Travelzoo

Hello, everyone. Thank you for joining us. And welcome to the Travel Zoo third quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. The company would like to remind you that all statements made during this conference call and presented in the slides that are not statements of historical facts constitute forward-looking statements and are made pursuant to the safe harbor provisions of the private securities legislation reform act of 1995. Actual results could vary materially from those contained in the forward-looking statements. are described in the company's forms 10K and 10Q 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 archive recording of this conference call will be made available on the company's investor relation website at TravelZoo.com forward slash IR. You can also download a copy of the Q3 presentation in the bottom right hand corner of your screen. Now, it is my pleasure to turn the floor over to TravelZoo's global CEO, Holger Bartel, its chair, chief membership officer and general counsel and CEO of Jack's Flight Club, Christina Ciocca, and its financial controller, North America, Jeff Hoffman. Jeff, we'll start with an overview.

Thank you, operator, and welcome to those of you joining us. Today, I'm stepping in for Lijun, 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. Revenue increased again year over year. Consolidated revenue was $22.9 million, up 3% year over year. in constant currencies, revenue was 23 million. We still reported a loss due to our investment in growing club members. The Q3 reported loss was 2.6 million compared to reported operating profit of 0.5 million in the prior year period. Slide five explains that we decided to accelerate the shift toward membership fee revenue by more quickly growing paid club members. The reported quarterly loss came from higher investment in growing the number of club members. Our objective is to increase recurring membership fees revenue. Please turn to slide six. Board club members drive recurring revenue from membership fees. In Q3, we added the largest number of club members yet. The number of club members increased 65% year over year. Slide 7 explains, as a reminder, that with subscription businesses, membership fee revenue is recognized readily over the subscription period, whereas acquisition costs are expensed as marketing costs immediately. Slide 8 shows that marketing costs reduce reported quarterly EPS in the short term, but are projected to drive better results in 2027 and beyond when deferred revenues and recurring revenues increase profitability. While marketing costs are negatively impacting EPS this year, we still estimate a positive impact on 2027 EPS of $1.20. Please turn to slide nine. Even though we invested even more than in Q2 and acquired more members, the average acquisition cost was lower, better in Q3. On the left side, you see that the average acquisition cost of a club member was $54 in Q3. The member pays, in the US case here, their $50 annual membership fee right at the beginning of the membership period. Additionally, we generated an average of $15 per member in revenue from transactions within 90 days. In addition, there will be revenue from transaction and advertising and future membership fees from recurring renewals in future period. We believe that total payback is attractive. Now please turn to slide 10. Both the North America and Europe segments increased revenues. Jack's Flight Club reported a decline due to a decrease in deferred revenue from less members acquired in Q1 and Q2. On slide 11, you will see the reported gap operating margins. As a number of membership renewals which do not have acquisition expenses grows, operating margins are expected to substantially improve. In the short term, fluctuations are likely. Slide 12 shows that investment of club members of Travelzoo occur in all key markets. On slide 13, we provide information on non-GAAP operating profit and operating loss as we believe it better explains how we evaluate financial performance. In Q3, 2026, non-GAAP operating loss was 2.1 million compared with non-GAAP operating profit of 1.1 million in the prior year period. Slide 14 provides information about the items that are excluded in the calculation of non-GAAP financial information. Please turn to slide 15. As of September 30, 2026, our consolidated cash, cash equivalents, and restricted cash was $8.8 million, an increase in $1.2 million compared with Q2. We repurchased 256,898 shares of our common stock. Now looking ahead, for Q4 2026, we expect year-over-year revenue growth. We also expect revenue growth in the subsequent quarters as membership fees revenue is recognized rateably over the subscription period of 12 months as we blow credit members and as more legacy members become club members. Over time, we expect profitability to increase as recurring membership fees revenue will be recognized. In the short term, fluctuations in reported net income are likely. Now I'll turn the discussion over to Holger.

Thank you, Jeff. We will continue to leverage Travelzoo's global reach, our trusted brand, and the 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. Please turn to slide 17. Membership empowers travelers to live the life of 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. Club offers cannot be found anywhere else. Some examples, 59 pounds for stays for two at one of 15 cozy English inns, a 60 night Hawaii cruise for around $60 per day, which includes your cabin, food, drinks, entertainment, Also exclusive offers like a cooking class with a Michelin star chef in Tuscany or for those who want luxury and seclusion, an all-inclusive stay at a five-star private island in the Maldives. Membership also provides complimentary access to airport lounges worldwide in case of flight delays. And in Q1, 2026, We launched, in partnership with Allianz, the first travel enthusiast hotline. It provides 24-7 complimentary assistance wherever you travel. Culinary journeys curated for the travel enthusiast are coming soon. Slide 19 shows the worldwide complimentary lounge access in case of flight delays. It is perfect for the travel enthusiast. Slide 20 provides information about sentiment and demographics of members. Travel Zoo is loved by travel enthusiasts who are affluent, active, and open to new experiences. 90% state they are open to new destinations and travel ideas. Almost 90% are likely to book an unplanned trip with an attractive offer. 62% plan to take two or more international trips in 2027. Information about their median household income shows that they have the means to do so, especially given the outstanding value of our club offers. TravelZoom members also hold on to leisure travel longer than the general population if household spending had to be cut. Finally, on slide 27, We provide an overview of our management focus. We are working to grow the number of paying club members and accelerate revenue growth by converting legacy members and adding new club members. Retain and grow our profitable advertising business. Accelerate revenue growth, which drives future profits in spite of temporary lower EPS. Grow Czech's flight club's subscription revenue. and launch Travel Zoo Meta. Now Christina will provide an update on Travel Zoo Meta and Chex Flight Club.