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

Welcome, everyone, to lastminute's investor and media conference. I'm Julia Weinhart, Head of the Investor Relations of lastminute.com, and I will be hosting today's call. Today, I am -- with me, our CEO, Alessandro Petazzi; and our CFO, Diego Fiorentini. As outlined in the agenda, we will begin with an update on our strategic direction followed by a review of our Q1 results, and Alessandro will then conclude with the key takeaways and the confirmation of our previously communicated 2025 guidance. After that, we will open the floor for both live and written questions. With this, I hand over to Alessandro now.

Thank you, Julia. Good morning, everyone. Thank you for joining us today. I'm glad to be here with you to comment a pretty solid set of results, as you probably have seen already. Before we dive into those, let me remind you the strategic framework in which these results happen, right? So the 2 key things that we're doing right now are strengthening our market presence. We have already started investing in 14 markets across Europe, which we define Tier 2 markets compared to our 5 core markets. This is something that we started doing in January already. And early signs from regions like Benelux and the Nordics confirm that things are working nicely there. Second element on which we've been working over the past 3 months is a focus on our brand portfolio, meaning having a stronger association between the categories of what we sell. In other words, dynamic packaging is mostly sold via the lastminute.com brand, whereas other local brands such as volagratis and rumbo are more focused on flights. And Weg.de in Germany is focused on tour operator distribution. So we have really created a strong association there. We have started investing to build on that brand presence in the local markets in which they are relevant, and we are also streamlining the brand identity. Over the next few weeks, it will be more evident that all of these brands all belong to the lastminute.com family, something that the connection between the single brands and lastminute has not been so strong over the past few years. The third element is the fact that we have progressively been moving from a pretty transactional approach in which we were mostly selling as a company until 2019. We're mostly selling flights to people who are coming from metasearch channels. And clearly, now, we're much more of an integrated holiday provider, which also means we have both an obligation towards our customers to be a trusted partner, but also an opportunity to be there more often during the journey, and also between the booking date and the moment in which they are on holiday, during the holiday itself and after the holiday to remind them of our existence for their next holiday. Last but not least, the evolution of packages. I mean, the fact that the packages we sell are created with a dynamic packaging technology, obviously, is something very important for us in the industry and for our investors in terms of the efficiency of the model. But from a customer point of view, at the end of the day, they want good value for money, they want a holiday that makes sense compared to their taste, and that's what we are providing. So we are progressively adding this model on top of the flight plus hotel model, which has been our, let's say, jewel of the crown over the past few quarters. We are progressively adding also a more curated and set of packages in a selected list of destinations in which we will be providing more components, so not just the flight and hotel, but also the transfers, also the extra baggage and also more components that really create a holiday in which customers can have peace of mind. This is something on which we are currently working in the background, and we will start testing the waters in the market in the second half of the year. So the first 2 elements of the strategy are what already drives the Q1 results. The other 2 elements are something that will have effects, which will materialize in the second half of the year. And with that, we can move towards seeing the numbers together. So GTV has grown 7% year-over-year. Revenue is 14%. Gross profit, also 14%. So clearly, revenues have increased more than proportionally, and this has been driven especially by packages growing, as you see, a 7% GTV, but 17% on revenues, mostly thanks to the parallel increase of take rate from 10.5% to 11.6%. Adjusted EBITDA also grew much more than proportionally, thanks to a stable fixed cost base, and we will see that in the next few slides, and that's obviously reflected on a very good net result as well. If we get more in the details, you will see that this is the first time that we have presented quarterly results with the new segment reporting structure, which we introduced in the previous investor call. We shifted from the old segmentation that was discriminating between B2B2C and B2C channels to a product-specific breakdown, focusing on packages, flights, hotels and other products. Packages include both on the dynamic packaging products and the tour operator packages that we distribute, especially in the German market with our brand, Weg.de. We're seeing continuous growth in our Packages business, especially as we are saying in the Tier 2 markets. Benelux and the Nordics are among those markets, the ones who have been driving most of the growth. But that being said, I think that the company, over the past few quarters, has mostly been talking about dynamic packaging and the increased weight of dynamic packaging in the mix. I would say that this is the quarter in which flight growth is back, and it contributes significantly to the overall performance. The main reasons for that are the fact that compared to last year, we have changed our approach to pricing and the update to the pricing algorithms. We have considerably increased our ancillary offerings, and these 2 components have basically allowed us to have better unit economics, and better unit economics really mean also possibility to invest more and distribute from cost. Plus this year, we have Ryanair content available on our B2C channels. Last year, that was not the case. So really, this has an impact. But I would say that the impact is not just on Ryanair per se, but the fact that the presence of Ryanair in our overall product portfolio allowed us to be present in more searches on metasearch channels. This improved the quality score of our proposition overall. And clearly, that had a halo effect also on the product of the other airlines because if you increase conversion rate, then the distribution channels realize that you are a reliable partner, and they are more willing to show your offers also for other searches at a pretty good price point. So that created a virtuous circle in the flight segments and strengthen our positioning as a trusted partner on meta channels on top of the direct investments that we did on our own core channels, so not the ones coming from meta side of things. On the hotel side, I mean, we've don't often talk about hotels because, clearly, they are a smaller component in our overall revenue mix. But clearly, hotels also performed very well in Q1. Growth has been driven mostly by our direct and organic traffic, again, a review of the pricing strategy and, I would say, also a very strong performance of the partnerships channel. So basically, the channel that creates partnerships with other consumer brands. Coca-Cola in Italy would be one notable example over the past few weeks, in which we basically partner with other companies to distribute our products, but always with the lending on our B2C website. Another example would be the welfare programs that are notable in some European countries. And then last, there is the other category, which is mostly composed of our cruise business. And in this one, it's the only category in which Q1 underperformed due to softer market demand and some operational challenges. Moving on. If we see the cost structure, you basically see a pretty, I would say, straightforward representation of what we were saying, right? So basically, if I compare the absolute numbers Q1 last year versus Q1 this year, we have an increase in revenues of approximately EUR 11 million and, as you see here, an increase in the total cost of approximately EUR 6 million. And then obviously, the increase in EBITDA has been around EUR 5 million, right? So pretty easy, especially because you might notice that all of these cost increase comes from the variable cost and specifically for marketing and sales costs, right? So what happened, as we were already discussing and numbers just confirm the -- what I was just saying a few minutes ago is that, basically, we are investing more in these Tier 2 markets. And clearly, the return on the investment in these markets is initially lower than the one we have in our core markets. It's normal when you start establishing a brand presence in those geography, that's exactly what is expected. So I would say that it's an exercise of balance that we're doing to make sure that growth in the top line and also return on investment on marketing are balanced in a way that is optimal, and that's exactly what has been happening here. And this is something that we plan to continue doing over the next few quarters. By the way, starting in May, we're also starting to invest in our summer brand campaigns, so nonperformance marketing. Obviously, that's the type of marketing investment that doesn't show immediate results. But I personally think this is something very important for the overall long-term strategy of the group to make sure that we reconnect also emotionally with a lot of consumers who might remember lastminute.com as a legacy brand in a number of markets, but not necessarily associated now with the brands they most love when booking a holiday. That's the connection we need to establish and, obviously, investing in branding and not just in performance marketing is not the only element, but is a key component of this strategy. The other element, too, which is, again, is pretty self-explanatory on this slide, but maybe worth saying a word about that is that you might see that the fixed cost base has been stable. So again, as a proof of the concept of operational leverage we've been talking about a few times already. So yes, that's -- the marketing is really the only element of cost that has been driven. And obviously, over time, this is also reflecting to an increased traffic in our direct channels. So having talked about that, I will leave it to our CFO, Diego Fiorentini, to get more in the details of our overall profit and loss account.

Thank you, Alessandro, and good morning to everybody. As a result of the positive developments explained, our adjusted EBITDA for the quarter reached EUR 14.4 million, an increase of 56% compared to the same quarter of 2024. EBIT reached EUR 4 million, exceeding Q1 levels, supported by the strong EBITDA performance, despite higher depreciation and amortization linked into the go-live of capitalized projects. Net results improved, benefiting from the higher EBIT, better management of financial items and the favorable impact of the reduced corporate income tax in Switzerland. Earnings per share increased to EUR 0.61, up 154%, also reflecting the accretive effect of the share buyback launched last November. Slide 11 shows the bridge of our net financial position over the last 12 rolling months. As you can see, the group generated a positive free cash flow of EUR 7.2 million, driven by the strong EBITDA of almost EUR 48 million, despite a negative change in the net working capital. I would like to remind everyone that over the past 12 months, the group has distributed approximately EUR 7 million in dividends, equivalent to the full year 2023 net results, and repurchased its own share to a share buyback program for approximately EUR 1 million. As a result, the net financial position remained in line with the level recorded at the end of the Q1 2024. Thank you, Alessandro, and I'll leave the word to you.

Thank you. Thank you, Diego. And before moving on to a wrap-up of this session, you might have noticed that we have decided to show our NFP evolution on a rolling 12-month basis. Because of the very strong seasonality of our business, we felt that this was a better representation of the industrial performance on the line. So pretty happy to see that we improved the free cash flow generation compared to last year. Obviously, if you just look at the quarterly basis from the end of December to the end of March, the positive effect is staggering, but it would be difficult to isolate how much of that is due to a good seasonal effect and how much of that is due to the underlying data performance on a more, I would say, structural basis. So with this slide, hopefully, you can get a sense of that. All of that being said, I would say that, yes, pretty straightforward, these results are really solid. I'm happy that we start the year on such note. All our core financial indicators are trending positively. The performance has been driven by the continued strong contribution from packages, of course, but flights have also shown solid growth after a few softer quarters and supported by improved pricing strategy and a broader ancillary portfolio, which, again, as we were saying, created a virtual cycle across distribution channels. What we're doing is really aligned with the execution of the strategic pillars that we have discussed in the first earnings call of the year. We continue and focus on our commitment to those and to deliver the results over the next few quarters. And because of that, we are confident that we will be meeting the same guidance that we have outlined in March already. Just as a very quick reminder to all of you, the guidance that we announced and that we are confirming today is an expectation to have both revenues and adjusted EBITDA to reach low double-digit growth this year, with adjusted EBITDA probably slightly better than revenues due to the operational leverage even if, as you can imagine, you shouldn't necessarily be expecting the type of adjusted EBITDA percentage growth you've seen this quarter. You might remember that Q1 2024 was also a relatively quarter compared to this. With that being said, I'll now turn it over to Julia, who will present our coming financial calendar conference schedule. And following that, we will open the floor to your questions. Thank you, Julia.

Thank you, Alessandro. As shown on the slide, you can see our next upcoming events. The first one will be the AGM in Amsterdam, followed by our publication in August of the half year report, and we will also participate a few other conferences until the end of the year. With this, we will now begin our Q&A session of today. We will start with the live questions first, followed by those submitted through the webcast. Please note, again, like always, we will group similar questions together, so our questions might have been rephrased. With that, I'll hand over now to Sandra, to our Chorus Call operator to begin with the first live question. Thank you, Sandra.

[Operator Instructions] Our first question comes from Volker Bosse from Baader Bank.

Volker Bosse, Baader Bank. And congratulations on the great results here in the first quarter. I would like to start with my questions with your current country portfolio. So could you remind us how many countries you are in now with your Packages business? And how much of these countries is operated together with your partner booking? And how many countries you are in with your own brand as of today? And perhaps also in that context, could you please provide us an update on the expansion plans into the U.S.? Second question is on the Flights business, good to see that it's back to growth, but I guess, it's mainly driven by Ryanair restrictions last year, which are, of course, off this year. So in other words, do you expect Flights segment to return to sustainable growth going forward, even if the lower base effect, so to say, fades out? And a more general question is on the strategy update, please, by you, Alessandro, perhaps. What are the new elements of your strategy, which you bring to the table? So what can we expect here to come in the course of the year? I think it's about ancillaries and -- which you name dropped, so to say, but to have a bit of a clearer picture what you have in mind and what is planned.

Thank you, Volker. This is Alessandro. So if I noted correctly, first question about geographic presence and expansion, technically, we are present in 33 markets overall. Among these 33 markets, 5 are what we consider our core markets, meaning the U.K., Germany, Italy, France and Spain. And then we have another 14 markets, which we now call Tier 2 European markets in which we have been investing over the past few months. As I was saying, these are the markets in which basically we are also investing marketing money from a B2C point of view to proactively drive traffic to our properties. The other 14 markets -- so it's 5, plus 14, total 19, and then we said we are in total of 33, so the other 14 markets are markets in which we are mostly present there, let's say, minor markets, as you can imagine. And we are mostly present via our relationship via -- with Booking.com, plus we also have a presence of our B2C brands, but we are not actively investing right now. So if I can maybe preempt a further question you might have, which is are you going to invest more marketing money for direct B2C presence in these markets as well, I would say this is something that we are always considering, but we are not planning to do it in the short term. I think we already have a bigger fish to fry in the 14 Tier 2 markets in which we are now focused. The second question was about Flights, and can we expect that Flights are going to continue their growth, well, yes, our plan for this year, maybe this is something that we briefly mentioned at some point, maybe not, but it's worth emphasizing it, yes, we do expect a continued growth in the Flights business for this year. Q2 is also a quarter in which, last year, we did not have the presence of Ryanair products in our B2C channels. From the second half of the year, we will really have an apples-to-apples comparison compared to last year. So we're looking forward to that as well. In terms of strategy, I think, I mean, I just emphasized the 4 pillars that we discussed. Maybe I can elaborate a bit more on the element of what we sometimes call internally curated packages or what we call here on the page as dynamic package evolution. Basically, the idea is that, so far, we've been mostly been appealing to people having very rational choices, either for their city breaks or sun and beach destination, wanted to look for a specific flight, a specific hotel and then adding the various components. But the idea is that, sometimes, people are just looking for peace of mind. And especially in a package type of holiday business, this is something, for example, that is very important in the value proposition of my old friends at TUI in which the idea that you have a one-stop shop that you are -- you as a tour operator, you are the travel expert, and you are the one who can suggest to customers what is really relevant to them in a specific moment of the year. Sometimes, people just want to know where they can be in a family destination in March or they want to know whether they should be going on holiday with their family in July in a not too crowded destination. And this is the kind of thing in which, historically, we haven't been very active, and I think there is an opportunity. And that opportunity comes, I would say, from 2 elements. On one side, to be the ones really selecting the -- not just the -- I mean to say, 2 components in 2 senses. On one side, what do you bundle in the package? Is it just a flight and hotel? Or is there also the transfers, the activities, the CityPASS potentially for a city break? That kind of stuff. So that's one element. The other element is that you don't necessarily provide all of the airline content or all of the hotel content, but only the ones with the best reviews, the ones that you know are more adapt for a certain audience, for a certain customer segment. So that's definitely something that we are working on, as I say, and that will materialize in the second half of the year. Now In terms of experiences, don't get me wrong, obviously, yes, that's my professional background, but I don't necessarily think that experiences are this magical dust that you sprinkle everywhere and everyone's happy. It really depends on the destination and on the customer segments. For example, I can tell you as a matter of fact that, that certain activities, you don't necessarily want to book them in the moment in which you move your holidays. For example, let's say that you are going to Greece, you might want to buy a package. The decision on whether you want to go on a catamaran tour on a specific date really depends on the weather, on how you're feeling that day. So these are decisions that are more, I would say, in line with the strategy of being suggested in the app as a cross-selling opportunity when the person is actually on holiday or just before the holiday rather than being bundled in the package at the beginning. Other things are much more -- let's say, make much more sense to be bundled together with the package. The transfer, I would say, is the very first example that we will be testing, and we have other components that we have in mind that we will be testing in the second half of the year. So it really depends. But yes, to be -- I would say, if I can sum it up in just one sentence, to be a more holistic, a trusted holiday provider.

The next question comes from Christian Salis from Hauck Aufhäuser.

And congrats to the great Q1 results. I've got 3 questions, please. So the first one is on your relative outperformance compared to other online players. So the top line performance is really, really strong and clearly above -- clearly exceeding other players in the industry, which also reported recently. So what is really driving this outperformance? Could you maybe elaborate a little bit on that here, please? What is the most important factor? Is it price? Is it convenience? Any color here would be really helpful. Second question relates a little bit to that. So could you please talk about the monthly performance a little bit more in Q1 and also the Easter shift effect? So many other companies have talked about February being quite weak in terms of consumer sentiment, especially in Germany due to the election probably. And there was also a negative Easter effect, because Easter was in April instead of March last year, and this obviously also weighed on the top line for many companies. So have you -- could you confirm these cost effects? And could you maybe also talk about the magnitude on -- of these effects on your top line? And then the third question would be on the profitability in dynamic packaging. Could you please explain why the gross margin decreased by 80 basis points year-over-year in DP, even though the take rate increased by 110 basis points? So usually, I would assume that the gross margin increases in line with the take rate. Yes, maybe also any color would be extremely helpful.

Christian, thank you for your questions. I mean, for the future, maybe as a methodology request to the other people, which will ask a question, it would be great if you could ask one question because, otherwise, it becomes -- and then go back in the queue. Otherwise, it becomes difficult to cover the interest of all the participants. So the first question, I think, was why we had such a strong revenue growth compared to other players. I mean, I think that one should also take into account our market share, right, in the market. Obviously, if you are the leader in the market, for example, TUI is in certain markets, seasonality is really impacting you, and you can maybe only lose market share in a way or keep it. In our case, being relatively smaller than other players, obviously, we can take market share away from them. And I would say in this way have room to grow, which is potentially also independent from seasonal effects or not so strongly dependent. So I would say that's the main thing. And yes, we improve things, I would say, internally. As I was saying, in terms of our pricing and in terms of our content with -- also with the Ryanair effect, even if Ryanair, we tend to probably -- I don't want to underestimate it, of course, but this is a question that other people might have further down the line, so I can anticipate it that the Ryanair effect accounts for approximately 50% of the growth on the Flights segment and only for 20% of the growth overall. So I mean, if I combine Flights plus Packages, 20% of the growth comes from products in which Ryanair was either the flight or the component in the package, and 80% come from Packages in which other airlines were involved. So yes, so I would say it's because of the changes we've done, we were able to get market share from bigger players. The second question in terms of the specific seasonal effects of the various months, I would say, again, sorry to insist, but for us, it was more important that the market share growing, which overcompensated whatever specific seasonal effect there might be. Of course, yes, we've also seen some -- let's say, some changes between March and April due to Easter being so late in April compared to Easter last year, but it's an effect that materialized a bit in March, a bit in April. So I think it's a bit early to draw a final conclusions on that. We will know better at the end of May. And the third question was, if I understand correctly, why the gross profit growth for Packages was lower than the revenue margin -- the gross profit margin for -- sorry, the gross profit margin for Packages was relatively lower than you might have expected. And the reason is the marketing investment in the Tier 2 markets, which, as I was saying, have intrinsically a lower return on investment than the historical investment in the core markets. This is normal part of the strategy, and we're very happy about how that's going. So there are, I would say, 2 sides of the same coin. You kind of accept a bit of the dilution of the percentage margin in exchange for robust absolute growth.

The next question comes from the Baptiste de Leudeville from Kepler Cheuvreux.

Just 1 question on the fixed costs. So you managed to have a fixed cost structure that is stable in Q1 versus last year. Can you give an outlook? I think my question is, do you think it's sustainable? And are you satisfied with your cost structure right now? Or you will need it maybe further investments? So just on the fixed cost structure.

Yes. Thank you for the question. Yes, you are right. Fixed costs remained stable overall in the quarter. As you saw in the slides, they include HR cost increasing 4%, which is in line with the inflation in the last 12 months, and other operating costs, which decreased by almost 10%. There is also a benefit effect coming from the favorable base effect because in Q1 2024, we have some additional fixed cost. Having said that, we have a strong commitment to keeping the growth of the fixed cost under control. And we have an ongoing effort to drive greater efficiency and operational leverage as the business scales up.

Yes. And Baptiste,, if I can also add one further element of color on this. You might remember in the previous call that what we said in terms of the challenges and opportunities of the business, I do think that, strategically, we -- this is a business that has -- I mean, because we're present in 33 markets, and we are clearly subscale in some of them, it means that we are used to manage a level of complexity that is, I would say, higher than our overall size. So clearly, as we are now structured to manage that level of complexity, that is, I would say, the bottleneck in terms of the type of fixed cost structure that we must have. But with that level of fixed cost structure, we are definitely able to manage higher volumes. So as volumes increase in the markets in which we're present, we do not expect that fixed cost structure to change. And so we should reap the benefits of this operational leverage. Thank you, Baptiste. Sandra, other questions -- other live questions?

There are no further questions on the phone right now. Back over to you for the written questions on the webcast.

Julia?

Perfect. Thank you, Alessandro. So we will start with the first live question we have received. Is the growth in Packages actually mainly due to DPs?

Yes. That's the very short answer. Dynamic Packages are the segment that has been growing. So we -- yes, that's the thing. The other packages are the packages that we distribute, the tour operator prepackage that we distribute in Germany Weg.de, especially packages from the likes of TUI and their tour. And yes, they have not been growing in the same way. So growth is mostly coming from our own DP products, especially in the Tier 2 markets, as we were mentioning.

Thank you, Alessandro. The next question we have received this morning, do you also see less demand for vacations in the U.S. after the new administration took office? Can you benefit from the fact that customers are now booking more vacations within Europe?

Yes. Well, on our side, we have not observed any material impact from the ongoing uncertainties in the global macroeconomic stage. Obviously, this reflects the fact that we are mostly focusing on European travelers traveling within Europe, right? So we're not necessarily exposed significantly to people flying to the U.S. We do have some customers who do that, but they are relatively minor in our overall customer base. And obviously, we continue to monitor the situation and evolving consumer demands to ensure that if something changes, we can quickly respond to that. But from a destination standpoint, again, in our mix of destination at least, we haven't seen a significant year-on-year shift in consumer preferences.

Thank you, Alessandro. Now moving to the next question. Could you explain how lastminute managed to keep other variable costs at the same level? Could you walk us through the mechanics of the cost movement?

Thank you, Julia. Well, other variable costs are primarily composed of fraud prevention, customer care, payment acquiring fees and service-related expenses, including licenses and platform fees. These costs are linked to the growth of the gross travel value, which was 7% in Q1 2024, and the growth reflects this increase.

Thank you, Diego. Now moving to the next question. Our fixed costs in Q1 now represent --sorry.

We already answered to this one. Yes, there's a question -- sorry, let me step in. There's a question about our fixed cost structure and whether we expect the fixed cost to change over the next few quarters. I asked Julia to skip it because I think we already answered pretty extensively earlier on.

Thank you, Alessandro. So now we'll move to the next question. Thank you for the results. Eventually, a top management. Bravo. Are you thinking to work on the 3 years' plan sometime in the future?

Well, thank you for the compliments. But it looks like a question that we asked ourselves. No, luckily, it's a genuine question. So thank you for that. Well, I would say that in terms of strategic direction, we have already shared our strategy and the pillars that will be the basis for our midterm plan. So that's not changing. We have provided guidance from a more financial point of view, all right? Because one thing is, what is your strategy? We have already disclosed our strategy. You should not expect news on that or changes in that. That's it. That's the things that we are working on and we will be working on in the meantime. Now you might have a slightly different question, which is, okay, we understand the strategy, but what is the financial outcome of this strategy? What should we be expecting? And in that sense, we have provided guidance for the year for 2025 on revenue and adjusted EBITDA, and we are focused on delivering on those results. But we already announced on the last call that before the end of this year, we will also be issuing a midterm guidance for the next few years, which will be, I would say, the numerical reflection of the more qualitative industrial elements on which we are already working.

Thank you, Alessandro. Now moving to the next question. Could you please detail more on NFP? Is it correct to assume that if the top line grows, the net cash should improve more than proportionally?

Yes. As we have already highlighted in previous calls, our business model is characterized by a negative working capital situation, which enables the group to generate cash as the volume increases. This is, of course, only a seasonal effect. Overall, the cash generation is, at the end of the year, linked to the increase of the top line, and this is not increasing more than proportionally to the increase of the profitability.

Thank you, Diego. Now moving to the next question on strategy. Who exactly is your target customer families with children, single travelers? And what is going on with customer satisfaction? How do you see the summer season 2025 so far on a general basis?

Well, that's a pretty far-reaching question. So we could be talking a lot about this. I'll try to make it sure. The first thing to keep in mind is that, first of all, it depends on the brands. So one thing is lastminute.com, completely different thing. It's volagratis, completely different thing. It's Weg.de. So there's not one size fit all answers for all the brands in the group, as you can imagine. I would say that the flight plus hotel offer is -- historically has been really used by couples and, I would say, relatively young with no kids. For them, the idea of the dynamic packaging is particularly relevant because of there might be a bit more price sensitive and spontaneous. Keep in mind that lastminute.com is the home of holiday deals, the home of last minute holiday deals. This is the brand positioning that we have, let's say, refreshed recently and on which we will be investing from May onwards with our summer brand campaign. So clearly, that is reflective of the people we are speaking to. Dynamic Packages are, also, I would say, potentially relevant for families with children, the value, the competitive pricing, the convenience and the flexibility. But I think that, probably, we need to do a better job here in providing the right type of product for these families, which -- because, obviously, they might want hotels with kid clubs. They might want to have more of that peace of mind that has not necessarily been among our core pillars, and that is something that we are currently working on and we'll start delivering in the second half of the year. If we're talking about more the static packages that we -- for example, that we distribute in Germany, as I was mentioning earlier, they tend to be more attractive for mature couples seeking a higher-end experience with a higher proportion of 4- and 5-star accommodations. So again, that will be more the Weg.de brand, which is more appealing for what we intend to call indulgent escapades. And then obviously, flights is also very different for people. People coming from metasearch channel are really value seekers, really focused on price, whereas people who are coming from our direct channels might have more of a brand perception of volagratis, rumbo and BravoFly as reliable brands in the markets, and that's why they're attracted by that. So a pretty, I would say, comprehensive portfolio of brands and as such different products for different audiences.

Thank you, Alessandro. Now moving to the next question. How do you judge your guidance? It seems very conservative in particular on the EBITDA side.

Well, I mean, it's always a fine line, right? And of course, Q1 results have been particularly encouraging. But as I was saying, we were also having a comparison with a relatively weak 2024 Q1. So I think it will be premature now with all the uncertainties still in the market to revise our full year guidance. We are confident that we can meet it. But I don't necessarily expect us to be delivering the next few quarters with such a strong year-on-year comparison on the adjusted EBITDA line. Obviously, we will keep on monitoring the performance. And I would say, after the announcement of our half year results, we will see whether there is something to be said there or not. Today would be really, really too early and premature.

Thank you, Alessandro. Now reading the next question, what is your AI strategy?

Well, AI, a buzzword, right? I mean, no investor call these days would be complete without a question on AI, right? So I think that AI for our sector is both an opportunity and a challenge in various elements. So there I see the impact of AI in the travel sector from 3 different points of view. On one hand, it's definitely an opportunity to improve our customer experience, and then I can elaborate a bit on that. It's also definitely an opportunity to augment the productivity of our team. Also an opportunity potentially to rethink the way we communicate with our customers. And I'll give you some examples on that. And so I would say these are all the opportunities that can improve the way we do things and the way we communicate with our customers and the way we build our products for our customers. Efficiency, more -- to be more efficient, to be more effective, and I'll give you some examples in that. But before I do it, I think it wouldn't be a conversation on AI in the travel sector wouldn't be complete with also mentioning the uncertainties that we will be facing because, let's be honest, in the past 25 years, the travel journey of customers on the web has mostly been starting with a Google search for either sunny destinations in a certain month or idea of trips to certain locations. And this is potentially changing from 2 points of view. You might have seen that Google is now starting to surface directly AI generated response to queries via their Gemini LLM. And plus, early adopters are starting to use LLMs, which are not linked to Google, such as OpenAI, ChatGPT or DeepSeek or Draft or Perplexity to consider their travel planning phase. So of course, a lot of online travel agencies, including us, have always had a big chunk of their traffic coming from Google searches and especially from the searches that Google have been monetizing with their AdWords product. Now clearly, is it going to be -- is this going to remain the same in the next few years? Is it going to change? I personally think it is going to change, but it's difficult to exactly see what's going to happen, right, in the sense that in the short term, for sure, Google is balancing the need to provide immediate responses to queries, but they're doing that with the need to preserve the monetizable base . AdWords is the key revenue driver for that. So clearly, we don't want to kill it. And therefore, they're currently surfacing the Gemini responses only to queries, which they deem to be not really monetizable. Whereas every time there is a query that can lead to an ad, they still show the ads. And so far, I would say they haven't seen any -- we were talking about this with them recently. They haven't seen any significant change in consumer behavior in terms of the travel intent. So travel intent is still very much something that is on Google for the mass market, okay? Probably in this room, and among you, connected, many people are using ChatGPT for travel planning now, but this is not yet representative of the market as a whole. Will it be -- how quickly the early adopters will become a mass market? Difficult to say. And it's also difficult to say how the business model of LLM providers will evolve because I -- it's difficult to say whether they will create something AdWords like, I would say, in the LLM world or whether they will be just from -- we will go from SEO to GEO, so the engine optimization for GenAI, to understand how they will be working with brands. I would say we are in direct touch with all of them. We are discussing these matters. But to be honest, also, they do not have a full strategic clarity on how this is going to evolve. So one thing, the one prediction that I feel pretty comfortable to make, however, is that -- and you might remember, if you have been following the online travel sector for a number of years, you might remember, there's always been a debate on will Google become an OTA, will Google display all the OTAs or just distribution partners. And I would say 2 comments on this. Number one, Google, and I would say the same applies now to the LLM providers, they really do not want to be involved in direct commercial relationships with hotels and airlines. So I really do not see the likes of OpenAI to start negotiating with Hilton, with Marriott, with small hotels, with tons of airlines to have -- the with tons of transfer providers to negotiate opaque rates and then create packages. They're not going to do it. They will always need a fulfillment partner to do it. And that's why I think that actually underpins one of the reasons why I think it's really important for our strategy to move, I would say, to integrate more vertically in the value chain, to move upwards, I would say, upstream in the value chain, to become not just a distribution platform, but to really own the customer experience more, to create our own packages with the Dynamic Packaging technology, but packages that are really the lastminute selection, if you want, of packages. And I think that's really important because once you have that, once you have something distinctive, which can be different because of the components you have, it can be different because of its price, because of its terms and condition, then no matter where the demand comes from, no matter the channel, is it from Google, from an LLM, that people will always need to get to you to actually consume the product, to move that product and to use it. So a pretty long answer on this, but I think it was important to also put our strategy in that context. And then 2 final quick comments on AI internally for the company. For sure, we're already working a lot with machine learning for pricing optimization. And we now have a few internal projects to improve the way that our customer service operations work in terms of agent augmentation and also in terms of -- I mean, the paradigm for customer service over the past few years has typically been to reduce the number of interactions with customers because more interactions equal more cost. And whereas GenAI might change a bit that equation because it makes additional interactions much more cost-effective. So you might even have a trade-off in which you say, you know what, more interaction provide better customer service, it's better to have that. Obviously, let's not forget, GenAI is not free, right? We can say that it's cheaper than -- it's much cheaper than other alternatives, but you still pay tokens, especially for the most complex models. So we're currently testing a few different iterations. We're working, for example, with Bedrock from Amazon to make sure that we have an optimization of the models that we use in the background, so that we don't necessarily use the Ferrari of models if you just have to go grocery shopping. There are also the models which are more simple, but more cost-effective and good for the type of interaction. So again, no one size fits all, but, yes, definitely working on it in terms of delivering a more personalized experience customer-facing and then working to have more efficiency in our operations and a better overall customer interaction.

Thank you, Alessandro. Now moving to the next question for this morning. What do you see for the Latin American market so far?

Well, for sure, I mean, there are various markets in which we're not yet significantly present. LatAm is one of them. Middle East and North Africa would be another one of them. India, I mean I'm recently back from a trip to our office in Bangalore, and we've been dealing with some local partners as well. India is another interesting market. But all of these markets combined are still a fraction of the European market and even more of a smaller fraction of the U.S. market. So I would say, right now, there are -- conceptually, there are many opportunities. But right now, I think it's important that we focus on our European Tier 2 markets and delivering those.

Thank you, Alessandro. Moving to the next question. How does the agreement with Booking.com work? Is there any metrics you can provide to better understand the weight of this revenue stream over the DP business?

Well, it's pretty easy. It's a revenue share deal in which basically they send us clicks, right? Basically, Booking.com customers have the possibility to see a tab, which is called flight plus hotel on their own interface. And when they click on that tab, they are moved to, let's say, a website that is managed by us, that is on our server, and that is very clearly represented as managed and powered by lastminute.com. And for every transaction that they generate, we have a revenue share agreement with various -- I would say, it's a pretty complex metrics of revenue share percentages based also on the type of product that we sell. So for example, the percentage are different that we share are different if the customer ends up booking a package in which the hotel is a hotel that we source directly by our contracts versus hotels that are sourced by Booking.com itself. Because, clearly, in that case, they already get a commission from the hotel itself. So that's how it works. It's an important channel, but I wouldn't necessarily overestimate it in the sense that, yes, the DP product is offered through a pretty diversified mix of channels. And this is definitely something that we're currently focusing on to make sure that B2C remains by far the lion's share of our overall revenue mix.

Thank you, Alessandro. Now moving to our last question. Is there any progress on the side of extend LM holiday experience, for example, get your guide?

Well, if you are aware of my background, it's funny that there's a specific question on our friends at GetYourGuide. I've been working -- we've been frenemies, so to say, for a number of years in the travel activity space with Musement, of course. I mean, in general, I think I already discussed the strategy for the evolution of Packages and the idea of combining more components of the journey in those. Plus, there's also the element that I call the travel companion, in which we are more focusing on providing an end-to-end customer experience. So long answer -- The short answer to that is, yes, sure. And actually, the company, lastminute, already has a deal with a partner for this. Funnily enough, it's Musement, but you might be -- think that I was the one pushing for the deal. Funnily enough, it's actually a deal that was signed after I had left my role as CEO of Musement and over a year before I was appointed CEO of lastminute. So as a joke, internally, I'm saying, sometimes, that probably I will be obstacle to the deal because it's a deal that I try to negotiate for many years during my tenure at Musement with no success. And after I left, the deal did materialize. So joking aside, it's important to have experiences as part of our portfolio. But again, as I was saying before, when you have an activity that is date specific, it's much better to suggest it to the customer when they are already on holiday or really close to the moment of departure, not the months before when they book a flight, when they book a package. That's typically not the right moment. That could be the right moment to suggest them a CityPASS if they are going on a city break because then CityPASS is more something that is not date-specific. You can then select whatever date you want to use it. So again, based on the product, there's likely different distribution strategy. But in terms of supply, yes, it's important for us to have that. And yes, we feel that we have already a good supply agreement with -- between Musement providing that on a B2B2C basis.

Thank you, Alessandro. With that, we will close our call for today. We thank everyone for joining our Investor Relations call. We appreciate your continued engagement, and we look forward to sharing with you our next update in August.

Thank you, everyone.

Thank you.