Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Web Travel Group Ltd (WEBJF, Financial) achieved a 25% increase in Total Transaction Value (TTV) for the first half of 2025, indicating strong growth momentum.
- The company reported a significant cash reserve of $510 million, highlighting robust cash generation capabilities.
- Web Travel Group Ltd (WEBJF) successfully completed a demerger, allowing for a more focused business strategy on the B2B segment.
- The company is on track to achieve $5 billion in TTV for FY25, demonstrating confidence in its growth trajectory.
- Web Travel Group Ltd (WEBJF) plans to conduct an on-market share buyback of up to $150 million, aiming to maximize shareholder value.
Negative Points
- Revenue margins decreased by 150 basis points, impacting overall revenue growth and EBITDA performance.
- EBITDA was down 11% compared to the previous year, reflecting increased expenses and lower revenue margins.
- The company faced challenges with customer financial incentive agreements, which contributed to a decline in margins.
- There was a significant management focus on the demerger, which may have diverted attention from other operational areas.
- The competitive environment and geographic mix changes have put pressure on revenue margins, particularly in Europe.
Q & A Highlights
Q: Can you clarify the medium-term outlook for revenue margins, considering the geographic mix and potential dilution?
A: John Guscic, Managing Director, explained that the company expects revenue margins to stabilize around 6.5% over the next three reporting periods. This expectation considers various factors, including geographic mix and market conditions. The company has conducted a detailed analysis of its business elements to arrive at this projection.
Q: How should we think about the fixed versus variable cost structure in relation to the quick margin recovery towards 50% EBITDA?
A: Tony Ristevski, CFO, stated that the cost structure is approximately 75% fixed and 25% variable, with 10% of the variable costs being semi-variable. The company plans to leverage economies of scale and invest in sales and contracting to maintain a 50% EBITDA margin.
Q: What factors contributed to the decline in revenue margins from 8% to 6.5%, and are these changes permanent?
A: John Guscic noted that the decline was due to several factors, including customer financial incentives, geographic mix, and supply mix changes. These factors are considered permanent, and the company plans to continue with customer financial incentives at the same rate as in the first half.
Q: Can you provide more insight into the competitive environment and whether the company is selling to or powering competitors?
A: John Guscic confirmed that the competitive environment has not changed significantly, and the company continues to sell to competitors as part of a coopetition model. The company is growing at a faster rate than the market and its competitors.
Q: How does the company view the wholesale channel's growth and its relevance in the market?
A: John Guscic emphasized that the wholesale channel remains essential for global distribution, and there is no decline in its need. The company believes that wholesale distribution will continue to grow and remain relevant in the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
