Good morning and welcome to the lastminute.com Q3 2025 and 9-month financial results conference call. Today's call will be hosted by Julia Weinhart, Head of Investor Relations, and joined by Alessandro Petazzi, Chief Executive Officer, and Diego Fiorentini, Chief Financial Officer. All participants are currently in a listen-only mode. There will be an opportunity to ask live or webcast questions following the presentation. Please note that this call is being recorded. At this time, I'd like to turn the call over to Julia, Head of Investor Relations. Please go ahead.
Thank you, Sherry. Good morning, everyone, and thank you for joining us today. We value your continued support and are pleased to present to you today our latest developments. After the presentation, we'll be happy to address your questions. With that, I'll hand it over to Alessandro to begin.
Thank you, Julia. Thank you, and good morning, everyone. Thanks for joining us. We just closed what is traditionally the most important period of the year for us and for leisure travel in general. Our results this quarter confirmed the strength of demand, and I would say the strength of execution, which is clearly more important. Over the past few months, we've been very focused on three things, right? On delivering disciplined growth, which means gaining customers and share in markets and channels where the unit economics are attractive. We've also been enhancing profitability, which we have achieved through pricing, automation, and improved booking quality, and I will elaborate on that in the next few slides. Lastly, we've been building a more scalable organization, one that is leaner, faster, and structurally more efficient.
This quarter, you see the first results of those decisions translating into performance: high teams Revenue growth, strong EBITDA expansion, and we've continued to improve our cash generation, supported by a lower fixed cost base, also following the reorganization of the company we had in the second quarter. Just as importantly, we have continued to simplify the business and allocate focus on the areas where we can win at scale. The decision to discontinue the Cruise units reflects that decision. Looking ahead, we're building a travel player with stronger customer engagement, increased automation, and enhanced operating leverage. We will also present today our three-year outlook, which reflects exactly this. We're sharing a roadmap grounded in execution with clear initiatives around product, loyalty, technology, brand, and we have aspirations and a clear plan to get there, which we'll be sharing with you today.
Before we do a deeper dive into the outlook, let's start by reviewing our third quarter and nine-month performance. I'll then move to our future and the strategic drivers supporting that trajectory. Also, with the support of Diego on certain stages, we're going to take a look at the numbers. Starting with, I would say, a snapshot of everything that happened in the quarter and in the nine months. Starting with the quarter, happy to say this summer was clearly very positive. I think the numbers really speak for themselves. We saw strong growth across GTV, Revenues, Gross Profit, and Adjusted EBITDA, and also Adjusted EBITDA minus CapEx. We're starting to talk about this because I think it's a metric that is important for us within the business, and I think it's important for the financial community to prove that we're focused on improved cash generation.
Adjusted EBITDA minus CapEx grew 68% in the quarter, reflecting this meaningful step up in operational efficiency. We're also seeing structural benefits of our organization with fixed costs decreasing 6% year-over-year in absolute terms, and even more significantly as a percentage of Revenue. The efficiency is now translating already in the P&L. It's also worth noting that the year-on-year comparison is clean. In Q3 last year, Ryanair had already been reintegrated into our offering. We had a lot of comments about that and questions, and rightfully so, understandably, in the first half. Now we can be very clear that the results we're showing show a genuine like-for-like comparison. I would say the first nine months, the key thing has been consistency. We explained already in Q2 results call that we had a strong Q1, softer Q2 due to Easter timing, and especially positive Q3.
I'd like to see the nine-month performance, which obviously is not impacted by these changes between March, April, or June, July. If we look at the nine months, the picture is also very clear and consistent. Before we move and take a look at each component of the P&L separately, as anticipated in this morning's Press Release, we have an announcement about our Cruise business, right? For those who maybe didn't have the time to read it, the announcement comes as a part of our commitment and long-term focus on consolidating and strengthening these segments of our Group, which are really the core where we can grow profitably and at scale. The Cruise division had primarily operated in the Italian market under the Crocierissime brand. As we announced in the PR, we'll cease its operations, complying, of course, with all applicable law provisions.
This division was reported under the others segment in the forthcoming Revenue slide and has been underperforming over the past few years, generating ongoing constant losses despite the effort of the team. This is the right decision to really make sure that we can focus our attention and resources where it matters and where we can move the needle for the Group as a whole. In the context of that, the Crocierissime trademarks and domain have been sold to Cruise Line, which is one of the European specialist leaders in that segment. Now, as we have a lot to go through this morning, let's take a look at the Revenues in the third quarter and in the nine months. Clearly, Revenues reached EUR 101 million in Q3, up 17% year on year from approximately EUR 87 million in the same year-ago period.
Packages remain the pillar of our growth, contributing almost EUR 66 million with an 11% increase. Now, I think it's important to give you a bit of details about how this performance came about because clearly, it's not that we're just riding away from the market. This is due to a lot of things that we are doing internally. For example, in Dynamic Packaging, we released a new pricing algorithm which progressively is substituting all the manual efforts on pricing. There's that element. We expanded the unitary Revenues, particularly from ancillaries, thanks to a higher show rate. We were able to show especially Flight ancillaries for more of our products, thanks to the fact that we've been adding suppliers which cover situations which were not covered by the previous suppliers. All of that basically reflects into an improvement of unit economics.
If you have higher margin and Revenues for a single transaction, then clearly, you can also afford to profitably spend more in marketing for the higher customer acquisition cost. You start having a flywheel effect on volumes and profitability. The other element was also to revise the strategy on how we consider our ad spending, which basically is focused not only on expanding traffic in the tier two markets, but also in considering Revenues from all channels in our ROI calculations. This might sound a bit like a technical element, but definitely helped deliver successfully both traffic and top-line growth across all markets. From a Flight point of view, you can see that there was a pretty even more significant growth, I would say, up 39% year on year to almost EUR 26 million. Again.
As I said, apples with apples, Ryanair was already there last year. This actually reflects stronger unit economics. Similar to DP, also here, new pricing model. I would say the one thing which also happened on Flights is not only pretty similar to the one we mentioned on DP with pricing and ancillary Revenues, but also with an improvement in conversion rates, which stemmed mostly from a change in our checkout, in which basically we reduced the steps to get to a final transaction. Okay? We were able to reduce the steps, improve the conversion for that, and also improve the quality of the bookings we delivered by increased automation. There was a number of bookings made on Flights, especially, which had to be completed manually by our customer operations specialist. Now that percentage has dramatically reduced.
Basically because of that, we are able to confirm the booking right away. Again, this has a positive flywheel effect on the whole system. Also, the Hotel category has been growing very significantly, 24% year on year to over EUR 7 million in the third quarter. Here, I would say the elements from an industrial point of view were for sure the revised approach to ad spending, which I was also already mentioning for DP, but also the launch of a partnership with a new mega search channel, Trivago, which, even if it happened towards the end of September, started to contribute significantly already. The partnership channel, so basically the Revenues that we get via the agreements we have for the so-called welfare channels for employees in a range of countries, especially in Southern Europe.
These were the other big contributors to the Revenue growth on Hotels. In summary, I would say the top line has been clearly very strong. We improved also the profitability for booking, and we executed on our technology and partnership roadmap, and altogether, that supported these results. With the things that we're doing in pricing and automation, it's not just the third quarter, but clearly, it's a strong foundation for the growth into 2026 and beyond. If we look at it from a nine-month point of view, Revenues at over EUR 284 million, up 13% year on year, with all the core segments delivering double-digit growth. Packaging is remaining the core, of course, but Flights and Hotels also delivering growth of 26% and 20%, respectively. The only element of the business which didn't perform is the other segments, which declined by 13%.
As I was mentioning, in this area, also the Cruise unit is included, and clearly, we will not see it going forward. Luckily, the overall impact of this on the overall results is limited, but I think the picture is very clear. Strong growth in the core, decline in the non-core, which we are defocusing or divesting or discontinuing. Now, as we move on to see profitability, the strong top-line growth also translated into Gross Profit growth very clearly with a growth of 9% year-over-year to almost EUR 38 million in the quarter, with Packages having a 10% increase, Flights 14%, and Hotels 10%. Now, one thing that would be directly addressing is the fact that you might see a slight dilution in our percentage gross margin. I would like to clarify that this movement is planned and is consistent with our strategy.
It's not a blip, it's not a glitch, it's something that is coherent with what is going on from an industrial point of view for two reasons. The one is that we increased our marketing investment to capture demand, as we were seeing, in a profitable way. This has clearly paid off with the 70% Revenue growth in the quarter. The second, obviously, is the business mix. Flights have been growing proportionally more than Packages, and we know that Flights have lower percentage marginality. Obviously, slightly different mix with a bit of a lower margin percentage, but higher. The key thing for me here is to emphasize that we're talking about higher absolute Gross Profit and contribution. This is what we care about, right? Basically, our unit profitability, which remains strong, and the absolute growth.
This is something that we continue to prioritize: profitable volumes and cash conversion over the pure, let's say, optics of doing the percentage calculation. Looking at the first nine months, also Gross Profit has been growing in the same pace, 9% overall, with Flights up 21% and Hotels up 16%. I would say that the fact that the performance was consistent over the nine months demonstrates the health here of what we're doing and the execution of the strategy on which we will also give you more details going forward. With that, I hand over to Diego for some more detailed look at our cost, P&L, and cash flow.
Thank you, Alessandro, and good morning, everyone. We are now on slide eight, where we show our total cost structure split between variable and fixed cost. The quarter brought some good news on the cost front.
Fixed costs were down 6%, as we are already seeing the first tangible benefits of the organization announced in Q2, flowing through the profit and loss. At the same time, variable costs were up 22% in the quarter, mainly reflecting the investments in marketing and sales that began in Q2 and continued over the summer, supporting the strong gross travel value growth momentum. This increase was partially offset by other variable costs, which rose only 7%, reducing their weight on Revenues by about 2% points. Taken together, the combination of higher Revenues and lower fixed costs brought the fixed cost ratio down 5% points over the quarter, which is a very positive development. If we look at the first nine months, the picture is quite similar, with fixed costs down about 2% year on year compared to 2024.
If we now switch to slide number nine, we can have a look at the full profit and loss, giving you a bit more detail of what we just went through. In the third quarter, Adjusted EBITDA reached EUR 17.2 million, up 35% year on year. The strong increase reflects our operational leverage, which amplified profitability, even if we continue to invest in marketing and sales. Reported EBITDA came in at EUR 13.5 million, which is broadly in line with last year, despite the provision related to the closure of the Cruise division. EBIT totaled EUR 4 million versus EUR 8.8 million last year, mainly impacted by the impairment of the Cruise-related intangibles. Importantly, despite all of these effects, the Net Results remain positive for the quarter at EUR 1.9 million, with earnings per share of EUR 0.18. If we move to the nine-month results, the picture remains very consistent.
Adjusted EBITDA continued to show a strong year-on-year improvement, which clearly supports our upgraded full-year guidance. EBITDA was in line with last year at EUR 13.7 million, while EBIT decreased to EUR 17.3 million, down 29%. Both metrics were impacted by one of the items mentioned earlier.
Yeah, and if I can chip in for a second, Diego, sorry to steal your thunder here, but I think it's also important to note the Adjusted EBITDA minus CapEx metric. Because basically, if you look at the nine months, you see that we've grown the Adjusted EBITDA by approximately EUR 10 million, and then we've also reduced our CapEx in the period. So the Adjusted EBITDA minus CapEx grew even more than proportionally, EUR 14 million or 80%. I think this is a very important metric. That we work on internally, and I think it's important to start talking about that with the financial community.
Yeah, thank you, Alessandro. I have a point on that on slide 11. If we can move to slide 10 now. We take a closer look at the Net Results for the quarter to help put the numbers into context. As you can see, reported net income is lower than last year. However, this difference reflects one of the items related to the closure of the Cruise division. In the third quarter, we booked a provision for restructuring expected to be settled over the next few months, while the impairment of intangible represents a non-cash charge. Together, this item had a negative impact of EUR 6.2 million net of tax. On a comparable basis, this picture looks quite different. Underlying net income would have been EUR 8.1 million, 42% higher quarter on quarter without this one-off effect.
We now move to slide 11, where you can see the Net Financial Position movements over the last 12 months. This view helps to smooth out the seasonality of our business, which is strongly influenced by the typical OTA working capital Dynamics. The Net Financial Position stood at EUR 63.5 million, broadly in line with the EUR 67.1 million recorded in September 2024. The main driver of the cash flow was EBITDA, which reached EUR 43.5 million over the last 12 months after absorbing the organization-related cost. CapEx, totaling EUR 19.1 million, continued its downward trend following the peak spending we saw in 2024. The change in Net Working Capital was essentially flat, reflecting the reversal of the seasonal movement we saw in Q2, and it is expected to continue its positive trajectory toward year-end, supported by higher gross travel value compared to last year.
Overall, Free Cash Flow came at EUR 16.4 million over the last 12 months, a significant improvement compared to the EUR 0.4 million in the same period of last year. With that, I'll hand over to you, Alessandro, for the key takeaways.
Thank you. Thank you, Diego. I think it's pretty straightforward. We had a very solid performance throughout the first nine months of the year, and we are expecting to continue doing that over the next few quarters. Packages have been growing, Flights and Hotels maintained good momentum. Because of that, we are raising our EBITDA guidance to around 20% of year-on-year growth. That showed improved unit economics and continued fixed cost discipline, driving stronger cash conversion. As part of that, I would also, I would say, talk about delivering on commitments in general, right? Not only cost discipline and growth.
I think we said in January when I joined and the first call I had with all of you, I was very clear on the fact that this company cannot be just a company with stagnating Revenues and bottom line growing by cost cutting. We need actually to grow the top line and grow the bottom line by having operational leverage. This is it, and having strategic focus. Clearly, the decision to discontinue the Cruise business also goes in that direction and will start showing its own positive effects in the next few quarters. Growth is the name of the game here, and it will continue to be so in our three-year outlook, which we are going to now see in greater details. What we're sharing today is a reaffirmation of the strategy we set earlier this year, right?
I would say no revolution, but an evolution and more clarity on the execution plan, right? I always like to say that a vision without execution is just an hallucination, and clearly, that's not where we are here. The first strategic drivers you see have guided our decisions already throughout 2025, and they will continue to guide how we operate, scale, and grow the business over the next three years. It's about execution, focus, consistency, and building momentum quarter after quarter. Now, before we dive into each of the four core pillars that you might already be familiar with, let me briefly touch on the two key enablers that support this roadmap, right? I mean, when we talk about scalability, what we mean is that we're building a business that scales efficiently with faster decisions, faster execution, and lower cost to serve our customers.
How do we make it happen? Because otherwise, it just remains a declaration of principle, but the fact is that we are already streamlining and consolidating systems to reduce complexity. Automating core workflows, we already have identified more than 40 on which we are working to provide automations, things such as refunds, cancellations, service reporting, things which some of them are in the back office, and some of them are also impacting customer satisfaction. Again, it's not just a matter of efficiency, but a matter of overall being better able to serve our customers. With the same philosophy, we're also applying a buy-over-build approach to technology, ensuring that we have speed and capital discipline, as you see reflected, as you saw reflected, for example, in the decline in CapEx this year.
The goal is pretty simple, and it's a leaner organization with higher productivity and better customer experience. I don't think the two things are in a trade-off. The two things must go hand in hand as we continue scaling the business with the strong operating leverage that we talked about. AI. Now, everyone is talking about AI, obviously. I do not think personally that AI is a value proposition. AI is a crucial tool, and AI must be embedded in everything you do. It's something that really must be the fabric of the organization, I would say. It touches our business in at least three different ways. One is that from a customer acquisition point of view. AI is already influencing how travelers search and plan, right?
We see a shift of behavior from search engines to LLMs, or within Google, for example, from traditional search to Gemini, AI mode, and AI-powered reply. We are preparing for all scenarios to ensure we remain relevant and competitive whatever happens in the upper funnel by remaining the trusted fulfillment partner of whoever is going to provide that type of recommendations to customers. That also includes, from a more tactical point of view, evolving from an SEO approach into a so-called GEO approach to make sure that we're also present organically in the results in the various LLMs. That's the first way that AI impacts us, which is a bit more, I would say, external from our own company. In terms of the things we can do internally, customer experience then comes first, followed by efficiency and automation.
AI is already helping us personalize inspiration and recommendation. We've been working on it for a few years already in terms of our ranking and pricing. Personalization systems, which are the ones, by the way, the evolution of which contributed to the significant growth we were seeing for the quarter. By continuing to work on that, we can also support the way our agents deliver faster and more consistent service in areas, especially where the human intervention matters. From an efficient point of view, as I was saying, it's across pricing, booking quality, customer operations. A lot of back-office systems. AI is already improving the speed of accuracy of what we do. A significant portion of the code we submit for deployment every month is already generated with the support of AI.
We have not been talking a lot about that, but there are a lot of things already happening in the organization. I would say, across the board, to allow us to scale without adding proportional cost. In short, AI is not a standalone initiative, but is really a core feature of our operating model. That being said, let's now walk through each of the four strategic drivers and how they evolve over the next three years and how together they underpin the financial ambition we are sharing with you today. The first one is our core engine, Dynamic Packages, right? Travelers expect relevance, simplicity, value, and seamless fulfillment. I think this is something that has been very clear for us and remains true even in an AI-first world, obviously, with potentially more and more of the operations powered by AI. For fulfillment, you need a lot more elements, right?
The goal here is to move from choice, which obviously is important, and we want to continue to give our customers choice, but we want to start introducing intelligent curation in that, bringing travelers to the right holiday faster, right, with a product that feels designed around them rather than assembled by them. This is exactly the evolution that we are talking about. In practical terms, it means a curated inventory focused on quality and relevance, with also personalized bundles, not only with Flights and Hotels, but further extras and further additions to the trip, which makes the trip more memorable. That is already happening in the short term. Going forward, we will have more and more audience-driven bespoke offers. We will also be offering themed signature collections such as a romantic weekend in Paris or a week on the slopes for ski lovers.
It might sound pretty normal, I would say, but I think that if you think about it, having a system that gives you exactly the type of holiday you need in a specific moment of the year is, I would say, an ambition that every travel company has been having and very few already delivered on. We definitely plan to be there. We intend to help travelers also in the discovery phase while remaining the trusted fulfillment partner that makes the holiday happen. From the point of view of the industrial effect and the economics, what do we expect by this evolution of the business? We expect, as you can see on the top right corner of the page, higher conversion rate, a higher attach rate, and higher average booking value.
This is basically the e ffect we expect on our own economics by this evolution. The second pillar, as you know, is about building deeper, repeatable customer relationships, moving beyond the transactional model that has been a staple of the company for a number of years. This is where loyalty, personalization, and proactive service come together. You might say that this is what every company wants, and it does not exactly sound like the discovery of fire. I think it is important to take a closer look at the key initiatives which are already in motion underpinning this. The launch of our multi-tier loyalty program, offering rewards and designed to drive lifetime value. Lifetime value, for sure, is the element of focus as we go forward. Providing more relevant content and offers, so that every interaction can feel tailored.
AI comes back into the picture to p rovide support in service and automation so that the attention of our human agents can be focused on where it has most impact. Support and inspiration are also coming to be embedded in our app, which must be the primary engagement hub for inspiration, booking, service, rewards. I would say the way for us to be relevant in every single moment, in every single touchpoint of the customer journey, not just when they book, but when they are waiting between the booking and the holiday itself, when they approach the holiday, that moment of expectation, when they actually start enjoying their holiday, and even when they are back home and thinking maybe about having those post-holiday blues and thinking about what they should be doing next. The expectation is that thanks to all these actions, we can increase the repeat rate, which is already pretty high.
I would say our repeat rate in the 12 and 18 months is already pretty high, but we can do better, for sure. We expect this to increase the app adoption, also as a way to remain relevant in the minds of customers, to increase our NPS, and to reduce the cost to serve. Now onto the next page. With brand. In 2025, our focus under the strategic driver has been on highlighting the strengths of each brand in the Group. You might remember we already talked about that, that rather than trying to be everything to everyone, we concentrate our investments where each brand creates most value. Obviously, we have Local Brands like Volagratis, Rumbo, VEG.DE, and the mothership lastminute.com.
Each deserves a differentiated approach and efficient marketing to make the most of local strength with a combination of the marketing approach, the brand, and the product that we sell via each brand. This already translated into something really concrete from aligning the visual identity of all the local brands with the core lastminute.com brand, which you might have noticed already if you are a customer or if you are curious anyway. We also launched brand awareness campaigns for the first time outside our core markets. If we look further ahead, this driver evolves towards ensuring that our Brand Purpose mirrors what we are becoming as a company. It must be consistently aligned with our vision of a curated travel experience, especially for Packages, right? What we have just been discussing and reflected across each touchpoint: product, pricing, conditions, and service.
A brand is not just about the nice ad campaign. If we say that we are customer-first, if we say that we are customer-centric, and this can really be a corporate cliché, if we really want to live that mission, then clearly terms and conditions and the way we treat our customers, the way we serve them, is part of that, and there must be consistency across all of that. The brand platform that supports our strategy is about curation, ease, trust, and emotional relevance. The, I would say, more practical economic consequence of that is, let's say, in our aspiration to have a higher recall of brand association, which then should also over time become a source of lower customer acquisition cost and higher conversion, especially as we shift more traffic into our own loyalty program and the app environment.
Finally, market presence and distribution, which is about b alance and profitable scale, not footprint for its own state. This is very important. Every time we've been expanding to new markets, we've been doing that with a data-driven approach and making sure that we were profitable very early on. From a geographic perspective, we are maintaining a strong focus on our core European markets, defending our leadership positions in the core five, while also expanding selectively into high-potential markets where unit economics are favorable, as we've been doing already since the beginning of the year. The new thing here is that from a market perspective, this also means widening our reach with the launch of a new B2B Hotel distribution channel and product. Basically, it's what in the sector is called a bed bank, bed as in B-E-D, not in B-A-D. Apologies for my pronunciation here.
That's what we're launching, opening an extra Revenue stream for the Group. This is something that is already happening in these very months. If we're talking about the B2C customer acquisition source point of view, the focus is on evolving how we reach customers. Shifting gradually from the history of the company, which has been pure performance marketing, to more of a brand-led growth, building awareness and preference to a more diversified mix, including paid social, where we've also already started investing this year, and B2B2C partnerships, and we were talking about generative engine optimization earlier on. The outcome of this, from a business point of view, is more resilient demand generation, which is consistent, whatever the possible shift in traffic in the upper funnel might be. Higher quality traffic, more diversified Revenue streams, and overall, a more resilient business.
I'm sure that all of you are now curious to see the financial impact of all the qualitative elements we talked about. Here we are, anchored in the strategy and supported by the initiatives we talked about, we're confident in our ability to continue delivering this profitable growth and reaching by 2028 approximately EUR 450 million of Revenues and an Adjusted EBITDA above EUR 70 million. We reflect the compounding effect of scale, automation, stronger customer and higher customer lifetime value for the reasons we discussed across all the core segments and the disciplined approach to cost and capital allocation. Let me also add, I would say, a brief personal reflection on this guidance, right? When I joined in January, you might remember one of the priorities I outlined was to make sure we established credibility with you guys.
The very simple principle to say what we do and to deliver on it, right? I think that the past three quarters, frankly, show pretty clear progress in that direction because we've been meeting our guidance, and actually, we're even upgrading our guidance, and we've been growing. Top line, growing bottom line, exactly. By doing, not because the market grew, but because we executed on all the plans that we outlined at the beginning of the year. We're executing with focus, with discipline, with transparency. That approach will continue. I also know it's just the beginning of a journey, right? The outlook we're sharing today is intentionally grounded and realistic. It is not the ceiling of our ambition. I would say it's more the base camp, if you want.
As we keep building operational momentum, I'm confident you'll see the same clarity and consistency reflected in the actual results, which at the end is what really matters, right? I mean, again, having a vision, a clear story, and a clear plan to get there and then the results. With that, I conclude the strategy overview, and I hand it over to Julia again for the Financial calendar. I'll be back shortly to take your questions.
Thank you, Alessandro. Now, let me briefly share with you which conferences we will be attending in the coming months in our Financial Calendar for 2026. On November 25, we will be at the Deutsches Eigenkapitalf orum in Frankfurt. On the 15th of January, we'll be at the Baader Swiss Equities Conference in Bad Ragaz in Switzerland. Now I'm moving into our Financial Releases.
We will release our preliminary unaudited full-year figures results on the 12th of February. Our Annual Report publication will be on the 2nd of April. On the 6th of May, we will publish our Q1 2026 trading update. On the 24th of June, we will have our Annual General Meeting. On the 30th of July, we will be sharing with the market our half-year results. Followed then on the 29th of October, our publication of the Q3 2026 trading update. With this now, we will begin our Q&A session, starting with the live questions first, followed by those submitted via the webcast. Please note again, as always, we might group similar questions together and slightly rephrase them. In line with our privacy and data protection policies, we remind participants that stating your name is optional when asking live questions today.
With this, I'll hand over now to Sherry, our conference call operator, to begin with the first live question. Thank you, Sherry.
We will now begin the question and answer session. Webcast viewers may submit their questions in writing by the relevant field. I am now pleased to hand over to Julia Weinhart, Investor Relations, who will be moderating the session.
Thank you, Sherry. Do we have any live questions in the queue already?
We have no questions in the queue.
Okay, no live questions. With that, we'll move directly to the webcast questions we have received. I will start with the first question, which we have received this morning. How do you intend to use the cash available since you are now even generating a significant amount per quarter? Any M&A ahead of us?
Yeah, thank you, Julia. I'll take this one. Where our cash position will be primarily used to sustain the growth of the business. Now, we've always been active, and we see ourselves continuing to be active in the M&A market if any opportunity arises. For example, there might be startups which come up with very interesting products but are not able to scale due to the known difficulty of scaling B2C businesses in the travel market, which is a market with very low frequency of usage, which creates more challenges than if you try to build a B2C brand in markets in which people potentially use your service every day or every week. There might be opportunities there to get maybe some support for our innovation efforts. Again, I see that rather than a, for sure, not a transformational M&A, more something that complements and contributes to the operational execution we talked about, right?
The very tactical, I would say, decisions on make or buy on certain things. I would say the strategic focus is on investing in the initiatives that we have to strengthen our position and continue driving this profitable organic growth.
Thank you, Alessandro. Now I will move to the next question we have received. What can you say about the current market cap and re-rating expectations? Are you planning to move the stock exchange to London or Amsterdam to improve liquidity?
Look, I think this question reflects frustration. To be honest, it's a frustration I share. It's a frustration we all share. You might know, I think we had. We already had comments on that, that the entire executive team is very much incentivized in line with shareholder value creation. Plus, we have an institutional duty, right?
It's not only, I would say, a selfish element, if you want, but also an institutional element in terms of our role to provide value for shareholders. I would say that right now, considering where we're coming from, the key focus is to improve the industrial results of the company, to make sure that we deliver quarter after quarter, as we've been doing over the past nine months, and also to continue to have more discipline and transparency in that approach to investors as well. As Julia was saying, I mean, we've already been meeting a lot of investors over the past few months, and as you've seen in our F inancial Calendar, we will be attending a number of conferences. We will be meeting a number of you one-to-one. I think that we are doing everything in our power to make sure that.
Progressively the market realizes that we deserve different multiples because the growth rate and the absolute value of our numbers. I also clearly think that we are not currently priced in the right way. Now, at the same time, when we are in this journey of transformation of the company, when so many things are happening with the potential to disrupt our sector and us trying to disrupt ourselves, right? We definitely want to be innovating in a way that we go ahead of market disruption. I think that's where the focus must be. Changing listing and stuff like that is potentially a huge disruption for the team, and even if it might sound like a shortcut to potentially improve our liquidity.
I think it would be the cost to pay in terms of defocusing the company at the moment in which the company actually is proving that focus is a good thing. Is probably not the right approach. That being said, this is the evaluation now. Going forward, we will continue to monitor the things. Again, deliver on the promise. Show credibility, show transparency, have a bit of patience because, of course, I think this journey is not one of a day, is one of a few years. The plan is not a coincidence, right? That it goes until the end of 2028. I think that's a reasonable time horizon. And then we might reassess, obviously, if a year from now. This hasn't changed, but we will see. But now focusing on industrial a spects for sure.
Thank you, Alessandro. Now moving to the next question.
Could you provide a breakdown of your net cash position? How much is real cash and how much is advance cash payments from clients?
Thank you, Julia. As you can see from our third-quarter report, cash and cash equivalents stood at EUR 103.8 million at the end of the quarter. It is important to note that part of the short-term financial abilities reflect the negative balance on our notional cash pooling structure. Adjusting for this, our effective cash position would be around EUR 55 million. This strong cash position is, of course, supported by the negative working capital Dynamics that are typical of our industry.
Thank you, Diego. Now moving to the next question. What is the composition of the Dynamic Packages growth? How much of growth comes from B2B? How much from B2C? Can you give us an overview of the growth in the various regions?
Yeah, okay. Two different questions in one. Let me try and address them both. The first one is that, I guess you know that narrow policy structure. When we talk about Packages, actually, it includes Dynamic Packages, which are the core of our business, mostly sold via the lastminute.com brand in its various incarnations in the various countries, but also the so-called tour operator business, which basically is a business in which we allow people to move the products of companies such as TUI or Dertour. This is especially strong in the German market, and it is mostly sold via the VEG.DE brand. There is also a portion in France, but the lion's share of this tour operator business is in Germany with VEG.DE. Now, that part has not been growing, to be honest, the tour operator bit. Again, it is where we do not have control of the product.
We are now working on some actions to make sure that we can also make sure VEG.DE gets back to the growth that it deserves as a historic brand in the German market. If we focus on the core of our Dynamic Packages, which are clearly the vast majority of the total line that we report as Package, we have seen growth across both B2C and B2B2C, as I prefer to call it, rather than B2B, right? The white-label solutions that we have with Booking.com, with Holiday Pirates, and with others, they were both growing. The B2C channel, which clearly represents the strategic focus on which we have more control, has been growing more than the other. I would say B2B2C has been relatively.
With pretty limited growth in terms of Revenues and a good growth in terms of profitability, whereas the B2C channel delivered higher growth in the quarter and in the nine months and also remains the predominant contributor in absolute terms within the Dynamic Packaging segment. Now, in terms of the growth in the various regions, we've been growing both in the core markets and in the other European markets, which we started to invest in this year. The growth doesn't come just from the new markets. I would say within the core markets the most positive performance has been coming from Italy and Germany. We are also satisfied about the situation in France, Spain, and the U.K. Italy and Germany have been for sure the outstanding ones in the quarter and in the nine months.
Thank you, Alessandro. I now move to the next question.
Currently, around 30% of Revenue is generated through partnerships. How much of the EUR 450 million in Revenue by 2028 is expected to come from partners? Will the share remain at 30%? Or will it maybe be higher?
No, I mean. Basically, as I said, our B2C core channels are growing more. I think that we will continue focusing on this. This is what we expect. The Revenues coming from partnerships will be growing if we are able to add more channels, more partners. I would say that for sure we do not expect the contribution of partnerships to increase as a percentage of Revenues. We expect it to remain stable or potentially even slightly decline as we focus on higher growth on our B2C core properties.
Okay, perfect. Thank you, Alessandro. With this, we have moved to the next question. Hello.
I missed the beginning of the presentation. Unfortunately, can you explain the growth to Missy Missel? When will it be closed? Which legal entities are changing their ownership, and when will it be closed?
Okay, let me first clarify that no legal entities will change ownership. This is very important. It's something else we're talking about. We're not talking about sale of entities. The strategic context of this is that we are delivering on the promise to be focused on what moves the needle and in the areas of the business where we can grow profitably at scale. That's why we have decided to cease operations of the Cruise division. This is what we're doing. We are ceasing operations. The Cruise division was primarily operating in the Italian market with the brand Crocierissime.
Now, the other thing we said is that that brand, Crocierissime, and the related domains have been sold to CruiseLine, which is one of the European special leaders in the sector. So this is what is happening. Seizing operations, and then. As a separate element, selling just the trademarks and domain. But for sure, not the operations as such, which are seizing, and not the legal entities.
Thank you, Alessandro. With this, we have answered now all of the questions we have received via the webcast. Sherry, maybe in the meantime, did we receive any requests to ask a live question? Otherwise, we would.
There are no more questions from the phone. Okay, then we will be closing the call. Alessandro, would you like to say a few words at the end?
Yeah, I mean, I just want to thank everyone for the questions and for the conversation, which we obviously value. We intend to remain focused. We intend to remain focused on building on the industrial performance, on the plan we disclosed. We're really confident in the path ahead. We have an ambition which even goes beyond what we've been talking about and the plan to deliver on targets we talked about. We look forward to continuing having this constant communication with you at the next quarter or ideally at one of the conferences that we will be attending. Thank you for that, and I see you very soon.
Ladies and gentlemen, the conference is now over. Thank you for choosing Carlscore, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.