eDreams ODIGEO S.A.

Good morning, everyone, and thank you all for joining us today for our first half fiscal year 2024 results presentation for the six months ending 30th of September, 2023. I'm Davide Larros, the Director of Investor Relations at E3M Sotillo. As always, you can find the results material, including the presentation and our results report on the Investor Relations section of our website. I would like to inform you that today's presentation will be a bit longer than usual. It will be broken down into two parts. Part one will focus on our results for the first half of the current financial year, Part 2 is a special deep dive into the business, focusing on a follow-up of our performance since our Capital Market Day two years ago, as well as an update on our progress towards our three-year guidance. I will now pass you over, Dana Dunn, our CEO, who will take you through our results highlights.

Thank you, David. And good morning, everyone. Thank you for joining us. We are two years on from the November 2021 Capital Market Day. and I'm pleased to be able to say that the Prime model has more than proven to be a success, with the results speaking for themselves. The key takeaway today is once again that profit margins and profits are up significantly due to Prime, that we continue to show strong subscriber growth and revenues and profit growth. In fact, our cash EBITDA almost doubled over the last 12 months, And cash EBITDA margin further improved 9 percentage points versus the first quarter of financial year 2023. This means that our cash EBITDA margin improved from 9% in Q1 23 to 18% in Q2 24. And we added 3.4 million subscribers in the last 24 months and 380,000 in Q2 of FY24. In total, we are on target to meet or exceed our self-set targets for FY25. Today, we'll take you through the key points of our strong performance. This will include, firstly, covering the EDO results highlights, second, a discussion about the prime model, and a review of our excellent first half of the year results. Third, we'll update you on our strategy two years on post our capital markets debt. Fourth, we'll discuss our investment highlights. And lastly, we'll conclude today's presentation with some closing remarks about our long-term growth potential well beyond FY25. So now let me ask you all to please turn to slide four, which is a summary of our performance of the first half for our fiscal year 2024 results. In the first half of FY24, again, the strength of our prime model drove significant profit improvement with cash EBITDA almost doubling year on year. We remain well on track to meet or exceed our FY25 guidance. Some of the key highlights for today's presentation are, first, in the first half of FY24, the significant improvement in profitability, specifically. Cash EBITDA was up 84% to 63.5 million euros. That's almost doubling the 34.5 million euros reported in the first half of FY23. And the cash EBITDA margin, as said, gained 9 percentage points since the first quarter of FY23. Cash marginal profit was up 46% year-on-year to 108.9 million euros. And the margin improved by, as well, 9 percentage points since the first quarter of FY23. Prime's percentage share of our cash marginal profit reached 72% of the group total. And this means that now our results are largely driven by subscription. And our free cash flow, excluding non-prime working capital, was up from 20 million euros in FY23 to 40 million euros in the last 12 months of the first half of FY24. This means it doubled in the past six months and will outperform cash EBITDA growth again in the next 18 months. Second highlight. Edo Prime model is firmly established as a success. In the first half of FY24, we surpassed 5 million subscribers, reaching 5.1 million, which is a 41% increase versus the same period last year. This, of course, is in the context of the industry moving to a more normalized seasonality patterns. And in the last 24 months, we added 3.4 million new subscribers. And on the 31st of October, our prime members stood at 5.2 million. Prime cash revenue margin. As we said last time, this is a new quarterly reporting KPI since the first quarter of FY24. Prime cash revenue margin showed very significant improvement. It was up 53%. versus the first half of FY23, in line with growth in prime members. Prime share of the total cash revenue margin was up from 38% in the first half of FY23 to 55% in the first half of FY24. And growth in cash marginal profit for prime increased more than cash revenue margin. With an increased maturity of our prime member base, cash marginal profit for prime is up 86% versus the first half of FY23. And as a result, prime share of cash marginal profit reached 72% of the group total. Third highlight. In November 2021, at our Capital Markets Day, we announced our FY25 guidance. Now as a reminder, this was during a period in which zero travel company had a quarterly yearly or multi-year guidance out there. And this was before Omicron, Ukraine War, double-digit inflation, and other macroeconomic issues. So we're two years on today, and we are reconfirming our guidance that we had set in November 21. We will meet or exceed our targets. In terms of prime members, our quarterly net ad run rate is ahead of the implied run rate needed to achieve our FY25 target of 7.25 million members. Prime ARPU, as expected, is converging with our FY25 guidance for around 80 euros per user. In the second quarter of FY24, prime ARPU stood at 78.8 euros per user. And cash EBITDA, our first half of FY24 results, demonstrate that an increasing share of year two plus prime members has a very positive impact upon margins, which doubled year on year. Today, numbers reconfirm we continue to be well on track to meet our target of over 180 million euros of cash EBITDA in FY25. The fourth highlight you'll hear in today's presentation is about the long-term and beyond for 2025, that Edo has strong fundamental growth. This is due to the attractiveness of our segment of travel, which is leisure. We will continue to benefit from the strong consumer demand for leisure travel, in which there's a clear structural shift from offline to online for convenience and, of course, the underlying desire to travel. Also, we'll benefit from either's ability to further increase household penetration from low levels in the markets in which we currently offer Prime. We'll also expand Prime into new markets, moving well below the 10 markets in which we currently operate, and enter into new customer segments and further launch additional products and services under Prime. Now let me pass it over to David, who will take you through some of the KPIs of our Prime model, and the excellent first half of FY24 results.

Thank you, Dana. If you could all please turn to slide six of the presentation, I will take you through some of the KPIs of the prime model and financial results in more detail. On a run rate basis, we are ahead of the required pace to achieve our target of prime members, and the run rate needed for the next six quarters is less than the one we achieved in the past four quarters. Please note that the net ads of Prime members are influenced by seasonality on a quarterly basis. For example, the net ads of Prime members in the first quarter of fiscal 23 were positively influenced by the Omicron catch-up effect as more people were looking to book travel closer to some of departure dates. Net ads during that period increased because of that. Similarly, when there are less people in the market looking for travel, such as in the third quarter, quarter, which is a seasonally low quarter, net ads of prime members will grow less. That is why it is important to look at our net ads over multiple quarters, and we are on track to meet our guidance of 7.25 billion members by March of 2025. Please turn to slide 7. Profit margins were up significantly due to the growing maturity of prime members. This has resulted in strong improvements in profitability during the last fiscal year. In the second quarter of fiscal 24, cash margin for profit margin in our prime segment continued to improve. It increased to 36% on a 12-month basis from 31% in the first quarter of 23. That is a 5 percentage points improvement. Cash EBITDA also improved substantially. In the second quarter of fiscal 24, cash EBITDA margin more than doubled to 18.2% versus 8.8% in the first quarter of fiscal 23. This is an improvement of 9 percentage points, well above the first quarter, the second quarter, the third quarter, and the fourth quarter, given the margin of fiscal 23. If you please turn to slide 8, let me remind you that when looking at prime versus non-prime, we still think it makes more sense to look at our business on a last-first-month basis. as prime is an annual subscription business, and seasonality affects the amount of NEDAs in a particular quarter, and the non-prime part is influenced by seasonality patterns in most respects. Our KPIs reported today show strong growth and significant marginal profit uplift as maturity of our prime members increased. A strong characteristic of subscription companies is strong growth in cash revenue margin and cash marginal profit. Our performance in these areas demonstrates this clearly with a 54% share of cash revenue margin and 64% share of cash marginal profit in the last 12 months to September 24 being delivered from prime members versus 42% and 54% a year ago. As we now have a much larger proportion of our prime members in the second and subsequent years of membership, the level of profitability of prime continually improves. Please turn to slide nine of the presentation. In the first half of fiscal 24, we delivered strong growth in cash EBITDA and substantial improvements in margin as the maturity of prime members increases. In the first half of 24, cash revenue margin is 12% higher than in the same period of the previous year. Cash margin of profit in cash EBITDA improved 46% and 84% respectively. Over the past year, our subscribers grew by 41%. In addition, 59% and 72% of our cash margin margin and cash margin and profit in the quarter, respectively, are now from prime members. As guided, the maturity of prime members is the most important driver for profitability, and this has resulted in strong improvements in profitability as we have more prime members renewing their memberships. Cash margin and profit margin increased seven percentage points to 31% in the first half of 24. Cash EBITDA margin in the first half of 2024 also achieved very substantial improvements and stood at 18% versus 11% in the same period of last year. That's a 7 percentage points advance. Cash EBITDA was up 84% year-on-year to 63.5 million euros, which compares to 34.5 million euros in the first half of 2023. Please turn to slide 10 of the presentation. Revenue margin, excluding adjusted revenue items, increased by 13% to €327 million, mostly driven by an increase in the prime side of the revenue margin, which is up 67%, following the successful expansion of the prime value base. Prime revenue margin growth rates were offset by the non-prime revenue margin, which decreased 19% versus the first 123%, as the first quarter of 23 was positively impacted by the catch-up of the Omicron bookings. Prime revenue margin growth rates were offset by the non-prime revenue margin, which decreased 19% versus the first half, as the first quarter was again impacted. The variable costs were broadly in line with the first half of 23, despite higher revenue margin, as maturity of prime members increases and reduces the member acquisition costs. Overall, the first half of 24 has seen the improving trends we saw during fiscal 23 continue and significant improvements in profitability as we have more prime members renewing their memberships. Fixed costs increased by 5.5 million euros, mainly driven by higher personal costs as we scale the business. As a result, adjusted EBITDA was 36.1 million, a material increase versus the same period of last year. Adjusted net income was a 2 million euro loss in the first half of 24. That's a meaningful improvement versus a loss of 19 million in the first half of 23. This was mainly due to the second half of 24 not having the revenue adjustment in prime of 7.9 when we changed the estimates, and a 10.5 million of higher tax expenses in Spain on higher taxable profits. Turning now to slide 11. I will take you through the cash flow statement. In the first half of 24, we ended the second quarter with a positive cash flow from operations of 73.7 million euros following the growth of our business. We had a working capital inflow of 31.7 million, again driven by the growth of our business. We remind you that in the first quarter of 23, the higher inflow in working capital was positively impacted by the catch-up effect of the Omicron period bookings. We have managed our liquidity position well, a consequence of a strong business model, cash generation, and active management. At the end of September 23, the liquidity position was strong at €237 million. We have invested €23 million in the first half of 2024, That's an increase of 6.8 million euros as we capitalized the development of software with that. Cash used in financing amounted to 16.7 million euros compared to 50.3 in the first half of 23. The difference of 33.7 relates to the absence in 24 of three elements that happened in 23. The repayment of the revolver by 45 million, The payment of costs associated with the refinancing of 3.4 million offset by a revolver drawdown of 15 million euros. Let's now move to our strategy performance updates. In the two years that have passed since November 21st, Capital Markets Day, there have been lots of movement in the market. We have had Omicron. We had the Ukraine invasion. We've had flight disruptions. We've had high inflation, but our investment thesis remains exactly the same. Nothing has structurally changed for that, and we're fully on track and reconfirm our fiscal 25 guidance. Please turn to slide 13. Let me start with our first KPI, which is the prime numbers. We are very confident we will achieve the 7.25 billion subscribers in fiscal 45 as we have a large addressable market, and very realistic assumptions. We are ahead in terms of net ads. The reason we were confident in exceeding the 7.25 million subscribers by March of 25 is because the addressable market is huge, and we have very realistic and conservative assumptions. More than 70% of the new Prime members we get are new customers. This indicates the product is equally attractive for travelers who did not transact with us in the past, and that is is a huge and awful market. Our assumptions are very realistic. The implied penetration rate needed to reach 7.25 million members by fiscal 24 is 2.5% in the 10 markets in which we currently offer Prime. This is assuming no additional markets launched. In the market we have been operating in longest, which is France, we're already at 5.2% penetration, and the rest of the markets, excluding the U.S., are at 2.1%. Furthermore, on average, in the rest of the markets, excluding France and the U.S., in which Prime has been live on average for 3.5 years, we have an average penetration of only 2.1%. Please turn to slide 13. Prime has demonstrated the ability to capture customers even during major macroeconomic events. During COVID, Ukraine war, flight disruptions, high inflation, Prime continues to attract new subscribers in large numbers. Over the past two years, we have added 3.4 million new Prime members. If you could now please turn to slide 18, our second KPI that we set two years ago is Arapu. Two years on from the capital markets day, the Prime Arapu is on track to meet our fiscal plan guidance as well. Primark has anticipated and guided in the second quarter of fiscal 24 increased to 78.8 euros. This is converging towards our target of 80 euros per user. Main reason for the output rising is because of the increased usage of the program and increased value for number of that usage. Let's now move to a third KPI and target, which is cash EVTA, which is well on track to reach the $180 million by fiscal 25, as we announced back in November of 21. Cash immunization is starting to show as expected the desired results. Consequently, profit margin and free cash flow are also increasing as the prime member base matures progressively. If you look at slide 20, as you may remember, because we showed this in the first half of fiscal 23, a strategy update, so one year ago, This slide shows you the breakout of our subscribers between year one and year two onwards, and outlines 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. However, from the second booking and after renewal, the profitability increases, and there's no meaningful CAC thereafter. So that percentage changes, so too does the average company cash margin or profit. On the left-hand side is last year's prime cash margin or profit margin mix of year one and year two with 61% and 39% respectively of the cash revenue margin. So you take the margin figure, multiply by the actual speed of revenue derived from the prime members in first year versus second and subsequent, and you obtain the aggregate cash margin or profit for the prime side of our business, which was 31%. On the right-hand side, we show the same mechanism, but for today's figures. You can see clearly that the percentage of revenue coming from year two plus members increase from 39% in fiscal 23 to 63% in fiscal 24. The aggregate margin increases in a mathematical way from 31% to 36% today, a five percentage points increase in a single year. Conceptually, As the 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 continue to increase progressively from now to fiscal 25. If you could please turn to slide 21, it is important to highlight that as cash EBITDA continues to grow, our free cash flow, excluding non-prime working capital, grows even more. As you can see on the slide, it doubled in the past six months and will outperform cash EBITDA growth again in the next 18 months. And just to be clear, this analysis excludes any uses of cash applied to either reduction of debt or repurchase of equity. The reason for this outperformance of cash flow versus cash EBITDA is that while the increase in margins from a higher share of year 2 plus members will lead to significant growth in cash EBITDA, on the other hand, capex, interest, and taxes will remain relatively constant. As a result, free cash flow will outperform cash EBITDA growth again in the next 18 months. I will now turn the presentation back to Dana to cover our long-term fundamentals and do some final closing remarks before we open the webcast for a Q&A session. Thank you, David.

As you can see, two years on from our capital markets day in November 2021, we're well on track to meet or exceed our FY25 guidance. and a huge potential beyond FY25. In addition, we want to share with you some other KPIs that underpin our strong long-term fundamentals of our business.

Please move to slide 45.

As you can see, subscription models have proven to be hugely successful over the years. In fact, The subscription model has been proven to be highly successful in a wide variety of industries, such as Costco for supermarkets, Netflix for video streaming, and on and on and on. In 2017, we launched our Prime subscription program. Until then, we were like all other travel companies. We were transaction-based with a transactional relationship with our customers. No one had a subscription-based model in travel at that time until us. We now have proven it can be very successful, with Prime having more than 5 million subscribers and adding in the last 24 months 3.4 million new subscribers with good healthy margins. As a result, today we're a different company. No longer are we a transaction company like all other travel companies. Instead, today, we have 75% of our cash EBITDA driven by subscription, and we benefit, therefore, from the predictability of results, lower susceptibility to external impacts, higher customer loyalty, et cetera. Our subscription business is getting bigger and bigger every day, month, and year, And consequently, we manage and run the business now as a subscription business. Please move to slide 24. As you can see, Prime is a superior value proposition for customers. An important KPI is customer advocacy, which leads to sustainability and growth. Prime has proven to be a superior value proposition And this is translated into leadership in customer satisfaction. Without strong customer advocacy, we could not have grown so rapidly. As you can see, our MPS scores have continued to increase since our capital markets day two years ago, when they were already extremely high for travel-related products.

Please move to slide 25. Related to this, as you can see, EDU is a leader in customer satisfaction.

Another way to look at customer advocacy is via third-party surveys like Trustpilot. Trustpilot is a review platform where people around the world rate their experience in different businesses from one to five. It shows that we rank meaningfully better to customers than any other OTA and or major airline across

all of our brands.

If you could please move now to slide 26. edu has a very strong employee engagement, which we are super proud of. Today, 90% of eduers recommend edu as a great place to work. And Forbes regards edu as Spain's best company to work for in both 2022 and 2023. Please move to slide 27. Prime provides a win-win proposition for our customers and 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 28. We have achieved and will continue to achieve significant value creation for EDU through Prime. The success for our Prime subscription model is demonstrated by our high growth in the number of members, together with the value it creates, and a business with higher LTV and lower CAC over the long run. We continue to achieve an LTV to CAC ratio between two and three, which is calculated over a 24-month period, excluding the second renewal. Other companies use 36 months instead to look at value creation, and if we were to do that, our LTV to CAC would be even higher.

Please move to slide 29. The new EDU is more stable and predictable business.

As I've said, today we have 75% of our cash EBITDA being driven by subscription. with all the benefits of being a subscription company. The share of Prime is expected to represent more than 80% of our total cash EBITDA in FY25. Let me leave you with one final closing remark before we move to the Q&A. So please turn to slide 31. Two years on from the November 2021 Capital Markets Day, we have made significant progress and truly transformed us. Since then, 50% of the time has passed until the completion of our target date of March 2025 for our guidance. On the prime member side, we have achieved 61% of our FY25 target. And on the cash EBITDA side, we have achieved 62% of our target. This is yet another way to show that we have are absolutely on track to meet our guidance of FY25, and that we have transformed Edo into a subscription company with already 5 million subscribers and growing. If you could now please turn to slide 32, I will conclude with our strong fundamental growth potential beyond FY25. The long-term potential beyond FY25 is huge. Prime is only currently in 10 countries. Yet as a transaction model, we're in 44 countries. Thus, over time, we will continue to expand Prime to many more countries. Also, within each country where Prime is currently offered, we're nowhere near the normalized household penetration of Prime. So this will provide us with, again, a very large material growth. Third, the many successful subscription companies evolve into more segmented offers by customers and product segments. So these two also provide us significant growth opportunities. Overall, EDU is now a much higher quality business with a pivot to our subscription model. This delivers loyal and repeating customers, resulting in more and more profitable and predictable business.

We are delivering high underlying profitability and have huge growth potential. In summary, Prime has proven to be a success and is now firmly established.

It delivered significant uplifts in profit margins, which will continue. We believe we have the right model, the right people, and the right structure to seize and deliver on the exciting value-creating opportunities ahead of us. All of this will drive superior returns for shareholders, excellent service for customers, while at the same time transforming and revolutionizing the travel industry.

Thank you, Dana. Thank you. With that, we would now like to take your questions. We will answer the questions sent to us in writing in the webcast. We will take questions on a first-come, first-served basis. We will try to group questions of similar nature. Should we not have time to respond to questions from the webcast, the investor relations team will make sure those are answered afterwards. And now, let me just go through the list of the questions that we have here. The first set of questions come from from Farrow Wealth. And we have here, the first question is, EDU is less competitive on ancillaries as compared to flights, where EDU is almost always cheaper. Is being able to discount ancillaries further linked to the hotel product, i.e., the greater package value, the more discount? or something else? There are several questions. I'm going to read them one by one, and I think that will be clear for everyone in the call. Absolutely. It's a delight to answer it.

Let me first say that we have millions and millions of flights on sale at any one point in time. So the way in which we do it and look at this is we actually scrape ourselves so that we can have an analytically robust view on what really is our crisis and compare them to other entities that we may want to. And we do that both, you know, on many types of offerings with that. When you look at and include bags and seats, we still, in let's say about the majority of cases, come up with about having the best or among the best prices that there are out in the marketplace. In addition, I should say that if you look at the attachment rate, not just for us, but in general industry data in terms of how many people take bags and take seats, it's actually a minority of people, of customers that actually attach a bag and a seat on it. And even though, and then when it gets to just the flight, I mean, we are, as you've seen, we've published that before, massively, massively, you know, overly competitive on it. I think the question was also about cars and hotels. We've released data on that as well, so I would just encourage this investor to go look at our website, and you see the data in terms of cars and hotels, and you'll find that, again, our prices are extremely attractive as well. But let me just bring this out into a broader context so that we don't get too caught up on the price, which, by the way, I would argue find someone else that's better than us as an entity as a whole, okay? But again, you have to think about this not, you have to think about it from a customer point of view. That is the key. And we again have published data that shows that the number one reason why customers actually take Prime is for the customer experience and for all of the additional things that we do for our Prime customers. Price is actually number two. So you need to be focusing on the right thing in terms of why customers are taking it. Now, when you look at it, we've also, as you see during my part of the presentation, I went through NPS figures that are extremely, extremely high for travel and actually across most industries that there are. You saw the customer satisfaction, and you've seen our growth rate. There's just absolutely no way we could grow without delighted customers. you know, at this type of run rate. And I think there was a next question that was asking also about an update on hotels. And so let me just say that we do believe that there is a real material opportunity within hotels for us, a good growth thing for us. We've proven that the prime product offering is a very attractive multi-product offering, meaning it offers flights, it offers cars, it offers hotels, etc., and that is absolutely attractive and provides us good growth opportunity. And so we have been investing in our hotel product, our hotel offering to customers, and we will continue to invest in this area over the next several years as well because we see this as being something that's very good for both our shareholders and our customers.

David, let me pass it back to you. Okay. The next question is still from Sammy Investor says, there was an increase in marketing spend in the second quarter versus the first quarter. However, when I look at fiscal 23, the second quarter marketing spend was lower than the first quarter. Any reason for this? Yes. The reason we've mentioned several times during the call, when you look at fiscal 23, you need to keep in mind that the first quarter was abnormally high. It's what we call the post-Omicron quarter. So again, first quarter, to have everyone on the same page, is the months from April, May, and June. Omicron happened in Europe between January and February, mostly. So a lot of the bookings for summer departures that normally take place in January or February, in fiscal 23, happened in April, May, and June. So April, May, and June was abnormally high. So yes, marketing spend right? That is the wave of seasonality of the market. So, let's say the comparison of Q1 to Q2 evolution in fiscal 24, you need to have that into account, that we are back to normal seasonality, right? If you allow me the expression, in previous years we've had COVID-ality more than seasonality, right? Whether volumes were higher or When people were allowed out of their homes, they were traveling or booking travel regardless of the time of the year. We're now back to much more normal seasonality. In much more normal seasonality, the Q1 and the Q2 follow a relatively similar trend. It depends which one is bigger from one year to another depending on where Easter falls, but they're broadly the same. And that didn't happen last year.

That's the reason for that change.

The next set of questions come from Juan Pena. He's from GDC. He says, would like to understand the decrease in the cash margin and profit margin in the quarter, considering that cash margin profit is growing significantly. Could we consider it as a one-off behavior? Should we assume future increases in total cash margin and profit between 30% and 35%? Look, when you look at these margins, it is always helpful to look at the last 12 months' numbers in the aggregate, and I made that comment during the presentation, and I think it's important to look at that because you managed to skew away from If you look at the numbers on a last 12-month basis and you look at the evolution of that quarter by quarter, you look at prime, you would see that the first quarter of 24, the aggregate margin was 34%. When you look at the second quarter, the one that we just published, the aggregate margin is a little bit above 36%. This is, again, for prime side of the business and on a last 12-month basis. That's the one that really gives you I think you go away from noise that can come from society. Now, on the second part of your question, you talk about the total cash marginal profit margin, and you mentioned a range between 30% to 35%. We're now at about 30%, and we will make progress towards the 35% as more orders pass. But I think it's not going to be 5%. Let me take this opportunity to make a broader comment about seasonality and how it plays out. At the beginning or in the previous questions, we were talking about, you know, COVIDality versus seasonality. We're back to normal seasonality. Normal seasonality entails that the period of time that we're in right now, the quarter from October to December, is the lowest quarter of the year. And the quarter from January to March, which is our fourth-history quarter or the first half of the quarter, is, again, a high-history order. So what everyone should expect is that the revenues and the number of prime ads in the quarter of December is going to be lower than what we just published for September. And For the quarter and then March, you will again go into much bigger numbers because you're again in a high seasonality period. When you go down to the aggregate cash margin or profit margins, which was the original question of Juan, is what I said. We're now at levels of 30%. You should expect the numbers to grow progressively over the next couple of quarters. And I want to also use this opportunity to remind everyone what's going to happen just below that, because just below that you have the fixed costs. We have said, and we said it already two years ago, that we are increasing the size of our IT talent capacity, which is what a our prime program, to be able to have new services like hotels, and so on and so forth, right? If you look at the national financial statement, you will see that over the last 12 months, we have increased our total workforce by 35%. That is a phenomenal amount. We're very happy that we're able to attract a lot of talent, but the cost of that increase in personnel hasn't flown through the P&L yet, because all of those employees have not been around for 12 months, and therefore, you're not seeing it in the P&L yet. For the first half of fiscal 24 that we just published, you can see that the fixed costs were a bit more than 45 million euros, okay? What you should expect for the second half you should expect an amount which is around 51 million euros to complete the year in around 96 million euros. So I advise you that you put that into your models and put together with the comment that I made on seasonality Q3 versus Q4 and the expected evolution of the cash margin on profit. I think it gives you a pretty good picture of how to think about the development going forward in both Q3 and Q4. The next question comes from a geography of Schwartz Investments. It says, you have a substantial cash balance. Are you starting to get very decent interest rates? What can I wish? For people that don't know, Schwartz Investment is based out of the U.S. In there, the interest rates are higher than in Europe. And they're not only higher for the interest that is paid, but also for the interest that is received on our bank accounts. That phenomenon hasn't panned out yet in Europe. The majority of the banks in Europe for euros are not remunerating the bank accounts in any significant way. And also, yes, it is true that we have a nice cash balance for the balance sheet as of the 30th of September of 23. during the month and a lot during the quarter. So you shouldn't expect to suddenly see meaningful interest income in our financial statements. Also keep in mind that, as I said in the previous answer, the period that we're walking in right now, the one from October to December, is a period of slower society. That means that we will have, during that period,

balances to decrease from here to December, and then to increase again from January onwards. The next set of questions come from Nisa Nisa of Deutsche Bank.

The first one says, do you have an increase in personal cost? How much of that is due to wage increases versus addition of new employees? which parts of the business are you investing in? So I think I advanced the answer to your question in the previous question, which is that the driver has been the increase in personnel, right? With an increase of 35% of the workforce over the last 12 months, that is the main driver. And as I said, it's not yet reflected on the last quarter, the real... you should expect for the aggregate of the second half to have a fixed cost of closer to 51 million euros compared to the 45 of the first half and that takes into account the new personnel and everything else that is moving in the fixed cost. As for the areas of the business that we're investing in, the majority of this personnel is what we call IT talent, which is not only software engineers, that's a very good portion, but it's also the people that work with the software engineers because you have a lot of product specialists that work hand-in-hand with the software engineers and are the ones that design what needs to be developed. So they go in tandem, right? And then we apply that to a lot of other things. One other relevant group of people that we hire as well is people that work in the same groups, we call them bots internally, with the engineers, software engineers, and the product people, which are the data scientists, who are the ones that examine all the data, help them to produce the new algorithms, get the learnings from the algorithms into the new developments, and so on and so forth. The second question from Nisla says, any color you can give us on how Prime retention rates have evolved in the last four years. Does it change from market to market?

Yeah, so I think that we touched on this kind of grief in the sense of saying that we don't provide church. on an ongoing basis. But what we did do is we provided that once. We also showed, I think maybe at the, again, memory may be slighting me, but I think it was in the last presentation or the one before, we showed that actually, if anything, our churn rates have gotten better, ever so slightly, marginally. We also show kind of surrogates for that, which is NPS, which is customer satisfaction. They all get to the same thing about do customers really for money? Do they believe that it's a really good experience? And as you can see, that, you know, even what we've shown today, they're extremely, extremely high, right? And the promotability is very, very high. Let me just make some other commentaries that some people may not be so well aware of. We don't advertise Prime outside, so you won't see kind of YouTube, TikTok ads on Prime or anything else like that, or in Facebook, et cetera. So what it means is that one of the big, big drivers for us in our subscription growth is word of mouth, referrals, right? And so, again, we couldn't achieve these numbers, these growth, without I think you really should use Prime. I use it. And that is a big way in which we get a lot of new customers for that.

Hi. The third question from Isla is, how do you view the potential for growth beyond fiscal 25? And any color you can give us on revenue potential and margins? Look, as to the growth of Fiscal 25, we're very, very optimistic about that. I was going to say we're looking forward for that to get, but let's take things step by step. Let's deliver on the 7.25 billion members, and let's deliver on the 180 million of cash EBITDA. Now, the driver for growth beyond Fiscal 25 is the first one and most important one, is everything that has to do with the number of prime numbers. That's what really drives our numbers. And what we have is an enormous opportunity of continuing to increase household penetration where we already are. And I gave the numbers during the presentation. We need to get to 2.5% on average. at 5.2%. There's no reason why any other main markets could not get to levels similar to the one of France. Then the second area of growth... Let me just stop you.

And also, France is growing at a really fast rate. It's growing at, I think, about its historic high or equal to its historic high. So even this 5.2%, It's not a cap.

It's not a high growth rate. It's not a cap by any means. It will continue to grow. If you look at other subscription services around Europe for, let's say, more mature services, the levels of penetration of households, depending on which one you look at, range between 20% and 50%. So there's no reason why we need to stop anywhere near the 5%. So that was the first dimension, increasing household penetration in the markets where we already are. The second axis of growth is going with the prime product to markets where we're not present today. We have 44 transactional markets. We only have 10 subscription markets. So there's a very large opportunity there as well. And then the third one is around product offerings. right? We started the product with just discounts on flights, then we moved on to discounts on hotels, then we moved on to discounts on cars, and then packages. At the end of the day, the subscription is like a basket in which you can put lots of additional products and services, and there are opportunities to offer more products and services to our customers, and as they obtain more of that value with us as the provider of the subscription. So there's plenty. Now, as to specific numbers of what revenue growth and dividend growth, what should expect beyond fiscal 25, I think it's a little bit too early for us to give specific numbers. When we get closer to the date, we will give you more specific views on it. But as I said, let's take this step by step. Let's deliver on the next 18 months, on the 17th.

and 180 billion of cash EBITDA.

The next question comes from Frederick Sudberg of Trezidor. And he says, what role does reduction in profitability in non-prime in the quarter? A lot of that is seasonality. And actually, if you look at the profitability per booking would be the marginal profit per booking of the Q2 of the previous year, you will see that it is in levels which are relatively similar to what we have published. Also, I need to warn people that as we move forward in time and the size of the non-prime in our P&L becomes smaller, it's also going to be more prone to variability from quarter to quarter. And also, from a structural point of view, we would expect, so despite this variation from quarter to quarter, we would expect that the non-prime side of the business over time decreases in average profitability. The reason for that being that the quote-unquote better profitability within the transactional side of the business, we would expect them to eventually become prime members and therefore move to the other side of the P&L. We still have a good portion of the people that is only transacting with us that come from chief channels of acquisition or at cost zero. Over time, we would expect those to progressively migrate to the prime side of the business so that what is left in the non-prime is mostly people in which we need to spend a meaningful amount in marketing to get them to transact with us. And therefore, the average profitability on that side of the business to come down over time. The next question comes from Guillermo Santayo of CaixaVac. Could you provide more details on the drivers? So especially good evolution in fiscal Q2 of one working capital and two prime deferred revenues. Okay. So I'm thinking one by one on the working capital. I think it is useful if you look for working capital purposes at the performance of first half of 24 to first half of 23. And that is more representative to Q2. The reason for that is what I've mentioned a couple times already during today's call. If you look specifically at the Q1 of last year, April, May, June, there was an abnormally high level of bookings there, which were catch-up bookings from the Omicron period. So Q2 last year was negative in working capital because it went from abnormally high number of bookings to more normal number of bookings. This year, we didn't have that spike in the Q1. So the evolution of Q1 to Q2 was more, quote-unquote, normal, I would say. So I think it is better to look at the aggregate of the first half when you look at working capital. The driver of that inflow is the increase in the size of business. It's very, very clear.

Now, on the prime deferred revenues...

the first quarter of this year was unusually low in the number of prime deferred revenues because we had the effect one time of the change in estimates going from the recognition of the revenues depending on usage to the recognition of revenues, which is gradual. So I would say the I think the first quarter of the year.

The next question comes from Eleanor Maidens of PGIM.

Sorry, this question has already been asked. So I'm going to move on to the next one. Estef Abelli of BNP Paribas. The first one says, over how long the additional prime revenues of 27 million should be recognized? One year? Okay, the 27 million that you're looking at is the increase in prime deferred revenue. And that is the amount that we have already recognized in the quarter. The amount that is pending to recognize, you will not find in the P&L, you will find it in the balance sheet. And there is a specific note in the financial statement in which we show the breakdown of the deferred revenue and how much of that belongs to prime. And that is an amount of 134 million euros. And that 134 million euros will be recognized over the next four quarters. Now, it is more helpful and it is we recommend everyone to do it, is that they follow for P&L more the cash metrics in which that effect is already outside of the equation. Sorry, the second question is, can you remind us what is the fee that prime members pay and is that annual? Well, it depends a little bit from country to country. It's not the same in every country, but in most countries it is 55 euros that is paid up front for a 12-month period. So what is your target prime member base linked to 7.25 million by 2035? How did you arrive to that number? Well, the 7.25 March of 25, and we got to that number through a detailed bottom-up process of looking at market by market where we're going to deploy, the expected penetration that we would have in those markets, and that led us to the $7.35 billion. That's how it's done. It depends a lot on the number of households that you have in each one of the markets in which we deploy, and then expected penetration of the households in those markets.

Also, can you reconcile the cash flow to the cash EBITDA? Okay, if you look at the cash flow statement that we publish in the presentation, that cash flow statement starts with not cash EBITDA, but it starts with adjusted EBITDA.

And then, when you go two or three lines below, you see a line that is changing working capital for 31.7 million. That change in world capital of 31.7 million includes inside the increase in deferred revenue of the 27 that we just talked, that you yourself mentioned in one of your previous questions.

So that's how you reconcile it. Another one is, what is the advantage of a prime customer versus non-prime? So I'm happy to take that one.

Okay. Look, there are, I think we've kind of touched on it through a number of the questions, so I'm going to try to just pull this together quite briefly. The customer pays up front, let's say on average about 55 euros, depending on the country, and that's paid up front. And as a result of that, you get 12 months of benefits, and these benefits are kind of priced and non-priced. On the price one, we've talked about this. These are great prices in terms of flights, cars, hotels, dynamic packages. And then there's also a lot of promotions, special exclusive offers that we only give to our Prime members as well throughout the course of the year. On the non-price side of it, again, I think we've touched on this already, that we do a number of things for our Prime customers that really delight them. And you can see, I think we touched on with Actually, the number one reason why people really advocate, promote, and love Prime is around the non-price elements of this, about everything that we do around the customer experience, around servicing with customers. And there's so many little things that we do to try to really make sure that our customers really feel good, comfortable, delighted, and differentiated, so to speak.

Okay. Let me move to the next question we have, which is from Paul Semenauer of BNP Paribas. It says, given limited prepayable debt and low coupons on your senior notes versus the market, would you be more focused on returning cash to shareholders right now? Okay, that is a broader question there. So that's a capital allocation question. As I said previously on this same call, In the three months to December, it's a cash destruction phase because we have an outflow of working capital. But once we pass December, we will again build out cash and we can get an idea about the amount of discretionary cash that we have on the balance sheet. What the not to leave cash idle. So there will be an investment of that cash. And that will be some distribution between repurchases of shares and repurchases of debt, even though there is not prepayable debt. You know, even though our debt is publicly quoted, we can go to the market and buy the debt just as anyone else. And it's a good investment because it's trading available. interest, expense, savings to the company on a cash basis. Now, what amount exactly and what proportion is a decision not to be taken at this time, but at the time of execution, so after we pass the low working capital cycle, and it will depend on the price of securities at that moment in time. Next question comes from Bill Jordan of Bolus Capital. Can you please remind us which products and services are provided directly by eDreams and which are supplied from partners referring to accommodation flights, rental insurance, et cetera?

Yeah, happy to answer that, David. So, look, we're, as everyone knows, we're extremely large in flights, and we, in fact, offer over 700 airlines to our customers through a variety of means. You know, when you Think about our scale. We actually have many ways of procuring this inventory, many, and duplicity, triplicity, et cetera, of the inventory. And also I should say, everybody's clear on it, we don't take inventory risk at all. So this type of platform allows us to ingest content from multiple providers. And we take a similar approach in hotels. And on a case-by-case basis, we decide what is the best way to source inventory for a given category so that we ensure we meet to the best way the needs that a business has, that a customer has, and that, obviously, is the right thing for shareholders.

Okay, that is the last question that we have right now on the line. So I'm going to thank everybody for joining us in the webcast. And before we conclude the call, I would like to inform you that on Wednesday, the 28th of February, we will be hosting our conference call for the third quarter of our fiscal year 24 result presentation. And in the meantime, we will be very happy to receive your questions via our investor relations team or in the investor information have a very nice day and rest of the week