Good morning, everyone, and thank you all for joining us today for our fiscal year 2025 results presentation for the 12 months ending 31st March 2025. I'm David de la Roz, the Director of Investor Relations at eDreams ODIGEO. As always, you can find the results materials, including the presentation and our integrated annual report on the Investor Relations section of our website. I will now pass you over to Dana Dunne, our CEO, who will take you through the first part of the presentation.
Thank you, David.
Good morning, everyone, and thank you for joining us. Fiscal Year 2025 has been a truly remarkable year for eD O. This past financial year marked the culmination of our ambitious 3.5-year strategic roadmap that we launched in November of 2021. I'm incredibly proud to report today that we have successfully achieved our long-term targets. If you recall, we set our targets to achieve 7.25 million Prime members and EUR 180 million of cash EBITDA, when we had only 1.9 million members and only EUR 2.9 million cash EBITDA. Despite a number of significant global headwinds, including Omicron variant, invasion of Ukraine, conflict in the Middle East, broader geopolitical instability, double-digit inflation, high consumer interest rates, and significant increases in energy prices during this period, nevertheless, we still achieved those targets. Importantly, this was our first strategic roadmap guided entirely by our subscription-first vision.
Therefore, successfully meeting these long-term targets represents more than just continued execution. It serves as another powerful, undeniable validation of our unique Prime model. We now have over eight years of experience with Prime subscription, and what we have clearly demonstrated is that this model is a proven enabler for sustainable, long-term value creation that sets us apart from other travel players. It's clear that the model is a proven success and has a long-term growth potential. Today, we'll take you through the key points of our strong performance. This will include, firstly, eD O results highlights. Second, eD O results and key achievements. Third, review of our strong FY25 results, in which the Prime model continues to drive very strong growth. Fourth, eD O's strong foundation for future success. Fifth, concluding today's presentation with eD O's investment highlights.
With that, please turn to slide four, which is a summary of our performance for the first nine months of the fiscal year 2025. In FY25, our three key metrics have grown significantly. Our Prime members grew by 25%, cash EBITDA grew by 49%, and free cash flow grew by 122%. In fact, we've beaten our 3.5 years ago self-imposed targets. We have beaten our FY25 free cash flow target even more, exceeding it by 11% due to the strength of our Prime model and the increasing maturity of Prime members. Some of the key highlights for today's presentation are, firstly, let's look at the key achievements in FY25. eD O meets its EUR 180 million cash EBITDA target. In fact, we delivered EUR 180.4 million. Meets its Prime members target with 7.25 million. We achieved 7.26 million members and exceeded our FY25 free cash flow target of over EUR 90 million.
We exceeded it by 11%. As guided in the first quarter FY25, we saw better year-on-year comparatives in the second half of the fiscal year as we continued to increase our member base, and the maturity of our Prime members further increased. As a result of the strong free cash flow the company generated, eD O already repurchased in FY25 EUR 80 million of its treasury shares. This is due to our belief that our shares are undervalued, and given we are cash generative, we expect to continue to buy more shares, taking advantage of how undervalued we think our shares are. In addition, eD O plans to reduce the capital stock by redeeming 3.5 million shares acquired, not needed to fulfill the company's obligations under the existing incentive plan, of course, subject to the approval of the general shareholders' meeting.
The second highlight, in FY25, the strength of the Prime model drove significant growth and has guided additional improvements in profitability. Prime members grew 25% year-on-year, reaching 7.3 million members, with net adds at 1.4 million, which more than met our year-and-a-half-year-old, sorry, our three-and-a-half-year-old self-imposed FY25 target of 7.25 million members. Also, cash margin profit for FY25 was EUR 282 million. That's a 30% increase year-on-year, and the margin had a 7 percentage point improvement, reaching 39%. In the fourth quarter of FY25, it reached 44%, and that's ahead of the guidance of 42%-43% for the second half of fiscal year 2025. Cash EBITDA for FY25 was EUR 180.4 million. That's a 49% increase year-on-year, exceeding our target with year-on-year, and cash EBITDA margins improving 7 percentage points versus FY24.
Most importantly, free cash flow, excluding non-Prime working capital, more than doubled to EUR 100 million in FY2025 versus EUR 45 million in FY2024. That is a EUR 55 million improvement year-on-year, a remarkable increase of 123%, and that is 11% ahead of our guidance. Third highlight, the Prime model continues to deliver strong growth. The growth in Prime more than offsets the anticipated decline in the non-Prime side of the business and resulted in significant improvements in overall eD O profitability. Prime cash revenue margin for FY2025 grew by 24%, following the strong growth in members and as guided, partially offset by a lower ARPU. Prime cash marginal profit for FY2025 grew 49%, with the margin improving by 8 percentage points year-on-year, and Prime cash EBITDA, with strong top-line growth, grew 62%, reflecting a margin improvement of 8 percentage points. The fourth highlight is our outlook.
Looking into the future, for FY26, we announced at our capital markets day three new targets. The first one, Prime members, achieved over 1 million new members. Second, cash EBITDA in the range of EUR 215 million-EUR 220 million. And three, generation of free cash flow, excluding non-Prime working capital, to over EUR 120 million. Similar to the guidance given for the first quarter of FY25, we expect a softer first quarter of FY26. Prime member net adds are expected to be in the range of 190,000-210,000, and cash EBITDA in the range of about EUR 38 million-EUR 40 million. Growing year-on-year comparatives in the second half of the fiscal year as the member base increases and the maturity of our Prime members increases.
Longer term, we have said that Prime members will grow in excess of 10% in FY2027 and FY2028, which shows, once again, eDreams ODIGEO has strong fundamental growth potential beyond FY2025, being significantly underpenetrated in our main markets. Furthermore, the Board of Directors has approved a new share repurchase program of EUR 20 million. This is due to the success of our prior share repurchase, which has resulted in daily trading activity and liquidity for the company shares increasing by 302% from EUR 0.7 million on the 12th of November 2024 to EUR 2.6 million per day on the 25th of April in 2025. That reaches an average of EUR 2.4 million in 2025 on the European Composite Index. This action is supported by strong financial performance and robust free cash flow generation.
The Board believes this proactive measure underscores its commitment to supporting shareholder value and reflects confidence in the company's growth prospects as the world's first and largest travel subscription company. In sum, Prime's proven model continues to drive very strong revenue and profit growth and has delivered a significant uplift in profit margins. We believe we have the right model, the right people, the right structure to seize and deliver on the exciting shareholder value-creating opportunities ahead of us. If you could please turn now to slide six, let me briefly go through some of the key achievements we've had in FY25. As I said, despite unforeseen macro events, eD O achieved its ambitious objectives. Three years ago, eD O established internal ambitious targets: the 7.25 million Prime members, the EUR 180 million of cash EBITDA.
During this period, Prime membership has achieved impressive and rapid growth, quadrupling from 2 million members to 7.26 million members, with ongoing momentum. Moreover, eD O delivered sustained quarter-on-quarter growth in cash EBITDA from EUR 2.9 million in the second quarter of FY2022, that's on the last 12 months' basis, to EUR 180.4 million in FY2025. We're also so proud to have achieved our overall goals, demonstrating the effectiveness of our model, the attractiveness of our customer proposition, and our ability to execute effectively our strategy and plans. If you could all turn to slide seven of the presentation. Since the capital markets day back in November of 2021, when eD O set its targets, a number of unexpected events impacted the industry. Since setting our targets, the industry has faced unexpected macroeconomic headwinds.
While 2021 saw some easing of COVID restrictions and the beginning of economic recovery, the emergence of Omicron significantly hampered this progress. During 2022 and 2023, geopolitical instability, double-digit inflation, high consumer interest rates, and significant increases in energy prices, among other factors, further jeopardized economic and market recovery. Please turn to slide eight. In fact, eD O has outperformed the sector over the past three years. Since 2021, eD O's cash EBITDA CAGR of 47% has significantly outpaced the industry. This exceptional growth positions eD O as a top performer relative to its competitors. Please turn to slide nine. eD O maintained targets while other travel companies lowered their guidance several times and issued profit warnings. In stark contrast, eDreams ODIGEO has steadfastly maintained and met its ambitious targets throughout the entire period.
Now, let me pass it over to David Elizaga , who will take you through some of our KPIs of the Prime model and the strong growth and significant profit improvements in FY2025 results, and eD O's strong foundation for future success.
Thank you, Dana. If you could all please turn to slide 10 of the presentation, I will take you through the Prime model. eD O profitability rose significantly due to strong growth in numbers of Prime members in the year two or subsequent years and growth in the Prime cash marginal profit margin. Cash EBITDA also increased significantly. In fiscal 2025, our Prime cash marginal profit margin increased to 48% from 40%. In fiscal 2024, that's an 8 percentage points improvement. Group cash EBITDA also improved substantially. In fiscal 2025, cash EBITDA margin reached 25% versus 18% in the third quarter of fiscal 2024.
That's an improvement of 7 percentage points. If you please turn to slide 12, let me remind you that when looking at Prime versus non-Prime, we still think it makes more sense to look at our business on an as-set-of-math basis, as Prime is an annual subscription business and the non-Prime part is quite influenced by seasonality patterns. Our KPIs reported today show strong growth and significant marginal profit uplift. Cash marginal profit was up 30% over the last 12 months, and that reflects more year-two-plus members of Prime. Also, Prime's strong growth more than offset the anticipated and planned decline in the non-Prime business as we focus on Prime. We continue to be careful and selective on marketing spend, focusing more on Prime products versus developing products and services for the non-Prime side of the business.
On this basis, in the fourth quarter, we have been selective on marketing investments and concentrated our efforts on the higher-margin Prime side of the business, which represents today around 90% of our profits, leading to a planned greater reduction compared to previous quarters on the non-Prime side of the business. The fourth quarter of fiscal 2025 is down in that respect 32% compared to the same quarter of the previous year, and it's a 22% reduction over the full fiscal year, 12 months. This evolution in the non-Prime side of the business contributed to a consolidated 6% increase in revenue margin and cash revenue margin in fiscal 2025. As a result, eD O is fundamentally a subscription business focused on travel. Over the last 12 months, Prime delivered a 71% share of group cash revenue margin, while it was 61% just a year ago.
Over the last 12 months, Prime delivered an 87% share of group cash margin profit versus 76% a year ago. There is no doubt now that we are a subscription-based business in which almost 90% of our group cash margin profit is subscription-based, and subscription is the driver of our results and our future. As a result, we should achieve a valuation as such since we have inherent characteristics of subscription, a much more stable and predictable revenue stream. Also, we now have a much larger proportion of our Prime members who have renewed their subscription for a second year and third, fourth, et cetera. So the level of profitability therefore of Prime improves. If you could all please turn to slide 13 of the presentation, I'm going to take you through the financial results in more detail.
In fiscal 2025, we delivered strong growth in cash EBITDA and substantial improvement in margin as the maturity of the Prime members increases. Fiscal 2025 revenue margin was 6% higher than fiscal 2024 and up 8% in the quarter. Cash marginal profit and cash EBITDA improved by 30% and 49%, respectively. If we look at the evolution quarter on quarter, cash marginal profit improved by 37% and cash EBITDA by 73%. Over the past year, our subscribers have grown by 25% to 7.26 million, and our ARPU was reduced by EUR 2.2. It is now standing at just under EUR 76, at EUR 75.9. As guided in the first quarter of past fiscal year, we have given more discounts to our Prime members as our algorithms indicate that that is better for lifetime value.
As a result of the above, we do expect in fiscal 2026 that the ARPU will be in a range between 70 and 75. Cash marginal profit margin increased to 39% for fiscal 2025 versus 32% in fiscal 2024. That is a 7 percentage points improvement. That is an overachievement of the guidance of 42- 43% that we gave for the second half of fiscal 2025. Cash EBITDA margin in fiscal 2025 also achieved very substantial improvement, and it stood at 25% versus 18% in the previous fiscal year. Cash EBITDA, EUR 180.4 million, that is up almost 50%, 49% year- on- year. Please turn to slide 14 of the presentation. Revenue margin, excluding adjusted revenue items, improved 4% compared to the previous year and 8% in the quarter.
The strong growth of Prime revenue margin, which for fiscal 2025 grew by 23%, was partially offset as guided by a lower ARPU. This strong growth in the Prime revenue margin was partly offset by the non-Prime revenue margin, which has planned decrease by 22% versus fiscal 2024, following the switching of customers that used to be non-Prime to become non-Prime, and more generally due to the focus that we have on the Prime side of the business. Now, if we go down the income statement and the variable cost line, those decreased by 5% in fiscal 2025 despite the higher revenues driven as the maturity of the Prime members. The fixed cost increased by EUR 5 million, driven by higher personnel costs and to a lesser extent, higher IT costs. As a result, adjusted EBITDA for fiscal 2025 was EUR 133.7 million.
That is an increase from EUR 87.8 million in fiscal 2024. Adjusted net income stood at EUR 51.2 million in fiscal 2025. Turning now to slide 10, I'm going to take you through the cash flow statement. We closed fiscal 2025 with a positive net cash from operating activities of EUR 146.4 million. Net cash from operating activities increased by EUR 7.5 million, mainly reflecting a working capital inflow of EUR 15.4 million compared to an inflow of EUR 49 million in the previous year, mainly driven by a decrease in the average basket value of the bookings, as well as a change in the IATA payment scheme in two of the countries where we operate, and the aforementioned decrease in the non-Prime side of the business.
We have continued to invest in our business with EUR 55.6 million of CapEx in fiscal 2025, an increase of EUR 6.8 million as we capitalize our software. Cash used in financing amounted to EUR 105.6 million compared to EUR 31 million from financing activities in fiscal 2024. The variation is mainly related to the acquisition of treasury shares for EUR 79.9 million during fiscal 2025. We have ample liquidity and headroom to deliver our plans as a consequence of our strong business model, cash generation, and active management. At the end of March 2025, the liquidity position was strong at EUR 222 million. If you could please turn to slide 17, let me briefly go through some of the key highlights from our capital markets day of four months ago and the strong foundations that we have for success at eD O.
The first one is that we have successfully achieved the transformation of our business model. Today, eDreams is a subscription-led company. Since fiscal 2022, we have witnessed a significant expansion of our Prime member base. Consequently, due to the program's strong profitability upon the renewals of those subscriptions, the cash margin of profit has substantially increased. These figures underscore the company's transition to a subscription-driven business model and trend that will further enhance revenue and profitability. Please turn now to slide 17, sorry, 18. In that one, you can see that since fiscal 2022, when we announced the shift to a subscription-based model, we have increased penetration while at the same time maintaining a stable LTV to CAC. This is a very important thing. We grow the base, but we keep the discipline on the returns that we require from our growth.
In the next page, you have the third element to flag, which is that we have a growing cash EBITDA, but we have an even higher growth of free cash flow. As the EBITDA continues to grow, we are expected to have the free cash flow growing more and outperforming cash EBITDA in 2026 and onwards. Please turn now to slide 20. There you have the fourth element to flag. Our plan is to keep the current LTV to CAC ratio within the same range. Again, keeping the discipline on how we invest in marketing. As a result, we will continue to expand the base according to this discipline. We are targeting 1 million new Prime members in fiscal 2026. After that, the company expects to sustain strong year-on-year growth, although with 10% in Prime membership.
This ongoing expansion will be driven by a number of factors, including expanding the current markets to further broaden the product range and launching a fully functional Prime program in more markets than the 10 in which it is today operational. If you turn to the following page, we will continue to invest to further grow beyond fiscal 2025. To maximize the opportunities we have to expand our business, we will invest in increasing our software development capabilities. The company's strong employer brand positions us well to attract top talent. We expect to add, with this additional talent, the extra million members and reach EUR 215 million-EUR 220 million of cash EBITDA in fiscal 2026. With this new additional software development capacity, we will also fuel the increase in the Prime member base by over 10% for years fiscal 2027 and fiscal 2028.
If you please turn to slide 22, there we show that we are a cash-generative business and we have begun to use the available resources to remunerate shareholders. If you turn to slide 23, you can see how the strong cash flow generation, as well as the increase in the EBITDA, the profitability, is enabling us to do a very significant deleveraging and opens the opportunity for bond refinancing. The optimal window for that refinancing would be normally between two years to maturity and one year to maturity. That is between virtually now and next summer. Please turn to slide 24, in which I am going to do some closing remarks on my side. As guided, we are expecting free cash flow for fiscal 2026 in excess of EUR 120 million, a CAGR of 63% between fiscal 2024 and fiscal 2026.
Whilst generating a strong free cash flow, the free cash flow yield is significantly higher than our peers. We achieve free cash flow yields of between 11% and 13% compared to a range of 4%-8% for different sets of comparable companies in sectors like hotels, airlines, global OTAs, or other B2C subscriptions. We believe this undervaluation presents a compelling investment opportunity when combined together with our strong fundamentals and our growth prospects. With that, I'm going to turn now the presentation back to Dana to do some closing remarks.
Thank you, David. I'd like to leave you with six thoughts to further support why we believe that the company's strong fundamentals and growth prospects warrant a significantly higher valuation. If you could please turn to slide 26 of the presentation. First, Prime is higher as high customer advocacy.
eDO, through Prime, has bested industry customer satisfaction, which has continued to improve over the years and reached the highest rate in the industry. Please turn to slide 27. Second, because we continue to deliver excellent financial results, as shown in FY2025, please turn to slide 28. Third, we operate in a vast and growing market where Prime is uniquely positioned. Valued at EUR 1.5 trillion, this presents a significant opportunity with notable growth in both the leisure and online sectors. As one of the world's leading e-commerce segments, travel provides an extensive and expanding addressable market. In addition, subscription is dramatically growing in terms of its usage throughout all industries across customer segments. eD O is strategically placed to capitalize on these trends, targeting the dynamic online and leisure segments and subscription. Within this market, eD O offers a unique proposition. Prime has only just begun its journey.
Today, the company has an average penetration of 3.7% of households in the seven European markets in which it has launched Prime. If eD O reaches 10% of household penetration in the markets in which it is present and extends to the 10 new markets it is currently testing, eD O could reach 41 million Prime members. If you could please turn to slide 29. Fourth, we have a team that delivers. The company has successfully transitioned to a subscription-based business model and, importantly, achieved the financial objectives it originally set, primarily due to the high-quality talent and the culture we have built in the business. Please turn to slide 30. Fifth, we have a great value appreciation opportunity. If you could please turn to slide 31. Sixth, our strong cash flow generation can fund future growth and returns to shareholders.
eDO has huge potential and is delivering superior returns for shareholders and customers while transforming and revolutionizing the industry. Furthermore, we are confident in the growth and profitability outlined in our FY26 and longer-term guidance. We also believe the company's worth continues to be unrecognized and undervalued. As a result of this, and due to our strong liquidity and balance sheet, we will continue to look at buying back our stock as we continue to generate free cash flow. I'd like to take a moment just to add one last thing before I conclude my remarks. I want to congratulate all eDO -ers on the absolutely outstanding work they have done, not only over the past year, but over the past 3.5 years in creating a really unique and dynamic business that has a very bright future. With that, let me pass it over to you, David.
Thank you, Dana.
We're going to now start to read questions and provide answers. We're going to answer the questions sent to us in writing in the webcast. I'm going to take questions in the first come, first services, but I'll also try to group questions of similar nature. Should we not have time to respond to questions from everyone, the investor relations team will make sure that those are answered afterwards. Let me go with the questions that I'm getting. The first one comes from Gabriel Megías from Bestinver. It says, "Within the guidance for the first quarter of fiscal 2026, I understand includes the softening in the fourth quarter of 2025 due to higher fixed costs and the non-Prime side of the business. This is offset by Prime marginal profit continuing to grow.
Could you elaborate on the main drivers behind the fiscal quarter of fiscal 2026 guidance? Thank you, Gabriel. Let me take this one. The most important thing to understand about the first quarter is that it has a peculiar seasonality every year. First of all, it is a seasonal low, the Q1, when you compare it to the rest and the average of the year, the same way that the fourth quarter, the full period from January to March, is a seasonal high. Last year, we also had a seasonal low in the Q1, and this year is happening again. What is additional versus last year and unique is that Easter has fallen at a different time period than previously. Easter is a holiday period of two weeks that, depending on the year, sometimes falls in March, sometimes falls in April. In fiscal 2026, it is falling in April.
In our previous year, it fell in March. When people are on vacation, they're not booking additional holidays. They're just on vacation. Because we provide the services to our customers at the time of booking and not at the time of the holiday, it is a seasonal low for us. Those two weeks fell in April this year. Those two are the most important reasons for the Q1 to be relatively soft when you look at it in the context of what we expect for the aggregate of the year, even more so than it happened in the previous year, that it also happened. The next set of questions come from Nizla Naizer from Deutsche Bank. The first one says, "In the current environment, are you seeing a change in travel trends when you observe the behavior of your Prime members?
For example, more short-haul travel, more inquiries to find deals and offers, more demand for hotel deals. You may want to take this, Dana.
Sure. Yeah, I think you're right. I think on the whole, you see a constant demand for travel. It does vary by region, absolutely. I think what you do see, the second point would be around a lower basket value. A preference towards more short-haul, less people traveling, let's say in a trip or in a booking, less days in destination on average for that. I think what you have is an environment where people are looking increasingly for deals over it.
Okay. There's a follow-up question. It says, "On the back of this, are you seeing a change in churn in the current environment?"
Do you want me to take that?
I can do it.
I can do it because it's very easy. We do not see a change in churn in the current environment. The third one says, "Will there be a focus on driving Prime in some markets over others in fiscal 2026?"
Sure. I'll do it. As we've said, we have tests going on. It's too early to say because, remember, we're not a transaction-based business. We are a subscription-based business. Therefore, it's very important to see about renewal rates and a number of other much more fundamental long-term trends in the market. Plus, it also takes time to actually gather a significant amount of customer feedback, information, etc. The choice and selection of which markets we would actually end up focusing on, it's too early to tell. We also do have our 10 existing markets that we do focus on as well for FY2026.
Okay.
The next set of questions we have from Carlos Treviño from Banco Santander. The first one says, "Could you give us some details on the recent business performance in April and May?" I would say that the main difference between April and May is that April had Easter and May did not. When I look at the numbers, the numbers in May look meaningfully better than the numbers in April, but it is a very unfair comparison because they are not really comparable one to another. We are, of course, taking into account the performance that we are seeing into April and May, plus our expectations of the business for the remaining month. That is all built on our guidance for the first quarter.
The second question from Carlos is, "Fixed costs were EUR 23.5 million in the fourth quarter, which were below previous quarters, EUR 28 million in the third quarter, EUR 26 million in the second quarter. Could you explain the reasons behind that reduction?" Yes. There is an element of the fixed costs which gets, let's say, reviewed and balanced at the end of the year that has to do with how much of our R&D expenditure has become capitalized, which goes in the auditing process. They review every piece of software that we have developed, check the amount of hours booked against that, and you refine what was until that moment a provision for capitalization becomes the real amount accrued for capitalization. That is the main reason for the difference. We continue to have the same people. Actually, we have a growing amount of people, which is the main driver.
The variation really comes from how much of that is booked as CapEx versus how much of that is booked as OpEx. The third question from Carlos Treviño says, "After an improvement in the third quarter with the non-Prime bookings dropping by 5.5%, we have seen a new significant deterioration in the fourth quarter. Could you give us the drivers behind this acceleration in the drop?" I think it needs to be put into the context of the direction of the business, general, right? The direction of the business is one in which Prime is bigger and bigger. There is a planned—if you take it in the long term, there is a planned decrease of the non-Prime side of the business, which will never be zero, but it is declining on an ongoing basis.
Now, if you take individual quarters, in individual quarters, you're going to find volatility in the non-Prime because, for us, it is a very opportunistic side of our business. Normally, like it has happened this time, if you see that the bookings are softer, it's usually accompanied by a higher profitability per booking because we are, let's say, choosy about where we invest our marketing money. The next set of questions—excuse me. The next set of questions come from Andrew Ross from Barclays Bank. The first one says, "Can you please describe the year-on-year change in booking value in the fourth quarter? And can you help us with what happened with the number of bookings year-on-year in the fourth quarter at group level for Prime members?
Did it accelerate as you lapped through the Ryanair headwind? I think a portion of this has been answered, which is about the last question that Carlos Treviño of Banco Santander asked, everything that relates to the non-Prime side of the business, be it the bookings or the profitability of those bookings. As for the Prime members, you do have a good positive number on the number of bookings. It is not a number that, as you know, we disclose because it is not a driver of the profitability, the number of bookings. As you know, we do not disclose that number anymore, but I can confirm to you that it is a growing number. The second question, I am not going to repeat because it is about Q1 guidance, and I have talked about that already. The third one is Prime bookings, Prime subscription, Prime bookings per Prime sub.
Is that number starting to grow? It's not a number that we disclose. We are satisfied with the number of bookings that we get from our Prime members. We're very satisfied with the level of net promoter score that we get from those same customers. We're very satisfied with the increase in the number of those bookings that come from hotels as opposed to flights, which is also something that we gave a specific disclosure at the Investor Day. All of those measures point in the right direction. The next and last question from Andrew Ross is, "Any change to acquisition costs since Google started making changes to AI-generated queries in search results?" No, there isn't any change in that.
It is something that will evolve in the future, certainly, but it is also—you can consider it, if you will, kind of like either a new channel or a variation of existing channel, but it is also a channel through which we get—to which we get leads because the AI results also point to our platform. We have a platform that, as you know, is very much driven by AI. Therefore, it is a platform that is able to interface not only with live customers, but it is also able to interface with AI agents. The next set of questions come from Guilherme Sampaio from CaixaBank.
The first one says, "Could you give more details regarding the implications of the change in IATA payment scheme for non-Prime working capital evolution?" Look, the non-Prime working capital evolution, which this year has been negative as opposed to the previous two years in which it was positive, is that it has had a number of factors. As I said in my prepared remarks, the change in the IATA schedule was one of them, but there were two other ones. One is the overall decline in the non-Prime side of the business, and the other one is the decline in the basket value. All three contribute. This time, we had also a change in the IATA schedules.
For those of you who are less aware of what this refers to, when we sell to our customers and collect from them the cash for airline tickets of an airline that belongs to IATA, this would be the normal regular airlines that used to be flagged airlines before, so call it the British Airways, Iberia, Lufthansa, and the sort. We make payments to the airlines on calendars that are specified by IATA on a country-by-country basis for all travel agents in that country. There has been a change that has affected Spain and Germany, two of those, not any of the other ones. It is, of course—sorry, it is not Spain and Germany. It is France and Germany, which are two material countries for us. It is one of several factors that has affected that decline in the non-Prime working capital.
The second question is asking about the quarter-on-quarter last 12 months ARPU improvement and how should we think about fiscal 2026 phasing. Look, the reality is that we don't have a target for ARPU. ARPU is something that we find out at the end of any determined period because what the platform is programmed to optimize is lifetime value of the customers and not the level of ARPU that we get from those customers. The thing that would affect the most the ARPU in that respect on a day-to-day trading is the exact level of discounts that we give to customers. The discounts are driven by the increased probability of that customer renewing, which is what has the most weight in the lifetime value calculation. We have provided a range of EUR 70-EUR 75, and the machine is going to optimize to get to the better LTV.
Depending if that includes more discounts or less discounts, you would be more close to 70 or more close to 75. We are not really able to anticipate what is going to be the ARPU. The third one is about the impact from the Easter timing, but I have already covered this with detail for previous questions today. The next set of questions come from Bharath Nagaraj from Cantor Fitzgerald. The first one says, "Transactional revenue for Prime decreased slightly year-on-year. Is there anything worth talking about here?" Look, this is mostly related with ARPU investments, so to the level of discounts that we give on a booking-by-booking basis. That was the driver. It is, let's say, part of the structural decrease that you see of the EUR 2.2 when you take it in the aggregate of the year.
The second question says, "In terms of traction in selling hotel offers to your Prime customers, how is it going, and could you quantify?"
Yeah, absolutely. It is going very well. I think the first point is about it clearly shows that Prime is a really good vehicle as a travel subscription, not an individual product subscription. It is not just a flight, or it is not just a hotel, but it is a travel offering in that. The second is that we have had a material, since we have started to really invest much more in hotel proposition, our conversion has gone up very materially. Also, just the number of customers using the product has gone up significantly. We have a very good and very high level of NPS by our customers in it. Overall, it is a good way of improving the retention of customers as well.
Okay.
The next question from Bharath is, "What is unique about France that you see a much higher penetration rate in the country? I mean, apart from the fact that you have been in the market for longer than most other markets. " I think this was what everyone asked.
Absolutely. It started back in October 2017 when we launched first in France. France is not only a large market within Europe in population size, right? But because of its tenure with us being the first market that we launched, it is clearly our largest market in terms of just overall actual absolute number of members.
Okay. The next set of questions come from Pratyush Rastogi of Farrer Wealth. The first one says, "What can Prime subscribers look forward to with AXA Partnership?"
Yes.
We recently announced a partnership with AXA, and it is really about insurance, so it is strengthening our insurance offerings and some of the flexibility that we also provide to consumers. This is really just part of our overall strategy to continue to improve our value proposition with our customers, and it is a very welcome addition.
The second question says, "In your opinion, how has the PayPal partnership progressed? Is there any difference in behavior of a Prime subscriber coming through PayPal versus organically?"
Yes. We look at new channels and new ways and new partnerships to see if and how we can create additional avenues of getting to customers, communicating with customers, and whether or not just trying to understand those economics of any one channel versus another channel. This is our first partnership along this type of channel from it.
We're in the process of evaluating the results of that. We are very much welcome to being a partner with a company like PayPal. I think it shows also the attractiveness of Prime for partners as well.
The third question from the same investor is, "During the Capital Markets Day, you mentioned that eDO was trialing Prime in a number of countries. How have those trials gone? Are there any countries of focus for fiscal 2026 beyond the top six?"
I think I addressed this somewhat with Nizla's questions as well. I'm probably just repeating myself, but trials take a long period of time because we're a subscription, not a transaction-based business or offering to them. It still is really at the early stages for us to be able to evaluate this.
Okay.
The next question comes from Isabel Palomero of BNP. "Could you please elaborate on the renewal rate of the Prime subscription members and the average subscription period?" Look, what I can say about this, staying within the official disclosure of the company, is that our Prime member renewal rate is strong, and it is actually improving. We have specifically provided data at the Capital Markets Day that the journey is reducing for both members in the first year and members in the second and subsequent years. The more that customers stay with us, the more noticeable is the decline in the journey. Of course, as the program continues to have more years inside, the average lifespan of a Prime member is expanding because the percentage of your members who are first-year members, it reduces logically. We do not disclose more information than that.
That is very sensitive and competitive, but that's the indications that I can point you towards. The next set of questions come from Chadd Garcia from Ave Maria Mutual Funds. The first one says, "Revenue was weaker in Northern Europe as opposed to France and Southern Europe. Is there something structurally different between those regions that make it harder to grow revenue in the north as opposed to the south?" Look, the slight decrease that we've had in revenue in Northern Europe has been driven by non-Prime. There's a particularity of that grouping of countries that includes the Nordics in that, and we don't offer the Prime subscription program in the Nordics. Other than that, there's really no major structural differences between the offerings in the different markets. Some of them weigh more, have a higher weight of year-two members that also transact more.
That can swing the revenue in one direction or another. There is nothing really structural about it other than in the grouping of Northern Europe, you do not have Prime everywhere. It is a non-Prime that is decreasing. The second question says, "Can you comment a bit on Prime Plus? What are some of the differences between Prime and Prime Plus? Are you seeing initial differences between the two programs regarding behaviors of the methods?"
Absolutely. Let me take that, David. Yeah. Let me first just mention what are some of the differences and then what are we seeing in terms of the behaviors between the two groups of customers. In terms of the different product differences, there are a number of ones. Let me just highlight the two biggest ones, which would be the first one is around friends and families.
What that means is that we actually allow an individual subscriber to actually share those Prime discounts with up to four friends and family members, meaning that the subscriber would not necessarily need to travel with those four nominated friends and family members. This really expands the value proposition, i.e., to families in particular, but also to friends. The second one is around offering something that is really unique and very much valued by, again, our target segment of customers, leisure customers, is around cancel for any reason. We allow a customer to actually cancel two flight bookings that they've made in the app after the free trial period. Most of us on the call think about it in terms of business. Yes, we can cancel our tickets.
In terms of a leisure customer, and particularly in Europe, that is more costly and sometimes not even possible depending upon how they've actually booked. This really is a very valued and unique feature on this. Now, let me move to the main differences that we see between a customer that would take, let's say, called Prime versus Prime Plus. We see a higher level of NPS, the net promoter score for the Prime Plus. We see a higher level of engagement on that for it, a higher level of usage in it for that, and a higher level of LTV for us as well. David?
With that, I'm going to thank everyone for joining us in the webcast. We will be hosting our conference call for the first quarter of fiscal 2026.
We're still firming up the date, but it will be either in the last week of August or the first week of September. We will choose to try to get the most attendance on the call. Sometimes the last week of August is not necessarily optimal for everyone given the usual holiday periods in Europe. In the meantime, we will be happy to receive the questions that you can have to that via our investor relations team or at the investor email address, which is investors@edreamsodigeo.com. Thank you very much. Have a nice rest of Thursday and rest of the week.
Thank you.