Webjet books $14.5m profit as second half revenue exceeds pre-pandemic levels

With group bookings, total transaction value (TTV), revenue and earnings all ahead of pre-pandemic levels in the second half of FY23, travel booking platform Webjet (ASX: WEB) has today posted a full year profit of $14.5 million.

It makes for a major turnaround in fortunes for the company - which also operates hotel booking platform WebBeds - with EBITDA improving by $150 million in the year to close out at $134.8 million.

The news sent Webjet shares rising by more than 5 per cent to $7.67 in early trading, up almost 30 per cent over the past 12 months but still short of heir pre-pandemic levels of $9.81. Within six weeks of COVID being declared as a pandemic, Webjet had raised close to $350 million to stay afloat, and implemented drastic cost-cutting measures that have seen the company through the past few years.

The company now reports WebBeds is also ahead of pre-pandemic levels on all key metrics for FY23 after momentum accelerated in the second half and is now ‘more profitable than it ever has been’. That segment reported earnings of $117.1 million in the financial year - 22 per cent ahead of pre-pandemic levels.

Overall in FY23, Webjet saw bookings rise by 115 per cent to $7.36 million (16 per cent ahead of CY19) and TTV of $4.35 billion (1 per cent of CY19). Full year revenue was 89 per cent of what the company achieved in CY19 at $364.4 million, while earnings were 85 per cent of pre-pandemic levels.

In the second half, revenue was 4 per cent ahead of 2H19 at $188.7 million while underlying earnings were 17 per cent ahead of pre-pandemic levels at $62.3 million.

With a strong cash position of $514 million as of 31 March 2023, Webjet managing director John Guscic said the company had ‘emerged from the pandemic better placed to deliver growth than ever before’.

“Even though travel has yet to fully return to what it was, in the second half of FY23 we saw group bookings, TTV, revenue and EBITDA all ahead of where they were when the pandemic hit. This reflects all the efforts we took to make sure we would not only recapture demand when travel returned, but also further accelerate our growth profile,” Guscic said.

“The key driver of these results has been the outstanding performance of the WebBeds business. Executing against our transformation strategy is paying off - we have retooled that business, streamlined the technology platform, eliminated inefficiencies and found ways to service markets that had not previously been open to us.

“WebBeds is now selling more product to more customers and is more profitable than it ever has been - and this is just the beginning. In transforming WebBeds, a number of attractive and highly profitable opportunities are now open to us.”

The managing director believes that by working closely with supply partners and better-understanding client profiles that WebBeds could deliver $10 billion in TTV in the longer term.

Though WebBeds performed well during the year, the managing director noted that both of its B2C businesses (Webjet and GoSee) continued to be impacted by external factors during its financial year - specifically airline capacity constraints and subdued demand due to higher prices.

Nevertheless, Guscic was confident the two businesses were ‘well placed to deliver growth once international capacity returns to 2019 levels’.

“Webjet OTA has maintained the significant market share gains it has seen in the domestic flights market and we are now seeing material uplift in international share as capacity starts to come back,” he said.

“We are confident GoSee will exceed pre-pandemic profitability in the medium term. Until then we are investing in building team capabilities and world class scalable technology to pursue growth once airline capacity is fully restored and motorhome supply levels return to normal.”

During the first seven weeks of the company’s FY24 period, which commenced 1 April, the managing director said WebBeds bookings and TTV were more than 35 per cent and 40 per cent higher respectively than for the same period last year.

“There is still widespread uncertainty in the global economy but we have never been more excited for our future,” Guscic said.

“Momentum in the WebBeds business is accelerating, Webjet OTA has significant international potential, and GoSee is laying the foundations to pursue growth in the global motorhome and car rental markets.”