Morning, and welcome to the lastminute.com Q3 and nine months 2026 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 listen-only mode. There will be an opportunity to ask live or webcast questions following the presentations. 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, Matilda. Good morning, everyone, and thank you for joining us today. We value your continued interest, and we are very pleased today to present to you our latest developments. After the presentation, we will be happy to address your questions. With this, I will hand over to Alessandro now to begin the presentation. Thank you.
Thank you, Julia. Good morning, everyone. Thanks for joining us. Let me start with some considerations to help you frame better the presentation that we will see today. I will start with something that should be obvious, but sometimes I think gets a bit lost in quarterly numbers, that not all growth creates value. I think that our Q3 results are a pretty good illustration of that. There's a big difference between being exposed to a challenging market, as the travel market, and especially the holiday packages market is this year, and being at the mercy of it. I believe that our results demonstrate that we are very much in control of the levers that matter. Started the year with the strongest January and February in the company history. Then the market changed.
Obviously, geopolitical disruption, there were pressure on consumer spending, as you're all aware, and a difficult summer for the entire travel industry, especially on holiday packages. In that environment, we had a choice. We could have definitely spent more on marketing to chase additional bookings, but we were not prepared to do so, to sacrifice profitability just to make our top line look better. I think it's a choice that we absolutely embrace, and we have no apologies for that. The numbers, basically, you've probably taken a look already. The nine months revenues are up 2%, adjusted EBITDA also up 2%, and adjusted EBITDA minus CapEx in the nine months up 9%. In Q3, despite revenues declining 2%, there's been an increase in the gross profit and a more than proportional increase in adjusted EBITDA by 7% and adjusted EBITDA minus CapEx 14%.
And I think that's, by the way, the most relevant metric of the industrial profitability of the business. This is not a company struggling to manage a difficult market. It's a company who manages a difficult market with discipline. Now, does it mean I'm happy? Does it mean we're satisfied with our volumes? Obviously not. Do we have to work on product, customer experience, and distribution? Absolutely. That's what we're doing, and we will also be talking about that today because there's another narrative that I want to address head-on. An investor at a recent conference in Munich told me, "Look, I'm sorry, man, but you are on the wrong side of the AI narrative. Whatever you do, whatever results you bring to the table." I do appreciate the candor, frankly. It made me think. It made us think inside the company. I think he's wrong.
I think there's a growing assumption that AI will inevitably disrupt online travel companies. When people see softer moments for a travel company, it's tempting to connect the dots and say, "Oh, there you go. It's AI, which is already taking the toll." But I'm sure that we're all very well aware that correlation is not causation, and confusing a difficult market with AI-driven disruption is a pretty significant mistake. We're not ignoring the transformative potential of AI. Actually, quite the opposite. We're really embracing it. We talked about that, and we will talk about it more today by showing you concrete proof points across three dimensions. AI as a new source of customer demand, AI as a driver of operational efficiency and profitability, and AI as an enabler of better products and customer experiences.
These are things which we've already been talking about in a few occasions, but today we will start showing you very practical examples of what that means in our day-to-day experience. Our flights, hotels, packages are already bookable through ChatGPT and Claude. We're using AI to improve how we operate, and we're developing new capabilities for our new features for our customers with AI. Of course, this will change how holidays are discovered and sold, but it doesn't change who are responsible for delivering them. We don't see AI as a force that inevitably disintermediates us. We see it as an opportunity to diversify distribution, strengthen our economics, and reinvent the customer experience. Again, this is not just a narrative. It's a strategy we're executing with results and initiatives that we can show you very practically, starting from today and obviously in the next few quarters as well.
As we go through today's presentation, I would encourage you to judge us by the evidence that we're bringing to the table and not just by a story that apparently makes sense. If we start taking a closer look at the numbers, actually, I already anticipated some of this. If we look at the nine months, basically revenues are up and adjusted EBITDA and adjusted EBITDA minus CapEx are up more than proportionally. If we look at the quarter, revenues are down 2%, especially on packages. As I was saying, there's been indeed, I would say, a softer market on packages specifically than on flights and hotels as a standalone product. This is a function of the type of holidays that people have been searching throughout the summer. So it's indeed a market dynamic. Again, to that external market dynamic, we reacted by privileging profitability.
You see that the gross profit has been growing in the third quarter, and the adjusted EBITDA +7%, adjusted EBITDA minus CapEx +14%. Just to comment on this, I do think that adjusted EBITDA minus CapEx is the number that makes most sense, and it is the number that internally we look more carefully at. Going forward, we will emphasize more and more because it is the number that basically does not care whatever accounting decision is made on CapEx. Especially, I would say that the fact that our CapEx is being reduced is not a function of the fact that we are investing less in the future, because it might be tempting to think that. I think it is a function of two technical elements.
One is that after the reduction of our workforce in June, clearly, the majority of our CapEx is capitalization of time spent by software developer developing our platform. So if there are fewer software developers in the company, obviously, there are fewer salary costs to be capitalized. The second element, as some of you are already very well aware, all the code that is developed by a human can be capitalized. All the code that is developed by a human with the support of, for example, Claude Code, is not capitalized. Therefore, as the percentage of code that we develop with the Claude Code is now in certain teams up to 70% or 80% of the total, clearly, that reduces the potential for that type of capitalization.
Pretty technical things, and EBITDA minus CapEx is the number that basically sterilizes that effect and allows us to look at the real profitability of the business. Now, having said the overall scene, I will leave the floor to Diego to take an even closer look at the numbers.
Thank you, Alessandro, and good morning, everyone. When we last spoke, we discussed about geopolitical headwinds were affecting our second quarter. These challenges persisted into Q3, traditionally the strongest quarter for our industry. Q3 revenues reached EUR 99.1 million, down 2% year-on-year. Hotels performed particularly well, with revenues up 28%, reflecting consumer shift in demand. Packages, on the other hand, were the segment most affected by the ongoing uncertainty, with revenues declining 6% in the quarter as consumer increasingly favor individual travel products, seeking greater flexibility in the booking decisions. The nine-month picture is broadly consistent with double-digit revenue growth in flights and hotels, offset by the weaker performance in packages. Moving to gross profit, Q3 delivered a 1% increase year-on-year, despite softer trading condition across all segments. As mentioned during the Q2 call, we responded quickly to changes in customer behavior by adjusting marketing investments to protect return on investments.
We will discuss these actions in more details on the next slide. Lower marketing spend helped offset the negative impact of the product mix, as flights and hotel generate lower gross profit per booking than packages. Looking at the first nine months, gross profit was down 2% year-on-year, with the decline in packages offset single-digit growth in both flights and hotel. We are now on slide 11. As you can see, variable costs were down 4% year-on-year, of which marketing spend decreased by 7%. As mentioned before, this reflects our disciplined approach to customer acquisition and our focus on protecting return on investment. Turning to the organizational restructuring announced in June, driven by the adoption of AI across the company, implementation is now close to completion across all countries, in line with or ahead of our original plans.
Expected annual saving have been upgraded to EUR 16.5 million, with associated one-off cost of approximately EUR 12 million. Faster execution of the restructuring plan is allowing us to realize more than 50% of the saving originally expected for the full year 2026 already in Q3. As a result, fixed costs were down 4% year-on-year, with personnel costs driving the improvement, decreasing by 9% in the quarter as the initiative began to translate into lower cost base. Slide 12 provides a more detailed view of the P&L and brings together the items we have just discussed. In Q3, adjusted EBITDA reached EUR 18.4 million, up 7% year-on-year, benefiting from the reduction in both variable and fixed cost. During the quarter, we increased the provision for the restructuring plan by EUR 1.2 million, reflecting the higher expected savings. Reported EBITDA increased by 29%, while EBIT more than doubled year-on-year.
This also reflects the comparison with Q3 2025, which was impacted by the closure of the cruise business and the associated one-off charge. As anticipated during our Q2 call, second half profitability is benefiting from the progressive realization of restructuring saving, with no further cancellation-related cost arising from the conflict in the Middle East. Finally, net profit reached EUR 7.3 million, compared with EUR 1.3 million in Q3 last year, also benefiting from lower net financial expenses. We are now on slide 13. This slide provides a more detailed view of our net financial position bridge on a rolling 12 months basis, helping us better understand the underlying drivers of cash generation while smoothing out seasonal effects. Free cash flow over the last 12 months was negative EUR 38.3 million, compared with positive EUR 10.9 million in the previous 12 months period.
The main driver of this change was a EUR 48.2 million cash absorption from net working capital over the last 12 months. This was driven by two effects, lower booking volumes, particularly towards the end of the quarter, and by a continued preference for prepaid cards to improve transaction economics while accepting a short-term cash impact. We expect this working capital impact to reverse completely by the end of Q4. Excluding the change in net working capital, free cash flow would have been positive by EUR 9.9 million. It continued to be impacted by non-recurring items. Total non-recurring cost amounted to EUR 16.4 million in the last 12 months, of which EUR 10.8 million have already been paid, while the remaining EUR 5.6 million remain provisioned and expected to be paid in Q4. With this, I'll pass the word to Alessandro. I'll be happy to take any follow-up questions during the Q&A.
Thank you, Diego. Actually, before we move on to the strategic developments, just a couple more comments on this page, because I am sure that a lot of you have curiosities about this. You can see pretty clearly, I guess, that basically the free cash flow pre-net working capital this year would have been better than in the. Sorry, it is not this year. In the last 12 months, would have been better than in the previous 12 months if we had not considered the one-off restructuring cost. We would have gone up basically EUR 16 to 26 million . Whereas last year, we had EUR 8 million of non-recurring costs, mostly related to the closure of the cruise business. And with those EUR 8 million, we would have been gone up to EUR 22 million, right? So we would have had an apples with apple comparison without the one-off items of 26 versus 22.
The big difference is clearly the change in net working capital. Again, I guess that here the name of the game is deliberate choices in the sense that we realized that we had enough cash to be able to start paying with prepaid cards rather than credit cards, which basically provide better unit economics. Again, protecting profitability at the expense of cash flow because we had enough cash to afford that. I would say also in terms of volumes, flights, especially on Meta. Meta meaning not Meta the company, but Meta channels, so Skyscanner and KAYAK is very affected by even very small changes on pricing. Here the choice was to retain profitability even at the expense of volumes, again, because we could afford it.
It is the same narrative that I started with the presentation to say in order to protect profitability, we had accepted certain things. We had enough cash that this was the right thing to do in order to improve our EBITDA. Now, if we look more at the strategic developments, because at the end of the day, as we said, we are not looking just quarter after quarter. We are here to build a stronger company for the next 10 years, a new type of travel company, a travel company that is fit for the AI era. This is the vision. This vision is realized across four drivers that we talked many times already, market presence, dynamic package evolution, being a travel companion, and having a focus on all of our brands enabled by AI. Proof points of that. So the first element is that dynamic package evolution.
This page specifically is still a bit conceptual, but let me explain what we have done, and then our next call, we will show you some demo of how this actually translates into a better product experience. Basically, we have done two things. On one hand, we have focused our inventory on curated hotels, meaning eliminating hotels which were providing very negative customer reviews and customer complaints. There were a relatively small number of hotels of low quality that was creating disproportionate amount of that. They represented anyway less than 3% of sales. So not an impact from that point of view, but definitely an impact in terms of perceived customer experience and also reduction of customer complaints. Not only that, but having. By the way, we are still talking about an hotel portfolio of over a few hundred thousand hotels.
We're not talking about having reduced our hotel portfolio significantly. We're still having the largest portfolio across companies who provide package holidays. In terms of hotels available for package holidays, we still have the largest portfolio. But the fact there is now hundreds of thousands rather than millions of hotels available also enable us to have a much more efficient use of caching, of pricing. This also basically is connected to the second element, which is an upgraded package platform. Which again, is more of a conceptual thing. I understand that without seeing it live, you do not appreciate the difference, but basically the thing is that it allows us to have an immediate possibility to see pricing of whatever package combination, whatever hotel, whatever flight.
I would say it allows the customer to, if we want, play in real-time by checking what are the best moments in the year to go to a specific destination, to a specific hotel, and what changes if they change the flight, and all of that happens in real-time. So you can really get a sense of, if you have especially a limited budget, you can really have a sense of when is the best moment to go to a specific destination throughout the year, very fast. Today on the website, and now this is a feature that is also coming to an integration with ChatGPT and Claude in order for that to also happen in a conversational interface. Now, it's all nice, but what is the industrial impact that we expect from this? We expect better customer experience and an increase in conversion.
The first tests that we're doing are proving that this is very promising in that direction. I think it's also appropriate, this is something that we've been discussing with some of you, but I think it's appropriate to have a very visual representation. I will not spend a lot of time on this page, but I think it's a page you will see more and more in our presentations that tries to really explain, again, this whole narrative about AI is taking over. Obviously, from a technical point of view, AI can do a lot of things. I would say everything, potentially, right? But in terms of business model, where is it that AI platforms are really relevant, and where is it that someone like us actually is in charge? If we look at how people book holidays, there's various moments.
The moments of inspiration in which people start thinking, "Where should I go?" The moment of consideration in which they've decided the destination, and they're comparing options. Then the moment in which they actually book the holiday, they go on holiday, and then they come back from the holiday. Of course, it's already something that we're seeing today, that AI platforms increasingly drive travel discovery from inspiration to the destination choice and simplify the final choice by comparing options in real-time. We're part of that, and by the way, we will see in a few moments that we are integrated exactly in those moments. For us, in this way, basically, this is something that always existed. It's a role that was traditionally held by Google and by social media platforms. By the way, they're not going away.
Google is still there, especially with AI Mode and the integration of Gemini. Social media platform also there for inspiration. AI platforms basically add as an additional customer acquisition channel, as an additional demand generation channel for us. When the moment to book comes, this is where a player like us has to take care of the responsibility. Again, this is not a technical thing. This is a legal and regulatory element in which a package holiday is a very specific thing, especially in Europe. If you book a package holiday, you are entitled to certain protections which require you to have a tour operating license. I mean, all things which are very far away from the business model of the demand generation platforms, Google, social media, AI chatbots.
That's where players like us come into play, and we have very solid moats, again, not from a technical, but I would say more from a business model and regulatory point of view to protect that part of the journey, where we really have the responsibility, especially, let's be honest, if something goes wrong. If something goes wrong and you are stranded in Thailand because the Dubai airport is closed due to the war, then it's a company like us who steps in and has to pay the extra nights at the hotel and make sure that we find a different flight for you to come back. I think it's important to understand exactly everyone's role in the value chain. Now, talking about the three pillars of how AI embracing is impacting our company. The first one was what I was talking about.
The fact that being present at lastminute.com on the leading AI platforms is a new way for us to tap into demand generation, and we will see in a moment how that works. Because I understand that when we talked in the past about MCP server integrations, that remained a bit conceptual and difficult to understand for someone who's not in the market. We're now giving very practical examples. The second element is the fact that AI allows us to enhance the travel experience, and you will see examples also on that. Then last but not least, AI as a tool to improve internal productivity.
I understand that on this one, probably you need fewer examples because it's already proven by the fact that our fixed costs are going down, and will go down even more in 2027 as the result of the actions that we took in 2026. But still, we think it's interesting for you to get also a more qualitative sense of how this all works. Starting from what is probably on everyone's mind, how does it work with demand generation?
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To be very clear, the numbers that we are getting from this integration and the ads are still pretty small, as for everyone in the industry. But I think it is important to prove the point that if and when demand goes there, we are already there ready to take advantage of that. If and when demand moves away from Google or social media platform, where historically we were getting our customer acquisition, for us, it would be just a new channel where we are present. Now, if we take a look, on the other hand, about how AI allows us to improve the customer experience, we have a recent example of a new feature that we are adding to the app, which has been completely delivered and managed with AI.
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You've seen, and this is just an example of the many things that we can add and that we can add much faster thanks to AI. On the last element in which AI is helping our company, internal productivity. As I said, probably on this one, you are already, let's say, sold on the concept, but we have some examples anyway, and I will also then make a few comments. Seeing the video first.
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This is just one example of the many things that we're doing. Other examples could include the fact that, as I said, almost 80% of the code that our engineers write today is initially generated with AI, which means that we can be much faster. For example, the evolution of the Dynamic Packages platform that I was mentioning and that we will see in the next few calls has been developed in a few months, whereas in the past it would have taken years. Even beyond tech, there is hundreds of colleagues who basically are using an internal platform we developed that lets anyone create and publish apps throughout the company using AI for internal tool. So far, over 400 internal tools have been created this way across the company, which speed up access to information, data analysis, and the automation of everyday tasks. It's real.
It's happening already. I hope that a video like this and these examples that I just made give it a bit more substance than when we talked in the past about shared intelligence layer. I know some of you asked me, what does it mean in practical terms, in layman terms? Well, actually, this is it, and these are the results already. So all in all, I think that, and I hope the message landed pretty clearly. Yes, the market has been challenging, but I think we took pretty early on bold decisions in order to navigate it by keeping profitability on and protecting it. Also leveraging the fact that we had abundant cash, and so we could make certain choices which helped us get better unit economics.
There was clearly a reduction in our. We now have a much leaner cost structure, but I would say that cost reduction is not the strategy. The strategy is having a company that is fit for future growth and a profitable growth as such. Obviously, by having a leaner cost structure, we have also more freedom to invest in the future, which we will keep doing, as I said, not just for the next few quarters, but for the long term, by continuing to evolve our Dynamic Packages platform and integrating AI even more deeply into our operations. In the short term, the guidance for the year is basically now that we expect to end 2026 in line with the revenues and adjusted EBITDA that we had in 2025. With that, I think we can conclude my remarks for today.
I just leave it to Julia to give you a snapshot of our upcoming financial calendar, and then we will be ready for your questions.
Thank you, Alessandro. Here on the next slide, you will see our next upcoming conferences and financial reporting dates for 2027. With this, I will begin now the Q&A session. We will start, like always, with the live questions first, then the questions followed by the webcast. Please note that similar questions we might have regrouped together. In line with our privacy and data protection policy, we remind all our participants today that stating your name is optional when asking a live question. With that, I will hand it over now to Matilda, our conference call operator, to begin with the first live question.
We will now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their telephones. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from a question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Webcast viewers may submit their questions in writing via the related field. Anyone who has a question may press star and one at this time. There are no phone questions at this time. Back over to you.
Thank you, Matilda. As we have no live questions4st at the moment, we will ask after our webcast questions again, if anybody might have connected in the meantime. We will take now the first webcast question we have received this morning, which I will read now. Q3 revenues impacted by higher travel prices and limited consumer budgets. Why not go more after a targeted group that is able to afford higher prices, loves tailor-made travel offerings, high-quality hotels such as four stars or five stars, as well as special travel offerings according to travel season?
Yeah, I would say this is a pretty complex question in a way. I think that we definitely see an opportunity to serve customers who are looking for high-quality travel experiences, and this is already reflected in the evolution of our Dynamic Packages strategy. At the end, I think our responsibility is to provide, again, a curated experience and then let customers choose. There will be customers with different budgets. For example, this year, we did indeed already grew the number of transactions with a value above EUR 3,000. This is actually the segment of the market that has been growing the most in our P&L. But the point is that there was a reduction in the number of people who bought packages under EUR 1,000.
And again, the perception here is that there's various elements, but obviously, if people have a reduced disposable income, what they might be doing is rather, if they normally have EUR 1,000 to allocate to holidays, if they have to spend EUR 200 or EUR 300 more for fuel, then maybe rather than buying a package, they would just book a hotel and drive to the destination. This is an effect that we've been seeing this year of people who were like, "Well, you know what? I will still go on holiday, but go directly to the destination with my car rather than booking a flight to a more distant destination." So shorter distance trip, I would say. I think this is an interesting opportunity for us to actually be better in learning how to sell packages to people who are looking for a hotel.
Because let's be honest, if you're British and you're looking for a hotel in Mallorca, at some point, you need a flight to get there, right? Today, to people who are that specific customer of my example, we typically sell them a hotel room, and I think we can be better in selling them a more curated travel experience, a package, maybe also the in-destination experiences, and this is definitely one of the areas in which we are working on.
Thank you, Alessandro. Now moving to the next question. Will you be sharing also a full set of Q3 financial statements today? Only a condensed balance sheet has been published today.
Yeah. The complete Q3 release is already live on our website as of this morning. Because this is a quarterly report, the disclosures are condensed. But if you need additional information, you can drop me a line.
Thank you, Diego. Now the next question. The only segment with good growth are hotels, as far as I can see. Behind this growth, is it Booking, our strategic partner, that drove this growth?
Well, no. Absolutely not. It was not booking.com. It was all coming from our B2C properties. And why that? Because just to be clear, our partnership with booking.com is strictly for our white label flight plus hotel Dynamic Packages solution. As you can imagine, Booking doesn't want a third party to sell hotels only, right? That's their bread and butter. Absolutely no correlation with that. It was 100% on our B2C properties, on our own brands, our own channels. The double-digit growth that you see is a function of, on one hand, market dynamics. As I said this summer, you can also read reports about that the number of people searching for hotels had a relatively better performance than the number of people searching for holiday packages. That was, again, a market dynamic.
Plus, I would say we tapped into this market dynamic by having an expansion of our market reach for the hotel-only product and also an expansion of the Meta search channels in which we are active. There were a bunch of internal actions that we took to grow that. Let me be very clear. Of course, we think that the Dynamic Packages is the jewel of the crown and the product on which we have a better defensibility and a better strategic leverage in the long term. But when in the short term, our hotel and flight products are growing, we are very happy about that, and there are whole teams within the company focused on growing just that.
It is one of the beauty of having a multi-product strategy that when changes like that happen for a few quarters in the market dynamics, we are there to basically give customers what customers are searching. If one specific quarter, they are searching more just hotels, then we are there with a product. If we were offering only packages, that would have been potentially more of an issue for us in this specific non-structural, but I would say contingent situation.
Thank you, Alessandro. Moving now to the next question. Could you please give me some background information for the development of the free cash flow in Q3 2026, and give an outlook for Q4 2026?
Okay. Thank you, Julia. I think we already discussed about the main items behind the figures at the end of the third quarter 2026. I would rather focus more on the outlook for the fourth quarter. First of all, the big swing in the net working capital we saw at the end of the third quarter will be reabsorbed, because typically the end of the year is the point of the year where we have a lower cash balance, so we will need more credit cards compared to prepaid cards. Secondly, we will have to pay out the latest portion of the restructuring costs that were still accrued as of the end of September, amounting to EUR 5.6 million. And the third item would be the evolution of the volumes, especially towards the end of the year. We are now approaching the low season, which ends around the end of November.
The volumes from that point in time until the end of the year will have an impact definitely on the value of the net working capital at the end of the year.
Thank you, Diego. Moving to the next question. Following June's reorganization, Q3 HR OpEx fell 9% to EUR 12.9 million, and HR CapEx dropped 36% to EUR 2.8 million. Is the resulting EUR 19.7 million fixed cost base a clean run rate for 2027? What are the annualized net cash savings?
Well, actually, this is something we already mentioned, I think, in the previous announcement, and we can confirm today now that basically all of those operations have been completed. All of the new organization is already live. All the collective procedures have been completed. There's nothing ongoing there that still creates any type of uncertainty. We're even more sure about the numbers, and we can confirm the number of EUR 16 million in annualized savings that will materialize, that actually have already started materializing in Q3 partially, even more obviously in Q4, because the process has been completed in Q3 already, and then obviously completely fully from Q1 2027. EUR 16 million for the year.
Just to be clear, however, it's not today the day in which we talk about expectation for 2027, but I think it is important for me to anticipate that you should not then automatically imagine a EUR 16 million increase in the adjusted EBITDA. For two reasons. One is that part of the EUR 16 million will have already materialized in 2026, and obviously at the end of the year, we will be able to be more precise on this. But the second element is that, as I said at the very beginning, we're now working to build a company fit for the next 10 years. I think it is still important to invest not only in technology but also in marketing and in our brand for the future. I would say that a leaner cost structure also enables us to do that.
Not every single penny should be seen as something that directly goes into the improvement of the adjusted EBITDA.
Thank you, Alessandro. Moving to the next question. Non-recurring items reached EUR 16.2 million in nine months, including EUR 12.2 million in restructuring costs, and the cash flow which shows EUR 5.6 million of restructuring costs are not yet paid. Are the organizational restructuring charges now 100% behind us, or should we expect further one-offs in Q4?
Well, yes. The answer is yes for the P&L, and as mentioned, we still have an open provision of EUR 5.6 million that will be paid in the fourth quarter.
Thank you, Diego. Moving to the next question. Can you comment on Q3 performance by geography? In which market was competition the strongest?
Well, again, I guess I am happy to give you some data here. I do not think that necessarily the point was competition being the strongest, but really, I would say consumer confidence and disposable income. The market in which we had more issues, to be honest, among the big ones was Germany. Germany, again, I think if you look at the statements by TUI, for example, and how much their profitability has declined this year, you will be, I think, quite I am going to say it creates quite a stark contrast with our ability to protect our profitability, even by acting in a market like Germany. On the other hand, at the other extreme of the spectrum, among our core markets, Italy was very positive, and among the expansion markets, we had positive news from Northern Europe, I would say, so countries like Belgium or Finland.
Again, this, to be honest, it can vary quarter after quarter, so I would not necessarily create a narrative around that. I would say the core markets were pretty stable, Italy positive, and the majority of the issues were really focused on the German market. Whereas the expansion market were positive overall, with a specifically positive performance of some of the Northern European countries.
Thank you, Alessandro. Now taking the next question on AI. In your announcement, you mentioned your connection to ChatGPT and Claude. In my view, the latest OTA scare came from Muse. Can you comment on your connection or plans to this element?
Yeah. We are also working to connect on Muse, if that is the specific question. We will talk about it in more details over the next few announcements. Yes. I would say that conceptually, it is always the same story. For me, maybe it is more important to re-insist on this story. You probably read when Muse announced the launch, they say, okay, launch partner Expedia, right? They did not say, "We are launching and we are disintermediating everyone else." They realize very well that they need, especially for a product like packages, a partner like us. Because their business model is to create demand, is to surface the right offer for the right type of customer audience. Our business is to fulfill that demand and manage the holiday itself. This is very clear to the people in the industry.
When we talk to Anthropic, to OpenAI, to Meta, it is very clear to them, to Google especially, that their business model. Google especially, who built the business model successfully over 30 years by selling ads and basically selling visibility to company like us. That it is not their business model to become a tour operator or an online travel agency. It is their business model to surface the right offer. I would say now it is Muse, then there will be other platforms, maybe someone else will launch. There will be a cool new startup with a new product. That is exactly what we are expecting, and this means we will diversify our customer acquisition channels. You might even envision a future in which by having more and more access points and places where people get inspiration, potentially the price to get in front of those customers might even go down.
That might be more competition, because let us be honest, so far it has been pretty much an oligopoly between Google and Meta. If that opens up, I think it can even be good for competition and good for companies like us to be present everywhere.
Thank you, Alessandro. Moving to the next question. How do you think you are performing relative to the competition? Also, how does your integration with AI compare?
Well, I guess it depends on also on how you define competition. As I said, we saw different dynamics between the hotel-only product and the package product. Frankly, we have been looking obviously at companies selling holiday packages across Europe. The fact is that most of the companies that do that are not listed. The few that are listed, if I think about TUI or On the Beach or eDreams, you can see the results better than me, and you can see the sharp drop in profitability, the experience, sometimes not even compensating with the top-line growth. I think that we have performed pretty well in that space. If you look at the non-listed companies, I think we also compare pretty favorably, but based on, let us say, stories that we have been hearing at conferences or in private conversations, so it is more difficult to sustain it.
Different story if we are looking at a company like Airbnb, for example, with a different model and focusing on alternative accommodation. Extremely successful company. They were able to still grow even in this environment because they provide, I would say, not just the reality, but also the perception of cheaper options for people who are on a budget. They can thrive in the current environment by being both an aspirational product at a cheap cost. I think this is a lesson that we can learn from a product point of view to combine that element of feeling and looking very aspirational, even if, at the end of the day, you sell things with pretty low price point. In terms of our integration with AI, I think, frankly, that we are there at the forefront of that. We are ready.
As I said, we integrated with all the existing platforms. We will continue to integrate with the other platforms. I think this is something that we are doing, Booking is doing, Expedia is doing. I would say we are at the forefront with the global leaders in the space.
Thank you, Alessandro. Moving to the next question. Where do you expect cash to land at the end of the year? Do you expect to still use prepaid instead of virtual credit card for payments?
Yes. You should look at this from a point of strength. The fact that we are able, year after year, to use more prepaid cards than credit is due to the fact that our financial position is improving every year. We will do our best to use the cards as long as possible. But of course, during the last couple of months of the year, we will have to switch back to credit cards. In terms of overall net financial position, it will be more or less in line with the previous year value of 2025.
Thank you, Diego. As I understood, we have now completed all our webcast questions for today. I will ask the conference call operator, Matilda, one more time if maybe in the meantime somebody connected via the phone and wanted to ask a live question.
There are no questions at this time from the phone.
Okay. Thank you, Matilda. With that, I hand it over to Alessandro for the closing words.
Well, thank you again, everyone, for joining. I hope this session was useful to give you not just an update on our quarterly results, but a better framing of how we are seeing things, the decisions we are intentionally making, and how we see the company in the next few years. I look forward to continuing interacting with you to give you a sense of that. See you soon. Thank you.