Thank you for standing by, and welcome to the Webjet Limited FY 2024 results and investor briefing. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. John Guscic, Managing Director. Please go ahead.
Thank you, Ashley. Don't stop me now! I'm having such a good time. I'm having a ball. Good morning. Welcome to the Webjet Limited FY 2024 results. Joining me today is our CFO, Tony Ristevski. Let's get stuck into it. So, as we see on slide three, key metrics are all at record levels, materially ahead of FY 2023 and obviously ahead of pre-pandemic numbers. Bookings are up 21% to 8.7 million. TTV is up 29% on last year to AUD 5.6 billion. Revenue up 29% to AUD 471.5 million, and most importantly, EBITDA up 40% to AUD 188.1 million. Let's go through the key divisions and look at their highlights.
The most important thing that, these results encapsulate are the revised strategies of the business over the last three years, and we're seeing a significant outperformance against the market for all of our business units. Let's go through them individually. WebBeds, the B2B wholesaling business, is up 39% on FY 2023, 27% on a functional currency basis, with a result of AUD 162.4 million. Obviously, all key metrics are up significantly ahead of FY 2023, and we achieved AUD 4 billion in TTV. We are on the road to getting to AUD 10 billion by FY 2030, and we'll talk a little bit about that in the results themselves. The Webjet OTA business, up 25%, EBITDA margins at record levels.
We already had the best-in-class EBITDA margins in the world, and we have increased those EBITDA margins during the course of FY 2024. Strong growth on all key metrics, and as we have signaled over the last two reporting periods, our focus has been on growing our share in the international market, which we have done. GoSee was circa flat, up 6% on and delivered AUD 1.7 million, and our total cash is up AUD 116 million as of March 2023. Obviously, a very strong cash position. We generated significant cash from operations, and Tony will cover that off when he gets to his stage. Let's get into WebBeds itself. So, bookings up 26% to 7 million. TTV, bang on AUD 4 billion, up 42%.
Revenue up 39% to AUD 327.9, with EBITDA up 39% as well to AUD 162.4. So the key drivers of the result that we just looked at, the accelerated growth in and recovery in the APAC region, and the continued strong growth in North America were the key driver of the bookings. TTV up on last year as a combination of both the volumes increasing, average booking value increasing, and some favorable FX tailwinds. Revenue was in line with TTV, and EBITDA was in line with our business.
We'll talk a little bit about the run rate when we get to the outlook slide, but it'd be suffice to say we are accelerating as we go into FY 2025, and we'll talk about that in the outlook slide. Moving on to slide seven. As we've covered, bookings are up 26%. Average booking value is up 13%. That is a combination of rate and exchange rate, rate being priced that we sell our hotel rooms. TTV up 42%, revenue up 39%, expenses up 38%, EBITDA up 39%. Revenue margin very strong at 8.2%, and EBITDA margin in line with our expectation of being around 50% going forward.
The key, key call-out compared to the first half results, that business transformation is continuing to-- and the investments that we've made that show a strong growth in expenses in the first half have ameliorated to some extent in the second half. The second-half expenses do have, Roomdex included in those numbers. The things that we're particularly proud of in the WebBeds business is with regards to the transformation of the business, that we want to be substantially more effective, across our employee base, which we now are. We are 73% more efficient than, on an FTE basis compared to pre-COVID. We expect that to continue to improve in FY 2025. TTV margins are modestly down in relation to the expected change in business mix.
Over time, we expect that to settle in the mid-sevens, as we highlighted during the Investor Day update in March. Overall, EBITDA are up 39%. We will continue to focus on absolute EBITDA growth, and we'll talk a little bit about the composition of how that is expected to be derived shortly. But EBITDA margins remain in line with our expectations of being circa 50%. So let's go to Slide 8. It's again very similar to the slide you would have seen at the Investor Day. You're seeing a strong growth in APAC. In particular, China, India, and South Korea have been the three fastest-growing and most substantive markets that have contributed to the APAC result. America, we continue through new client wins and other market share gains coming through to drive that result.
Europe has been very strong, with new client wins in our largest TTV market. The Middle East, as we have signaled for a couple of years now, remains material lower in light of our trading policies. We talk a little bit about significant opportunity for point of sale, and we're already starting to see the benefits of that in our FY 2025 run rate. So I'll cover that off at the outlook slide. As we've suggested, we've got a globally diversified portfolio in our business, and we expect over time that that will circa be three equal TTV shares, three equal TTV share regions across the top three, with a smaller Middle East business. Moving on to Slide 9.
There have been lots of other public companies, particularly in America, that have reported their results over the course of the last few months, and they've seen a sort of slowing of the travel market. It's still growing at a healthy rate, but it's not growing at the same rates that it was in the first half of calendar 2024. So as we look at our 30% growth rate at a TTV level and its composition, and we put that into our actions that we've undertaken to drive those outcomes, we see the market growing at circa 7% over the course of financial year 2024. So that's part of our thirty.
As we have spoken at some length during the Investor Day, the new customer supply markets, where we get additional supply into our inventory mix, we get additional customers, and we penetrate new markets. That contributed circa 13% of our growth in FY 2024. And on the conversion side, where we're selling more to our existing players on the back of activities that we undertake in ensuring relevance and getting the right inventory at the right price, at the right time to our people, then we're starting to see an increase in that conversion number, and that's now up to 10% for FY 2024. These three pillars of growth will be the key drivers for our continued outperformance.
They will also be the key drivers for our aspirational - not aspirational, our realistic goal of getting to AUD 10 billion by FY 2030. So we're on our way, and, as you can see, we delivered AUD 4 billion. Our target that we disclosed at the Results Day was AUD 5 billion for FY 2025. We are currently ahead of the run rate to achieve that FY 2025 number, and our longer-term goal is to get to AUD 10 billion by FY 2030. Let's move to the Webjet business. Again, strong growth over FY 2023. Bookings are up 5% to 1.3 million. TTV is up 6%, at AUD 1.4 billion. Revenue is up 12%, at AUD 121.2 million, and EBITDA up 25% to AUD 54.2 million.
The most significant element of our growth in bookings has been in the international airfare arena. Average booking values are up, notwithstanding the softening of prices in the last six months of our financial year. We'll talk a little bit about that for the implications for FY 2025 again, when we get to the outlook slide. The business has pivoted substantially throughout the last two to three years to focus on maximizing the margin available to us in light of the lower international commissions that we used to receive. The net result of that is that we have increased our revenue ahead of TTV, which is a fabulous outcome, and it's the key driver of our outperformance at an EBITDA level. So delighted with the performance of the Webjet business, and it continues to be the market leader in Australia.
If we move on to Slide 13. Obviously, we're seeing strong improvement across all our metrics. Bookings up 5%, average booking are circa flat, TTV up 6%, revenue's up 12%, expenses only up 4%, EBITDA up 25%, revenue to TTV margin up a whopping 50 basis points, EBITDA margins up on last year by 440 basis points to 44.7% for the full year. We have the highest airline denominated OTA EBITDA margins in the world. It's the team has done an incredible job on ensuring that we deliver an increased EBITDA at a higher EBITDA margin, which is a strength of the brand and our ability to continue to pivot to markets which there are opportunities for us to increase our revenue and increase our bookings.
So strong improvement across all metrics, and it's been the key driver of what's been a stellar result for the Webjet OTA business. Move on to slide 14. Per our comparison basis, we see that we've increased our market share across the board, in particular in international bookings. We're now 33% higher than pre-pandemic on international bookings, which is a great result. We've spoken again previously about the acquisition of Trip Ninja. It was an important component in in helping us drive improved multi-city results and being able to book a multi-city itinerary. The Trip Ninja element delivered circa AUD 4 million of the EBITDA result that we're talking about. So it was a key driver in our outperformance by circa 25% against last year.
We're the leading OTA, travel agency, as represented by the awards that we've won, but most importantly, by the market share gains that we've made. It's important to note after a very difficult pandemic period, where customer service issues were front and center of our mind in ensuring that we did the right things by our customers, that, in light of a more normal environment, that our service improvements have increased both Net Promoter Score and Customer Engagement Score, scores, driving significantly higher customer satisfaction, which we're very proud of. Moving on to GoSee. It's a mixed business. The cars business continues to do well. The demand for motor homes still is impacted.
There's been ample coverage about the issues in the motor homes business, of lack of supply and lack of inbound tourism beyond friends and family coming to New Zealand, therefore restricting our opportunity, which is one of the reasons that we haven't seen the GoSee business rebound as substantially as our other two businesses. Overall, the business delivered a solid result with an EBITDA of AUD 1.7 million. Tony, tell us about this fabulous set of numbers in a little bit more detail.
Thank you, John. I'll turn your attention to slide 18 first. It's a financial summary. I'll start off with the statutory result because I'll talk about it in the context of the second half, and there's quite a few items there that are driven from an accounting, non-cash perspective. I'll start off with the first one, being in the non-operating gains and expenses. We've had a gain there of circa AUD 10 million as it relates to the mark-to-market to the financial instrument, where we have exposure to ourselves through the derivative thereof of circa 4.9 million shares. The share price has appreciated AUD 2 per share since the last time we measured that at the half year, resulting in a gain of AUD 10 million, which is non-cash and sits inside the statutory result, and not included in the underlying result.
Moving down the page to acquired amortization. Taking off from what John mentioned around the GoSee business and what we've seen in the broader market space, particularly around some of our listed peers that operate in the motor home space. This calendar year, we have seen a subdued recovery around the motor home space, and it's been delayed as a consequence of supply challenges, along with inbound visitation. So what we've done at the full year is impair that goodwill as it relates to GoSee on the back of that, and being quite prudent as we think about the outlook going forward. Moving down the page to convertible note interest. What you would expect to see there is a notional interest expense, like last year, of AUD 12.2 million or thereabout.
Instead, we've got a gain of AUD 12.3 million. A bit of technical background there. When we first entered into the note 3 years ago, we had to bifurcate the instrument between debt and equity. Effectively, it was a 15%-85% split, and over time, what we'd end up doing is circa, put a notional interest expense through the P&L around AUD 12 million, on the presumption that the bond will last 3 years as opposed to the 5-year term. Given that the 3-year put option was not exercised prior to year-end, we're required under the accounting standards to remeasure the instrument as if it was always bifurcated over 5 years. And that meant we had a true up in this financial year in the order of around AUD 25 million.
So what would it mean going forward in years four and five? We would have approximately AUD 12 million of notional interest expense next year and the following year as we get to the five-year term. Then that concludes the statutory results and the key items, but the focus really is on underlying operations, because that is a better proxy of the generation of cash for the business and how we choose to look at it. John's gone through the underlying earnings components. When I look below that item into D&A, we closed the year off almost AUD 30 million there, and we start to see that increase over time, particularly with the improved increased CapEx spending B2B. And we see that from an outlook perspective, going to AUD 35 million next year and then growing by CPI thereafter.
Moving down the page to net interest and finance costs. The AUD 10.2 million this year. We see that reducing by half going forward, which is driven by two key elements. Those elements being, we entered into some interest rate swaps a few years ago that were quite favorable for us in the first part of the term, but in the later part of that three-year swap was unfavorable, resulting in more of a cash out. That ended in April with the three-year put, so going forward, that won't be an onus on us. And secondly, as we generate more cash in the business, that will generate more income, thereby reducing the overall interest expense, and see that being circa 50% of where it is today in the near term.
Then lastly, looking at the tax line, at the half year flight, that would be around the high teens to mid-teens. As you can see there, for the last two years, it was just circa 13.5%. We see that going forward as being 16%, so for the near term. An increase there of circa 2.5% is driven off primarily by two factors. One being the introduction of corporate tax in the UAE, which is where WebBeds is headquartered, and that tax applies from FY 2025 onwards, which goes from 0% to 9%. And equally proportionally, the earnings we see coming out of the WebBeds Group as proportion to the broader Webjet Group are the key drivers there.
They will have a material impact going forward as it relates to the growth in the underlying earnings per share, which did grow 82%, from last year's AUD 0.803 to this year's AUD 0.333. So a bit there to cover, but I'll move on to the next page, which is cash position on slide 19. This waterfall chart now has changed over time in its composition in a more favorable way. When I reflect back on FY 2022, presenting this chart, you would see back then we had positive cash contribution from working capital of AUD 103 million, and had a loss from operations of AUD 55 million.
As the business has recovered and exponentially grown to TTV, last year, we saw working capital contribution reduced to AUD 56 million, and the earnings contribution contribute AUD 82 million. This year, you can see there's been nominal contribution out of working capital, but the more positive is that it's been contribution of cash has come from the earnings of AUD 131 million, and we'll start to see that grow going forward, as the earnings grow across the broader group. Equally, we took the opportunity of being prudent to upsize our revolver just in case, we couldn't control equity markets, and we couldn't foreshadow what the bondholders would do with their three-year put. So we upsized it from AUD 50 million to AUD 100 million, and that's been resized back down to AUD 50 million subsequently year-end.
All in all, our cash position is a healthy AUD 630 million, consistent with where we were in the first half. Moving forward to the next slide, looking at corporate costs and non-operating items. I'll start off there first with the technology investments in the second half. That loss of AUD 1 million is in line with what we guided six months ago as it relates to Trip Ninja. We see Trip Ninja continuing to improve and the losses diminish, where we expect that business to break even in the last quarter of the new financial year, which is quite positive for the team. Looking at corporate costs, we were guiding six months ago to about AUD 26 million. That was over.
We spent AUD 27 million, a bit more spend as it relates to sort of third-party advisory costs, to complete the year at AUD 27 million. We do see that growing by CPI, CPI going forward. I've already covered off earlier as it relates to the mark-to-market instruments. I won't go through that one-off item. Turning attention to the balance sheet on slide 21. I'll call out the areas. Our receivables continue to be managed in line with our credit policy. That's improved materially from the pre-COVID days, where debt to days are now sort of circa in the late 20s versus the mid- to high 30s. We've had the mark-to-market as it relates to the financial instruments, as it relates to exposure to Webjet stock appreciating in value.
In trade payables and receivables, in payables, should I say, we're obviously starting to see now as supply mix changes, and then we exceed the pre-COVID TTV numbers for the group, for WebBeds specifically, that the supplier mix will start to see a contraction around creditor days, and we started to see that in the FY 2024 period, and we'll continue to see that in the FY 2025 period. And I'll talk about it a bit more as it relates to that, and the impact around cash on the next slide. In the borrowing section, at the half year, the convertible notes, as it was with the 12-month period of the put risk, was classified as current, should I say. At year-end, considering the put was not exercised, it moved back to non-current.
So positive areas that are net, that cash level was sitting on positive cash of AUD 460 million, up on last year's AUD 233 million. At a current ratio, we're greater than 1.6, up from where we were at last year, 1.4. But more pleasingly, is the return on invested capital, where that's grown from the half year, 22% to now 24%. And that's a function really of the inorganic investments we've done pre-COVID, particularly in the WebBeds business, and then the organic growth that's subsequently delivered. And we'll start to see that ratio continue to grow as the, as per the, the numbers John's outlined for the WebBeds business going forward. Go to the next slide on cash flow.
Continuing from the thread on the earlier slide as it relates to our thinking around cash and the impact around creditors going forward, what we saw in the FY 2024 period was two things. One was a bit of a benefit as it relates to the Easter long weekend. We had some payments go out, didn't get processed on time as a result of the public holidays. They ended up getting processed after Easter, so we had a bit of a, an AP free kick. If we were to adjust the FY 2024 numbers, cash conversion would have been closer to 99% as opposed to 107%. But what we'll see there is obviously in FY 2025, cash conversion dripping, dropping down to about 80%. And we'll start to see that normalize around 100% from FY 2026 going forward.
There is no dividend declared for the full year, and obviously, in light of the announcement today around the separation, that's been paused along with the bond, and I'll let John talk to that later in the slide deck. But they are the key call-outs as it relates to thinking around cash and cash in the next sort of year or two. Lastly, on CapEx. As John talked about the strategy around the WebBeds business, particularly point of sale, back in March, we did accelerate from the half year the investment in that development. That resulted in a bit more CapEx spend this year than otherwise was contemplated six months ago. We do see CapEx normalize going forward at a rate of CPI across the group. And I'll leave it at that and hand it back to John.
Thanks, Tony. Webjet is burning through the sky. Yeah, 200 degrees. That's why they call us Mr. Fahrenheit. We're traveling at the speed of light. We wanna make a supersonic investor out of you. We're on track to deliver slipping growth in FY 2025. We break it down to our two business units. WebBeds has accelerated out of FY 2024, and our bookings and TTV are both up circa 20%-35%. Put that into context, as you've just seen, FY 2024, our bookings were up 26% and our TTV was up 30% on a constant currency basis. Now, our TTV, on a much bigger base, is up 35%, and the natural implication is that EBITDA is significantly ahead of the same period last year.
The key drivers for the increase in booking in TTV in FY 2025 for the first 7 weeks, continuation of the growth in APAC, Americas, strong growth in Europe, and a significant rebound in our Middle East business for 2 reasons. 1 is deeper conversion for existing customers, and early days in the release on the soft launch of our point of sale system, but we're seeing a natural improvement in the conversion of our existing customers. There clearly will be more to come on the point of sale as that gets rolled out and additional functionality improves over the course of the next 3 months to 4 months. Looking forward into the European Northern Hemisphere summer, or the Northern Hemisphere summer, strong bookings a couple of months out, which augurs well for the first half.
So delighted in our performance at WebBeds to start the year off. On the Webjet side, not surprisingly, bookings are flat and TTV is down 5%. In a market where average booking values have declined somewhere north of 10% over the course of the year, TTV being down only 5% shows that we have outperformed in the first seven weeks on international, so we are up on international compared to last year. We're down modestly on domestic compared to last year. The shift to international has contributed to our business at an EBITDA level performing ahead of last year, notwithstanding that bookings are flat. The other way to think about it is April, we were down a little bit, in May, we've been up a little bit, which gets us to the flat result.
So again, very solid result from Webjet and, a very strong result from WebBeds. As is customary at this juncture, I want to thank all of the the employees within our organization for their substantial efforts in delivering these world-class results. And we're very, we're obviously delighted in being able to present them, but we're very proud of the contribution that each of them have made. And all the stakeholders within our respective businesses, from the board through to our partners of supply, our customers, and the support of our investors over the last 24 months, last 12 months, is being appreciated.
So that is normally where I would wrap up the presentation and ask the Q&A, but we do have one additional slide, which is significant in the sense that we are exploring the separation of WebBeds and the Webjet B2C businesses. Webjet B2C would include our OTA business, GoSee and Trip Ninja, via a demerger. So if it's completed, the demerger will create two standalone ASX-listed companies. Obviously, both will have leadership positions in their respective industries, their own distinct operating profile, strategy, and growth opportunities. The decision to explore the separation reflects the attractive but divergent growth opportunities available to the respective businesses, and the independent capital structures will allow both divisions to make optimal investment decisions on their own.
If this is to be completed, it would happen at some point during FY 2025, and clearly, any decision to demerge is subject to regulatory approvals, shareholder approvals, final board approvals, and various third-party approvals. So with that, Ashley, we finished the formal component of the presentation and happy to take questions.
Thank you. If you wish to ask a question via the phones, you will need to press the star key, followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Lisa Deng with Goldman Sachs. Please go ahead.
Hi. A question on the WebBeds business from the first seven weeks, it looks very strong. Can you give us a little bit of color in terms of the key regions that's driving that outperformance? And we also noted a sentence on the presentation saying that the revenue growth is going to outstrip EBITDA. Is that still just talking about that 50% margin, or, you know, is there opportunity to go above that? Thank you.
Well, I'll start there, thanks for the question. I'll start with the second element. EBITDA margins are expected to be 50%. Nothing's changed since we made that statement at the Investor Day. And we expect, as we sort of said previously, that the revenue to TTV margin will decline during the course of this year.
Mm-hmm.
That's clearly a result of mix, and as we're selling and moving into new geographies and looking at other opportunities, we're certainly not gonna die on the altar of high margins. We've got a broad, yeah, well-stated and well-documented ambition to get to AUD 10 billion by FY 2030. To do that, we need to pursue greater opportunities than what we're currently looking at. So there is some mix that will drive that number closer-
Mm-hmm
-to 7.5 of the revenue to TTV. And as for the regions, it's predominantly all business units obviously are up when you're up as significantly as 35%. The key element is the delta between sort of the underlying 26% booking growth and the circa 35. So the 9% improvement is a continuation of the story that we told at the Investor Day, that conversions are improving across the board. And so I'm not gonna call out regions of where that's happening, but conversions are improving across the board. And the Middle East has gone from going backwards in FY 2024 to growing in FY 2024, and that's predicated on a couple of things I spoke about.
But the most important is the point-of-sale system being soft launched in that market over the course of the last 2 months. So that's contributed to the growth for FY 2025 for the first 7 weeks.
Got it. And a follow-up on the OTA business. Clearly, we're still gaining share, but if I compare the FY 2024, you know, share versus the first half 2024, it seems like within that last six months, we've kind of gone backwards.
Mm-hmm
A little bit in terms of share. Can we talk a little bit why that is?
Yeah, we've in a choppy market, which is the Australian retail market, where, you know, well-documented cost of living pressures, the sky-high airfares of FY 2023 have dissipated during the course of the year. Our focus in a flattish market wasn't to go after share, it was to maximize our EBITDA result, and that's what we did. So we focused on pursuit of profit ahead of pursuit of growth, and that's the key driver.
Okay, got it. Thank you.
Your next question comes from John O'Shea with Ord Minnett. Please go ahead.
Morning, John. Tony, can you hear me okay?
Perfectly well, John.
Thank you. Excellent result. Well done, guys. Look, couple from me, firstly, sort of following on, on the OTA side. I hear your comments there about focusing on profitable growth. Obviously, 2024, you know, EBITDA was up, you know, 25%. Obviously, the start to the year in the booking side has been pretty modest. Can you give us a sort of broad expectation around how we should think about that as we look into this year? You know, I mean, obviously, you'd be expecting that level of growth again or lower than that, or just a general sort of sense on how we should think about the EBITDA side, the growth to 25 in that?
For the EBITDA side, we expect to grow EBITDA for the OTA business.
Yep.
It'll be a continuation of the strategy for FY 2024.
Yep.
It will be, as we have demonstrated, and we have demonstrated again in the first seven weeks of the year, we can focus on closing sales that have higher margin, and that's been the primary goal.
Yep.
So we will continue to do that. Bookings growth, we would expect to be modest. I think average booking value will continue to decline into the year. I think it's inevitable that that will happen. We're already seeing that. You know, if we have the same mix as we had in the first seven weeks of financial year 2024, our TTV number will be down circa 15%. So you're seeing us focus into higher TTV opportunities per booking as we continue to look at international as the growth driver, and our revenue to TTV margins are higher in international. So that'll be our focus. I think, you know, modest booking growth, TTV will be down as a consequence of airfares being significantly down on last year, and EBITDA will be up on last year, on last year. That's our expectation.
Okay. Thank you, John. Look, secondly, for me, just sort of carrying on from the comments you've made about the B2B business in terms of that, EBITDA margin as a percentage of TTV moving lower. So this year the number was 4.1, on my rough numbers. So as you've articulated before, sort of, should we be thinking that number moves sort of down into that sort of 3.5% range or somewhere around there, or somewhere in between that? Or how am I, am I thinking about it the right way, or how should we think about that?
This is the EBITDA margin?
I think-
EBITDA to TTV in the B2B business.
Yeah, John, we've moved away from that measure. It's probably a legacy of the past, the way you've described it, as being a 3-5, where 5 was the percentage of TTV. To us, the real focus is around absolute growth, to John's point, and the margins there will be sort of circa 50% on revenue is the way to think about it.
Yeah. Yeah. Yeah, I guess what I'm saying to you. What I'm saying to you is you, you know, this year you've done 4.1, say, but as you move away from that, that number moves down, as you said before, John.
Yeah, absolutely. Absolutely. Yeah, there's the, we're sort of. Well, we haven't. We've been explicit in stating that we expect revenue to TTV margins to be in the mid-sevens.
Yep.
So, and a 50% EBITDA margin, roughly. You know, you, you're looking at high threes, not, not low four point—not 4.1.
No, that's right.
Yep.
Well, it makes sense.
Yeah.
I just wanted to clear that one up. Now, just finally, just to Tony, I was a bit unsure what you were saying about the effective tax rate. Can you just articulate that or let someone else have a go? But just very quickly, what you were trying to say there, mate, I just missed that bit.
It's just at an underlying level going forward, if you think about outlook for the coming years-
Yeah.
16% is the appropriate rate to use in that underlying column when you look at the financials-
Right.
- on slide 18.
Thanks, mate. Thanks, guys.
The next question comes from Sam Seow with Citi. Please go ahead.
Good morning, guys. Thanks for taking the question. Just a quick question on average booking values. I saw they're up 13% there in B2B, and just wondering if you could split the international versus domestic bookings like you did in OTA? And maybe how we should think about the magnitude of the tailwind if length of stays continues to increase the international kind of travel recovery in FY 2025?
Yeah, that's always a little bit counterintuitive on the average booking values. So let's cover off this year's average booking values. There's only a nominal increase in average booking values. The tailwind is the exchange rate that's been the key driver of that 13%. And that becomes really clear in the first seven weeks of this financial year, because average booking value or TTV is the same growth rate as bookings, which would suggest average booking value is flat. Now, in reality, what we're seeing is marginal increases of average booking value. I'm talking low single digits, you know, 2%, 3% across the board. But we're seeing a shift in mix, which is contributing to a different output.
Now, if we were just growing our European business at 10%, our Asian business at 10%, Americas at 10%, and Middle East at 10%, then you'd see probably this financial year, FY 2024, you'd see a 5%-5%, 7% sort of number, improving the average booking value. But because our mix is, and our growth rates across regions are very, very different, you're seeing that almost, almost replicate the underlying, booking activity. So length of stay is changing for some, geographies.
But as we're going and continuing to focus on newer, newer, newer markets, a different conversion hypothesis behind our businesses, it's not immediately apparent to be able to call out those numbers, because in aggregate, we're seeing what we're seeing, which is average booking values are flat, TTV growing at the same level of bookings, as you'd expect with average booking values are flat. But if you strip out a like-for-like comparison, for example, we will see that in Europe, length of stay has increased. But because, and we're growing faster in America, and we're growing a lot more domestic bookings in America, and we're growing at a lot lower revenue TTV margin in America, for example, then you're not going to see that flow through our numbers.
In aggregate, the numbers are the numbers, which are pretty easy to understand. Bookings are growing at the same rate of TTV, but the component parts have been, you know, roughly, as I've just described, varied across the growth. Tony, do you want to add to that?
Yeah. Sam, just to, to qualify it at a constant currency level, LOS has stayed nominal change year-over-year. The ADR rates have only gone up less than CPI. So the real growth in TTV is really room nights, which is a function of bookings, effectively. So it's highly correlated there. So we've had no tailwinds on ADRs, as you might have seen in the broader marketplace, and stays are pretty much constant. So that's the way to think about the breakup around ABV.
That's really helpful, guys. Maybe just another way to ask that then, like, you've obviously had the massive shift to US and domestic, which would drag on booking values. But, you know, with hotel prices consolidating at, you know, kind of materially higher levels, do you think you can get ABVs back to anywhere near FY 2019 levels despite the mix change? Or do you think they'll settle on a normalized level, you know, somewhere below those FY 2019 levels?
Look, FY 2019, I'll explain why we're net worth. It's not something that we're actually targeting, and it's not something that we think about on a daily basis. FY 2019 was influenced by the following: We had a significantly higher skew of Middle East business, and our Middle East business, the, for just the peculiarities of our penetration in that market, was highly skewed to five-star properties, so, and extremely long length of stay. You know, when we get to the summer periods in FY 2019, we had many bookings that were, you know, stays of 2 weeks-3 weeks at a five-star resort somewhere in the world. So it was heavily skewed to the Middle East.
The Middle East has gone from circa, you know, north of 25% of our—or more than 20% of our TTV—to circa 10%. So it's never gonna go back to that level. The rest of our business has grown so substantially faster over the course of the last three years that, you know, even when the Middle East does recover, as it is in the current set of results, it's not gonna drive an outcome that is different to what we're currently seeing. And over time, we think what will happen is the higher growth of ABV will be offset by some of the new markets that we're entering into, where the average booking value is substantially lower.
That will. You'll see that continue over the next 2 years-3 years as we move into Latin America, as we move into Eastern Europe, as we penetrate markets that so far we have only a nominal presence in.
Got it. That's actually really helpful. And then, and then lastly, maybe just a quick comment on the Olympics. They fall in your first half 2025. I mean, on the continent, that's your largest exposure and generates the highest margin in your business. Just any thoughts on the materiality there to your business?
Look, early bookings and our booking window obviously extends out for, you know, the next 18 months. Our booking window for June, July. June, at this time of the year, we've normally got circa 60%-65% of bookings already on the books. July, we've got circa 45%-50%. We're not seeing any change in demand patterns as a consequence of not only the Olympics, but the European Championships for football are also on at the same time. So we're not seeing any change in demand patterns over that June, July period in Europe.
Okay. Thanks, guys. Congrats on the result.
Thank you.
Thanks.
Your next question comes from Ben Wilson with Wilsons Advisory. Please go ahead.
Thank you. Morning, John and Tony. Congratulations on the strong result. Just first question regarding WebBeds. Yeah, look, no doubt, that's a really strong start to FY 2025. Just wondering if you, at this stage, would expect a similar seasonality to play out for the year? So as with in FY 2024, say broadly, sort of 52% in the first half, 48% in the second half. You know, just I guess we really do see a strong rate growth for the full year.
We would anticipate something similar to what you've described. You know, a slightly stronger first half versus the second half for seasonality reasons. And it's sort of a continuation of the last question in this sense. As the underlying bulk of our business, which is the volumes that we get across every month, continue to increase, the Northern Hemisphere seasonality impact diminishes each year. Not saying it goes away. July and August are our record TTV months, and they're our record EBITDA producing months. And that's not going to change, I don't think, in the next five years. It will always be important primer, because it's again, to the previous question, length of stay is longer, average booking values are higher.
Even if bookings are relatively flat, you know, you're getting a benefit of both at a TTV and an EBITDA level. So, we would expect to see that and, you know, we expect to see this year sort of mimic last year from that element, where first half will be slightly stronger because of that Northern Hemisphere summer bias, in particular in Europe. We don't see the same summer bias in North America, and we don't see the same peaks in Asia. We have very different profiles there, which are related to different holiday periods over those particular geographies.
Great. Thanks, John. That's helpful.
Thank you.
Just moving to the OTA side of things. Can you just give a, I guess, an updated health check where the consumer, you know, you've said, cost of living pressures are sort of starting to, starting to bite. It has been quite a delayed impact in the travel sector. Is that something that you think is gonna increasingly play out from here? Or, the, I guess, the, the sort of resilient traveling class, do you think that will continue to hold up?
Yeah, I don't think in aggregate, the market is gonna go backwards. You know, when we put our budgets together for this year. And we look at the first 7 weeks of trading, it's there have been other 7-week periods in FY 2024 that mimic the first 7 weeks of FY 2025. So it's been a bumpy ride in the overall market, and you see that in some of the pullbacks, some of the flight availability, especially on the domestic side. So we would think that the market will have international growth in general, and I think a sort of more modest to flattish domestic growth would be my expectation for FY 2025.
Okay. Yeah, great. Thank you. And so just two more quick questions. Just further to the previous one, domestic and international flight capacity has been, you know, steadily increasing in Australia-
Yep.
and airfares obviously coming down. So, you know, do you think that will sort of continue to be a tailwind for demand?
Airfares coming down will be a tailwind, but it may well just be a stabilizer rather than a tailwind. We're not expecting, you know, double-digit growth, and we're not expecting double-digit supply increase in FY 2025. It's gonna be much more modest. I think the airlines that were coming back to Australia have come back. There's, you know, only one or two that have asked for increased capacity. So I think the growth you've seen in supply will slow down, and as you said, domestic is up modestly. So, I think that will sort of plateau this year.
Great. Thanks. And sorry, just last question. Just with Trip Ninja, it looks like that has started life very well. Just interested in, I guess, is the consumer aware of this functionality or, you know, is there, what's driving the consumer, I guess, to really take it on board?
Sure. The consumer wouldn't know the brand Trip Ninja. It's Webjet that the consumer knows the brand. If you see our billboards on the freeways of Australia, you'll see that we're promoting multi trips, multi-city, more complex itineraries. We're pushing an awareness around that element of the functionality within Webjet. So the consumer won't know that it's Trip Ninja, but it's Trip Ninja that helps provide a stitch-together itinerary that enables us to offer savings to the consumer. And we're seeing that as represented by two elements. One, the high conversion of international sales without having to increase our marketing, which again goes to the brand strength of Webjet. And the second is the EBITDA result. So we're taking a bigger clip along the way for those multi-city trips.
So they're the fundamental drivers of FY 2024's result, and it's a fundamental driver of FY 2025's improved EBITDA performance over FY 2024 in the first seven weeks.
Great. Yeah. Thanks very much, John. That's all for me.
No problem. Thank you.
Your next question comes from Tim Plumbe with UBS. Please go ahead.
Hi, guys. A lot of my questions have been asked. I've just got two, if that's all right. A lot of net cash there, John. Can you maybe talk about how you're thinking about any potential capital management initiatives and how those would fit into timing around a potential demerger?
Yeah, thanks. Hi, Tim. Yeah, at the moment, we've got no plans to do anything other than continue to explore the possibility of a demerger and then work out the appropriate capital structures for both businesses. If they were to proceed, then that decision will be made. We are very comfortable, in aggregate, without the consideration of the demerger, of having the cash on hand. There have been significant opportunities that continue to present themselves to us in an inorganic sense. We obviously haven't entered into any arrangements with anybody, and the key reason is it just doesn't fit the profile of what we want to do. There's plenty of opportunities that will come up in the next year or two with regards to inorganic.
So, we will preserve the cash for that possibility.
Got it. And the second one, just around the Webjet business, strong margin improvement in the second half. I mean, it's historically been second half stronger margins, but given some of those initiatives that you spoke about implementing in the second half of 2024 to go after more profitable growth, should we expect a further uplift in the first half 2025 in terms of EBITDA margin there as you annualize those initiatives?
We haven't made a call. You know, it's, you know, we don't do, as you'd appreciate, Tim, we don't do guidance by stealth. So, the numbers are, as I sort of suggested, that, you know, we're more profitable than the first half. I'm not going to call out whether it's more profitable than the second half, but it's more profitable half-on-half comparison to the first seven weeks. And our focus, as I've already articulated, is on continuing to look at the international component to grow that at a faster rate than domestic, and by default, that comes with greater revenue. So, if we keep our expenses under control, then, you know, it'll be a healthy EBITDA result.
Great. Thanks, guys. Appreciate it.
Y our next question comes from Abraham Akra, Shaw and Partners. Please go ahead.
Hi, Tony. Hi, John. Two questions from me. So firstly, John, I'm just curious, you know, if demerger goes ahead, are you interested in being part of Webjet moving forward?
Sorry, Abraham, you didn't, you broke up in the question. I heard demerger and someone's going to be in Webjet. What was the question?
Sorry. Yeah, so, I'm just interested in knowing whether you're interested in being a part of either the WebBeds business or the OTA business moving forward, if in the event there is a demerger?
It would be fair to say that we haven't decided to demerge, and there will be ample notice given to everyone about where everybody lands, from the board to management team and the like. So, we haven't, we haven't made that decision just yet. When that decision is made, we'll let everyone know.
Yep, got it. And in regard to the B2B, B2B business, yourselves and your other large peers are—they're all pretty much growing more than 20% at the B2B level, and the market's growing at mid-single digit. How long can all the big guys like yourselves continue growing way above market before you effectively start competing against each other by region?
I think we're 10 years away from that, Abraham. We, we have, we have a very fragmented market. The smaller end of the market still exists. Many of them are, are in a weakened state. The customers and suppliers want high-tech solutions that enable efficient distribution of their inventory, and our customers want significant aggregation so they can make the best choice possible for their end consumer. So, in that world in which if you line us all up, and you would make obviously reference to, I think, an American one and one based in, just down the road from me in Palma, the three of us would have less than half the market. So, there's ample above market growth to, for all of us to, to enjoy the fruits of our respective labor.
Yep, I got it. Can I fit in one more?
Why not? You're the last question, I think, at 9:59.
Okay. So last one from me. So historically, the playbook in B2B is go hard in the market, underprice, aggregate inventory, then you add third-party contracts through M&A. Is that the same playbook that you're alluding to in regard to inorganic opportunities moving forward?
No, no. I'll be clear on that. The inorganic opportunity and I've spoken about this a little bit in the past, it's got to be some tech-related innovation that enables us to do more with less and be more relevant and compelling to everybody in the supply and demand chain. So, anything that connects people is and gives us, you know, the most overused word in English language, a unique capability is what we would look at. I'll make this statement as I've made previously, and then I'll contradict myself. The chances of us doing another JacTravel or Destinations of the World acquisition to give us scale are long gone for us. You know, we have a global business.
The only real geographies in which we have deficiencies today are Latin America and Eastern Europe. The rest, we are growing through our, through the acquisitions that we've made and building on those acquisitions over the course of the last six or seven years. So, we continue to be strong in Asia, North America, Europe, and the Middle East. Organically, we think that is sustainable for us. The possibility of doing another one is really remote, even though we get offered them all the time. There's been a myriad of them go through my, my inbox over the course of the last 24 months, and we've rejected all of them because the, you know, we, we can grow. We, we can get the market share without having to buy it.
So, we're comfortable with our strategy and our ability to work on, you know, the three pillars of growth, continue to be a sustainable growth driver for us over the next five years. And new customers, supply, and markets, there's still plenty of work for us there, and conversion is going to be the bigger, the bigger, the biggest driver in the medium term of our outperformance. And there's lots of work that we're doing in our systems and in our algorithms to enable us, to enable that to happen. So that, that's all a work in progress in which we want to reap the, the fruit of that labor over the course of the next couple of years.
Understood. Very clear. Thanks a lot.
Thanks. Thanks, Abraham. And Ashley, I think our time is up. Thank you very much to everyone for your participation, and we wish you all a cracking day.
Thank you. That does conclude our conference for today. Thanks for participating. You may now disconnect.