Good morning and welcome to the Travelzoo second quarter 2025 earnings call. Today's call is being recorded. Currently, all callers have been placed in a listen-only mode, and following management's prepared remarks, the call will be open for your questions. If you would like to ask a question at that time, please press star one on your telephone keypad. If you need to remove yourself from the queue, please press star one again. At any time, if you should need operator assistance, please press star zero. The company would like to remind you that all statements made during this 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 differ 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 this conference call will be made available on the company's investor relations website at www.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 Jack's Flight Club, Christina Ciocca, and its Financial Controller, North America, Jeff Hoffman. Jeff, we'll start with an overview. Thank you, operator, and welcome to those of you joining us. Today, I'm stepping in for Lijun, 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 number four. Travelzoo's consolidated Q2 revenue was $23.9 million, which is up 13% from the prior year. In constant currencies, revenue was $23.5 million, up 12% from the prior year. Operating income, which we as management call operating profit, decreased as we invested more in member growth. Q2 operating profit was $2.1 million, or 9% of revenue, down from $4 million in the prior year. Let me explain the rationale for our significant increase in marketing expense, which lowered EPS. Slide five shows a favorable payback on the acquisition of new club members that we were able to achieve. On the left side, you see that average acquisition cost for a full-paying club member was $28 in Q1 and $38 in Q2. On the right side, you see that we get this money back right away. The member pays, in the U.S. case here, immediately their $40 annual membership fee. Additionally, we generated $18 in revenue from transactions in the same quarter. This immediate payback doesn't even consider an increase in advertising revenues and future membership fees and other revenues. Now, slide six shows, as a reminder, that with subscription businesses, membership fee revenue is recognized relatively over the subscription period, but the acquisition costs are expensed immediately when incurred. Slide seven shows the effect. While we have an immediate payback, the impact on earnings and EPS is different. Higher member acquisition expenses, coupled with only a portion of revenue recognized in the quarter, reduced EPS this quarter. In the case of Q2, that effect was a reduction of $0.13. On slide eight, you can see that revenue growth came from all segments. With favorable ROI on member acquisition in the UK, we invested heavily there. Jack's Flight Club revenue increased by 33%. Operating profit decreased in both our North America and Europe segments, but increased slightly in our Jack's Flight Club segment. On slide nine, we break down our categories of revenue: advertising and commerce, membership fees, and other. Advertising and commerce revenue was $20.9 million for Q2 2025. Revenue from membership fees increased to $3 million. Membership fees have started to drive significant revenue growth. Next year, we expect them to account for about 25% of revenue. On slide 10, you can see that our GAAP operating margin was 9%. In Q2 2025, acquiring more club members has the effect of lowering GAAP operating margin. Still, given the currently favorable ROI, we will continue to further grow the number of club members to bring Travelzoo into high growth mode. Slide 11 shows that investments in club members occur in all key markets. Over time, we expect margins to return to previous levels or even exceed them. On slide 12, we provide information on non-GAAP operating profit, as we believe it better explains how Travelzoo's management evaluates financial performance. Q2 2025 non-GAAP operating profit was $2.4 million. That's 10% of revenue compared to non-GAAP operating profit of $4.8 million in the prior year period. Slide 13 provides information about the items that are excluded in the calculation of non-GAAP operating profit. Please turn to slide 14. As of June 30, 2025, consolidated cash, cash equivalent, and restricted cash was $11.2 million. Cash flow from operations was $1.3 million. We reduced merchant payables by $2.4 million and repurchased 172,088 shares. Now, looking ahead, for Q3 2025, we expect year-over-year revenue growth to continue. We expect revenue growth to accelerate as a trend in subsequent quarters, as membership fees revenue is recognized relatively over the subscription period of 12 months, as we acquire new members and as more legacy members become club members. Over time, we expect profitability to substantially increase as recurring membership fees revenue will be recognized. In the short term, fluctuations in reported net income are possible. We might see attractive opportunities to increase marketing. We expense marketing costs immediately. Now I turn the discussion over to Holger. Thank you, Jeff. We will continue to leverage Travelzoo's global reach, trusted brand, and our 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. Today, I would like to share a bit of information about the Travelzoo club membership. Please turn to slide 16. Travelzoo is becoming the place where the world's travel enthusiasts get together. Membership allows them to live their life to the fullest, and it comes with an array of benefits, most importantly, club offers that are only available to them. Slides 17 and 18 provide some examples of club offers. From unique experiences like cooking with a Michelin star chef in Tuscany, coupled with an amazing price, to a luxury escape to the Maldives in an overwater villa, or an adventure in Iceland, club offers provide outstanding value and make us travel enthusiasts get up and go even more. As slide 19 shows, worldwide complimentary lounge access in case of flight delays is another popular benefit among club members. Slide 20 provides more information about Travelzoo members. Travelzoo is loved by travel enthusiasts who are affluent, active, and open to new experiences. Moving to slide 22, it provides an overview of our management focus. We are working on growing the number of paying members and accelerating revenue growth by converting legacy members and adding new club members, adding new benefits to the paid membership, retaining and growing our profitable advertising business from the popular Top 20 product, accelerating revenue growth, which drives future profits in spite of temporary lower EPS, growing Jack's Flight Club's profitable subscription revenue, and developing Travelzoo Meta with discipline. Now, Christina will provide a quick update on Travelzoo Meta as well as Jack's Flight Club. Thank you, Holger. We continue to work on the production of the first metaverse travel experiences. They will be browser-enabled. As stated in previous earnings calls, we are conscious of developing Travelzoo Meta in a financially disciplined way. We will provide additional updates in due time. For Jack's Flight Club, revenue increased 33% year- over- year, and the number of premium subscribers increased 15%. The increase in revenue is driven primarily by investments in growth of the premium subscribers over the past few years and the increase in the price of the membership fee, which was implemented in Q2 of last year. We plan to continue to invest in growth, especially now as we have even more runway to do so. I'm now handing over to the operator for questions for Jeff, Holger, and me. Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, again, press star one. Your first question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead. Hey, thanks very much. I'm trying to understand a little more clearly the dynamics of the profitability going forward. I'm thinking about this slide seven here with the net impact in the quarter being a little lost at $0.13. When you talk about the profitability improving over time, does that mean that the acquisition costs go lower or the revenue goes higher or both of those things are occurring? Theodore, the slide seven looks at one specific quarter. It looks at Q2. In Q2, we had marketing expenses, actually member acquisition expenses of $2.7 million. The slide shows the revenue that is specifically generated from the members that we acquired in Q2. What you see there is that in quarters going forward, in Q3 and Q4, we will continue to generate revenue from these, but we will not have expenses to that cohort of new members that signed up. In Q3, we will sign up new members, so there will be new member acquisition costs for these new members, but we will have the positive impact for members that we acquired in Q1, Q2, and even at the end of last year, which will contribute revenue growth in the form of membership fees. Coupled together with all that revenue that is coming in for members that were acquired in the past, that is what's driving overall profitability going forward in the next few quarters and then more so next year. Okay, thanks very much. My other question is about the club offers. I've got my press release here about the offers from July 17. I'm wondering about the sort of the pace of these. Do you expect, like, is this a monthly thing that we'll come up with special offers? Is this a quarterly? What's the expected pace of these offers? There are several per week. There are many per week, usually a few dozen per week. We do not issue press releases for every new club offer. The press releases just show an example of some offers that we released over that period. Okay, I thought perhaps there was something special there. Okay, thanks very much. Your next question comes from the line of Michael Kupinski with Noble Capital Markets. Please go ahead. Thank you for taking my questions. I appreciate it. You stated that you invested in acquiring subscribers, and while I see the marketing expenses went up, it seems like the cost of revenue also went up significantly. I was wondering if you can address the cost of revenue in a quarter. Sure, Michael. We had a few opportunities again to purchase distressed inventory, distressed travel products from suppliers with a highly discounted price. That allowed us to create very strong club offers, and you heard that they are very important to our members. That in turn is what we then leverage to attract new members. It also makes it easier to convert legacy members to club members. To properly classify these expenses, we had to put them into cost of revenue. Gotcha. As we kind of look towards the second half of the year, should we look for more normalized or normalized levels, or how should we look at that given that this seems like it was more of a one-time opportunity? Can you kind of just give us what might be ongoing? It really depends on the opportunities that we see. Since the travel industry in general, particularly hotels, are seeing a little bit weaker demand, I would expect that we will continue to see these opportunities. Okay. In terms of the favorable dynamics, in terms of the investments in marketing spend, is that something that we should model going into the second half of the year? Are those favorable dynamics still evident as we go into the third quarter? Michael, as we explained, the payback is very, very attractive for us. Essentially, I give someone $28, $38, and right away they give me $40 or $58 back. I would do that as much as I can. The question is probably what stops us from doing more of that. Let me explain to you, what stops us from that is our cool hats. Of course, we will only do it as long as the payback is favorable. As long as we can keep that acquisition cost at $40 or below, and we actually hope we can even lower it further as we gain more experience, we will continue to invest in member acquisition. We would be stupid not to do so. In essence, the market somehow will drive how much we can spend, and that's why it's very difficult to predict for the next couple of quarters how much we will effectively spend on member acquisition. If the conditions are the same, if we can continue to see that very attractive payback, we will continue to invest, even if it affects in the very, very short term EPS. I'm sure you will model this out. As you then move into next year and you see all this revenue coming in from the new members that we acquired this year because the revenue gets prorated over the next 12 months, we will finally see the very, very positive impact of the members we are acquiring now. It appears that the focus on acquiring subscribers, and you tell me if I'm wrong, but it seems like it was focused in Europe. Can you talk a little bit about the strategy there, particularly about your European strategy? It was both. Actually, we acquired even more club members in North America. You just noticed that in Europe we reported a loss, so one might wonder why was there specifically a loss in Europe this quarter? The answer is simply that member acquisition in the UK went extremely well. Members, consumers were very attracted to our model. We have a good brand there. Our offers are strong, so we were able to acquire club members there at a very attractive price. We put more money into the UK, and that's what drove the income in Europe lower than it was last year. My final question, Holger, thanks for all the questions. Can you talk about the prospect of maybe a premium subscription level? I know that you talked in previous calls about the prospect that the $40 annual fee is seemingly pretty low given the value that you have for your membership. I was just wondering if you had given some thought about the rollout of more of a premium subscription level and whether or not that might be for 2026 or maybe out in 2027. Good idea, Michael. We are not looking at it right now. We want to keep things simple, so we will go with this one tier. However, you are right. From conversations that we have with our members, we see that our membership fee is probably too low. For 2026, we will evaluate by what extent we would like to increase it if so. Great. Thanks for all the questions. Appreciate it. Good luck. Your next question comes from the line of Patrick Scholl with Barrington Research. Please go ahead. Hi. I just have another question on the subscriber acquisition spending. Are you essentially saying that you would limit how much you are willing to pay on acquisition costs to that annual membership fee? In terms of the benefits for the members, if we think of maybe a gross contribution for the membership fee, how should we maybe think about how that nets out versus some of the benefits, obviously excluding the benefit of being able to access and purchase the deals that you present to them? Pat, what I meant is that the effectiveness and the ROI of member acquisition is what will limit our activity to acquire new club members. If our acquisition cost to acquire new club members in the U.S., for example, was way higher than $50, we would obviously slow down. We would maybe even discontinue investing in certain channels that we use to acquire new members. That is what I meant. As long as the payback is positive, then we have no reason not to invest because, and even from a cash perspective, the $38 is mostly what we pay to advertising channels, being it Meta, Google, or some others, while the $40 is something that comes in from the member right away. As soon as they join, they pay the $40 membership fee with their credit card. Even from a cash perspective, there is no limitation on how much we could do. Answering your second part, when I speak with members, I meet with them a lot. They value different benefits differently. The number one thing why they love to be members of Travelzoo is because, as we say, they are, we are travel enthusiasts. They love to go to new places. I met a couple that went to an Italian lake in Italy. They said we had never even heard of it, but Travelzoo told us about it. It sounded so exciting. We just decided to go. We just came back and we booked already another trip. That is what the Travelzoo Club is all about. Others really appreciate these benefits like free lounge access for flights. In fact, we had one member who already registered over 50 flights over the next few months for this benefit. Even people who travel very frequently see such a good value in being a Travelzoo member because of that. Okay. I understand that it's like the cohort of subscribers a year ago were much lower. I'm just kind of curious if there's any sort of things that you've learned in terms of being able to retain subscribers and just how those retention efforts have been working. The majority of members, club members that we have right now became club members at the end of 2024 because they were legacy members. They were members who have been Travelzoo members for a long time, and they were excluded. They now have their membership until the end of the year. We only will start having really good and reliable data on renewal rates starting at the beginning of 2026, unfortunately. Yeah, no, I understand that. I was just under the impression that you had brought in some members before that. That was all I was really asking about. All right, I think that's all I had. Thank you. Sure. Your next question comes from the line of Ed Woo with Ascendiant Capital. Please go ahead. Yeah. Hey, Holger. Congratulations on the subscriber growth. My question is, what are you seeing out in the travel industry in the U.S. as well as in Europe in terms of, you said it was a little bit soft. Have you noticed any, is it getting worse? Is it stabilized? Thank you. Hi, Ed. There's not much difference right now between North America and Europe. As you have seen, prices for flights are coming down. It's not like the airlines are flying empty. Hotel prices are coming down. That all indicates a bit lower demand. This allows us to develop these strong offers. I mean, you saw some of these club offers. They provide excellent value. That's what we do by taking advantage of how the travel industry is evolving. Great. You did mention that when it is a little bit weaker in the hotels and travel suppliers need to fill in their rooms, have you noticed any change in consumer behavior? Have you noticed maybe your high-end spenders trading down or spending less? No, we have not heard that from our members. Our members are actually quite affluent. From all the conversations and meetings we have had, we haven't heard that they would be trending down. They are Travelzoo members, so it allows them to go to very luxurious places and incredible experiences at prices that are much better than what other people are paying. That, by effect, allows them to do more with less. Great. My last question is, as you talk to a lot of these travel suppliers, do you think that people just see this as kind of like a little bit of a blip, or are people a little bit concerned heading into the back half and maybe possibly into 2026 in terms of the weakening travel trends? Right now, everyone is thinking quite short-term because the whole environment is a bit unsecure, unsure. People don't know what's happening in the U.S. with the political administration and so forth. No one is really making any long-term predictions. Great. Thank you for answering my questions. I wish you guys good luck. Thank you. Sure. You're welcome, Ed. This concludes the Q&A portion of today's call. I would like to turn the call back over to Mr. Holger Bartel for closing remarks. Sure. Dear investors, thank you so much for your time and support today, and we look forward to speaking with you again next quarter. This concludes today's Travelzoo's second quarter 2025 earnings call and webcast. You may disconnect your lines at this time and have a wonderful day.