Edreams Odigeo · BME:EDR
Edreams Odigeo — Santander Iberian Conference 2020
42 slides from Edreams Odigeo's conference presentation, Feb 6, 2020
Slide 1: Investor Presentation
February 2020 INVESTOR PRESENTATION
Slide 2: Disclaimer
Disclaimer 1 This presentation is to be read as an introduction to the unaudited condensed consolidated interim 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 ex
Slide 3: eDreams ODIGEO, a global online travel company
eDREAMS ODIGEO, A GLOBAL ONLINE TRAVEL COMPANY One of the largest e-commerce businesses in Europe 261 Websites and Apps in 20 languages and 30 different currencies on one central platform Strong presence in 46 markets, covering 80% of total market with 5 leading brands 3 INVESTOR PRESENTATION
Slide 4: Why eDreams ODIGEO?
Why eDREAMS ODIGEO? Investment Highlights 1 Global OTA in attractive market, with leading position in flights 2 Sustainable scale advantages relative to competition 3 Large growth opportunities capitalizing on position 4 Proven high-margin, FCF-generating business model 5 Strong growth outlook with
Slide 5: The scale player in flights for Europe, and one of the largest worldwide
THE SCALE PLAYER IN FLIGHTS FOR EUROPE, AND ONE OF THE LARGEST WORLDWIDE 1 1.1 ONLY 3 BIG GLOBAL PLAYERS IN FLIGHTS eDO UNRIVALLED SCALE WITH 1.8X MORE WITH EXPEDIA AND CTRIP, VERY LARGE EUROPEAN FLIGHT REVENUE THAN THE #2 IN THE US AND CHINA PLAYER GLOBAL FLIGHT REVENUE EUROPEAN FLIGHT REVENUE ESTI
Slide 6: Strategically positioned in enormous online travel market
STRATEGICALLY POSITIONED IN ENORMOUS ONLINE TRAVEL MARKET 1 eDO’s leadership in the €15B European online flight sector positions it strongly for growth in the €1.2T global travel market 1.2 WORLDWIDE TRAVEL MARKET (GROSS BOOKINGS, 2019 – 2022, €B) EUROPE 4.8% 6.7% 4.0% 1,2% €15B €63B €181B €361B €59
Slide 7: Sustainable scale advantages relative to competition
2 1.1 SUSTAINABLE SCALE ADVANTAGES RELATIVE TO COMPETITION DRIVING GROWTH IN CLASSIC FLIGHTS AND DIVERSIFICATION 1 2 CLASSIC FLIGHTS DIVERSIFICATION WINNING CONTENT RICHER PRODUCT PORTFOLIO BETTER PRICE AND MARGIN SUNK MARKETING COSTS AT LOWER COST POINT BETTER PRODUCT CAN TRANSFER BENEFIT TO CONSUM
Slide 8: Classic flights: pricing superiority and better content quality
2 CLASSIC FLIGHTS: LEVERAGING SCALE & POSITION TO DELIVER PRICING SUPERIORITY & BETTER CONTENT QUALITY % OF TIMES eDO MORE FLIGHT COMBINATIONS HAS A LOWER PRICE ON METAS THAN ANY OTHER OTA OR AIRLINE (INDEXED) 97% 100% 96% 95% 93% 83% 91% 90% 75% 57% 82% 45% 41% 29% 6% 5% Airline A Airline B Airline
Slide 9: Classic flights: best end-to-end (mobile) experience
2 1.1 CLASSIC FLIGHTS: BEST END-TO-END (MOBILE) EXPERIENCE RETURN SINGLE CARRIER TIME TO COMPLETE BOOKING RETURN MULTIPLE AIRLINES 9m 36s 7m 7m PENDING 4m 4m 07s 26s PENDING CONFIRMATION 01s 06s CONFIRMATION OF BOOKING OF BOOKING 3m 3m 3m 05s 12s 21s 4m 10s 3m 1m 58s 40s 1m 38s eDO Meta (direct) Met
Slide 10: Diversification: our customers save money on flight+hotel
2 DIVERSIFICATION: OUR CUSTOMERS SAVE MONEY ON FLIGHT+HOTEL DYNAMIC PACKAGES TOP AIRLINES TOP AIRLINES AVERAGE TOP 4 OTAS + TOP HOTELIERS + TOP HOTEL OTAS 85% 90% 88% 83% 80% 75% 80% % OF TIMES eDO IS CHEAPER €194 €184 19% €179 18% 17% €153 €153 Average saving €123 15% 15% value (*) ( €) 12% % OF AV
Slide 11: Large growth opportunities capitalize on our scale advantages
3 1.3 LARGE GROWTH OPPORTUNITIES CAPITALIZE ON OUR SCALE ADVANTAGES Vision “YOUR TRUSTED TRAVEL COMPANION” Strengthen and grow online Leverage strong travel Goals flights offering to build strong travel relationships relationships to serve customers’ full travel needs #1 #2 #3 #4 Growth Expand Prime
Slide 12: Prime: our goal to grow to 2M members
3.1 PRIME: OUR GOAL TO GROW TO 2M MEMBERS 1.3 We have reached ~450k members since launching 2 years ago IN 2023 Launch of Launch Launch of 450k 2M 1st pilot in of Prime Spain and MEMBERS MEMBERS France in Italy Germany 2017 2018 2019 2020 2023 1st renewals France Launch of Hotels in France 2 YEARS +
Slide 13: Prime: great for our customers and great for us
3.1 PRIME: GREAT FOR OUR CUSTOMERS AND GREAT FOR 1.3 Strong and unique value proposition for customers, with beneficial impact for our businessUS! GREAT FOR OUR GREAT FOR CUSTOMER Great flight prices: we are the cheapest in the market 90%+ of the times Great hotel prices: Members now also save on al
Slide 14: Innovative end-to-end mobile experience: app ratings
3.2 1.3 INNOVATIVE END-TO-END MOBILE EXPERIENCE: PROVIDING COMPREHENSIVE MOBILE SOLUTION FOR CUSTOMER PAIN POINTS MOBILE OUTGROWS DESKTOP BY 6.5X WITH A CAGR OF 20% FY16-22 VS. 3% IN DESKTOP European Online Travel Market gross APP RATINGS bookings (€ Bn) growth by device Booking.com 4,6 Lufthansa 2,
Slide 15: Innovative end-to-end mobile experience: whole customer journey
3.2 1.3 INNOVATIVE END-TO-END MOBILE EXPERIENCE: COVERING THE WHOLE CUSTOMER JOURNEY AS ONLINE TRAVEL GOES MOBILE PROVIDE INNOVATIVE MOBILE LEADING SEARCH EXPERIENCE PROVIDE SOLUTION INNOVATIVE FOR CUSTOMER PAIN COVER ALL PRODUCT LEADING AND SEARCH COVERSION PROVIDE INNOVATIVE PROVIDE INNOVATIVE COV
Slide 16: Leveraging strong flight position to gain share of consumer travel spend
3.3 1.2 LEVERAGING STRONG FLIGHT POSITION TO GAIN LARGE SHARE OF TOTAL CONSUMER TRAVEL SPEND Leisure travelers typically begin their travel planning process with the most time sensitive element – flights – and book other items around this FIRST PURCHASE IN TRAVEL GLOBAL SEARCH CPC PER PRODUCT PLANNI
Slide 17: Diversification: leveraging scale to grow into full-service travel provider
3.3 1.1 DIVERSIFICATION: LEVERAGING SCALE AND POSITION TO GROW INTO FULL- SERVICE TRAVEL PROVIDER NUMBER OF PRODUCTS SOLD ADDITIONAL PRODUCTS SOLD DIVERSIFICATION REVENUE (NUMBER OFFERED) (PER 100 FLIGHTS) (€ IN MILLIONS) 237 16 72 23% 24% CAGR CAGR 56 179 59% CAGR 146 10 45 39 124 6 4 FY16 FY17 FY1
Slide 18: Diversification: opportunity to grow Dynamic Packages
3.3 DIVERSIFICATION: WE HAVE A VERY MEANINGFUL OPPORTUNITY TO GROW DYNAMIC PACKAGES We have grown significantly our Dynamic Packages business over the past years and we will grow it further in coming years. We have an opportunity to grow our Dynamic Packages revenue margin by 10x in coming years, dr
Slide 19: Diversification: opportunities to expand ancillary revenue
3.3 1.3 DIVERSIFICATION: WE HAVE SUBSTANTIAL OPPORTUNITIES TO EXPAND ANCILLARY REVENUE ACROSS ADDITIONAL TOUCHPOINTS ANCILLARY PRODUCTS BOOKING PATH POST-BOOKING CHECK-IN AT-DESTINATION Baggage OPPORTUNITY - Seats - Car hire OPPORTUNITY Transfers, Taxis & VTC OPPORTUNITY OPPORTUNITY Cancellation ins
Slide 20: Strong growth potential from strategic M&A: scale and product
3.4 1.3 STRONG GROWTH POTENTIAL FROM STRATEGIC M&A: SCALE AND PRODUCT SEVERAL TARGETS WOULD SELECTED POTENTIAL ALLOW US TO FURTHER TARGETS WOULD ALLOW INCREASE OUR SCALE US TO GATHER GROWTH THROUGH NEW We have identified many potential targets that PRODUCTS would allow us to reach There are currentl
Slide 21: Proven high-margin, FCF-generating business model
4 1.4 PROVEN HIGH-MARGIN, FCF-GENERATING BUSINESS MODEL Solid Revenue, EBITDA and FCF Generation REVENUE MARGIN ADJUSTED EBITDA Recurring FCF (*) (€ in millions) (€ in millions) (€ in millions) 5% +4-7% +9-12% 35% CAGR 7% 65.5 CAGR CAGR 533 509 118.3 119.6 487 55.3 463 107.3 436 49.3 95.8 90.5 17.9
Slide 22: Strong growth outlook with substantial optionality
5 1.3 STRONG GROWTH OUTLOOK WITH SUBSTANTIAL OPTIONALITY FY15 -FY19 FY20 FY20 -FY23 CAGR Actual Guidance vs FY19 CAGR Outlook OPTIONALITY Increase in offer of in-destination services Bookings 2% 4-7% High single digit to double-digit growth Further VIN investment Further technical conversion improve
Slide 23: Large value gap relative to peers
6 1.3 LARGE VALUE GAP RELATIVE TO PEERS 16x CLEAR VALUATION 15x gap vs. key peers 14x Market Cap / FCFE (*) CY2020E 13x 12x 11x 10x 9x 8x FCFE (*) CY2019-2021E CAGR 7x 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: eDO analysis based on market data (*) FCFE = Operating Cash Flow – Capex – Net Interest Ex
Slide 24: Why invest in eDreams ODIGEO?
WHY INVEST IN eDREAMS ODIGEO? GLOBAL OTA IN LARGE GROWTH SUSTAINABLE SCALE ATTRACTIVE MARKET, OPPORTUNITIES ADVANTAGES RELATIVE WITH LEADING CAPITALIZING ON TO COMPETITION POSITION IN FLIGHTS POSITION STRONG GROWTH PROVEN HIGH-MARGIN, OUTLOOK WITH LARGE VALUE GAP FCF-GENERATING SUBSTANTIAL RELATIVE
Slide 25: Appendix
APPENDIX 25
Slide 26: European flight market especially attractive for OTAs
1 1.2 EUROPEAN FLIGHT MARKET ESPECIALLY ATTRACTIVE FOR OTAS Highly fragmented European market US 224 EUROPE 60 58 208 NUMBER OF NUMBER OF AIRLINES1 2016 2019 2016 2019 AIRLINES1 Supply MARKET SHARE OF MARKET SHARE OF US 81% EUROPE 29% TOP 4 AIRLINES2 TOP 4 AIRLINES2 HIGH AIRLINE BRAND AIRLINE BRAND
Slide 27: Sustainable scale: industry-leading technology
2 SUSTAINABLE SCALE: INDUSTRY-LEADING TECHNOLOGY POWERFUL, … ARE POWERING REAL REUSABLE PLATFORM... SCALE ADVANTAGES 1 platform 261 websites / apps 1.7 BILLION monthly searches 340,000 PEAK searches per second 160 MILLION Working with supplier searches 660 AIRLINES per day … AND INDUSTRY LEADING TEA
Slide 28: Brand strength reduces reliance on search & meta-search
2 BRAND STRENGTH REDUCES RELIANCE ON SEARCH & META-SEARCH Our scale advantages make us both a better partner to and less reliant long-term on the metas versus competition, especially fragile tier 2 OTAS eDO IS THE OTA WITH THE HIGHEST AVERAGE MONTHLY META DEPENDENCY BY BRANDED QUERIES IN GOOGLE IN A
Slide 29: eDO's accelerating growth strategy
3 1.3 eDO’S ACCELERATING GROWTH STRATEGY FROM TO VISION Flight-centric, Flight-centric, “Your Trusted Transactional Service Travel Relationships Travel Companion” Excel in online flights with best Leverage strategic flights position Leverage customers relationships prices and flight options to engag
Slide 30: Prime is driving sustainable long-term impact
3.1 PRIME IS DRIVING SUSTAINABLE LONG-TERM IMPACT 1.3 It is not a self-selection of existing heavy users, it generates incremental bookings for every cohort UPLIFT IN 12 MONTH REPEAT BOOKINGS - COHORT ANALYSIS (INDEXED TO 1x) NEW USERS LIGHT USERS HEAVY USERS NO PURCHASES OF ANY KIND IN THE ONE NON
Slide 31: Overwhelming response from customers in our key markets
3.1 OVERWHELMING RESPONSE 1.3 Strong performance of the main KPIs FROM CUSTOMERS IN OUR KEY MARKETS SHARE OF VOLUNTARY REVENUE RENEWAL 22% BOOKINGS Prime has become 2% CHURN RATE Very few customers 65% RATE Percentage of 3% 64% requested to subscriptions renewed 26% a high share of the total booking
Slide 32: Covering the whole customer journey: pain points and needs
3.2 1.3 COVERING THE WHOLE CUSTOMER JOURNEY: CUSTOMER PAIN POINTS AND NEEDS After the booking, we manage the check in: Planning the Convenient fast booking perfect trip: process and receive all Price alerts, week- your boarding passes in end deals, travel Book one place independent of anniversary, e
Slide 33: Increasing our competitiveness in flight
3.3 1.3 INCREASING OUR COMPETITIVENESS IN FLIGHT REVENUE DISTRIBUTION ON A € PER BOOKING BASIS 2.4 2.3 Over the recent years we have focused on providing more and 2.1 7.2 3.0 2.7 6.6 better product / service to our 6.2 6.6 customers. 5.8 14.5 This has been instrumented 17.4 through strong investment
Slide 34: Revenue diversification: substantial market opportunity
3.3 1.3 REVENUE DIVERSIFICATION: SUBSTANTIAL MARKET OPPORTUNITY GLOBAL FLIGHT ANCILLARIES MARKET GLOBAL PACKAGES MARKET Gross sales in 2018 13% increase over 2017 Gross sales in 2018 4-5% CAGR expected 2018-22 €81Bn €185Bn FLIGHT ANCILLARIES DYNAMIC PACKAGES (DP) MARKET Large and fast growing market
Slide 35: Example of a hotel search in NYC
3.3 EXAMPLE OF A HOTEL SEARCH IN NYC Members will have special Member-only deals, as well as always-on vouchers SEARCH PAYMENT PAGE LEADING HOTEL OTA PRICE RESULTS PAGE AFTER APPLYING PRIME10 VOUCHER (10% EXTRA DISCOUNT) SAME DATES, SAME HOTEL, SAME ROOM… WE ARE 275€ CHEAPER XXX OTA 35 INVESTOR PRES
Slide 36: Hoteliers are willing to incentivise us for high value customers
3.3 HOTELIERS ARE WILLING TO INCENTIVISE US FOR HIGH VALUE CUSTOMERS Our Dynamic Packages customers book more in advance and drive low cancelation... 52% Book with Cancel their more than 31 4% Dynamic Package days in advance booking VS … compared with the average in 35% Book with the hotel industry
Slide 37: We have successfully grown share of hotels sourced directly
3.3 WE HAVE SUCCESSFULLY GROWN SHARE OF HOTELS SOURCED DIRECTLY Since the launch In only 2 years, our hotel Increasing the share of own inventory hotels has allowed of our own inventory, inventory has grown us to significantly increase our price we have signed to represent ~30% competitiveness in Dy
Slide 38: Our capital allocation policy
3.4 1.3 OUR CAPITAL ALLOCATION POLICY 1. Our overriding objective is to generate value for our shareholders, through both share price appreciation and eventually by returning cash to shareholders. 2. We expect that the business will continue to generate robust cash flow. 3. We also believe that EDR
Slide 39: A business model that has proven strong cash generation
4 1.3 A BUSINESS MODEL THAT HAS PROVEN A STRONG CASH GENERATION (IN EUROS MILLION) FY15 FY16 FY17 FY18 FY19 1. EBITDA - Capex annual cash flow improved by RECURRING EBITDA 90,5 95,8 107,3 118,3 119,6 €36m between FY15 and FY19 from €55m to €91m. CAPEX (35,2) (30,5) (29,5) (28,9) (28,8) REC. EBITDA -
Slide 40: Strong balance sheet and returns
4 1.3 STRONG BALANCE SHEET AND RETURNS Net leverage reduced by 30% and Adj. Net Income doubled in only 3 years ROBUST DELEVERAGING PROFILE … AND DELIVERING STRONG RESULTS (**) NET DEBT (€M) ADJUSTED NET INCOME (€M) 329.1 -13% +100% 285.3 282.7 40.2 253.8 FY16 FY17 FY18 FY19 31.6 32.3 NET LEVERAGE RA
Slide 41: Substantial growth upside and optionality to base case
5 1.3 SUBSTANTIAL GROWTH UPSIDE AND OPTIONALITY TO BASE CASE OUR PLAN DRIVERS OPTIONALITY Taking advantage of a growing market. Strong position in Metas. Increase in offer of in-destination services Bookings Virtual interlining (VIN) development with in-house resources. Further VIN investment Invest
Slide 42: More detail on growth model
5 1.3 MORE DETAIL ON GROWTH MODEL DRIVER KPI FY21 FY22 FY23 Market growth Basis for growth is an OTA flights Volume market growing at 1-2% plus our own growth on top of that based on eDO growth market share gains within OTAs (superior end-to-end customer Revenue experience, more loyalty and repeat d