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9M Adjusted EBITDA up 10% to €86.8 million, all key metrics in line or above guidance


Barcelona – WEBWIRE
Summary Income Statement
Summary Income Statement

eDreams ODIGEO (www.edreamsodigeo.com), Europe’s largest online travel company with over 18 million customers and one of the largest European e-commerce businesses, reported its results for the nine months of the fiscal year 2020.

9M RESULTS HIGHLIGHTS

  • 9M performance in line with guidance
    1. Bookings, following the completion of our strategic revenue model shift, started to show faster growth. During 3Q fiscal year 2020, Bookings grew by 5% year-on-year, and reached 8.3 million in 9M fiscal year 2020, up 2% versus 9M fiscal year 2019 
    2. Revenue Margin was up 8% year-on-year to €412.9 million, due to an increase in Revenue Margin per booking of 6% 
    3. Adjusted EBITDA rose 10% to €86.8 million (9M fiscal year 2019: €79.1 million) 
    4. Adjusted Net Income increased 46% to €31.4 million 
    5. Cash position improved by 47% to €71.7 million (net of overdrafts) (9M fiscal year 2019: €48.9 million) 
    6. Net leverage ratio reduced to 2.9x from 3.9x in December 2018.

  • Strategic initiatives delivering strong results.
    1. Diversification Revenue up 29% year-on-year, 86% larger than our Classic Customer Revenues
    2. Revenue Diversification Ratio up to 51% (from 43%)
    3. Product Diversification Ratio up to 82% (from 68%)

  • Acquisition Cost per Booking Index reduced by 31 pp since fiscal year 2015, and Repeat Booking Rate rose to 41%
  • Mobile bookings up to 44% of total flight bookings versus 39% in 9M fiscal year 2019
  • Industry-leading subscription programme (Prime) showing strong results. Prime subscribers grew by 110,000 to 499,000 (+28% vs 2Q FY20) and reached 555,497 on the 23rd of February 2020
  • Acquired Waylo, the US hotel booking technology business

CURRENT TRADING & FY20 UPDATE

  • Bookings, following the completion of our strategic revenue model shift, have shown improving performance in the first three quarters of our fiscal year.  This is as anticipated and guided to the market.
  • This growth in Bookings has  accelerated during the third fiscal quarter, with December growing at 11% year-on-year
  • After the Coronavirus outbreak, the biggest drop is in Asia. Also we have seen a drop in all our destinations, and more recently in Italy in particular.
  • What we have seen since the expansion of the disease to Italy is a drop in Bookings for the entire group of 12%
  • If we assume this pattern to continue for the remaining 5 weeks of FY20, we estimate the following results for the aggregate of the fiscal year:
    1. Bookings: UP 1% vs FY19, reaching 11.3 million
    2. Revenue Margin: UP 4% vs FY19, reaching €538 million
    3. Adjusted EBITDA: UP 9% vs FY19, reaching €130 million

 Dana Dunne, CEO of eDreams ODIGEO said:

‘’I am pleased to report another quarter of solid results across the Group in line with our guidance. Our strategy shift to enhance revenue diversification again has delivered positive results, the 20th consecutive quarter of achieving or exceeding guidance. With leading positions in many European markets, a proprietary, market leading technology platform and the industry leading subscription model, the foundation is set for continued progress. While the impact of the coronavirus has brought a slowdown to the industry, the underlying fundamentals of online travel are strong, and once the virus is contained, a return to normal trading patterns will resume. I find comfort in the resilience of our business model and our strong financial position.”

Business Overview

During 9M of the current year we have seen continued progress. Bookings are starting to show faster growth in 3Q fiscal year 2020, up 5% year on year, and reached 8.3 million in 9M fiscal year 2020 (up 1.9% vs 9M fiscal year 2019). This is in line with our guidance and reflected the completion of our shift to a new revenue model, albeit with some markets operating within the first 12 months of the change and yet to deliver a full period of trading. Our focus is to build a high quality, sustainable business, as demonstrated by the increase in Revenue Margin of 8% for a total amount of €412.9 million. Adjusted EBITDA was up 10% to €86.8 million in 9M fiscal year 2020, in line with guidance. 

Our revenue diversification initiatives are delivering results. Diversification revenues continue to grow, up 29% year-on-year, and are now 86% larger than Classic Customer Revenue. As planned and as a consequence of our revenue model shift, Product Diversification Ratio and Revenue Diversification Ratio have increased to 82% and 51% in the third quarter, up from 68% and 43% in 3Q last year, rising an excellent 14 and 8 percentage points in just one year. 

Overall, we are delighted by the continued rapid progress of revenue diversification and product diversification. We are particularly pleased with dynamic packages and ancillaries as revenues increased 25% year-on-year in both categories. 

Our industry-leading subscription programme Prime, launched just two years ago, has continued its success. The number of subscribers has increased rapidly to 499,000, 110,000 more than in 2Q fiscal year 2020, and as of 23rd of February reached 555,497 subscribers. We now operate Prime in four of our largest markets: Spain, Italy, Germany and France. Additionally, mobile bookings continue to grow and account for 44% of our total flight bookings in 3Q fiscal year 2020, rising 5 percentage points from 3Q last year. 

In January we acquired Waylo to keep us technologically at the forefront of the hotel booking market.

Adjusted Net Income stood at €31.4 million, up 46%. We believe that Adjusted Net Income better reflects the real ongoing operational performance of the business.

Cash position (net of overdrafts) stood at €71.7 million, up 47% versus €48.9 million in 9M fiscal year 2019. The solid cash performance was driven by a) net cash from operating activities, which increased by €40.0 million, mainly reflecting lower outflow in working capital, increase in adjusted EBITDA and increase non-cash items, b) cash for investments of €20.5 million, broadly in line with the same period last year, and c) cash used in financing, amounted to €16.1 million, compared to €21.2 million in the same period of last year due to higher financial expenses in fiscal year 2019 in relation to refinancing of 2021 notes. As a result, Net Leverage ratio was reduced from 3.9x in December 2018 to 2.9x in 2019. In 9M fiscal year 2020 Gross Leverage ratio was also reduced from 4.4x in December 2018 to 3.6x in 2019. 

About eDreams ODIGEO

eDreams ODIGEO is one of the world’s largest online travel companies and one of the largest e-commerce businesses in Europe. Under its four leading online travel agency brands – eDreams, GO Voyages, Opodo, Travellink, and the metasearch engine Liligo – it serves more than 18 million customers per year across 46 markets. Listed on the Spanish Stock Market, eDreams ODIGEO works with over 665 airlines and has partnerships with 130. The brand 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 consumers across the globe.

Glossary of definitions

Non-reconcilable to GAAP measures

Acquisition Cost per Booking Index refers to the most relevant marketing expenses incurred to acquire new customers (encompassing Paid search, Metasearch and Affiliates), divided by the total number of Bookings. For any given period, the ratio is expressed as an index 100, in which 100 is the value of Acquisition Cost per Booking for the 3 months ended on December 2015.  The acquisition cost per booking index provides the reader a view of the trend of one of the main variable costs (marketing cost) of the business.

Reconcilable to GAAP measure

Adjusted EBITDA means operating profit/loss before depreciation and amortization, impairment and profit/(loss) on disposals of non-current assets, certain share-based compensation, restructuring expenses and other income and expense items which are considered by management to not be reflective of our ongoing operations. Adjusted EBITDA provides the reader a better view about the ongoing EBITDA generated by the Group.

Adjusted Net Income means our IFRS net income less certain share-based compensation, restructuring expenses and other income and expense items which are considered by management to not be reflective of our ongoing operations. Adjusted Net Income provides to the reader a better view about the ongoing results generated by the Group.

Revenue Diversification Ratio is a ratio representing the amount of Diversification Revenue earned in a twelve-month period as a percentage of our total revenue. Our management believes that the presentation of the Revenue Diversification Ratio measure may be useful to readers to help understand the results of our revenue diversification strategy.

EBIT means operating profit/loss. This measure, although it is not specifically defined in IFRS, is generally used in the financial markets and is intended to facilitate analysis and comparability.

EBITDA means operating profit/loss before depreciation and amortization, impairment and profit/loss on disposals of non-current assets. This measure, although it is not specifically defined in IFRS, is generally used in the financial markets and is intended to facilitate analysis and comparability.

Gross Leverage Ratio means the total amount of outstanding Gross Financial Debt on a consolidated basis divided by “Adjusted EBITDA”. This measure offers to the reader a view about the capacity of the Group to generate enough resources to repay the Gross Financial Debt.

Net Leverage Ratio means the total amount of outstanding Net Financial Debt on a consolidated basis divided by “Adjusted EBITDA”. This measure offers the reader a view about the capacity of the Group to generate enough resources to repay the Gross Financial Debt, also considering the available cash in the Group.

Net Income means Consolidated profit/loss for the year.

Revenue Margin means our IFRS revenue less cost of supplies. Our management uses Revenue Margin to provide a measure of our revenue after reflecting the deduction of amounts we pay to our suppliers in connection with the revenue recognition criteria used for products sold under the principal model (gross value basis). Accordingly, Revenue Margin provides a comparable revenue measure for products, whether sold under the agency or principal model.

Other Defined Terms

Bookings refers to the number of transactions under the agency model and the principal model as well as transactions made under white label arrangements. One Booking can encompass one or more products and one or more passengers.

Customer Repeat Booking Rate (%) refers to the ratio, expressed on a percentage basis, of Bookings made in a quarter by customers who made a prior Booking in the 12 months prior to that quarter divided by the total number of Bookings. The ratio is annualized, multiplying by four and by the ratio of the quarter over the average of the last 4 quarters, to eliminate seasonality effects.

Product Diversification Ratio (%)  is a ratio expressed on a percentage basis and calculated by dividing the number of flight ancillary products and non-flight products linked to Bookings (such as insurance, additional check-in luggage, reserved seats, certain additional service options, Dynamic Packages and car rental) by the total number of Bookings for a given period.

Core Markets and Core Segment refers to our operations in France, Spain and Italy.

Expansion Markets and Expansion segment refers to our operations in Germany, the United Kingdom and the other countries in which we operate, including, among others, the Nordics and countries outside Europe.

Flight Business refers to our operations relating to the supply of flight mediation services.

Non-flight Business refers to our operations relating to the supply of non-flight mediation services, as well as other non-travel activities such as advertising on our websites, incentives we receive from payment processors, charges on toll calls and Liligo’s metasearch activity.Non-recurring Items refers to share-based compensation, restructuring expenses and other income and expense items which are considered by management to not be reflective of our ongoing operations


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