Curious what your thoughts are with the latest news. Market clearly isn't happy. By my calcs they have pushed back earnings 2 years assuming their new plan works.
They seem to have access to Ryanair flights at the moment. I wonder if they were sandbagging when it came to Ryanair.
I think that this was clearly an unforced error / poor positioning on management's part.
RA is about 20% of their new Prime subs. If that goes to zero, it hurts, but it is not a thesis killer, particularly at the valuation the company was trading at.
Strategically, the growth is probably the right move. If you look at the margins for FY30, they are lower than you'd expect, so there is still ample growth expense running through the income statement in 2030. I spoke to management, and they confirmed this and that their new FY31 internal estimate is higher than what it was under the old plan. That's good, but I don't know if they will be believed at any point soon.
The issue with the poor positioning it that it took something that is likely good for the business and made it look like a Hail Mary due to Ryanair, which I don't think is the case.
I was not aware Ryanair is about 20% of their new Prime subs, that is helpful disclosure. However it begs the question as to why they are now only guiding to 600k new subscribers for the year. They were originally guiding for >1m so with the loss of
Ryanair access for 6 months their guidance should be more like 900k? 800k worst case.
I also noticed that their earnings guidance was low for 13m subscribers.
As you say, it has certainly comes across as a Hail Mary.
Keep in mind that RA accounts for 20% of gross prime adds, so the reduction in gross has a bigger impact on net due to churn.
Again, unforced error. What didn't come across well on the call is that they have been testing new markets and new products extensively and the decision to go into the new markets / products is likely well-supported by their empirical evidence.
Curious what your thoughts are with the latest news. Market clearly isn't happy. By my calcs they have pushed back earnings 2 years assuming their new plan works.
They seem to have access to Ryanair flights at the moment. I wonder if they were sandbagging when it came to Ryanair.
I think that this was clearly an unforced error / poor positioning on management's part.
RA is about 20% of their new Prime subs. If that goes to zero, it hurts, but it is not a thesis killer, particularly at the valuation the company was trading at.
Strategically, the growth is probably the right move. If you look at the margins for FY30, they are lower than you'd expect, so there is still ample growth expense running through the income statement in 2030. I spoke to management, and they confirmed this and that their new FY31 internal estimate is higher than what it was under the old plan. That's good, but I don't know if they will be believed at any point soon.
The issue with the poor positioning it that it took something that is likely good for the business and made it look like a Hail Mary due to Ryanair, which I don't think is the case.
I was not aware Ryanair is about 20% of their new Prime subs, that is helpful disclosure. However it begs the question as to why they are now only guiding to 600k new subscribers for the year. They were originally guiding for >1m so with the loss of
Ryanair access for 6 months their guidance should be more like 900k? 800k worst case.
I also noticed that their earnings guidance was low for 13m subscribers.
As you say, it has certainly comes across as a Hail Mary.
Keep in mind that RA accounts for 20% of gross prime adds, so the reduction in gross has a bigger impact on net due to churn.
Again, unforced error. What didn't come across well on the call is that they have been testing new markets and new products extensively and the decision to go into the new markets / products is likely well-supported by their empirical evidence.
How do you manage to get hold of management? I have sent the odd email to investor relations with some questions but I never manage to get a reply.
Thank you for highlighting!
Thanks for his, helpful. Can you explain the middle bar on the demographics barchart on slide 32? It is the only bit I don't understand.
The age group? It looks like they are saying that the 61% of their customers are GenZ and Millennials, so they have a long runway for growth.
No sorry, I mean the customer type bar
I think what they are saying is 75% of Prime customers are new to eDreams and 25% were previously transaction-based customers.
Ah, that makes sense