Hostelworld Group Plc · LSE:HSW
Hostelworld — FY2023 Earnings Presentation
37 slides from Hostelworld's earnings presentation, Mar 21, 2024
Slide 1: 2023 Preliminary Results
2023 Preliminary Results 21 March 2024 st Our Help travellers find Mission people to hang out with
Slide 2: Disclaimers
Disclaimers NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO ANY JURISDICTION IN WHICH SUCH DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. This presentation has been prepared by Hostelworld Group plc (the “Company") for informational and background purposes only. The foll
Slide 3: Highlights
Highlights
Slide 4: FY23 – Financial Summary
FY23 – Financial Summary €619M €93.3M 6.5M Net GMV1 Net Revenue2 Net Bookings +32% vs FY’22 +34% vs FY’22 +37% vs FY’22 €14.36 22.7M 50% Net ABV3 Net Bednights Marketing as % of -4% vs FY’22 +30% vs FY’22 Revenue4 FY’22: 58% €18.4M €7.5M €12.3M EBITDA Cash Net Debt5 FY’22: €1.3M Dec ‘22: €19.0M Dec
Slide 5: Key Highlights
Key Highlights Strong financial delivery and strategic progress in FY’23: ● Record full year net GMV1 and generated revenue2 ● Robust bookings growth across all regions, a record year for Asia ● Operating costs continue to decline as a % of revenue ● Returned the business to profitable earnings per
Slide 6: FY’23 Results
FY’23 Results
Slide 7: Largest revenue generating year on record
Largest revenue generating year on record Net GMV1 Generated Revenue2 Net Bookings3 €m €m m 700 100 7 90 600 +32% +32% 6 +37% 80 500 70 5 60 400 4 50 93.7 6.5 300 619 3 40 71.2 4.8 470 200 30 2 20 100 1 10 0 0 0 FY’22 FY’23 FY’22 FY’23 FY’22 FY’23 1.1. Net NetGMV GMVisisGMV GMV(Gross (Grosstransacti
Slide 8: Strong growth across all regions, record volumes in Asia
Strong growth across all regions, record volumes in Asia Generated Revenue1 and Net bookings by region YoY USA & Canada Western Europe Eastern Europe North Asia (4% of net bookings) (35% of net bookings) (9% of net bookings) (2% of net bookings) 1% 7% 20% 13% 32% 21% 382% 306% Generated Net Generate
Slide 9: Net margin growth driven by volume and marketing efficiency
Net margin growth driven by volume and marketing efficiency €m 50.0 1.0 -1.7 5.8 Strong net margin1 growth driven by: 40.0 12.3 • Net booking volume +37% vs. FY’22 (+1.8m) • Marketing2 efficiency driven by ‘Social’ 30.0 strategy (50% FY’23, 58% FY’22). Improved efficiency from H1 (51%) into H2 (48%)
Slide 10: Increasing operating leverage through opex discipline
Increasing operating leverage through opex discipline €m Opex as % of 35% 35% Revenue4 30.0 FY’23 operating costs1, 10% lower than FY’19, 28.0 27% continued cost rationalisation programme 24.9 25.3 25.0 • Wages & Salaries increase driven by wage inflation, discretionary compensation and subsidy bene
Slide 11: … resulting in strong FY’23 EBITDA performance
… resulting in strong FY’23 EBITDA performance €m 20.0 0.4 Strong full year performance, ahead of market 18.0 1.0 guidance 16.0 • Record revenue and booking growth 5.8 14.0 • Particularly strong performance in Asia 12.0 • Paid marketing efficiencies, supported by 10.0 App-centric social strategy 18.
Slide 12: … strong cash generation enabling balance sheet deleverage
… strong cash generation enabling balance sheet deleverage €m Favourable debt refinance, strong cash conversion 35.0 12.4 • €11.5m reduction in cash reserves, €24m of 30.0 cash utilised in financing activities 25.0 • Replaced legacy €30m debt with new AIB €17.5m2 facility (May’23), initial rate of 3
Slide 13: Firmly on track to meet CMD targets
Firmly on track to meet CMD targets FY 2025 target FY 2023 delivery €715M Net GMV 15% CAGR vs. FY’22 €619M €106M Net Revenue 15% CAGR vs. FY’22 €93.3M Marketing % of 45% - 55% 50% Revenue Adj. EBITDA Margin ~ 20% 20% Adj. FCF Conversion ~ 75 % 75% 2023 PRELIMS MAR 2024 | 13
Slide 14: Capital allocation priorities focussed on maximising shareholder returns
Capital allocation priorities focussed on maximising shareholder returns Principle objective is to deliver growth that drives long-term sustainable value creation Continued repayment of AIB debt facility ● Asset light business model generating substantial cash flow Repayment of warehoused payroll ta
Slide 15: ESG is at the core of our culture and our category
ESG is at the core of our culture and our category A number of milestone achievements: ● ‘Staircase to Sustainability’ framework live, with over 1,000 hostels badged ● Continued partnership with Global Sustainable Tourism Council to promote the category ● Second edition of ‘Understanding the carbon
Slide 16: Strategy Update
Strategy Update
Slide 17: We are the market leaders in Social Travel
We are the market leaders in Social Travel 2023 PRELIMS MAR 2024 | 17
Slide 18: Changing people’s lives…
Changing people’s lives… @cdarrah @endlesslycurious 2023 PRELIMS MAR 2024 | 18
Slide 19: Our Social members also become powerful brand advocates
Our Social members also become powerful brand advocates 2023 PRELIMS MAR 2024 | 19
Slide 20: Our pioneering social network is the cornerstone of our strategy
Our pioneering social network is the cornerstone of our strategy Customer invited Customer leaves Customer signs up to into City and Hostel City and Hostel Chat our Social Network Books on any platform Chat Groups Groups (web, iOS, or Android) 14 days before 3 days after check-in check-out OTA only
Slide 21: Delivering long term EBITDA and FCF growth
Delivering long term EBITDA and FCF growth Revenue Growth ● New customer growth Unique customer need led growth strategy ● Strong retention rates Margin Growth X EBITDA/FCF ● Reduces CAC App centric Increased ● Lower marketing cost as a % EBITDA growth delivery model of net revenue Increased Operati
Slide 22: Social platform continues to accelerate
Social platform continues to accelerate Unique Social Members (Cumulative) Messages sent on Social Network Percentage of Social Members who can join at least 1 LinkUp in trip 1.7x 1.6x 1.9x 1.8x 74% 4.6x 7.6x 4% H1'22 H2'22 H1'23 H2'23 H1'22 H2'22 H1'23 H2'23 H1'22 H2'22 H1'23 H2'23 2023 PRELIMS MAR
Slide 23: Strategy continues to attract and retain high value customers
Strategy continues to attract and retain high value customers Social Members make 2.3x the … and are 3.2x more likely to make their …and account for over 70% of our bookings over the first 91 days bookings via the App … total bookings compared to non members … 80% 70% 74% 2.3x 3.2x 68% 69% 3.4 51% 6
Slide 24: Driving strong growth in App bookings, & reduced marketing expenses
Driving strong growth in App bookings, & reduced marketing expenses YoY growth rate in net bookings by platform Marketing as % of net revenue +49% YoY 60% 57% 51% 48% +29% YoY H1'22 H2'22 H1'23 H2'23 Web Bookings App Bookings H1'22 H2'22 H1'23 H2'23 2023 PRELIMS MAR 2024 | 24
Slide 25: And strong growth in recurring revenue YoY
And strong growth in recurring revenue YoY FY Net Generated Revenue, millions, segmented by customer by year of acquisition €100 New customer revenue Return customer revenue 2023 €80 2022 2021 2020 €60 2019 2018 2017 €40 2016 2015 €20 2014 2013 Pre 2013 €0 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 26: Another strong year of growth
Another strong year of growth Total bednights, FY’22 vs FY’23 millions +30% YoY ~ +20% YoY ~ +8% YoY1 ● Robust growth across all regions, a record year for Asia ● Social strategy driving share ● Growth driven mostly by YoY gains on top of category 23 capacity increase, minor growth 17 increase in oc
Slide 27: Continued growth in market share
Continued growth in market share 1 Category (FY22) Category (FY23) ~ 215m ~ 200m +8% YoY Market Coverage Market ~74% Coverage 10.5% ~74% 8.7% Category Category OTA share OTA share 50% 50% 17.4% 21% ~ 17m ~ 23m +30% YoY 1. Estimate based on available hostels online (HW and non-HW) and internal HW dat
Slide 28: Continuing to execute our strategy
Continuing to execute our strategy ● Continue to invest in our uniquely differentiated Social platform ● Strengthens our growing competitive “moat”, and drives continued share gains ● Develop complementary low cost customer acquisition channels ● Reduces average CAC, leading to lower marketing costs
Slide 29: Near Term Guidance
Near Term Guidance FY 2023 FY 2024 Results Trends Net Bookings 6.5m Net GMV €619m High single digit growth Net Revenue €93.3m Marketing % of Revenue 50% < 50% Adj. EBITDA €18.4m ~ 20% EBITDA margin 2023 PRELIMS MAR 2024 | 29
Slide 30: Well positioned, well financed and firmly on track
Well positioned, well financed and firmly on track Well positioned… ● ‘Social’ strategy is uniquely positioned to win in this category vs. other OTAs ● HW growth driven by category growth and strong market share gains Well financed… ● Debt refinancing completed with materially lower interest rates ●
Slide 31: Thank you!
Thank you! Helping travellers find people to hang out with
Slide 32: Appendices
Appendices
Slide 33: Strong growth originating from all source regions
Strong growth originating from all source regions Generated Revenue1 and Net bookings by source region YoY USA & Canada Western Europe Eastern Europe North Asia (13% of net bookings) (37% of net bookings) (4% of net bookings) (2% of net bookings) 27% 28% 18% 16% 14% 12% 188% 215% Generated Net Gener
Slide 34: Balance Sheet
Balance Sheet FY’23 FY’22 €’m €’m Intangible assets 66.5 73.3 Property, plant and equipment 0.8 0.7 Deferred tax assets 15.5 9.2 Investment in associate 1.1 1.0 Cash and cash equivalents 0.8 0.8 ● Intangible assets primarily relates to Hostelworld brandname and IP. Total non-current assets 84.7 85.0
Slide 35: Income Statement
Income Statement FY’23 FY’22 €’m €’m Revenue 93.3 69.7 Net revenue increased to €93.3m (FY’22: €69.7m) Administrative expenses1 (76.6) (71.5) 6.5m net bookings (FY’22: 4.8m) with strong across all regions, particularly Depreciation and amortization expenses (11.8) (11.6) Asia Share of results of ass
Slide 36: Cash Flow Statement
Cash Flow Statement FY’23 FY’22 €’m €’m Adjusted EBITDA1 18.4 1.3 Working capital movement 2.4 0.2 Exceptional costs (0.2) (0.8) Net interest / income tax paid (3.2) (1.6) Cash from operating 17.4 (0.7) Improved adjusted free cash conversion represents a return to a more Capitalisation and acquisiti
Slide 37: Adj EBITDA to Adj Free Cash Flow
Adj EBITDA to Adj Free Cash Flow FY’23 FY’22 €’m €’m Adjusted EBITDA 18.4 1.3 Working capital movement 2.4 0.2 Exceptional items 0.9 0.1 Net interest / income tax paid1 (2.8) (1.6) Cash from operating 18.9 (0.1) Adjusted Free Cash Flow excludes items not relating to day-to-day Capitalisation and acq