The Web Travel Group Ltd (ASX: WEB) share price is in focus after reporting the FY25 first-half result.
This business operates WebBeds, a business-to-business company that operates in the global travel industry. It recently split from Webjet Group (ASX: WJL).
Web Travel FY25 first-half result
Here are some of the highlights of its underlying performance from the six months to 30 September 2024:
- Bookings grew 23% to 4.3 million
- Total transaction value (TTV) rose 25% to $2.59 billion
- Revenue increased 1% to $170.4 million
- Underlying EBITDA fell 8% to $70 million
- Net profit declined 2% to $52.5 million
Web Travel explained that WebBeds saw “significant variations” of growth which was driven by geographic differences and the customer mix.
The company said its TTV margin was impacted by those “variations”, with revenue only climbing 1%, yet expenses rose 8% as it invested in its headcount and technology.
Web Travel believes its TTV margin will stabilise at around 6.5%, and it still has a TTV target of $10 billion in FY30, with an EBITDA margin of approximately 50% to deliver profitable growth.
Management commentary
Web Travel Group’s Managing Director John Guscic said:
In the period of June and July, TTV margins declined in Europe. The decline coincided with the collapse of FTI Group, the Paris Olympics and European football championships.
We underestimated this decline and the extent of changing market conditions and customer mix, and underlying margins did not recover in August as anticipated. We also underestimated the incentive payments during August (at the time of the AGM) which were $7.5 million higher than planned, representing a decline of 0.3% of the TTV margin in 1H25.
Concurrent with our TTV target of $10 billion in FY30, we are forecasting our targeted customer, geographic and supplier mix to stabilise with a margin of c. 6.5% for the medium term. Our strong economies of scale are demonstrated by 1H25 delivering the same TTV and Bookings as calendar year 2019, but at c.30% lower cost.
Outlook for the Web Travel share price
Web Travel revealed that in the first seven weeks of trading in the second half of FY25, TTV was up 23% and the TTV margin was 6.5% in October.
Based on the current level of trading, Web Travel is expecting FY25 EBITDA to be between $117 million to $122 million.
Considering the Web Travel share price is down by 40% from 11 October 2024, I think there could be a long-term recovery opportunity after it’s worked through the decline for this year.
However, it seems this is going to be one of the more volatile ASX growth shares that Aussies can buy. If it’s a cyclical business, it could be smart to buy during the weak stage in its cycle (and perhaps sell when there are strong operating conditions).