Travelzoo (NASDAQ:TZOO) reported fourth-quarter 2025 revenue of $22.5 million, an increase of 9% from the prior year, as the company continued to invest heavily in growing its paid Travelzoo Club membership base. In constant currency, revenue was $22.1 million, up 7% year over year, according to prepared remarks on the company’s earnings call.
Quarterly results and the impact of member acquisition spending
Financial Controller Jeff Hoffman, standing in for the company’s Chief Accounting Officer, said operating income (referred to as “operating profit” by management) declined “as expected” due to higher marketing investments tied to acquiring club members. Operating profit was $0.6 million, or 3% of revenue, down from $4.9 million in the prior-year quarter.
Hoffman also provided quarterly average acquisition costs for a full-paying club member: $28 in Q1, $38 in Q2, $40 in Q3, and $34 in Q4. Using the U.S. example discussed on the call, management said the company collects a $40 annual membership fee upfront and generated an additional $10 in transaction revenue in the same quarter, which it described as a fast payback even before considering future renewals and other revenue streams.
Revenue mix: advertising softness and growing membership fees
Travelzoo reported Q4 advertising and commerce revenue of $18.3 million, with membership fees contributing $4.1 million. Hoffman said membership fees are becoming a larger and more stable share of the business, and management expects membership fees to account for around 25% of revenue for the year.
During the Q&A, management acknowledged that advertising and commerce revenue was “a bit soft” in Q4 and said it expected that softness to continue “a bit more into Q1 as well.” Global CEO Holger Bartel said there was no specific reason he could point to for the sequential weakness, adding that the company has been “focused very much on membership and adding new members.”
On membership fee revenue growth, Bartel characterized the quarter-to-quarter change as not substantial and suggested the apparent slowdown was “mostly a rounding issue.” He said the company expects quarterly increases in membership fee revenue to accelerate in 2026 as it plans to spend more on member acquisition, assuming the company can maintain the positive return and quick payback described in prepared remarks.
Segment performance, margins, and cash
Hoffman said revenue growth came from all reporting segments, while noting that investment in member acquisition in Europe led to a loss for that segment. He also said general and administrative expenses increased primarily due to a one-time expense related to a global company meeting held in Q4. In response to an analyst question, management reiterated the G&A increase was not expected to be permanent.
Travelzoo’s GAAP operating margin was 2% in Q4 2025. Hoffman said growing the club member base has the effect of lowering GAAP operating margin in the near term, but management expects margins to return to prior levels over time “or even exceed them” as the membership base scales.
On a non-GAAP basis, Q4 2025 operating profit was $0.9 million, or 4% of revenue, compared with $5.4 million in the prior-year quarter. Hoffman pointed listeners to the company’s slides for the items excluded from non-GAAP results.
As of December 31, 2025, consolidated cash, cash equivalents, and restricted cash totaled $10.8 million. Cash flow from operations was $1.5 million, and Hoffman said the cash balance increased accordingly.
Strategy: accelerating paid membership and adding benefits
Bartel framed paid membership growth as central to the company’s strategy, describing Travelzoo members as “affluent, active, and open to new experiences.” He said the company plans to leverage its global brand and supplier relationships to negotiate more club offers and highlighted member benefits including exclusive travel offers, complimentary airport lounge access worldwide in the event of flight delays, and a newly launched “travel enthusiast hotline” providing 24/7 complimentary assistance in partnership with Allianz. Bartel also said “culinary journeys curated for the travel enthusiast” are coming soon.
In management’s strategic overview, the company said its focus includes:
- Growing the number of paying members by converting legacy members and adding new club members
- Retaining and growing the advertising business tied to the Top 20 product
- Growing Jack’s Flight Club’s profitable subscription revenue
- Developing Travelzoo Meta “with discipline”
Christina Ciocca, Chair and Chief Membership Officer, provided an update on product initiatives, saying the company now expects the first Travelzoo Meta experiences to become available in Q2 2026 and plans to incorporate access to Travelzoo Meta as a benefit of Travelzoo Club membership. On Jack’s Flight Club, she said the company focused in Q4 on profitability while acquiring enough premium subscribers to offset attrition due to other investment priorities.
Outlook, pricing changes, and travel industry commentary
Looking to Q1 2026, Hoffman said the company expects year-over-year growth to continue, with continued revenue growth in subsequent quarters as membership fees are recognized over time and as the company acquires new members and converts legacy members into paying club members. He cautioned that fluctuations in reported net income are possible in the short term if the company sees attractive opportunities to increase marketing, since marketing costs are expensed immediately.
In Q&A, management said it plans to increase member acquisition spending in 2026 versus 2025 as long as returns remain attractive. Bartel also addressed renewal and churn questions, saying it was “too early to judge” because many club members joined in the first quarter of 2025 and renewals were approaching. He added that new benefits are being introduced and have been “very much appreciated” by members, which he said could help retention even in periods when a member does not purchase a specific offer.
Bartel also discussed travel conditions, saying luxury travel is “absolutely booming” while lower-end travel is more challenging, and that Travelzoo’s customer demographic skews higher income. He said the trend is similar across regions, though “more pronounced in the U.S.”
Finally, Bartel confirmed a pricing change in the U.S., saying the annual membership fee increased to $50 beginning January 1, while fees were not increased in other markets. Existing members were given the opportunity to renew at the prior $40 rate before the end of January, but those who did not renew at that time would pay $50 going forward, including renewing members whose memberships expire after February 1.
About Travelzoo (NASDAQ:TZOO)
Travelzoo (NASDAQ: TZOO) is a global internet media company specializing in publishing curated travel, entertainment and local deals to a subscriber base of millions. Through its website, mobile applications and weekly email newsletters, Travelzoo partners with airlines, hotels, cruise lines, tour operators and local merchants to promote time-sensitive offers at discounted rates. The company generates revenue primarily from media commissions, advertising arrangements and marketing services provided to its hotel and resort partners.
Founded in 1998, Travelzoo went public on the NASDAQ in 2003 under the ticker symbol TZOO.
