The Webjet Limited (ASX: WEB) share price is up 6.2% today after providing a market update at its annual general meeting (AGM).
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
Webjet’s AGM FY20 Market Update
The travel business is holding its AGM today and gave an update about its business in FY20.
WebBeds
Webjet highlighted WebBeds as a critical distribution channel for both its hotel supply partners and booking enabler customers.
Management said the B2B (business to business) landscape is continually changing with players leaving as demonstrated by the recent collapse of Thomas Cook. Webjet said WebBeds is well positioned to fulfil the needs of businesses requiring hotel room distribution capabilities.
Excluding Thomas Cook, WebBeds continues to grow total transaction value (TTV), revenue and EBITDA (click here to learn what EBITDA means) in all regions.
Management said the WebBeds business continues to see significant growth of EBITDA margins and is on track for revenue to be 8% of TTV and costs to be 4% of TTV which would mean EBITDA being 4% of TTV, in other words a 50% EBITDA margin.
Rezchain, which Webjet describes as an industry leading blockchain solution will continue to play an important role in driving efficiencies across the business and help reduce costs. Rezchain was previously launched to the broader travel industry earlier this month.
FY20 Guidance
In the first half of FY20 the company is expecting underlying EBITDA (which excludes one-off revenue & costs and the impact of new accounting standards AASB16 to be at least $80 million, which would be 37% growth.
Webjet is expected to achieve WebBeds organic EBITDA growth of 25% in the first half with Webjet OTA EBITDA growth of between 1% to 5%, although Online Republic EBITDA is expected to be less than last year’s first half because of restructuring costs.
Total underlying EBITDA for FY20 is expected to be between $157 million to $167 million. That would be growth of 26% to 34% over FY19%, with organic growth of 16% to 23% after adjusted for the DOTW acquisition.
Cash conversion remains a strong focus and the company is reducing its receivables.
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