Release Date: December 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- On The Beach Group PLC (LSE:OTB, Financial) reported a 15% increase in sales, reaching £1.2 billion, and a 13% growth in volume, marking another record summer.
- Adjusted profit before tax grew by 25% to £31 million, while reported profit before tax increased by 84% to £26.5 million.
- The company ended the year with a strong cash position of £96 million, excluding £140 million held in a trust account.
- A share buyback of up to £25 million has been initiated, reflecting a strong balance sheet and disciplined investment approach.
- The company has set a medium-term ambition to more than double its business size to £2.5 billion in sales and £85 million in adjusted profit before tax.
Negative Points
- Adjusted revenue per booking was slightly down compared to the prior year, impacted by a deflationary environment in the second half of the year.
- There was significant volatility in airfares due to excess capacity from low-cost carriers, affecting revenue growth.
- The company incurred £3 million in costs related to keeping Ryanair on sale, which were not adjusted in the financial results.
- Group headcount decreased by 14% due to changes in B2B operations and increased automation, which may impact employee morale.
- The company faces challenges in maintaining EBITDA margins at pre-pandemic levels, despite improvements in marketing and overhead efficiencies.
Q & A Highlights
Q: Can you elaborate on the financial performance and key metrics for the year?
A: The company reported sales of £1.2 billion, a 15% increase from the previous year, with a record summer showing 13% volume growth. Adjusted profit before tax rose by 25% to £31 million, and reported profit before tax increased by 84% to £26.5 million. The business ended the year with £96 million in cash, excluding £140 million held in a trust account. A final dividend of 2.1p per share was declared, totaling 3p for the year. Additionally, a share buyback of up to £25 million has commenced. (Unidentified_1)
Q: What changes were made to the revenue recognition policy, and how did it impact the financials?
A: The revenue recognition policy was simplified, with all revenue now recognized on an agency basis at the time of booking. This change, along with a focus on driving efficiencies in marketing and overhead spend, contributed to a 14% growth in statutory revenue. Adjusted revenue was shown after deducting the refund settlement with Ryanair. (Unidentified_2)
Q: How has the partnership with Ryanair impacted the company?
A: The partnership agreement with Ryanair resolved a longstanding risk regarding access to seats and litigation issues. It has improved customer experience, simplified operations, enhanced automation, and removed barriers to growth. This agreement is working well and has positively impacted the company's operations. (Unidentified_1)
Q: What technological advancements have been made, and how do they support future growth?
A: Significant upgrades to technology include smart caching technology, live pricing capability, upgraded airline and hotel integrations, replatformed Android and iOS apps, and AI-powered content for hotel onboarding. These advancements enable the company to scale quickly, increase supply, meet customer demand, and improve customer experience. (Unidentified_1)
Q: What are the strategic priorities for the next 3 to 5 years?
A: The strategic priorities include designing for stickiness through mobile app engagement, increasing the share of the holiday wallet by expanding offerings to include city destinations, ensuring peace of mind for customers through technology, and designing for scale to enable limitless expansion. The company aims to double sales and achieve an EBITDA margin of 40% with an adjusted profit of £85 million. (Unidentified_1)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
