.
Revenue from membership fees increased to $3 6 million.
Membership fees, which are more stable and predictable are adding revenue and are becoming a larger share.
On slide 13, we provide information on non-GAAP operating profit as we as we believe it better explains how we evaluate the financial performance.
Next year, we expect them to account for about 25% of revenue.
On Slide 10, you can see that revenue growth came from all reporting segments.
[Company Representative]: On slide ten, you can see that revenue growth came from all reporting segments. With favorable ROI on member acquisition in the UK, we invested heavily there. DAX Flight Club revenue increased 12%. Operating profit was lower in both our North America and Europe segments and was slightly less in our DAX Flight Club segment. On slide 11, you can see that GAAP operating margin was 2% in Q3 2025. Acquiring more club members has the effect of lowering GAAP operating margin. Still, given the favorable ROI, our goal is to further grow the number of club members to accelerate Travelzoo's growth. Slide 12 shows the investment in club members occurring in all key markets. Over time, we expect margins to return to previous levels or even exceed them. On slide 13, we provide information on non-GAAP operating profit, as we believe it better explains how we evaluate financial performance.
Q3, 2025, non-GAAP operating profit was $1 1 million.
With favorable ROI on member acquisition in the U K, we invested heavily there.
That's approximately 5% of revenue compared to non-GAAP operating profit of $4 9 million in the prior year period.
Jack's flight club revenue increased 12%.
Operating profit was lower in both our North America, and Europe segments and was slightly less than our Jack's flight club segment.
Slide 14 provides information about the items that are excluded in the calculation of non-GAAP operating profit.
On Slide 11, you can see the GAAP operating margin was 2% in Q3 2025.
Please turn to slide 15.
As of September 32025, consolidated cash cash equivalents and restricted cash was $9 2 million.
Acquiring more club members has the effect of lowering GAAP operating margin.
Still given the favorable ROI. Our goal is to further grow the number of club members to excel and to accelerate <unk> growth.
Cash flow from operations was negative $4 million.
We reduced merchant payables by <unk> 7 million and repurchased 148602 shares.
Slide 12 shows the investment in club members occur in all key markets over time, we expect margins to return to previous levels or even exceed them.
Now looking ahead for Q4 2025, we expect year over year revenue growth to continue.
On slide 13, we provide information on non-GAAP operating profit as we as we believe it better explains how we evaluate financial performance.
We expect revenue growth to accelerate as a trend in subsequent quarters as membership fee revenue is recognized ratably over the subscription period of 12 months.
Q3, 2025, non-GAAP operating profit was $1 1 million.
[Company Representative]: Q3 2025 non-GAAP operating profit was $1.1 million. That's approximately 5% of revenue, compared to non-GAAP operating profit of $4.9 million in the prior year period. Slide 14 provides information about the items that are excluded in the calculation of non-GAAP operating profit. Please turn to slide 15. As of September 30, 2025, consolidated cash, cash equivalents, and restricted cash was $9.2 million. Cash flow from operations was negative $0.4 million. We reduced merchant payables by $0.7 million and repurchased 148,602 shares. Now, looking ahead, for Q4 2025, we expect year-over-year revenue growth to continue. We expect revenue growth to accelerate as a trend in subsequent quarters, as membership fees revenue is recognized ratably over the subscription period of 12 months, as we acquire new members, and as more legacy members become club members. Over time, we expect profitability to substantially increase, as recurring membership fees revenue will be recognized.
We acquire new members and it's more legacy members become club members.
Over time, we expect profit profitability substantially increase as recurring membership fees revenue will be recognized in the short term fluctuations in reported net income are possible with <unk>.
That's approximately 5% of revenue compared to non-GAAP operating profit of $4 9 million in the prior year period.
Slide 14 provides information about the items that are excluded in the calculation of non-GAAP operating profit.
Might see attractive opportunities to increase marketing.
We expense marketing costs immediately.
Please turn to slide 15.
Now I'm going to turn the discussion over to holder.
As of September 32025, consolidated cash cash equivalents and restricted cash was $9 2 million.
Thank you Jeff.
We will continue to leverage travels with global reach and trusted brand.
Cash flow from operations was negative $4 million.
Our strong relationships with top travel suppliers to negotiate more global force for club members.
We reduced merchant payables by <unk> 7 million and repurchased 148602 shares.
Travelers who members effluent.
Now looking ahead for.
Dave and open to new experiences.
For Q4, 2025, we expect year over year revenue growth to continue.
We inspire traveling for ECS to travel to places they never imagined it could.
We expect revenue growth to accelerate as a trend in subsequent quarters as membership fee fees revenue is recognized ratably over the subscription period of 12 months.
Travelers with the mass tier from membership.
Those we love to travel as much as we do.
Prior new members and it's more legacy members become club members.
Today, I would like to share a bit more information about the travelers who club membership.
Over time, we expect proppant profitability substantially increase as recurring membership fees revenue will be recognized in the short term fluctuations in reported net income are possible.
Please turn to slide 17.
Travelers, who is becoming the mastiff membership for travel enthusiasts.
[Company Representative]: In the short term, fluctuations in reported net income are possible. We might see attractive opportunities to increase marketing. We expense marketing costs immediately. Now, I'm going to turn the discussion over to Holger.
Membership empowers you to live your life as a traveling enthusiasm to the fullest.
We might see attractive opportunities to increase marketing.
We expense marketing costs immediately.
While respecting different cultures.
Now I'm going to turn the discussion over to <unk>.
Membership provides access to high quality and highly valuable highly valuable global force.
Thank you Jeff.
Holger Bartel: Thank you, Jeff. We will continue to leverage Travelzoo's global reach, trusted brand, and our strong relationships with top travel suppliers to negotiate more club offers for club members. 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. Today, I would like to share a bit more information about the Travelzoo club membership. Please turn to slide 17. Travelzoo is becoming the must-have membership for travel enthusiasts. Membership empowers you to live your life as a travel enthusiast to the fullest while respecting different cultures. Membership provides access to high-quality and highly valuable club offers. Our global team negotiates and vets them rigorously. These offers cannot be found anywhere else.
We will continue to leverage travels with global reach and trusted brand and our strong relationships with top travel suppliers to negotiate more club offers for club members.
Our global team negotiates and vets them rigorously diesel force cannot be found anywhere else.
Membership also provides complementary access to airport launches worldwide Keith your flight is delayed cooling.
Travelers, who members affluent active and open to new experiences.
Culinary travel deals curated for the traveling with yes, they're coming soon.
We inspire traveling enthusiasm to travel to places they never imagined it could.
Travels with the must have membership for those who love to travel as much as we do.
Slide 18 shows a few of the many exclusive club office that we created for club members during Q3.
Yeah.
Today, I would like to share a bit more information about the travelers who club membership please turn to slide 17.
For example, travel to members could head to an all inclusive vacation in the Caribbean for $499, which even includes round trip flights.
Travelers, who is becoming the mastiff membership for traveling for us yes.
Or attend to futuristic.
Membership empowers you to live your life as a traveling enthusiasm to the fullest.
Boy It show in London at the special member price.
While respecting different cultures.
In Rome travelers, who members would pay $99.
Membership provides access to high quality and high valuable highly valuable Global force.
Two nights at the four Star Hotel, while the general public with three times as much.
Trips to high end luxury awards.
Our global team negotiates and vet stem rigorously diesel force cannot be found anywhere else.
The film on my call, but you're a particularly popular with members.
These are all offers that you can only get a travelers who remember.
Membership also provides complementary access to airport launches worldwide.
Holger Bartel: Membership also provides complimentary access to airport lounges worldwide in case your flight is delayed. Culinary travel deals curated for the travel enthusiasts are coming soon. Slide 18 shows a few of the many exclusive club offers that we created for club members during Q3. For example, Travelzoo members could head to an all-inclusive vacation in the Caribbean for $499, which even includes round-trip flights, or attend the futuristic ABBA Voyage Show in London at a special member price. In Rome, Travelzoo members would pay €99 for two nights at the four-star hotel, while the general public would pay three times as much. Trips to high-end luxury resorts like the Fairmont Mayakoba here are particularly popular with members. These are all offers that you can only get as a Travelzoo member. You will not find them anywhere else.
You will not find them anywhere else.
Keith Your flight is delayed.
Slide 19.
Culinary travel deals curated for the travel enthusiasts are coming soon.
It was the worldwide complementary launch access in case of flight delays.
Perfect for the traveling with yes.
Slide 18 shows a few of the many exclusive club both listed to be created for club members during Q3.
Slide 20 provides information about travelers who members.
For example, travel do members could head to an all inclusive vacation in the Caribbean for $499, which even includes round trip flights.
Travelers, who is loved by traveling with yes affluent active.
Active.
And open to new experiences.
Yeah.
Or attend to futuristic.
Slide 22 provides an overview of our management focus.
Boy It show in London at the special member price.
We are working to grow the number of <unk>.
In Rome travelers, who members would pay $99.
Members in accelerated revenue growth by converting legacy members and adding new club members.
Two nights at the four Star Hotel, while the general public with three times as much.
Retain and grow our profitable advertising business from the popular top 20 product.
Trips to high end luxury resorts.
<unk> Europe, particularly popular with members.
Accelerated revenue growth, which drives future profits in spite of temporary lower EPS.
These are all offers that you can only get a travelers who remember.
Wrote checks flight clubs profitable subscription revenue.
You will not find them anywhere else.
Slide 19.
Holger Bartel: Slide 19 shows the worldwide complimentary lounge access in case of flight delays. It's perfect for the travel enthusiast. Slide 20 provides information about Travelzoo members. Travelzoo is loved by travel enthusiasts who are affluent, active, and open to new experiences. Slide 22 provides an overview of our management focus. We are working to grow the number of paying members and accelerate revenue growth by converting legacy members and adding new club members, retain and grow our profitable advertising business from the popular Top 20 product, accelerate revenue growth which drives future profits in spite of temporary lower EPS, grow Czech Flight Club's profitable subscription revenue, and develop Travelzoo Meta with discipline. Now, Christina will provide an update on Travelzoo Meta and Czech Flight Club.
And develop travelers who met up with discipline.
It was the worldwide complementary launch access in case of flight delays.
Yeah.
Kristina will provide an update on travel meta and check flight club.
Perfect for the traveling with yes.
Slide 20 provides information about travel to members.
Thank you okay.
We continue to work on the production of the first net adverse travel experiences it'll be browser enabled as stated in previous earnings calls we are conscious of developing travel do matter in a financially disciplined way, we will provide additional updates in due time.
Travelers, who is loved by traveling with us.
<unk> <unk>.
Active and open to new experiences.
Yeah.
22 provides an overview of our management focus.
So Jeff I club revenue increased 12% year over year in the number of premium subscribers increased 8%.
We are working to grow the number of <unk>.
Members in accelerated revenue growth by converting legacy members and adding new club members.
We continue to invest in the growth of premium subscribers, we expect to see a greater increase in premium subscribers year over year in Q4, Ikea promotional activities that took place in Q3.
Retain and grow our profitable advertising business from the popular top 20 product.
Accelerated revenue growth, which drives future profits in spite of temporary lower EPS.
I'm now handing over to the operator for questions for Gaslog.
Thank you at this time, if you wish to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue by pressing star one again, please limit yourself to one question and one follow up.
<unk> slide clubs profitable subscription revenue.
And develop travelers who met up with discipline.
Now Kristina will provide an update on travel meta and Chick flight club.
We'll take our first question from Theodore O'neill from Litchfield Hills Research. Please go ahead. Your line is open.
Thank you Jorge.
Christina Ciocca: Thank you, Holger. We continue to work on the production of the first metaverse travel experiences. They will be browser-enabled. As stated in previous earnings calls, we are conscious of developing Travelzoo Meta in a financially disciplined way. We will provide additional updates in due time. For Czech Flight Club, revenue increased 12% year over year, and the number of premium subscribers increased 8%. We continue to invest in the growth of premium subscribers. We expect to see a greater increase in premium subscribers year over year in Q4 due to promotional activities that took place in Q3. I'm now handing over to the operator for questions for Jeff, Holger, and me.
Thanks, very much I'm looking at slide nine.
Can you can work on the production of the first net adverse channel experiences that will be brought attorney Bob.
And it is clear here that.
Stated in previous earnings calls, we are conscious of developing travel do matter in a financially disciplined way, we will provide additional updates Andy times.
If I look at the advertising and commerce revenue on a rolling four quarter basis.
The numbers are rising.
And obviously the fees arising on the same basis.
So Jeff I club revenue increased 12% year over year in the number of premium subscribers increased 8%. We continue to invest in the growth of premium subscribers, we expect to see a greater increase in premium subscribers year over year in Q4, Ikea promotional activities that took place in Q3.
So so clearly clearly this is all working in your favor and I was wondering.
What do you think is driving the popularity of <unk>.
All of these.
So the options that you are providing out there for travel experiences.
I'm now handing over to the operator for questions.
Because in light of economic uncertainty I think a number of US would have thought these numbers will be going in the other direction.
Thank you at this time, if you wish to ask a question. Please press star one on your telephone keypad.
Operator: Thank you. At this time, if you wish to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star one again. Please limit yourself to one question and one follow-up. We'll take our first question from Theodore O'Neill from Litchfield Hills Research. Please go ahead. Your line is open.
Okay.
ICU.
I think the slide that shows the offers that we are negotiating for our members' choice did very well.
You may remove yourself from the queue by pressing star one again, please limit yourself to one question and one follow up.
We will take our first question from Theodore O'neill from Litchfield Hills Research. Please go ahead. Your line is open.
The opportunities you receive from travelers.
Exclusive to our members are so much better when what the regular person can get.
Theodore O'Neill: Thanks very much. I'm looking at slide nine, and it's clear here that if I look at the advertising and commerce revenue on a rolling four-quarter basis, the numbers are rising, and obviously, the fees are rising on the same basis. Clearly, this is all working in your favor, and I was wondering, what do you think is driving the popularity of these options that you're providing out there for travel experiences? Because in light of the economic uncertainty, I think a number of us would have thought these numbers would be going in the other direction.
Thanks, Thanks, very much I'm looking at slide nine.
That they motivate people to travel they must be motivate people to travel even more if they make it also more affordable and even they allow our members to grow as you saw with this example from family my accrual, but to go in luxury vacations when they normally could only afford a relatively inexpensive trip so travel.
And it's clear here that.
If I look at the advertising and commerce revenue on a rolling four quarter basis.
The numbers are rising.
And obviously the fees arising on the same basis.
So so clearly clearly this is all working in your favor and I was wondering.
And so what you saw people love to travel they can't get enough of it and I think the travelers who membership is what enables them to leave that to the full list in.
What do you think is driving the popularity of <unk>.
All of these.
Of the options that you are providing out there for travel experiences.
That's why we are seeing the popularity of the membership continuing to increase.
Because in light of economic uncertainty I think a number of US would have thought these numbers will be going in the other direction.
And looking at the membership numbers, which are clearly increasing here.
Yeah.
Is that how does that look.
ICU.
Holger Bartel: Hi Theo. I think the slide that shows the offers that we are negotiating for our members shows that very well. The travel opportunities you receive from Travelzoo, and they are exclusive to our members, are so much better than what the regular person can get, that they motivate people to travel. They motivate people to travel even more. They make it also more affordable, and they allow our members to go, as you saw with this example from Fairmont Maya Coba, to go on luxury vacations when they normally could only afford a relatively inexpensive trip. Travel enthusiasts are people who love to travel. They can't get enough of it, and I think the Travelzoo membership is what enables them to live that to the fullest, and I think that's why we are seeing the popularity of the membership continuing to increase.
I think the slide that shows the offers that we are negotiating for our members' choice did very well.
Reconcile with your expectations for them for that for that growth.
It's in line with expectations and please remember that the number that's shown on this slide includes also check slight uptick slight cup is not growing quite as fast as travelers, who membership travelers who membership is even growing much faster than what our what you might think when you look at the stat on the right.
There are other opportunities you receive from travelers.
Exclusive to our members are so much better when what the regular person can get.
That they motivate people to travel they must be motivate people to travel even more they make it also more affordable and even they allow our members to grow as you saw with this example from family my accrual, but to grow in luxury vacations, when they normally could only or for relatively inexpensive trip so travel.
But in general we are in line with what we are expecting we are obviously always wanted to.
Foster and we are very optimistic with the return that we are receiving on our marketing investments that we can even accelerate the growth more because as we see here.
And so what you saw people love to travel they can't get enough of it and I think the travelers who membership is what enables them to leave that to the full list and I think that's why we are seeing the popularity of the membership continuing to increase.
We expect next year membership revenue to account for at least 25%.
Membership revenue is recurring it's attractive and the combination of membership revenue and continued strong advertising business will ultimately create a travelers business is more profitable than in the past.
And looking at the membership numbers, which are clearly increasing here.
[Company Representative]: Looking at the membership numbers, which are clearly increasing here, how does that reconcile with your expectations for that growth?
Is that how does that.
Reconcile with your expectations for them for that for that growth.
Thanks very much.
Holger Bartel: It's in line with expectations, and please remember that the number that's shown on this slide includes also Czech Flight Club. Czech Flight Club is not growing quite as fast as Travelzoo membership. Travelzoo membership is even growing much faster than what you might think when you look at this data on the right. In general, we're in line with what we are expecting. We obviously always want to grow faster, and we are very optimistic with the return that we are receiving on our marketing investments that we can even accelerate the growth more because, as we say here, we expect next year membership revenue to account for at least 25%. Membership revenue is recurring. It's attractive, and the combination of membership revenue and a continued strong advertising business will ultimately create a Travelzoo business that is more profitable than in the past.
It's in line with expectations and please remember that the number that's shown on this slide includes also check slight uptick slight drop is not growing quite as fast as travelers, whom membership travelers who membership is even growing much faster than what our what you might think when you look at this data on the right.
Our next question comes from Michal Krupinski from Noble capital markets. Please go ahead. Your line is open.
Thank you. Thanks for taking my questions I see that the cost of customer acquisition has gone up a little bit and I was just wondering if you could just talk a little bit about what's driving that and at what price would you say that they do.
But in general we are in line with what we are expecting we are obviously always one tool.
But youre not getting the benefit of <unk>.
$40, you're still getting a benefit from the membership but at what price do you think that you are not.
Grow faster and we are very optimistic with the return that we are receiving on our marketing investments that we can even accelerate a growth more because as we say here.
Would not see.
An attractive return.
From that.
Sure. It Didnt change that much from 38 to 40 years I think it's just a minor fluctuation, but I'll, let Christine I'll comment a bit more on what's driving the success in member acquisition.
We expect next year membership revenue to account for at least 25%.
Membership revenue is recurring it's attractive and the combination of membership revenue and continued strong advertising business will ultimately create a travelers business is more profitable than in the past.
Sure.
So I agree with what Greg said, it hasn't gone up too much.
Thanks very much.
[Company Representative]: Thanks very much.
The only reason that I believe it would have gone up even more.
Our next question comes from Michal Krupinski from Noble capital markets. Please go ahead. Your line is open.
Operator: Our next question comes from Michael Kupinski from NOBLE Capital Markets. Please go ahead. Your line is open.
We're scaling spending more.
That's kind of just what naturally happens as you start Q scale up.
[Analyst]: Thank you. Thanks for taking my questions. I see that the cost of customer acquisition has gone up a little bit, and I was just wondering if you could talk a little bit about what's driving that and at what price would you say that you're not getting the benefit? I know $40, you're still getting a benefit from the membership, but at what price do you think that you would not see an attractive return from that?
Thank you. Thanks for taking my questions I see that the cost of customer acquisition has gone up a little bit and I was just wondering if you could just talk a little bit about what's driving that and at what price would you say that the that youre not getting the benefit of $40, you're still getting a benefit from the membership.
Well I'm on member acquisition on certain channels.
But we are doing everything we can to counteract that by finding optimizations that will enable us to not have that time cost per acquisition go up too much more.
But at what price do you think that you are not.
Would not see.
And yeah, I think in general we have been finding ways to optimize and channels that work for us.
Track to return.
That.
Sure. It Didnt change that much from 38 to 40 years I think it's just a minor fluctuation, but I'll, let Christine a comment a bit more on what's driving the success in member acquisition.
Holger Bartel: Sure. It didn't change that much from 38 to 40. I think it's just a minor fluctuation, but I'll let Christina comment a bit more on what's driving the success in member acquisition.
So hope that we have such strong club offering.
Two one holder said previously that's really why it's working for US as people see these amazing club.
They want to join and that helps us to get to our efficiencies.
Sure.
Christina Ciocca: Sure. I agree with what Holger said. It hasn't gone up too much. The only reasons that I believe it would have gone up even the $2 is just we're scaling and spending more, and that's kind of just what naturally happens as you start to scale up and spend more on member acquisition on certain channels. We are doing everything we can to counteract that by finding optimizations that will enable us to not have that kind of cost per acquisition go up too much more. I think in general, we have been finding ways to optimize and channels that work for us, and it also helps that we have such strong club offers. To what Holger said previously, that's really what's working for us is people see these amazing club offers and they want to join, and that helps us to get to our efficiencies.
I agree with Mike Holmgren, Todd it hasn't gone up too much.
Great.
And Mike Michael a four times a year, we have remember these.
Only reason that I believe it would have gone up even more.
Remember these are what what's special about your office and remember these are diesel offers that only club members can see.
We're scaling spending more.
And that's kind of just what naturally happens as you start Q.
You could see other offers if you like.
Yeah.
And while I'm on member acquisition uncertain channel.
Just get a preview of the awful, but these offers and remember these are offers that you can only see once European club member.
But we are doing everything we can to counteract that by.
They drive member acquisition, but on the other hand, what's important here is.
Hi.
Planning optimization that will enable us to not have that time cost per acquisition go up to much more.
These are all sourced at some of our travel partners like to create and make even more aggressive because they know these can only be seen by us very very small select and very close group of members. So put yourself into the shoes of this luxury hotel and do you want do you want the name out to millions of people on Expedia.
And yeah, I think in general we have been finding ways to optimize and channels that work for us.
Also helps that we have such strong club offering.
One holder said previously that's really why it's working for US as people see these amazing club Oh, sorry.
That you're offering a discount no you don't want to travelers who provides the opportunity here for these luxury hotels and similar travel partners to create offers that are hidden away from the public but that can be enjoyed by people really love them. So that.
While you're doing that helps us to get to our efficiencies.
Great.
Holger Bartel: Great. I was going to say that, Michael, four times a year, we have member days. Member days are, what's special about the offers on member days are these are offers that only club members can see. You could see other offers if you just get a preview of the offer, but these offers on member days are offers that you can only see once you are a paying club member. They drive member acquisition. On the other hand, what's important here is these are offers that some of our travel partners like to create and make even more aggressive because they know these can only be seen by a very, very small, select, and very closed group of members. Put yourself into the shoes of this luxury hotel, and do you want to name out to millions of people on Expedia that you're offering a discount?
Michael Michael a four times a year, we have remember these.
Remember these what what's special about your office and remember. These are these are all force that only club members can see.
That's why for example, these remember these have been quite critical in.
Driving member acquisition and what we are seeing is that during those periods.
You could see other offers if you just get a preview of the awful, but these offers and remember. These are offers that you can only see once European club member.
They are looking to <unk>.
Steve even more to endorse period CPA is even substantially lower than the $40. We see here. So in short it's really the strength of workforce and the better. The offers are that's what's impacting the CPE and of course over time, our marketing efforts will also become more efficient. So we also think there's a good chance that.
Do you drive member acquisition, but on the other hand, what's important here is.
These are all sourced at some of our travel partners like to create and make even more aggressive because they know these can only be seen by a very very small select and very close group of members. So put yourself into the shoes of just luxury hotel and do you want do you want the name out to millions of people on Expedia.
We can't drive CPA in certain quarters, even lower than the $40 plus as long as we see this attractive payback.
Would you be illustrated a couple of times before we will continue to invest because if we get the money back within a quarter. If the profitability is there long term even if it's in the short term even in the short term, we see a hit on profitability. It's the right thing to do when we're actually quite happy that we're in this situation.
That you're offering a discount no you don't want to travelers who provides the opportunity here for these luxury hotels and similar travel partners to create offers.
Holger Bartel: No, you don't want to. Travelzoo provides the opportunity here for these luxury hotels and similar travel partners to create offers that are hidden away from the public but that can be enjoyed by people who love them. That's why, for example, these member days have been quite critical in driving member acquisition. What we are seeing is that during those periods, and we are looking to boost these even more, during those periods, CPA is even substantially lower than the $40 we see here. In short, it's really the strength of offers, and the better the offers are, that's what's impacting the CPA. Of course, over time, our marketing efforts will also become more efficient. We also think there's a good chance that we can drive CPA in certain quarters even lower than the $40.
Hidden away from the public but that can be enjoyed by people, we love them. So.
That's why for example, these remember these have been quite critical in.
Thanks for the color there <unk> can you talk a little bit about the current advertising environment.
Driving member acquisition and what we are seeing is that during those periods.
I would have thought that it would have been a little bit stronger in the quarter, but can you just talk a little bit about how you see that and whether or not it might be improving especially now in the North America given that we're seeing you know the fed rate cuts and so forth do you anticipate that it will improve the or do you think that.
They are looking to <unk>.
Steve even water endorsed period CPA is even substantially lower than the $40. We see here. So in short it's really the strength of workforce and the better. The offers are that's what's impacting the CPE and of course over time, our marketing efforts will also become more efficient. So we also think there's a good chance that.
Just kind of give us your general thoughts about.
The advertising environment.
You have a good day, Michael Yes, this quarter was a bit slower on the advertising revenue side is.
We can't drive CPA in certain quarters, even lower than the $40 plus as long as we see this attractive payback.
Holger Bartel: As long as we see this attractive payback, which we illustrated a couple of times before, we will continue to invest because if we get the money back within a quarter, if the profitability is there long term, even if it's in the short term, even in the short term, we see a hit on profitability, it's the right thing to do, and we're actually quite happy that we're in this situation.
It normally be Q3 is generally our slowest quarter, but yeah. There were a couple of advertisers who pulled back but we have these fluctuations from one quarter to the next or the timing or sometimes it's more sometimes it's less in general.
Would you be illustrated a couple of times before we will continue to invest because if we get the money back within a quarter. If the profitability is there long term even if it's in the short term even in the short term, we see a hit on profitability. It's the right thing to do when we're actually quite happy that we are in this situation.
You know.
The feeling in the U S is quite good.
We really see where we really see hesitance in the U K and not just us of them hitting this from other companies as well travel companies in any kind of consumer consumer company in the U K.
Thanks for the color there <unk> can you talk a little bit about the current advertising environment.
[Analyst]: Thanks for the color there, Holger. Can you talk a little bit about the current advertising environment? I would have thought that it would have been a little bit stronger in the quarter, but can you just talk a little bit about how you see that and whether or not it might be improving, especially now in North America, given that we're seeing the Fed rate cuts and so forth? Do you anticipate that it will improve, or do you think that, you know, just kind of give us your general thoughts about the advertising environment?
I would have thought that it would have been a little bit stronger in the quarter, but can you just talk a little bit about how you see that and whether or not it might be improving especially now in the North America given that we're seeing the fed rate cuts and so forth do you do you anticipate that it will improve the or do you think that.
It's probably you know announcement about quite aggressive take sites at the end of November but until the people here are.
What exactly is going on they are hesitant to businesses are hesitant to spend consumers are hesitant to buy so get there I would say we are seeing a relatively soft advertising business in general in all the other markets. What we are seeing I would not over interpret that it's just the natural fluctuation from one quarter to the next.
Just kind of give us your general thoughts about.
The advertising environment.
Holger Bartel: Look, you have a good eye, Michael. Yes, this quarter was a bit slower on the advertising revenue side as it normally would be. Q3 is generally our slowest quarter, but yeah, there were a couple of advertisers who pulled back. We have these fluctuations from one quarter to the next all the time. Sometimes it's more, sometimes it's less. In general, the feeling in the U.S. is quite good. Where we really see hesitancy is in the UK, and not just us, I'm hearing this from other companies as well, travel companies and any kind of consumer company in the UK. There is probably an announcement about quite aggressive tax hikes at the end of November, but until people hear what exactly is going on, they are hesitant. The businesses are hesitant to spend. Consumers are hesitant to buy.
You have a good day, Michael Yes, this quarter was a bit slower on the advertising revenue side as well.
It normally would be Q3 is generally our slowest quarter, but yeah. There were a couple of advertisers who pulled back but we have these fluctuations from one quarter to the next or the tightening or sometimes it's more sometimes it's less in general.
Got you. Thank you.
Our next question comes from Patrick Sholl from Barrington Research. Please go ahead. Your line is open.
Hi, could you maybe talk a little bit on some of the retention efforts around subscribers that.
You know the.
The feeling in the U S is quite good.
We really see where we really see hesitance in the U K and not just us and I'm hearing this from other companies as well travel companies in any kind of consumer consumer company in the U K.
Became paying members in either Q4 of last year that raised that's a really small cohort or at.
The legacy members that became a paying members at the start of this year, just any sort of like a commentary around like retention metrics are.
It's probably you know announcement about quite aggressive take sites at the end of November but until people here.
How you would expect like the retention costs relative to initial acquisition cost.
What exactly is going on they are hesitant to businesses are hesitant to spend consumers are hesitant to buy so yeah. Yeah. I would say we are seeing a relatively soft advertising business in general in all the other markets. What we are seeing I would not over interpret that it's just the natural fluctuation from one quarter to the next.
Really good question Kristina do you want to respond to that one.
Sure.
Holger Bartel: There I would say we are seeing a relatively soft advertising business in general. In all the other markets, what we are seeing, I would not overinterpret that. It's just a natural fluctuation from one quarter to the next.
Of course, we're constantly tracking retention and renewal.
We'll say that the volumes have not been massive just yet and we expect much more or a new laws, especially for the legacy members that.
Got you. Thank you.
[Analyst]: Gotcha. Thank you.
Joined in Q4 of last year, they actually did not start their membership until January 1st So I think well be expecting to have many more renewals starting in Q1 of next year. So were working on implementing different strategy keen kind of.
Our next question comes from Patrick Sholl from Barrington Research. Please go ahead. Your line is open.
Operator: Our next question comes from Patrick Sholl from Barrington Research. Please go ahead. Your line is open.
Hi, could you maybe talk a little bit on some of the retention efforts around subscribers that are.
[Analyst]: Hi. Could you maybe talk a little bit on some of the retention efforts around subscribers that became paying members in either Q4 of last year? I realize that's a really small cohort, or the legacy members that became paying members at the start of this year. Just any sort of commentary around retention metrics or how you would expect the retention cost relative to initial acquisition cost?
Became paying members in either Q4 of last year I read about some really small cohort or at the legacy members that became our paying members at the start of this year, just any sort of like a commentary around like retention metrics are.
So are they renew.
But the main thing is just making sure we get them content and information about the club membership while they are in number and hit kind of their preferences. So that they see the value in the membership and wanted to say.
How you would expect like the retention costs relative to initial acquisition costs.
So far we are seeing fairly good renewal rate, especially pulling from legacy embrace that became club member.
Really good question Kristina do you want to respond to that one.
Holger Bartel: That's a really good question. Christina, do you want to respond to that one?
Sure.
Christina Ciocca: Sure. Of course, we're constantly tracking retention and renewals. I will say that the volumes have not been massive just yet, and we expect much more renewals, especially for the legacy members that joined in Q4 of last year. They actually did not start their membership until January 1. I think we'll be expecting to have many more renewals starting in Q1 of next year. We're working on implementing different strategies to kind of ensure they renew, but the main thing is just making sure we get them content and information about the club membership while they are a member and hit kind of their preferences so that they see the value in the membership and want to stay. So far, we are seeing fairly good renewal rates, especially coming from legacy members that became club members.
We're hoping that trend will continue next year, when we have larger quantities that bringing wells.
Of course, we're constantly tracking retention and renewals.
Isn't there.
I will say that the volumes have not been massive guests yet and we expect much more in our new laws, especially for the legacy members that.
Actively opting into make sure that it's renewed because they wouldn't have like have they would have until end of year to cancel like I guess, how do you.
Joining in Q4 of last year, they actually did not start their membership until January 1st So I think what you're expecting to have many more renewals starting in Q1 of next year. So were working on implementing different strategies Keene.
So the one guy.
That's where the one guy.
Joined I don't think I'd point is are the ones that joined.
<unk> previously.
Not necessarily on any specific promotions, we're starting to see some renewals I guess many of them.
I'm sure they renew.
But the main thing is just making sure we get them content and information about the club members shop Wow.
Okay.
Legacy members, but new to travel with you.
And number and hit kind of their preferences, so that they see the value in the membership and wanted to say.
But we are seeing.
Other kind of conversion rates and thanks, all I can see numbers that are trending in the right direction.
And so far we are.
Okay, I understand pet question might be about renewable itself, it's an automated renew where they don't have to actively renewables. So that's.
We're seeing fairly good renewal rate, especially pulling from legacy number is that became club member.
Christina Ciocca: We're hoping that trend will continue next year when we have larger quantities of renewals.
That's an.
That trend will continue next year.
Unless they cancelled and then as you mentioned pit.
A larger quantity is that bringing walls.
As you mentioned very correctly we.
[Analyst]: Are they actively opting in to make sure that it's renewed because they would have until the end of year to cancel? I guess, how do you?
So it isn't like there.
Actively opting into make sure that it's renewed because they wouldn't have like have they would have until end of year to cancel like I guess, how do you.
We have a very large group of renewals coming up at the end of this year and then again at the end of Q1, there was a really large numbers of new work and we can see already from.
Like we already we already you can already see a little bit we can forecast renewals rates quite well because we can look at how many of these members have already activated their automated renewal on these two groups it's actually.
For the one guy.
Christina Ciocca: For the ones that joined, that's a good point. For the ones that joined previously, not necessarily on any specific promotions, we're starting to see some renewals. I guess many of them are not legacy members but new to Travelzoo. We are seeing other kind of conversion rates and things for legacy members that are trending in the right direction.
That's why no one got.
Hi, Julie.
I can point as are the ones that joined.
Previously not necessarily on any specific promotions, we're starting to see some renewals I guess many of them.
I'd be very small because they've been with travelers over a long time, but the reason why I also mentioned it at that point of time when they renew with the membership fee comes in and that's why we are expecting also quite a nice income of cash at the end of this year and then again at the end of Q1, we're also looking and we'll always supposed likely in.
Legacy members, but new to travel with you, but we are seeing.
Other kind of conversion rates and things for legacy Margaret that are trending in the right direction.
Okay, I understand pet question might be about renewable itself, it's an automated renew where they don't have to actively renewable solar autonomous.
Holger Bartel: Okay. I understand Pat's question might be about renewal itself. It's an automated renewal. They don't have to actively renew. It will automatically renew unless they cancel. As you mentioned, Pat, as you mentioned very correctly, we have a very large group of renewals coming up at the end of this year and then again at the end of Q1. Those are really large numbers of renewals. We can already see a little bit. We can forecast renewal rates quite well because we can look at how many of these members have already deactivated their automated renewal on these two groups. It's actually very, very small because they've been with Travelzoo for a long time.
Increase the membership fee.
Certain markets next to you maybe already at the beginning of the year because.
Because to $40 just teams.
Unless they cancelled and then as you mentioned pit.
It seems.
As you mentioned very correctly.
Maybe a little bit too low and people.
We have a very large group of renewals coming up at the end of this year and then again at the end of Q1, there was a really large numbers of new work and we can see already from.
People, who used to membership really love it and from what we're hearing is.
We have an opportunity to increase the membership fees there, it's not decided yet just to be clear, but we are.
Like we already we already you can already see a little bit we can forecast renewals rates quite well because we can look at how many of these members have already activated their automated renewal on these two groups it's actually.
We are looking into it very seriously.
Okay.
And then just on the advertising and commerce are components of revenue could you maybe talk about maybe just how the mix of that has shifted.
Very very small because they've been with travelers for a long time, but the reason why I also mentioned it at that point of time when they renew with the membership fee comes in and that's why you're expecting oil so quite a nice income of cash at the end of this year and then again at the end of Q1.
Holger Bartel: The reason why I also mentioned it, at that point of time when they renew, the membership fee comes in, and that's why we are expecting also quite a nice income of cash at the end of this year and then again at the end of Q1. We're also looking and will most likely increase the membership fee in certain markets next year, maybe already at the beginning of the year because the $40 just seems maybe a little bit too low. People who lose the membership really love it. From what we are hearing is we have an opportunity to increase the membership fees there. It's not decided yet, just to be clear, but we are looking into it very seriously.
Maybe over the last you know.
Four quarters.
It's really a relatively small portion of wherever you have the opportunity to buy a travel inventory for example hotel rooms in advance which is weird.
That then has an impact on cost of revenue, but it's it's it's a relatively small situated relatively small apart and it hasn't really changed dramatically nor do we expect.
We're also looking and will most likely increase the membership fee in.
Certain markets next year, maybe already at the beginning of the year, because because to $40 just teams.
It will change dramatically.
So sort of like that that goes into cost of revenues and you know that that was about like a $2 million increase year over year. So is that kind of like that component that we should be thinking about that.
It seems.
Maybe a little bit too low and people.
People, who used to membership really love it and from what we're hearing is.
We have an opportunity to increase the membership fees there, it's not decided yet just to be clear, but yes, we.
Relatively lower margin.
Sure.
That would kind of be the.
We are looking into it very seriously.
The delta on the advertising side, but yes.
Okay.
[Analyst]: Okay. On the advertising and commerce components of revenue, could you maybe talk about how the mix of that has shifted over the last four quarters?
And then just on the advertising and commerce are components of revenue could you maybe talk about maybe just the how the mix of that has shifted.
Okay.
And then just on like the the overall travel environment are you seeing like any.
Like kind of difference between the types of travel services offered in terms of whats.
Maybe over the last you know.
Four quarters.
It's really a relatively small portion wherever you have the opportunity to buy a travel inventory for example hotel rooms in advance which is weird.
More.
Holger Bartel: It's really a relatively small portion where we have the opportunity to buy travel inventory, for example, hotel rooms in advance, which is where that then has an impact on cost of revenue. It's a relatively small, sort of a relatively small part, and it hasn't really changed dramatically, nor do we expect it to change dramatically.
I guess active and offering deals.
Well, there's like a flights or hotels.
That then has an impact on cost of revenue, but it's it's it's a relatively small situated relatively small apart and it hasn't really changed dramatically nor do we expect.
We have not seen any changes it's still the same.
Consumers in general and particularly yellow traveling with us they are looking for value and they're looking for amazing offers and theyre looking for experiences and they want to do something new they are not looking for something boring.
It will change dramatically.
So sort of like that that goes into cost of revenues and you know that that was about like a $2 million increase year over year. So is that kind of like that component that we should be thinking about that.
[Analyst]: That goes into cost of revenues, and you know that was about a $2 million increase year over year. Is that kind of like that component that we should be thinking about as being a relatively lower margin? That would kind of be the, I guess, delta on the advertising side then?
They are looking for vacations that reward them that are exciting for them, but most of all they are really looking for great value as I said and that's we are the travelers who membership comes in and.
Relatively lower margin.
<unk>.
That would kind of be the.
The delta on the advertising side, but yes.
Oh for stem exactly that and offer them more opportunity to travel because that's what they would like.
Holger Bartel: Yes.
[Analyst]: Okay. You know, just on the overall travel environment, are you seeing any kind of difference between the types of travel services offered in terms of what's more, I guess, active in offering deals, whether it's flights or hotels?
Okay.
And then just on like the the overall travel environment are you seeing like any.
Okay. Thank you.
Okay.
Like kind of difference between the types of travel services offered in terms of what's.
Our next question comes from Steve So Steve Silver from Argus Research. Please go ahead. Your line is open.
More.
Thanks, operator, and thanks for taking my question as well.
I guess active in offering deals.
Oh, great. The presentation site additional advertising revenues as a potential incremental value driver over time.
Well, there was like a flights or hotels.
We're not seeing any changes it's still the same.
Holger Bartel: We are not seeing any changes. It's still the same. Consumers in general, and particularly our travel enthusiasts, are looking for value. They're looking for amazing offers, they're looking for experiences, and they want to do something new. They are not looking for something boring. They are looking for vacations that reward them, that are exciting for them. Most of all, they are really looking for great value, as I said. That's where the Travelzoo membership comes in and offers them exactly that, and offers them more opportunity to travel because that's what they would like.
Curious as to whether there's any color you can provide on your thinking just in terms of the timeline for reaching some of the thresholds to reach that critical mass or whether you'd think that those opportunities might be either more near immediate or longer term based on the current member acquisition rate.
Consumers in general and particularly yellow traveling with us they are looking for value and they're looking for amazing offers.
Theyre looking for experiences and they want to do something you end up looking for something boring.
Looking for vacations that reward them that are exciting for them, but more stuff or theyre really looking for great value as I say, it and that's where all the travelers who membership comes in and.
In the past, we've seen a roughly time delay of one year, it's difficult to predict Steve.
It's why we didn't put a number on it. So we just illustrated on this slide is you know obviously if I if more members do you have a bigger audience I can increase my advertising fees, but right.
[noise] office them exactly that and offer them more opportunity to travel because that's what they would like.
Right now it's not something we are so focused on incredibly well probably more maybe 2026 of 2027.
Okay. Thank you.
[Analyst]: Okay, thank you.
Okay.
Operator: Our next question comes from Steve Silver from Argus Research. Please go ahead. Your line is open.
Our next question comes from Steve <unk>.
Steve Silver from Argus Research. Please go ahead your line is open.
Right now our main focus is really on getting the number of club members up and providing them a service that they absolutely do not want to keep up on.
Thanks, operator, and thanks for taking my question as well.
[Analyst]: Thanks, operator, and thanks for taking my question as well. Holger, the presentation cites additional advertising revenues as a potential incremental value driver over time. I'm curious as to whether there's any color you can provide on your thinking, just in terms of the timeline for reaching some of the thresholds to reach that critical mass, or whether you think that those opportunities might be either more near, immediate, or longer term based on the current member acquisition rate.
The presentation site additional advertising revenues as a potential incremental value driver over time, I'm curious as to whether there's any color you can provide on your thinking just in terms of the timeline for reaching some of the thresholds to reach that critical mass or whether you would think that those opportunities might be even more.
That's helpful. Thank you and then one last one if I may.
There's been a lot of chatter, particularly in North America, just in terms of flights being delayed whether it's the shut down or a shortage of air traffic control at all of those types of issues.
I'm curious as to whether there is the risk of any capacity issues at these airport lounges.
Your immediate or longer term based on the current member acquisition rate.
In the past we've seen a roughly time delay of one year, it's difficult to predict as Steve and that's why we didn't put a number on it. So we just illustrated on this slide as well.
Holger Bartel: In the past, we've seen a roughly time delay of one year. It's difficult to predict this, Steve, and that's why we didn't put a number on it. We just illustrated on the slide as, you know, obviously, if I have more members, if I have a bigger audience, I can increase my advertising fees. Right now, it's not something we are so focused on incredibly, probably more maybe 2026 or 2027 because right now, our main focus is really on getting the number of club members up and providing them a service that they absolutely do not want to give up on.
If there was an increase in flight cancellations those types of things or whether they're whether like airport lounges are equipped to take on a higher number of potential people.
Obviously, if I if more members if I have a big audience I can increase my advertising fees, but right.
Twice or delayed at that kind of pace.
So far we haven't heard about any issues or problems or members would certainly let us know.
Right now it's not something we are so focused on incredibly well probably more maybe 2026 of 2027.
Hmm.
Well.
You know trip Thanksgiving is at the end of November is the big travel periods. So hopefully hopefully all travel issues will be resolved by then and people can travel safely and without too much interruption, but you know it's nice for our members to know what that does surface and just benefit exists when they need it.
Right now our main focus is really on getting the number of club members up and providing them a service that they absolutely do not want to give up on it.
That's helpful. Thank you and then one last one if I may.
[Analyst]: That's helpful. Thank you. One last one, if I may. There's been a lot of chatter, particularly in North America, just in terms of flights being delayed, whether it's the shutdown or a shortage of air traffic controls, all of those types of issues. I'm curious as to whether there is the risk of any capacity issues at these airport lounges if there was an increase in flight cancellations, those types of things, or whether airport lounges are equipped to take on a higher number of potential people if flights are delayed at that kind of pace.
There's been a lot of chatter, particularly in North America, just in terms of flights being delayed whether it's the shut down or a shortage of air traffic control at all of those types of issues.
Okay fair enough thanks for taking the questions.
Yeah.
Our last question comes from Ed Woo from <unk> Capital. Please go ahead. Your line is open.
I'm curious as to whether there is the risk of any capacity issues at these airport lounges.
Yeah, a little bit more on what youre seeing out in the travel environment and you know with all the economic issues.
If there was an increase in flight cancellations those types of things or whether they're.
And stuff are you seeing any change in the consumer either they want to travel spending down or traveling less and also on the supply side are securing much from your hotel or travel providers that did.
Whether like airport lounges are equipped to take on a higher number of potential people it twice or delayed at that kind of pace.
So far we haven't heard about any issues or problems or members would certainly let us know.
Holger Bartel: So far, we haven't heard about any issues or problems. Our members would certainly let us know. Thanksgiving is at the end of November. It's the big travel period. Hopefully, all these travel issues will be resolved by then, and people can travel safely and without too much interruption. It's nice for our members to know that this service and this benefit exists when they need it.
They are having issues filling seats with consumers or to get to.
Lower their prices.
Well.
You know trip Thanksgiving is at the end of November is the big travel periods. So hopefully hopefully all travel issues will be resolved by then and people can travel safely and without too much interruption, but you know.
Yes.
Last week I read a report.
There is a increasing oh.
Bernie between more affluent.
Consumers, who continue to travel and travel even more.
It's nice for our members to know what that is service and just benefit exists when they need it.
And those really really have to watch their budget Luckily.
Okay fair enough thanks for taking the questions.
[Analyst]: Okay. Fair enough. Thanks for taking the questions.
Sure.
Luckily our members travelers who members are very affluent I mean, you saw that.
Our last question comes from Edward from Sandy had capital. Please go ahead. Your line is open.
Operator: Our last question comes from Ed Woo from Ascendiant Capital. Please go ahead. Your line is open.
Really high percentage of them that have incomes over $20000. So.
Yeah, a little bit more on what youre seeing out in the travel environment with all the economic issues.
[Analyst]: Yeah. A little bit more on what you're seeing out in the travel environment with all the economic issues and stuff. Are you seeing any change in the consumer, either they want to travel, spending down or traveling less? Also, on the supply side, are you hearing much from your hotel or travel providers that they're having issues filling seats with consumers or that they have to lower their prices?
Our members are not.
They are not one of the low income side. So they are more in the group of people traveling more so as long as we provide them with excellent opportunities and with fantastic all for us.
Are you seeing any change in the consumer either they want to travel spending down or traveling less and also on the supply side are you securing much from your hotel or travel providers that data.
We'll continue to travel.
Yeah.
Great are you here.
They are having issues filling seats with consumers.
Any concerns from those travel suppliers either that they feel like they have to advertise BARDA filter rooms are there any concerns or do they feel optimistic heading into the holidays and next year.
Lower their prices.
Yeah.
Okay.
So I'll speak I read a report.
Holger Bartel: Last week, I read a report that there's an increasing disparity between more affluent consumers who continue to travel and travel even more and those who really, really have to watch their budget. Luckily, our members, Travelzoo members, are very affluent. I mean, you saw like a really high % of them that have incomes over $200,000. Our members are not cheap. They are not on the low-income side. They are more in the group of people who travel more. As long as we provide them with excellent opportunities and with fantastic offers, they will continue to travel.
It is increasing.
Disparity between more affluent consumers, who continue to travel and travel even more.
We haven't heard any you havent heard anything that really changes how do you look at it I think.
And those really really have to watch their budget Luckily.
Theyre more gamma.
We're more focused now on keeping occupancy rates high you know compared to the Covid period. When it was just normal that the hotel was not busy so yeah I mean I.
Sure.
Luckily our members travelers, who members Bob very affluent I mean, you saw that.
Really high percentage of them that have incomes over $200000. So.
I would not see it goes much more beyond what would be seasonally as seen in the past, but you know.
Our members are not.
Yes, not on the low income side. So they are more in the group of people traveling more so as long as we provide them with excellent opportunities and with fantastic All force they will continue to travel.
The economy in the U S, particularly is still doing well and let's see what happens in 2026 as we said in the past if we have more travelers suppliers for example, hotels et cetera that have trouble being food they come to us and they will create office for us and know that we have disclosed.
Yeah.
Okay.
[Analyst]: Great. Are you hearing any concerns from the travel suppliers, either that they feel like they have to advertise more to fill their rooms, or are there any concerns, or do they feel optimistic heading into the holidays and next year?
Are you hearing any concerns from the travel suppliers either that they feel like they have to advertise more to fill their rooms are there any concerns or do they feel optimistic heading into the holidays next year.
This closed user group it allows them to do this very discretely.
We are really positioned to be a great partner for them.
Okay.
Great. Thanks for answering my questions and I wish you guys. Good luck. Thank you.
We haven't heard any we haven't heard anything that really changes how do you look at it I think.
Thanks, you too.
Holger Bartel: We haven't heard anything that really changes how they are looking at it. I think they are more focused now on keeping occupancy rates high, compared to the COVID period when it was just normal that the hotel was not busy. I would not say it goes much more beyond what we seasonally have seen in the past. The economy in the U.S., particularly, is still doing well, and let's see what happens in 2026. As we said in the past, if we have more travel suppliers, for example, hotels, as you say, that have trouble being full, they come to us and they will create offers for us. Now that we have a disclosed user group that allows them to do this very discreetly, we are really positioned to be a great partner for them.
Okay. This concludes the Q&A portion of today's call I would like to turn the call back over to Mr. Holger Bartel for closing remarks, great.
They are more gamma.
We're more focused now on keeping occupancy rates high you know compared to the Covid period. When it was just normal that the hotel was somewhat busy so yes.
Great.
Thank you again for your time and support today.
We look forward to speaking with you again next quarter have a great day.
This concludes today's travel due to third quarter 2025 earnings call and webcast. You may disconnect. Your lines at this time and have a wonderful day.
I would not see it goes much more beyond what we seasonally have seen in the past, but you know.
The economy in the U S, particularly is still doing well and let's see what happens in 2026 as we said in the past if we have more travelers suppliers. For example, hotels FCC that have trouble being food they come to us and they will create office for us and now that we have.
This closed user group that allows them to do this very discretely.
We are really positioned to be a great partner for them.
Great. Thanks for answering my questions and I wish you guys. Good luck. Thank you.
[Analyst]: Great. Thanks for answering my questions, and I wish you guys good luck. Thank you.
Thanks, you too.
Holger Bartel: Thanks, Ed. You too.
Okay. This concludes the Q&A portion of today's call I would like to turn the call back over to Mr. Holger Bartel for closing remarks.
Operator: Okay. This concludes the Q&A portion of today's call. I would like to turn the call back over to Mr. Holger Bartel for closing remarks.
Holger Bartel: Great. Dear investors, thank you again for your time and support today. We look forward to speaking with you again next quarter. Have a great day.
Great.
Mr. <unk>. Thank you again for your time and support today.
We look forward to speaking with you again next quarter have a great day.
This concludes today's travel due to third quarter 2025 earnings call and webcast. You may disconnect. Your lines at this time and have a wonderful day.
Operator: This concludes today's Travelzoo third quarter 2025 earnings call and webcast. You may disconnect your lines at this time and have a wonderful day.
Okay.