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What changed in TRAVELZOO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TRAVELZOO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+197 added−246 removedSource: 10-K (2025-03-19) vs 10-K (2024-03-22)

Top changes in TRAVELZOO's 2024 10-K

197 paragraphs added · 246 removed · 167 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

37 edited+6 added−26 removed33 unchanged
Biggest changeDH Travel Services Jetline Travel Entertainment Benefits Group KLM Royal Dutch Airlines Exoticca Myrtle Beach Area Conventions & Visitors Bureau Fairmont Mayakoba Stunning Tours Fiji Airways Swan Hellenic Gate 1 Travel Tourism Ireland Globus Family of Brands Travel Discounters Holland America Line TraveloDeals Icelandair (US) Vacation Express USA Corp Imagine Cruising Wingbuddy.com As discussed in Note 12 – Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report and incorporated herein by refer ence, we did not have any advertisers that accounted for 10% or more of our total revenues during the years ended December 31, 2023 and 2022.
Biggest changeVirgin Voyages Destination Weddings Travel Group Imagine Cruising Holland America Line Wingbuddy.com TripToGo Rocky Mountaineer Vacations Gate 1 Travel Transat Tours Canada Inc Visit Santa Barbara WestJet Airlines As discussed in Note 11 – Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report and incorporated herein by refer ence, as of December 31, 2024, the Company had one customer that accounted for more than 10% of revenues across Travelzoo North America and Travelzoo Europe.
Growth Strategy Our growth strategy is predicated on building our trusted travel, entertainment and local brands; increasing the value of our membership base and their engagement with our content; enticing advertisers to provide more exclusive and compelling offers for us to publish, and innovating with new experiences and revenue streams. • Building Our Trusted Brands.
Growth Strategy Our growth strategy is predicated on building our trusted travel, entertainment and local brands; increasing the value of our membership base and their engagement with our content; enticing advertisers to provide more exclusive and compelling offers for us to publish, and innovating with new experiences and revenue streams. 8 • Building Our Trusted Brands.
As travel and entertainment can be complex and highly-considered purchases, we believe that satisfaction is essential to every interaction or transaction our members have with us, and that our brand and reputation support our future growth. 9 • Increasing the Value and Engagement of Our Membership Base.
As travel and entertainment can be complex and highly-considered purchases, we believe that satisfaction is essential to every interaction or transaction our members have with us, and that our brand and reputation support our future growth. • Increasing the Value and Engagement of Our Membership Base.
To maintain and expand relationships with partners and suppliers, we attend and sponsor industry conferences and live events, meet with existing and future prospects virtually and in person, and employ public relations to create visibility for our brand. To promote membership to consumers, we primarily utilize digital marketing efforts.
To maintain and expand relationships with partners and suppliers, we attend and sponsor industry conferences and live events, meet with existing and future prospects virtually and in person, and employ public relations to create visibility for our brand. 9 To promote membership to consumers, we primarily utilize digital marketing efforts.
We believe developing a service for Metaverse travel experiences will enable us to be a first-mover in this fast-growing space. 7 Our Products and Services The following table presents an overview of our products and services: Product Content Publication Schedule Reach/Usage* Advertiser Benefits Consumer Benefits Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia and Japan, listing thousands of outstanding offers from more than 5,000 travel, entertainment and local businesses 24/7 over 6 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to offers, ability to search and browse by destination or keyword Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding offers Weekly 27.0 million members Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked offers chosen by our internal deal experts from among thousands Standalone emails Regionally targeted email newsletter service, usually with a single newsworthy travel and entertainment offer, which can include Local Deals and Getaways offers As needed 27.0 million members Regional targeting, 100% share of voice for advertiser, flexible publication schedule Daily travel and local offers and ideas Travelzoo Network A network of third-party websites that list outstanding offers published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel offers that have been handpicked and professionally reviewed by our internal experts Travelzoo mobile applications iOS and Android applications that allow users to discover the best travel, entertainment and local offers On-demand 7.5 million downloads Allows travel, entertainment and local offers advertisers to reach our audience that is on the go 24/7 access to travel, entertainment and local offers for consumers that are on the go Jack's Flight Club website Website available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 24/7 316,000 visitors per month N/A 24/7 access to alerts, travel advice and guides.
We believe developing a service for Metaverse travel experiences will enable us to be a first-mover in this fast-growing space. 6 Our Products and Services The following table presents an overview of our products and services: Product Content Publication Schedule Reach/Usage* Advertiser Benefits Consumer Benefits Travelzoo website Website available in the U.S., Canada, France, Germany, Spain, and the U.K., as well as via licensees in Australia and Japan, listing thousands of outstanding offers from more than 5,000 travel, entertainment and local businesses 24/7 over 6 million unique visitors per month Broad reach, sustained exposure, targeted placements by destination and travel segment 24/7 access to offers, ability to search and browse by destination or keyword Travelzoo Newsletters Including the Travelzoo Top 20 and Standalone emails 27.0 million travelers Travelzoo Top 20 Popular email newsletter listing 20 of the week's most outstanding offers Weekly Mass “push” advertising vehicle to quickly stimulate incremental travel and entertainment purchases Weekly access to 20 outstanding, handpicked offers chosen by our internal deal experts from among thousands Standalone emails Regionally targeted email newsletter service, usually with a single newsworthy travel and entertainment offer, which can include Local Deals and Getaways offers As needed Regional targeting, 100% share of voice for advertiser, flexible publication schedule Daily travel and local offers and ideas Travelzoo Network A network of third-party websites that list outstanding offers published by Travelzoo 24/7 Over 400 third-party websites Drives qualified users with substantial distribution beyond the Travelzoo audience Contextually relevant travel offers that have been handpicked and professionally reviewed by our internal experts Travelzoo mobile applications iOS and Android applications that allow users to discover the best travel, entertainment and local offers On-demand 7.8 million downloads Allows travel, entertainment and local offers advertisers to reach our audience that is on the go 24/7 access to travel, entertainment and local offers for consumers that are on the go Jack's Flight Club website Website available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 24/7 417,000 visitors per month N/A 24/7 access to alerts, travel advice and guides.
We also license Travelzoo products, services and intellectual property to licensees in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to quarterly royalty payments based on a percentage of net revenue. The Company recognized $71,000 and $25,000 in royalties in 2023 and 2022, respectively.
We also license Travelzoo products, services and intellectual property to licensees in (a) Australia, New Zealand, and Singapore and (b) Japan and South Korea, in each case, where the Company is entitled to quarterly royalty payments based on a percentage of net revenue. The Company recognized $71,000 and $71,000 in royalties in 2024 and 2023, respectively.
Because of the design of our websites, our users are not required to download or upload large files from or to our websites, which allows us to continue increasing the number of our visitors and pageviews without adversely affecting our performance or requiring us to make significant additional capital expenditures.
Because of the design of our websites, our users are not required to download or upload large files from or to our websites, which allows us to continue increasing the number of our visitors and page views without adversely affecting our performance or requiring us to make significant additional capital expenditures.
In addition, the application and interpretation of these laws, rules, and regulations are often uncertain, particularly in the rapidly evolving industry in which we operate. Employees As of December 31, 2023, we had 223 employees. Non e of our employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.
In addition, the application and interpretation of these laws, rules, and regulations are often uncertain, particularly in the rapidly evolving industry in which we operate. Employees As of December 31, 2024, we had 227 employees. Non e of our employees are represented under collective bargaining agreements. We consider our relations with our employees to be good.
Travelzoo North America consists of the Company’s operations in the U.S. and Canada. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK. Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, Travelzoo META and MTE.
Travelzoo Europe consists of the Company’s operations in France, Germany, Spain, and the UK. Jack’s Flight Club consists of subscription revenue from premium members to access and receive flight deals via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, Travelzoo META and MTE.
We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers. Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications. The Travelzoo website is visit ed by over 6 million unique visitors monthly.
We work in partnership with thousands of top travel suppliers—our long-standing relationships give us access to irresistible offers. Travelzoo attracts a high-quality audience of travel enthusiasts across multiple digital platforms, including email, websites, social media and mobile applications. The Travelzoo website is visit ed by over 6 million unique visitors monthly.
Information included on our website does not constitute part of this report. 11
Information included on our website does not constitute part of this report. 10
Advertisers As of December 31, 2023, our advertiser base included more than 5,000 travel, entertainment and local providers, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Some of our advertisers are: Alaska Airlines Indus Travels Inc.
Advertisers As of December 31, 2024, our advertiser base included more than 5,000 travel, entertainment and local providers, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies.
We have over 4.5 million social media followers on Facebook, Instagram, and Twitter and, to date, our iOS and An droid mobile applications have been downloaded 7.5 million times.
We have over 5 million social media followers on Facebook, Instagram, X and WeChat and, to date, our iOS and An droid mobile applications have been downloaded 7.8 million times.
Based upon this outlook for the travel industry, we believe we are well positioned to continue pursuing our mission and growing our business. Digital Advertising Digital advertising, the primary means by which we operate, has been growing continuously.
Based upon this outlook for the travel industry, and our presence in the United States, Germany, the United Kingdom and France, we believe we are well positioned to continue pursuing our mission and growing our business. Digital Advertising Digital advertising, the primary means by which we operate, has been growing continuously.
We believe that travel, entertainment and local businesses often face the challenge of being able to quickly and effectively market and sell their excess inventory (i.e., airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled) and, therefore, need a fast, flexible, and cost-effective solution for marketing 6 excess inventory.
Digital media also allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner. 5 We believe that travel, entertainment and local businesses often face the challenge of being able to quickly and effectively market and sell their excess inventory (i.e., airline seats, hotel rooms, cruise cabins, theater seats, spa appointments or restaurant seats that are likely to be unfilled) and, therefore, need a fast, flexible, and cost-effective solution for marketing excess inventory.
Travelzoo's production servers are hosted by Microsoft Azure, a cloud-based computing service operated by Microsoft. Microsoft Azure's data center facilities and services include robust high availability, reliability and scalability features. We believe our arrangements with Microsoft Azure will allow us to grow without being limited by our own physical and technological capacity.
Microsoft Azure's data center facilities and services include robust high availability, reliability and scalability features. We believe our arrangements with Microsoft Azure will allow us to grow without being limited by our own physical and technological capacity.
We also source members organically, by word-of-mouth and through our reputation for quality and value. 10 Technology We have designed our technology infrastructure to send a large volume of emails, serve a large volume of web traffic and track activity in an efficient and scalable manner.
We also source members organically, by word-of-mouth and through our reputation for quality and value. Technology We have designed our technology infrastructure to send a large volume of emails, serve a large volume of web traffic and track activity in an efficient and scalable manner. Travelzoo's production servers are hosted by Microsoft Azure, a cloud-based computing service operated by Microsoft.
As of December 31, 2023, there wer e 13,574,774 sh ares of common stock outstanding. Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro is the Company’s largest shareholder and, as of December 31, 2023, holds approximately 40.2% of the Company's outstanding shares.
As of December 31, 2024, there wer e 11,835,976 sh ares of common stock outstanding. Ralph Bartel, who founded Travelzoo, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro is the Company’s largest shareholder and, as of December 31, 2024, holds approximately 37.5% of the Company's outstanding shares.
Holger Bartel, the Company's Global CEO, is Ralph Bartel's brother and separately holds 3.8% of the Company's outstanding shares as of December 31, 2023 .
Holger Bartel, the Company's Global CEO, is Ralph Bartel's brother and separately holds less than 1% of the Company's outstanding shares as of December 31, 2024 .
We cannot yet predict trends in consumer adoption of paid membership for Travelzoo, although we do not anticipate it will contribute materially to our financial results in 2024. We are currently developing various marketing and advertising strategies to acquire new paying members and convert existing free members.
We cannot yet predict trends in consumer adoption of paid membership for Travelzoo, although as anticipated, because of the waiver of the fee for existing members, it did not yet contribute materially to our financial results in 2024. We are scaling and diversifying our marketing and advertising strategies to acquire new paying members and convert existing free members.
The “Travel” category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties and (b) commissions generated from operation of our hotel booking platform and the sale of Getaways vouchers.
Advertising revenue consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commission 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.
Item 1. Business Overview Travelzoo® (including its subsidiaries and affiliates, the “Company” or “we”), the club for travel enthusiasts, is a global Internet media company. Travelzoo provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment and local experiences.
Item 1. Business Overview Travelzoo® (including its subsidiaries and affiliates, the “Company” or “we”), the club for travel enthusiasts, is a global Internet media company. We reach 30 million travelers. Club Members, who pay a membership fee, receive Club Offers personally reviewed by our deal experts around the globe.
According to Zenith, online advertising continues to lead as the fastest growing category of advertising and is expected to account for 59%, or approximately $550 billion, of global advertising spending in 2024. In addition, according to the Kelsey Group's (BIA/Kelsey) U.S. Local Advertising Forecast in March 2024, local advertising spending will reach $172 billion in 2024.
According to Zenith, online advertising continues to lead as the fastest growing category of advertising and is expected to account for 59%, or approximately $550 billion, of global advertising spending in 2024, with continued growth in 2025.
We recognize revenues monthly pro rata over the respective subscription period. Travelzoo membership has historically been free, however, beginning in 2024, new members in the United States, Canada, United Kingdom and Germany are charged an annual fee of $40 (or local equivalent), with the 2024 annual fee waived for existing members as of December 31, 2023.
Travelzoo® membership has historically been free, however, on January 1, 2024, Travelzoo 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 as of December 31, 2023. Jack’s Flight Club subscription options are quarterly, semi-annually, and annually.
Other benefits to advertisers of digital compared to traditional media include more precise audience targeting, real-time listings, real-time updates and performance tracking. Digital media also allows advertisers to advertise their sales and specials in a fast, flexible, and cost-effective manner.
Other benefits to advertisers of digital compared to traditional media include more precise audience targeting, real-time listings, real-time updates and performance tracking.
Ability to change user settings Jack's Flight Club mobile application App available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 1–12 per week depending on membership level and region 155,000 sessions per month.
Ability to change user settings Jack's Flight Club mobile application App available in the U.S, U.K., Germany, Netherlands, Luxembourg, Norway, Sweden, Denmark, Belgium, listing up to date exceptional airfares to paying members 1–12 per week depending on membership level and region 208,083 sessions per month N/A Timely alerts and push notifications of new alerts, 24/7 access to alerts, ability to change user settings and select departure airport Jack's Flight Club newsletters Regionally targeted newsletter alerting of outstanding cheap airfares and including articles about travel destinations and other newsworthy travel content.
In 2023 we launched Travelzoo META, a paid membership service, to extend the range of travel, entertainment and local experiences we offer to consumers to the Metaverse. According to Precedence Research, the U.S. Metaverse market in 2023 was estimated at approximately $34.2 billion of revenue, which accounted for 37% of global market share.
In 2023 we launched Travelzoo META to extend the range of travel, entertainment and local experiences we offer to consumers to the Metaverse. According to Precedence Research, the U.S. Metaverse market in 2025 is estimated at approximately $32.7 billion of revenue. The market is anticipated to grow rapidly and is forecasted to reach $395.15 billion by 2034.
The WTTC forecasts that the global value of travel & tourism will grow by over 50% in the coming decade, expanding the industry’s value, contribution to GDP and employment. Our mission, as the club for travel enthusiasts, is to provide our members with the highest quality information about the best travel, entertainment and local offers.
Our mission, as the club for travel enthusiasts, is to provide our members with the highest quality information about the best travel, entertainment and local offers.
Newsletter includes paid and unpaid subscribers 1–12 per week depending on membership level and region 3 million emails per week to 2.4 million subscribers N/A Breaking news flight offers and travel advice * For the Travelzoo website, reach information is based on data from Google Analytics.
Newsletter includes paid and unpaid subscribers 1–12 per week depending on membership level and region 2.5 million emails per week N/A Breaking news flight offers and travel advice * For Travelzoo website, Top 20, Standalone e mails ( which can include Local Deals and Getaways), Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2024.
Travelzoo META opened for founding membership in May, 2023, and is exploring options to further develop its service and offerings, including leveraging the capabilities of MTE, which we acquired in December, 2022.
The Metaverse offers experiences that can be immersive and provide social features, enabling consumers to virtually travel geographically and through space and time. Travelzoo META is exploring options to further develop its service and offerings, including leveraging the capabilities of MTE, which we acquired in December, 2022.
For Getaways vouchers, we recognize a percentage of the face value of the vouchers upon sale, net of an allowance for future refunds.
We recognize a percentage of the face value of vouchers upon the sale of the vouchers, net of an allowance for refunds. Membership fee revenue consists of subscription fees paid by Travelzoo, Jack's Flight Club, and Travelzoo META members.
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.” 5 Our Industry The global Travel & Tourism industry, at its peak in 2019, reached $10 trillion of value, representing 10.4% of global GDP, according to the World Travel & Tourism Council (WTTC).
Travelzoo is listed on the NASDAQ Global Select Market under the symbol “TZOO.” Our Industry According to the World Travel & Tourism Council (WTTC), the global Travel & Tourism industry grew 13% in 2023 to reach more than $1 trillion, with a return to pre-pandemic levels anticipated by 2025.
Our agreements with certain advertisers are in the form of multiple insertion orders and merchant agreements from groups of entities under common control. Sales and Marketing As of December 31, 2023, our advertising salesforce and sales support staff consisted of 68 employees worldwide.
We did not have any advertisers that accounted for 10% or more of our total revenues during the years ended December 31, 2023. Our agreements with certain advertisers are in the form of multiple insertion orders, hotel agreements and merchant agreements from groups of entities under common control.
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. We typically recognize advertising revenue upon delivery of emails or clicks, as tracked by our internal platform or third-party platforms, in the period of the applicable insertion orders.
We typically recognize advertising revenues upon delivery of emails or clicks, as tracked by our internal platform or third-party platforms. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails.
For the year ended December 31, 2023, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack’s Flight Club operations comprised 5% of revenues. In 2020, the Company classified the results of its Asia Pacific segment as discontinued operations in its consolidated financial statements for all periods presented.
For the year ended December 31, 2024, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack’s Flight Club operations comprised 5% of revenues. Our principal business office is located at 590 Madison Avenue, 35th Floor, New York, New York 10022.
More th an 5,000 travel and local providers use o ur advertising and marketing services, including Alaska Airlines, DH Travel Services, Entertainment Benefits Group, Exoticca, Fairmont Mayakoba, Fiji Airways, Gate 1 Travel, Globus Family of Brands, Holland America Line, Icelandair (US), Imagine Cruising, Indus Travels Inc., Jetline Travel, KLM Royal Dutch Airlines, Myrtle Beach Area Conventions & Visitors Bureau, Stunning Tours, Swan Hellenic, Tourism Ireland, TraveloDeals, Vacation Express USA Corp and Wingbuddy.com.
Thousands of travel and local providers use o ur advertising and marketing services, including Exoticca, Inspiring Vacations, Prestige Travel+Cruise, TraveloDeals, Globus Family of Brands, Tripmasters Inc., Destination Weddings Travel Group, Holland America Line, TripToGo, Gate 1 Travel, Visit Santa Barbara, Online Vacation Center, Princess Cruises, Travel Discounters, Vacation Express, Fiji Airways, Virgin Voyages, Wingbuddy.com, Rocky Mountaineer Vacations, Transat Tours Canada Inc. and WestJet Airlines.
Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company. In March 2022 we announced the development of, and in May 2023 we launched, Travelzoo META to extend the range of experiences we offer consumers to the emerging metaverse.
Under the licensing agreements, Travelzoo's existing members in the applicable territories continue to be owned by the Company. The Company has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada.
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As of December 31, 2023, we had 31.1 million members worldwide, up from 30.4 million as of December 31, 2022. In North America, Travelzoo had 16.2 million unduplicated members as of December 31, 2023, consistent with December 31, 2022.
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The Company generates revenue from advertising, membership fees, and other sources.
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In Europe, Travelzoo had 9.2 million unduplicated members as of December 31, 2023, up from 9.0 million as of December 31, 2022. Jack’s Flight Club had 2.4 million subscribers as of December 31, 2023, up from 1.9 million as of December 31, 2022.
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We recognize subscription revenues ratably over the respective subscription periods. For Travelzoo META, a founding membership was launched in 2023 following a test-and-learn strategy. 4 Other revenue consists of licensing fees from license agreements, as well as the retail business originally operated by Metaverse Travel Experiences, LLC ("MTE") and acquired and maintained by the Company following the acquisition of MTE.
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We generate revenues from the Travelzoo brand and business primarily from advertising fees from two categories of revenue: Travel and Local.
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The WTTC forecasts that the global value of Travel & Tourism will grow by over 50% in the coming decade, expanding the industry’s value, contribution to GDP and employment. The United States was revealed as the world’s most powerful Travel & Tourism market, with Germany, the United Kingdom and France in the third, fifth and sixth spots, respectively.
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The "Local" category consists of publishing revenue for negotiated high quality offers from local businesses, such as restaurants, spas, shows, and other activities and includes Local Deals vouchers and entertainment offers. 4 Jack’s Flight Club revenue is generated from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually.
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For Jack’s Flight Club , reach/usage information is based on data from Google Analytics and internal Jack’s Flight Club statistics as of December 31, 2024. 7 Our Audience With reach of 30 million travelers worldwide, we attract a high-quality audience of travel enthusiasts. We inform our audience about compelling offers sourced from over 5,000 providers worldwide.
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For any subscription revenue derived from paid memberships, we recognize revenue monthly pro rata over the subscription periods.
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Some of our advertisers are: Exoticca Online Vacation Center Inspiring Vacations Princess Cruises Prestige Travel + Cruise Travel Discounters Travelodeal Vacation Express Globus Family of Brands Fiji Airways Tripmasters Inc.
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This paid membership service currently provides founding members with a limited edition “Travel Companion” non-fungible token (“NFT”) and future access to beta version metaverse travel experiences, as developed. On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC, to support Travelzoo META in sourcing prospective travel experiences .
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Sales and Marketing As of December 31, 2024, our advertising sales force and sales support staff consisted of 75 employees worldwide.
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MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results. In connection with the acquisition of MTE, formerly a wholly-owned subsidiary of Azzurro Capital Inc. ("Azzurro"), the Company completed a private placement of newly issued shares with Azzurro.
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Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro was the Company’s largest shareholder at the time of the MTE acquisition and, as of December 31, 2022, Azzurro and Ralph Bartel, in his individual capacity, owned approximately 50.3% the Company's outstanding shares.
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On December 28, 2022, the stockholders of Travelzoo approved the issuance and sale of 3.4 million shares of common stock (the “Shares”) of Travelzoo to Azzurro, in exchange for certain consideration, and on December 30, 2022 (the “Closing Date”), the transaction was consummated.
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The closing price of Travelzoo’s common stock on December 30, 2022 was $4.45 per share, resulting in an aggregate fair value of the Shares of $15.2 million.
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The consideration for the Shares consisted of the following: (a) $1.0 million in cash paid on the Closing Date; (b) $4.8 million paid in the form of a promissory note, carrying a 12% interest rate per annum, issued on the Closing Date and payable by June 30, 2023; and (c) the transfer to the Company of all outstanding capital stock of MTE, which was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date.
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The Company recorded the $4.8 million promissory note as Note receivable from shareholder in the stockholders' equity section on the consolidated balance sheet as of December 31, 2022.
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In October 2023, the Company and Azzurro agreed to a payment plan for payment of the promissory note in five installments, ending in February 2024, with interest on the outstanding principal accruing at 16% per annum beginning on July 1, 2023. The Company has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives.
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Financial information with respect to our business segments and geographic areas appears in Note 12– Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report and is incorporated herein by refer ence. Our principal business office is located at 590 Madison Avenue, 35th Floor, New York, New York 10022.
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The outbreak of the coronavirus (COVID-19) in 2020, however, had a material impact on the industry, including severe restrictions on and reductions in travel, dining and in-person activities, with the industry size declining by approximately one-half, according to WTTC.
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The measures implemented to contain COVID-19 correspondingly had a significant negative effect on our business, as many of the Company’s advertising partners paused, canceled, and/or stopped advertising during the global pandemic. Additionally, there were significant levels of cancellations for the Company's hotel partners and travel package partners and refund requests for our vouchers.
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As airlines were unable to complete or cancelled flights and routes, and people were significantly restricted from traveling, the need for flight alert services was greatly reduced, and consequently premium membership in Jack’s Flight Club declined.
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In 2021, the effects of the pandemic started to subside and travel in general started to recover, with the industry growing by 24.7%, according to WTTC. Advertising clients who had previously paused or canceled placements with us began to resume their spending and airlines began adding flights and routes back, increasing inventory.
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With the returning demand for travel, the need for flight alert services also resumed. Consumer demand in many ways outpaced the readiness of airlines, hotels and restaurants, which had reduced staff to save costs in response to the pandemic. This, in some cases, resulted in an under-supply, causing airline and hotel room prices to increase.
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In 2022, the industry continued its rebound, growing by 22% to $7.7 trillion, according to WTTC. As supply and capacity resumed for airlines and hotels, and restaurants returned to normal operations, we experienced increased supply, with many of our partners working with us again to provide exclusive offers for our members.
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In 2023, the WTTC anticipates that, despite geo-political disruptions, the global Travel & Tourism industry continued its recovery, growing 23.3% over 2022 and achieving a value of $9.5 trillion, only five percent below the industry’s pre-pandemic peak.
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The market is anticipated to grow rapidly, at a compound annual growth rate of 44% over the next five years. The Metaverse offers experiences that can be immersive and provide social features, enabling consumers to virtually travel geographically and through space and time.
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N/A Timely alerts and push notifications of new alerts, 24/7 access to alerts, ability to change user settings and select departure airport Jack's Flight Club newsletters Regionally targeted newsletter alerting of outstanding cheap airfares and including articles about travel destinations and other newsworthy travel content.
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For Top 20, Standalone e mails ( which can include Local Deals and Getaways), Travelzoo Network and Travelzoo mobile applications, reach/usage information is based on internal Travelzoo statistics as of December 31, 2023. For Jack’s Flight Club , reach/usage information is based on data from Google Analytics and internal Jack’s Flight Club statistics as of December 31, 2023.
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Our Audience With over 30 million members worldwide, we attract a high-quality audience of travel enthusiasts.
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According to a U.S. member survey we conducted in October 2023, over 84% of respondents planned to take 2+ domestic trips in the coming year, 64% had a valid passport (compared to 45% of the overall US population) and 91% were open to new destinations and travel ideas. 8 We inform our audience about compelling offers sourced from over 5,000 providers worldwide.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor the year ended December 31, 2023, our cash and cash equivalents was $15.7 million, of which $10.7 million was held outside the U.S. in our foreign subsidiaries. As of December 31, 2023, we had negative working capital of $3.4 million. Merchant payables was $20.6 million as of December 31, 2023.
Biggest changeWe may not be able to obtain sufficient funds to grow our business and equity or debt financing may be on adverse terms. For the year ended December 31, 2024, our cash and cash equivalents was $17.1 million, of which $13.8 million was held outside the U.S. in our foreign subsidiaries.
We may continue to invest in marketing as well as additional employees to support our operations (including licensing arrangements) o r develop new products, such as Travelzoo META or the new Travelzoo paid membership, whic h may generate operating losses. Furthermore, operating losses in certain jurisdictions may not have any recognizable tax benefit.
We may continue to invest in marketing as well as additional employees to support our operations (including licensing arrangements) o r develop new products, such as Travelzoo META or the Travelzoo paid membership, whic h may generate operating losses. Furthermore, operating losses in certain jurisdictions may not have any recognizable tax benefit.
Further, actions by third parties to block, impose restrictions on, or charge for the delivery of emails or other messages could also materially and adversely impact our business. From time to time, Internet service providers block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to third parties.
Further, actions by third parties to block, impose restrictions on, or charge for the delivery of emails or other messages could also materially and adversely impact our business. From time to time, Internet service providers block bulk email transmissions or otherwise 14 experience technical difficulties that result in our inability to successfully deliver emails or other messages to third parties.
Outside parties may attempt to fraudulently induce disclosure of sensitive information in order to gain access to our secure networks or to take over customer accounts. A party that is able to circumvent our security systems could steal proprietary or other sensitive information. A security breach at any third-party supplier could result in negative publicity and exposure.
Outside parties may attempt to fraudulently induce disclosure of sensitive information in order to gain access to our secure networks or to take over customer accounts. A party that is able to 21 circumvent our security systems could steal proprietary or other sensitive information. A security breach at any third-party supplier could result in negative publicity and exposure.
While we strive to use commercially acceptable means to protect personal data, no method of transmission over the Internet, or method of electronic storage, is 100% secure. Cyberattacks are increasing in frequency and sophistication and are 22 evolving. Consequently, we may be unable to anticipate these attacks or to implement adequate preventative measures.
While we strive to use commercially acceptable means to protect personal data, no method of transmission over the Internet, or method of electronic storage, is 100% secure. Cyberattacks are increasing in frequency and sophistication and are evolving. Consequently, we may be unable to anticipate these attacks or to implement adequate preventative measures.
Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive 21 regulates the business of electronic money institutions. Many of these laws contain provisions governing the use of gift cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees.
Other foreign jurisdictions have similar laws in place, in particular European jurisdictions where the European E-Money Directive regulates the business of electronic money institutions. Many of these laws contain provisions governing the use of gift cards, including specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees.
In addition, the costs for third parties to sell vouchers would increase, which may restrict our ability to enlist third parties to issue vouchers. 23 Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission.
In addition, the costs for third parties to sell vouchers would increase, which may restrict our ability to enlist third parties to issue vouchers. Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission.
Moreover, a search or metasearch engine could alter its search algorithms or display of 13 results, causing a website to place lower in search query results. This would adversely affect our business and financial performance, potentially to a material extent. We could also face a significant decrease in traffic to our websites and/or increased costs.
Moreover, a search or metasearch engine could alter its search algorithms or display of results, causing a website to place lower in search query results. This would adversely affect our business and financial performance, potentially to a material extent. We could also face a significant decrease in traffic to our websites and/or increased costs.
If we obtain additional financing through debt securities, the terms of these 16 arrangements could require the pledging of assets, could subject the Company to restrictive covenants or large fees, and could limit our flexibility. We may be sensitive to recessions or other macroeconomic circumstances or events affecting the travel industry generally.
If we obtain additional financing through debt securities, the terms of these arrangements could require the pledging of assets, could subject the Company to restrictive covenants or large fees, and could limit our flexibility. We may be sensitive to recessions or other macroeconomic circumstances or events affecting the travel industry generally.
This could have a material adverse effect on our business and results of operations. Our business model may not be adaptable to a changing market. Our current revenue model depends primarily on advertising fees paid by travel and entertainment companies and still relies significantly on email communications with our members.
This could have a material adverse effect on our business and results of operations. 13 Our business model may not be adaptable to a changing market. Our current revenue model depends primarily on advertising fees paid by travel and entertainment companies and still relies significantly on email communications with our members.
The implementation of new information technology, payment, enterprise resource planning, or other systems (including AI) could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.
The implementation of new information technology, payment, enterprise resource planning, or other systems (including generative AI) could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.
We may not succeed in developing features, functions, products, or services that travel and entertainment companies and Internet users find attractive, including in unsettled and untested areas like artificial intelligence (AI) and the Metaverse. Our current technology may not meet the future technical requirements of travel and entertainment companies.
We may not succeed in developing features, functions, products, or services that travel and entertainment companies and Internet users find attractive, including in unsettled and untested areas like generative artificial intelligence (AI) and the Metaverse. Our current technology may not meet the future technical requirements of travel and entertainment companies.
It is possible that the interests of Azzurro may conflict with those of the Company or its other stockholders in the future. As a result of Azzurro’s ownership interests and voting power, they could be in a position to influence significant corporate actions.
It is possible that the interests of Azzurro may conflict with those of the Company or its other stockholders in the future. As a result of Azzurro’s 23 ownership interests and voting power, they could be in a position to influence significant corporate actions.
These companies have significantly greater financial, technical, marketing and other resources and larger advertiser bases. They may be able to research, develop and deploy new products and technologies (including in the area of AI) faster than us.
These companies have significantly greater financial, technical, marketing and other resources and larger advertiser bases. They may be able to research, develop and deploy new products and technologies (including in the area of generative AI) faster than us.
Our stock price 24 may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control. In the event that our operating results fall below expectations, the trading price of our common shares may decline significantly.
Our stock price may be volatile given that operating results may vary from the expectations of securities analysts and investors, which are beyond our control. In the event that our operating results fall below expectations, the trading price of our common shares may decline significantly.
Nevertheless, to the extent that any tax authority succeeds in asserting that we have a tax collection responsibility (for hotel bookings, packaging or any other aspects of our business, including Jack’s Flight Club and/or the new paid membership), or we determine that we have one, with respect to future transactions, we may collect any such additional tax 14 obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions and with respect to past transactions, we could have a liability for tax that we did not collect from our customers.
Nevertheless, to the extent that any tax authority succeeds in asserting that we have a tax collection responsibility (for hotel bookings, packaging or any other aspects of our business, including Jack’s Flight Club and/or the paid membership), or we determine that we have one, with respect to future transactions, we may collect any such additional tax obligation from our customers, which would have the effect of increasing the cost to our customers and, consequently, could make our services less competitive and reduce reservation transactions and with respect to past transactions, we could have a liability for tax that we did not collect from our customers.
Any failure to implement or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our costs or otherwise adversely affect our business, brand, market share, and results of operations. 20 Acquisitions, investments, licensing arrangements and joint ventures could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.
Any failure to implement or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our costs or otherwise adversely affect our business, brand, market share, and results of operations. 19 Acquisitions, investments, licensing arrangements and joint ventures could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.
In addition, advertisers may choose to limit advertising spend, which can adversely impact our business. Macroeconomic factors and uncertainties such as rising interest rates, persistently high inflation and/or recession fears may have a negative impact on consumer behavior by reducing consumers’ ability or willingness to engage in discretionary spending on travel.
In addition, advertisers may choose to limit advertising spend, which can adversely impact our business. Macroeconomic factors and uncertainties such as tariffs, rising interest rates, persistently high inflation and/or recession fears 15 may have a negative impact on consumer behavior by reducing consumers’ ability or willingness to engage in discretionary spending on travel.
Additionally, we could also experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale and productivity and adverse effects on our ability to attract and retain highly skilled employees. Any of these consequences could adversely impact our business. 18 We may not be able to continue developing awareness of our brand names.
Additionally, we could also experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale and productivity and adverse effects on our ability to attract and retain highly skilled employees. Any of these consequences could adversely impact our business. 17 We may not be able to continue developing awareness of our brand names.
Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations. We perform our impairment test annually in October unless there are events that trigger the need for an interim test. No impairment was identified in connection with the annual impairment test for 2023.
Impairments of goodwill, long-term investments and long-lived assets have a negative impact on our results of operations. We perform our impairment test annually in October unless there are events that trigger the need for an interim test. No impairment was identified in connection with the annual impairment test for 2024.
Factors that may affect quarterly results include: consumer refund rate; mismatches between resource allocation and client demand due to difficulties in predicting client demand; changes in general economic conditions (perceived or actual) that could impair consumer spending; the magnitude and timing of marketing initiatives, including member acquisition and expansion efforts; the introduction, development, timing, competitive pricing and market acceptance of our products and services (including our move to a paid membership model) and those of our competitors; our ability to attract, hire and retain key personnel; our ability to maintain merchant and member satisfaction such that we are able to continue to attract high-quality merchants and members; our ability to manage our planned growth; our ability to encourage our existing members to engage with our products and services and to convert them to revenue-generating users; technical difficulties or system downtime affecting the Internet or our products and services; and volatility of our operating results in new markets.
Factors that may affect quarterly results include: consumer refund rate; mismatches between resource allocation and client demand due to difficulties in predicting client demand; changes in general economic conditions (perceived or actual) that could impair consumer spending; the magnitude and timing of marketing initiatives, including member acquisition and expansion efforts; the introduction, development, timing, competitive pricing and market acceptance of our products and services and those of our competitors; our ability to attract, hire and retain key personnel; our ability to maintain merchant and member satisfaction such that we are able to continue to attract high-quality merchants and members; our ability to manage our planned growth; our ability to encourage our existing members to engage with our products and services and to convert them to revenue-generating users; technical difficulties or system downtime affecting the Internet or our products and services; and volatility of our operating results in new markets.
The cost of these changes may negatively impact our results of operations during the transition. 17 Increased focus on environmental, social, and governance ("ESG") responsibilities have and will likely continue to result in additional costs and risks, and may adversely impact our business.
The cost of these changes may negatively impact our results of operations during the transition. 16 Increased focus on environmental, social, and governance ("ESG") responsibilities have and will likely continue to result in additional costs and risks, and may adversely impact our business.
There are a number of proposals for enactment or modification of data privacy laws pending or proposed in other jurisdictions (including various states across the United States), including laws and regulations which dictate whether, how and under what circumstances we can transfer, process, or receive certain data that is critical to our operations and consent-related requirements for email marketing.
There are a number of proposals for enactment or modification of data privacy laws pending or proposed in other jurisdictions (including various states across the U.S.), including laws and regulations which dictate whether, how and under what circumstances we can transfer, process, or receive certain data that is critical to our operations and consent-related requirements for email marketing.
If our key management personnel are not able to work together effectively, our business could be materially adversely affected. 19 Intense competition may adversely affect our ability to achieve or maintain market share and operate profitably.
If our key management personnel are not able to work together effectively, our business could be materially adversely affected. 18 Intense competition may adversely affect our ability to achieve or maintain market share and operate profitably.
The SEC approved amendments in 2018 that raised the cap for status as a “smaller reporting company” . Travelzoo qualified as a smaller reporting company since 2020, meaning it is not subject to the SOX 404(b) requirement of having an auditor attestation report on internal control over financial reporting.
The SEC approved amendments in 2018 that raised the cap for status as a “smaller reporting company” . Travelzoo has qualified as a smaller reporting company since 2020, meaning it is not subject to the SOX 404(b) requirement of having an a uditor attestation report on internal control over financial reporting.
Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open our emails or messages, or purchase 15 any of our advertised offers, our revenue and profitability could be adversely affected.
Because of the importance of email and other messaging services, if we are unable to successfully deliver emails or messages, or if members decline to open or opt out of our emails or messages, or purchase any of our advertised offers, our revenue and profitability could be adversely affected.
We spent $7.0 million and $5.3 million on marketing initiatives relating to member acquisition for the years ended December 31, 2023 and 2022, respectively, and expect to continue to spend significant amounts to acquire members. Our long-term success depends on our continued ability to attract, retain and engage members.
We spent $2.5 million and $7.0 million on marketing initiatives relating to member acquisition for the years ended December 31, 2024 and 2023, respectively, and expect to continue to spend significant amounts to acquire members. Our long-term success depends on our continued ability to attract, retain and engage members.
Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Company’s services less attractive, delay the introduction of new products, or cause the Company to change or limit its business practices or incur more costs to comply or defend itself.
The costs of compliance, which may arise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Company’s services less attractive, delay the introduction of new products, or cause the Company to change or limit its business practices or incur more costs to comply or defend itself.
Macroeconomic circumstances over which the Company has no control may result in payment processing services requiring larger deposits, imposing stricter rules or requirements, or deciding to stop working with companies related to the travel industry altogether.
Macroeconomic circumstances over which we have no control may result in payment processing services requiring larger deposits, imposing stricter rules or requirements, or deciding to stop working with companies related to the travel industry altogether.
For example, the Company and Jack’s Flight Club employ employees and engage contractors in various countries and therefore could be subject to misclassification or tax claims related to such arrangements or increased costs to ensure continued compliance as both companies grow and add to their workforce.
For example, Travelzoo and Jack’s Flight Club employ employees and engage contractors in various countries and therefore could be subject to misclassification or tax claims related to such arrangements or increased costs to ensure continued compliance as both companies grow and add to their workforce. In addition, the U.S.
Events like war, political instability or other conflicts (including the war in Ukraine and the Israel-Hamas war), terrorist attacks, mass shooting incidents, strikes, natural disasters and extreme weather situations, plane crashes, major public health events, such as the COVID pandemic, and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.
Events like war, political instability or other conflicts (including the war in Ukraine and the Israel-Hamas war), terrorist attacks, mass shooting incidents, strikes, natural disasters and extreme weather situations (e.g., hurricanes, fires, droughts and floods), plane crashes, major public health events and logistical challenges such as widespread travel disruptions may have a negative impact on the travel industry and affect travelers’ behavior by limiting their ability or willingness to visit certain locations.
In March of 2022, we announced the creation of our new Metaverse business and in 2023, we launched Travelzoo META Founding Membership, following a test and learn strategy, with plans for the launch of a subscription membership service that provides members with exclusive access to Metaverse travel experiences to follow.
In March of 2022, we announced the creation of our new Metaverse business, following a test and learn strategy, with plans for the launch of a subscription membership service that provides members with exclusive access to Metaverse travel experiences to follow.
These evolving expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which may be outside of our control or could have a material adverse impact on our business.
These evolving expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals, commitments, and targets present numerous risks, any of which may be outside of our control or could have a material adverse impact on our business.
You should also keep these risk factors in mind when you read forward-looking statements. Risks Related to Our Financial Condition and Business Model We cannot assure you that we will be profitable. In the year ended December 31, 2023, we generated consolidated net income of $12.5 million, of which $12.4 million income was attributable to Travelzoo.
You should also keep these risk factors in mind when you read forward-looking statements. Risks Related to Our Financial Condition and Business Model We cannot assure you that we will be profitable. In the year ended December 31, 2024, we generated consolidated net income of $13.7 million, of which $13.6 million income was attributable to Travelzoo.
The Company already has in place applicable corporate governance processes and procedures necessary for a controlled company to ensure independence (e.g., board of directors with majority independent directors, committees comprised solely of independent directors, etc.). Holger Bartel, the Company’s Global Chief Executive Officer, is Ralph Bartel’s brother and holds approximately 3.8% of the Company’s outstanding shares.
The Company already has in place applicable corporate governance processes and procedures necessary for a controlled company to ensure independence (e.g., board of directors with majority independent directors, committees comprised solely of independent directors, etc.). Holger Bartel, the Company’s Global Chief Executive Officer, is Ralph Bartel’s brother and holds less than 1% of t he Company’s outstanding shares.
Risks Related to Investment in our Shares Our stock price has been volatile historically and may continue to be volatile. The trading price of our common stock has been and may continue to be subject to wide fluctuations. During the twelve months ended December 31, 2023, the closing price of our common stock on NASDAQ ranged from $4.51 to $10.45.
Risks Related to Investment in our Shares Our stock price has been volatile historically and may continue to be volatile. The trading price of our common stock has been and may continue to be subject to wide fluctuations. During the twelve months ended December 31, 2024, the closing price of our common stock on NASDAQ ranged from $7.12 to $22.44.
We have registered the Travelzoo and Jack’s Flight Club trademarks in various jurisdictions. If we are unable to protect our rights, a key element of our strategy could be disrupted and our business could be adversely affected. We may not always be able to detect unauthorized use or take appropriate steps to enforce our IP rights.
If we are unable to protect our rights, a key element of our strategy could be disrupted and our business could be adversely affected. We may not always be able to detect unauthorized use or take appropriate steps to enforce our IP rights.
Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, unexpected technical problems in the systems that power our websites and distribute our email newsletters, break-ins and similar events. Outages could cause significant interruptions of our service.
Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event. Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, unexpected technical problems in the systems that power our websites and distribute our email newsletters, break-ins and similar events. Outages could cause significant interruptions of our service.
We have implemented policies and procedures designed to ensure compliance, but there can be no assurance that our employees, contractors, partners, or agents will not violate such laws and regulations or the Company’s policies and procedures. The CARD Act and similar state and foreign laws may harm our Local Deals and Getaways business.
We have implemented policies and procedures designed to ensure compliance, but there can be no assurance that our employees, contractors, partners, or agents will not violate such laws and regulations or the Company’s policies and procedures.
Azzurro is the Company’s largest shareholder, and as of December 31, 2023, holds approximately 40.2% of the Company's outstanding shares.
Azzurro is the Company’s largest shareholder, and as of December 31, 2024, holds approximately 37.5% of the Company's outstanding shares.
The payable to merchants is generally due upon redemption of the voucher. The expiration dates of vouchers range between January 2024 through December 2025; however, these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration.
The expiration dates of vouchers are through December 2025; however, these expiration dates may sometimes be extended on a case-by-case basis and final payment may not be due for up to a year after expiration.
We believe that the Travelzoo mobile experience continues to present an opportunity for growth. Further development of and investment into our mobile offering is necessary to maintain and grow our business. It is increasingly important for us to develop and maintain effective mobile websites optimized for mobile devices.
Further development of and investment into our mobile offering is necessary to maintain and grow our business. It is increasingly important for us to develop and maintain effective mobile websites optimized for mobile devices.
In the year ended December 31, 2022, we generated consolidated net income of $6.6 million, of which $ 6.6 million income was attributable to Travelzoo . Our profitability was adversely impacted in 2022 and 2021 due to the global COVID pandemic. We forecast our future expense levels based on our operating plans and our estimates of future revenues.
In the year ended December 31, 2023, we generated consolidated net income of $12.5 million, of which $12.4 million income was attributable to Travelzoo. We forecast our future expense levels based on our operating plans and our estimates of future revenues.
We have experienced a significant shift of both business and traffic to mobile. The consumer experience with mobile applications, as well as brand recognition and loyalty, has become even more important. We also rely on application marketplaces, to drive downloads. In the future, marketplaces may make changes that make access to our products more difficult.
The consumer experience with mobile applications, as well as brand recognition and loyalty, has become even more important. We also rely on application marketplaces, to drive downloads. In the future, marketplaces may make changes that make access to our products more difficult. We believe that the Travelzoo mobile experience continues to present an opportunity for growth.
Additionally, in some of our contracts we or the other party have agreed to bidding restrictions. If bidding restrictions are held to be illegal or otherwise unenforceable, our performance marketing costs may increase if bidding on affected key words (especially those related to us) becomes more expensive, which could adversely affect our marketing efficiency and results of operations.
If bidding restrictions are held to be illegal or otherwise unenforceable, our performance marketing costs may increase if bidding on affected key words (especially those related to us) becomes more expensive, which could adversely affect our marketing efficiency and results of operations. 12 Trends in consumer use of mobile devices continue to create challenges.
In turn, that could have a negative impact on demand for our services. We are not in a position to evaluate the net effect of these circumstances as many of these events and developments cannot be reliably forecasted.
In turn, that could have a negative impact on demand for our services. We are not in a position to evaluate the net effect of these circumstances as many of these events cannot be reliably forecasted. In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall.
This format may require additional investments to maintain and grow the business including the hiring of additional sales personnel and additional spend on customer service, marketing, technology tracking systems and payment processing. Such vouchers had been typically non-refundable or refundable by the Company within 7-14 days of purchase.
This format may require additional investments to maintain and grow the business including the hiring of additional sales personnel and additional spend on customer service, marketing, technology tracking systems and payment processing.
Trends in consumer use of mobile devices continue to create challenges. Continued widespread use of mobile devices, smart phones, and tablets, coupled with improved web browsing functionality and development of thousands of useful “apps” available on these devices, has been driving substantial traffic and commerce activity to mobile.
Continued widespread use of mobile devices, smart phones, and tablets, coupled with improved web browsing functionality and development of thousands of apps available on these devices, has been driving substantial traffic and commerce activity to mobile. We have experienced a significant shift of both business and traffic to mobile.
However, if redemption activities are more accelerated, if our business is not profitable, and if our planned targets for cash flows from operations are not met, we may need to obtain additional financing in the future.
However, if redemption activities accelerate, if our business is not profitable, and if our planned targets for cash flows from operations are not met, we may need to obtain additional financing in the future. We may not be able to obtain financing on commercially reasonable terms, or at all, especially due to volatile market conditions.
This material weakness continued to exist as of December 31, 2023. We may be unable to protect our registered trademark or other proprietary intellectual property rights and may face liability from intellectual property litigation. Our success depends to a significant degree upon the protection of the Travelzoo brand name.
We may be unable to protect our registered trademark or other proprietary intellectual property rights and may face liability from intellectual property litigation. Our success depends to a significant degree upon the protection of the Travelzoo brand name. We rely on a combination of copyright and trademark laws, non-disclosure and other contractual arrangements to protect our intellectual property (“IP”) rights.
We may in the future invest in upgraded technology for our email 12 products or invest in completely new technology or products. Such product modifications and expansions may result in an increase in costs in the near-term and an increase in cost structure in the long-term, which may be in excess of incremental revenue.
Such 11 product modifications and expansions may result in an increase in costs in the near-term and an increase in cost structure in the long-term, which may be in excess of incremental revenue.
If our revenues grow at a slower rate than we anticipate or decline, or if our spending levels exceed expectations or cannot be adjusted to reflect slower growth, we may not be profitable. Fluctuations in our operating results may negatively impact our stock price.
We may also expand, upgrade and/or add technology and make investments in existing or new products that may impact our profitability. If our revenues grow at a slower rate than we anticipate or decline, or if our spending levels exceed expectations or cannot be adjusted to reflect slower growth, we may not be profitable.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues or our expenses in any particular period. You should not rely on our quarter to quarter comparisons of our results of operations, as they are not considered an indication of future performance.
Fluctuations in our operating results may negatively impact our stock price. Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues or our expenses in any particular period.
We rely on a combination of copyright and trademark laws, non-disclosure and other contractual arrangements to protect our intellectual property (“IP”) rights. The steps we have taken to protect our IP rights, however, may not always succeed in deterring misappropriation of proprietary information or preventing improper utilization of the Travelzoo brand name.
The steps we have taken to protect our IP rights, however, may not always succeed in deterring misappropriation of proprietary information or preventing improper utilization of the Travelzoo brand name. We have registered the Travelzoo and Jack’s Flight Club trademarks in various jurisdictions.
For the annual impairment test in 2022, we recorded a $200,000 impairment charge in connection with the indefinite lived intangible assets (JFC Trade name). The determination of fair value reflects numerous assumptions that are subject to various risks and uncertainties. It requires significant judgments and estimates and actual results could be materially different.
The determination of fair value reflects numerous assumptions that are subject to various risks and uncertainties. It requires significant judgments and estimates and actual results could be materially different.
We therefore pivoted back to 14 day voucher refundability in April 2022, but also added a surcharge option, where members can pay an extra fee for full refundability of the voucher.
Our vouchers typically have a 14-day refundability period, but as of April 2022, also have a surcharge option, where members can pay an extra fee for full refundability of the voucher. However, since before 2021, we have seen a general decline in demand for voucher products.
Given the challenges inherent in identifying these members, we do not have a reliable system to accurately identify the number of actual individual members, and thus we rely on the number of total members shown on our records as our measure of the size of our member base.
Given the challenges inherent in identifying these individuals, we do not have a reliable system to accurately identify the true reach, and thus we rely on the reach shown in our records. In addition, the reach we report includes the total number of individuals that have completed registration through a specific date, less individuals who have fully unsubscribed.
Our reported total number of members may be higher than the number of our actual individual members and may not be representative of the number of persons who are active potential customers.
Our reported reach may be higher than the actual reach and may not be representative of the number of persons who are active potential customers. The total reach we report may be higher than the actual reach due to multiple registrations, death/incapacity, fictitious names or email addresses not in use, or different preferences for email communications.
As a result, the reported number of members should not be considered as representative of the number of persons who continue to actively consider our deals by reviewing our email offers. We may not be able to obtain sufficient funds to grow our business and equity or debt financing may be on adverse terms.
Those numbers may include individuals who do not receive our emails because our emails have been blocked or are otherwise undeliverable. As a result, the reported number should not be considered as representative of the number of persons who continue to actively consider our deals by reviewing our email offers.
However, we may be obligated to evaluate our internal control over financial reporting if we were no longer a s maller reporting company and if we identify areas of internal control that may need improvement or require remediation efforts.
However, we may be obligated to do so if we were no longer a smaller reporting company.
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We may also expand, upgrade and/or add technology and make investments in existing or new products (including, but not limited to the move to a paid membership model) that may impact our profitability.
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You should not rely on our quarter to quarter comparisons of our results of operations, as they are not considered an indication of future performance.
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We previously expanded our voucher offering to include fully refundable vouchers and later added a surcharge option where members can pay extra for full refundability. We have historically invested in packaging technology and expansion of our hotel booking platform.
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In Q4 2024, we introduced additional member benefits, including but not limited to, Club Offers, early access to the Top 20, airport lounge access for delayed flights and a weekly giveaway.
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In March 2020, the Company expanded its voucher products to include fully refundable vouchers, which allowed the consumer to request a refund through the expiration date of the voucher. This shift increased the rate at which our existing customers purchased vouchers. However, as market conditions have continued to shift, we have seen a decline in demand for vouchers again.
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The voucher product typically has a 14-day refund policy, but we may in the future alter or update the product, including refund windows, or invest in upgraded technology or new technology or products.
Removed
It is also possible that travel restrictions may change again, resulting in consumers being unable to utilize their vouchers in the near-term or at all, meaning we would need to again work with partners to extend travel windows and expiration dates or reinstate full refundability without a surcharge.
Added
Additionally, in some of our contracts we or the other party have agreed to bidding restrictions.
Removed
The total number of members we report may be higher than the number of our actual individual members because some members have multiple registrations, other members have died or become incapacitated and others may have registered under fictitious names or with email addresses they no longer use, and different members may have selected different preferences for email communications.
Added
As of December 31, 2024, we had negative working capital of $4.7 million. Merchant payables was $16.3 million as of December 31, 2024. The payable to merchants is generally due upon redemption of the voucher.
Removed
In addition, the number of members we report includes the total number of individuals that have completed registration through a specific date, less individuals who have fully unsubscribed. Those numbers of members may include individuals who do not receive our emails because our emails have been blocked or are otherwise undeliverable.
Added
However, we cannot predict what, when and how the new administration in the U.S. may take actions to rollback or otherwise revise existing laws, rules or regulations focused on ESG.
Removed
We did receive certain subsidies, tax relief or other financial aid from various governmental programs relating to COVID (particularly in the US, Canada, UK and Germany), however, we repaid back any funds received that were required to be repaid.
Added
Federal Trade Commission and certain states (including California and Minnesota) have introduced or are considering laws aimed at eliminating or regulating "junk fees" that require us to include all mandatory, non-governmental fees and charges in the prices we display, even though these are set by our partners.
Removed
We may have been required to agree to certain restrictions, audit requirements and/or obligations to reimburse support payments in part or in total, which could negatively impact the business. We may not be able to obtain financing on commercially reasonable terms, or at all, especially due to volatile market conditions.
Added
In particular, we cannot predict what, when and how the new administration in the U.S. may take actions to rollback or otherwise revise existing laws or regulations, or the ultimate impact such changes may have on our results of operations. 20 The CARD Act and similar state and foreign laws may harm our Local Deals and Getaways business.
Removed
In the longer term, our business might be negatively affected by financial pressures on or changes to the travel industry and the economy overall. Our operations could be significantly hindered by the occurrence of a natural disaster or other catastrophic event.
Added
We are unable to predict if we may have future ineffective controls and procedures, if we 22 will be able to effectively and efficiently remediate any such deficiencies and whether these deficiencies or the corresponding remediation efforts could result in a negative impact to our business.
Removed
Claims have been asserted against us relating to shares not issued in our 2002 merger. In 2002, Travelzoo.com Corporation (“Netsurfers”) was merged into Travelzoo.
Removed
Under and subject to the terms of the merger agreement, holders of promotional shares of Netsurfers who established that they had satisfied certain prerequisites were allowed a period of 2 years following the effective date of the merger to receive one share of Travelzoo in exchange for each share of common stock of Netsurfers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−0 removed17 unchanged
Biggest changeSeparately from the Incident Response Team, the Company requires all employees to complete an annual security training and the Company’s Head of Corporate Systems evaluates security features and compliance with security requirements by employees on an ongoing basis, in consultation with legal. 25 Given the importance of our member data, the Company has also appointed an internal Data Protection Officer (DPO), who is a member of the Company’s legal function and who has received outside training and qualifications.
Biggest changeSeparately from the Incident Response Team, the Company requires all employees to complete an annual security training and the Company’s Head of Corporate Systems evaluates security features and compliance with security requirements by employees on an ongoing basis, in consultation with legal.
We do not believe these cybersecurity incidents have had a materially adverse effect on our Company, including our business strategy, results of operations, or financial condition. For further discussion, please review our Risk Factors. Governance The Board, in coordination with the Audit Committee, oversees the Company’s risk management program, which includes evaluation of material cybersecurity-related risks as needed.
We do not believe these cybersecurity incidents have had a materially adverse effect on our Company, including our business strategy, results of operations, or financial condition. For further discussion, please review our Risk Factors. 24 Governance The Board, in coordination with the Audit Committee, oversees the Company’s risk management program, which includes evaluation of material cybersecurity-related risks as needed.
Added
Given the importance of our member data, the Company has also appointed an internal Data Protection Officer (DPO), who is a member of the Company’s legal function and who has received outside training and qualifications.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed4 unchanged
Biggest changeHigh Low 2023: Fourth Quarter $ 10.45 $ 5.08 Third Quarter $ 8.83 $ 5.83 Second Quarter $ 10.42 $ 5.64 First Quarter $ 6.04 $ 4.51 2022: Fourth Quarter $ 6.35 $ 4.11 Third Quarter $ 6.80 $ 4.43 Second Quarter $ 8.04 $ 5.71 First Quarter $ 10.33 $ 5.30 O n March 18, 2024, the last reported sales price of our common stock on the NASDAQ Global Select Market was $10.35 per share.
Biggest changeHigh Low 2024: Fourth Quarter $ 22.44 $ 11.37 Third Quarter $ 15.23 $ 7.12 Second Quarter $ 10.65 $ 7.39 First Quarter $ 11.23 $ 8.02 2023: Fourth Quarter $ 10.45 $ 5.08 Third Quarter $ 8.83 $ 5.83 Second Quarter $ 10.42 $ 5.64 First Quarter $ 6.04 $ 4.51 On March 17, 2025, the last reported sales price of our common stock on the NASDAQ Global Select Market was $14.42 per share.
Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023.
Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024.
Measurement Point 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Travelzoo $ 100 $ 109 $ 96 $ 96 $ 45 $ 97 NASDAQ Market Index $ 100 $ 135 $ 194 $ 236 $ 158 $ 226 Russell 2000 Index $ 100 $ 124 $ 146 $ 167 $ 131 $ 150
Measurement Point 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Travelzoo $ 100 $ 109 $ 96 $ 96 $ 45 $ 97 $ 202 NASDAQ Market Index $ 100 $ 135 $ 194 $ 236 $ 158 $ 226 $ 291 Russell 2000 Index $ 100 $ 124 $ 146 $ 167 $ 131 $ 150 $ 165
The Shares were registered by the Company pursuant to an S-3 registration statement made effective on February 15, 2023. Repurchases of Equity Securities We repurchased 600,000 of our equity securities during the quarter ended December 31, 2023.
The Shares were registered by the Company pursuant to an S-3 registration statement made effective on February 15, 2023. Repurchases of Equity Securities We repurchased 135,792 of our equity securities during the quarter ended December 31, 2024.
As of March 18, 2024, there were approximately 175 stockholders of record of our shares. Dividend Policy Travelzoo has not declared or paid any cash dividends since inception and does not expect to pay cash dividends for the foreseeable future.
As of March 17, 2025, there were approximately 161 stockholders of record of our shares. Dividend Policy Travelzoo has not declared or paid any cash dividends since inception and does not expect to pay cash dividends for the foreseeable future.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Shares that May Yet be Purchased Under the Programs October 1, 2023 - October 31, 2023 107,065 $ 7.04 107,065 892,935 November 1, 2023 - November 30, 2023 377,527 $ 8.25 377,527 515,408 December 1, 2023 - December 31, 2023 115,408 $ 9.95 115,408 400,000 600,000 600,000 27 Performance Graph The following graph compares, for the dates specified, the cumulative total stockholder return for Travelzoo, the NASDAQ Composite Index (the “NASDAQ Market Index”), and the Russell 2000 Index.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Shares that May Yet be Purchased Under the Programs October 1, 2024 - October 31, 2024 52,418 $ 16.64 52,418 947,582 November 1, 2024 - November 30, 2024 83,374 $ 17.51 83,374 864,208 December 1, 2024 - December 31, 2024 0 $ — 0 864,208 135,792 135,792 26 Performance Graph The following graph compares, for the dates specified, the cumulative total stockholder return for Travelzoo, the NASDAQ Composite Index (the “NASDAQ Market Index”), and the Russell 2000 Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+14 added−34 removed58 unchanged
Biggest changeWe do not know if we will have market acceptance of our new products or whether the market will continue to accept our existing products. 33 Results of Operations The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated. 2023 2022 Revenues 100.0 % 100.0 % Cost of revenues 12.9 14.2 Gross profit 87.1 85.8 Operating expenses: Sales and marketing 44.7 46.8 Product development 2.5 2.9 General and administrative 21.4 25.4 Total operating expenses 68.6 75.1 Operating income 18.5 10.7 Other income, net 1.7 3.4 Income from continuing operations before income taxes 20.2 14.1 Income tax expense 6.0 4.6 Income from continuing operations 14.2 9.5 Income (loss) from discontinued operations, net of tax 0.5 (0.1) Net income 14.7 9.4 Net income attributable to non-controlling interest 0.1 — Net income attributable to Travelzoo 14.6 % 9.4 % Net income attributable to Travelzoo—continuing operations 14.1 % 9.5 % Net income (loss) attributable to Travelzoo—discontinued operations 0.5 % (0.1) % 34 Operating Metrics The following table sets forth operating metrics in Travelzoo North America, Travelzoo Europe, and Jack's Flight Club: Years Ended December 31, 2023 2022 Travelzoo North America Total members (1) 16,238,000 16,251,000 Average cost per acquisition of a new member $ 2.81 $ 2.81 Revenue per member (2) $ 3.45 $ 2.82 Revenue per employee (3) $ 456 $ 381 Mobile application downloads 4,158,000 4,126,000 Social media followers 3,300,000 3,185,000 Travelzoo Europe Total members (1) 9,225,000 9,029,000 Average cost per acquisition of a new member $ 3.32 $ 2.08 Revenue per member (2) $ 2.66 $ 2.32 Revenue per employee (3) $ 240 $ 193 Mobile application downloads 2,356,000 2,335,000 Social media followers 981,000 938,000 Jack's Flight Club Total members 2,407,000 1,905,000 Consolidated Total members (1) 31,097,000 30,404,000 Average cost per acquisition of a new member $ 3.02 $ 2.36 Revenue per member (2) $ 2.78 $ 2.32 Revenue per employee (3) $ 359 $ 297 Mobile application downloads 7,524,000 6,461,000 Social media followers 4,499,000 4,123,000 (1) Members represent individuals who are signed up to receive one or more of our email publications that present our travel, entertainment and local deals.
Biggest changeWe do not know if we will have market acceptance of our new products or whether the market will continue to accept our existing products. 31 Results of Operations The following table sets forth, as a percentage of total revenues, the results from our operations for the periods indicated. 2024 2023 Revenues 100.0 % 100.0 % Cost of revenues 12.5 12.9 Gross profit 87.5 87.1 Operating expenses: Sales and marketing 41.1 44.7 Product development 2.9 2.5 General and administrative 21.5 21.4 Total operating expenses 65.5 68.6 Operating income 22.0 18.5 Other income, net 0.7 1.7 Income from continuing operations before income taxes 22.7 20.2 Income tax expense 6.4 6.0 Income from continuing operations 16.3 14.2 Income from discontinued operations, net of tax — 0.5 Net income 16.3 14.7 Net income attributable to non-controlling interest 0.1 0.1 Net income attributable to Travelzoo 16.2 % 14.6 % Net income attributable to Travelzoo—continuing operations 16.2 % 14.1 % Net income attributable to Travelzoo—discontinued operations — % 0.5 % 32 Revenues The following table sets forth the breakdown of revenues (in thousands) by category Advertising, Membership Fees, and Other.
Factors relating to members include their willingness to purchase the deals we advertise, their demand for vouchers as a promotional format, and with the introduction of membership fees for new members in 2024 and existing members in 2025, our ability to enroll new paying members and transition existing members to paid membership, without adversely affecting our membership base and existing advertising revenue streams.
Factors relating to members include their willingness to purchase the deals we advertise, their demand for vouchers as a promotional format, and with the introduction of membership fees for new members in 2024 and existing members in 2025, our 29 ability to enroll new paying members and transition existing members to paid membership, without adversely affecting our membership base and existing advertising revenue streams.
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.
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 36 required to agree to operating covenants that would restrict our operations.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. Significant judgment is required in evaluating the Company's uncertain tax positions and determining the Company's provision for income taxes.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. 37 Significant judgment is required in evaluating the Company's uncertain tax positions and determining the Company's provision for income taxes.
See Note 7— Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence for further information. Critical Accounting Policies and Estimates We prepare our consolidated financial statements and accompanying notes in accordance with GAAP .
See Note 6— Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence for further information. Critical Accounting Policies and Estimates We prepare our consolidated financial statements and accompanying notes in accordance with GAAP .
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 and payment of membership fees, changes in refund request trends and provisioning of customer service.
Our cost of revenues may change in relation to volume and terms with third-party partners of the Travelzoo network, incurring merchant processing fees from the sale of vouchers for Local Deals and Getaways and payment of membership fees, changes in refund request trends and provisioning of customer service.
Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 12– Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein .
Financial information with respect to our business segments and certain financial information about geographic areas appears in Note 11– Segment Reporting and Significant Customer Information to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein .
The information set forth unde r “Note 6— Commitments and Contingencies ” and “Note 14— Leases ” to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein by refer ence.
The information set forth unde r “Note 5— Commitments and Contingencies ” and “Note 14— Leases ” to the accompanying consolidated financial statements included in Part II, Item 8 of this report is incorporated herein by refer ence.
Based on current projections of redemption activity, we expect that cash and cash equivalents on hand as of December 31, 2023 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 and cash equivalents on hand as of December 31, 2024 will be sufficient to provide for working capital needs for at least the next twelve months.
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. The Company recognized $71,000 and $25,000 in royalties in 2023 and 2022, respectively.
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. The Company recognized $71,000 and $71,000 in royalties in 2024 and 2023, respectively.
See Note 7– Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence.
See Note 6– Income Taxes to the accompanying consolidated financial statements included in Part II, Item 8 of this report which is incorporated herein by refer ence.
For the year ended December 31, 2023, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack's Flight Club comprised 5% of revenues.
For the year ended December 31, 2024, Travelzoo North America operations comprised 66% of revenues, Travelzoo Europe operations comprised 29% of revenues and Jack's Flight Club comprised 5% of revenues.
For the years ended December 31, 2023 and 2022, advertising expenses accounted for 26% and 21%, respectively, of total sales and marketing expenses. The goal of our advertising is to acquire new members, increase our audience through mobile and social media channels, drive traffic to our websites and increase brand awareness.
For the years ended December 31, 2024 and 2023, advertising expenses accounted for 13% and 26%, respectively, of total sales and marketing expenses. The goal of our advertising is to acquire new members, increase our audience through mobile and social media channels, drive traffic to our websites and increase brand awareness.
General and Administrative General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, professional service expenses, legal expenses, amortization of intangible assets, general office expense, facilities costs and bad debt expense. General and administrative expenses were $18.1 million and $17.9 million for the years ended 2023 and 2022, respectively.
General and Administrative General and administrative expenses consist primarily of salary and related expenses associated with administrative and executive employees, professional service expenses, legal expenses, amortization of intangible assets, general office expense, facilities costs and bad debt expense. General and administrative expenses were $18.1 million and $18.1 million for the years ended 2024 and 2023, respectively.
Cost of revenues as a percent of revenues declined from 14.2% in 2022 to 12.9% in 2023. Operating Expenses Sales and Marketing 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 participation in industry conferences, public relations expenses and facilities costs.
Cost of revenues as a percent of revenues declined from 12.9% in 2023 to 12.5% in 2024. Operating Expenses Sales and Marketing 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 participation in industry conferences, public relations expenses and facilities costs.
Income tax expense was $5.1 million and $3.3 million, respectively, for the years ended December 31, 2023 and 2022. Our effective tax rate was 30% and 33% for 2023 and 2022, respectively. Our effective tax rate decreased for 2023 as compared to 2022, primarily due to a decrease in non-deductible stock compensation .
Income tax expense was $5.4 million and $5.1 million, respectively, for the years ended December 31, 2024 and 2023. Our effective tax rate was 28.3% and 30% for 2024 and 2023, respectively. Our effective tax rate decreased for 2024 as compared to 2023, primarily due to a decrease in non-deductible stock compensation .
Revenues generated from these products are based upon a percentage of the face value of the vouchers sold, commission on actual sales or a listing fee based on audience reach. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails.
Revenues generated from local business offers are based upon a percentage of the face value of the vouchers sold, commission on actual sales or a listing fee based on audience reach. We recognize revenue upon the sale of vouchers, upon notification of the amount of direct bookings or upon delivery of emails.
Cash paid for income tax, net of refunds received, in 2022 was $1.1 million. Net cash used in investing activities for 2023 was $39,000 which consisted of $255,000 for purchases of property and equipment and $216,000 proceeds from repayment of note receivable from a licensee.
Cash received for income tax refunds, net of payments in 2023, was $1,000. Net cash used in investing activities for 2024 was $177,000 for purchases of property and equipment. Net cash used in investing activities for 2023 was $39,000 which consisted of $255,000 for purchases of property and equipment and $216,000 proceeds from repayment of note receivable from a licensee.
Sales and marketing expenses were $37.8 million and $33.1 million for the years ended December 31, 2023 and 2022, respectively. Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs.
Sales and marketing expenses were $34.5 million and $37.8 million for the years ended December 31, 2024 and 2023, respectively. Advertising expenses consist primarily of online advertising, which we refer to as user acquisition costs and member acquisition costs.
Sales and marketing expenses as a percent of revenues declined from 46.8% in 2022 to 44.7% in 2023. Product Development 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.
Sales and marketing expenses as a percent of revenues declined from 44.7% in 2023 to 41.1% in 2024. 33 Product Development 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.
For 2023 and 2022, none of our customers accounted for 10% or more of our revenue. 36 Cost of Revenues Cost of revenues consists primarily of network expenses, including fees for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network , amortization of capitalized website development costs, software license expenses, merchant processing fees, certain estimated refunds for member purchases of vouchers, customer service costs and salary expenses associated with network operations and customer service employees.
Cost of Revenues Cost of revenues consists primarily of network expenses, including fees for co-location services and depreciation and maintenance of network equipment, payments made to third-party partners of the Travelzoo Network , amortization of capitalized website development costs, software license expenses, merchant processing fees, certain estimated refunds for member purchases of vouchers, customer service costs and salary expenses associated with network operations and customer service employees.
Product development expenses were $2.1 million for each of the years ended December 31, 2023 and 2022, respectively. Product development expenses increased modestly by $49,000, or 2.4%, in 2023 as compared to 2022, primarily due to increased salary and related expenses. Product development expenses as a percent of revenues declined from 2.9% in 2022 to 2.4% in 2023.
Product development expenses were $2.4 million and $2.1 million for each of the years ended December 31, 2024 and 2023, respectively. Product development expenses increased by $300,000, or 14%, in 2024 as compared to 2023, primarily due to increased salary and related expenses. Product development expenses as a percent of revenues were 2.9% and 2.5% in 2024 and 2023, respectively.
Cash used in operating assets and liabilities was primarily due to a $12.1 million decrease in merchant payables, offset partially by a $3.8 million decrease in prepaid expenses and other, $2.4 million increase in other liabilities and $1.2 million decrease in prepaid income taxes.
Cash used in operating assets and liabilities was primarily due to a $12.1 million decrease in merchant payables, offset partially by a $3.8 million decrease in prepaid expenses and other, $2.4 million increase in other liabilities and $1.2 million decrease in prepaid income taxes. Cash paid for income tax, net of refunds received, in 2024, was $1.9 million.
Travelzoo Europe consists of the Company’s operations in France, Germany, Spain and the U.K. Jack’s Flight Club consists of subscription revenues from premium members to access and receive flight deals from Jack’s Flight Club via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, the Travelzoo META subscription service and MTE.
Jack’s Flight Club consists of subscription revenues from premium members to access and receive flight deals from Jack’s Flight Club via email or mobile applications. New Initiatives consists of Travelzoo’s licensing business, the Travelzoo META subscription service and MTE.
The vouchers expire between January 2024 through December 2025; however these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration.
Payables to merchants are generally due upon redemption of vouchers. The vouchers expire through December 2025; however these expiration dates may sometimes be extended on a case-by-case basis and final payment upon expiration may not be due for up to a year after expiration.
All else equal, increased competition may require us to increase advertising for our brand and advertisers’ deals. 32 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.
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.
Jack’s Flight Club cost of sales and operating expenses increased $718,000 in 2023 as compared to 2022, primarily due to an increase in advertising and marketing expenses.
Jack’s Flight Club cost of sales and operating expenses increased $690,000 in 2024 as compared to 2023, primarily due to an increase in headcount to support Canadian expansion and advertising and marketing expenses.
Liquidity and Capital Resources As of December 31, 2023, we had $15.7 million of cash and cash equivalents , of which $10.7 million was held outside the U.S., and we had $675,000 in restricted cash held in the U.S.
Liquidity and Capital Resources As of December 31, 2024, we had $17.1 million of cash and cash equivalents , of which $13.8 million was held outside the U.S., and we had $675,000 in restricted cash held in the U.S.
The following table provides a summary of our cash flows from operating, investing and financing activities: Year Ended December 31, 2023 2022 (In thousands) Net cash provided by (used in) operating activities $ 10,675 $ (23,121) Net cash used in investing activities (39) (1,315) Net cash provided by (used in) financing activities (14,150) 1,282 Effect of exchange rate changes on cash, cash equivalents and restricted cash 525 (2,457) Net decrease in cash, cash equivalents and restricted cash $ (2,989) $ (25,611) Net cash provided by operating activities for 2023 was $10.7 million, consisting of net income of $12.5 million and $2.4 million adjustments for non-cash items, offset partially by $4.2 million used in changes in operating assets and liabilities.
The following table provides a summary of our cash flows from operating, investing and financing activities: Year Ended December 31, 2024 2023 (In thousands) Net cash provided by operating activities $ 21,100 $ 10,675 Net cash used in investing activities (177) (39) Net cash used in financing activities (18,973) (14,150) Effect of exchange rate changes on cash, cash equivalents and restricted cash (599) 525 Net increase (decrease) in cash, cash equivalents and restricted cash $ 1,351 $ (2,989) Net cash provided by operating activities for 2024 was $21 million, as compared to $10.7 million in 2023, consisting of net income of $13.7 million, $2 million of adjustments for non-cash items and $5.4 million used in changes in operating assets and liabilities.
Net cash used in investing activities for 2022 was $1.3 million, which consisted of $1.0 million for purchases of intangible assets and $462,000 for purchases of property and equipment. Net cash used in financing activities for 2023 was $14.2 million, which primarily consisted of $16.8 million for the repurchase of common stock and $3.0 million payment of promissory notes.
Net cash used in financing activities for 2024 was $19 million primarily for the repurchase of common stock. Net cash used in financing activities for 2023 was $14.2 million, which primarily consisted of $16.8 million for the repurchase of common stock and $3.0 million payment of promissory notes.
The Company recognized royalties of $35,000 and $25,000 from the licensee for the years ended December 31, 2023 and 2022, respectively. 29 The license agreement for Japan and South Korea provides the licensee exclusive rights to use Travelzoo products, services, and intellectual property in exchange for quarterly royalty payments based on net revenue over a 5 year term, with an option to renew.
The license agreement for Japan and South Korea provides the licensee exclusive rights to use Travelzoo products, services, and intellectual property in exchange for quarterly royalty payments based on net revenue over a 5 year term, with an option to renew.
In addition, there may be a significant number of members that cancel or we may cancel their subscriptions for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.
However, as we test new strategies and gain more learnings as to acquiring paying members, our expenditures may increase significantly. In addition, there may be a significant number of members that cancel or we may cancel their subscriptions for various reasons, which may prompt us to spend more on member acquisition in order to replace lost members.
Reportable Segments The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business. The Company currently has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada.
The Company currently has four reportable operating segments: Travelzoo North America, Travelzoo Europe, Jack’s Flight Club and New Initiatives. Travelzoo North America consists of the Company’s operations in the U.S. and Canada. Travelzoo Europe consists of the Company’s operations in France, Germany, Spain and the U.K.
To the extent the final tax outcomes of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.
To the extent the final tax outcomes of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as related net interest.
The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as related net interest. 41 Recent Accounting Pronouncements For a discussion of the recent accounting pronouncements, see Note 1 — Basis of Presentation and Summary of Significant Accounting Policies of the notes to consolidated financial statements in Part II Item 8 of this Annual Report on Form 10-K.
Recent Accounting Pronouncements For a discussion of the recent accounting pronouncements, see Note 1 — Basis of Presentation and Summary of Significant Accounting Policies of the notes to consolidated financial statements in Part II Item 8 of this Annual Report on Form 10-K.
We monitor our membership base to assess our efforts to maintain and grow our audience reach. We obtain additional members and activity on our websites by acquiring traffic from Internet search companies.
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 activity on our websites by acquiring traffic from Internet search companies.
If we are able to increase the reach of our publications, we still may not be able to or want to increase rates given market conditions, including intense competition in our industry. Even if we increase our rates, the increased price may reduce the number of advertisers willing to advertise with us and could, therefore, decrease our revenue.
We therefore also do not know if we will be able to increase the reach of our engagement with our publications. Even if we are able to increase the reach of our publications, we still may not be able to or want to increase rates given market conditions, including intense competition in our industry.
New Initiatives Year Ended December 31, 2023 2022 (In thousands) Revenues $ 204 $ 25 Income from operations $ (976) $ (988) New Initiatives revenues increased $179,000 in 2023 as compared to 2022 . New Initiatives cost of sales and operating expenses increased $167,000 in 2023 as compared to 2022, primarily due to increased product advertising and marketing expenses.
New Initiatives Year Ended December 31, 2024 2023 (In thousands) Revenues $ 107 $ 204 Loss from operations $ (510) $ (976) New Initiatives revenues decreased $97,000 in 2024 as compared to 2023. New Initiatives cost of sales and operating expenses decreased $604,000 in 2024 as compared to 2023, primarily due to decreases in sales and marketing and headcount.
How We Generate Revenues Travelzoo Revenues from the Travelzoo brand and business are generated primarily from advertising fees from two categories of revenue: Travel and Local. The “Travel” category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties and (b) commission generated from the sale of Getaways vouchers.
The "Advertising" category consists primarily of (a) advertising fees paid by travel companies for the publishing of their offers on Travelzoo’s media properties, (b) commission 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.
Cash, cash equivalents and restricted cash decreased by $3.0 million to $16.4 million as of December 31, 2023 from $19.4 million as of December 31, 2022, primarily due to $16.8 million of cash used to repurchase common stock, offset partially by $10.7 million of cash provided by operating activities and $3.0 million payment of promissory notes.
Cash, cash equivalents and restricted cash increased by $1.3 million to $17.7 million as of December 31, 2024 from $16.4 million as of December 31, 2023, primarily due to cash provided by operating activities, offset partially by cash used to repurchase common stock. 35 As of December 31, 2024 , we had m erchant payables of $16.3 million related to unredeemed vouchers.
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. Due to the adverse effects of the global pandemic, the Company reduced expenditures in many areas, including but not limited to, marketing, technology and human resources.
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.
Travel revenue includes travel publications ( Top 20, Standalone emails, Website, Travelzoo Network ), Getaways vouchers, and hotel platform and vacation package bookings. Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).
Advertising includes travel publications ( Top 20 , Travelzoo website, Standalone email newsletters, Travelzoo Network ), Getaways vouchers, hotel platform, vacation packages, Local Deals vouchers and entertainment offers (vouchers and direct bookings). Membership Fees includes subscription fees paid by Travelzoo, Jack’s Flight Club and Travelzoo META members.
Segment Information Travelzoo North America Year Ended December 31, 2023 2022 (In thousands) Revenues $ 56,080 $ 47,642 Income from operations $ 15,254 $ 10,348 Income from operations as a % of revenues 27 % 22 % North America revenues increased $8.4 million, or 17.7%, in 2023 as compared to 2022 (see “Revenues” above).
Segment Information Travelzoo North America Year Ended December 31, 2024 2023 (In thousands) Revenues $ 55,092 $ 56,080 Income from operations $ 15,883 $ 15,254 Income from operations as a % of revenues 29 % 27 % North America revenues decreased $988,000, or 1.8%, in 2024 as compared to 2023.
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. Initially, we are reducing our advertising expenditures, as we are no longer offering free memberships for new members and, accordingly, prior user acquisition strategies are not in use.
Initially, we are reducing our advertising expenditures, as we are no longer offering free memberships for new members 30 and, accordingly, prior user acquisition strategies are not in use. Further, we are early in the development of new strategies to acquire paying members, so our test budgets have not yet fully scaled.
Other Income, net Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for Corona-related pandemic relief, interest income and interest expense.
General and administrative expenses remained flat year-over-year. Other Income, net Other income, net consisted primarily of foreign exchange transactions gains and losses, sublease income, German federal government funding for Corona-related pandemic relief, interest income and interest expense. Other income was $588,000 and $1.5 million for the years ended December 31, 2024 and 2023, respectively.
Jack's Flight Club Year Ended December 31, 2023 2022 (In thousands) Revenues 4,172 $ 3,477 Loss from operations $ (23) $ — Loss from operations as a % of revenues (1) % — % 38 Jack’s Flight Club revenues in creased $695,000, or 20.0%, in 2023 as compared to 2022 .
Jack's Flight Club Year Ended December 31, 2024 2023 (In thousands) Revenues 4,632 $ 4,172 Income (Loss) from operations $ 44 $ (23) Income (Loss) from operations as a % of revenues 1 % (1) % Jack’s Flight Club revenues increased $460,000, or 11%, in 2024 as compared to 2023 due to increase of subscription fees and increase of premium members.
The decrease in cash from changes in operating assets and liabilities was primarily due to $35.2 million decrease in merchant payables, offset partially by $1.6 million decrease in prepaid expenses and other, $1.5 million decrease in prepaid income tax and $1.3 million decrease in accounts receivables.
Cash used in operating assets and liabilities was primarily due to a $4.1 million decrease in merchant payables, offset partially by a $950,000 decrease in prepaid expenses and other and $1.9 million increase in other liabilities.
Foreign currency movement s relative to the U.S. dollar negatively impacted local currency income from our operations in Europe by approximately $40,000 and $246,000 in 2023 and 2022, respectively.
Europe cost of sales and operating expenses decreased $2.9 million in 2024 as compared to 2023, primarily due to decreased member acquisition costs. Foreign currency movements relative to the U.S. dollar impacted local currency income from our operations in Europe by approximately $106,000 and negatively $40,000 in 2024 and 2023, respectively.
Travelzoo® provides its 30 million members with exclusive offers and one-of-a-kind experiences personally reviewed by our deal experts around the globe. We have our finger on the pulse of outstanding travel, entertainment and local experiences. We work in partnership with more tha n 5,000 top travel suppliers—our long-standing relationships give Travelzoo members access to irresistible offers.
We reach 30 million travelers. Club Members receive Club Offers personally reviewed by our deal experts around the globe. We work in partnership with thousands of top travel suppliers—our long-standing relationships give us access to irresistible deals.
As of December 31, 2023 , we had m erchant payables of $20.6 million related to unredeemed vouchers. In the Company’s financial statements presented in this 10-K report, following U.S. generally accepted accounting principles (“GAAP”), we classified all merchant payables as current.
In the Company’s financial statements presented in this 10-K report, following U.S. generally accepted accounting principles (“GAAP”), we classified all merchant payables as current. When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $4.7 million .
Net cash used in operating activities for 2022 was $23.1 million, which consisted of $30.4 million decrease in cash from changes in operating assets and liabilities, offset partially by net income of $6.6 million and $684,000 increase in non-cash 39 items.
Net cash provided by operating activities for 2023 was $10.7 million, consisting of net income of $12.5 million and $2.4 million adjustments for non-cash items, offset partially by $4.2 million used in changes in operating assets and liabilities.
Adjustments for non-cash items primarily consisted of $2.2 million for depreciation and amortization, $1.8 million for stock-based compensation and $774,000 for deferred income tax, offset partially by $4.4 million reversal of reserves from accounts receivable and other reserves. Cash refunds received for income tax, net of payment made, in 2023 was $1,000.
Adjustments for non-cash items primarily consist of $907,000 for depreciation and amortization and $1.6 million for stock-based compensation, offset partially by $518,000 of deferred income tax change.
We may need to decrease our rates based on competitive market conditions and the performance of our audience in order to maintain or grow our revenue. We do not know what our cost of revenues as a percentage of revenues will be in future periods.
We do not know what our cost of revenues as a percentage of revenues will be in future periods.
Cost of revenues was $10.9 million and $10.0 million for the years ended December 31, 2023 and 2022, respectively.
Cost of revenues was $10.5 million and $10.9 million for the years ended December 31, 2024 and 2023, respectively. Cost of revenues decreased $465,000 for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to a decrease in software and license costs .
We do not know if we will be able to increase the reach of our publications, particularly with the introduction of membership fees in 2024. We do not know if by increasing the reach of our publications, we will also be able to increase engagement and other key metrics of importance to our advertisers.
With the introduction of a membership fee in 2024, the main way in which we will increase our reach and our engagement is by acquiring new Club Members, or paying members. We do not know if we will be able to efficiently or effectively acquire Club Members at sufficient volumes.
North America cost of sales and operating expenses increased by $3.5 million in 2023 as compared to 2022, primarily due to a $1.5 million increase in member acquisition costs, $1.2 million increase in salary and related expenses and $943,000 increase in member acquisition costs.
North America cost of sales and operating expenses decreased by $1.9 million in 2024 as compared to 2023, primarily due to a $2.5 million decrease in member acquisition costs and $631K decrease in software expenses, offset by various increases including $811K in salary costs. 34 Travelzoo Europe Year Ended December 31, 2024 2023 (In thousands) Revenues $ 24,071 $ 24,021 Income from operations $ 3,081 $ 1,317 Income from operations as a % of revenues 13 % 5 % Europe revenues increased $50,000, or 0.2%, in 2024 as compared to 2023.
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. 40 The following summarizes our principal contractual commitments as of December 31, 2023 (in thousands): Operating Lease Commitments Long-term Operating Lease Commitments Short-term Total Operating Lease Commitments Purchase Obligations Total Commitments 2024 $ 2,701 $ 381 $ 3,082 $ 492 $ 3,574 2025 1,900 — 1,900 43 1,943 2026 1,396 — 1,396 — 1,396 2027 1,350 — 1,350 — 1,350 2028 1,350 — 1,350 — 1,350 Thereafter 1,575 — 1,575 — 1,575 Total $ 10,272 $ 381 $ 10,653 $ 535 $ 11,188 We also have contingencies related to net unrecognized tax benefits, including interest, of approximately $24.7 million as of December 31, 2023.
The following summarizes our principal contractual commitments as of December 31, 2024 (in thousands): Operating Lease Commitments Long-term Operating Lease Commitments Short-term Total Operating Lease Commitments Purchase Obligations Total Commitments 2025 $ 2,723 $ 264 $ 2,987 $ 586 $ 3,573 2026 1,800 — 1,800 584 2,384 2027 1,458 — 1,458 133 1,591 2028 1,458 — 1,458 — 1,458 Thereafter 1,674 — 1,674 — 1,674 Total $ 9,113 $ 264 $ 9,377 $ 1,303 $ 10,680 We also have contingencies related to net unrecognized tax benefits, including interest, of approximately $25 million as of December 31, 2024.
Sales and marketing expenses increased $4.7 million, or 14.2%, in 2023 as compared to 2022, primarily due to a $1.8 million increase in member acquisition costs, a $1.8 million increase in salary and related expenses, and a $1.2 million increase in trade and brand marketing expenses.
Sales and marketing expenses decreased $3.3 million, or 9%, in 2024 as compared to 2023, primarily due to decrease in member acquisition.
Jack's Flight Club Jack’s Flight Club generates revenues from paid subscriptions by members. Subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues monthly pro rata over the respective subscription periods.
Jack’s Flight Club subscription options are quarterly, semi-annually, and annually. We recognize subscription revenues ratably over the respective subscription periods. For Travelzoo META, a founding membership was launched in 2022 following a test-and-learn strategy.
An interest free loan was provided to the licensee for JPY 46 million (approximately $430,000), of which $133,000 was repaid in 2021 and the remaining amount repaid in 2023. The Company recognized royalties of $36,000 and $0 from the licensee for the years ended December 31, 2023 and 2022, respectively.
The Company recognized royalties of $41,000 and $35,000 from the licensee for the years ended December 31, 2024 and 2023, respectively.
The increase in Travel revenues was primarily due to a $3.2 million increase in revenues from Top 20 and Standalone emails and a $709,000 increase in Hotel booking commissions. The increase in Local revenues of $175,000 was primarily due to an increase in Local Deals voucher commissions.
This decrease was primarily due to the decrease in revenues from hotel platform and Local Deals .
Other income was $1.5 million and $2.4 million for the years ended December 31, 2023 and 2022, respectively. 37 Other income decreased $860,000, or 35.8%, in 2023 as compared to 2022, primarily due to a $1.5 million reduction in German federal government funding for COVID pandemic relief, offset partially by $604,000 interest income on note receivable from stockholder.
Other income decreased $953,000, or 62%, in 2024 as compared to 2023, primarily due to a $205,000 German federal government funding for COVID-19 pandemic relief the Company received in 2023, $348,000 decrease in sublease income as a result of the sublease term expiration in 2023, and $375,000 decrease in interest income as the result of Azzurro's repayment of $3.0 million principal of its Notes Receivable in 2023.
Removed
This paid membership service currently provides founding members with a limited edition “Travel Companion” non-fungible token (“NFT”) and future access to beta version metaverse travel experiences, as developed. On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), to support Travelzoo META in sourcing prospective travel experiences.
Added
On December 30, 2022, we acquired Metaverse Travel Experiences, Inc., now Metaverse Travel Experiences, LLC (“MTE”), to support Travelzoo META in sourcing prospective travel experiences. MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results.
Removed
MTE also continues to operate its legacy business in retail and fashion, which is included in but not material to the Company’s consolidated results. See Note 3– Acquisitions to the accompanying consolidated financial statements included in Part II, Item 8 of this report, which is incorporated herein by refer ence for further information regarding the acquisition of MTE.
Added
The Company recognized royalties of $ 30,000 and $36,000 from the licensee for the years ended December 31, 2024 and 2023, respectively. 28 Reportable Segments The Company determines its reportable segments based upon the Company's chief operating decision maker managing the performance of the business.
Removed
In the second quarter of 2020, due to the pandemic and various stay-at-home protocols, the Company expanded its voucher refund policy to fully refundable until the voucher expires or is redeemed by the customer.
Added
How We Generate Revenues Revenues from the Travelzoo brand and business are generated primarily from three categories: Advertising, Membership Fees, and Other.
Removed
This refund policy was reverted in April 2022 to a 14-day refund period from date of purchase, with a newly introduced option to extend refund eligibility until voucher redemption or expiration, for a surcharge.
Added
The "Membership Fees" category consists of subscription fees paid by Travelzoo, Jack's Flight Club, and Travelzoo META members.
Removed
The expiration dates of vouchers range between January 2024 through December 2025; provided, that these expiration dates may sometimes be extended on a case-by-case basis and final payment to merchants upon expiration may not be due for up to a year later.
Added
Travelzoo® membership has historically been free, however, on January 1, 2024, Travelzoo 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 as of December 31, 2023. We recognize subscription revenues ratably over the respective subscription periods.
Removed
As of December 31, 2023 and 2022, the Company had approximately $5.2 million and $8.1 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.
Added
The "Other" category consists of licensing fees from license agreements, as well as the retail business originally operated by MTE and acquired and maintained by the Company following the acquisition of MTE.
Removed
The Company estimated and recorded a refund reserve of $268,000 and $1.3 million as of December 31, 2023 and 2022for these unredeemed vouchers which is recorded as a reduction of revenues on the consolidated statements of operations, and accrued expense and other on the consolidated balance sheet.
Added
Even if we increase our rates, the increased price may reduce the number of advertisers willing to advertise with us and could, therefore, decrease our revenue. We may need to decrease our rates based on competitive market conditions and the performance of our audience in order to maintain or grow our revenue.
Removed
Merchant payables of $20.6 million as of December 31, 2023 related to unredeemed vouchers is recorded on the 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.
Added
While we will have membership revenue to offset any reductions in advertising revenue or add incrementally to advertising revenue so that we can continue to grow total revenue, we are unsure of the volumes in which we will be able to convert to membership from either our existing database or through new member acquisition.
Removed
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. 30 The "Local" category consists of publishing revenue for negotiated high-quality offers from local businesses, such as restaurants, spas, shows, and other activities and includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).
Added
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.

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