eDreams ODIGEO S.A.

Good afternoon, everyone, and thank you all for joining us today for our Q2 fiscal year 2021 results presentation for the three months ending 30th of September, 2020. I'm David Larros, the Director of Investor Relations at Ethereum Solillo. As always, you can find the results materials, including the presentation and our results report, on the investor relations section on our website. I will now pass you over to Dana Dunn, our CEO, who will take you through the first part of the presentation. Thank you. Thank you, David.

Good afternoon, everyone. and thank you for joining us. Today, I'll give an overview of our Q2 of this financial year's results, current trading to date, and what we have done to even further improve our strategic position over the past few months during the pandemic. Following this, David Alicaga, our CFO, will take you through our financial performance in more detail. I will then finish with some closing remarks. Please turn to slide four, which gives a summary of our performance during Q2. During Q2, we have improved our performance as the market picked up significantly versus Q1. Yet we also saw renewed softening towards the end of the quarter. Trading shows the strong and rapid turnaround we experienced during the summer period. Trading improved from the April trough at minus 96% year-on-year in bookings to an average of minus 62% in the second quarter of fiscal year 21, despite further travel restrictions being imposed in some markets starting in early August. Clearly, July to September 2020 was still an extraordinary trading period because of the COVID-19 situation and its related travel restrictions. Of note, revenue margin down 75% year-on-year in the second quarter of FY21, reaching €34.4 million and doubling the amount of Q1 FY21. This was driven by a decrease in bookings of 62% and the reduction in revenue margin per booking, which was driven by lower average basket value of bookings due to the COVID-19 situation, which results in lower classic revenue from customers and lower revenue from providers. Marginal profit, which is revenue margin minus variable costs. This stood at 11.5 million euros positive. That's at 10 times the amount of Q1, and increasing the variability and flexibility of our cost structure, adapting to the new mix of bookings made by customers during COVID-19. This results in marginal profit per booking increasing 2.5 times from the Q1 figure to the Q2, despite revenues decreasing more than bookings. An adjusted EBITDA was a loss of 2 million euros. an 86% improvement on the Q1 FY21 figure. Another highlight is how we are managing our liquidity. Through these difficult times for the travel industry, we at eDreams or Digio have managed our liquidity well, which remains strong despite short-term trading and acceleration of reimbursements to customers. Because we have a strong liquidity position, we made a proactive decision to accelerate the refunding to our customers who are suffering from the airlines, in most cases, taking a long time to refund. In terms of our liquidity, cash performance was better than in Q2, the previous financial year. Our liquidity position at the end of September and October stood at $115 and $117 million, respectively, and is higher than March and June figures, excluding the acceleration of the reimbursements. The main reasons for this development is the high variability of the cost structure and good fixed cost management. This was offset by proactive decision to accelerate the reimbursement of our customers versus inflows received from suppliers. and a decrease in bookings due to higher travel restrictions. Combined, these create a working capital outflow. We have reduced our average monthly cash burn, excluding working capital and taxes, from €13 million to €6 million. And we have a strong liquidity reserve. Our no-action stress test implies we can run the business at current booking levels through the end of 2021. And as we have highlighted in our July and August results presentation, we are using this period to improve our strategic positioning. Specifically prime is shining during these tough times. Prime subscriptions and share of total bookings continues to grow. Prime members in the second quarter of FY21, reached 664,000 members. That's a 71% increase versus the same period the last financial year. Share of bookings, or share of total bookings, reached 26% in Q2 of this year versus 7% in Q2 of the last financial year. Prime is proving to be a successful proposition to customers, even in this current depressed market, with 100,000 new subscribers alone in Q2 of this financial year versus just Q1 of this financial year. And we are on track to reach 2 million subscribers by 2023. In terms of current trading, The short-term outlook is largely outside our control and driven by travel restrictions and COVID-19. October and November numbers are showing minus 67 to minus 73% bookings growth year on year. It remains impossible to predict the future with any accuracy given the uncertainty around COVID-19 and travel restrictions, and therefore we continue to offer no guidance for this financial year. Now I will go through the points I have just mentioned in more detail in the following slides. Please turn to slide five, in which we cover our diversification revenue KPIs. Overall diversification revenue is proven to be more resilient than classic customer revenue during these times. And our product diversification ratio and revenue diversification ratio have both improved. the product diversification ratio increased from 80 to 87 percent, a seven percentage point improvement in a single year. Similarly, the revenue diversification ratio increased from 48 percent to 56 percent in Q2 FY21. That's an eight percentage point improvement again in a single year. Please turn to slide six, which demonstrates the progress made against our other three KPIs. On an annualized basis, and to be expected, our customer repeat booking rate decreased due to the spread of COVID-19. This is reflected in the strict way in which we calculate this ratio. However, Q2 performance improved meaningfully versus Q1 FY21, and is three times greater, moving from 7% to 22%. This has been mainly driven by the success of Prime as a customer proposition. As a result of COVID-19 situation, which is distorting the relevance of this KPI, we have decided to discontinue the reporting of this KPI till further notice. Also, we have really stood out in terms of mobile yet again, which bodes well for the future. In the last five years, bookings through mobile have risen exponentially from 18% of total bookings to 57%. We have always prioritized and focused on mobile and have led the industry in Europe. Now, in a post-COVID-19 world, mobile will become even more important, which is demonstrated by almost 60% of our bookings are now actually completed on a mobile device. Lastly, on KPIs, let's look at the changes to the Acquisition Cost for Booking Index, which improved by 48 percentage points year on year. This is due to the adaptability and flexibility of our business and the fact that more than 80% of our costs are variable. However, I want to make it clear that this very low level is not sustainable for the long term. As travel restrictions ease, we expect to spend more in online marketing, and this ratio will trend back to more normalized levels. If you can now turn to slide eight, let me brief you on our current trading to date and what we have done to improve our strategic position during the pandemic. Current trading shows that short-term outlook is impacted by travel restrictions. We have seen this by the rapid rebound in bookings during the summer. As travel restrictions eased, trading improved from the April trough at minus 96% to minus 59% in August. This is positive in that in a matter of months, a large portion of the market returned in a very short period of time. Towards the end of the summer, there was a return in Europe to increasing COVID-19 cases with further travel restrictions imposed by some governments. This has reduced bookings to minus 73%, which has stabilized more recently. In comparison to the market, our trading suggests outperformance against airline industry, gaining market share versus supplier direct due to better quality, more comprehensive content, and flexibility, and a focus on leisure travel. Please turn to slide nine, where I update you on trading outlook based on analysis from the IACA economics team published on the 29th of September. The good news is that the leisure customers are still willing to travel if allowed. We saw this in the summer, and we strongly believe that any further lifting of restrictions or the introduction of a vaccine is likely to result in a sharp rebound again. the announcement of Pfizer-BioNTech and Moderna vaccines, as well as the AstraZeneca announcement this morning, and eight other companies in stage three trials, all of this brings forward scenarios of travel returning sooner in 2021, which will favor more leisure travel companies like ours. Before the latest vaccine announcements, IATA surveys suggest that over 80% passengers will return to air travel within six months from now. Russia recovered to pre-crisis levels due to the news about its vaccine, and China is only 20% below pre-COVID-19 levels due to strong domestic demand. Please turn to slide 10. We are pleased to continue to report strong liquidity. consequence of our strong business model and active management of the situation. We have achieved this despite increasing travel restrictions and the acceleration of reimbursements to customers to protect our brand. Given our strong liquidity position, we made the proactive decision to accelerate reimbursements to customers versus inflows received from airlines. which resulted in 40 million cash outflow during the quarter. This resulted in liquidity positions of 115 and 117 million euros at the end of September and October, respectively, both of which is higher than March and June figures, excluding acceleration reimbursements. We have achieved this through four things. One, high variability of the majority of our costs. Two, fixed costs and capex were reduced. Three, obtaining additional financial resources of 15 million euros from government-sponsored loans due 2023. And four, by reducing our average monthly cash burn, excluding working capital and tax, from 13 million to 6 million euros. Furthermore, our no-action stress test shows we can run the business at minus 70% bookings year and year through the end of the calendar year 2021. The minus 70% is our average booking performance from March through October. It is important to note the conservative nature of this no action stress test calculation. It assumes we take no action on fixed or variable costs. None. No improvement made to working capital, nor any improvement in our business whatsoever. If you can now please turn to slide 11. I'm delighted to talk to you about the success of Prime as a customer proposition. Prime is performing strongly in this weak market. the number of subscribers has continued to improve and has risen by 100,000 in three months from Q1 to Q2 of this financial year, despite all of the market conditions. As you can see on the right-hand chart, Prime subscription rate and share of Prime continues to grow. Prime members in Q2 of this financial year grew 71%, versus the same period last year. That's a growing from 389,000 subscribers in Q2 FY20 to 664,000 subscribers in FY21. And the prime share of total bookings almost quadrupled from 7% in Q2 FY20 to 26% in FY21. In addition, we launched Prime in new markets UK most recently in November. We also launched new products, launching hotels in four of our largest markets being France, Italy, Spain, and Germany. Also, I'm pleased to say that in our most recent survey with over thousands of responses from customers, prime customers showed good levels of customer satisfaction, equal or higher than pre-COVID-19 levels. If you can now turn to slide 12, let me brief you about what we have done in customer service to be on the side of the customer. First and foremost, during these times of high airline cancellations, we have focused on the customer. To have this is a key competitive advantage and to encourage customers to come back when travel restrictions are lifted. These are some of the key highlights on our canceled flight management. One, 92% of canceled flights have been resolved and are processed. Two, we have invested in significantly increasing our contact center capacity. Three, we have developed automated flight cancellation identifier, which automatically identifies canceled flights and proactively informs customers through all possible touchpoints and proposes options to the customer. Four, we've contacted all customers who apparently have a solution, e.g., they've gone directly maybe to the airline, just to ensure that the customer really has a solution. Five, we have informed customers of long lead times by airlines and, where possible, propose a voucher as an alternative, but always allow customers to choose between a cash refund and a voucher. We want to be on the side of the customer as their advocate and agent. Six, implemented automated processes that provide our customers near real-time updates on the status of their refund requests. And seven, we've accelerated the reimbursements to customers versus inflows we receive from airlines for those cases where we know future cash reception from the airline is guaranteed. I could go on, but let's suffice to say that we have taken and continue to take actions to help our customers and put us on their side. If you can turn to slide 13. Let me conclude my part by summarizing what are our three key top priorities at the moment. One, Prime. To introduce Prime in more of our markets. expand to other travel services, and improve its effectiveness. Two, connectivity. Improve the quality of the content by building a content agnostic platform, which will facilitate taking content from many providers and taking even different content. It could be trains, air content, et cetera. And three, customer service automation. implement an automated customer service system, which is volume agnostic, so if there were much higher levels of customer demand, the system can automatically handle it with high levels of satisfaction. We'll now hand you over to David Elizaga, who will take you through our consolidated results.

Thank you, Dana, and good afternoon, everyone. If you could all please turn to slide 15 of the presentation, I will take you through the financial results in more detail. Clearly, the pandemic had a significant impact in Q4 of last year, and this has continued into the first six months of the current year. Let's outline the financial performance during the second quarter of our fiscal 21. Looking at the income statement, for the second quarter of fiscal 21 on slide 15, revenue margin decreased by 75%. This was due to a decrease in bookings of 62% and lower revenue margin per booking, driven by lower average basket value of bookings due to COVID-19. Customers are booking on average with less passengers per trip and to destinations closer to their homes. As a result, the revenue we get from providers is smaller, and the classic revenue we get from customers is also lower. When travel patterns return to normal, we expect revenue margin for booking to increase from its current level. On the cost side, variable costs decreased by 75%, which is the result of the adaptability of our business model to the new mix of bookings made by customers during COVID-19. Again, when travel patterns return to normal, we expect the variable cost of booking to increase from its current level. These dynamics resulted in marginal profit of 11.5 million euros positive. Marginal profit, again, is revenue margin minus all of the variable costs. Those 11.5 million are 10 times the amount of the first quarter. increasing the variability and flexibility of a cost structure. Fixed costs decreased by 31%, driven by a decrease in personal costs through a temporary employment reduction, as well as IT and external fees IT saves. As a result, the second quarter adjusted EBITDA amounted to a loss of 2.1 billion euros, which is 86% better than it was in the first quarter of this fiscal year. If we continue down the income statement, you will note that EBITDA amounted to a loss of 3.6 million. This was primarily due to adjusted items in line with the same period of last year. Full details of the adjusted items can be found in our condensed consolidated interim financial statements and in the Excel file that you can find in our website as well. The DNA and impairment increased by 29% relating to the increase of the capitalized software finalized in March 20. Our overall financial loss decreased by 10%, mainly due to the foreign exchange differences, partially offset by the increase in interest expense related to the use of our revolver and the new government-sponsored loan due 2023. The income tax expense amounts to 1.3 million in the second quarter, which compares with an expense of 3.3 in the second quarter of last year, mainly due to lower taxable profits compared with a comparable period, the write-off of certain deferred tax assets relating to tax-loss carry-forwards in the UK, and no movement in the provision for income tax risk, and no recognition of a deferred tax asset for part of the second quarter of 21 tax losses. Finally, adjusted net income stood at a loss of 19.3 million euros. We believe that adjusted net income better reflects the real ongoing operational performance of the business. Full disclosure of the adjusted net income can be found in Section 7 within the condensed consolidated interim financial statement . Turning now to slide 16, I will take you through the cash flow statement. In the second quarter of fiscal year, despite increasing travel restrictions and acceleration of reimbursement to customers by 40 million versus the inflows received from airlines, partially mitigated by higher volumes in September versus June, resulted in a working capital outflow of 1.8 million euros in the second quarter of fiscal 2021. The group continues to have a strong balance sheet, with liquidity position of $115 million at the end of September, including the $40 million acceleration of reimbursement to customers versus the inflows received from airlines, $106 million undrawn from a super senior revolving credit facility, and the $15 million new government sponsored loan to finance the decrease of negative working capital, placing us in a position of strength as soon as normal activity resumes. The cash position net of overdrafts stood at 0.5 million at the close of September. The cash performance in the second quarter of fiscal 21 was driven by net cash from operating activities improved by 12 million euros, mainly reflecting the working capital outflow just described, and income tax paid, which increased by 4.2 million from 0.9 to 5.1, mainly due to the fact that there were no income tax payments and taxable profits, but we had an advance payment in respect of an administrative procedure against the Portuguese tax authorities. There was no income tax payments and taxable profits. There was a decrease in adjusted EBITDA by 31.2 million, following the decrease of bookings. And we experienced an outflow in non-cash items of 3.3 million euros, when last year we had an outflow of 2.7 million. The driver of this quarter is that costs linked to COVID-19 flight cancellations were provisioned in the year end of fiscal 20, but the outflow of that provision has happened during the last two quarters. We have decreased cash used for investments by 2.5 million from 6.9 to 4.4 due to the implementation of cost-saving measures to minimize the temporary impact of COVID-19. Cash used in financing increased by 40.3 million euros from 12.9 to 53.2, mainly as a result of the repayment of 54.5 million of the revolver offset by the drawdown of the new 15 million government sponsored law. I will now turn the presentation back to Dana to do the closing remarks.