Barcelona, 29 November, 2017 – eDreams ODIGEO (www.edreamsodigeo.com), Europe’s largest online travel company and one of the largest European e-commerce businesses, today reported its results for the six months ended September 30th, 2017.
H1 RESULTS HIGHLIGHTS
- First half revenue margin growth of 6% €254.5m and adjusted EBITDA growth of 8% €58.7m
- H1 bookings up +3% on last year, adjusting for the sale of corporate travel and packaged tours business
- Progress against KPIs delivering positive results across the business:
- Revenue diversification ratio increased from 28% to 32%
- Product diversification ratio increasing from 44% to 48%
- Acquisition cost per booking index down 6 percentage points on Q2 last year
- Customer repeat booking rate up from 44% to 45%
- Strong growth in mobile bookings now representing 37% of total flight bookings versus 29% in Q2 2017
- On track to meet raised FY 2018 guidance, bookings in excess of 11.7m, revenue margin in excess of €487m, adjusted EBITDA €118m +/- 2 million (+10% growth year-on-year)
Dana Dunne, CEO of eDreams ODIGEO said:
“We are pleased with our performance in the first half of the year, with revenue margin growth of 6% and adjusted EBITDA growth up 8% to €58.7m. Our solid results were driven by our strategy, with good results in mobile, leveraging our scale, and our customer proposition. In addition we start to see the investments in our change in revenue model paying off, and good progress in our dynamic packages proposition”.
eDreams ODIGEO delivered a solid financial performance in the first half of fiscal year 2018, with growth in bookings of 1% and revenue margin, up 6% (+11% in Q2), despite strong comparatives in H1 FY2017. As previously guided, H1 performance was tempered by accelerated investment in the transition to mobile and change of our revenue model as well as by the sale of our corporate travel and packaged tours business. In addition, a portion of revenues and adjustments to costs that were booked in Q2 apply to all of H1, and therefore H1 results are a better reflection of our performance than Q2 results.
We estimate the impact of the sale of the corporate travel and packaged tours business to be in the region of 149,000 bookings. Excluding this effect, bookings would have grown by 3%. Adjusted EBITDA growth rates were up by 8%.
The financial performance for the first half demonstrates that the shift in our business model is delivering the desired results. Our revenue diversification strategy continues to have a positive impact on our business, increasing revenues outside of flight tickets, which are higher margin and generate more profit for the business.
We are also seeing measurable improvements in our new KPIs. We’ve increased our Product Diversification Ratio and Revenue Diversification Ratio from 44% and 28% in Q2 FY17 to 48% and 32% in FY18, respectively. Continued investment in mobile resulted in mobile bookings up 27% in Q2 2018, now representing 37% of total flight bookings.
We continue to invest to build a long-term highly attractive business by offering an exciting range of innovative products and services, investing in mobile, evolving our pricing and communication of that pricing, and becoming a one-stop shop for travel. Overall, we consider this a solid set of results and set us on the path to meet our increased full year FY 2018 Outlook.
Gross Leverage ratio was down from 4.09x in September 2016 to 3.84x in September 2017, which give us ample headroom against our covenant ratio. Despite cash outflow from working capital, net leverage ratio also slightly decrease from 3.05x in September 2016 to 2.94x in September 2017 (previously guided in the FY2017 results presentation). Reflecting solid financial performance we prepaid €10 million of the outstanding 2021 bonds post-closing, resulting in Gross Leverage ratio of 3.76x .
The Group reported a cash position of €101.7 million, despite an outflow in working capital of €66.6 mostly driven by Q1 FY 2018, and additionally revenue accrued from revised terms with our providers had not been collected by end of H1.
Business review by business line
In our flight business, bookings grew 2%, driven by our revenue diversification strategy, which is positioning us well for long term growth. Excluding the effect of the sale of corporate travel and packaged tours business, bookings would have grown by 4%. We continue to make investments in order to build scale, become more agile, improve the business model, and create a better customer experience.
Revenue margin performance in our flight business experienced growth rates of 8% (+12% in Q2), reaching €203.7 million for H1 fiscal year 2018. Revenue margin growth was driven by revenue margin per booking due to improved operating performance, revised terms with our providers leveraging our scale, and starting to deliver on revenue diversification strategy.
Non-flight bookings were down 11% in line with expectations due to sale of the corporate travel and packaged tours businesses, and investment in the transition to mobile and change of our revenue model. Excluding this impact, bookings would have been down only 2%.
Non-flight revenue margin was down 2% in H1 (+4% in Q2) as a result of an increase of 10% in revenue margin per booking due to strong improvements on our dynamic packages business, overall product and operational improvements and revised terms with our providers, already explained.
Business review by geography
Our Core markets (Spain, Italy and France) were slightly down or flat in H1 FY 2018 (-2% bookings, flat revenue margin growth year-on-year) due to tough comparatives (+10% booking, +7% revenue margin in H1 FY2017), the strategic initiatives mentioned above and the sale of non-core businesses. In FY 2018, revenue margin stood at €136.7 million; performance was driven by bookings, already explained, and improvements of 2% in revenue margin per booking due to results from operational execution and leveraging scale, and more favourable terms in a number of contracts with the Company’s suppliers.
In the Expansion markets, bookings were up 4%, as a result of investments made in the business and revenue diversification, and despite the adverse impacts mentioned. Excluding the effect of the sale of the Corporate Travel business, bookings would have grown by 10% in H1 FY 2018.
Expansion markets revenue margin was up 13% year-on-year for H1 FY 2018 to €117.7 million. The performance was driven by bookings growth, negative foreign exchange impact, in particular the depreciation of the pound vs the euro, and improvements in revenue margin per booking of 15% and 8% in Q2 and H1 FY 2018, respectively..
We continue to see benefits across the group from the shift in our revenue model, the investment in mobile and our focus on Dynamic Packages.
The shift we have made in our revenue model has proven to be successful, and we are rolling it out across most of our key markets. Conversion, repeat booking rates, attachment of value-added services and satisfaction with our customer experience have performed quite positively. Marketing cost per booking has decreased and traffic, as expected, after an initial reduction has returned to growth in our case study.
Looking at our investment in mobile, we have continued to invest significantly in our mobile offering and we are reaping the rewards. Bookings for flights through mobile channels are up by 27% in H1 18, representing 37% of total flight bookings done via mobile devices, and our performance in mobile continues to outperform the industry average. In pre-booking, our mobile platform now offers all products available on desktop and through continued investments we are moving towards our app including all of our Dynamic Packages and including all of our ancillary products post booking to help improve conversion on mobile devices to match that of desktop users.
Finally, in the first half of 2018 we also made good progress in our strategy to focus on Dynamic Packages (DP). We have improved our mobile web front in DP, which makes it easier for our customers to navigate and complete bookings, and make the flight + hotel search and booking more accessible to customers coming from Meta. A result of our commitment to grow this business is that our DP related A/B test have increased by 80% year-on-year, with a 65% success rate. Overall we are seeing significant improvements in traffic, conversion and revenue margin per booking which is generating strong results. DP bookings grew at twice the pace of flight bookings in Q2, with growth in revenue margin per booking of 17%. In addition we are adding new points of sale for DP like Telesales and increasing the number of touch points and intermediate pages. Looking ahead we will continue to drive our investment into DP including launching our hotel inventory and improving our app, so that we can continue to provide our customers with a solution to all of their travel needs.
We will continue to invest to build long-term highly attractive business:
- Evolving our pricing and communication of that pricing
- Offering an exciting range of innovative products and services as a one-stop shop
- Improving our Product Diversification Ratio and Revenue Diversification Ratio as a result
- Pushing the transition to mobile, which affects performance in the short term but improves our strategic position and long-term attractiveness
- We will control the transformation pace to continue to grow absolute Adjusted EBITDA
Reflecting these investments, through the implementation of our strategy and the change in our revenue model, we expect Q3 bookings to decrease year-on-year and Q4 to increase year-on-year, with H2 FY 2018 on aggregate showing positive results and in line with the phasing of the full year guidance given back in June 2017.
On the 2nd of November, the group raised its short-term guidance for fiscal year 2018 as well as long-term guidance for fiscal year 2020. The increased guidance results from operational execution and leveraging scale, and more favourable terms in a number of contracts with the Company’s suppliers, and it is based on the continuity of its current strategies on product transparency and revenue diversification.
The annual targets for fiscal year 2018 are as follow:
- Bookings: In excess of 11.7 million
- Revenue margin: In excess of €487 million
- Adjusted EBITDA: €118 million (10% growth year-on-year), +/- €2 million
The annual target for fiscal year 2020 is as follows:
- Adjusted EBITDA: €130 to €145 million
(*) Definition of Non GAAP performance measures provided on pages 7-8
About eDreams ODIGEO
eDreams ODIGEO is one of the world’s largest online travel companies and one of the largest European e-commerce businesses. Under its four leading online travel agency brands – eDreams, GO Voyages, Opodo, Travellink, and the metasearch engine Liligo – it offers the best deals in regular flights, low-cost airlines, hotels, cruises, car rental, dynamic packages, holiday packages and travel insurance to make travel easier, more accessible, and better value for the more than 18 million customers it serves across 43 markets. eDreams ODIGEO is listed in the Spanish Stock Market.