What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-10 · 81 added, 187 removed, 130 unchanged (67% of the section changed)

9 unchanged sentences

Travelzoo undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other circumstances occur in the future.

Travelzoo (including its subsidiaries and affiliates, the “Company” or “we”) is a global Internet media company.

It operates Travelzoo ®, the club for travel enthusiasts, and Jack’s Flight Club ®, a subscription service that provides information about exceptional airfares.

Travelzoo reaches 30 million travelers around the globe, including the United States, Canada, United Kingdom, Germany, France and Spain and through licensing arrangements covering Australia, Japan, New Zealand, Singapore and South Korea.

Through its websites, e-mails newsletters, iOS and Android apps, and on social media platforms, Travelzoo provides members information and access to exclusive discounted travel, entertainment, and local offers and experiences.

Offers are researched, negotiated, and personally selected by Travelzoo’s deal experts around the globe.

Offers are sourced from more than 5,000 top travel and entertainment partners.

The Company generates revenues from advertising and commerce, membership fees, and other sources.

In March 2022, the Company began the development of Travelzoo META, a subscription service that is intended to provide Metaverse travel experiences.

We are a global Internet media company.

We operate Travelzoo ®, the club for travel enthusiasts, Jack’s Flight Club ®, a subscription service that provides information about exceptional airfares, and Travelzoo META .

We reach 30 million travelers.

Club Members, who pay a membership fee, receive Club Offers negotiated and rigorously vetted by our deal experts around the globe.

Travelzoo membership has historically been free, however, beginning in 2024, new members in the United States, Canada, United Kingdom and Germany were charged an annual fee of $40 (or local equivalent), with the 2024 annual fee waived for existing members as of December 31, 2023.

On January 1, 2026, we increased the annual membership fee to $50 in the United States for new members, For existing members, the new pricing is applied from the next renewal of their membership after February 1, 2026.

On April 1, 2026, we increased the annual membership fee to €40 in Germany for new members.

For existing members, the new pricing is applied from the next renewal of their membership after May 1, 2026.

For any subscription revenue derived from the paid membership, we recognize revenue monthly pro rata over the subscription period.

We also license Travelzoo products, services and intellectual property to licenses in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to a quarterly royalty payment based on a percentage of net revenue.

Under the licensing agreements, existing Travelzoo members in the applicable territories continue to be owned by the Company.

Reportable Segments

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Advertising and Commerce, Membership Fees, and Other.

The "Advertising and Commerce" category consists of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commissions and revenues generated from the sale of Getaways vouchers and bookings on our hotel platform, and (c) publishing fees from high-quality local businesses, sale of Local Deals vouchers and

entertainment offers.

The “ Advertising and Commerce ” category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commissions and revenues generated from the sale of Getaways vouchers and bookings on our hotel platform, and (c) publishing fees from high-quality local businesses, sale of Local Deals vouchers and entertainment offers.

Advertising fees may be based on audience reach, placement in email newsletters or on media properties, number of listings, number of clicks, and/or actual sales.

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Insertion orders and merchant agreements for Local Deals are typically for periods between one and twelve months and are not automatically renewed.

As of September 30, 2025 and December 31, 2024, the Company had approximately $2.9 million and $4.1 million of unredeemed vouchers that had been sold, respectively, representing the Company’s commission.

As of March 31, 2026 and December 31, 2025, the Company had approximately $3.4 million and $2.9 million of unredeemed vouchers that had been sold, respectively, representing the Company’s commission.

The Company estimates a refund reserve using historical and current refund rates by product and by merchant location to calculate estimated future refunds.

The Company estimated and recorded a refund reserve of $173,000 and $144,000 as of September 30, 2025 and December 31, 2024, respectively, for these unredeemed vouchers which is recorded as a reduction of revenues on the condensed consolidated statements of operations, and accrued expense and other on the condensed consolidated balance sheet.

Merchant payables of $11.8 million as of September 30, 2025 related to unredeemed vouchers is recorded on the condensed consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed.

The Company estimated and recorded a refund reserve of $283,000 and $188,000 as of March 31, 2026 and December 31, 2025, respectively, for these unredeemed vouchers which is recorded as a reduction of revenues on the condensed consolidated statements of operations, and accrued expense and other on the condensed consolidated balance sheet.

Merchant payables of $13.5 million as of March 31, 2026 related to unredeemed vouchers is recorded on the condensed consolidated balance sheet, representing amounts payable to merchants by the Company for vouchers sold but not redeemed.

Certain merchant contracts, typically in foreign locations, allow the Company to retain the proceeds from unredeemed vouchers upon expiration.

With these contracts, the Company estimates the value of vouchers that will ultimately not be redeemed and records the estimate as revenues in the same period.

In certain scenarios, the Company will pre-purchase vouchers or hotel inventory (in the form of credit amounts, vouchers or gift cards) in bulk from clients and partners (e.g.

hotel or spa partners).

In certain scenarios, the Company will pre-purchase vouchers or hotel inventory (in the form of credit amounts, vouchers or gift cards) in bulk from clients and partners (e.g., hotel or spa partners).

In those scenarios, the Company is not acting as the agent, but rather as the principal.

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Travelzoo membership has historically been free, however, on January 1, 2024, the Company introduced an annual membership fee of $40 (or local equivalent) for new members in the United States, Canada, United Kingdom and Germany, with the 2024 annual fee waived for existing members.

On April 1, 2026, we increased the annual membership fee to €40 in Germany for new members.

For existing members, the new pricing is applied from the next renewal of their membership after May 1, 2026.

Jack’s Flight Club subscription options are quarterly, semi-annually, and annually.

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Trends in Our Business

Revenues from local businesses have been and may continue to decline over time due to market conditions driven by competition and declines in consumer demand.

In the years prior to the COVID pandemic, we saw a decline in the number of vouchers sold and a decrease in the average commission rate earned by us from the merchants for vouchers sold.

However, during the global pandemic, we saw an increase in demand by consumers for fully refundable travel options, which led to a slight reversal of this trend and an increase in the sale of Getaways hotel vouchers (although demand for restaurants and spas continued to be low).

With the ending of the pandemic, the importance of fully refundable travel options decreased (and we also shifted to offering a surcharge for full refundability), and the trend is therefore returning to pre-pandemic patterns.

Our ability to continue generating revenues through advertising, commissions and subscriptions depends heavily upon our ability to maintain and grow an attractive audience for our publications.

We monitor our membership base to assess our efforts to maintain and grow our audience reach.

We obtain additional members and increase activity on our websites by acquiring traffic from Internet search and social media companies.

The costs to grow our audience have had, and we expect will continue to have, a significant impact on our financial results and can vary from period to period.

With the introduction of membership fees in 2024, we have been adjusting our member acquisition practices to ensure that we pursue a strategy of efficient growth.

We initially reduced our expenditures on acquiring members as we tested new strategies for efficacy.

Having now been able to achieve in certain cases a one quarter payback period to acquire a paying member, we have now increased and plan to further increase these expenditures to grow our paid membership and engagement with our products.

We will continue

to invest for so long as we are able to maintain efficiency.

We do not know if we will be able to maintain efficiency or continue efficiently growing through member acquisition.

We continue to see a shift in users accessing our services through mobile devices and social media and, therefore, anticipate continuing to address these growing channels through additional investments.

We believe that an important factor for our advertising rates is the reach of our publications, however, we also believe, particularly as we transition to paid membership, that there are other more important factors, such as the engagement of our membership base with our content.

We do not know if we will be able to increase engagement, however, early signs indicate that on average paying members are more engaged than members who have not paid a fee.

We do not know if by increasing engagement, we will also be able to increase other key metrics of importance to our advertisers.

As we make this transition, we may need to decrease our rates based on competitive market conditions and the performance of our audience.

However, as we increase member acquisition, we expect that a greater proportion of our revenue will be driven by membership revenue, as opposed to advertising revenue.

We do not know what our cost of revenues as a percentage of revenues will be in future periods.

Our cost of revenues may change in relation to volume and terms with third-party partners of the Travelzoo Network, the incurrence of merchant processing fees from the sale of vouchers for Local Deals and Getaways, changes in refund request trends, pre-purchasing of voucher inventory and provisioning of customer service.

With the transition to paid membership, we regularly review the classification of cost of revenues and operating expenses.

We expect fluctuations in cost of revenues as a percentage of revenues from quarter to quarter.

Some of the fluctuations may be significant and may have a material impact on our results of operations.

We do not know what our sales and marketing expenses as a percentage of revenue will be in future periods.

Changes in the average cost per acquisition of new members impacts our advertising expenses and sales and marketing expenses as a percentage of revenue, and are not readily predictable.

With the introduction of membership fees in 2024, we expect the cost of acquiring new paying members to increase significantly, as compared with the cost of acquiring non-paying members prior to 2024.

We have found efficiencies in member acquisition gained through careful testing and optimizing throughout 2024 and the beginning of 2025 and we hope that we will be able to continue to scale.

However, in the future, there may be a significant number of members that cancel or we may cancel their memberships for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.

We also cannot predict seasonality and the potential increase of advertising rates by third party channels, which would impact the efficiency of our member acquisition activities.

The Company’s ability to grow revenues depends heavily upon the ability to maintain and grow the number of Travelzoo members and Jack’s Flight Club members.

The costs to market our membership have had, and we expect will continue to have, a significant impact on our financial results and can vary from period to period.

In addition to the type of membership offered, we believe the average cost per acquisition depends mainly on the advertising rates we pay for media buys, the quality of the members we acquire (based on both clicks and purchases through Travelzoo), our ability to manage our member acquisition efforts successfully, the regions we target to acquire new members and the relative costs for that region, and the degree of competition in our industry.

All else equal, increased competition may require us to increase advertising for our brand and advertisers’ deals.

Beside member acquisition costs, we may see a unique opportunity for a brand marketing campaign, experience increases in the cost of retaining or sourcing new advertiser clients, or change the number of personnel or compensation structure for the sales and marketing function, any of which would result in an increase in sales and marketing expenses.

We expect fluctuations in sales and marketing expenses as a percentage of revenue from year to year and from quarter to quarter.

Some of the fluctuations may be significant and have a material impact on our results of operations.

We expect increased marketing expenses to spur continued growth in revenue in future periods;

however, we cannot be assured of this due to the many factors that impact our growth.

We expect to adjust the level of such incremental spending dynamically during any given quarter based upon market conditions, as well as our performance in each quarter.

We do not know what our product development expenses as a percentage of revenue will be in future periods.

We expect to increase investment in our products in connection with building out and refining the value proposition of the Travelzoo club membership.

There may be fluctuations that have a material impact on our results of operations.

Product development changes may lead to reductions of revenue based on changes in receptivity of our offerings to our member audience and advertiser clients.

We expect our efforts in developing products and services will continue to be a focus in the future, which may lead to increased product development expenses.

Increases in expense may result from costs related to third-party technology service providers and software licenses, headcount and the use of professional services.

We do not know what our general and administrative expenses as a percentage of revenue will be in future periods.

There may be fluctuations that have a material impact on our results of operations.

We do not know what our income taxes will be in future periods.

There may be fluctuations that have a material impact on our results of operations.

Our income taxes are dependent on numerous factors such as the geographic mix of our taxable income, foreign, federal, state and local tax law and regulations, and changes thereto.

Our income taxes are also dependent on

the determination of whether valuation allowances for certain tax assets are required or not, any audits of prior years' tax returns that result in adjustments, resolution of uncertain tax positions and different treatments for certain items for tax versus book purposes.

We expect fluctuations in our income taxes from year to year and from quarter to quarter, which may be significant and have a material impact on our results of operations.

Results of Operations

The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated.

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Three Months Ended

Revenues 100.0 % 100.0 %

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Other includes licensing fees from license agreements and the retail business acquired with MTE.

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Three Months Ended

Advertising and Commerce $ 19,688 $ 20,680

Membership Fees 4,568 2,443

Other 27 33 63 87

Total revenues $ 24,273 $ 23,140

Advertising and Commerce

Advertising and Commerce revenue decreased by $39,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 .

This decrease was primarily driven by a $1.3 million decrease in Top 20 and Newsflash and a $201,000 decrease in hotel platform commission revenue which was partially offset by $1.5 million increase in revenues from Getaways and Local Deals vouchers purchases.

Advertising and Commerce revenue increased by $709,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 .

This increase was primarily driven by $3.6 million increase in revenues from Getaways

vouchers purchases which was partially offset by a $1.9 million decrease in hotel platform and other commission revenue and a $0.4 million decrease in cost per click revenue.

Advertising and Commerce revenue decreased by $992,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 .

This decrease was primarily driven by selling less advertising insertion orders, as the Company prioritized the sale of memberships.

Membership Fees

Revenues from Membership fees increased $2.1 million for the three months ended September 30, 2025 from the three months ended September 30, 2024 due to the increase of subscription fees paid by Travelzoo and Jack's Flight Club members.

Revenues from Membership fees increased $5.3 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 due to the increase of subscription fees paid by Travelzoo and Jack's Flight Club members.

Revenues from Other decreased $6,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the decrease revenue from the retail and fashion business.

Revenues from Other decreased $24,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the decrease revenue from the retail and fashion business.

Revenues from Membership fees increased $2.1 million for the three months ended March 31, 2026 from the three months ended March 31, 2025 due to the increase in paying members.

Revenues from Other remained flat for the three months ended March 31, 2026 from the three months ended March 31, 2025.

Cost of Revenues

Cost of revenues consists primarily of network expenses related to powering the Company's websites, database services, sending e-mails, amortization of capitalized website development costs, software and license expenses, publishing fees to partners of the Travelzoo Network , costs incurred upon the sale of pre-purchased vouchers and other products, including directly attributable member services (call center), cost of certain membership benefits that are considered integral to the contractual obligation to Club Members, and fees to payment processors.

Cost of revenues was $4.5 million and $2.5 million, respectively, for the three months ended September 30, 2025 and 2024.

Cost of revenues was $13.1 million and $7.7 million, respectively, for the nine months ended September 30, 2025 and 2024.

Cost of revenues increased $2.0 million for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the increase in costs recognized upon the sale of pre-purchased vouchers.

Cost of revenues increased $5.4 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the increase in costs recognized upon the sale of pre-purchased vouchers.

Cost of revenues was $5.2 million and $4.2 million, respectively, for the three months ended March 31, 2026 and 2025.

Cost of revenues increased $1.0 million for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to the increase in costs recognized upon the sale of pre-purchased vouchers.

Operating Expenses

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Sales and marketing expenses consist primarily of advertising and promotional expenses, salary and related expenses associated with sales, marketing and production employees, expenses related to our participation in industry conferences, marketing professional service costs, public relations expenses and facilities costs.

Sales and marketing expenses were $12.2 million and $8.2 million for the three months ended September 30, 2025 and 2024, respectively.

Sales and marketing expenses were $34.4 million and $26.2 million for the nine months ended September 30, 2025 and 2024, respectively.

Sales and marketing expenses were $11.1 million and $10.2 million for the three months ended March 31, 2026 and 2025, respectively.

Advertising expenses consis t primarily of online advertising which we refer to as traffic acquisition cost and member acquisition costs.

For the three months ended September 30, 2025 and 2024, advertising expenses accounted for 26% and 14%, respectively, of the total sales and marketing expenses.

For the nine months ended September 30, 2025 and 2024, advertising expenses accounted for 22% and 12%, respectively, of the total sales and marketing expenses.

For the three months ended March 31, 2026 and 2025, advertising expenses accounted for 22% and 15%, respectively, of the total sales and marketing expenses.

The goal of our advertising was to acquire new members to our email products, increase the traffic to our websites, increase brand awareness and increase our audience through mobile and social media platforms.

Sales and marketing expenses increased $4.0 million for the three months ended September 30, 2025 from the three months ended September 30, 2024.

The increase was primarily due to the increase in member acquisition costs as a result of management's strategic plan.

Sales and marketing expenses increased $8.1 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 .

Sales and marketing expenses increased $0.9 million for the three months ended March 31, 2026 from the three months ended March 31, 2025.

The increase was primarily due to the increase in member acquisition costs as a result of management's strategic plan.

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Product development expenses consist primarily of salary and related expenses associated with software development employees, fees for professional services, software maintenance, amortization, and facilities costs.

Product development expenses were $631,000 and $594,000 for the three months ended September 30, 2025 and 2024, respectively.

Product development expenses were $2 million and $1.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Product development expenses increased $37,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the increase in salary expense.

Product development expenses increased $200,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the increase in salary expense.

Product development expenses were $664,000 and $634,000 for the three months ended March 31, 2026 and 2025, respectively.

Product development expenses increased $30,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to the increase in salary expense.

General and Administrative

General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, bad debt expense, professional service expenses, legal expenses, amortization of intangible assets, general office expense and facilities costs.

General and administrative expenses were $4.4 million and $4.7 million for the three months ended September 30, 2025 and 2024, respectively.

General and administrative expenses were $13.4 million and $13.9 million for the nine months ended September 30, 2025 and 2024, respectively.

General and administrative expenses decreased $302,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to a $175,000 decrease in salary expense and a $193,000 decrease in bad debt.

General and administrative expenses decreased $455,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to $335,000 decrease in professional services expenses and $257,000 decrease in legal expense, offset partially by $196,000 increase in office expenses.

General and administrative expenses were $3.8 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively.

General and administrative expenses decreased $493,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to a $305,000 decrease in stock compensation expenses and a $210,000 decrease in bad debt.

Other Income (loss), net

Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for COVID-related pandemic relief, interest income and interest expense.

Other income (loss), net was ($64,000) and $359,000, respectively, for the three months ended September 30, 2025 and 2024.

Other income, net was $727,000 and $674,000, respectively, for the nine months ended September 30, 2025 and 2024.

Other income (loss), net decreased $423,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the interest income and foreign exchange transactions loss.

Other income, net increased $53,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the release of JFC VAT liabilities after a four-year statute of limitations and foreign exchange transactions gains.

Other income, net consisted primarily of foreign exchange transaction gains and losses, sublease income, German federal government funding for COVID-related pandemic relief, interest income and interest expense.

Other income (loss), net was ($5,000) and $629,000, respectively, for the three months ended March 31, 2026 and 2025.

Other income (loss), net decreased $634,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to the foreign exchange transaction loss.

Our income is generally taxed in the U.S., Canada and U.K.

Our income tax provision reflects federal, state and country statutory rates applicable to our worldwide income.

Income tax expense was $245,000 and $1.1 million, respectively, for the three months ended September 30, 2025 and 2024.

Our effective tax rate from continuing operations was 58% and 26%, respectively, for the three months ended September 30, 2025 and 2024.

The Company’s effective tax rate for the three months ended September 30, 2025 changed from the three months ended September 30, 2024 primarily due to a higher interest expense related to unrecognized tax positions in the three months ended September 30, 2025.

Income tax expense was $2.2 million and $3.9 million, respectively, for the nine months ended September 30, 2025 and 2024.

The Company’s effective tax rate from continuing operations was 30% and 27% for the nine months ended September 30, 2025 and 2024 .

Income tax expense was $0.9 million and $1.2 million, respectively, for the

three months ended March 31, 2026 and 2025.

Our effective tax rate from continuing operations was 27% and 26%, respectively, for the three months ended March 31, 2026 and 2025.

The Company’s effective tax rate for the three months ended March 31, 2026 changed from the three months ended March 31, 2025 primarily due to a decrease in operating profit in the three months ended March 31, 2026.

We expect our effective tax rate to fluctuate in future periods depending on the geographic mix of our worldwide income or losses mainly incurred by our operations, statutory tax rate changes that may occur, existing or new uncertain tax matters that may arise and require changes in tax reserves and the need for valuation allowances on certain tax assets, if any.

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There may be fluctuations that have a material impact on our results of operations.

Our income taxes are dependent on numerous factors such as the geographic mix of our taxable income, federal and state and foreign country tax law and regulations and changes thereto, the determination of whether valuation allowances for certain tax assets are required or not, audits of prior years’ tax returns resulting in adjustments, resolution of uncertain tax positions and different treatment for certain items for tax versus books.

We expect fluctuations in our

income taxes from year to year and from quarter to q uarter.

We expect fluctuations in our income taxes from year to year and from quarter to q uarter.

Some of the fluctuations may be significant and have a material impact on our results of operations.

Travelzoo North America

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

(In thousands) (In thousands)

Three Months Ended March 31,

(In thousands)

Revenues $ 15,667 $ 15,128

1 unchanged sentence

Operating profit as a % of revenue 20.7 % 23.8 %

North America revenues increased by $1.4 million for the three months ended September 30, 2025 from the three months ended September 30, 2024.

This increase was primarily due to the increase in paid membership fees and Getaway vouchers .

North America expenses increased by $3.4 million for the three months ended September 30, 2025 from the three months ended September 30, 2024.

The increase was primarily due to a $1.3 million increase in cost of revenue related to purchase of vouchers and gift cards which were sold during the three months ended September 30, 2025, and a $1.7 million increase in member acquisition costs.

North America revenues increased by $4.3 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024.

This increase was primarily due to the increase in paid membership fees and Getaway vouchers .

North America expenses increased by $8.1 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024.

The increase was primarily due to a $3.9 million increase in cost of revenue related to purchase of vouchers and gift cards which were sold during the nine months ended September 30, 2025, and a $3.3 million increase in member acquisition costs.

North America revenues increased by $539,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025.

This increase was primarily due to the increase in paid membership fees and Getaways vouchers .

North America expenses increased by $0.9 million for the three months ended March 31, 2026 from the three months ended March 31, 2025.

The increase was primarily due to a $932,000 increase in cost of revenue related to purchase of vouchers and gift cards which were sold during the three months ended March 31, 2026.

Travelzoo Europe

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

(In thousands) (In thousands)

Three Months Ended March 31,

(In thousands)

Revenues $ 7,277 $ 6,712

Operating profit (loss) $ (640) $ 1,028 $ (1,296) $ 2,922

Operating profit (loss) as a % of revenue (9.7) % 17.1 % (6.6) % 15.7 %

Europe revenues increased by $547,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024.

The increase was primarily due to the increase in paid membership fees .

Eur ope expenses increased by $2.2 million for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to $833,000 in member acquisition costs, a $569,000 increase in cost of revenue related to the purchase of vouchers and gift cards which were sold during the three months ended September 30, 2025, and a $269,000 increase in salary and related expenses.

Europe revenues increased by $1 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024.

The increase was primarily due to the increase in paid membership fees .

Eur ope expenses increased by $5.2 million for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to $1.6 million in member acquisition costs, a $1.4 million increase in cost of revenue related to the purchase of vouchers and gift cards which were sold during the three months ended September 30, 2025, and a $1.1 million increase in salary and related expenses.

Foreign currency movements relative to the U.S.

dollar negatively impacted our local currency income from our operations in Europe by approximately $41,000 for the three months ended September 30, 2025 and positively impacted our local currency income from our operations in Europe by approximately $31,000 for the three months ended September 30, 2024 .

Operating profit $ 279 $ 228

Operating profit as a % of revenue 3.8 % 3.4 %

Europe revenues increased by $565,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025.

The increase was primarily due to the increase in paid membership fees and Getaway vouchers .

Eur ope expenses increased by $514,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to a $408,000 increase in member acquisition costs and a $260,000 increase in cost of revenue related to the purchase of vouchers and gift cards which were sold during the three months ended March 31, 2026.

Foreign currency movements relative to the U.S.

dollar negatively impacted our local currency income from our operations in Europe by approximately $31,000 for the nine months ended September 30, 2025 and positively impacted our local currency income from our operations in Europe by approximately $84,000 for the nine months ended September 30, 2024 .

dollar positively impacted our local currency income from our operations in Europe by approximately $2,000 and $11,000 for the three months ended March 31, 2026 and 2025, respectively.

Jack ’ s Flight Club

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

(In thousands) (In thousands)

Three Months Ended March 31,

(In thousands)

Revenues $ 1,312 $ 1,283

1 unchanged sentence

Operating profit (loss) as a % of revenue (3.7) % 0.9 %

Jack ’ s Flight Club revenues increased by $150,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 due to the increase of subscription fees paid by the members.

Jack’s Flight Club expenses in creased by $140,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the increase in advertising expenses.

Jack ’ s Flight Club revenues increased by $707,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 due to the increase of subscription fees paid by the members.

Jack’s Flight Club expenses in creased by $413,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the increase in advertising expenses.

Jack ’ s Flight Club revenues increased by $29,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 due to the increase in subscription fees paid by the members.

Jack’s Flight Club expenses in creased by $89,000 for the three months ended March 31, 2026 from the three months ended March 31, 2025 primarily due to the increase in advertising expenses.

New Initiatives

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

(In thousands) (In thousands)

Three Months Ended March 31,

(In thousands)

Revenues $ 17 $ 17

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New Initiatives segment primarily consists of Travelzoo licensing business, Travelzoo META, Metaverse experience scouting and development business and the retail and fashion business acquired with MTE.

New Initiatives revenues decreased $6,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the decrease in the retail and fashion business.

New Initiatives segment expenses decreased by $145,000 for the three months ended September 30, 2025 from the three months ended September 30, 2024 primarily due to the decrease in salary and related expenses .

New Initiatives revenues decreased $24,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the decrease in the retail and fashion business.

New Initiatives segment expenses decreased by $417,000 for the nine months ended September 30, 2025 from the nine months ended September 30, 2024 primarily due to the decrease in salary and related expenses .

Liquidity and Capital Resources

As of September 30, 2025, we had $8.5 million in cash and cash equivalents, of which $6.1 million was held outside the U.S.

As of March 31, 2026, we had $10.6 million in cash and cash equivalents, of which $7.4 million was held outside the U.S.

in our foreign operations.

If this cash is distributed to the U.S., we may be subject to additional foreign withholdings taxes in certain circumstances.

If this cash is distributed to the U.S., we may be subject to additional foreign withholding taxes in certain circumstances.

We also had $754,000 in restricted cash held in the U.S.

as of September 30, 2025.

Cash, cash equivalents and restricted cash decreased $8.5 million from $17.7 million as of December 31, 2024 to $9.2 million as of September 30, 2025, primarily due to $13 million cash used to repurchase common stock, offset partially by $4.2 million cash provided by operating activities.

As of September 30, 2025 , we had merchant payables of $11.8 million related to unredeemed vouchers.

as of March 31, 2026.

Cash, cash equivalents and restricted cash increased $562,000 from $10.8 million as of December 31, 2025 to $11.3 million as of March 31, 2026, primarily due to $3.9 million cash provided by operating activities, partially offset by $3.3 million cash used to repurchase common stock.

As of March 31, 2026 , we had merchant payables of $13.5 million related to unredeemed vouchers.

In the Company’s financial statements presented in this 10-Q report, following U.S.

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Payables to merchants are generally due upon redemption of vouchers.

As of September 30, 2025, unredeemed vouchers have maturities through March 2026;

As of March 31, 2026, unredeemed vouchers have maturities through March 2026;

however, expiration dates may be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year after.

Based on current projections of redemption activity, we expect that cash on hand as of September 30, 2025 will be sufficient to provide for working capital needs for at least the next twelve months.

Based on current projections of redemption activity, we expect that cash on hand as of March 31, 2026 will be sufficient to provide for working capital needs for at least the next twelve months.

The following table provides a summary of our cash flows from operating, investing and financing activities:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash (14) 142

Net decrease in cash, cash equivalents and restricted cash $ (8,493) $ (4,283)

Net cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.

Net cash provided by operating activities for the nine months ended September 30, 2025 was $4.2 million, which primarily consisted of net income of $4.9 million, $1.2 million increase in non-cash items and $884,000 decrease in cash from changes in operating assets and liabilities.

Adjustments for non-cash items primarily consisted of $1.1 million for stock-based compensation and $239,000 for depreciation and amortization.

The decrease in cash from changes in operating assets and liabilities was primarily due to $5.1 million decrease in merchant payables, offset partially by $2.4 million increase in deferred revenue and $2.1 million increase in accounts payable.

Net increase (decrease) in cash, cash equivalents and restricted cash $ 562 $ (5,513)

Net cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.

Net cash provided by operating activities for the nine months ended September 30, 2024 was $13.3 million, which primarily consisted of net income of $10.4 million, $1.9 million increase in non-cash items and $963,000 increase in cash from changes in operating assets and liabilities.

Adjustments for non-cash items primarily consisted of $1.2 million for stock-based compensation and $737,000 for depreciation and amortization.

The increase in cash from changes in operating assets and liabilities was primarily due to $1.8 million increase in deferred revenue, $1.4 million increase in other non-current liabilities and $802,000 increase in accounts payable and accrued expenses, offset partially by $3.3 million decrease in merchant payables.

Cash paid for income tax, net of refunds received, during the nine months ended September 30, 2025 and 2024 was $3.6 million and $1.5 million, respectively.

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $49,000 and $129,000, respectively.

The cash used in investing activities for the nine months ended September 30, 2025 consisted of purchases of property and equipment.

Net cash used for financing activities for the nine months ended September 30, 2025 was $13 million which primarily consisted of the repurchase of common stock of $13 million.

Net cash used for financing activities for the nine months ended September 30, 2024 was $16.6 million which primarily consisted of the repurchase of common stock.

Consistent with our growth, we experienced fluctuations in our cost of revenues, sales and marketing expenses, product development expenses and general and administrative expenses, and we anticipate that these increases will continue for the foreseeable future.

We believe cash on hand will be sufficient to pay such costs for at least the next twelve months.

In addition, we will continue to evaluate possible investments in businesses, products and technologies, the consummation of any of which would increase our capital requirements.

Net cash provided by operating activities for the three months ended March 31, 2026 was $3.9 million, which primarily consisted of net income of $2.5 million, $154,000 increase in non-cash items and a $1.2 million increase in cash from changes in operating assets and liabilities.

Adjustments for non-cash items primarily consisted of $77,000 for net foreign currency effect and $56,000 for depreciation and amortization.

The increase in cash from changes in operating assets and liabilities was primarily due to $2.8 million decrease in accounts receivable, offset partially by $2 million increase in deferred revenue and $1.9 million increase in merchant payables.

Cash paid for income tax, net of refunds received, during the three months ended March 31, 2026 and 2025 was $290,000 and $1.5 million, respectively.

Net cash used in investing activities for the three months ended March 31, 2026 and 2025 was $8,000 and $21,000, respectively.

The cash used in investing activities for the three months ended March 31, 2026 consisted of purchases of property and equipment.

Although we currently believe we have sufficient capital resources to meet our anticipated working capital and capital expenditure requirements for at least the next twelve months, unanticipated events and opportunities or a less favorable than expected development of our business with one or more advertising formats may require us to sell additional equity or debt securities or establish credit facilities to raise capital in order to meet our capital requirements.

If we sell additional equity or convertible debt securities, such sale could dilute the ownership of our existing stockholders.

If we issue debt securities or establish a new credit facility, our fixed obligations could increase and we may be required to agree to operating covenants that would restrict our operations.

We cannot be sure that any such financing will be available in amounts or on terms acceptable to us.

If the development of our business is less favorable than expected, we may decide to significantly reduce the size of our operations and marketing expenses in certain markets with the objective of reducing cash outflows.

The information set forth unde r “Note 4— Commitments and Contingencies ” and “Note 10— Leases ” to the accompanying condensed consolidated financial statements included in this report.

Litigation and claims against the Company may result in legal defense costs, settlements or judgments that could have a material impact on our financial condition.

We also have contingencies related to net unrecognized tax benefits, including interest and penalties, of approximately $23.9 million as of September 30, 2025.

Income Taxes” to the accompanying unaudited condensed consolidated financial statements for further information.

Critical Accounting Policies and Estimates

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Our critical accounting policies include income taxes.

For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2024 as well as updates in the current fiscal year provided in “Note 1 Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements.

Recent Accounting Pronouncements

See “Note 1 — The Company and Basis of Presentation” to the accompanying unaudited condensed consolidated financial statements included in this report, regarding the impact of certain recent accounting pronouncements on our unaudited condensed consolidated financial statements.

For additional information about our critical accounting policies and estimates and recent accounting pronouncements, see the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2025 as well as updates in the current fiscal year provided in “Note 1 Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis