Good morning, everyone, and thank you all for joining us today for our First Quarter Fiscal Year 2026 Results Presentation for the three months ending 30th of June, 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 results 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. Thank you for joining us. Today, I'd like to walk you through the key highlights from our Q1 results. Last year, eDreams ODIGEO delivered an exceptional FY 2025, not only achieving but actually surpassing its ambitious 3.5-year targets. Building on the strategy from our January 2025 Capital Markets Day, we have launched tests into new markets and are testing innovative new products, for example, monthly subscription fees for a subset of our customers. Our momentum has carried us into the first quarter of the financial year 2026, and we're proud to report that we again met in the first quarter of this financial year all our targets and are on a clear path to achieving our goals of Prime members and cash EBITDA for the full year. Today, we'll take you through the key points of our strong performance.
This will include, first, eDO results highlights. Se cond, that the Prime subscription model is the engine of growth and continues to drive excellent performance, and we'll review our strong Q1 FY 2026 results as a result. Three, we'll conclude today's presentation with some closing remarks about our attractive investment highlights. Please now turn to slide four, which is a summary of our performance for Q1 fiscal year 2026. Our Prime business is financially strong, and our overall profitability continues to improve and delivers outstanding margins. Building on the strategy from our January 2025 Capital Markets Day, this momentum has carried through the first quarter of FY 2026. I'm proud to report that we've met all of our targets and are on a clear path to achieving our goals of Prime members and cash EBITDA for the full year. I'd like to now walk you through the key highlights from today's presentation.
First, performance highlights. The Prime subscription model continues to be the engine for growth. Our Prime subscription model remains the core driver of our success. We've grown our membership to 7.5 million members, adding over 1.2 million new members in the past year alone, and added 205,000 in the first quarter, which is at the high end of our guidance, which was 190,000 - 210,000. Subscriber growth is translating directly to our bottom line. Cash EBITDA increased by 8% to $39 million, hitting our target. The revenue from Prime members is now very significant. 72% of our cash revenue margin it accounts for, and that's a 5 percentage point increase in the quarter year- on- year. Our Prime business has a robust model. It's delivering growing profitability and achieving outstanding margins.
We saw a 3-point increase in our cash EBITDA margin in the quarter year- on- year, and this was driven by the increasing maturity of our Prime members, which leads to improved profitability and margins. The free cash flow, excluding non-Prime working capital adjusted for runoffs, stood at EUR 11.4 million, and that's from EUR 20.4 million in the first quarter of FY 2025. The reduction is due to an increase in taxes paid during the quarter, which increased mainly due to higher profits and a change in Spanish regulation on advanced tax payments, as well as an Italian tax litigation. Other highlights from the quarter include we report a net income of EUR 13.6 million. That's a major improvement from a loss in the previous year. However, our adjusted net income was even better at EUR 23.6 million, which we believe is a more reflective measure of our business's performance.
Second, we'll cover the focus on shareholder value. I'd like to take a moment to discuss our recent actions related to capital allocation and shareholder value. We're committed to not only growing the business but also ensuring that our shareholders benefit directly from our success. In terms of capital allocation and liquidity, I want to highlight a couple of things. First, we are excited to announce that as of last Friday, we have already repurchased 80% of the EUR 20 million program we announced just last May. This has contributed to a significant increase in our average daily trading volume, which now stands at EUR 2.5 million in the European Composite Index. Given the success of this program and our strong financial position, our Board of Directors approved a new additional share repurchase program of another EUR 20 million.
The start date of such a new program will be announced upon expiration of the current share repurchase program. This is a clear sign of our confidence in the company's value. We have made remarkable progress in improving the liquidity revenue. During 2025, our 10-day rolling average liquidity in the European Composite Index increased by a staggering 492%. Our average daily trading volume in 2025 is EUR 2.5 million per day. In August, we reached EUR 3.9 million average daily trading volume. This is a dramatic improvement that makes our stock far more accessible and attractive to investors. In terms of remuneration to shareholders, at our annual general meeting on 9th of July, our shareholders unanimously approved the multi-stage capital reduction plan. The first stage involved the redemption of nearly 3 million shares. Those are shares that we had previously acquired through our buyback program.
These actions demonstrate our strong financial position and our proactive approach to managing capital, improving liquidity, and providing tangible returns to our shareholders. Third, our positive outlook. Looking ahead, our outlook is very positive. For the full year, we project to add 1 million new Prime members and generate cash EBITDA in the range of EUR 250 million - EUR 220 million. We're also confident in our ability to generate between EUR 103 million and EUR 108 million in positive free cash flow, excluding non-Prime working capital. We have revised the guidance to include the changes in taxes mentioned above, and this is partially compensated by interest savings from the refinancing we did. Our long-term growth fundamentals are strong, and we believe we are well positioned to continue our momentum into fiscal years 2027 and 2028, where we expect Prime members to grow in excess of 10%.
eD O has significantly underpenetrated its main markets, is testing new markets and products online, and has strong fundamentals beyond FY 2025. In sum, Prime's proven model continues to drive very strong revenue and profit growth, and simultaneously, we have delivered a significant uplift in profit margins. We believe we've got the right model, the right people, and the right structure to seize and deliver on the exciting shareholder value creating opportunities ahead of us. Now, let me pass you over to David, who will take you through some of the KPIs of our Prime model and the strong growth and significant profit improvements in the first quarter of the financial year FY 20 26.
Thank you, Dana. If you could all please turn to slide six of the presentation, I will take you through the Prime model. This line clearly and visually demonstrates the growth and financial strength of our Prime business and its impact on our overall profitability. Our Prime business has a robust model, is delivering growing profitability, and achieving outstanding margins. On the left, you can see how our cash marginal profit margin for Prime has consistently increased over the last five quarters. Our cash marginal profit margin for Prime has started at 42% in the first quarter of fiscal 2025 and has now reached 49% in the first quarter of fiscal 2026. This represents an impressive 7 percentage point increase over the last 12 months. This trend shows that as our Prime members become more established and engaged with our services, the profitability of each transaction improves significantly.
This strong performance for Prime has a direct and positive effect on our company's overall profitability, as shown on the cash EBITDA margin on the right-hand side. Cash EBITDA margin has also improved consistently, mirroring the success of our Prime business. Cash EBITDA margin has increased from 19% in the first quarter of 2025 to 26% in the first quarter of 2026, also a 7 percentage point improvement over the last year. This correlation demonstrates clearly that the maturity of our Prime membership base is a direct driver of our improved overall margins. In conclusion, Prime business is not just growing, but it is also becoming increasingly profitable. This improved efficiency and profitability for our Prime members are directly contributing to the significant growth we see in our company's overall cash EBITDA margin.
If you please turn to slide seven, this slide illustrates our strategic shift to a subscription-based model and highlights how strong Prime growth is successfully offsetting planned decline in the traditional non-subscription side of our business. This trend shows that we are successfully shifting our business model, and Prime is without doubt now the dominant resource. Today, Prime accounts for 72% of our total cash revenue margin, and that's a significant jump from 63% last year. The shift to Prime is not just about revenue, it's also about profitability, as shown on the right. Our total last 12 months' cash marginal profit increased by a notable 27%, from EUR 225 million to EUR 287 million over the last 12 months. This is a direct result of the high profitability of our Prime members as their maturity increases.
While our non-Prime marginal profit declined, the Prime profit surged, driving a substantial improvement in our overall profitability. Consequently, Prime now accounts for 87% of our total cash margin or profit, proving that our subscription model is not only growing our top line but also dramatically improving our bottom line too. Our strategy is working. The strong and profitable growth of our Prime business is more than compensating for the anticipated decline in our non-subscription business, proving our model is sustainable, effective, and set up for further growth. If you could all please turn to slide eight of the presentation, I will take you through the financial results in more detail.
In the first quarter of fiscal 2026, the Prime model continued to show that it is the engine of our growth, and we saw significant improvements in profitability, driven primarily by the increasing maturity of our Prime member base. Looking at Prime's impact on profitability and the drivers behind that growth, the cash margina l profit, which is a key measure of profitability, grew by 8%, reaching EUR 65.1 million. This shows that our business is not just growing, but each transaction is becoming more profitable. The improvement is due to the maturity of our Prime member base. As members stay with us longer, the profitability grows, which is evident in a 10% increase in cash margin or profit for Prime and its margin increasing by 4 percentage points over the past year.
This is having a positive ripple effect on our entire business, as our overall cash EBITDA margin improved by 3 percentage points, from 21% in the first quarter of 2025 to 24% in the first quarter of 2026. Cash EBITDA for the quarter reached EUR 39 million, within our target range of EUR 38 to EUR 40 million, marking an 8% year-on-year increase. Looking at revenue performance, in the first quarter of fiscal 2026, we have observed a few key changes in our revenue margin. While our overall revenue margin increased by 8% compared to the same period last year, our cash revenue margin saw a 6% decrease. This shift is primarily due to a 23% growth in Prime revenue margin, driven by a 20% increase in Prime members, but this growth has largely been offset by a 20% planned reduction in the non-Prime revenue margin.
Cash revenue margin for the Prime segment remained in line with the first quarter of the previous fiscal year. While member growth was a positive factor, it was offset by a test of monthly subscription fees for a subset of our customers. As mentioned in our Capital Markets Day in January, we're very focused on consumer feedback on the overall proposition and will continue to explore and test new propositions over the coming years. As a result of research we have done, some customers tell us they prefer monthly subscriptions, which in turn may lead to higher engagement and higher customer satisfaction. We are testing this to see if it can be attractive to us economically in the longer term. In the meantime, it has an impact on deferred revenue while we assess what is best for the business long term. Let me explain briefly.
For the portions of our traffic where we test the monthly subscription, we have the negative economic effect of cashing in the subscription fee gradually, as opposed to the yearly fee in advance. This is the reason for the negative change in deferred revenue over the first quarter. In summary, the maturity and retention of our Prime members are the most significant drivers of our profitability, leading to strong and tangible improvements in our financial performance. Please turn to slide nine of the presentation. Revenue margin, excluding adjusted revenue items, increased by 8% versus the first quarter of fiscal 2025 to EUR 172.6 million. This increase was achieved through growth of 23% in revenue margin for Prime, resulting from expansion of our Prime member base.
The growth in revenue margin for Prime, as anticipated, was partly offset by the planned reduction in non-Prime business and more generally to the focus on the Prime side of the business. Variable costs decreased by 14%, despite revenue margin being 8% above the first quarter of the previous year, as the increase in maturity of Prime members reduces acquisition costs. Fixed costs increased by EUR 2.1 million, mainly driven by higher personnel costs associated with an increase in the number of employees. As a result, adjusted EBITDA more than doubled to EUR 49.3 million. That's EUR 39 million including the full contribution of Prime, from EUR 22.6 million in the first quarter of fiscal 2025. We reported a net income gain of EUR 13.6 million. That's a major improvement from a loss of EUR 1.2 million in the previous year.
Moreover, our adjusted net income was even more impressive, standing at EUR 23.6 million in the first quarter of 2026, and this is a better measure of our business's health. Turning now to slide 10 , I will take you through the cash flow statement. In the first quarter of fiscal 2026, we end with positive net cash from operating activities of EUR 23.9 million, following the successful expansion of the Prime member base, which resulted in higher adjusted EBITDA. In the first quarter of fiscal 2026, we had a working capital outflow of EUR 15.3 million compared to an inflow of EUR 6.8 million in the same period of the previous year, impacted by a lower average basket size and the decrease in Prime deferred revenue due to the test of monthly subscription fees, partially offset by an improved hotel working capital. Income tax paid increased from EUR 100,000 to EUR 11.6 million.
There are three main reasons for this increase. Firstly, we have started to generate positive profit before tax, which generates a need to pay more taxes. Secondly, the Spanish regulation has limited to 50% the amount of in-year losses of legal entities within a tax group and will reimburse in cash the remaining 50% over a 10-year period. Thirdly, in order to appeal in a tax litigation in Italy, we have paid EUR 2 million in advance. We have invested EUR 15.5 million in the first quarter of fiscal 2026, an increase of EUR 0.8 million as we capitalize our software. Cash used in financing amounted to EUR 33 million compared to EUR 6.2 million from financing activities in the first quarter of fiscal 2025. The variation of EUR 26.8 million in financing activities is mostly due to the impact of our recent refinancing.
At the end of June, we refinanced our 2027 notes, expanding the maturity by three years and lowering the coupon from the previous 5.5% to 4.875%. This is the lowest coupon of any euro issuer in our credit rating of B+ in the last four years. Additionally, we refinanced our superseded revolving credit facility, increasing the size from EUR 180 million to EUR 185 million, and initiated dialogue with additional relevant banks in Europe, which may increase the size by another EUR 20 million. Due to the refinancing, we show in our cash flow a number of one-off effects. These are detailed in slide 22 in the appendix. We paid EUR 5.2 million for the early redemption of the 2027 notes. We paid in aggregate EUR 6.5 million in fees for the refinancing. Please be aware that there are another EUR 5 million in fees pending to be paid in future.
We advanced payment of the interest on the 2027 notes of EUR 9.2 million, which we would have normally paid in the second quarter of the year. During the first quarter, we also invested EUR 10.4 million in further purchases, which is more than double what we invested in the same period of last year. I will now turn the presentation back to Dana to do some closing remarks.
Thank you, David. I'd like to leave you with seven thoughts to further support why we believe that eDO's strong fundamentals and growth prospects provide an attractive case for a higher valuation. If you could please turn to slide 12 of the presentation. First of all, Prime has high customer advocacy. eDO through Prime has best in industry customer satisfaction, which has continuously improved over the years and achieved the highest rate in the industry. Please turn to slide 13. Second, because we delivered an exceptional FY2025, not only achieving but surpassing our ambitious 3.5-year targets despite significant global challenges. This momentum carried us into the first quarter of FY2026, and we've met all of our targets and are again on a clear path to achieving the Prime and cash EBITDA goals for the full year. Please turn to slide 14.
Third, we operate in a vast and growing market where Prime is uniquely positioned. The travel market is 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. eDO has strategically placed to capitalize on this, specifically targeting the dynamic online and leisure segments. Within this market, eDO Prime offers a unique proposition. Prime has only just begun its journey. Today, the company has an average penetration of 3.8% of households in the seven European markets in which it's well-promoted. If eDreams reaches 10% of the household penetration in the 10 new markets and extends it to existing markets, it could reach over 40 million Prime members. If you could please turn to slide 15. 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 our high-quality talent and the folks we have built into our business. Please turn to slide 16. Fifth, we have a great value appreciation opportunity. Please turn to slide 17. 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 FY 2026 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 financial resources balance sheet, we will continue with our daily repurchase program, and we will consider subsequent share buybacks as we continue to generate free cash flow on an ongoing basis. If you could please turn to slide 18 for my closing remark. I'm excited to share with you the significant improvement in our company's liquidity through calendar year 2025. Thanks to the success of our share repurchase programs and the premier placement, our 10-day rolling average liquidity in the European Composite has increased by a staggering 492%. This is a truly remarkable achievement being done in less than a year, with our liquidity rising from EUR 0.7 million on 12th of November, 2024 to EUR 3.9 million on August 20th, 2025.
This has resulted in an average daily volume in the European Composite Index of EUR 2.5 million per day on average in the calendar year of 2025 to date. With these significant improvements, we are no longer the illiquid stock some investors may have thought of us. This makes us more investable and creates a compelling investment opportunity for both new and existing investors to consider. In sum, eDO is a finely tuned model, fast growth, self-funded, and a huge opportunity ahead of us. We have demonstrated consistent delivery across all KPIs and an exciting journey we have ahead of us. This concludes our remarks.
Thank you, Dana. With that, we are now going to take your questions. We will answer the questions sent to us in writing in the webcast. We will take questions on a first come, first served basis. We'll also try to group questions of similar nature. Should we not have time to respond to questions from the webcast, the Investor Relations team will make sure those are answered afterwards. Now, I'm going to start reading these questions. The first set of questions that we have come from Francisco Ruiz from BNP Paribas. The first one says, "Where did you do the monthly test and do you expect this to be maintained? What could be the impact in deferred income?" As to the exact footprint of the test, that's not something we disclose. The tests have been done in an A/B format, like we test many other things.
It's been in a number of markets and in different types of scopes to make sure that we gather data, which will be a very important source of information for us for the future. We will evaluate the impact over time, and we will see if we maintain or not, or what we do. For the moment, it is very early to say. The second question says, "We understand the seasonality of the business, but new net Prime members are at 205,000 in the quarter with a target of 1 million in 2026. Are you worried to reach that level?" The simple answer is no. I have the exact amount of faith that I had in this than we had three months ago when we gave the guidance because we have hit exactly what we said we would hit on the first quarter.
To review some of the characteristics of the seasonality, first, the first quarter is a seasonal low from a Prime perspective. If you check the number of net adds of the previous year, it was also relatively softer in the first quarter. Additionally to that, there is an Easter effect. Easter was at the end of April this year, which didn't happen the previous year, which means that for a period of two weeks, people are just enjoying their holidays and they're not making additional bookings and therefore becoming new Prime members. The third question says, "There has been a huge reduction in variable costs, which could best do a relatively easy quarter in the first quarter of 2025. Do you expect these levels of 49% marginal profit margin for Prime business to be maintained?"
The driver for the increase in the margin is what we've been repeating time and again, which is the fact that as we have more Prime members in their year two and the subsequent years, which have a higher level of profitability and less percentage of the members being in year one, that drive is going to continue. The next set of questions comes from Carlos Treviño of Banco Santander. The first one says, "Which conclusions do you obtain from your test of charging customers on a monthly basis instead of annually? Is this something that you could intensify moving forward?" Dana?
Yeah, absolutely. Let me take it. This is not just for Carlos, who knows very well our business, but for a broader set of people. Because we run a subscription-based business, we're extremely focused on the customer and the LTV for the company and customers' behavior over a period of time. We continuously do research on the customer to ensure that we really understand their needs. You have seen this through our NPS scores. Based on research we've done, one of the things that clearly comes out from customers is that they would actually prefer a monthly to an annual subscription. We have decided to test a monthly offering like we test many, many, many other things. As we always said, we will really consider the long-term impact on the business and on the customer.
Therefore, it's going to take us a long period of time to really understand what the customer behavior is from a subscription-based business, not from just a one-off transaction. To come to what conclusions can we obtain from the tests, which was Carlos's question, it's really too early to say. We will need to give this a long period of time to be able to see how this affects consumers' behavior over time, and then we'll take our decision. In addition, within that, we may decide to roll back. We may decide to roll out. We may decide to simply revise and test again and again and again. You have seen this with our Prime Plus proposition that we did a while ago, and we're now very focused on seeing if there's something here, but it is too early to tell.
Okay. The second question from Carlos Santander is, "Could you elaborate on the specific impacts in your lower free cash flow guidance in fiscal 2026? Which part could be explained by the change in the Spanish regulation on advanced tax impacts and which part from the Italian tax litigation that I understand could be a one-off?" The split between the two is the Italian was a EUR 2 million payment, like I said in my prepared remarks. It should be a one-off, although we have a number of other litigations. Depending on the decisions that the lower courts render, if we want to appeal to those, we normally need to make a partial payment on whatever amount is at stake in courts. The other part is the change in the advanced tax payments regulation.
To give a little bit more of an explanation for people to understand, let's say that you have a tax group and you have a legal entity with EUR 100 million in profits and another one with EUR 100 million in losses. In a tax group, your profit would be EUR 0 and your tax would be EUR 0. That's been the case, you know, always. Now, what the Spanish government is saying is, "The EUR 100 million of losses, you can only compensate 50% of them in this year, and therefore you have a 50% profit that you will be taxed on. The other 50%, we will give it back to you in cash over the next 10 years." Basically, what the government is getting is interest-free financing for a 10-year period on a portion of the losses in legal entities belonging to a tax group. That's what's happening.
That has been EUR 9.5 million in the first quarter. It's not going to be EUR 9.5 million every quarter. Our guidance of that range of EUR 103 million- EUR 108 million has built into it tax expenditure in the high 20s percent for the area of the year. The third and last question from Carlos says, "Could you give us any indication on your expectations for the second quarter of fiscal 2026 and your recent business performance during the summer season?" We're not going to give quarterly guidance beyond the first quarter. Last year, we gave specific guidance for the first quarter because there were specific elements that merited it. We did the same for this year for the first quarter. From now onwards, we don't see specific circumstances that need to be flagged.
You should see a gradual improvement from the first quarter over to the second, third, and fourth in order to get to yearly numbers. There's not going to be a specific guidance for the second quarter. As for the summer, it has gone according to what we expected. Of the summer, there's nothing really relevant to mention of those two months of trading of July and August. The next set of questions come from Nizla Naizer from Deutsche Bank. The first one says, "The monthly subscription test, does this change the offers you give the subscribers, i.e., the size of the discounts? In other words, can you cover the discounts that you offer when a subscriber only pays a subscription for a month?"
As we said, we're testing multiple models. This is not one, and this is typically the way in which we do things. We test many things, then we look to see over a period of time what makes sense for the customer, what makes sense for us, and we look at the LTV.
The next question says, "For a Prime member, is the monthly subscription more expensive than the yearly fee divided by 12?" I think the previous answer applies.
Exactly.
We're testing many different models, which includes also different subscription fees for that monthly. There's not a single answer to that question. The next question says, "Can you quantify the change in deferred revenue you expect for the full year on the back of this?" Look, in the first quarter, we expanded the sample of the monthly. It's not the first time that we test monthly. We have tested monthly previously in other months. What we did in the first quarter is to expand the sample versus what we've done in the past. In the second quarter onwards, the sample is less significant than it was in the first quarter. What I cannot tell you exactly is what our approach will be going forward because it depends on the test results. The guidance that we provide is the guidance on the cash metrics, and those are affected by this. What is affected is the change in deferred revenue, and therefore, let's say the IFRS type of P&L.
The next set of questions come from Guilherme Macedo from Caixa Bank. The first one says, "Could you provide more details regarding the churn dynamics around the timing of the subscription payment charge versus the remainder of the year?" Look, we don't disclose churn. However, we have published, and the last time with specific data points in the Investor Day of earlier this year, that we have improved our churn rates. That's due to lots of smaller actions that we have implemented over time. We continue to focus on the customer experience and customer engagement, like Dana was saying, and we make sure that the customers have a really good experience. The next question is, "Could customer acquisition costs be affected by the movement to monthly subscription fees?" This is not affected for the moment, but this is something that we will have to see over time.
The decision of whether or not to choose a monthly model versus an annual model is one that will be based on lifetime value of the customers and therefore value to the company. We look very carefully at LTV to CAC. That's a second-order type of effect. It's still too early to say. The last question from Guilherme is, "Could you update us on your view regarding Prime and non-Prime working capital expectations for this year?" Prime is already included in the free cash flow guidance. That's part of our official guidance. The part of non-Prime depends, first of all, on the basket size, which is something that we don't control. It depends on what type of destinations, length of stays, type of hotels that the customers use. That's the reason that we excluded from the free cash flow ex non-Prime working capital, that we don't control that part.
The most important factor is basket size. It's really not up to us, so it's difficult to forecast. The next set of questions come from Bharath Nagaraj from Cantor Fitzgerald . The question says, "Given the higher tax burden, how should we model full-year tax expenses in fiscal 2026 and beyond? What about cash taxes?" I think I've answered this, actually, already, that for the aggregate of the year, we expect it to be in the high 20s percent. That number will grow in the following years as a proportion of the growth in the profit before tax that we see in the business. Over the longer term, you can take probably around a 25% tax rate, which is the dominant one in the geographies in which we do pay the income taxes. There's an additional follow-up question coming from Francisco Ruiz.
"Can you repeat the pending impact in cash flow from refinancing in the second quarter?" That's $5 million. The total cost of the refinancing, including all the fees, the early repayment of the bonds, etc., etc., it's $16.7 million. We paid $11.7 million of that in the first quarter, and there's $5 million pending of advisors that have still not submitted their invoices, etc. It should reasonably come during the second quarter, and it is $5 million. The next question comes from Miguel Medina of Mirabaud. "Can you comment on changes to the Google artificial intelligence functionality? I'm asking because some B2C businesses have mentioned disruption caused by this change. Just wondering whether it has had any impact on eDreams." Dana?
Absolutely. We have not really seen any negative impact on traffic coming from Google. We're seeing demand for travel on Google reasonably stable. We are aware that some publisher websites can be negatively impacted because Google summarizes key information. This would be cause for some of you to notice is the AI overview on their results page. Those things don't require users to actually click out onto the publisher website. Like I said, we don't see any real impact on it. Of course, we've been really at the forefront of AI for over a decade, and we actively dialogue, engage, and monitor changes not just in Google AI functionality, but in the leading other set of agentic agents searches. I guess I can also say, look, it's quite early days for these technologies. The product, the user experience of generative AI is clearly not finalized yet.
We haven't really seen a meaningful impact at the moment. I really do have to point out and stress to everybody that, with our leadership position for so long in AI, with our Prime and the uniqueness of Prime on it, it puts us in a very good position. We discussed this in great detail at the Capital Markets Day in January.
Okay. The next set of questions come from Pratyush Rastogi of Farrer Wealth. The first one says, "eDreams did not release mobile booking percentage this quarter. Any color on this?" The thing is, this metric we believe has had an evolution that by now is not so meaningful because the vast majority of our customers operate through mobile anyway, and that's even more the case with the Prime members. We decided to simplify a bit of disclosure. Having said that, the specific number is that 73% of our Prime members make their bookings through mobile devices. I think it speaks about the maturity of our mobile-first strategy and the deep engagement of most of our customers.
The next question says, "There was a significant drop in your marketing costs, which is quite amazing. Is this all driven by maturation of Prime users and thus no need to rebid on them via Google or were there other factors?" You're absolutely correct. It is for more percentage of our customers being in year two, year three, year four, and beyond, which requires then significantly lower customer acquisition costs to maintain them. That's a driver. Next question says, "I see that Booking signed with Ryanair and that Ryanair doesn't require Booking customers to verify with Ryanair. Does any of this make eDreams any closer to signing anything with Ryanair?" I know when I asked, Dana said it was an NPV calculation, but just wondering if you view the terms Booking got as a step in the right direction. Dana?
You're happy to discuss it. First, we simply don't comment on other companies' strategies or their commercial arrangements. Let me help you with what we do focus on. Our focus really is solely on delivering value for our customers, for our partners, for shareholders, and for eDOers . The policy we have is consistent and very clear. We will explore any partnership in any area of our business that is in the best interest of three things, of consumers, of shareholders, and fully complies with European law. I should also point out the European High Courts have already regulated a final decision in our favor confirming our legal right to distribute Ryanair flights as part of our wider offering.
Next question comes from Chadd Garcia of Ave Maria Growth Focused Fund. It says, "To revisit the testing of a monthly Prime subscription, the outcomes are either, one, customers like it and their lifetime value increases, generating more free cash flow for eDreams over time, or two, you decide not to continue the program and your increasing Prime deferred revenue line goes up in the quarter that you cease the trial.
Yeah.
It is correct. Yes. That is to say, an analytical description of the two possible outcomes. It is too soon to say, right? You gather data, you gather a cohort that is big enough, you evaluate the data over time, and you figure out if there's more lifetime value in the alternative or in the legacy. The next set of questions comes from [Ted Terrence of MusiLink]. The first one says, "Can you provide the gross ads and churn for the quarter?" We do not disclose those. Those are competitively sensitive KPIs. Apologies for that. That has been the case forever in our case. The second question of this investor says, "Can you comment on the change in volume of transactions for Prime members? Is there any read-through from the 20% reduction in non-Prime members' revenue?"
We don't disclose volumes as in number of transactions for the Prime members since we changed the segmentation to Prime versus non-Prime. The reason for that is that our profits do not depend on the number of transactions of a customer. Our subscription program is mirrored on the one that Costco pioneered a long time ago, where we make our money on the subscription fee, and each individual transaction is more or less break-even for us. It results in higher engagement. We'd love for customers to do more searches and more bookings, but it doesn't drive the P&L. We do not disclose. There is nothing.
The next question says, "In terms of the test of monthly subscriptions, is this as a result of a request from the more mature existing customers, or is this in relation to new customers?" I'm happy to repeat, like we said in January, we continuously experiment with different formats of the subscription, being in the amount of products that are inside, be it on the typology now of when is it they pay the subscription fee, in one go or in 12 installments, basically to get a view as to what needs to stay in a sweet spot of engagement and value for the Prime members and value for our shareholders and our business as well over the LTV of the customer. It is one of many tests.
We will continue to do many tests, and we're confident that in the end, we will end up having a product that fits better and better the customer needs and is as well profitable for our shareholders. This is the last question that we have. Thank you, everyone, for joining us today. Before we conclude the call, I would like to inform you that on Wednesday, the 19th of November, we will be hosting a conference call for the first half of fiscal year 2026. In the meantime, we will be very happy to receive your questions via our Investor Relations team or the investor email address, which is investors@edreamsodigeo.com. Thank you very much. Have a nice day.