Travel + Leisure Co. (TNL) Income Statement

The revenue trajectory appears stable, with quarterly growth rates ranging from 0.7% to 5.7% over the past ten quarters. The most recent quarter (2026Q2) reported $1.1B in revenue, a 4.4% increase year-over-year, indicating a steady but not accelerating trend. This consistency likely reflects the recurring nature of membership fees and financing income, which provide a stable base, while VOI sales contribute more volatile transactional revenue. Investors should monitor whether the recent acquisitions can accelerate growth beyond this modest pace.

Gross margin has shown a clear upward trend, from 44.9% in 2024Q1 to 57.0% in 2026Q2, indicating improved efficiency in resort operations or a shift toward higher-margin recurring revenue. However, operating margin remained relatively stable around 19-20%, implying that SG&A expenses have absorbed some of the gross margin gains. The Q4 2025 anomaly, where gross margin plummeted to 14.4%, appears to be a one-time event, possibly related to impairments or restructuring, and warrants further investigation. This margin resilience suggests pricing power, but the sustainability depends on controlling sales and marketing costs.

Despite revenue growth of 4.4% in Q2 2026, operating income grew only 1.9% year-over-year, indicating that operating leverage is not materializing. SG&A expenses increased from $268M to $302M, a 12.7% rise, outpacing revenue growth. This suggests that the company is investing heavily in sales and marketing to drive VOI sales, which may be necessary but dilutes incremental profitability. The lack of operating leverage could be a concern if revenue growth slows, as fixed costs would pressure margins.

The primary cost drivers are COGS and SG&A, with R&D being negligible. COGS has been volatile, ranging from $441M to $878M, with the Q4 2025 spike likely due to one-time charges. SG&A has steadily increased, reflecting higher sales and marketing investments to support growth. The provision for loan losses, embedded in COGS or SG&A, is a critical variable that could impact margins if credit quality deteriorates. Management's expense discipline appears moderate, but the rising SG&A suggests a focus on growth over cost containment.

Q4 2025 stands out as an anomaly, with gross profit of only $148M on $1.0B revenue, leading to a net loss. This could be due to a large impairment, restructuring charge, or a change in revenue recognition. The subsequent recovery in Q1 and Q2 2026, with gross margins back to 54-57%, suggests the impact was temporary. However, the lasting impact may be increased scrutiny on cost management and a more cautious approach to acquisitions. Investors should monitor whether this quarter signals underlying volatility in the business model.