Travelzoo (NASDAQ:TZOO) Q3 2024 Earnings Conference Call October 23, 2024 11:00 AM ET

Company Participants

Jeff Hoffman - Finance Controller for North America
Holger Bartel - Global CEO
Arveena Ahluwalia - Global Director, Premium Membership
Christina Ciocca - Corporate Secretary and Chair

Conference Call Participants

Theodore O'Neill - Litchfield Hills Research
Michael Kupinski - NOBLE Capital Markets
Steve Silver - Argus Research
Ed Woo - Ascendiant Capital
Patrick Sholl - Barrington Research

Operator

Good morning, and welcome to the Travelzoo Third Quarter 2024 Earnings Call. Today's conference is being recorded. [Operator Instructions].

The company would like to remind you that all statements made during the conference call and presented in the slides that are not statements of historical facts constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could vary materially from those contained in the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in the company's Forms 10-K and 10-Q and other SEC filings.

Unless required by law, the company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's website for important information, including the company's earnings press release issued earlier today. An archived recording of the conference call will be made available on the company's Investor Relations website at travelzoo.com/ir.

Now it is my pleasure to turn the call over to the floor over to Travelzoo's Global CEO, Holger Bartel, its General Counsel and Head of Global Functions and CEO of Jack's Flight Club, Christina Ciocca, and its Finance Controller for North America, Jeff Hoffman.

Jeff will start with an overview.

Jeff Hoffman

Thank you, operator, and welcome to those of you joining us today. Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our Investor Relations site at travelzoo.com/irr.

Let's begin with Slide number 4. Travelzoo's consolidated Q3 revenue was $20.1 million, down 2% from the prior year. In constant currencies, revenue was $20 million. This was a little below our expectations. Operating income, which we as a management call operating profit increased 30% year-over-year. Q3 operating profit was $4 million or 20% of revenue, up from $3.1 million in the prior year.

Slide 5 shows that higher profits came particularly from our Europe segment. On Slide 6, we break down our categories of revenue, Advertising, Membership Fees and other. Advertising revenue was $18.7 million for Q3 2024. Revenue from membership fees was $1.4 million. Membership fee revenue is still small. We expect to substantially drive revenue and profit growth in 2025 for the following reasons. At the beginning of 2024, we introduced a membership fee. Those who are already members at that time are exempt from the fee during 2024, but have to pay in 2025. We call this group legacy members, and they represent over 95% of current members.