Experience Co Limited (EXP) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Experience Co Half Year '23 Results Conference Call. [Operator Instructions] CEO, John O'Sullivan; and CFO, Owen Kemp will present the results for the half year, followed by a question-and-answer session. [Operator Instructions] I'd now like to hand the conference over to CEO, John O'Sullivan. Please go ahead, John.

Thanks very much. Good morning, ladies and gentlemen. And can I start by acknowledging the traditional owners of the country that we now gather on here in Gadigal Country in the Eora Nation and Elders past, present and also emerging. Thank you very much for your time this morning, and it's our pleasure to present to you Experience Co's first half of FY '23 financial results. With me this morning, as per usual, is EXP CFO, Owen Kemp. And on slide 3, you'll find the format for the meeting that the moderator has already outlined, being a business update provided by myself, followed by Owen running through the financial results for the half, and then we'll conclude the presentation by providing a brief trading update and outlook for the business, and of course, happy to take your questions. Turning now to slide 5 in the presentation. If our FY 2022 results represented the toughest year on record for Experience Co, the first half of financial year '23 represented one of the more optimistic starts to our trading year that we have experienced since the COVID pandemic began. The key drivers of the optimistic start to the financial year were primarily down to 4 very distinct reasons. Firstly, we've seen a pronounced improvement in market conditions off the back of limited COVID-19 restrictions, a continual easing of labor supply pressures in the business and strong performances in destination markets, such as Queenstown, Cairns and Port Douglas, all resulting in more solid trading conditions. Secondly, we've seen a domestic customer within Australia and also in New Zealand that has remained resilient to outbound replacement and macroeconomic changes in both markets and with whom Experience Co was able to maintain a stronger direct relationship and a higher spend per passenger. Thirdly, we've also seen during the half, meaningful improvements in policy adjustments that will favor the creation of upside for international tourism into both Australia and New Zealand, underpinned by the reopening of the North Asian markets and increasing aviation capacity. And finally, we've seen good progress on key EXP organic growth projects, in particular, within our Wild Bush Luxury and Treetops Adventure business units. Turning now to slide 6. Owen, of course, will go through the financial results in more details, but reflective of the improved trading conditions and factors experienced during the half, I'm pleased to report that at a headline level, we saw revenues increase to AUD 51.5 million for the half, up from AUD 19.2 million in the corresponding half of FY 2022. The business was able to produce an underlying EBITDA of AUD 5.8 million, up from an underlying loss of AUD 3.1 million in the first half of FY 2022 and also resulting in an improvement in our net loss after tax of AUD 1.6 million, an improvement from a AUD 4.1 million loss in the same corresponding half of FY 2022. Our balance sheet remains in good health with AUD 14.4 million in cash and cash equivalents and net debt of AUD 2.3 million. Turning now to slide 7. As we outlined during the course of 2022 during our full year results and again at our Annual General Meeting in October, the Experience Co of today, even allowing for the impact of COVID-19 is a better business than the one that existed prior to the pandemic. Since 2019, our Board and management team have reset and reestablished the business with a clear strategy that is built around capital discipline, a focus on people and culture, a more diverse mix of customers and experience also while staying true to the original escape in the ordinary ethos on which the business was founded over 20 years ago. The opportunity of the business still remains ahead and as last reported, we believe the business prior to any new organic or inorganic growth projects is capable of earning AUD 40 million through the 4 verticals we have within the business today. Turning now to slide 8. As we reported during our full year results presentation for FY 2022, the key attributes of international demand recovery for Australia remain in very good health as recorded and reported by Tourism Australia. With regards to latent demand, the Skyscanner now reports that pre-pandemic levels have been exceeded by the level of searching for Australia over the course of 2022. With regards to Aviation Capacity, we saw that at December 2022, Aviation Capacity into Australia was at 70% of pre-COVID levels and is projected to be closer to 90% by the end of this financial year. Finally, international arrivals have recorded 61% of pre-pandemic levels without the impact of the newly re-opened China and Hong Kong markets. In addition to this, just this week, Tourism Research Australia in their latest tourism forecast for the period of 2022 to 2027, now predict that inbound visitor arrivals will be above pre-pandemic levels during 2025 and a total of AUD 11 million in 2027, whilst they also forecast that total visitor expenditure, both domestic and international combined will surpass pre-pandemic levels during the course of 2023. Turning now to slide 9. Before I hand over to Owen to take you through the financial results for the half, I'd like to give you a quick update on some key growth projects that have been occurring within the business. Whilst of course, our focus during FY '23 has been unashamedly about restoring Skydive and Reef Unlimited businesses to pre-pandemic levels, as we have outlined to the market previously, we have commenced a number of organic growth projects that have been focused without the requirement for additional external capital and focused on projects delivering a strong IRR. Our Treetops Adventure business is poised to reopen at Taronga Park Zoo attraction prior to the end of this financial year, and we are well advanced on securing new sites in locations such as Victoria, Queensland and also the ACT. Our Wild Bush Luxury team are nearing completion of the new expansion to Bamurru Plains with the launch of a new 6-star Jabiru suite offering a private family oasis in a very unique part of Australia. The new expansions into this luxury lodge will boost its capacity by some 30%. And I'm also very pleased to advise you that Experience Co has been selected by the New South Wales government as the preferred tenderer to develop the new Gardens of Stone luxury guided Walk and [indiscernible] adventure experience. Subject to final lease agreements and consultation, both will open progressively from the end of 2023 and will be part of the New South Wales government strategy to further extend the iconic Blue Mountains tourism precinct further west in New South Wales. This announcement proves our capability as a business to work alongside state government successfully in developing sustainable and highly attractive tourism experiences similar to the Reef Magic Pontoon which we launched in partnership with the Queensland government in April of 2022, and which continues to [situate] strongly. With that, I'd now like to hand over to Owen to take you through the first half financial results for financial year 2023. Thank you.

Thank you, John, and good morning to all on the line. As John said, today, we're very pleased to be discussing the first half 2023 results where we've seen the earnings potential of the reset EXP business coming through. Volumes were the strongest since pre-COVID in each segment. And along with disciplined pricing strategies, we see revenue at AUD 51.5 million or more than 2.5 times to PCP. In the period of the first half, there was no government COVID support, which is easily overlooked when considering the PCP, the results were aided by some AUD 3.3 million of government support attributable to tourism specific programs and wages support such as JobSaver. Echoing John's earlier comments, staffing shortage and inflationary pressures eased as the half progressed, after the impact of adverse weather conditions. The operating leverage in the business is evident, and that is seen in the underlying EBITDA of AUD 5.8 million in the half and similarly at the improvement in the PBT line. Corporate costs at AUD 3.3 million for the half are in line with expectations and have remained on par with the second half FY '22, once again, noting that the PCP of 2.7% was inclusive of and government support of over AUD 350,000. Those were the key note for detail on this page, you will notice that [indiscernible] AUD 29,000 income tax expense in the period despite a PBT loss. This is a one-off effect of a re-estimation and otherwise, you would see an income tax benefit that you'd normally expect at the corporate tax rate. Importantly, some of trading has been robust and as volumes continue to improve as inbound markets normalize, margins are anticipated to improve into 2023. Moving into slide 12. The result was one all about operating leverage with volume being the key driver here. Revenue is tracking in line with our recovery expectations, and this is despite the challenging weather conditions in Australia in the half, which impacted our Skydiving and Treetops Adventure categories in the calendar year 2022. Adventure Experiences traded strongly in the half with Reef Unlimited, in particular, performing ahead of recovery expectations. Looking at Skydiving on this page, while achieving the highest volumes post-COVID in both Australia and New Zealand, as you can see in the chart, on the page is recovering in line with the return of inbound markets, but also reflects labor supply improving as the half progressed. Only in the recent December and January months have we seen both markets returned over 50% of pre-COVID comps, and we look forward to this continuing to improve and result in improved earnings. Into Slide [13], Skydiving. Skydiving as a segment achieved breakeven in the half, and that was principally top line driven. Sales revenue of AUD 19.5 million was 110% up on the PCP, with over 38,000 tandem packs compared to 18,000 in the prior period and an increase in revenue per pack following price increases. We are pleased with the reset of our pricing approach over recent years, exiting the half with an average of AUD 460 per pack compared to pre-pandemic averages of approximately AUD 390. As I discussed earlier, with no government support in the period, and as such, I presented the other income line, which is predominantly in the PCP income support. And you'll see that drop off from 1.5% to 0.2% in the current period. Now looking to rationalize the skydiving EBITDA, which is the obvious question when you look at the page. There are 3 factors at play here and they relate to timing and how the recovery has played out. The first thing, the trajectory of the recovery, with the start of the half, including labor shortage and an uncertain demand overlaid with adverse weather. The second element considers the compounding effect of these factors on our supply with labor shortages and weather conditions and to a lesser extent, JET A-1 prices, each have a compounding effect when demand and supply are not in a steady state. As an example, in the half, we started Q1 with 4 tandems per plane load by the end of the half were approximately 6 with a view towards getting towards a more regular 7 to 8. What this means is doing 4 loads per day, it takes twice as long ground crew and flight operations cost per passenger twice as much. And the loft and overlook factors, the day goes logged up. So you are exposed to adverse weather conditions, air traffic holds and alike. The freeing up of the labor supply has been critical in improving the efficiency of each plane. And the third and last one is volume. And in particular, international is the key ingredient looking forward. And we can see this in December and January where an increased volume results in starkly improvement in revenue and earnings. All while it is worth noting that December and January is still more akin at the moment to what our normal off-peak times will be of July and August in a pre-pandemic year. So with strong confidence, we look forward to improvement of earnings in this segment. On the demand side, it remains robust with pent-up demand from the pandemic and weather reschedules, but also good momentum in new sales from a record Christmas campaign and a more active international consumer in the countries. In New Zealand, as you can see on the slide, Q2 was vastly improved with easily the best volume conditions post COVID. This is all about operating leverage from here and it's all about volume in terms of magnitude and consistency of which international markets will greatly insist in the near term, and we are excited about the trajectory ahead. China is fast emerging as an opportunity for the calendar year, and John will talk to this topic later in the presentation. Moving to slide 14, Adventure Experiences. In this category, we're seeing a strong momentum from the final quarter of FY '22 continue. Reef Unlimited continue to achieve circa 90% of pre-pandemic volumes on the back of a largely domestic market today. Labor shortages, similar to Skydiving eased considerably in the half, albeit some work remains to flex-up our staffing levels to boost onboard sales and other revenue add-ons. Treetops had a solid half, a very resilient business, albeit volumes were curtailed by the adverse weather in key operating locations, particularly in New South Wales and Sydney catchment in the all-important July and October school holiday periods. Summer holiday training has been robust in the Treetops category with over 3,000 packs on a few days in late December. Cape Tribulation was opened in July and is continuing to build momentum as the region recovers and Taronga Zoo is scheduled to reopen in the fourth quarter of this financial year. In our Wild Bush Luxury category, Bamurru Plains had a record season and the expansion projects, which commenced in November is progressing nicely, albeit with the obvious timing challenges that come with building a project in the tropics. Maria Island also continues to perform strongly. And as John said earlier in the presentation, we are delighted to be announced as the preferred operator for the Gardens of Stone projects, and these remain great opportunities for our Wild Bush Luxury and Treetops Adventure brands into 2024. Moving on to slide 15 and the balance sheet and cash flow. As John alluded to, we completed the period with the balance sheet remaining in a really healthy shape. On the cash flow, we saw robust operating cash flow of AUD 4.2 million from the improved trading, albeit in part offset by an increase in inventories and receivables at the balance date. We also invested in the period with fleet renewal in our Skydiving segment, including the divestment of a non-core [air-frame] as well as the expansion construction costs at Bamurru Plains and other growth signs, all the while noting that our accrued maintenance CapEx is somewhere near AUD 7 million to AUD 8 million per annum. So this is all in line with expectations. Cash holdings of AUD 14.4 million and net debt of AUD 2.3 million at 31 December has us in a good position and our NAB facility has been -- continued to be extended out and we work cooperatively with them going forward. We also have carried forward tax losses from the pandemic of AUD 44.5 million in gross terms of AUD 13.3 million tax effect. These are real and we look forward to accessing those in coming years as trading improves. I'll now pass back to John to talk through the trading update and outlook, including a focus on the international demand outlook and what it means for our business.

Thanks, Owen. Turning now to slide 17. Perhaps the most exciting years of 2023 was the recommencement and reengagement of the Chinese market in the international visitor economy, but equally, what is also becoming class apparent within our business, but also broadly in the sector is the improving fast rate of recovery from key inbound markets into Australia, New Zealand. Our internal view remains unchanged from previous presentations in that -- during 2025, we should see a recovery of the inbound markets to pre-pandemic levels, and therefore, the impact on our business will be similar. Without question, China remains the most important market for Australia and New Zealand's visitor economy from both a visitation and expenditure perspective. For EXP, this is no different. And whilst the initial file of Chinese tourists outbound will be the markets probably more closer to home, we expect that as 2023 progresses and through 2024, it will begin to exceed its performance of 2019. This is also confirmed by tourism economics and recent work conducted for Tourism Australia to predict that by 2025, it will be almost 30% larger as a market to Australia than pre-COVID times. In addition to that, we are also buoyed and very excited about the opportunities that present itself from some other key inbound markets to Australia, in particular, the United States, the United Kingdom and also very importantly, from a skydiving and adventure experiences perspective, the market of India. Turning now to slide 18. Finally, this morning before we take questions, I'm pleased to report that demand for our experiences during the month of January remained robust and our business finished slightly ahead of our projected profitability for the month. In line with seasonality, February and March are traditionally quite our shoulder periods, but I'm very pleased that the business is well positioned for the remainder of the financial year. Once again, our discipline on cost of acquisition of customers, pricing as well as cost controls generally have resulted in the business being able to continually improve its profitability and cash flows as volumes have increased. As a result of that, during the month of January, the business was positive at both an EBITDA and cash flow perspective. We anticipate that 2023 will see a continued improvement in international volumes for our business as aviation capacity and inbound movements by key markets into both Australia and New Zealand continue to improve. Equally, we also believe that strong domestic demand for EXP's core experiences will remain. As always, management continues to remain vigilant to market conditions, both positive and negative and we continue to build a pipeline of complementary and accretive acquisition opportunities. Of course, given the market uncertainty, we will not be releasing a guidance for financial year 2023. And in conclusion, this morning, I'd like to thank you again for your time and your ongoing support of Experience Co. With that, Owen and I are now very happy to take any questions that you may have. Thank you.

[Operator Instructions] The first question comes from John O'Shea from Ord Minnett.

Just a couple of questions from me. One on the micro level, just in relation to your net debt calculation, just confirming that when you've done that, you've included your finance leases in calculating your net debt.

Yes, that's right. Any leases or asset finance as you traditionally call them John, yes, they're included in that. So if you were to back those out, it would be a net cash position.

Second point is getting back to slide 7 on your recovery base and earnings, and you've mentioned that AUD 40 million number. Can you talk us through sort of how we should think about that AUD 40 million? Is it a base case AUD 40 million? Is it a kind of optimistic case or do you understand what I'm asking.

Yes, 100%. So the framework for that number, I guess, John, is very similar to what we presented at the AGM and in the FY '22 results series. But what we're not factoring in there, so we're just saying, really, this is what if those businesses did what they did before, now we actually think they've got a bit more potential in them. And as John alluded to there, there's potential for that market size to grow as well. But we haven't factored any of that into the AUD 40 million that we have presented on the page nor have we included any growth earnings. So say, the Bamurru project or any of the trees expansion, for example, John, we haven't put that in the AUD 40 million.

The rollout of the additional sites for trees are not included in that.

Correct. No, that's all right. And then, of course, look, we haven't tried to put anything in there, as we've talked about around our focus on yield and cost of acquisition, but we haven't factored anything in there on that. Now the reasons for that is, look, we're not trying to say that AUD 40 million is the absolute top potential of this business, John, as you'd imagine. I think it's got a bit more in it. But we need that volume to be through there on a consistent basis. So we need that linear relationship between demand and supply to be in equilibrium again.

Yes. And just an extension of that Owen is, by definition, what would we need to see in terms of the Chinese and the inbound market? Are we assuming that in doing that, of course, it's an annualized pro forma that we kind of get back to those levels? And if we do better than that or worse than that, the numbers flexes up and down or.

I mean just to sort of jump in on that, I think that's what we're saying that those levels of that level of profitability is based on the business in those, I guess, those legacy business units getting back to those FY '19 volumes, which, as we've said before, is a key focus of management and then looks at the cost we've taken out of the business and then also I guess, the performance that we know that the existing business units for Wild Bush Luxury and Treetops Adventures can do. So that's how we've calculated that number.

So I guess my attention of that is, if Tourism Australia are right and Tourism Economics are right, then that would, by definition, mean that it was up.

Yes, absolutely.

Your next question comes from Allan Franklin from Canaccord Genuity.

I wanted to sort of flesh-out a couple of discussion points, please. Just perhaps on your slides on the international recovery. Could you perhaps cut it slightly differently, please? I mean just sticking with the skydive, but saying the skydive New Zealand in your other basket, I'm assuming Australia is in that? And/or can you just carve-out a bit more detail what might be hiding in that other?

Should I set that through. So maybe if I -- we will actually do it. So the domestic in skydive New Zealand, Allan, it would be very similar to Australia represents about the same. So if you have New Zealand, which is domestic and it would be 8%, Australia would be 8% of the total pie.

And realistically, a lot of, I mean, Queenstown Airport has been busy from an international perspective, I assume that's mostly Aussies flying-in but not necessarily jumping out of a plane as much as the other international cohorts have. So New Zealand, -- is that a fair comment? So New Zealand obviously does need a lot more of the international tourism piece? And is that delayed relative to what we might think here and or are you feeling comfortable it's the same profile?

I'm feeling maybe in terms of international arrival into the New Zealand or Australians arriving into New Zealand, it's basically on a like-for-like basis, it's actually slightly ahead of where it was in FY '19, the Australian component. Queenstown as an aviation destination, the only international flights to go in there directly currently is from Australia, and that's traditionally been the case with that airport. So that international traffic feeds in from Christchurch, Wellington, Auckland, in particular into that market. But I mean, I guess, looking forward, we're feeling very comfortable about New Zealand as a market because it almost feels in some ways that the snapback as a destination is going along very well compared to other international markets.

And then maybe just shifting still on skydive, but just think about the yield dynamics, presumably a little bit of a tailwind from the international side. Is that a fair observation --

Yes. I think that's a fair observation, Alan. Look, if we revert to historical type here in pre-pandemic, generally, our internationals were high-yielding in terms and particularly certain subsets such as China on uptakes of, say, the video product in the skydiving or the option of altitude that generally be a high-value consumer. So that would be a fair sort of statement to introduce that there's a tailwind there.

And just any sort of commentary you can make around the sort of the ability for you to capitalize on that on the dynamics relative to competition. I presume that you obviously need to be in the year of Asian Networks again and the sort of mix shift, I guess, sort of shifting away from sort of a direct to an agent dynamic just sort of how that might sort of play through? And any sort of any color you can sort of provide on that.

Yes. So I think for us, we have spent a lot of time during the pandemic, investing in systems and capabilities within the business that allows us to maintain a much more direct relationship with the customer. And as what we've seen during December within the skydive segment as a whole is that direct relationship is running at about -- I think it's around 70% pre-pandemic, it was at about 45%. Naturally, there will be an increased influence of third-party distributors in our business now as those international markets come back and we are starting to engage with them more frequently and more proactively. But I guess one of the things that we -- what excites Owen and I is that we're very well positioned now for that direct-to-consumer relationship to continue and a really practical example at the moment, Alan, is that we're spending a lot of time in the [indiscernible] network, but rather than just being sort of handing out focus like we might have done in the past, we're actually taking and receiving bookings at on-site and converting that directly. So there will be an increase, no question, and we welcome that, and we value our trade partners. But at the same time, we also know the importance of that direct relationship in where we're going to battle very hard to maintain that as a higher percentage as we can.

The next question comes from Julian Mulcahy from E&P.

Just a couple of questions on the Skydiving business. If you look at that in the first half result, you did much greater volume in the next sort of final quarter. What was the sort of EBITDA mix between first quarter and second quarter, just certain idea of the leverage?

That's a good question. Yes, it's very back-ended is probably the best way to say that. So I'm reticent to share too much detail on a quarterly data of EBITDA at this stage until things settle. But certainly back-ended, and we've seen that recovery really kick-in from that December period, Julian. And that even goes across the business I think at a high level, that earnings was weighted to the second quarter and the EBITDA line.

So was there like a meaningful loss in the first quarter?

Considerable, yes. You're talking a business that when you start hitting through that 50% comps, you can sort of get in the order of AUD 1.5 million, AUD 1.6 million EBITDA in a month. So it's quite a considerable turnaround.

And as you go back to more agent traffic, is that going to sort of change the sort of margin because we pay [indiscernible] commission.

Look, not to face that you guys looking at the numbers prima facie because what will happen is actually get more volume, which is where you'll have that happening at the same time. And that volume is really key to the labor efficiency and the flight operation efficiency. So while we might see an increase in the commission line, that efficiency of just throwing the volume and getting the plane more full, getting your days done quicker, all those sorts of things. You probably won't see that too much I guess Julian from an outsider. But if you were to pick one line, I would expect the Asian commission line in my opinion would go up, but I'd expect that to be offset by better efficiency as the volume plays out in the P&L.

The other thing as well, Julian, we spent a lot of time in, I guess, reshaping our relationships with distributors. So we have taken quite a more disciplined approach to the levels of commissions that we pay. So you'll probably find even allowing for the increase in that third-party channel as a channel overall, the commission rates that we paid in the percentage-wise in the past are less than on average, we've taken about 5% of those commissions.

[Operator Instructions] Your next question comes from David Kingston from Ocean Capital.

Just a couple of questions. Just clarifying the AUD 40 million, which is the magic number. Is that EBITDA or is it after head-office costs, could you give any color on that?

Yes, inclusive of head office costs. Correct.

So it's at the EBIT line, EBITDA or the pretax line.

EBITDA for the group.

Look, secondly, good to hear you think the Chinese are coming back in numbers. Where do you see fast forward to 2025 the split of inbound, John, roughly between Chinese, Americans, Europeans, et cetera.

In terms of total visitation to Australia, I'd see it being similar to what it had been before. So I mean, if you take roughly, David, it was at about 1.4 million visitors out of, I think it was a circa AUD 9 million overall visitors to Australia. I think it will be similar. If not, it could be -- if you take what tourism economics are saying, it could be higher than that. So I think as that overall inbound market grows, I think you'll roughly see to Australia will be between sort of 10%, 15% of total share.

Okay. And finally, on the business. You've got quite a few businesses, John. Look, the Marine business is a good business. I think Treetops is solid. Look, clearly Skydive is pretty fragmented. You've got a lot of sites all around Australia and New Zealand, a lot of equipment to look after. It's heavily exposed to inbound, heavily exposed to weather. So Skydive has sort of obviously been a challenge. But secondly, your new business on the Wild Bush Luxury, it sounds alluring and quite a few people like going on those, but they're relatively small scale and serve a management input in those. And all these businesses do take-up plenty of head-office times. So just interested in your general thoughts about which of your businesses you are happiest with in terms of delivering --

It is like trying to pick a child. But we're very happy. We've obviously been very happy, as you would know from your own investment with Sunlover, the Great Barrier Reef. The performance up there has been very strong. We've equally been happy with how our businesses in New Zealand have performed. And that's both our Skydive and our aviation business. We've got work to do in Australia is, I think, as Owen has alluded to going through the segments. And Wild Bush Luxury, yes, it is, but it is currently a small scale of business, but we are excited by the fact that the investment that we're making in Bamurru, we are looking at some expansion of Arkaba and then obviously, the tender that we've picked up with the New South Wales government as preferred bidder for preferred bidder for Garden Stone will allow us to grow that segment. And we also like the customer that comes into that, David, because they're high yield. We also believe we can cross-sell them across other parts of our business in particular the Reef business. And to an extent, some of the skydive locations. And on skydive more generally, yes, look, it's exposed to weather as any tourism business is, and there's obviously some safety overlay we have on that. But what we've become better at doing during the course of the pandemic is moving customers through the site. So I guess, leveraging the network. So if there are, for example, delays or weather impacts at places like Wollongong, transferring those customers into, say, Newcastle, for example, is now what we're increasingly doing. So we're lessening that operational impact we may have. But overall, happy with all the businesses. As I've said previously, the key focus and the key driver of that AUD 40 million EBITDA number is going to be getting the Reef and Skydiving businesses back to their pre-pandemic levels. So that's where we are spending a lot of time. And then the final thing I'd say is what we're really happy with as well is a level of our management capability that we have across the business now. So distinct is where we were from before and even we've made some changes during the course of this calendar year to our executive team. We're very happy with the level of capability better than where it has been. So that also ensures that. Owen and I can spend time on those things that are most important. And certainly, for us, that for those 2 core businesses being marine and also skydiving is where we're focusing a lot of time on, as we've said consistently before.

And to deliver that magic AUD 40 million, what revenue are you assuming, John, to deliver the AUD 40 million.

Anything around sort of AUD 150 million to AUD 160 million will get you there.

It's been a fantastic company back in the days of [indiscernible] cranking it up, and it's had its ups and downs, but look, good recovery in the last 6 months. And yes, look, I'm sure it will kick up from here on in. It's just a matter of how quickly you can get up to the AUD 160 million to AUD 200 million revenue. And judging from the revenue lift in the last 6 months, you may be able to do it in 2024. So we look forward to that.

Your next question comes from [ Raima Zhang ] from CCZ Equities.

I just had a question about -- with the recent acquisitions with the trade types and also the Wild Bush Luxury businesses. Are you seeing a lot of cross-selling activities between those 2 segments. And I guess the other ones that you have the skydiving, is it like the cruises?

Look, it's a good question. And I guess similar to the part of the question that David had before. We started one of the things we did do during the course of the pandemic was we invested in a new CRM capability with HubSpot through our provider. We've now got a customer database across the group. So any customers that have opted in for Skydiving, Treetops Adventures, Wild Bush Luxury and our Great Barrier Reef Experiences business are all now within that subset. So we are able to now start offering experiences not just across the 2 acquisitions verticals across the entire group provided that customer opportunity, and our opt-in rate has been pretty good. So we don't look at it just as the new acquisition business, we look at it across the group.

The next question comes from [indiscernible].

Just focusing on the Skydiving numbers. With your revenue as a percentage of pre-pandemic, would that be higher than your volumes pre-pandemic presumably.

Yes, with the yield driven, on a revenue per tax basis. That's correct.

Okay. I mean that's certainly what it looks like for the first half versus first half '19. So if all else equal with the price improvements you'd expect pre-pandemic versus that to exceed it on a revenue basis with you?

If we did the simple all else equal, it's always a dangerous assumption in operating business in tourism, but yes, absolutely.

And then just following down, obviously, with more direct as opposed to the third-party services that wouldn't necessarily increase your revenue, presumably, but improve the gross margins.

Improve the growth, yes. So you'll see that come out in the gross margin in 2 ways. So you have, first of all, the percentage mix as you alluded to, but also as John sort of touched on earlier, which we haven't spoken about extensively in a while, just that reset of the commission base from a -- that has happened over the pandemic as well.

And then just lastly, just looking at the inbound tourism numbers on slide 8, just like to see on Australia. What would you say your volumes would be as a percentage relative to that, your skydiving numbers, would you be lagging.

Yes. That's a good -- and you use the word [argue] when we look at it -- it does seem to lag and it is not a small data set since Australia opened its borders, but it seems to be that point where that initial capacity was taken up by a lot of VFR rather than actual tourism consumers, if you will, who are you going to do activities in our space. So I guess if you compare us to some of the other travel stops, everyone has to open a plane to get to Australia, right? So if you got a shot at the prize, whereas we need the people who get on the planes in the coming year actually doing experiences. So we are lagging that visitation, but it is improving as that VFR gets out of mix, and we get to that more steady state, I'd expect that to close the gap.

And presumably, that segment of the market would be -- are they backpackers, students.

When you think about backpackers students for skydiving segment but just also the free independent traveler as well in the Skydive segment in particular. And then up in the Reef, Unlimited Reef, some of that group and major markets, North Asia markets, big Western groups as well is what we'd see there.

Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.