Edreams Odigeo · BME:EDR
Edreams Odigeo — Non-Deal Roadshow (October 2018)
60 slides from Edreams Odigeo's roadshow presentation, Oct 15, 2018
Slide 1: Investor Presentation October 2018
Investor Presentation October 2018
Slide 2: Disclaimer
Disclaimer This presentation is to be read as an introduction to the audited consolidated financial statements of the Group and contains key information presented in a concise manner on the Group and its financial condition. The information contained in this presentations is extracted from the una
Slide 3: Why eDreams
Why eDreams • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix
Slide 4: Why eDreams ODIGEO? Winner in Europe, revenue diversification, growing markets
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO WHY eDreams ODIGEO? 1 1. Winner in Europe • Number 1 in flights in Europe • Number 1 or 2 in all main European markets • We provide great value to customers vs their alternatives 2. Significant revenue diversification 3. Growing attractive markets
Slide 5: Why eDreams ODIGEO? Strong performance management and delivery
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO WHY eDreams ODIGEO? 4. Strong performance management and delivery while changing the business model • 14 Consecutive quarters meeting or exceeding guidance • Exploring alternatives of shifting the revenue model with potential to improve even more t
Slide 6: Leading player in Europe with unrivalled scale
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – WINNER IN EUROPE 1 We are a leading player in Europe, unrivalled scale with 1.8x moreScale European flight revenue than the #2 player advantage European flight revenue Estimated, latest FY (€m) Long-tail of other OTAs (not-exhaustive) 339 1 1.8x
Slide 7: Leader in the European online leisure travel market
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – WINNER IN EUROPE 1 eDreams ODIGEO is the leader in the European online Scale leisure travel market advantage # Market position Expansion Core European OTA flight market share 1 2 30% # 2 1 eDreams ODIGEO: the leading flights 1 2 retailer in Europ
Slide 8: Customers book with us because of value and choice
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – WINNER IN EUROPE 1 Customers book with us because we provide strong value and choice, in the most convenient way We make it <100 seconds for users to book a direct flight easiest to book 8 vs 3 We give They can >6,000 customers the customize ever
Slide 9: Revenue diversification on track, positive results on KPIs
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – SIGNIFICANT REVENUE DIVERSIFICATION Revenue diversification on track, positive results visible on the 2 KPIs Revenue diversification ratio Revenue split evolution Q4 ‘16 Q1 ‘19 35% 38% 27% 30% 31% 5% 7% 27% 15% 14% 38% Q4 '16 Q4 '17 Q4 '18 Q1 '18
Slide 10: Our market continues to be a good market from a macro perspective
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – GROWING ATTRACTIVE MARKETS 3 Our market continues to be a good market from a macro Macro perspective Perspective Improved macro environment creates an …as well as greater continuous shift from attractive environment for OTAs… offline to online tr
Slide 11: Flight market dynamics in Europe suited to OTAs
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – GROWING ATTRACTIVE MARKETS Flight market dynamics in Europe make it especially suited 3 to OTAs Market US Europe 120 Number of airlines1 60 Supply 75% Market share of top 4 airlines2 29% Airline brand recognition High Low Domestic 23% 20% Proport
Slide 12: Capture growth on fast growing markets
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – GROWING ATTRACTIVE MARKETS 3 REVENUE DIVERSIFICATION – Capture growth on some fast growing markets Flight ancillaries market We focus on growing Dynamic Packages as well as some key Flight ancillary products 80b€ Dynamic packages Gross sales in 2
Slide 13: Financial track record, achieving financial objectives
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – STRONG PERFORMANCE MANAGEMENT AND DELIVERY Financial track record, achieving financial objectives while shifting 4 the business model Adjusted EBITDA (€Mn) 118.3 115.0 €117m €113m 107.3 105.0 €107m €103m 95.8 92.5 €94m €91m 2016A 2017A 2018A Repo
Slide 14: Revenue model on track, evidenced by KPIs
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – STRONG PERFORMANCE MANAGEMENT AND DELIVERY 4 Revenue model on track, we are successful on executing on our strategy as evidenced on our KPIs Mobile as share of flight bookings Acquisition cost per booking index 37% 34% 32% 100 -18 percentage poin
Slide 15: Strong cash flow generation
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – STRONG CASH FLOWS 5 Strong cash flow generation € in millions Favourable Easter Seasonality 171.5 143.5 132 134.1 121.8 97% 104.6 108.2 67% 82 79.3 54% 54.3 51.5 21% 19.1 FY 2015 FY 2016 FY 2017 FY 2018 CF Operating Activities CF before Financing
Slide 16: Deleveraging created an opportunity to reduce cost of debt
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – STRONG CASH FLOWS 5 Deleveraging created an opportunity to reduce cost of debt Net debt (€m) Net leverage ratio (a) (x) 22.2% 1.3x 331.0 3.4x 285.1 2.7x 257.6 2.1x Q4'16 Q4'17 Q4'18 Q4'16 Q4'17 Q4'18 Gross debt (€m) Gross leverage ratio (b) (x) 7
Slide 17: Significant reduction of debt coupon
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – STRONG CASH FLOWS Significant reduction of debt coupon and 80 basis points below 5 average market yields for B2 rated bonds Debt markets As a % 8.5% -300 basis points 80 basis points below average 6.3% 5.5% eDreams ODIGEO eDreams ODIGEO Average Y
Slide 18: Current valuation multiples not justified
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – VALUATON NOT JUSTIFIED 6 Current valuation multiples not justified Equity markets EV/EBITDA multiple 18.7 15.1 15.1 14.9 13.5 Average 12.7 10.8 9.4 58% 57% discount 6.3 discount 5.4 FY 2019E FY 2020E eDreams (*) On the Beach (**) Bookings Holding
Slide 19: FY2020 guidance reconfirmed
Q1 FY 2019 Roadshow Presentation WHY EDREAMS ODIGEO – FY 2020 GUIDANCE RECONFIRMED 7 FY 2020 guidance reconfirmed, with a clear path to achieve 14 consecutive quarters meeting or exceeding guidance DRIVERS € Mn 130-145 Volume effect • 3 main markets in P2 in H2 FY20 118.3 • Partly offset by 1 main m
Slide 20: Full Year Results Highlights
Full Year Results Highlights • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 20
Slide 21: FY2018 Results Highlights
FY 2018 Results Presentation HIGHLIGHTS RESULTS HIGHLIGHTS Increased guidance achieved for FY18: Bookings, Revenue Margin and Adjusted EBITDA 14 Consecutive quarters meeting or exceeding guidance Change in revenue model and diversification on track Positive results visible on KPIs Strong cash flow a
Slide 22: Solid results above initial and raised guidance
FY 2018 Results Presentation HIGHLIGHTS SOLID RESULTS, results above initial and raised guidance Bookings +3% Revenue Margin Adjusted EBITDA In thousands In € million In € million +1% +5% +10% +9% 11,653 11,740 +5% 508.6 +12% 118.3 463.3 486.6 107.3 10,675 95.8 FY 2016 FY 2017 FY 2018 FY 2016 FY 201
Slide 23: Strategy delivering good growth in Adjusted EBITDA
FY 2018 Results Presentation HIGHLIGHTS STRATEGY DELIVERING GOOD GROWTH IN ADJUSTED EBITDA Adjusted EBITDA evolution YoY variation +12% 15% Change in Management +12% 10% CAGR 15-18 10% +6% 5% 0% +7% Bookings -5% -10% -15% % Growth normalised for no bonus payment FY 2015. 100% accrual in FY 2016 +5%
Slide 24: Q1 Results Highlights
Q1 Results Highlights • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 24
Slide 25: Q1 Results Highlights
Q1 FY 2019 Results Presentation Results Highlights Solid performance and in line with our guidance ▪ Bookings (+1%), Revenue Margin (+7%) and Adjusted EBITDA (-3%) Q1 performance was driven by: ▪ Solid bookings and revenue margin ▪ Positive revenue margin per booking: Flight (+4%) & Non Flight (+11%
Slide 26: Results in line with H1 outlook and on track for FY2019 guidance
Q1 FY 2019 Results Presentation Results in line with H1 outlook and on track to meet FY 2019 guidance Bookings Revenue Margin Adjusted EBITDA (*) In thousands In € million In € million 134.6 27.0 2,934 2,970 26.1 125.3 +1% +7% -3% Q1 Q1 Q1 Q1 Q1 Q1 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 Sou
Slide 27: Outlook
Outlook • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 27
Slide 28: Reiterate full year outlook
Q1 FY 2019 Results Presentation FY 2019 OUTLOOK Reiterate full year Outlook Outlook Statement Outlook for FY 2019 In FY 19, we will continue to invest and accelerate the strategic shift in our revenue model, including increased price transparency display in some countries. We expect this strategy to
Slide 29: Strategy Update (Part 1)
Strategy Update (Part 1) • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 29
Slide 30: Scale positions us to serve the mobile travel customer
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE - WHO WE ARE AND WHAT WE HAVE ACHIEVED This scale means we are best placed to serve the mobile travel Scale customer advantage IT Mobile developer capability comparison, European OTAs FTE Dedicated mobile 400+ ~70 ~60 ~50 ~40 ~30 ~20 ~20 ~40 OTA A OTA
Slide 31: Scale balanced by agility to execute rapidly
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE - WHO WE ARE AND WHAT WE HAVE ACHIEVED Our scale is balanced by a high level of agility to execute on ideas Scale rapidly and cost efficient advantage 1,100 15 A/B 50 6,177 minutes tests agile teams Features Users participating in Best case delivery +
Slide 32: Technology with significant scale
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE - WHO WE ARE AND WHAT WE HAVE ACHIEVED Overall our technology has significant scale and allows us to offer Scale customers the best experience advantage 1 billion monthly searches 120,000 peak searches per second 80 million supplier searches per day >
Slide 33: Market-leading customer service
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE - WHO WE ARE AND WHAT WE HAVE ACHIEVED We have market-leading customer service Best service Award-winning customer service 24/7 round the clock Customer service customer service 1 recognized as better 2 3 than competition 4 Trustpilot score ranking 5
Slide 34: Strategy Update and Outlook (Part 2)
Strategy Update and Outlook (Part 2) • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 34
Slide 35: Why we see value in the change in revenue model
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE Why we see value in the change in the revenue model and diversification? Because we are responding to evolving customer needs and preferences 36% see transparency as a key decision factor Clear and 1 transparent pricing 53% abandon booking upon seeing
Slide 36: Step 1 of the transformation: change in pricing model
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – CHANGE IN REVENUE MODEL Step 1 of the transformation, the shift in the revenue via change in the way we price? How this impacts P&L initially and overtime? What it 1 Change in pricing model Step 1 - Search Step 2 – Purchase means? First Price Final
Slide 37: Countries in Phase 0, 1 or 2 of revenue model shift
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – CHANGE IN REVENUE MODEL Our results are a mixture of our countries/markets, each of which are in 1 of 3 phases in our change of the revenue model. What it means for countries to be in Phase 0, 1 or 2 of the shift in the revenue model Effects Phase 0
Slide 38: Results are a blend of phase 0, 1 and 2
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – CHANGE IN REVENUE MODEL Our results are a blend of phase 0, 1, and 2 with Phase 2 showing very good results FY 2018 Year on Year Change Bookings Revenue Margin Marginal Profit (*) Mobile Bookings (**) 48% 50% 31% 33% 21% 16% 15% 13% 5% -11% -16% -20
Slide 39: Price transparency improved customer satisfaction
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – CHANGE IN REVENUE MODEL Changes in Price Display towards more price transparency improved customer experience leading to higher customer satisfaction When moved towards more transparent Pricing Display… … contacts per bookings related to …detractors
Slide 40: Acceleration of the shift in the revenue model
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – OUTLOOK FY 2019 In FY 2019 we plan to invest in the acceleration of the shift in the revenue model Evolution of Q1 FY17 Bookings breakdown (*) % over total Acceleration of the shift 5% in the revenue model (**) 11% 16% 62% 36% 31% On average pushed
Slide 41: Revenue diversification and why we see value
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION Step 2 of the transformation, revenue diversification and why we see value on doing it? Rest of market 2 Access to a wide range 65% want to buy on a single online platform of products and services with ease 2.4x increased spe
Slide 42: Ambitious plan to expand through additional revenue sources
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION We have an ambitious plan to expand the business through additional revenue sources eDreams is well placed to achieve our ambition eDreams is the European leader in flights, generating significant flight traffic and booking v
Slide 43: Positive revenue diversification reflected in KPIs and growth
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION In summary, positive revenue diversification reflected on KPIs and revenue growth rates on both ancillaries products and dynamic packages Results are visible on our KPIs and results over the past 3 years …with future growth c
Slide 44: In summary
Q1 FY 2019 Roadshow Presentation In summary… World-class product Customer value Growing market Industry structure and technology Mobile leader Scale Market leadership Investment Results 44
Slide 45: eDreams ODIGEO
eDreams ODIGEO eDreams ODIGEO
Slide 46: Appendix
Appendix • Why eDreams • Full Year Results Highlights • Q1 Results Highlights • Outlook • Strategy Update (Part 1) • Strategy Update (Part 2) • Appendix 46
Slide 47: Technology platform superior to metas and directs
Q1 FY 2019 Roadshow Presentation eDreams’ technology platform is superior to that of metas and directs in providing a more efficient and flexible offering for the customer Search technology Complete bookings Traffic Build itineraries Booking Payment / Customer and display of within GDS/LCC acquisiti
Slide 48: Dynamic packages: Case study
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION Dynamic packages: Case study Dynamic Packages: Evolution to date and our competitive advantage Initiatives in place to achieve growth What we have achieved to date Access ▪ DP available in the app ▪ DP grew 10x faster than fl
Slide 49: Flight Ancillaries: Bags case study
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION Flight Ancillaries: Bags case study Bags: Evolution to date and our competitive advantage What we have achieved to date ▪ Now have added +70% more bags development capacity since September ▪ With our new resources, we tripled
Slide 50: Flight Ancillaries: Seats case study
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION Flight Ancillaries: Seats case study Seats: Evolution to date and our competitive advantage What we have achieved to date ▪ Over 80% Growth in attachment rate in H2 ▪ Created a full team of developers dedicated to seats ▪ Ove
Slide 51: Cars case study
Q1 FY 2019 Roadshow Presentation STRATEGY UPDATE – REVENUE DIVERSIFICATION Cars case study Cars: Evolution to date and our competitive advantage Initiatives in place to achieve growth in plan What we have achieved to Access date ▪ Testing in-flight funnel ▪ Delivering double-digit ▪ Landing page foc
Slide 52: Customers can save on each booking
Q1 FY 2019 Roadshow Presentation Save Customers can save on each booking by using eDreams ODIGEO money 9 major pan-European Average final price saving per booking, carriers and LCCs eDreams v airline % AOV 45% > 5,000 43% 41% common routes on 37% 36% 36% 36% or same date, same payment 26% €134 20% a
Slide 53: Broad inventory means eDreams can be cheapest
Q1 FY 2019 Roadshow Presentation Broad inventory selection means that eDreams can be cheapest: Save one example money Price of return flight, 1 pax, EUR 20-40% cheaper 161 149 142 Example trip: 123 120 Barcelona > 99 Brussels (return) 18th-21st November Airline A Airline B Airline C Airline D Airlin
Slide 54: More direct flight options per day per route
Q1 FY 2019 Roadshow Presentation For each route, we offer many more direct flight options per day Best choice Average number flights per day per route1 Airline 14.3 10.4 9.7 7.6 7.1 7.0 6.5 8 direct flight 5.5 5.0 4.7 4.9 vs options per day 4.3 with airline 3.6 3 (on average) 2.3 1.6 1.5 Airline A A
Slide 55: Twice as many flight options as the next airline
Q1 FY 2019 Roadshow Presentation For the same route as before, eDreams offers twice as many flight Best options than the next nearest airline choice 9 06:00 08:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Example direct one-way trip: 3 Barcelona > Brussels 18th November 55 55
Slide 56: Customers can book their trip much more quickly
Q1 FY 2019 Roadshow Presentation Customers can book their trip much more quickly by Convenience using eDreams Time to complete booking, minutes Direct Multi-leg Flight and hotel 13mins 9m 30s 4mins 5mins 3m 20s 2m 30s 1m 30s Airline Meta Meta Meta Additional 20-25s can be saved if card payment detai
Slide 57: Book a return trip 4x faster
Q1 FY 2019 Roadshow Presentation You can book a return trip on eDreams 4x faster Convenience (vs meta and airlines) Risk of return leg being repriced or Metasearch and airlines made unavailable in the time taken to book first leg 2:00 PM 100% 2:00 PM 100% 2:00 PM 100% 2:00 PM 100%2:00 PM 100%2:00 PM
Slide 58: Glossary of Definitions
Glossary of Definitions Non-reconcilable to GAAP measures "Acquisition Cost per Booking Index" refers to the most relevant marketing expenses incurred to acquire new customers (encompassing Paid search, Metasearch and Affiliates), divided by the total number of Bookings. For any given period, the
Slide 59: Glossary of Definitions
Glossary of Definitions Other Defined Terms “Bookings” refers to the number of transactions under the agency model and the principal model as well as transactions made under white label arrangements. One Booking can encompass one or more products and one or more passengers. Product Diversificati
Slide 60: Glossary of Definitions
Glossary of Definitions Other defined terms Classic Customer Revenue represents customer revenue other than Diversification Revenues earned through flight service fees, cancellation and modification fees, tax refunds and mobile application revenue. Our management believes that the presentation of