On the Beach Group H1 2025 Earnings Report

On the Beach Group EPS Results

• Actual EPS: GBX 3.70
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

On the Beach Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

On the Beach Group Announcement Details

• Quarter: H1 2025
• Date: 5/13/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 13, 2025
• Conference Call Time: 5:30AM ET

On the Beach is one of the UK’s largest online package holiday specialists with significant opportunities for growth. Founded in 2004 and listed on the London Stock Exchange in 2015, today over 1.7 million customers find, book and enjoy their perfect package holiday with us every single year. Our innovative technology, low-cost base and strong customer-value proposition provides a structural challenge to legacy tour operators and online travel agents, as we continue disrupting the market. Our model is customer-centric, asset light, profitable and cash generative.

On the Beach Group H1 2025 Earnings Call Transcript

Key Takeaways

• Strong first half: Sales of $640M up 13% and bookings up 11% drove a 23% rise in adjusted PBT.
• Expanded addressable market to over 50M passengers with 130 city destinations live and entry into Ireland.
• Operational leverage improved as marketing costs remained flat, cost per booking fell 9%, yielding a 4% boost to EBITDA margin.
• Balance sheet strength maintained with £18M net debt reduction despite £30M returned to shareholders, an interim dividend of 1p, and an £85M RCF extension.
• Product and tech enhancements, including platform personalization and AI integration, lifted customer NPS to 57 and reduced service inbounds by 27%.

Presentation

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Welcome to the On the Beach interim results presentation. Me and John will start by talking through performance so far this year, and I will then provide an update on our strategic progress. I'll start by talking through some of the key highlights of the period. We've had a great start to 2025. Sales of $640,000,000 were 13% ahead of last year.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Within this, booking volumes were up 11%, which is significantly ahead of the growth in both Atoll numbers and seat supply out of The UK. Operational leverage continues to improve, which contributed to a 23% increase in adjusted profit before tax. We have significantly expanded our addressable market, now live with 130 city destinations, and we have established a presence in Ireland. We invested $1,500,000 in our Ireland expansion during the period. Worth noting that without this investment, adjusted profit before tax for the group would have increased by nearly 50%.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We have a strong balance sheet. Total cash has increased year on year. And over the last twelve months, thirty million has been returned to shareholders via share buyback and dividends. Today, we are declaring an interim dividend of 1p per share, in line with our capital allocation policy. And we're pleased to report that we remain on track to deliver our medium term ambition to more than double the size of the business.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Moving on to trading highlights for the period. The chart in the top right shows booked sales by month. As you can see, booking momentum has been building through the year. Sales were plus 15% in q two, a key booking quarter, and q three has started strongly. Sales so far this quarter are 18% ahead of last year.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

The chart in the bottom right shows the value of holidays departing by month. This is in line with how tour operators will be reporting their numbers. You can see winter finished very strongly with 19% growth, and sales for summer departures are currently up 14% year on year. So with the current trading momentum, we are on track for another record summer. And on that, I'll hand over to John to run through financial performance.

[Jon Wormald, CFO at On the Beach Group]

Thanks, Shaun. I'll take you through the half one performance starting with the group p and l on slide seven. From a group perspective, we now show both the b to b and b to c segments on an agency basis. So with a consistent revenue recognition policy, has simplified our reporting from previous periods. The first half saw revenue growth of 12% on an adjusted basis, with strong revenue growth across both the b to c and b to b segments.

[Jon Wormald, CFO at On the Beach Group]

Growth in marketing and overheads year on year was 7%, which is significantly below the rate of volume growth. And this resulted in EBITDA growth of 19% after a 1,500,000.0 investment into Ireland as we begin to build our brand presence there with a 4% improvement in operating leverage. After taking into account depreciation and finance income, our adjusted PBT has increased by 23% year on year, which is in line with the full year expectations. Turning to Slide eight and the B2C segment p and l. We've seen overall bookings growth of 10% with positive growth across three star, four star and five star holidays, highlighting the broad appeal of the On the Beach brand.

[Jon Wormald, CFO at On the Beach Group]

Average booking values and margin per booking are up one percent on the prior year, and that reflects low single digit inflation in the core beach market with a slight dilutive impact of the city's proposition to both of those measures. Total marketing costs are broadly flat year on year, resulting in a cost per booking down 9% despite the investment of 1 and a half million into Ireland. Online marketing costs are up reflecting cost per click inflation, partially offset by an increased efficiency through the benefits of our offline campaigns. This year, we've got an intention to retain an offline presence for a greater proportion of the year, and so offline spend in the first half was down by 7% versus last year. Our current creative continues to work very well, and our investment into perks continues to ensure that our brand's messaging is strong.

[Jon Wormald, CFO at On the Beach Group]

B to C segment overheads were up 9%, again, below the rate of bookings growth. And we continue to invest into key tech and product roles as well as continuing to pay the national living wage for our lowest paid colleagues. Within our medium term ambition, we set a target for EBITDA margin to increase to 40%, and our continued focus on improving leverage is shown through a 4% improvement in the EBITDA margin year on year. Turning to Slide nine and an overview of the cash position. Position as of the end of the first half really reinforces the cash generative nature of our business model.

[Jon Wormald, CFO at On the Beach Group]

As Sean said, was a reduction in net debt of 18,000,000 versus the prior year despite the return of 30,000,000 to shareholders through divis and share buyback over the past twelve months. Customer monies which are held in trust have also increased by 28,000,000 and will continue to build ahead of the peak summer departure months of July and August. And we have also agreed with our banking syndicate that the 25,000,000 RCF extension, which we agreed in January 24 for initial eighteen month period, will now become a permanent part of the RCF facility. So we now have £85,000,000 available under that facility until it expires in December 2027. And we feel that this gives us increased optionality for investment as part of the capital allocation framework, which I'll now talk to on slide 10.

[Jon Wormald, CFO at On the Beach Group]

The framework is consistent with the prior year, and the prioritization remains with our focus on organic growth. In terms of that investment into organic growth, the recent tech spend has resulted in a 30 city destinations now live, and we've added 13,000 more hotels and 19 additional airlines to the platform all in the last six months. As Sean mentioned earlier, we've also made a net 1,500,000.0 investment into Ireland to build the brand's presence. And the board has proposed an interim dividend of 1p per share, an increase of 11% on the interim dividend paid last year. In terms of m and a, we continue to review opportunities that could accelerate our growth in either the core or expansion areas, but we're not aware of any opportunities that are appropriate at the current time.

[Jon Wormald, CFO at On the Beach Group]

And finally, the board continues to assess whether there is surplus cash available for distribution. At the current time, we're minded to retain maximum flexibility for investment into organic growth in order to accelerate our medium term ambitions and therefore do not believe there is surplus cash for distribution at the current time. I'll now hand

[Jon Wormald, CFO at On the Beach Group]

back to Sean.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Thanks, John. I'll just take us through the the progress we've made on the strategy over the last six months. I will start by recapping the strategy we introduced last year. Our strategy is based on delivering against four core design principles shown on this diagram, stickiness, choice, peace of mind, and scale and automation.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

I'll summarize them briefly in turn. Firstly, customers are shopping around as much as ever, so we are having to reacquire them. We must therefore design for stickiness. Secondly, we are currently only competing or have been only competing for a small share of our customers' holiday wallet. We therefore must design for increased choice.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Thirdly, we know that customers want the choice, value, and flexibility that we offer or that travel agents and tour operators offer, but they also want hiccup free holidays. Therefore, we must also design for peace of mind. And finally, we have significant opportunities to expand our customer base as I'll take you through. Therefore, we must design for scale. And by this, we mean a platform that can deliver 10 times, not plus 10%.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

By delivering on these design principles, we expect to achieve a higher level of repeat bookings, increase average annual customer spend, attract new customers to the brand, and continue to improve operational leverage. Moving on then to talk about key tech developments in the period. Take these in turn on the on the right hand side. We have created a new inventory data store. This is optimized for accuracy and performance.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

By introducing a live search layer to our platform last year, we were able to optimize how we collect and store inventory data. As a result, we are now able to include significantly more hotels and destinations in our offer, all delivered with increased accuracy. This development has been transformational in unlocking our ability to expand efficiently. We are now developing faster search technology with smarter filtering and better discoverability. This will improve our customers' on-site experience.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We have developed our platform to be customer rather than booking centric. This enables us to deliver an increased level of personalization to our customers. And underpinning our drive for scale and automation, we continue to develop towards being an AI literate organization. This includes using AI to improve operational efficiency across the organization, as well as improving customer service and experience. Now on to our proposition.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

As shown on this diagram, our proposition is designed to achieve several things. It's designed to efficiently attract new customers, improve customer experience, and increase loyalty and repeats. As a result of the technological developments we've just talked through, we are now able to supercharge our proposition by increasing the level of personalization through our customer centric app. The leading indicators so far are very strong. In the period, we have achieved all time high top three brands consideration.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We're seeing increasing customer repeat rates. We have increased our customer net promoter score from 48 to 57 so far this year, and we've achieved a 27% reduction in customer service inbounds. Now I'll talk about some of our expansion areas, starting with City Breaks. We continue to upgrade our platform to enable us to offer more holiday options. The latest leg of our expansion program was to launch City Breaks in the final quarter of FY twenty four.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We did this because our customers told us they would purchase city breaks from us if we sold them, and that certainly seems to be the case. The process of adding cities is now largely automated, making rapid expansion possible. And we now have a 30 city destinations live on-site, resulting in a tripling of our hotel inventory since FY nineteen. As a reminder, whilst the City Brake attracts a lower revenue per booking than a beach holiday, the economics are very attractive. This is because, firstly, there is a significant addressable market for City Brakes that we are now able to access.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We estimate this is more than 20,000,000 passengers out of The UK. We are not investing in brand or direct marketing at the moment. Therefore, city breaks increase the overall effectiveness of our marketing activity. And finally, these city bookings can be fulfilled and served on our existing technology and by our existing operation, so the offer scales very efficiently. Now moving on to Ireland.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Following the Ryanair integration last year, we upgraded our platform to launch on the beach in Ireland. Growth in the core business last year and so far this year has enabled us to create room for GBP 1,500,000.0 investment in the first half of this year to establish a brand presence in this new market. We are pleased with progress so far and plan to invest up to 1,500,000.0 again in half two to continue to build this brand presence. This market is a very attractive and obvious choice for us for a number of reasons, not least because we estimate the beach and city package market from Ireland to be around 6,000,000 passengers. On the next slide, we summarize how the total addressable market has evolved for the business.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Significant upgrades to our technology have enabled us to increase the size of our addressable market from around 20,000,000 in FY twenty four to over or over 50,000,000, nearly 50,000,000 in FY twenty five. Represented here in the first third of this diagram is the core business as it's stored in FY twenty four. We show beach holiday pack beach package holidays from The UK as our core market, which was around 20,000,000 passengers. With the developments discussed today, we have now more than doubled this addressable market to include city destinations and establishing a presence in Ireland. You can see in the table on the right, this is part of this addressable market expansion over the last six months.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

We have increased the number of hotels on offer from 9,000 to 23,000 and increased the number of airlines on offer from 28 to 47. I'll now finish with some messages on current trading and outlook. Half one growth in profit before tax was 23%. This is in line with expectations and stated after the net 1,500,000.0 investment into Ireland. Quarterly booking momentum has been building and sales so far this quarter are 18% ahead of last year.

[Shaun Morton, CEO & Executive Director at On the Beach Group]

Summer twenty five is currently 14% ahead of last year, which is an improvement on the position we reported back in February. As a result of these factors and the continued execution of the strategy, we expect to have another record year this year. We are confident in delivering this year's profit in line with current consensus expectations, 38,200,000.0, And we are on track to deliver our medium term ambition of 2,500,000,000.0 sales and 85,000,000 adjusted profit before tax. Thank you for joining us today.

Participants

Executives

• Shaun Morton, CEO & Executive Director
• Jon Wormald, CFO