A recording of this 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 floor over to Travelzoo's global CEO, Holger Bartel, its chair, general counsel, and CEO of JAX Flight Club, Christina Chalka, and its financial controller in North America, Jeff Hoffman. Jeff will start with an overview.

Great. Thank you, operator. Welcome to those of you joining us. Today, I'm stepping in for Eugene Chieb, our Chief Accounting Officer. Please refer to the management presentation to follow along with our prepared remarks. The presentation in PDF format is available on our investor relations site at travelzoo.com/ir. Let's begin with slide four. Travelzoo's consolidated Q4 revenue was $20.7 million, down 2% from the prior year. In constant currencies, revenue was $20.6 million. Operating income, which we've management call operating profit, increased 8% year over year. Q4 operating profit was $4.9 million or 24% of revenue, up from $4.5 million in the prior year. While operating income increased and outstanding shares decreased, EPS was slightly lower compared to last year and we'd like to explain why. A year ago, extraordinary income from discontinued operation and from favorable FX trends added five cents to quarterly EPS. Done. This year, a strong dollar at the end of 2024 led to negative other income and impacted EPS negatively. Without these effects, the EPS would, in management's opinion, better reflect the positive earnings and JAX Flight Club segments. While revenues in Europe's below, this was caused primarily by fluctuations in Germany, which we do not view as a trend. Operating profit increased in both our North America and JAX Flight Club segments but decreased in our Europe segment. On slide seven, we break down our categories of revenue: advertising, membership fee, and other. Advertising revenue was $19.1 million for Q4 2024. Revenue per membership increased to $1.6 million. We expect this revenue to grow substantially in 2025. In 2024, we introduced a membership fee for travel season. Legacy members who joined before 2024 were exempt from the fee during 2024. Legacy members represent more than 95% of travels in this reach. In 2025,…

Thank you, Jeff. We will continue to leverage Travelzoo's global reach, our trusted brand, and strong relationships with top travel suppliers to negotiate more club offers for club members. Travelzoo members are affluent, active, and open to new experiences. We inspire travel enthusiasts to travel to places they never imagined they could. Travelzoo is the must-have membership for those who love to travel as much as we do. Slide fifteen provides more information about travelers and members. Ninety-one percent say that they are open to new destinations and travel ideas. We are the club of travel enthusiasts. Slide seventeen provides an overview of management's focus. We are working to grow the number of paying members as we continue to convert legacy members and add new club members, add new benefits to make membership even more valuable. Retain and grow our profitable advertising business from the popular top twenty product, utilize higher operating margins to increase EPS, grow JAX Flight Club's profitable subscription revenue, and develop Travelzoo Meta with discipline. Now, Christina will provide a quick update on Travelzoo Meta and JAX Flight Club. Thank you, Holger.

We continue to work on the production of the first metaverse travel experiences. They will be browser-enabled. Stated in previous earning calls, we are conscious of developing Travelzoo Meta in a financially disciplined way. We will provide additional updates in good time. JAX Flight Club in 2024 expanded the team and increased marketing spend. We increased premium members, we also grew revenue 19% year over year. We continue to generate operating profit. We are well-positioned for 2025 to continue this growth trajectory, with a focus on further penetration of both the Canadian and US markets. I'm now handing over to the operator for questions for Jeff, Holger, and me. And we'll take our first question.

So, Michael Kupinski with Noble Capital Markets. Please go ahead.

Thank you. Yes. My question is really related around the subscriptions. I was wondering if you can give us some color on the added value that you're offering for the subscription. Subscriptions, the pricing, and maybe on the experience so far that you've had with your subscription. How many legacy members do you anticipate to convert to? And any other additional color that you can give us about how your advertisers are viewing the subscription offerings and how that is being balanced, I guess, with your legacy advertising partners.

Hi, Michael. Yes. It's a bunch of questions. Let me start off. The membership is a twelve-month membership in the US. It's forty US dollars. In the other markets, it's around the same. In local currency, and what you receive for that is really all the Travelzoo offers and input. We have started producing club offers, which are offers that only those who pay for the membership have access to. We just came off the last couple of days, our first member day. Member day is an event four times a year where we have special offers exclusive offers for our club members. And those were really quite amazing, I would say. We had, for example, a lot of hotels for ninety-nine dollars. Unheard of. It's a four-star hotel centrally located very, very well with Utah TripAdvisor. We have a Europe trip with flights for two ninety-nine. We had a countryside escape in the UK for ninety-nine pounds with dinner and hotel and breakfast, I mean, quite unbelievable. I'm just giving these examples because that's what's attracting both new members as well as legacy members to convert. How is it going so far? Well, it's all going according to our plans. And it's in line with expectation. We don't release a specific number, but we had a good number of legacy members who already converted to paying members before the end of last year. And as we are introducing these club offers and additional member benefits, which are exclusive to the members, this motivates legacy member conversion over the current world and over the future. We also see better results in new member acquisition. We have finally built a robust model that allows us to acquire new members at a cost that works for us. So now we have started scaling in Q1, for example, already on Pay Store acquire more new members for marketing than we did entire last year. So we are seeing more growth. And then lastly, I think you asked about the advertising business. Our advertisers continue to reach the travelers that they used to reach in the past. So, certainly, there's a lot of questions about what's going on, but their offers reach the same people. And, actually, even active at much more almost glued to receiving our emails and top twenty. So it bit like for sure, when you pay for something, you wanna take advantage. So the responses, both in terms of activity, click level, purchases that we are seeing from those who have become the members of Travelzoo are quite impressive compared to what we saw before.

Okay. Thanks for that color. Just to follow-up, indicated that there will be an incremental $8.3 million I think or 5% of revenue growth from subscription in the first quarter. Can you talk about the current trends that you're seeing for travel and update us on differences between North America and Europe? Outside of the subscription. I would say the US people I mean,

In the US, the economy is doing quite well. There is now more uncertainty from a political perspective and perhaps particularly to what it means for consumers. But look, the very, very budget-conscious consumers are a bit hesitant from what we are seeing, but that's not really our member base. Our member base is more affluent as you saw earlier from the chart. And higher-end luxury travel in the US and in Canada is still doing quite well. Europe, I would say we see a little bit more hesitation on the consumer side, but, you know, that's as I always say, that's good for us because if all hotels in London were full, they certainly wouldn't offer a ninety-nine dollar room night at the centrally located four-star hotel. See value, Travelzoo members. They wouldn't do that. So I'm happy that this was it was almost a craziness of what we saw after COVID. I mean, the COVID ranch travel.

And

All travel companies were so busy. That has certainly ebbed, and that's good news for us.

My question. Appreciate it.

Thank you. We will take our next question from Patrick Scholl with Barrington Research. Please go ahead.

Hi. I was wondering if you could maybe talk about

Like, the continued engagement levels of, like, the of the numbers that haven't joined

Club

And what I guess, sort of has been in what in what tends to encourage them to join? I guess just what share of, like, the of those numbers kinda joined ahead of year-end and maybe just talking about, like, you know, if you could talk a little bit about

Who has

Many have joined since the start of the of the year.

So we don't have we don't see much of a change in the behavior of the ones that have not become paying members yet. Key grades are still on click rates per email still fairly similar to what we saw last year. And we're not specifically deleting the information. How many members have converted. We don't wanna talk about that, but what I can tell you is that we are currently on pace that at the end of Q1, we will have fifty percent more paying members than we had at the end of last year, and that focus in one quarter is good for us and makes us happy. But maybe, Christina, you can speak a little bit about what motivates legacy members to become paying members because there's more than just the offers. There's a whole range of things that they benefit from. Christina, do you wanna speak?

Sure. In addition to the offers, which we really believe are the core of the membership and the service the great service that we've always provided of research identifying these offers, we are also adding other benefits. In Q4, we added lounge access towards the eight flights, and all quite a good response. Both from legacy members who were interested in that benefit and also from those external to Travelzoo. We've also launched a weekly giveaway. Members have the opportunity to win, to be randomly selected, to select any top twenty top offer that they would like to take for free. In addition to that, we've been building out our member services and have priority member services for club members. And we're excited to potentially add additional benefits as the year progresses.

Okay. And then you you had mentioned

Weakness in Germany. I guess, can you maybe talk about why you feel that that was more of a one-off and maybe just additional commentary around

That

Around Europe and the ad market there. And then are there, like, any sort of marketing expenses that you're pulling back on in order to market the paid service? Great. So Europe,

We were not happy with Europe in Q4. Very clearly, and we were disappointed particularly with Germany. Well, the fluctuations were a result of many factors. So just an example, some destination advertising did not run as planned. Some revenue got delayed. Cruise advertising was slow. Then on top of that, on the accounting side, we had the higher true-up of annual breakage revenue. We have to do that once a year. It's a true-up versus estimate that came in higher than what we expected because more people use their vouchers. And then look, the political turmoil in Germany in Q4 where the government resigned, they just had elections last weekend. All of that didn't help either. Many consumers and travel companies just went into a holding pattern. And as you see, I just all these things came together all at once, but as we said earlier, we don't see that as a trend that would worry us at this time.

Okay. Thank you.

Thank you. And we will take our next question from Steve Silver with Ardagh Research. Please go ahead.

Thanks, operator, and thanks for taking my question. And congratulations on reaching positive net cash. Looks like this quarter, the cash is outpacing the merchant payables for the first time since the pandemic. So congratulations. You guys have been working on that for several years now. Question is, with the expectation of significant ramping in revenues, it's expected over the course of 2025 whether this might have any read-through to your ability to ramp growth investments like Meta while still maintaining discipline. I know you guys have been active in repurchasing shares, just curious as to whether the ramp in revenues will allow you to increase growth investments as well.

Well, first, thanks for pointing out the positive development in our balance sheet, Steve. And now you know, actually, Pat also asked about marketing, whether we are planning to spend more. And, yeah, we are. We are in 2025. We will ramp up marketing spend. We are already doing that in Q1. Number one, we have found a model that works. Okay? So if we can acquire members at a reasonable cost, and we benefit from them over long periods of time. The renewal rates are renewal rates so far that we are seeing we are happy with them. Then, of course, we invest because it's a smart decision for the business to do that. And second, as revenues increase and as we were trying to explain earlier, that 5% incremental revenue growth we are seeing in Q1, that number will continue to go up throughout the year. Because the subscription revenues are only recognized over the course of the twelve months. So it's a little bit difficult to really conceptualize that. But that's why we are already happy with what we are seeing in Q1. Will that affect investments in Meta in JAX Flight Club? Now we look at these quite independently and, as you also pointed out, Steve, we are developing Meta with quite some discipline. We're not still spending millions and millions or billions of dollars on developing that metaverse experience. We do it rationally. And we don't see that this is affected particularly as our balance sheet is improving and we are generating more cash. Cash flow this quarter or cash flow in Q4 as you saw was among the highest we have seen in quite some time.

Thanks for all the additional color.

Thank you. We will take our question from Ed Woo with

Yeah. Congratulations on the quarter. I have a question on the JAX Flight Club membership and the Travelzoo club membership. Are they separate products under are there any plans to combine them?

So that you have one membership for both products?

I can repeat that. With that question. For now, we are operating the businesses independently, and that includes the member. Since we've acquired JAX Flight Club, we look for ways to find synergies between the two businesses, and that includes some cross-promotion and of both the membership and of content identified by either Travelzoo or JAX Flight Club. And oh, we're doing that in a way that makes sense. And is beneficial for both brands. And they service slightly different markets. So for now, that's the plan is to keep them independent.

Great. Well, thanks for answering my questions.

Thank you.

Okay. This concludes the Q&A. I would like to turn the call back over to Mr. Holger Bartel for closing remarks.

Yes. The investors, thank you for listening for your time and support. We look forward to speaking with you again next quarter. Have a great day.

This concludes today's Travelzoo fourth quarter 2024 earnings call and webcast. You may disconnect your lines at this time, and have a wonderful day.