European OTA eDreams Odigeo (edO) has hailed an “exceptional”performance of its Prime subscription model in the first half of its financial year.
The continuous expansion of the membership base, with 41% growth in the past 12 months, along with the increasing maturity and renewals from existing members, delivered a positive impact on margins, the group reported.
The Prime scheme now has more than 5.2 million members, with 3.4 million subscribers added over the past two years.
The company said: “As guided, the maturity of Prime members is the most important driver for profitability. The increasing number of Prime members renewing their memberships has resulted in a substantial improvement in profitability.”
Mobile bookings in the half year also improved and accounted for 59% of total flight bookings.
The results for the six months to September 30 showed “confidently reconfirming” a self-imposed target of more than 7.25 million Prime members by 2025 with annual earnings [ebitda] of more than €180 million.
The company reported adjusted ebitda of more than €36 million for the period with a net loss of €1.6 million.
The group explained: “While the bottom-line result showed a notable improvement of €22.4 million from the previous year, the remarkable growth in revenues – €38 million – requires a longer period to fully translate into net income.
“This is the result of targeted investments in future growth. Specifically, the decision to invest in expanding the Prime membership base means that profitability for Prime members in their initial year is deferred to the second year and beyond, as first-year subscribers do not generate as much immediate profits as more mature members.
“Furthermore, the company is actively bolstering its tech workforce to further expand its subscription platform.
“These additional personnel expenses take some time to effectively contribute to enhancements in the product and platform, and consequently, generate incremental profits.
“As these forward-looking investments mature, the already evident robust growth in the top line will ultimately lead to improved bottom-line results too.”
Chief executive Dana Donne said: “Our strategic shift to a subscription-led business continues to yield results, notably increasing profitability and enhancing predictability.
“With a rapidly growing membership base, committed and highly satisfied members who book significantly more often than non-subscribers, and a steady flow of recurring revenues, our business has never been more solid and promising.”
He added: ”Today marks the two-year anniversary since we unveiled our 3.5-year strategic roadmap, a transformational journey to consolidate eDO as a leading global subscription business.
“Throughout this period, we have consistently fulfilled our commitments, even in the face of unforeseen macroeconomic challenges, including the Omicron variant, the conflict in Ukraine, and double-digit inflation rates, among other factors.
“Our unique model has proven its resilience, clearly setting us apart from other travel brands and positioning us in the pole position for further growth.
“Not only do we have confidence in our ability to meet or even surpass our self-imposed targets for 2025, but we’re also excited about the strong foundational growth potential that we foresee extending well beyond 2025.”