Travelzoo

management's prepared remarks the call will be open for your questions if you would like to ask a question at that time please press star 1 on your telephone keypad if you need to remove yourself from the queue please press star 1 again at any time if you should need to need an operator's assistance please press star 0. 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 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 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 TravelZoo.com forward slash 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 Jaxx Flight Club, Christina Chilka, and its Financial Controller, North America, Jeff Hoffman. Jeff will start now with an overview.

Thank you, Operator, and welcome to those of you joining us. Today, I'm stepping in for Lejeune, 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 forward slash IR. Let's begin with slide four. TravelZoo's 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. 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 our significant increase in marketing expense, which lowered EPS. Slide 5 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 US 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. 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 cents. As shown on slide 8, 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 travel. On slide 9, 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 for 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. On slide 10, you can see that revenue growth came from all reporting segments. With favorable ROI on member acquisition in the UK, we invested heavily there. Jack's Flight Club revenue increased 12%. Operating profit was lower in both our North America and Europe segments and was slightly less in our Jack's Flight Club segment. On slide 11, you can see the GAAP operating margin was 2% in Q3 2025. Acquiring more club members has the effect of lowering GAAP operating margins. Still, Given the farewell ROI, our goal is to further grow the number of club members to accelerate Travels' growth. 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. On slide 13, we provide information on non-GAAP operating profit, as we believe it better explains how we evaluate financial performance. Key 3 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 regularly over the subscription period of 12 months as we acquire new members and as more legacy members become club members. Over time, we expect profit profitability to substantially increase as recurring membership fees revenue will be recognized. 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.

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. Travel Zoo 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 Travel Zoo Club membership. Please turn to slide 17. Travel Zoo 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. 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, Travel Zoo 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, Travel Zoo members would pay 99 Euro 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 Maya Coba here, are particularly popular with members. These are all offers that you can only get as a Travel Zoo member. You will not find them anywhere else. 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 Travel Zoo members. Travel Zoo 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 ChexFlightClub's profitable subscription revenue, and develop TravelZoo Meta with discipline. Now Christina will provide an update on TravelZoo Meta and ChexFlightClub.