Asmallworld AG (ASWN) Earnings Call Transcript & Summary

Good day, and welcome to the ASMALLWORLD Earnings Call 2021 H1. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jan Luescher, CEO of ASMALLWORLD. Please go ahead.

Thank you very much, Katie. Also from my side, I would like to welcome everyone to our earnings call for the -- our results for the first half of 2021. As Katie said, my name is Jan Luescher. I'm the Chief Executive Officer of ASMALLWORLD, and I will lead you through today's call. As always, I will touch on the operational and financial highlights for the for the period, and we'll provide additional context and background information for you to better understand the headline numbers. And at the end, we will also open up for a Q&A session. And I'm happy to answer every question you may have at that point. To guide you to this presentation, I'm using a presentation that is available online for download from our corporate website. If you have not downloaded it yet, I recommend that you will do so, it will make it easier for you to follow my explanations when you look at the charts and some illustrations as well. You can find a link to the presentation in this morning's press release or you can go straight to our corporate website from your browser. The URL is www.asmallworldag.com. Once you're on the site, you will have to click on the Investors button from the menu section. And within that menu, there's a submenu called Investor Documents. And there at the top of the list, you should find the presentation. It is called 2021 H1 Results Presentation. Good. Fantastic. Let's get started. Let's jump right in. As always, Page #2 of the presentation is a brief recap of the ASMALLWORLD's mission statement. And ASMALLWORLD is the world's leading travel and lifestyle community. We focus on experiences, the modern definition of luxury. And centered around our core, the ASMALLWORLD social network, we operate a digital travel and lifestyle ecosystem, which shall inspire our members to travel better, experience more and make new connections. This mentioned travel and lifestyle ecosystem is then illustrated on Page #3, just as a brief recap. For those of you who have followed us, you will know this chart by now. For those who are new, it's a nice, quick introduction. The group, ASMALLWORLD, it consists of 7 businesses that make up this travel and lifestyle ecosystem that I've mentioned at the center is the ASMALLWORLD social network, which shall attract the right customer segment. It's a very affluent customer segment, and an internationally minded customer segment that we're going after with a high willingness to spend on travel and experiences. And this audience, we then use to create demand for other businesses around it, ranging from events to the world's leading nightlife concierge with The World's Finest Clubs to bespoke travel arrangements and hotel bookings. So in short, we attract the right customers with the social network and then increase our share of wallet with these customers with our other businesses. Worth noting is that it's been only 12 months since we have launched our latest business, the ASMALLWORLD Collection, which is our online hotel booking engine. And in this point -- then in July last year, concluded what I would call the build phase of our ecosystem, and we were able to shift our focus from building businesses to improving each of those businesses and also driving synergies between our businesses, which is the state that we're in right now. So much for the introduction and for a quick overview of our businesses, so let's jump right in to the actual half year results on Page #5. We'll start with the financial highlights, and there is probably no presentation right now that doesn't mention the market environment's in COVID-19. We, as ASMALLWORLD, have been impacted quite significantly by the restrictions, especially the travel restrictions and the social distancing restrictions and also the whole uncertainty that, that brings. And we see it as sort of putting a lid on our demand for our products, and we'll go into more detail on that later. Having said that, despite this environment, I'm very happy that today, I can come with good news to our investors and our potential investors. So we grew our sales by 62% year-on-year from CHF 5.9 million to CHF 9.5 million. And at the same time, we tripled our EBITDA from CHF 0.4 million to CHF 1.3 million. And net income over the period increased by 126%. The operating cash also jumped from CHF 1.4 million to CHF 4.1 million. But here, I would say that this is actually a bit of an overstatement just to put that into perspective because this includes CHF 1.1 million of a short-term effect. So I would say to have a more like-for-like number, the right operating cash flow number is probably closer to CHF 3 million. But that's still impressive. And then I believe it underlines the company's ability to generate cash flow from its businesses even during difficult times. And also just to mention it, our cash position was at CHF 5.3 million per end of June. Overall, I believe these results are quite impressive, especially the -- given the market environment. And they are definitely higher than what we had anticipated at the beginning of the year, which is, I guess, a positive surprise for all of us. Now moving on to Page #6. And well, we can have -- we'll have a look at the operational highlights that led to the financial results. As I've already mentioned, the uncertainty from COVID-19 is with us, and it puts a lid on demand for our products. We have to acknowledge this reality and we did. And we then focused on 3 things. One was to continue to improve our cost position, which we've done. So we have the strong focus on cost over the last sort of, I'd say, 18 months. You will have seen the numbers year-on-year for the first period of the -- first 6 months of the year, we have cut our personnel expenses by 17% and operating -- or other operating expenses by 10%, which is quite significant. Secondly, we have focused our sales and our marketing efforts on the products, which continue to have robust demand even during the pandemic. These are mainly the ASMALLWORLD Prestige membership and First Class & More's flight packages and upgrade options. And I will mention that later as well. Both of these products are basically driven by continued demand from customers for business and first class travel, which seems to be a safety concern. So more people, when they travel, they want to try business, they want to try first class. And with both products, the Prestige membership and also with First Class & More, the flight package and upgrade options, we use air miles to enable customers to get business and first class flights cheaper than if they would buy them outright. So this is basically where the demand is coming from and what we -- what has helped us to sell more of these products. The third point of our focus is we continue to invest in the long-term revenue potential of our business, even during these times where we've been cutting costs and focusing on costs. We didn't just do that and said we're not going to invest anymore. We believe in the long-term growth of the business, and we've made significant upgrades to the ASMALLWORLD social network, but also the ASMALLWORLD Collection. And I will illustrate these points a bit more on the following slides. After the financial and operational highlights, we are now moving to the reporting of our 2 business segment units, Subscriptions and Services. At this point, if -- for the participants who have just joined the call now, you can download the presentation that I'm referring to from our Investor website. You will find the lead through that section in today's press release or you can go straight to our corporate website from your browser. The URL is www.asmallworldag.com. Once you're on the site, please select Investors from the menu and the submenu Investor Documents. And there, you'll find the presentation that I'm using, which is called 2021 H1 Results Presentation. So moving on to Page #8 with the highlights for the Subscription segment. This business segment grew by 59% compared to the 6 months of 2020. EBITDA improved by 461% from CHF 0.1 million to CHF 0.6 million. And this corresponds with an EBITDA margin of 11% -- sorry, I have to make sure that's the right thing. I just lost my screen here. This -- yes, 11%, an increase by 8 percentage points from 3% during the last period. Now the strong revenue growth was primarily driven by ASW Prestige membership sales. As I mentioned earlier, they were in high demand due to continued interest in business and first class flights. The Prestige membership really carried these segments during the first half of this year as some of the other parts, the regular ASMALLWORLD membership has slowed a bit. I mean we grew the member base by 3% compared to where we were a year ago, which is a bit of a slower growth than what we previously had. We see very healthy renewal rates for our member base, but new sign-ups remain low during this period of social restrictions and uncertainty and travel restrictions. And yes, so that is a challenge that we have. But we decided to keep investing in our online functionality, particularly, and also the ASMALLWORLD social networking apps. And I will also illustrate this point further on the next few slides. So Slide #9 is a deep dive of the Prestige membership sales, which was the clear sales driver this period. The ASMALLWORLD Prestige membership is 1 of our 2 premium memberships and the other 1 is called the ASMALLWORLD Signature membership, which are essentially travel benefits packages. The most important value element of the -- or the most important element in terms of value is our air miles, 250,000, you can choose either Miles & More or Etihad. And these award miles can then be used to purchase flight awards or upgrade the business in first class and this continues to be extremely popular during the pandemic. And during the period, the first 6 months of 2021, we actually ran 2 sales specials also in partnership with Miles & More directly, 1 in January and 1 in June, and this really helped to push the sales for this product. So Miles & More in -- during both sales periods also sent an e-mail to more than 300,000 of its own customers, which further created demand. So as a result, we sold a record number of memberships during the first 6 months of the year, and this is really the main contributor to the growth year-on-year. Then from -- moving from the ASMALLWORLD Prestige membership sales to going back to the sign-ups for ASMALLWORLD. So they're still below pre-COVID even now that sort of we're further into the pandemic. So as I mentioned, we grew our member base 3% year-on-year. We believe that COVID-19 restrictions and also fewer in-person events continue to limit the demand for our social network, especially the lack of in-person events hurt new sign-ups because it was usually a strong driver for sign-ups. And to illustrate this point, there's a chart here on the slide, where you can see how many events that we held over the years. So in 2019, we held 1,124 in-person events. In 2020, this number then dropped to 316, of which most of the events were actually January to March. So precorona, there was virtually nothing summer and some -- later in the year. To fill the gap in the event schedule, we then started doing online events when we hosted 376 of those during 2020, which brought the total number of events to 692. Having said that, online events, really, we find are more to keep members, existing members happy than having a strong pull for new members. And now where do we stand in 2021? So this is an estimated number based on the first half of the year. But we believe that we will have even fewer in-person events this year, about 208 is the right estimate. About the same level of online events, but like an overall decrease in events as well. And obviously, in-person events are not the only driver for sign-ups, but I believe they are good -- also, they're one of a -- and a strong one, and I believe they are also a good illustration of how COVID-19 directly impacted and still impacts our business. The bottom line is that new sign-ups currently stand at about 53% of precorona levels, and that's -- meaning comparing sign-ups for the first half of 2021 to the full year of 2019 on a per month basis. So it is comparable. So means we have -- only have the sign-ups that we previously had, which is also the reasons for slower membership growth because renewal rates are still very healthy. So again, once people are in, they're not more likely to leave due to corona. It stays about the same, but we get fewer people to join right now. And we will continue to drive sign-ups with other means, and we're also now trialing -- we are trialing a trial period, so -- which we've introduced, like you can join us ASMALLWORLD for 3 months and then it will only be charged after that. So trying new models to get people in. And we also continue to invest in our online product. And -- but we expect that the organic membership growth will only really accelerate again once travel restrictions are lifted, people travel again and we can return to events, and we all have all these positive factors that leads to sign-ups. So a bit of a contrast between the regular Access membership business and the Prestige. I mentioned the online functionality, which we further expanded, and Page 11 is a very good illustration of that. We did a major release. I mean we continuously do smaller releases for networks with bot fixes and improvements. But we did a major release for our social network in June, when we introduced a brand-new feature called Member Posts. The photo you see on the slide basically illustrates what it is, so you can share photos that you've taken with your phone with the community. So you can upload them and they will then be distributed via the news feeds to other members' phones. If you've ever used Instagram exactly what I'm talking about, it's basically the same functionality there. And the photo is now mixed in with our other news feed elements like event notifications, travel articles and travel offers and so on and so forth. So it really enriches the experience. So it gives users new ways to engage with ASMALLWORLD and with other users. And obviously, it generates a wealth of new user-generated content, which is -- it's fantastic. From a business point of view, this feature will drive user engagement. So we're seeing that users are checking in more frequently and they stay longer, which should ultimately lead to higher retention and then growth. And we have also updated the news feed logic, meaning the way the app determines what news feed elements that you will see. And we aim to give users always something new when they open the app, and we can do that much more easily now with this new element. So it makes it a lot more interesting to use the app and to also just consume content on the app. We will continue to refine this functionality going forward, and we will migrate to better image service, which slightly increased quality. We're also, at some point, introduced video functionality as we -- currently, it's only limited to photos, so to expand and improve the functionality. And personally, I'm extremely happy about this new feature as it's something that I've always wanted to have. I believe sharing content and in this case, photos, really is the essence of social media. And now that we finally have this on ASMALLWORLD, I believe we filled a very, very important gap in our online functionality that will drive engagement and usage of our app. So really, really good news to build on long term. That concludes the few deep dives and the overview of the Subscriptions business. We're now moving on to the highlights of the Services segment on Page 13. The segment here grew by 68%, even stronger than the Subscription segment, but from a lower base. EBITDA increased by 136%, and the EBITDA margin by 6 percentage points from 12% to 18%. Here, the main driver were First Class & More service revenue, which came from strong sales of their business and first class flight packages and upgrade options, which is very similar to the demand that we've seen for the prestige membership. They are actually similar products. One is packaged as a membership and the other one more as a service. But it's driven almost by the same user demand or the same goal from a user's point of view. And it's also worth noting that the ASMALLWORLD Collection has started to contribute to the service revenue, even though on a very low scale at this point, but I will go into a deep dive there. Staying with travel, ASMALLWORLD Private or traditional travel agency business is still heavily impacted by corona. And as overseas travel, more complicated round trips and so on are still not taking place in most cases, and that was really the bread and butter of that business, so we have very low sales from that area. And as a result of the pandemic and the impact on travel, we had also decided towards the end of last year to downsize our travel setup. And I think I mentioned that in our call half a year ago. We have significantly reduced the team size of the travel team. We have closed the London office by the end of last year, so -- which was primarily the home of our travel team. However, even despite downsizing, closing the London office, we will continue to offer all our services that we had going forward just with a smaller and more cost-effective setup, which helps us to maintain our margins. And it's also worth mentioning that ASMALLWORLD events revenue is also still down here on the Services side. As we've seen earlier there, it's just a massive reduction in activity for in-person events who've been driving the sales from that segment. So again, some business doing very well, others are a bit -- is still impacted by the environment, of the pandemic. So the deep dive here in the Services side is really all about the ASMALLWORLD Collection. And think about 4 slides we'd like to go a bit deeper here because it's our newest business, and I just wanted to illustrate what we've done and how we continued to sort of beef up this business. So Slide 14 actually illustrates the inventory of our hotels, basically what we can sell to the customers. And we started the Collection in July last year with just under 600 hotels. And by now, we spend at over 1,200 hotels, meaning we've more than doubled the amount of hotels that we can sell in the 12 months since launch. We're also now covering the 345 destinations compared to 156 destinations at launch. So that more than doubled as well, really giving customers options in all sort of travel destinations that they -- that are in demand. And obviously, this means a better inventory, better options for members and giving us more inventory to sell. However, we're not compromising quality. So these are all still great hotels that we like. And we also don't think we will double from here anymore. We think we're probably going to add another 100, 200, maybe 300 hotels, but then we've really reached sort of the inventory that we wanted to have, but made great progress on that. Page 15 then is connected to that, as it nicely outlines how we are actually getting access to the hotel inventory. So we started the year with 3 partnerships. We are part of Virtuoso, the independent luxury travel agency association. We had partnerships with Hyatt and Hilton, where we have the right to feature properties from all of these partners. And then we have entered in 3 new partnerships during the first half of 2021 and further expanded the pools of potential hotels that we can feature. So the new partnerships are Marriott, where we closed the agreement in January; Shangri-La also in January; and The Doyle Collection in May. Obviously, we're not featuring Marriott hotels directly, but it gives us access to their premium brands as well, between the Ritz-Carltons and Reaches or W. Obviously, for Hilton, we're also only not featuring the Hilton, but the Waldorf Astorias and the Conrads. And with that, we have a wealth of options of properties that we can add to ASMALLWORLD Collection. And I believe that the setup that we have and the partners that we have is really, really strong at this point. Based on the partnerships, we've also introduced a new customer benefit, which is outlined on Page 16. Well, customers of your ASMALLWORLD Collection can now -- I mean they always got the booking perks with the smaller preferred rates. And now on top of that, they can even earn loyalty points in their booking with us. And we've decided that we don't want to have our own loyalty scheme, which would be meaningless, but we give customers the ability to earn points with their favorite programs that they're already a part of. So customers will now -- have the ability now to earn loyalty points with 4 of the world's most popular loyalty programs, which are World of Hyatt, Marriott Bonvoy, Hilton Honors and Shangri-La Golden Circle. As you will see on the images from this, it's basically the search results when you search for hotels, you see at the bottom right, a logo of the corresponding program. If it's part of that program and if you earn miles from that program, and all you have to do as a customer is adding your member number for that program during the booking process, only the first time. Once you've done it, it's stored and it will automatically happen. And this is completely free of charge and comes on top of the other benefits. And we believe it gives us another great competitive advantage over other third-party booking engines because other third-party booking engines like Booking.com or so on can't offer loyalty points. They usually reserve for direct bookings with the respective hotels. So for Marriott you would need to book on the Bonvoy page and so on. And we are one of the few online platforms, third-party platforms that actually offer loyalty points. So another great reason to book with us. And then the last slide on the Collection, Page 17, just to illustrate a bit like how it's developing in terms of bookings. On the chart, you will see an indexed version of our booking volumes per month. And I think it's quite easy to see that there was a lot more activity for the first half year of this year compared to the half year of 2020, which is also illustrated here. Expressed in numbers, we had a 5.6x the booking volumes in first half of '21 compared to the second half of 2020. It's still small numbers, to be honest. So maybe driven by the environment, maybe driven that people need to get to know us first, but we started to see a steady influx of bookings. Still, also a lot of cancellations, unfortunately, due to the environment. But we expect that the hotel bookings will steadily increase because I think once you have people on the platform, they will come back when they like the service. So the most important part is to get them here for the first time. And -- but as we've expanded the hotel inventory and it really -- or added points as well, which we really have a great offering, I believe. And we now also need to leverage our affiliate program and get third parties to send us bookings our way, which is -- which we'll continue to focus on over the next few months. So that's really it from the highlights of the 2 business units. Now let's move on to Page #19 for the financials of the period. A more comprehensive report is also available for download on the investor website, but I will briefly like touch on the highlights. So Page 19, the income statement. We've looked at the headline number. Sales increased by 62%. You will see a jump in direct expenses. This is due to higher COGS for the Prestige membership and the First Class & More services. So this is reflected there. I mentioned a reduction of 17% in personnel expenses and also 10% in other operating expenses, which is great. And the EBITDA, as we see, an increase by 232%. What's probably also worth mentioning a bit further down the line before the ordinary result is the financial results. So we had a very high number 6 months -- or 12 months ago with CHF 455,000 positive contribution from the financial income. These were basically FX benefits that we had on the outstanding debts that we have in euros, so which worked in our favor in Swiss francs. Now during this first 6 months this year, it worked against us, so that's why there is a change. But there's really nothing, from a business point of view, that's changed. So it's primarily FX fluctuations. So that's why this number looks slightly different there. Moving on to the balance sheet, Page 20. Cash position increased by CHF 2.4 million to CHF 5.3 million. This is also due to a short-term effect of -- it's actually more CHF 1.1 million. I have to correct that number here due to outstanding payables. So I can actually mention that here already, we had from the Prestige sale in June and from a bit before that, we had outstanding bills for Miles & More, which sort of went over the June -- end of June period. So basically, if we would have paid them right away, our cash position would have been at 5 -- sorry, CHF 4.2 million, which is a more realistic number. So it's really just a very short-term effect there. So I just feel like I have to mention this here, so not to give you a wrong impression, but it's still a lot of money in the bank. Other short-term receivables have been reduced to an impairment of one of our outstanding license arrangement field. So we impaired CHF 0.5 million on a CHF 0.75 million outstanding invoice due to corona. It was uncertain whether we'll go ahead with that, so that's a bit of a negative impact for the period. And the rest of the positions here have been largely unchanged. Page 21 is the other side of the balance sheet. Here, it's worth mentioning that the payables from goods and services jumped by CHF 1.1 million. This is exactly what I mentioned, this is the Miles & More air miles invoice that wasn't paid. What's also important to mention is sort of the shift in short-term and long-term provisions. You may remember that we still have outstanding payments for the earnout from First Class & More. So we have actually paid CHF 2 million of that during the first half of the year. So that's been -- it's been reduced by that. And the long-term provisions of CHF 3.7 million, which we had a year ago, have now moved to the short-term provisions because they're actually due within the next 12 months. So overall, reduced by EUR 2 million and the EUR 3.8 million that are still due from the earnout have moved from long-term provisions to short-term provisions. So that's shifted there. Accrued liabilities increased due to the deferred income from Prestige and First Class & More memberships. And in the long term, financial liabilities, we've also seen increase. We've drawn some of the credit from our anchor investor Pellegrino due to the uncertain times and sort of the financing need we had throughout the early period of this year. So that increased the total financial liabilities there. As for the cash flow statement, Page 25 (sic) [ Page 22 ], we've seen the operating cash flow improve from CHF 1.4 million to CHF 4.1 million. However, again, this is this increase in payables that's sort of been pushing this up, this CHF 1.1 million. So the right number is probably closer to CHF 3 million, just to mention that here again as well. Other expenses that do not affect the fund, we see the impairment there as well and the CHF 0.3 million share-based compensation, which are in there, primarily pushed this one up. And then if you're looking at cash flow from investing activities, this is primarily the earnout payment of CHF 2 million to First Class & More. You see that nicely, that last year, it was CHF 5.6 million. And next year, it will be the last payment of CHF 3.8 million, and then this will be closed of these payments. Page 23 is the second part of the cash flow statement, financing activities. You see issuance of long-term financial liabilities, this is the loan from Pellegrino Capital that I mentioned earlier. The one repayment is what we did have to pay because we had a government loan in the U.K., which we have to pay back in order to close the legal entity over there. And to sum it all up, we see the change in net cash, which increased by CHF 2.4 million over the period. Okay. So that's the financials. And to conclude, I just want to give you a brief outlook for the second half of the year on Page 25. Starting with the market environment. I know in the last calls I've been saying we believe that the next 6 months are going to get better and it's going to recover and all that. I think we have become a bit more pessimistic and believe that the -- on the -- with regards to the market environment and believe that an immediate recovery from COVID-19 has become a bit more elusive. At this stage with the Delta variant, we actually anticipate a bit more of a gradual, longer -- a gradual improvement that takes longer instead of a V-shaped bounce that we had all hoped after the vaccine has been rolled out. So I think it might be more of a gradual improvement over the next 2 years. What that means for us is that we will do 3 things, and they're probably very similar to the focus areas that I have discussed earlier at the beginning of the presentation. So we will continue to be prudent with our resources. Having said that, I think we've exhausted pretty much all our cost-saving options. And we don't believe that we can further save costs, but we will definitely not go in and spend money where we don't have to. We will continue to focus on products that have proven resilient during the pandemic. I mean the ones that I've mentioned and that have driven sales over the last few months, so they will obviously stay in focus because we know that we can sell them right now and we push those first. And at the same time, we will continue to invest in the long-term earnings potential of our services, and there are especially 3 areas which are in the immediate focus. It's the functional improvements to the ASMALLWORLD social network. I mean we talked about posting and needs can be further upgraded, a couple of ease-of-use features there, which we will do. So we really want to make sure that ASMALLWORLD social network gets from good to great and from a technical point of view, especially because we believe the online component will stay very, very important and very relevant. Then for the ASMALLWORLD Collection, we will continue to focus on the inventory, but it will also be -- you will also see a few improvements to the UX and the functionality, not massive ones, but they will sort of gradually convince people that it's great to book with us. And it feels like it's a bit of an evergreen. We said we would launch a new website for World's Finest Clubs. It's been sort of a bit deprioritized a few times since sort of the nightlife has been pretty dead in most places. But most likely, we will actually like finally go ahead with it and get it done in the second half of this year. So this is sort of a very brief outlook for the second half of the year and what we will focus on how we think about it. On the final slide, on Page 26, it also illustrates our thinking around the guidance for the full year. We are increasing our guidance for revenues and for EBITDA, members we're leaving unchanged. For the revenue guidance, we're increasing it from -- it was previously at CHF 12.5 million to CHF 13 million to CHF 13 million to CHF 14 million. And the EBITDA guidance which was previously at CHF 1.7 million to CHF 2.2 million, we're increasing that one to CHF 2.0 million to CHF 2.3 million, make sure I'm saying this correctly. So we don't think we will fall under CHF 13 million in terms of revenue, which is great, which has been higher than where we were in 2019, which is great. So it will be also the best year for ASMALLWORLD even despite the pandemic. And for EBITDA, we don't think we'll fall under CHF 2 million, which is also a great improvement compared to last year and which sort of should be a very positive sign that we can achieve that during these pandemic times. This concludes the presentation part of this call, and I will now gladly open up for the Q&A section. And for that, I will hand it back over to you, Katie.

[Operator Instructions] Our first question comes from Pierre Gauthier with AlphaValue.

Yes. Well, thank you for this very clear presentation as usual, excellent delivery, very impressive. Very, very impressive. The -- I have a question about the Subscriptions side of the business, where it's a bit difficult from outside to get a clear sense of numbers. You tried to say that with a very limited of members, you raised the value of the subscription dramatically because those members were willing to go for this first class or business class travel services. So you had a very large mix effect. But the volume side of it remains pretty small.

That is absolutely right. So we have -- I mean, we have the -- there are a couple of things. So we have the ASMALLWORLD memberships, and we have First Class & More memberships. But on the ASMALLWORLD side, obviously, we have the regular ones. The Access memberships were about CHF 100 or -- and then the Prestige membership for about CHF 5,000, right, or CHF 5,500 and -- which is really the travel package, right, that we discussed. And so what I was saying is for the Access membership, the CHF 100 membership, we're struggling a bit at the moment with new sign-ups, right? So that's a reality, and I think that we have to acknowledge that. Having said that, it's mainly due to the environment, we believe. And for the Prestige membership, we've just seen a really pretty strong demand in the first half of the year. So we actually sold more Prestige memberships in the first half of 2021 than we sold in all of 2020. So yes, for you, this means we have a very small group of people who contributed a very -- probably a majority of the Subscriptions revenue in the first half of 2021. This is correct.

And in relation to that same question, those people who love, obviously, to pay, in effect, a higher subscription because of the benefit they get, is it trying to say that at the current stage, your bargaining power vis-à-vis the airline is very strong because, obviously, they are looking for clients and that this may be transitional? Or is it, do you think, a stable state of business for the next few years?

Yes. I mean it's a very good question to ask. So because we obviously depend on the airlines to give us access to the miles, otherwise, we don't have a product to sell, right? It's absolutely the right observation. With -- I mean we have 2 partners, Etihad and Miles & More at the moment. Most of the sales are with Miles & More, so which makes Miles & More the critical partner. We have just secured another agreement at the beginning of the year with them for another 3 years, right, which is -- which puts our mind at ease that we will be able to continue to sell this product. Also, given that they are working closely with us to help us sell it by also sending it to their members, I believe at the moment, they're actually quite happy to work with us in this form. So I see the risk that this collaboration will go away, it's not very high at the moment but it's there. In terms of bargaining power, it's a bit of a mix, right? Because -- obviously, because we're becoming more important to them as a customer, there is some bargaining power. And we actually renegotiated a better price at the -- for us at the beginning of this year. So that would be a reflection of the bargaining power, right? But at the same time, also, we want to make sure that they are happy with the partnership and make money on it as well because if we start to squeeze them too much and for some reason, they say, "Well, we start selling our miles directly," which they are not doing right now, then we would potentially have the loss of them as a partner, which would impact our business, too. So we see it as a partnership where both has profit at the moment, and that should be quite stable for the next 3 years. And yes, we have gotten a better price for the renegotiation earlier this year.

Your next question comes from Marie-Therese Gruebner with H&A Investment Banking.

Yes. Jan, Marie-Therese here. A couple of questions from my side. I think I will ask them one by one. And don't worry, they are not too many.

Shoot. Shoot.

The first one is pertaining to your guidance that it implies a radical slowdown in revenues in the second half and a radical increase in margins -- in the EBITDA margin in the second half. So if I understand this correctly, at least, can you kind of give us some flavor on what you're trying to tell us with this margin in terms of the revenue slowdown?

Yes -- no, no. It's a fair -- it's a good observation, and it's absolutely right. Look, we had a -- in short, the first half will be better than the second half of this year. So it's the very short answer. The bit longer answer is that -- so because the sales from Prestige membership has become so important during this period, we had 2 sales specials during the first half of the year, January and June, I think I mentioned that in the presentation. And we will only have one in the second half of the year, which basically then skews it towards the first half, at least for this product. And since it's quite important for the sales, that does have an impact. And then we are also cautious...

They're all -- sorry, Jan. So this -- sorry to interrupt you. So it means that these guys have already paid their membership, their one-off membership in the first half for the full year?

Correct. Yes, yes.

Yes. Okay. Good.

So from a revenue recognition point of view, about 80%. So for these -- for the regular memberships, it's 12 months, right, where we have a revenue recognition, so it sort of basically spreads out over the year. For the Prestige membership, we have to do it slightly differently because we pay the cost right away and -- for the mountain -- for other parts of the membership, which means we also recognize the revenue right away. So about 80% of the memberships are recognized at the moment of point of sale -- at a point in time of sale. And only 20% is then sort of like going across the 12-month period. So which makes it a lot more immediate, right, in that sense with the impact. And then obviously, having to -- and we're selling also 90% of the memberships during these sales push periods. So it's almost virtually all of our sales are coming from the sales push periods and giving -- having 2 in the first half and only 1 in the second half obviously makes a difference. And then for the First Class & More service business, we're a bit cautious for the second half because we believe that as fall comes, things might start to look a bit trickier again with sort of travel restrictions and new restrictions coming in with the Delta variants and so on. So we're a bit less optimistic for the fall and early winter period compared to sort of what sells the bid as an opening like during spring and summer this year. So we're being a bit cautious for that. And this is why we haven't increased the guidance even further. But yes, the observation's right? We don't think the second half is going to be as strong as the first half. Having said that, I don't think we want to see this as a -- I think it's more first half, second half problem. I don't think we will -- mean we've peaked now and we continue to go down. So meaning I don't think 2022 will go down compared to 2021. I think we will continue to grow. But we're a bit -- I think we had a blowout half year and the second half is just not going to be as good as the first half, it's sort of the short version. And that's why we're a bit cautious. Having said that, I mean, I can see as -- if a few things work out, I can see us go way -- I mean, clearly go beyond even the CHF 14 million in terms of sales for the full year.

And what about the margin?

So it's a bit of a cautious outlook on the margin.

The margin is improving still, I mean, in the second half dramatically, based on the numbers. And what is driving that?

Yes. I think it will probably remain roughly where it is, will be my anticipation. It may even go down a little bit. So there are a few other effects that have played into this. So yes, we have downsized the team. We closed the travel team and so on, right, which are sort of one-off situations. We also have had people on reduced workload in a few places. We have also drawn on a few furlough scheme support parts or support mechanisms. And most of them will run out -- or at least the Swiss ones will run out by the end of August, which means our personnel expenses are probably going to slightly increase again in the second half of the year. They're not going to bounce back to what they were. I mean they're going to stay lower, but they might be slightly higher than what we've seen in the first half of the year due to those effects. So that might be slightly negative implications on the margin. Having said that, I mean, if you compare year-on-year, I think we're still looking a lot stronger than what we looked like a year ago or 2 years ago, right, so -- for the full year.

No. What I was -- what was a bit [ posing ] me, Jan, is that if I take the midpoint of the revenues and the midpoint of your EBITDA guidance, midpoint to midpoint and I do the ratio, I get to 16% EBITDA margin. And the -- in the first half, you're at 13.7%, so this is selling a slightly different story than what you are saying or explaining right now. .

Fair enough.

So yes.

Yes. Okay. I agree. Does that help? Does that answer the question?

Yes, that means that -- that's what -- I mean, no, because -- so if the margin is going to be lower in the full year compared to -- sorry, compared to the first half, that means that in the second half, it's going to be -- I mean, it means you can't do CHF 2 million on the CHF 13.5 million of revenues. You're going to do less.