lastminute.com N.V. (LMN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to lastminute.com Investor and Media Conference Call and Live Webcast on the Half Year 2023 Results. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Silvia Sanchez, Investor Relations Officer of lastminute.com. Please go ahead, madam.

Thank you, Sandra. Good morning, everyone. Thanks all -- to all of you for joining us today for the webcast and our results for the first half of 2023. The speakers today will be Luca Concone, our Chief Executive Officer; and Sergio Signoretti, our Chief Financial Officer. On the next slide, you can see the agenda for this call. Luca will start with the highlights, showing you the key developments in the first half of the year, then Sergio will take you through the financials. And as you may have seen in the press release, we provided you with some guidance for the full year 2023, which Luca will explain after Sergio's part, and [ will ] close the presentation with the key takeaways. After that, we are happy to take your questions during the Q&A session. You can post your questions already during the whole presentation or eventually during the Q&A session itself in the question field that you see next to the slides on your webcast screen. We will address as much as we can in the Q&A session following the presentation. If we run out of time and there are still open questions left, we will address them offline. Also, keep in mind that the session will be recorded and a replay provided on our webpage, so you can always relisten also in case you lose connection or something is missed. And with that, I hand it over to Luca for the presentation.

Good morning. Thank you for finding the time on the 3rd of August to analyze lastminute.com results. As Silvia just said, I will start with the key highlights. I will hand over to my CFO, Sergio Signoretti, and then I will take back control, takeaways and our initial guidance for the year 2023. In terms of highlights for the first half of 2023, as you know, I took the reins exactly at the beginning of the year. So this is my first 6 months and happy of what the company achieved. We grew the Holiday Package business with 7 new markets last year and 5 more this year. So now we offer our core product in 23 different markets. We have done a significant improvement in terms of payment. Now, especially those clearly buying our Holiday Packages can pay in full, which is always welcome, but they can also pay deposit and balance in installments. We have launched -- we are the first European OTA to launch holiday products powered by ChatGPT in our app, which I highly recommend you should download and use, and it helps you basically plan your holidays. So there is a lot of added value. We have broadened our B2B partnership, essentially set up -- [ you ] -- just focus on B2B than [ 2C ] partnerships. It is very successful. It's already at a level which is more than double what was last year, especially gift cards. But in general, the B2B partnerships have been a focus of the company, and they've brought home some very good -- and finally, we have decided during the course of 2022 to internalize the customer care. We kept that direction in the first half of 2023. So now we have more control in terms of the quality, the service, feedback from the clients, having now our teams internally. The teams are located in Bangalore, in India and in Madrid, in Spain. And we cover basically all the languages that our customers use to interact with us as we are now selling different countries. What has happened, I would like to say that, first of all, we changed the governance and we reorganized the company. So this is not uncommon when a new CEO comes in, but in this case, was very needed given what has happened. So we set up more [ stringent ] processes, control, audit. We basically -- if -- those of you who attended my previous call, I said we went from a teenager to an adult company. Now we are focused on, so Dynamic Packages to operators, hotels, cruises, flights so that we have heads of business that have all the levers that they need in order to govern the business. At the Board level, as you may remember, we have changed the Board completely, new committees that now regularly monitor more strictly what's happening in the company. Financially, we have fully repaid in May, the 29 million of subsidies that were received during 2020, 2021 and 2022. So we have reimbursed SECO for all the money they gave us. We financed this with 25 million of new credit lines in February, but we also repaid 50 million of COVID loans in February. So let's say, we financed 10 million in February with new credit lines, [ best ] from the business. As some of you may remember, in the previous call, which was quarter 1 related, we announced that we annulled the Freesailors transaction, it was a transaction which we were buying shares of our holder over the down payment of 15 million, which was done. So financially, again, we got the money back. We are stronger, and if you follow us on the media, you may remember that in April we won the Landmark case against Ryanair. Litigation with Ryanair is still going on, not just with us, actually, they are in legal cases with the whole industry. That tells you something about their behavior. But with us, particularly, we won a very important case. In terms of numbers, we are minus 2% in terms of booking versus 2022, very stable, and the main reason is that we decided to focus much more on profits as opposed to growth. So the number of bookings has been going down. The [ GTV ] has been going up. The reason why the GTV is plus 21% with a minus 2% of booking is both product mix. We are selling more Dynamic Packages and package holidays versus flights. And so, these have a higher ABV or average booking value, and there is inflation. So same flight now it costs more. And so you just have a higher GTV. We have 15% more revenues than last year, which is very important because that's basically our key metric, especially in the OTA business. And that should be read with the plus 22% of adjusted EBITDA. That tells you that we have a better operating leverage now because 15% extra revenues, 22% extra EBITDA. Clearly, we improved our [indiscernible] what that shows is also that Holiday Packages now are the core of our company. The contribution margin is 68%. Most of those we sell directly and part through white label agreements with a number of players. But clearly, they became so important and we've invested so much in technology to provide them to all the other players that this makes us by far the leader in Europe of Holiday Packages. And the net financial position is very strong. Sergio will elaborate with all the details, but basically, even though we reimburse the COVID loans, we reimburse the COVID contributions, we are in a very strong financial position. So I would say we are very satisfied with where we are right now. Also because in 6 months, the turnaround of the company [indiscernible] and this testifies to the quality of the people that work in lastminute.com. Having said that, I hand the reins over to Sergio, and I'll talk to you shortly after we finish discussing the financial results.

Many thanks, Luca. Good morning all, and nice, again, to hear you back for this first half investor call. So as Luca was anticipating, I mean, we registered a very good first half in terms of growth versus 2022. So again, the top 3 metrics, a plus 21% gross travel value versus last year, which is -- as we will see later on the record for us, entirely driven from the growth of Holiday Packages, plus 51% versus last year. Which translates into even more profitable growth than growth at the top line level with adjusted EBITDA growing at 22% -- plus 22% versus last year. Going into retail numbers. So we are at Page 11 now. As Luca was anticipating, volumes of bookings have been stable versus half 1 2022, and this is actually the result of a strategic form and it's a combination of, let me say, profitability strategy plus mix of higher Holiday Packages sales, which affects, as we were saying before, gross travel value, which has led to EUR 2 billion in the first 6 months. This is a record for us. It was a record already expected, and is driving if we go from the revenues generated from Holiday Packages, which in terms of mix have reached almost 60% of the overall OTA revenue pie versus the 39% of 2019. So it's 20 percentage points higher mix generated by the Holiday Packages, which is corresponding to the minus 21% of incidence of the flight revenues, which, again, is part of a strategic decision. So part is the commoditization of the flight business and part is, again, decision of focusing on the most profitable pie of the travel market. This is in terms of comparison versus pre-COVID level. So in a market which still has not recovered, we are plus 9% in terms of top line. Then if we go back and compare versus 2022, which is Page 13, we see that we have registered EUR 184 million revenues versus EUR 160 million first half of 2022. So again, this is a plus 15% with an even higher growth of gross profit. So again, this is the weakness that we are growing in terms of profitability more than what we are growing in terms of top line, plus 22%, EUR 74 million versus EUR 61 million, and this is essentially derived from a more efficient marketing spend contrary to what was happening in the second half of 2022, as we commented also in our previous investor call. And also from the development of the B2B2C business that Luca was anticipating before, where we basically offer our content travel to third-parties, which are interested in news in our content travel for their customer base. So this is a business which is growing, which is ensuring a higher profitability. And so it's also a mix effect of this strategic piece of business that more and more we are going to develop in the future on top of the development of our B2C strategy on our customer base. Going to the page -- following page. So this is related to the usual representation of our cost base. On the left side you see what we define HR fixed cost, which is essentially our HR cost, net of the capital expenditures which are related to the development time and costs that, of course, tech people do. They have increased as planned, plus 20% versus last year. This is the result of what you may remember is the huge investment in hiring more than 130 people in our tech department in order to reinforce the capability to make -- with the [ make ] strategy. The effort in order to improve more and more our website and the customer experience on our properties. So this is fully reflected into first half of 2023, given the annualization of the cost of these people which have been hired from Q4 2021 to Q4 2022. You see it reflected at this point into the headcount -- into the average headcount number, which has passed from 945 people to 1,076 in first half 2023. If you go on the right-hand side, this is representing what we define running cost. So it's actually the tech cost plus the overhead cost plus the SG&A. We are here still 6% down versus where we were in 2019. So still the effect of the massive cost reduction program that we've done during COVID there. We are growing as planned, plus 20% -- plus 23% versus half 1 2022, given partially to the increase of the headcount and partially to the increase of the traffic that has generated our top line growth, which affects, of course, part of the IT cost. Then moving to Page 15. Page 15 represents in a more numerical format comparing '23 -- first half '23 versus first half '22. The key performance indicators at P&L level, I would not enter in detail into that, but just comment on the 2 last lines. The one before the last, again, shows what we define adjusted EBITDA in continuity with all our previous investor calls, which is the combination of the EBITDA generated by the 2 -- by the 3 business units, so by the OTA, the META and the Cruises business, which is almost EUR 30 million, EUR 29.9 million versus EUR 24.5 million of first half 2022. So a significant 22% increase. Then we have added the last line which takes into account, as it's written on the left, the combined effect of cancellations, that we'll comment in a while and of the voucher misredemptions. That managerially speaking are part of the same phenomenon because, of course, vouchers are one of the refunds method in order to refund for the cancellation. So if we combine the 22, actually, we are a plus 1% versus last year. And this is entirely -- almost entirely driven from the lower misredemption experience in first half, '23 versus first half '22 that I will comment in the following page. So if you go to Page 16, this tries to explain, well, this sort of phenomenon. So if you start from the left, you see that, again, EBITDA adjusted has been plus 22%. And then the cancellation impact, which, as you know, are a structural component of the tour operator business, are actually growing 1 million versus what it was last year. So 9.7 million versus 8.7 million, are growing 11% versus a growth of the GTV of 21%. So as you know, cancellation is a factor of 2 drivers. One is the cancellation rate. Cancellation rate is lower versus last year. So it's in the region of 5% versus 6%, which was last year. The second driver is the average booking value, which, of course, is a function of the mix. So the more we sell Holiday Packages, the more the average booking value increases. And so the combination of these 2 factors affect the cancellation costs. So cancellation are growing less than gross travel value, and this is a very good news. And of course, we are working more and more, as we will say also later on, in order to reduce the level of 5% for what at least is related to the cancellation of -- voluntarily made from our clients because part of the cancellations, approximately half of that is related to the average behavior of the industry, of the airlines, generated by strikes, generated by capacity issues, generated by cap in the capacity of the airports, which still is there and still is more than double than what it was in 2019. Then the Q4. Please, Luca.

Allow me to elaborate a little bit on the cancellations, please.

Please.

So first of all, cancellation rate at 5% is pretty in line with the industry. [ 2% ] of that is supply side. It's basically airlines. It's extremely rare that hotels cancel on their end. And there is nothing we can do clearly with a 2% airline, except identifying some airlines that are much worse than the others and try not to sell them in Dynamic Packages. But really, airlines are still our market 12% below 2019 in terms of number of flights. They are higher in terms of revenues, but that's because of pricing inflation. But there is not much that we can do on the 2%. On the 3%, which is client side, many of those not fulfilling their payment obligations before travel date. And so we do cancel because we don't allow people to travel with our money. And usually, we get the money back from the hotel, and again, we are stuck with the flight component, clearly. And what we are -- the number of interventions in order to better assess the creditworthiness of the clients before we allow them to choose installment or deposit and balance payments. So we are expecting a significant change in the second half of the year. Those changes happen. It's just that the effect is clearly a travel date. So anything that is booked 70, 90 days before travel date will not appear until 3 months later. So it's very important, the 2%, which is the supply side, not much you can do. The 3%, which is client side that you can really work on, and we have been doing it. Go on, please, Sergio.

Thanks, Luca, for the clarification. Now the second phenomenon is vouchers. Voucher is a preferred method, as you know. For those of you who follow us since COVID times -- so during COVID we issued more than EUR 200 million, EUR 250 million vouchers in order to refund the EUR 500 million cancellation that we managed at the point in time. So of course, the voucher issue at that point in time had an expiry date. And of course, now the amount of outstanding vouchers which are out there in the market are mostly related to the more recent cancellations. So the COVID [ tail ] has ended, and that is affecting entirely the number that you see here. So the voucher misredemption, which -- again, let's define it is the economic benefit in terms of seized liability that voucher generate when they expire without being utilized from the customer. This corresponds on average to 30% of the overall outstanding voucher. It was corresponding to 30% last year as well. It was corresponding to 30% even in the previous years. But the point is that the stock is much less. The stock is much less because most of the COVID vouchers have expired. And therefore, this is generating the 41% that you see at the bottom as a delta which you need to read in combination of the cancellation cost. Because last year, if you look at the bottom, the 2 phenomenon were exactly compensating each other. So the next effect of cancellation voucher misredemption was neutral, whereas this year, we have an effect of approximately EUR 5 million, which is mostly derived from the voucher long tail end due to COVID, then to the cancellation phenomenon. That's why the EBITDA net of cancellation and vouchers, which we represent on the right side of the slide, is 25 million, not far from what it was last year. If we go to the next page, we see the bridge down to IFRS EBITDA, which is impacted by a noncash cost, which is what is represented into the incentive plans. As you know, accounting principles require to revalue at every closing the liabilities that we have towards employees based on what is the stock price of that moment. So stock price of lastminute.com has increased from approximately EUR 20 million -- CHF 20 million, sorry, which was the price at the beginning of the year to approximately CHF 28 million. This CHF 8 million increase has correspondingly generated an increase in the liabilities towards employees, for the long-term incentive plans existing and outstanding. And this is generating the 3.6 million. So if you compare versus last year, which again is represented in the bottom, this was a positive relief to our P&L because the stock price devalued in the first half of 2022 versus the price existing at the 1st of January 2022. So this is a swing of approximately EUR 6 million year-on-year comparing to first half that is impacting IFRS EBITDA. So it's purely accounting staff. It's a noncash cost, but of course, we need to comply with accounting principles. So we need to fully consider this effect. That's why EBITDA IFRS is 20 million versus the 27.7 million of last year. In Page 18, you find the -- again, the numerical explanation line by line of the various KPI of the profit and loss from the adjusted EBITDA to the net result. Net result, of course, we are back to net income, which is very good news. If you remember, last year, the result was affected by the provision of EUR 35 million for the investigation and the repayment of the government subsidies. So we are back to profitability. Versus first half 2022 net income is approximately 7 million lower, and this is almost entirely due to the noncash costs that I commented before related to the long-term incentive plans, starting from a similar level of adjusted EBITDA, net of cancellation and voucher misredemption. So last slide on my side represents, as always, what is the trend of gross and net cash. The red curve is the gross cash, which at the end of June was EUR 167 million, net of the repayment of the EUR 29 million -- CHF 29 million to Switzerland, to the SECO for the government subsidies. So not far, if you gross up the amount of the government subsidy is repaid to what was the level in June 2022. In terms of net financial position, it has more than doubled, 2.5x what it was at the end of 2022. So the end of 2022 was 42 million. It is more than 100 million, 102 million in -- at the end of June, and this is actually factoring the approximately 60 million, 65 million of financings that we have and is factoring also the reversal of the timing difference accounted for at the end of 2022 related to the accounting treatment of the purchase of minority of membership interest in Freesailors that we commented as a one-off effect on the financial position effect, which has entirely been reversed in Q1 2023. So very solid position, again, even after having repaid entirely the government subsidies to the Swiss state. Maybe, Luca, you can take up again from here.

Thank you, Sergio. So clearly, as Sergio noted, since the new Board came in, the shares have grown more than over 30% in 6 months, and the only negative impact in our incentive plan that flows all the way through in the P&L. So hopefully, we're going to have additional costs in the future too if we keep on growing the share value significantly, as we plan to do. I'm going straight to what is obviously for lastminute.com. It's -- give you some guidance about 2023. Basically, we expect to finish the year 10% to 15% higher in revenues and 15% to 20% higher in adjusted EBITDA the cancellations, which we mentioned before. And even including cancellations, we expect to be 10% to 15% higher than last year. This is particularly important because we are basically managing this growth. We could -- I wouldn't say easily, but we aim for faster growth in terms of revenues and lower growth in terms of adjusted EBITDA. But we think that you, as our shareholders, really appreciate that the company grows better than market, but keeps the focus on profit. And this, I believe, and Sergio has shown it in our MFP, makes the company stronger, which is a key element for the future. So the key takeaways, and then we will quickly go into the Q&A session is [ like ] with all our initiatives, expect some additional positive impact in H2. We've also done a big job to identify some factors to keep on cutting costs and rightsizing our employees, and this will kick in the year. The Board is much stronger and the reorganization is starting to show its effect in terms of efficiency. We are above 2019 levels, which is always the benchmark in this industry, 2019. Profitability is in line, but we aim to grow it a bit more in the second part of the year. We have a lot of cash. Now most of this cash is trapped because as you know, we have restricted accounts. When we're talking about our customers' money [indiscernible] they travel, there is quite a [ potpourri ] of regulations going around in our markets, but basically, we keep the customers' money part of it aside before they complete the travel, and this explains the EUR 100 million difference between our [indiscernible] cash position. But overall, if nothing like COVID happens, you can expect our full year to be higher in revenues in the 10% to 15% range and the same for net of cancellations, which is a key metric in our industry. Having said that, I hand it over to Silvia, who probably is the best person to lead the Q&A session.

Thanks, Luca. So we are now starting the question-and-answer session. As said before, you can post your questions in the field that you see next to the slide or should see. I can see that there are already some questions posted. Some of them are similar. So let me just point out that we will bundle similar questions to be able to address as much as possible. So don't be surprised if your question might be phrased a bit differently when I read it out from the exact way you posted it so we can cover the broader topic, and as I said, address as much as possible. In case we won't have time to answer your questions during the call, as I said before, please feel free to reach out to the Investor Relations team, and we can schedule a follow-up so we can address any questions left offline. And please remember the session also is being recorded, and we will provide the replay on the website so you can relisten. So let's start with the first question. One, it's for Luca, and it refers to the employees. So lastminute.com has now over 1,500 employees. About 300 are working in IT. How many are working in sales, marketing, customer support and administration? So a bit -- if you could just give a bit more color on the split of the staff in terms of departments?

Yes. I mean, there are tons of details. But overall, we are actually over [indiscernible] employees. [ definitely ] a good growth. Those working in IT are over 400, plus external contractors. So it's quite a relevant part of our business, our customer care, which is 660 employees. So between tech and customer care, we add up to 1,000. The rest is around 300, 350 depending what you count with the META business are in business side. Then there is finance and payments, which is over 100. And then myself, my staff, all the corporate functions, legal, you name it, it's all the various -- HR, all the various functions that are the remaining -- another 100. What I'm very proud to say is that as a company, we are almost perfectly 50-50 divided by gender, men and women, which is something important, given our ESG commitment, and that the majority of our employees is less than 45 years old. The most common group is 25 to 35, with almost half of our staff in that bracket. So it's young and it's quite balanced in terms of gender. I hope I replied. If you want some additional details, please feel free to ask.

So the next question refers to the net cash and the possibility of a repurchase program, share buyback program. So the question says, the net cash is now over EUR 100 million. Is it too early to think on applying such a repurchase program?

Is it me or Sergio?

It's you, Luca.

Okay. Yes. Sorry. So yes, the AGM on the 30th of June has again approved a repurchase program, but the share buyback is focused on financing our long-term incentive plans. So if and when we restart, it just depends on the need of our incentive plans. We will stay focused. And of course, we will adhere to all regulations and inform the market. But for the time being, there is no additional big buyback program approved by the shareholders.

Next question would be for Sergio, and it refers to the finance income. Your finance income only shows EUR 335 million. Should we weigh the large increase in this position, considering that the over 100 million cash in combination with the credit interest of over 50%, as you know, the European interest rate is now 4.25%?

I mean, this is a good point. So what do we do with all this cash. But -- so it's related to the, let me say, liquidity investment strategy that the company may have. But you should consider 2, 3 factors. One factor is that we've been quite cautious over time in terms of investing our cash in excess because still, there are some uncertainties in the market. So, I mean, Luca has presented the guidance before, but we should remember that there is [ over ] 1.5 hours flight from here, that there are some economic -- some macroeconomic uncertainties that we read every day on the newspapers. We were having CHF 29 million to be paid to the Swiss State up to May. So there were a number of reasons for which end -- and last but not least, part of this cash is "not available in order to be utilized for future payments, for future departures related for the regulated business." Okay. So everything combined, our approach on the possibility of reinvesting part of the excess cash has been so far quite cautious. So this is something that we are going to be evaluating in the future. Of course, there is an opportunity which is derived from the high interest rates. So we will evaluate based on the opportunity that we will have. Yes, I think that's it.

Next question is again for Sergio, and it's about the profitability. So what were the triggers for the improvement in adjusted EBITDA in absolute terms and in margins Q2 versus Q1?

The triggers are entirely at gross profit level, as we said. So if you compare -- so we are talking about comparison of Q2 versus Q1, if I understand correctly the question. So it's quarter-on-quarter increase. We have registered a higher gross profit versus Q1 with revenues which were more or less in line versus Q1. And this is entirely driven from the combination of the 2 factors that was I mentioning before. So one is a more efficient marketing performance spend mostly on the Holiday Packages business through a more wise approach in order to ensure that the recurring investments of our marketing spend is proper. And the second is the acceleration of the mix of sales to a B2B2C channel relates, mostly related to Holiday Packages which is, again, part of the strategy of the company. We are not talking about booking.com only. We are talking about agreements with third-parties, nontravel players in order to offer content travel to their customer base. In particular, I'm talking about the employment benefit business, which is a business which is growing a lot and which strategically is very relevant for us.

Then again, it's -- I think it's maybe already implied in the question before. But again, the Q2 margin was 18.3%. Is above 20% margin in Q3 and Q4 thinkable?

I would say that we should expect -- for sure, we should expect an increase the percentage margin, taking into account cancellation and voucher misredemption. For what Luca was saying before, this is going to be happening. There are a number of actions, a number of interventions in order to reduce -- and this is already materializing in July, the generation of EBITDA after cancellation of voucher misredemption. Thanks to the action in place that Luca was commenting before. So I would say that yes, we should expect, I would say, to maintain this percentage and eventually to increase the [indiscernible] cancelation and voucher misredemption.

Then the next question is on -- because we mentioned in the presentation the case with Ryanair. And the question is basically just a quick recap of what that case is about? It would be for Luca, in this case.

So unfortunately, as I said before, Ryanair is in litigation with the industry. With us specifically, we had positive ruling in Spain, Italy and Switzerland. In Italy, after obtaining a real confirming full lawfulness of our activities, we are now waiting for a decision in terms of abuse of dominant position of Ryanair in the Italian market. We have won costs and damages from Ryanair. Just to remind everybody, this has been going on for over 10 years in the various legislations. So it is not something that will come to an end soon. But we are, let's say, with other players in the industry try to see if we can find some sort of agreement with Ryanair, but it really depends on their side and on their attitude towards distributors who actually help a lot the customers, because, if you buy a Ryanair flight by yourself on Ryanair website and you go and book a hotel, and then Ryanair cancels the flight, you are left with your cost of the hotel pending there, and there is nothing you can do, nothing Ryanair would do to help you, and you may end up having pay the hotel for nothing. Now, if you do this via lastminut.com, buy the Ryanair flight, you buy the hotel and then Ryanair cancels the flight, we -- at lastminute, we reimburse you, not only the flight, but also the hotel. We are protecting the consumers, which is something that Ryanair doesn't seem to care about how much the consumers are protected. We have a very different view in terms of what's important as a service to the people who end up paying for the holidays. So we will keep on fighting Ryanair in all the courts, but hopefully, one day, they will come -- senses and be more accommodating to the production of the consumer. Anything else, Silvia?

Yes, there are a couple of more questions. So for example, on the extension of our Dynamic Package business to other markets, it was just [ twice ] the questions, which countries were added in the first half of '23? And what is to be expected in the -- for the second half? And if all countries were added on a stand-alone basis and together with white label partners?

So the 5 countries that were added, unfortunately, were not very large ones. We are talking Malta, Luxembourg, [ Czechoslovakia ] and Estonia and a number of other of Eastern countries are in the pipeline for the second half of the year. Those we have added in our partner with booking.com. At the same time, we have added other partners. Unfortunately, we did not get permission to release the information. And the only one that I can mention is O2, the large mobile player in the U.K. market, who is now one of our partners. So we added partners both in the travel industry and outside the travel industry.

The next question would be for Luca as well, and it's related to customer care. Is the customer care improving? What are first results? Have you done any surveys that show any changes in the customer care results?

Yes. So first of all, yes, of course, we've done surveys. We actually [indiscernible] to surveys, post call, post chat, because we want to know how well we are doing. And the 2 key metrics are -- for us that has improved significantly, the one-stop shop answer. So when the customer contacts us, the percentage of timing which we -- they issue in just one single contact it on the phone or via a chat, that has increased significantly. And the second that we look at is our score in Trustpilot. The trend has been going up significantly again on our website. So regardless of the brand, I remind everybody on the call that we have 5 major brands that we are using across Europe. Now the total score in Trustpilot clearly is moving very slowly because when you have tens of thousands of ratings, even if 1,000 [ new ] rating come in at 5 star, the overall average is slowly moving. But we monitor the trend score and the trends score from a customer point of view is going up. So it's going down the cost for us because with one contract we solved the issues and the satisfaction of the customers is going up. This is a very good result.

The next question is a bit about how the summer season has started. So if you can provide some color on the summer season development and any indication on the second half of the year, if we are expecting an acceleration versus the first half?

So yes, early summer season has started. We are happy with the result. I have to say that this year, the seasonality has not been remarkable as in the past. Simply people were booking their holidays before for later travel dates. But still, of course, the business is growing and without giving any specific guidance to quarter 3, but we are definitely heading in the right direction. So we are very happy for the way things are going. Let's not forget that we are letting go of many flights because they are not contributing enough in terms of margin. And we are trying to look for flights to move into the DP space. So in terms of holidays, we are investing more in DP marketing, in Dynamic Package marketing versus what we are investing in flight. And even if you come to our website for a flight, we have a number of touch points in the funnel, while you are booking to push you towards the DP. This has allowed the big change in product mix, that Sergio was illustrating before, and of course, together with that a higher margin.

Then a bit on the mix topic. How do you influence the mix? Or can you influence the mix of Dynamic Packages versus flights? How can you push one more than the other?

Silvia, I think that frankly there is not much to add. Marketing spend more in DP and touch points in the [ funder ] from flights to move you over to DP.

And then maybe a question -- because there are several ones on the market growth. But maybe what's the current market growth, the number or the metric you look at and compare to our own growth? So lastly, the market growth metric we take as a comparison?

Well, in both, I mean, we look at Eurostat flights as a third-party, very reliable information source, plus a number of searches and surveys, like from Skift for people inside industry, and limit those to the European markets. And as Sergio was mentioning before, in the European market, we are still 12% below in number of flights -- not in volume, in number of flights compared to 2019. What we have to do is to outpace the market in DPs in holidays in general. And we really don't have very much if we reduce our market share in flights only. Flights only is a cut throat market with all the [ METAs ] like Skyscanner [ competitors ]. The amount of margin that you can make has been significantly reduced and basically left only on ancillaries. You really don't make money on flights by themselves. Without any ancillaries that are all money losing. And so we have decided to use the flights to push the DP or just serve those customers that are contributing, generating via ancillaries on the flight side. Everything else, we really don't care.

So next question -- there were a couple of questions around cancellations. And one of them, I think, is a good one to just [indiscernible].

We entirely reprotect the customer with a different flight. And in case we are not able to do it or he's not able to -- or he's not accepting the reprotection, we need to refund him. And we refund them either through cash or through vouchers. The voluntary cancellation, in fact, is something which is entirely in the hands of the customer behavior and is something which can be related to customer ability to leave, or, as Luca was mentioning before, to unpaid. Of course, the more we sell Holiday Packages, the more for us is strategic to allow the possibility of paying through installments. An average booking value for the Holiday Package is in the region of EUR 2,000. Any customer will have his credit card stuck if he pays in one shot. So it's strategic for us more and more to allow them to pay through installments. 50% of the bookings of Holiday Packages that we sell today are sold through installment plans, which, again, we will increase more and more going forward because it's a fundamental factor in order to increase conversion and sales. Then, of course, if a customer doesn't pay one installment, and we are not able to recover that through the credit recovery process, we don't let him go because he must complete the entire repayment prior to departure. If we don't let him go, we cancel the booking, and that is also another, let me say, piece of the reasoning. I think there was also a question about the classification and how we treat and how we expose the data. And yes, I mean, more and more in order to also allow analysts, allow the market, allow the [indiscernible] in order to have better transparency and -- about our performance. Yes, more and more -- In fact, we are going to show what is the level of EBITDA, net of cancellation and vouchers because again, these 2 phenomenon have to be considered as a whole, because voucher again, is a mean of refund of a certain cancellation. So yes, more and more we are going to show this KPI as the main one in order to focus on. And yes, in the second half, we should absolutely expect an improvement versus first half of the net effect of the 2 phenomenon because we are working a lot in order to reduce the cancellation rate, in order to improve our processes, in order to better score the customer to offer -- to whom we offer consumer credit solutions and to reduce this percentage going forward.

Yes, Sergio, just allow me, that clearly, besides not offering to untrusted customers, the deferred payments solution that we are also working on "forcing" -- and I say forcing between quotes clearly -- the customers to purchase insurance against cancellation so that in case of cancellation we can then go to the insurance to limit our P&L [ layback ]. So pushing insurance is also a very important lever in order to reduce the cost of cancellations. We aim, like everybody in the industry, to have 0 cancellation costs. Now can that be achieved tomorrow morning? No. Can that be achieved in the nearby future? Yes.

And we are almost out of time. So let's take maybe one last question because it's an important topic. It's for Sergio again. How can you optimize the marketing spend? What are the levers to do it? And if it has any relation to the reduction or the decrease of the META business?

I would -- I would say that the -- I mean, we are talking about marketing performance, first of all. So what we find, marketing performance is the biggest chunk of cost of the variable costs that we have. Remember, 70% to 75% of our cost base is variable. So it's linked to how the business goes. That's why one of the key strengths of our business model. The biggest part of that is related to marketing performance. How optimize it. First of all, being cautious in how we spend on the campaigns that we do on Google, setting proper targets of return on investments. There are very, very sophisticated analytical tools in order to, let me say, drive what is the daily marketing spend per campaign on a specific keyword in order to avoid to overspend. So this is something that is out there in the market. It's a matter of doing properly, implemented properly, manage it properly. Second is, of course, related to increasing the weight of the channel where the spend of marketing performance is lower. So the more we increase traffic on our website, on our direct channel on the app, the more we retain customers, and there is a strategic lever in order to generate mix from nonpaid traffic channels, which, of course, is another of the, let me say, ways in order to reduce the marketing spend. And this is happening because we are investing on the app and the share of the app traffic and bookings and sales is progressively increasing.

Let's -- just one last question because it's really important to answer, even if a bit of time. So this is for you, Luca, and it refers to the part of the announcement about our CFO. What are the requirements for the new CFO?

So first of all, let me start by saying that Sergio's performance has been extremely good all these years. And so I'm very grateful that he gave us ample notice of his leaving and is giving us enough time in order to find the perfect candidate. So thank you again, Sergio, for what you've been doing, and you will still be doing because, at least we'll see when exactly, but up to the approval of the 2023 accounts, you will stay on board. So thank you, really.

Thank you.

And then as far as the requirements for the new CFO, we have strong internal candidates. We will compare them with strong external candidates. Clearly, we need somebody who has a background in digital, much more than specifically travel because we are a digital technological company more than anything else and that has a very good strategic view, because the CFO in the future is less and less administration and accounting and more and more strategic contribution to the leadership team looking forward to the dynamic of the industry and the key investments that have to be made. The Board having been informed by Sergio has already decided to search for a new CFO. We have my co-executive, Maria Teresa Rangheri, who I thank too, who's taking this on board personally, and let's say that without any particular time pressure given the [indiscernible] gave us. We will announce to the market when we are ready, the introduction of our new CFO.

Thanks, Luca, and thanks, Sergio. Let me -- so we're out of time. We need to close the Q&A session. Unfortunately, thanks to all of you for your questions. I can see that there are a few ones still in the system that we didn't have time to answer. So please reach out to us. If you feel that something was left unanswered or if you would like a follow-up, just drop us an e-mail at [email protected]. And also note that, as I said before, we will, of course, provide the replay of this session as soon as we can. So you can always relisten. Before we close the Chorus Call, let me just mention the financial calendar, the next upcoming date. It is the 9th of November for our first-line month update. So please take note of that next coming financial calendar date. And with that, I would hand over to Luca for any less words. Goodbye from my side. Again, thanks for listening and for posting your questions.

So as a final last word, which is actually not foreboding well -- let's say, final words for the call. Let's say that as you have seen, we have done a lot of [ road ] in 6 months, and we have still a lot of ground to cover going forward. But we have clearly focused with the key issues. I have clearly a very talented team of professionals that's continuously being improved by hiring very qualified employees from the market. So we know where we have to go. We know how to get there. And I think we have all the means both HR and financial together. So my outlook overall is extremely positive for this group. Thank you so much to everyone who has spent all this time with us this morning. I wish you all the best.

Thank you very much also from my side and talk soon.

Bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.