Asmallworld AG (ASWN) Earnings Call Transcript & Summary

Good morning, everyone. I'm Zain Richardson, and I'm the Chief Executive Officer of ASMALLWORLD, and I'd like to welcome you all this morning to our 2025 earnings results. We'll be live streaming these results via Zoom while also sharing the accompanying slides to add further detail to our annual report, which we shared earlier this morning. This presentation and the recording of the call will be made available in the Investors section of our corporate website, which is asmallworldag.com. And just in terms of housekeeping this morning, participants will be muted. For the presentation, however, we will be pleased to answer any questions at the end where we have a Q&A session. As many of you know, I joined ASMALLWORLD last June 2025. And so I'm proud not only of the work that the team has done during this transition year, but also the work to refocus the business in this year and position it for great success in 2026. Today, in terms of an agenda, I'll be sharing an overview of the 2025 performance for the full year. I'll then share an update on the focus areas for the business in 2025 and how those translated into key activities and initiatives, which drove our results for the year and then specifically how they will impact and influence what we are expecting in 2026. I'll then cover the segment reporting, which will talk about our 2 key segments within the business and the performance of those 2 and also then move into our consolidated financials. As a last agenda item, I'll be providing a short update on what we can expect in terms of results for 2026, and then we'll close with some time for some brief Q&A. So moving first to an overview of 2025. And you'll hear me mention a few times during this call that 2025 was really a foundational year for the business. As you know, I joined the business to bring greater commercial as well as operational focus and 2025 was a deliberate year of transition. I joined midway through the year with a clear mandate to sharpen the commercial focus, diversify our revenue streams and build the foundations on which we can really scale into profitable growth. And we delivered on that. Our member growth of 38% to nearly 122,000 really gives us that scale that will allow us to monetize in 2026. We signed new global airline partnerships, which I'll talk about in a moment, as well as expanding our portfolio of membership products and also services. In addition, we secured several global distribution partnerships with new strategic partners, which are really the fuel by which we will gain that scale in 2026. We also made some harder decisions. We exited noncore and unprofitable activities. We restructured the organization specifically to improve collaboration and also manage our costs better and more closely. And we also initiated our multiyear data transformation and AI program, which I'll be pleased to share more later in the presentation. We will see some of these impacts in the 2025 numbers, but really what this does is sets us up well for 2026. In addition, we will talk a little bit more when we get to the financial statements section, how we continue to strengthen our balance sheet by deleveraging further and reducing our overall debt burden for the company as well as obviously the interest payments associated. Now turning to the KPIs that we think about within the business. All 3 KPIs, which we monitor most closely, came within guidance. Looking first at our net sales, our expectations were that we would land somewhere between CHF 18 million and CHF 20 million in terms of net sales. We came in just over CHF 19 million so solidly within that range. Our membership growth, which is really our growth engine to fuel future monetization and also obviously profitable revenue streams continued to accelerate. And so we landed solidly within that range of the 120,000 to 125,000 members coming in at 122,000 members at the end of 2025. Our EBITDA of CHF 0.9 million was towards the lower end of our guidance and our expected range, which I'll explain the drivers of in a moment, particularly as we think about the comparative 1-year impacts, both in 2024 and 2025 as we've heard on previous earnings calls. Most importantly, from a comparative basis, 2024 benefited from a legal settlement related to a dispute that occurred previously and also some extraordinary one-off benefits from events that would not continue in 2025. And as you'll see and we get into the financial statements, we have deliberately exited certain services and certain projects, which incurred one-off costs in 2025, which will not occur in 2026. And adjusting for those, what I can say is that the underlying business performance represents significant improvement to 2024. And most importantly, as I mentioned, the member growth chart here obviously tells the real story. We've nearly doubled our member base in just over 3 years to 122,000, and that's the platform on which we are really building this growth engine and monetization strategy for 2026. So looking at what we focused on in 2025. So if you joined us for our half year earnings call in August, you'll have seen these key focus areas or pillars, which I shared previously. And now let me walk through those with you, which I set when I first joined the business last year. Firstly, it was all about product and partner diversification. As we've mentioned on a previous call, as a business, we were over reliant on a narrow set of partnerships. And as we saw in the first half of 2025, that impacted and dampened some of our revenue on some of our memberships. We addressed that in the second half of 2025 by adding global partnerships with Cathay Pacific and with Turkish Airlines and launching our new Advantage tier. Secondly, my focus for the team and the business was really around how we scale our B2B distribution. And what does that mean? That means both from an acquisition standpoint so finding ways to cost effectively access pools and communities and bases of relevant consumers who would seek benefit and value from our membership offering, but also sell-through in terms of ASMALLWORLD offering to B2B partners, products, services, memberships and other benefits on a paid basis to these other membership groups and cardholder bases, where we made tremendous progress in 2025, which I'll go into in a second. Thirdly, growing travel services. Growing travel services is critical for the business, not only because we know that it is at the heart of our DNA and where the business started in terms of ASMALLWORLD members really wanting to share and learn from other members about the best places to eat, drink and explore, but also because we know that our members are looking for trusted curated options for where they should travel and how they should travel there. And ASMALLWORLD has moved from not just being a place where you can find that inspiration, but being a place where you can actually feel confident that you are getting both access to the best product in terms of hotels, airlines, et cetera, but also the best benefits via our VIP programs, which I'll talk about further in a second. We saw great growth in our travel booking services, both which is great in terms of obviously further monetizing and offering further value to our member base, but also because of future trips that will occur, builds a growth engine and a pipeline of future revenue streams that will continue to help us grow the business. And then fourth, it was -- the focus was really around operational discipline, as you can see there. Focus is really about restructuring the organization, which you can read more about in the annual report, exiting unprofitable projects and then most importantly, very exciting for me and the team, the launch of our multiyear program, both in terms of data unification and transformation, but also leveraging AI and automation in a mixture of ways across the business, which I'll share more about. These are -- all of these 4 initiatives, obviously, are interdependent and really focused around building a larger, more engaged member base, creating obviously more demand for our travel services. That allows us to negotiate better terms with our travel partners and making better decisions with the AI and data transformation project. And so taking these 4 key areas. I'll share some of the highlights in terms of how we address these priorities in 2025 and what that means for our business in 2026. So firstly, thinking about product expansion and our strategic partnerships. Firstly, we launched a new membership tier with our Advantage membership tier, and this was an important strategic addition to our portfolio. Price -- starting price at around USD 900. It bridges the gap between our premium membership and our Prestige and Signature products, which start at between USD 5,000 and USD 10,000 or equivalent. So having a product price at around USD 1,000 or just under USD 1,000 mark was really important to us to provide greater relevance, both to a broader group of aspirational travelers, but also for other travel occasions. What that allows us to do is to provide a product and a series of benefits where members may not want to invest or purchase large quantities of hotel or airline currency but do want benefits and access in terms of access to lounges or using award miles for upgrades on some of their upcoming trips. On the airline side, we added Cathay Pacific and Turkish Airlines, which both extend our geographic reach significantly, obviously, both into Asia Pacific and also other European corridors via Turkey and also to the U.S. And obviously, as many of you know, the Turkish Airlines is actually the largest global airline in terms of destinations served. So this is exciting for us as we really look to strengthen the value proposition of our membership tiers, but also geographic relevance to different partners. These were -- just to note, these were the first new airline partnerships that the business have negotiated and launched in over 3 years, and they sit alongside our core existing partnerships with Miles & More part of the Lufthansa Group and Emirates Skywards. This focus on adding new products, but more importantly, new partners to add relevance and benefits to our members will continue into 2026. And as you will have seen earlier in the year and in 2026, we launched the series of benefits with Hilton in our different membership tiers so that our members can access Hilton status when they purchase one of our memberships. And then just last week, we're thrilled to announce that we launched a suite of membership tiers with Marriott Bonvoy, obviously, the largest and most global of the hotel program. So very excited to add to our roster of partners and membership offerings that our members can choose from. The next area of focus was really around scale. And what do I mean by scale? So as you can see, obviously, 38% member growth was not accidental. This was a deliberate investment in acquisition and a structural decision to broaden our membership offering. But growth is not just about obviously our member base. It's about increasing our relevance and the value we provide to those members. And so one part of that is the benefits offering and the partner packages that we can offer to members, which we -- which I've just talked about, but also how do we provide benefits to other ecosystems of strategic B2B partners. And so Klarna, AMEX and UBS are just a small selection of our strategic B2B partners with whom we launched new partnerships in 2025. How we work with these different B2B partners differs in different ways. This could be from direct distribution of our memberships to their member base, but also more often than not, with these partners, we are actually selling in our core services to their own cardholder on member basis. So that could be offering our world's finest clubs, nightlife and dining concierge services, access to some of our status programs, our travel booking services. What you'll see in terms of this acceleration of scale is a fundamentally different approach to distribution. So instead of focusing acquiring members one by one, we are focused around integrating into platforms that already serve millions of high net worth individuals. And so to allow us to do that in a both a cost-effective way, but also a level of filtering to make sure that we are not investing, for example, in acquisition marketing for members that won't necessarily convert to either our membership -- paid membership tiers or to some of the paid services that we offer to our member base. And working with key B2B distribution partners allows us to both drive that acquisition, but more importantly, significant revenue streams through being a service provider and partner to those different ecosystems. Travel bookings continue to grow, as you can see on the slide here, and are very important to us as they represent a few different things. Firstly, higher-margin revenue stream that we see because of the commissions that we secure through our travel booking services. And what we're building here importantly is not just revenue as of today, but a pipeline of future revenue and future profitability. As you'll see in our balance sheet when we walk through the financial statements, our increasing deferred income picture reflects our investment and the growth in this profitable revenue stream. So we are building a pipeline for future growth. And the ASMALLWORLD Collection, which is our closed hotel booking service for our members as part of our travel services offering is really that story of consistent compounding growth. If we look at our bookings on an annual basis since 2021, they've almost quadrupled. The value of our bookings was up 15% compared to 2024, and we continue to add hotels to the program. But let me be very clear, this 1,800 number is not a pure addition from where we were last year. We also have a curatorial angle to this, and we make sure that we remove hotels that are not performing or aren't as relevant to our members. And so what you'll see with our approach with ASMALLWORLD collection is we have the best hotels in the best destinations, which we know our members and partners want access to, and we will deliberately manage the growth here. We're not -- we will not be an Expedia or Booking.com where we'll aim to have every type of product in every type of market. This is really about how we lean into our ability to curate and access the best of the best for our members. And why that's important is at these different hotel brands and individual hotels, the more volume that we deliver to them, this gives us increased negotiating leverage with those partners and in turn, allows us to secure better benefits when our members stay at these hotels and brands, but also as we join these preferred partner programs, as you'll see on the slide here, it also comes with elevated commission -- rates of commission. So not only do we obviously drive more volume to those hotels, the rate of commission that we secure for each of those bookings we provide increases. And we're thrilled to be recognized by Virtuoso, obviously, one of the leading players in the luxury and ultra-luxury travel space for the second consecutive year as a leading travel agency and advisory business, which is a real testament to the hard work of the team and the work we do both in our ASMALLWORLD collection business, but also ASMALLWORLD Bespoke Travel, which is our travel design and agency business. As you know and we will have heard on these earnings calls in the past, ASMALLWORLD has built or acquired different brands and businesses over the years. A key learning for me since joining the company last year is that the -- each of the business and areas of business had largely been run independently. And so my focus has been, and my team hear it from me a lot, is really about bringing those businesses together to accelerate growth and find efficiencies to effectively kind of break down the walls between those different businesses. A couple of examples of the key changes. Our travel business now sits under one business leader who leads both our online travel booking platform as well as our travel advisory business. In terms of ASMALLWORLD Bespoke Travel, this is -- this allows us to really think holistically about what travel product and partners we work with and then how we promote best travel to our members. And then areas such as business development and sales had all sat in a fragmented way across the business, which are now centralized. So a lot of work in terms of restructuring and reorganization has occurred in 2025 to set us up well for 2026. And then thinking about as a result of this kind of historic siloed structure, all of the member touch points and data lived in separate systems, separate databases and separate teams. As ASMALLWORLD is the original community network for high net worth travelers built over 20 years, this knowledge, this insight, this data is really our goal, which we need to connect to allow us to better serve our members and ultimately drive profits and attract new members cost effectively. This slide shares a little bit of the challenge I inherited, but that every interaction lives in a different location, whether it's contacting our member services team, whether it's attending an event. And each of these obviously generates data living in different systems and databases. And so that left us in a scenario where we couldn't easily necessarily answer some of the most important questions about members and their behavior. That has changed or is in the process of changing with the program that we launched in Q4 of 2025. We've started the work for a full AI and data unification transformation that will continue into 2026, where we'll see -- start to see the tangible output that this work will generate. This will be focused around smarter retention interventions, more efficient marketing spend, starting to allow us to automate workflows across different parts of the business as well as starting to see cost efficiencies, which are already being visible across the business. And this is not just a speculative future investment as many businesses obviously are talking about data unification and integrating AI into their business models. This is fundamentally changing how we operate. As an example, we've signed a multiyear strategic partnership with Salesforce to bring their best-in-class data unification and CRM platform to our business. And this week, we completed the first phase of the member and marketing data integration. April also sees us launch the first phase of our end-to-end commission tracking and payment systems to improve both our financial reporting, but also automating workflows to accelerate payment and reconciliation. And these are just a couple of examples of how we're unifying data and automating workflows to increase efficiency, cost-effective cash management, but also ultimately drive revenue in the business. And this is important to note as we've started in 2025 with audits and evaluations of the business across the different areas to really understand how best to unify and connect the data across our business to allow us to reaccelerate in 2026. Now turning to specifically the segment reporting. As you know, we have 2 core segments within the business. Specifically, our first segment is our subscriptions business. And subscriptions are really the core of the business and the results here are very encouraging. We grew revenue from our subscription business at 4% from 2024 to 2025, landing at just over CHF 15 million. This was driven by both new membership products and partnership additions. We saw some compression in EBITDA margin, as you see on the slide here from 3.9% to 3%, which reflects the investment required to launch new partners and new membership tiers, which is a deliberate trade-off that we decided to make the cost to onboard what Cathay Pacific or Turkish Airlines or some of the other partners that we've worked on into our membership infrastructure is that onetime investment, which you'll see in the costs. Our services business, you'll see a conscious decline in the top line of our services business. Two things which are key here, and you'll see this, which is on the slide. I realized that there were several projects, initiatives, areas of work, which have been signed in 2024 that were -- for which costs were increasing dramatically without the commensurate increase in the revenue. And so I deliberately chose to exit a few of those projects in 2025. So you'll see a cost hit to exit some of those projects, but that was to make sure that we have a solid base going into 2026. More importantly, we also had -- the business had added unnecessary costs in the wrong places in 2024 into the services business. And so with my team, I went through a systematic review to address that. We worked on a restructuring in 2025, and that means that each of our segments, both the Subscriptions and Services segment enters 2026 both leaner and better focused to really secure that higher-margin travel bookings going forward. As I shared earlier, 2025 was a transition year and really being about laying the foundations as well as improving our financial and operating discipline, but also refocusing the business externally and on commercial growth, which had not been a focus historically within the business. Looking at our income statement. As discussed earlier, our revenue and EBITDA were in line with guidance, while we -- and specifically, that has been driven by our increase in our membership revenue from adding new partners to the business. While we don't break down line-by-line impacts related to nonspecific projects, but as I mentioned earlier, there were nonrecurring project revenue items in 2024, specifically as it relates to our -- to a legal dispute that was resolved and also some costs incurred in 2025 that are nonrecurring, which will -- do not impact the underlying business. And what I would say is on a like-for-like basis, the underlying business performance is strong. We've improved the cost discipline and set up the business up for a much leaner cost structure in 2026 and also with a larger degree of opportunity for monetizing that larger member base. Our negative net result is largely due to amortization costs related to historic investments in the platform, which, as you'll see in terms of our costs going forward, that is -- that will be reduced. And so I expect that in 2026, that amortization charge to continue to decrease. Personnel expenses increased significantly year-on-year. And as I mentioned in the half year, this was largely due to transition costs associated with the CEO change. But -- and then other operating income and expenses are largely related to one-off projects or discontinued projects that will not impact the business in 2026. Moving to our balance sheet. The main change in terms of cash reflects our decision to repay a larger amount of our outstanding debt, which was anticipated as well as some of the reclassification of our financial assets from securities into financial assets. What you'll see is our net balance sheet position remains stable year-over-year. We've improved our working capital position in terms of the gap between receivables and payables and the underlying business remains stable and strong going into 2026. As I mentioned, we've reduced our balance sheet liabilities with the reduction of our debt obligations in particular. And this will also allow us to save on our interest payments in both -- in 2026 and going into 2027. Our accrued liabilities and deferred income increased, as you'll see, from 2024 to 2025. And in our 2025 annual report, you will see that to increase or enhance our transparency here, we have deliberately presented the accrued liabilities and deferred income separately. And the increase in deferred income is a very positive story for us, and it relates to a couple of different things. So firstly, it reflects the higher membership sales where the revenue is then recognized over the subscription period so forward-looking for the 12 months of the membership, but also reflects our forward travel bookings for trips that have not yet departed. So for example, trips that were booked in 2025, but will take place in 2026. So our growing deferred income balance is a leading indicator of our future revenue and is reflective of our increased rate of bookings, particularly within travel, but also of our increased membership sales. As you can see on the liability side, the story is about deleveraging, reducing both our short-term and long-term liabilities. As you'll see, we have no short-term financial liabilities for the -- going into 2026 and -- because we repaid that ahead of schedule, and we reduced our long-term debt to CHF 2.4 million. As you'll see here, operating cash flow turned positive in 2025. The primary driver here is a change in receivables. There had been a large buildup of receivables in 2024, particularly from the MAG of Life settlement, which -- and also some receivables related to membership and services sales. And so we were diligent in our collection for those receivables in 2025 to more closely manage our cash flow versus previous years. As I mentioned, the increase in deferred income also contributed positively to our cash flow in 2025. And to draw your attention to a noncash impairment of just under CHF 1.6 million was a nonoperating cash impact. And so on a net basis, did not impact the underlying business. Looking at the second part of our cash flow statement. So as I mentioned, we focused on reducing our debt servicing costs to positively impact our cash flow, particularly this year in 2026. To note, we already have positive conversations underway for the refinancing of that CHF 2.4 million, which we reduced further in 2025 to allow us to extend beyond 2027. And then I think it's important to note at this stage that the business that I joined in 2024, the reality was that it had overbuilt its cost base, both in terms of headcount and other operating costs. 2025, as I mentioned earlier, was really a year of refocus and improved discipline in relation to removing that cost, but also rightsizing the business going forward. So reducing those unnecessary operating costs, but also improving our cash generation ability to drive future growth. We saw a slight reduction in our investment in intangibles. This reflects, as I mentioned, our decision to refocus on -- from tech investment to commercial priorities rather than rebuilding our platform. And in future years, you'll see, again, a lower amortization charge in the same way that we are -- you'll see a lower capitalization for that work in 2025. So the 2026 debt repayment schedule, as you see, is now completely clear, which meaningfully reduces our cash flow pressure in 2026 and sets us up well for the refinancing we will undertake this year as our last outstanding piece of debt comes to conclusion in Q2 or end of Q1 2027. Now turning to the outlook for 2026. Important to note, our platform is now bigger, it's more focused and it's more structurally efficient than it was. And so 2026 is really about how we start to convert that into profitable growth. The platform we've built now in 2025, 122,000 members, new airline partners, more distribution partners, B2B distribution partners, better unified travel operations and the foundational work to connect unify and leverage data across the business is really materially stronger than what existed a year ago. 2025 really has been about building that foundation and transitioning the business. And 2026 is now where that converts. Our strategic priorities are clear: scale distribution through B2B partnerships, deepen the monetization and share of wallet from our members in terms of travel and other services with us and carry on with the data unification to drive both revenue efficiencies as well as improving our cost structure within the business. And now turning to our guidance for 2026. So our guidance for 2026 for members is between 135,000 and 140,000 members. This will represent between 12% and 15% growth within the business. As you'll see, it's -- we are making a deliberate decision to slow membership growth to make sure that, as I said earlier, that the members we're acquiring into the business are those members with the most likely to see value and convert to one of our paid membership products, one of our paid services. Our net sales, we expect largely to be flat from 2025 to 2026, but an increase in our EBITDA from -- to be in a range of CHF 0.9 million to CHF 1.1 million. And as you'll see, we're not projecting a hockey stick, but we're projecting disciplined profitable growth within the business now that we have a solid base. And now that this foundational work has been completed in 2025, 2026 is really about delivering those results. And with that, I will thank you for your time and open it up to questions. So please add questions you may have into the chat, and I'll give it 1 minute to -- yes. So if you could please put your question into the chat, and I'll make sure to answer.

A question I had was about quantifying one-offs for 2025 -- 2026, I think you mean '24 and 2025. So 2024, it's probably in the region of CHF 400,000 to CHF 600,000, I would say, in terms of one-offs. And then in 2025, we would probably have a similar amount, as you'll see in terms of one-off costs, there was CHF 183,000 increase in our personnel costs related to the CEO transition, and we had other one-off costs related to specific projects. We will, in future, be looking at actually indicating our underlying EBITDA or adjusted EBITDA within the business. We decided not to do that for this earnings call, but we will be doing that in the future. Question about data unification. Are you already seeing -- starting to see first positive effects? Short answer is yes. We are -- on the revenue side, we have looked to unify how members purchase with us and specifically their renewal dates and when -- and then when we start to market to them coming up to the 10, 11th month of our memberships and making sure we're targeting those members with new offers as they come to that renewal, and we're already seeing great progress there. Also, we're starting to see efficiencies, particularly within -- in terms of cost within the organization where we had spent a lot of time with manual processes on the reconciliation of certain financial processes, indeed kind of commission tracking where we would have to manually pull data from different parts of the business. Some of the tools that we've now implemented, particularly on the commission tracking side, will save days and days of time for our finance team. Next question, biggest levers in regards to growth for the next 2 to 3 years. So I think a couple of different areas. One, within our existing member base, it's really about, as you saw earlier, connecting the different services that we have in a way that will show the benefit and value of the ASMALLWORLD ecosystem holistically to our members. Give you one example. Certain members who come to us because they attend one of our nearly 1,000 events per year. I've attended lots of those events. And sometimes I hear from members that they aren't aware of our travel booking services and the amazing benefits upgrades, et cetera, we can secure for them. And so that really says to me that there's an understanding or an education gap. And so I think in terms of a lever for driving revenue and ultimately profit in the business, it's around regardless of where you -- or how you have first encountered ASMALLWORLD, how can we know enough about you to be able to propose other parts of our benefit services, be that travel booking, be that hotel booking, if you want to book it yourself, be that access to miles, et cetera. So that's internally. And then as it relates to scaling externally, it's really around B2B distribution. As I said, we launched Klarna in end of 2025, and now we're integrated into the Klarna ecosystem, and we're starting to see members come through the Klarna channels. And so my sales and partnership team are really focused on identifying businesses and brands that have existing customer bases of high net worth individuals and travelers and identifying ways in which we can add value, be it through the benefits we offer, the access we provide and both in terms of services that we can charge for in terms of revenue to the B2B partner or indeed acquire members through that channel and make commissions or margin on memberships through them. And that's -- so I would say it's a mixture of doing a better job at making sure we're getting a greater share of wallet. And when I say greater share of wallet, the reason why it will matter is because members understand we can do more than one sort of, let's say, facet of what they might understand our offering to be. And then secondly, really about scaling externally with the right partners where we can offer value to their customer bases. Great. Well, thank you so much for joining me this sunny Thursday morning before Easter here in Zurich. I appreciate everyone's time. This recording and the presentation will be added to the Investors section of our website. And I wish everyone, if you celebrate the holiday, a wonderful few days. Thank you very much.