eDreams ODIGEO S.A.

Good morning, everyone, and thank you all for joining us today. I'm David Larros, the Director of Investor Relations at the Dreams of the Year. As always, you can find the results materials, including the presentations and our results report, on the investor relations sections of our website. I would like to inform you that today's presentation will be longer than usual. It will be broken down out in two parts. Part one will focus on our results for the first half of the current financial year, and part two will focus on our performance since our capital market day one year ago. and update on our progress towards our three-year guidance. I will now pass you over to Dana Dunn, our CEO, who will take you through the first part of the presentation. Thank you, Debbie.

Good morning, everyone, and thank you for joining us today. Throughout the first half of this financial year, FY23, we've seen the travel market continue to improve and recover significantly. Even with the conflict in Ukraine, even with high inflationary pressures, even with flight disruptions and outbreaks of COVID, people have clearly demonstrated that they want to travel and are willing to spend their money on it. We've been saying this for over a year now, based upon survey data from consumers. and actual data based upon what consumers have done over the past 50 years when there have been significant macroeconomic shocks. I know that this goes counter to a number of high-paid industry experts and their reports, and their assertions have been wrong to date. Within this market context, we've demonstrated superior performance within our industry. In fact, we are now at five quarters in a row above pre-COVID levels in bookings, and no other global travel business has achieved this. And we have a unique model that's more driven by a stream of recurring revenues from other subscription businesses versus any other travel company. Please turn to slide six. which is a summary of our performance of the first half of our fiscal year 2023 results. In the first half of FY23, we again achieved strong bookings, reaching $8.6 million. We continued to gain market share and consequently remain well on track to exceed our FY25 guidance. Some of the key highlights for today's presentation are, first, We have again achieved strong bookings growth. In FY23, bookings were up 50% year-on-year and 48% above pre-COVID-19 levels. This is despite all of the disruptions in the travel market from COVID, Ukraine war, flight disruption, inflation. And we know that the travel market has yet to fully recover to pre-COVID levels. Despite these macroeconomics, headwinds. Even our most recent booking numbers still show strong growth, with our bookings in October up 45% versus 2019 pre-COVID numbers. And in November from the 1st to 8th, also up 45% again versus 2019 numbers. There's no doubt consumers want to travel, and they want to travel with us. There's a reason why travel is the largest single category online. Travel provides the unique experience that people cherish, a desire, and a will to spend on it. The second highlight we'll hear from today, both Prime and our market-leading, Prime, meaning our market-leading subscription products, and edu continue to outperform. Edu bookings continue to outperform and are materially better than the markets. While the market remains below pre-COVID levels, we continue to trade significantly above pre-COVID levels, now having achieved our fifth consecutive quarter above pre-COVID levels. Above all, our business has increased its quality with the PIS 2 subscription. It has higher repeat rates and becomes more profitable year by year as prime customers renew. In Q2 FY23, we reached 3.6 million subscribers to a run rate of 479,000 per quarter during the first half of FY23. This is an increase of 8% versus FY22 quarterly revenues and 47% versus FY21 quarterly revenues. Over a year ago, we started a super high growth in adding new prime members. One year on now, the net new ads are now stabilizing with the effective churn from all the new members added over a year ago. The third highlight today is that in the first half of FY23, revenue margin and cash revenue margin moved above pre-COVID levels for the second consecutive quarter since April 2020. The first half of FY23 revenue margin for cash revenue margin exceeded pre-COVID-19 levels by 3% and 12% respectively. Cash revenue margin in the first half of FY23 increased 69% versus the same period last year, with bookings up 50% and the increase in revenue margin per booking of 15% driven by the increased quality of our business following the pivot to subscriptions. Overall, the first half of FY23 has seen the continuation of the improving trends we saw in FY23 and a return to profitability. Cash marginal profit stood at 74.4 million euros. That's an increase of 51% versus the amount in FY22. And as expected, strong cash EBITDA in the second quarter of FY23, which resulted in 34.5 million euros in the first half of FY23. This is up 78% versus the same period last year. As guided in the first quarter, the strong growth in prime numbers in their initial year delayed growth in profitability, since profitability of prime number grows in the second year. In addition, it is important to note that if instead of reaching 3.6 million members in the end of Q2 FY23, if we have just reached 3.5 million members, that means just 110,000 less net assets, This would have resulted in EDU achieving an 18% cash EBITDA margin instead of the 13% you see reported. That means cash EBITDA margin would have been 5 points higher. We had just added 110,000 less net subscribers. Fourth highlight. When we're on from setting out our self-imposed targets for FY25, we are well on track to meeting them. Prime members. Despite a host of negative macroeconomic factors that have occurred after we set our target of 7.25 million members by the end of FY25, we are on track to meet or exceed that target. Our net ads run rate is ahead of expectations, and our trend rates are slightly improving, and we are confident we will meet or exceed the target. Our group. Our group is converging with our guidance of 80% per user, and we are confident we will meet the guidance. Cash EBITDA. Our Q2 FY23 results demonstrate that as the percent of year 2 plus prime members increases, that our margins increase. Our most recent results clearly demonstrate we are well on track to meet our target of over 180 million euros of cash EBITDA in FY25. In sum, we really believe we've got the right model, right people, right structure, to see them deliver the exciting opportunities ahead of us. Now I'll take you through more detail. Please turn to slide 8, where I'll go through EDA's outperforming. As I referred to earlier, EDA achieved strong bookings growth in the first half of FY23. reaching 8.6 million bookings in the semester. This is 48% greater than the pre-COVID levels. And if we look at the most recent figures of October and November, we have continued to experience strong growth of 45% above pre-COVID-19 levels in October and the first eight days of November. All of this has been achieved under the Ukraine war COVID high inflationary pressure, slight disruptions, etc. Also, I would like to add that despite the excellent performance in October and November, as we move away from COVID comparisons, we do expect to return to a more normal autumn and winter trading pattern. This means we will likely start to see a return to more normal seasonality. And this, in turn, would mean that we will likely have a lower number of absolute bookings in the months leading up to Christmas, and, therefore, also a higher absolute booking in January and February, of course. Please turn to slide 9. E-Dreams for Digital has consistently outperformed against peers, as evidenced by IACA public data and recent results from low-cost carriers. This results in market share gains and highlights our superior proposition to customers, as well as the strength and adaptability of our business model. However, I would also like to highlight that as corporate travel returns, this gap probably will close too. We do outperform versus regular airlines, IATA, by 64 percentage points, and versus low-cost by 20 percentage points in the second quarter of this financial year. Please now turn to slide 10. As we already highlighted in our FY22 results presentation, over the past 40 years, even during recessions, energy crises, high inflationary environments, et cetera, passenger traffic has mostly grown. While there always is uncertainty in a future situation with a unique set of factors, based on prior market performance, there were in fact only three years during the period of 1980 to 2019, in which passenger numbers declined. And the largest decline was 2.6%, which occurred in 1991. Please turn to slide 11. Even with inflation, either benefits from highly variable cost structure, resulting in you being less impacted as most of the variable costs are linked to volume level. 85% of our costs in the second quarter of FY23 over the last 12 months are variable. And this is on a business that is profitable and growing. With that, let me now pass it over to Debbie, who will take you through in more detail our financial results.

Thank you, Dana. If you would all please turn to slide 13 of the presentation, I will take you through the financial results in more detail. Our new KPIs show the strong growth in prime cash revenue margin and marginal profit in the last 12 months due to the exponential growth in prime numbers. Our average revenue per user, or ARPU, as we have already highlighted, is converging with a guidance of 80 euros per user. However, as previously outlined, we did not expect the previous levels to be sustainable, and we maintained our long-term guidance of 80 euros per user. As expected, the evolution in this quarter was driven by the phasing out of the second quarter of fiscal year 22 in the last 12 months calculation. That was a quarter in which we had a material increase in revenues, and there was a sudden increase in travelers due to the rollout of vaccination. The strong growth in cash revenue margin and cash margin of profit has led to 42% and 54% of our last 12 months cash revenue margin and cash margin of profit respectively, now being delivered for prime members versus 38% and 50% respectively just one year ago. I would like to remind you that profitability of prime members increases substantially from the second year as customer acquisition costs reduce very significantly. Once we have a larger proportion of our prime members in the second year cohort and subsequent years of membership, profitability of Prime will continue to improve. This turns out to be like 14% of the presentation. During the pandemic, we continued to invest and innovate in our subscription offering and subsequently have seen remarkable results. Cash-over-the-margin is already above pre-COVID-19 levels by 12% and cash margin of profit and cash EBITDA will improve due to the large increase of prime members in the year as profitability of prime members jumps from the second year onwards. In the first half of fiscal 23, deferred revenue growth associated with prime has obviously accelerated, following the subscription of 1.9 million more new members over the course of the year. This amounts to 27.5 million euros, and that is up 48% year-on-year. Cash EBITDA with a full-prime contribution was 34.5 million in the first half of the fiscal year, and that's an improvement of 78% in just one year. As expected, strong cash EBITDA in the second quarter of the fiscal year was alone 20.5 million euros, and that is a 42% increase versus just the quarter prior, the first quarter of the fiscal year. Please turn now to slide 15 of the presentation. In the first half of fiscal 23, revenue margin and cash revenue margin continued with levels above pre-COVID-19 levels by 3% and 12%, respectively, despite the microeconomic end wins and the industry disruptions. Revenue margin in the first half of 23 increased 72% versus the same period last year due to high bookings of 50% and the increase in revenue margin for booking of 15% subscription and the strong growth in our revenue diversification. Viable costs increased by 76%. The increase was caused by the rise in bookings and an increase in viable cost of booking of 18%, from 24 million in the first half of last fiscal year to 28.2 million in the first half of fiscal 23. The cost of booking increased because of higher acquisition costs to acquired prime members, and a rise in merchant costs, which are associated to higher basket values. Overall, in the first half of 23, we have seen the improving trends we guided you in the fiscal 22 on the first quarter of fiscal 23 results presentation. Cash marginal profit increased to 74.4 million euros. That's up 51%, the amount we achieved in the previous year. And cash dividend grew 78% versus the same period of last year. As guided previously, the strong growth in prime members in their initial year delays growth in profitability, with profitability rising in the second year. Over the next few quarters, we expect improvements in profitability as the proportion of prime members in the second year and beyond increases. Fixed costs increase by €10 million, mainly driven by higher personal costs and external fees, both related to the recruitment of new employees as well as some negative impact of foreign exchange. I would like to remind you that we do not expect the increase in fixed costs from the 63 million in fiscal 22, the last one, to 100 million in fiscal 25 target to be linear because the recruitment is front-end loaded in order to deliver on our business plan. We will show you more detailed figures on the same thing later on in the presentation. If you look at Note 9.2, of our financial statements, we have increased the workforce by 201 employees year-on-year, with 170 being incorporated between March to September, only six months. That is 34% of our target headcount in less than 15% of the time. As a reminder, in total, we plan to add 500 new employees by March 25, with much of this front-loaded. As a result, adjusted EBITDA was 7 million euros, That's 34.5 million, including the full contribution of prime from a profit of 19.4 in the first half of fiscal 22, also including the prime contribution. Adjusted net income was 19 million euros lost in the first half of fiscal 23. Turning now to slide 16, I will take you through the cashless statement. In the first half of fiscal 23, despite the Ukraine war, year industry disruptions, which had good portions of the first quarter and macro headwinds, we ended the semester with a positive cash flow from operations of 33 million euros, mainly due to a working capital inflow of 19.5. The inflow in the first half of 23 is smaller than it was in the first half of fiscal 22 due to the higher recovery volumes that we had in the second quarter of fiscal 22. So that is July, August, September. of 2021. And if you remember, that happened right after the massive vaccination and release of a good portion of the travel restrictions, while in these last six months, the volumes have been more in line with the normal seasonality, not that big of a jump. We have managed our liquidity position well, a consequence of our strong business model and active management. We have achieved this despite travel restrictions, which reduce the levels of trade. Liquidity has remained more than sufficient and stable throughout the pandemic. In fiscal 23, end of September, the liquidity position was strong at 167 million euros after repaying 3.8 million euros of the government-sponsored loan and another 3.4 million of costs associated with refinancing. We have used 16.2 million of cash in the first half of 2023 for investments. That's 4.5 million more than last fiscal year. as we are increasing our development capacity and therefore higher capitalization of software developers. Cash used in financing amounted to 50 million euros compared to 14.9 from financing activities the previous year. The variation by 35.5 million euros in financing activities mainly relates to the reimbursement of the Super Senior Revolver credit facility by 30 million and the government-sponsored ROM by 3.8 million. This variation is offset with an increase of bank overdrafts by 28.5 million euros. That's including the line bank overdrafts usage in the cash flow statement. I will now turn the presentation back to Dana to do the first part of our strategy performance in Prime one year after the capital market day, which will cover the strategy overview and two of our self-imposed fiscal 2021 targets, that is Prime members and the IFO.

Thanks, David. So let's now move to our strategy performance update one year on from the Capital Markets Day.

First, the context. Since our Capital Markets Day in November 2021, there has been a number of factors that have occurred.

Omnicron, the Ukraine invasion, flight destructions,

high inflation levels, etc. So, how are us redoing and how is the investment thesis?

Exactly the same. The investment thesis in us remains exactly the same. Nothing has structurally changed. While some may think that the world is crumbled under our feet, our investment thesis is the same. fully on track to meet our FY25 guidance.

So please turn to slide 19, where I'm first going to cover some strategic priorities.

As you recall, our position for the future success due to our innovative approach in travel has been proven in other industries. And there are a number of real reasons in why we are so strong in this position for future growth. One, we're in pole position in an attractive market. The Edo addressable market is sizable, growing and attractive, and Edo is positioned in the right segment, online and leisure. Edo market is one of the largest in the world. It's growing and attractive. It's still in the recovery phase, coming from all-time low and continues to grow. Moreover, time and time again, leisure consumers have proven that they want to travel and will prioritize travel versus other things. And leisure travel is not substitutable. In our year-end results, we share data from surveys showing consumers who give up other discretionary spending versus travel. The results we have seen published in the last few weeks by some retail companies in comparison with our results and those of other travel companies, already confirmed this in actual data. You have seen our bookings over the past year and the most recent quarter. We have been substantially above pre-COVID levels for five quarters now. Please turn to slide 20 of the presentation. The second reason. Within travel, EDA is the global flight leader, including China, and over three times large, the size of the second player in Europe. Please turn to slide 21 of the presentation. The third reason, EDO has demonstrated the ability to capture new customers through the Prime program, while also converting existing customers. Prime is the number one travel subscription program in the world, with over 60% of our Prime customers being new customers who have not used an eDreams product during the last three years. It's demonstrated that the prime proposition is attractive and appealing not only for existing customers, i.e., our 24 million plus customer base who have booked business over the past seven years, but also for new members too. And it's been part of things why we are building market share. One of the many virtues of prime is that it attracts new members, almost 2 million just in the last 12 months. So, Whichever way you look at it, crime is successful, delights customers, grows our market share, and is mutually beneficial for our customers, the company, and shareholders. Please turn to slide 22 of the presentation. I would like to reemphasize that we believe, regardless of the current macroeconomic uncertainties, our business model and track record positions us to outperform the industry. We have demonstrated that we are the platform where customers prefer to book their travel. This is driven by, first, through Prime, we offer best prices, value, and customer experience. Second, because we meet the customer needs more than competitors, through depth of choice, the speed of overall experience, after-sales service, and so many other things that have taken us years to perfect. This results in higher customer satisfaction sports in our competitors. 3. Also, customers now, in more challenging economic times, will focus on price even more as their discretionary income comes under pressure. This plays to our strength and value proposition. 4. In addition to all that, we have scale and resiliency of crime, with 3.8 million prospective scribes, which leads to business resiliency given the highest kickiness of subscribers, margin expansion after initial acquisition, and giving us a much higher share of wallets of the travel industry they continue to consume.

Let's now turn to slide 22 of the presentation.

As a result, you can see we're well-positioned, well-financed, and we're on our way to meeting our self-employed FY25 targets. I want to remind you what those targets are. First target, find members over 7.25 million members. Second target, find articles around 8 euros. And third target, cash in the bear neck depth of 180 million euros. We announced these two targets to the market one year ago. So a very valid and important question is, how are we doing one year on? We will now dedicate time discussing in more detail each of these three targets to explain, based on actual performance, why we are so confident one year on that we will meet and receive each of these three FY25 targets.

So please turn to slide 26.

Let me start with the first target, crime numbers. We are on track to reach the $7.25 million, numbers tied at FY25. And so why are we so confident in this? There are five reasons. First, because our quarterly prime net ads run rate achieved to date are well ahead of the implied member run rates we require to achieve the target. on a market that is still below pre-COVID levels, and with all of the external macroeconomic effects that we talked about since we set the target. Within this point, we also need to remind you that one year after the start of super high growth and prime net ads, gross ads will be partially offset by churn, applying to a higher prime number basis. So going forward to maintain levels of circa 500 net assets per quarter will become more challenging in the short term. But exceeding the implied figure needed to hit on a quarterly basis from now to March 25 is absolutely difficult. In addition, we still have improvements for launch for Prime, which improves our run rate as well as launching Prime in new countries also improves that run late as we increase a total adjustable market. And also market recovery can help as well. All of these give us full confidence in achieving our FY25 target of 7.25 million prime members.

Please move to slide 27.

Reason two of why we are confident to exceed the 7.25 million subscribers by March 25 is because we operate in a huge addressable market and have overlaid very realistic to conservative assumptions. We continue to converge our existing customers. We capitalize on a base of 24 million non-prime customers who have worked with us over the past three years. In addition, we continue to converge a massively large non-customer base. We have only 5% of the European select market, and more than 60% of new client members are new customers to us. So while we are growing dramatically our market share, frankly, there's still 95% to go after. Also, our assumption, very realistic. The implied penetration target of Prime is 2.4% of households across nine markets in which we currently offer Prime to reach the 7.25 million numbers by FY25. This also assumes that we do not launch Prime in any additional markets. Also in the market, we have been operating in the longest, France. We are already at 3.8% penetration of French household. So again, 2.4% is very conservative. And I want to point out one very important fact. France, our oldest market, is still growing exceptionally strong. So it's not getting anywhere near its long-term growth level. This goes well for years 2026 through 2030. there's still large growth to be had even after achieving our FY25 target. The rest of the prime markets we operate in Europe, on average in their third year, have reached a 1.5% penetration of households. This actually is a bit better than the penetration we had in France after year three. There's no reason why we can't achieve in those other European markets the same penetration of households we had in France after five years.

and push on to the much higher levels. Please move to slide 28.

This is related to my last point and our long-term growth prospects beyond 2025. Subscription companies show high growth and penetration over many years, and our specific data supports this as well for Egypt.

Please move to slide 29.

Reason four is that crime has demonstrated the ability to capture customers even during major macroeconomic events, like COVID, Ukraine war, flight disruptions, high inflation, etc. Crime continues to attract new subscribers.

Moving to slide 30. It's also important to note that our churn rates are improving slightly. If you now, could you please turn to slide 33.

We discussed, in this section, our second KPI, which we set a year ago, called ARPU. One year on from our ARPU, it is on track to meet our FY25 guidance as well. Over the past quarters, we have repeatedly said that ARPU will converge around the FY25 guidance of 80 euros per user. And this is exactly what is happening. The evolution in this quarter was driven by the phasing out of Q2 FY22 in the last 12-month calculation. Q2 FY22 was a quarter in which we had a material increase in revenues due to a sudden increase in travelers due to the rollout of the vaccine in early 2021. We do expect, and this is within our three-year plan, the next few quarters to trend to options in the mid-70s. as a bigger base of prime numbers reduces the gap between average and end of period numbers. Later on, as we roll out new prime products and features, our pool will trend back to our FY25 target of 80 euros. I will now turn the presentation back to David to cover the last of our self-imposed FY25 KPI targets. And I will then come back to you with some final closing remarks before we open the webcast for Q&A.

Thank you, Dana. Let's now move to our third KPI, which is the cache editor. You have seen in part one of today's presentation, cache editor is starting to show, as expected, the desired results. This is a key metric. and we think it is important for us to discuss in detail our progress on this and the fundamentals underlying this. As noted by Dana, the investment thesis in us remains exactly the same. Nothing has structurally changed, and the numbers you're going to see prove that we are on track and on our way to meet our self-imposed fiscal 2025 target of over 180 billion of cash at the time. Please move to slide 36. This is a slide, or similar to, slide that we presented at the time of the investor day, which shows how cash marginal profit margins increase as prime members become more mature. You will recall that in year one of a customer's membership, we do incur considerable customer acquisition costs for CAC. However, from the second booking and after renewal, the profitability builds and there is no meaningful CAC thereafter. On slide 36, you see three different perspectives of cash margin and profit margins. The first one on the left is the one we presented 12 months ago at the Capital Market Day. This was an illustrative example based on just one customer joining on day one of the first year. In the middle version on the chart, we show the actual numbers as of September 2022. Clearly, not all customers join on day one of the quarter of the financial year, so this takes into account all of the timing differences and the aggregation of all of those customers. The right side shows the expectation we have for fiscal 25. As you can see, we continue to be on track with our financial target for fiscal 25. All in all, our cash margin and profit margins are on track to meet our fiscal 25 targets. If you could please turn to slide 37. This is my shows you the breakout of our subscribers between year one and year two onwards. And as that percent changes, so too does the average company cash margin of profit. On the left-hand side is the prime cash margin of profit margin with a current mix of year one and year two, which is 61% of revenue coming from year one, 39% of revenue coming from year two, subsequent years. So taking the figures of margins from the previous slide and multiplying by the actual split of revenue coming from prime members in the first year versus second subsequent years, we obtain the aggregate cost margin of profit for the prime side of a business. And on the right-hand side, we show the same mechanism, but for figures that we expect to achieve in fiscal 25 according to our business planning guidance. You can see clearly that as the percentage of revenue coming from year two and subsequent member increases, the aggregate margin increases in a mathematical way. Conceptually, as a portion of year two plus members increases, so do our margins, since year two members have very low cap. Thus, as you can see, margins will increase progressively from now to fiscal 25, although given the return, we expect to the normal travel seasonality, there can be variations from one quarter to another. Please move to slide 38. This is another example in which we show this mechanic, but for the last three quarters that we have published, specifically for the last three quarters. As the increase in the weight of year two plus members rises from the fourth quarter of 22, this is clearly reflected in the cash marginal profit of the Prime Minister. An increase of 15 index points in year two plus from the fourth quarter to the first quarter of 2023 resulted in an increase of four points in cash margin and profit margin. And a 45-point increase in the year two from the last fiscal year to the second quarter of this fiscal year resulted in an increase of 12 points in cash margin and profit margins for the final year. which is three times the four points as such, totally correlated. This shows how a slow increase in margins was driven by the strong growth in the prime year one subscribers in the past four months. And as this changes over time, we can see the impact on the prime margins and the overall margins of the business. Please move to slide 39. Another way to look at this is doing a sensitivity analysis on the prime members. where we use the following assumptions as a base. For all the numbers in this chart, there is a stable assumption in turn, and the variation of the member growth is reached through variation in the investment in paid channels, i.e., more investment in paid channels, more members, less investment in paid channels, less members. And that would result in acquiring less time first and also getting less non-prime bookings. As you can see in the chart, a result of different growth in members translates into higher or lower cash margin or profit markets.

The higher the growth in the short term, the lower the margins in buyers.

Please move now to slide 40, and this is to complete the picture for further down the P&L and cash flow. And in the past, we had given the end of fiscal 25 number for both the fixed costs and the CAPEX. They're both proceeding according to plan, but given the level of success that we've had and we were pushing on acquiring more talent to develop the new personal services that we know there's demand for in our member base, And this of course has that short-term impact on cash EBITDA, but it is built into our freezer plan budget. If you could now please move to slide 41. This slide, the same as for the cash marginal profit, this is the cash EBITDA markets. So this is exactly the same analysis that we presented two slides before, but adding the fixed costs in the results of the sensitivity. As you can see, If we were to have a run rate of 547,000 net prime members per quarter from now until fiscal 25, that would result in 9 million prime members in fiscal 25, and you would have cash flow in the margins of 18%. If we were to have 364,000 run rate of members per quarter, which is the linear progression from where we are today to the 7.25 million numbers, we would reach cash flow in the margins of 22% as guide. Now please move to slide 42. Many of you have asked how our margins may look like beyond fiscal 25, where our fixed costs are stabilized around the base of 100 million euros that we grow with inflation, the CAC continues to be reduced as the weight of year two plus members continues to grow. And again, let's be clear. This is only for illustrative purposes. These are not final targets. This is not a guidance. It is just the result of sensitivity analysis to the growth in CAC members. We have run two scenarios for you. Scenario one is static scenario. What happens if we were to grow zero after 6 to 25. This is totally unrealistic. But it is just a case for you to see what would happen to the markets. Assuming no increase in household penetration in existing markets, we don't launch Prime in any new markets, there are no new products or Prime fares, all of them not realistic assumptions, but even this will get our cash return margins to grow from 22% to 27%, just by doing nothing. In a scenario two, we assume that we maintain the net quarterly ask run rate of 364,000. That's the one that gets us from today in a straight line to fiscal 25 to reach the 7.25 million numbers. As you remember in fiscal 25, we get nowhere near what would be a reasonable household penetration figure. So there are years more growth to achieve. As you can see, the cash in the margins despite the growth, can grow from 22% to 26%. Again, this is too far away. This is hard to predict, but we thought this sensitivity analysis will help you to understand the business better and help you as well to build your models. Most importantly, it should help you to understand the huge potential which will drive superior returns, excellent service for customers, at the same time, transforming and revolutionizing the industry. I will now turn the presentation back to Dana.

Thank you, David.

As you can see, one year on from the Capital Markets Day, we are well on track to meet or exceed our FY25 guidance. And we have huge potential beyond FY25. In addition, we want to share with you some other KPIs that underpin the strong long-term fundamentals of our business. Please move to slide 45. An important KPI is customer advocacy, which leads to sustainability and growth. You have seen how rapidly Prime is growing, and we could not do this without the strong customer advocacy. As you know, we currently do not advertise Prime per se, and we rely largely on word of mouth. As you can see, our NPS scores have continued to increase since our capital markets day a year ago. And already a year ago, we were extremely hard for travel-related products. If you could please move to slide 46. Another way to look at customer advocacy is via third-party surveys like Trustpilot. Trustpilot is the review platform where people around the world rate their experience in different businesses from one to five. It shows that we rank meaningfully better than any other OTA or airline. And second, we are the only one that has improved over the past 12 months despite all the price distractions that there have been. Please move to slide 47. Prime provides a win-win proposition for our customers in EDU. As you can see on this slide, Prime members visit us more often and have higher repeat bookings than non-Prime members. Please move to slide 48. All in all, we have achieved and will continue to achieve significant value creation for EDU for Prime. The success of our Prime model is demonstrated both by our high growth in the number of members together with the value it creates, and a business with higher LTD and lower CAC over the long run. We continue to achieve an LTD to CAC range between two and three times.

Let me leave you with one final closing remark before we move to the Q&A session. If you can please move to slide 50.

We strongly believe EDU is unique in terms of profitability and growth. The subscription model has been proven in other industries, such as Netflix for video streaming, Costco for groceries and goods, Spotify for music streaming, and the list goes on and on. Yet we are not just copying. We are innovating. and doing some things that no one else has done. As a proof point, we continue to satisfy the rule of 40. In fact, we do that better than all our subscription peers, which are profitable and good growth businesses. Overall, edu has become a much higher quality business with a pivot to our subscription model. This delivers loyal and repeating customers, resulting in a more profitable and predictable business and with sustainable relationships with customers. We have high underlying profitability and huge growth potential. All of this will drive superior returns for shareholders. We will deliver excellent service for customers while at the same time transforming and revolutionizing the industry.

Thank you, Dana. And with that, we would now like to take your questions. And we will answer the questions sent to us in writing in the webcast. We're going to take questions on a first come, first serve basis. Given that we've extended our preferred remarks more than usual, we are going to group questions of similar nature. So those that are here repeated, I will not even read. Should we not have time response to questions on the webcast, the investor relations team will make sure that those are answered afterwards. So I'm going to start with the list that I have here. The first set of questions comes from Juan Pena from GDC Gajesco. The first one says, I see that the revenue for booking is rising and that you already have a good base of second year prime plans. Why doesn't it show in the operating profit and EBITDA crisis margin in the sense that both drop versus the second quarter of fiscal 22. Now, there are two elements explaining that. The first one is that the marketing investment is higher to drive the growth of prime members in general. And that is much higher than the second quarter of fiscal 22. and has become higher particularly since, I would say, third quarter, fourth quarter of fiscal 22. That is the most important part. When there has been more customers coming generally into the travel market to make travel searches, it's when we have taken up our marketing investment because there are just more customers that are potential targets for us to become future prime vendors. And that's the main reason. Actually, but if you look sequentially at how the margins are behaving as opposed to compare it to the second quarter of fiscal 22, you will see that the margins are growing quite healthily. In the fourth quarter of 22 and in the first quarter of 23, they were at 21% in cash on your profit. In this last quarter, we published they're at 26%. And I would encourage you to look again that those are the aggregate margins of the business. I would encourage you to look again at this slide that I have just covered recently, which looks specifically at the prime side of the business and where you can see very clearly the correlation between the margin and the increase in the percentage of customers coming from year two. The next set of questions come from Chan Garcia of Schwartz Investments. The first one says, you're not on the churn, says that it's a weighted average of involuntary and voluntary churn. Can you explain the differences and the relative size of each category? I think you're better off taking this one.

Absolutely. So first of all, voluntary churn is when a customer proactively takes action to discontinue being a customer. That means, for example, they call our contact center, they go into the app and click on discontinue crime, et cetera. It's an action-based one. Involuntary churn is the opposite, meaning the customer hasn't done anything. So when the renewal comes up at day 366, when we go to present or to collect, so to speak, for the new renewal, we're unable to. So it's, you know, failure to collect. This is something that is more prominent and prevalent in Europe, and not, the system is not the same as in the U.S. A typical leisure travel customer has a credit card that lasts on average in most countries three years, and then it'll start renewing in many countries with a new set of numbers. And so the mechanism of passing on those numbers, et cetera, is not merely a setup and establishment as in the US, the States. And so what that means is that we have a disproportionate amount of failure to collect, or what we call involuntary churn. And as we've said in previous times, the involuntary churn category is far larger. The far larger bucket of the total churn is done.

I think that's it. Yes. So the second question is, the business should start to naturally be leveraged given the cash generation and the EBITDA growth. What do you expect to see for leverage at the end of fiscal 2025? This is explicit guidance that we gave in the investor day a year ago, and we have reiterated it. You can find it as well written in this landing, which we call the investments and the fixed costs. I want you to have a bullet point to reiterate what I'm about to say, which is that we expect for the end of fiscal 24, so a year and a half from now, we will be just below two times of net leverage. That's net leverage in which you have in the numerator net debt, and in the denominator you have cash EBITDA. And by the end of fiscal 25, we will be between one times and two times. So, yes, there is some material deleveraging that we expect happening, because we are now standing at a six and a half times. So, we're going from six and a half in one year to just under two, and in, well, one and a half years to just under two, and in two and a half years to between one and two. The next question says, given your success in growing prime, is it fair to say that once you return to normal travel seasonality, your revenue and earnings should be less impacted as you are becoming more driven by prime subscriptions as opposed to bookings. It is true that we will become less dependent on seasonality, but there is also something to take into account is that the prime revenue is coming from the subscription. Out of the 80 euros, you have 55 that come from the subscription, and that's the part that is stable. But you have another 30 euros, 25, 30 euros that come from the revenue related to the bookings done during the period by the customers. And those bookings done during the period by the customers will have a relationship to sustainability. So is the weight of sustainability going to be smaller? Yes. Is it going to disappear? No. There's always going to be some element of sustainability. And the next question from this investor is, I would assume, this is the last one, I would assume that after the first year, a prime customer knows if they like the program or not. Does your LTV2CAC range of two to three times assume a finite life to a prime member, which may not happen? And you are correct in that our LTV calculations and therefore the LTV2CAC is for a period of two years. So it just has the first renewal inside. It doesn't have the second, the third, the fourth renewal. Now other companies choose more, let's say, luxe ways of measuring LTV and they go to 36 months or to 48 months. Ours is particularly stringent. We just look at two years. So that return is the return of 24 months of the customer. will the customer disappear and not do any more business with us? No, we don't think so. But that is the way that we calculate LTV and LTV2.

The next set of questions comes from Atrius Farwell.

And the first one says, marginal profit margins fell by 500 bps year-on-year in France. Why, given it's your most mature market, shouldn't we see this increasing? Well, there is indeed a positive effect of the growth in the year-to-members, but this is affected by two things. The first one is that we've actually had, in our oldest market, record high levels of new subscribers in France. And actually, if you look at this line in which we show the progression of the household penetration in France, and the number of households hasn't changed, so this is all driven by changes in the numerator, over these last six months, we've broken the record in terms of new apps in France. So the number of sign-ups in France continues to be very, very positive. The second thing that is a bit unique about France is that last year we already benefited in France of a better recovery versus other countries, which was driven by different factors, but one of them, with respect to free testing for travel, because we didn't have to pay the PCR tests, which in some places it was north of 100 euros. And there was also unemployment help even to French people, which would have been a good level of savings. The second question says, why was there an outflow in working capital in the quarter? The answer to that is that what drives specifically for the quarter, so taking the key two in isolation, the working capital, is the last two weeks of trading of June versus the last two weeks of trading of September. And in that period, when you compare, second half of September had a slight decrease in bookings, about 1% to 2%. and it had also a slight decrease in airfares, so that the basket size of the bookings that we did in the second half of September was slightly lower than the basket size of the bookings that we did in the second half of June, which is seasonally normal. When you start to approach the autumn period, airlines usually reduce the price of the fare, And that has happened this year as well. Coming back to what we said, that it's more normal seasonality now. The third question from this investor says, most competitors, both in Expedia last minute, have returned to pre-COVID operating profit levels. E-Dreams is yet to get there due to increased marketing expense. Can you discuss the short-term and long-term trade-off here? Well, Different competitors have different business models. We have a business model that, you know, you see that we have more than 50% now driven by subscription, and that is a fundamental difference between us and the other 12 competitors. Our business model is more sustainable, more stable, but you have the first year, right? the CAC is relatively high, and you have low profitability, and we are having a super high increase in the number of prime members. Now, we've talked at the beginning about a sensitivity, right? And that sensitivity was one in which we have grown, instead of growing by 400,000 net apps, we have grown by 110,000 less, so 290,000. instead of having a cash in the margin of 13%, which is what we have printed for the quarter, we would have had 18%. Now in the longer term, which is also what is mentioned in the question, we've provided you three or four different slides with sensitivities that you can look at at the cash margin of profit level, that you can look at at the cash EBITDA level from here to fiscal 25, and even simulations of what could happen after fiscal 25, depending on the different levels of growth in the permanent base. I think you have plenty to digest that and look forward to your questions after you find an opportunity to digest that. Fourth question from this investor says there seems to have been a drop in value for booking this quarter versus last quarter. Any particular reason? Now, I have to assume that the expression value per quarter remains bucket size of the bookings because when I look at the cash revenue for booking, it's been going up consistently over the last four quarters. If I look at the cash revenue for booking, It's going down consistently over the last three quarters from about 7.5 euros to almost 10. So it has to be basket size. Now, the basket size, I just replied to that two questions before. In the end of June, we had a basket size which was approaching 400 euros. In the end of September, we had a basket size which was approaching about 370 more or less in broad terms. And that is defined by the evolution of the airfares in the market. And then the last question from this investor says, you mentioned new features that will drive ARPU in later years. Can you talk more about these features? Well, I can talk in a broad sense because we generally do not disclose a feature that is about to come until it actually comes because it will be giving undue clues to our competitors. but you know that we are working on a number of developments, new products and services. They're broadly going to be in the area of hotels and more new ancillaries that we'll be able to put in the hands of customers. And this goes in line with the increase in the development resources that we are hiring. and because we have a lot to do and we have things that we know are going to have strong demand from our customers and we're trying to develop them and put them live as quickly as we can. There is a set of questions from Carlos Teriño of Banco Santander. The first one says, the expected drop in ARPU on next quarters is fully driven by the explained mathematical impact of prime ads or are there other impacts? And if this will be the case, which ones? And the answer is very simple. It's mainly driven by the denominator effects. So this is not us either reducing fares or increasing a lot of discounts or what have you. This is a denominator effect, not a numerator effect. The second question says, additionally,

you expect to reach the target of 80 euros adding new prime products. Sorry, this is here, live page.

Additionally, you expect to reach the target of 80 euros adding new prime products and features. Does this mean that with the current prime offering, your ARPU would be below that level. Well, with the current prime offering, our ARPU is going to trend for the set for the next few quarters to about the mid seventies. And that is mathematical effect of the denominator. The prime offering is going to improve significantly with the software developers that we have in house, plus the new ones that we are incorporating. The third question says, assuming Should we also expect lower prime net ads in the third quarter than in the second quarter? Yes. That is correct because at the end of the day, the number of people that we increase in the prime number days is a function of the number of people that are searching for travel in the market. the number of people searching for travel between October and December is lower than the number of people searching for travel between July and September. Conversely, we also expect that the number of people looking for travel in January to March will be superior to the one of the quarter of December. So we do expect that the normal seasonality of the business is clearly coming back for

Periods that go down, 92.3, and for the periods that go up, 92.4.

We have now a question from Gerard Vilen of Volus Capital. The first question says, on page 30 of the presentation, you mentioned that churn has improved by 2% from year one members and 4% for year two plus members. What levels is this improvement from? I'm afraid that we don't disclose. This is a highly competitive metric. Actually, you will not see in any subscription company that caters to consumers or B2C as opposed to B2B. And we don't think we should be disclosing that. The second is The cash balance is down to $2.8 million, excluding overdrafts and other short-term borrowings. How comfortable are you with liquidity, given we are entering a seasonal low, H2 for bookings and working capital outflow? Well, what I'd say is that the level of cash is not that relevant, and that number of 2.8 is one which you have subtracted. the availability under our credit facilities, that is close to 170 million. It's actually 167 million. And that in advance, I mean, we're sitting now in the middle of November. So there are six weeks left of the low seasonality. So yeah, we feel very comfortable that that is more than enough to go through that period. The next question says, have you discussed the company's improved performance and positive outlook with rating agencies and what has been their feedback and indication on when they might consider improving the company's low credit rating? Well, we have, I think we just published this and therefore we haven't had the opportunity to discuss this set of results with them. But, you know, to temper your, I would say, very rational desires. The rating agencies are insiders of our budget of projections and what we are publishing is in line with what we have in the budget. So I don't think that it changes their perception other than one quarter more of us delivering on the results and proving that we do what we say we're going to do. But when exactly they will change the rating, we need to see. And the next set of questions come from Bruce Ivory of Cheney Capital. The first one says, what were the gross odds for Prime in the first half of 23? I'm sorry, but we don't disclose gross odds. And the other two questions are repeated. The next set of questions come from Eduardo Ortega of Societe General. The first one says, do you expect revenue from classic customers to recover to pre-pandemic levels? This figure is still well below pre-pandemic levels, and while total revenue margin has almost recovered to pre-pandemic levels. Well, the classic customer revenues include the discounts to prime members inside, whereas they do not include the increase in deferred revenue. So being a subscription company and having now more than 50% of our bookings of profits that is going to increase to more than 80% according to our guidance in fiscal 2025, I don't think that we will ever recover the revenue from classic customers that we had before the pandemic. What matters is the total revenue that we get in the business and in the case of resource providers, the output that we get from them. That is the last of the questions that we have. And therefore, we're going to close the presentation now. We want to thank everyone for joining us in the webcast. And before we conclude the call, I would like to inform you that on Thursday, the 23rd of February, we will be hosting our conference call for the third quarter results of fiscal 23. And in the meantime, we will be very happy to receive your questions via the investor relations team or the investor email address which is investors at idrinsodigio.com. I hope that you have a very nice day.