Web Travel Group Limited (WEB) Earnings Call Transcript & Summary

Good morning, and welcome to the Webjet Limited Financial Year '22 Results Briefing Conference Call. Today, you are able to view the briefing via webcast and listen via webcast or teleconference. At this time, I would like to turn the call over to Mr. John Guscic, Webjet Limited's Managing Director. Please go ahead.

Thank you, operator. Guess who's back? Travel's back, baby. Welcome to the Webjet Financial year '22 results. Joining me is our CFO, Tony Ristevski. Let's go to the first slide. So big news is that in the second half, we've returned to profit driven by both WebBeds and the OTA business being profitable in the second half. As we foreshadowed over the course of the last 2 years when we made strategic initiatives for our businesses to reduce costs, we're seeing cost efficiencies coming through as the business returns to scale. Most importantly, the business generated substantial cash during the year, a circa $10 million turnaround per month compared to financial year 2021. The profitability of WebBeds is driven by a 200% improvement over the last couple of months in the North American business as well as the European business returning to scale. Our expenses are down 31% over pre-COVID levels, and we are on track to be 20% more cost efficient when back at scale. The OTA business is profitable for the entire year, notwithstanding the tumultuous period that we experienced with borders closing and the impact of Omicron in the second half. Bookings have increased substantially in the last quarter. GoSee has been rebranded. It used to be Online Republic. We believe that the rebrand and the new tech platform and the new improved customer experience will improve the underlying performance of that business as we get to scale. As our global markets -- as the global markets reopen, we are seeing significant opportunities in all businesses. WebBeds is targeting new business opportunities that will drive operational efficiency. Our differentiated offering is clearly picking up share. The Webjet OTA has continued to outperform the market, and GoSee singular platform for both cars and Motorhomes will deliver greater efficiency. If you look at our key metrics, happiness is a low base, but at a TTV level, we're up circa 250%. Revenue is up circa 450%. Expenses are up circa 10%. Let's go to the next slide. We'll sit on the divider slide because it's important for all of our shareholders to note that the business is intact at the WebBeds level. To put that into perspective, we've got 1,500 employees, we operate in over 50 languages, we operate in over 120 cities, we have a physical presence in 50 countries, we have 20 offices, and what we're now doing is offering 400,000 hotels worldwide to over 16,000 destinations. And that is the mainstay of what our business has evolved into. It's still -- it has greater capacity than what we were able to offer to our partners pre-COVID, and we've been able to do it at a substantially lower cost. Moving to the next slide. As the travel markets have reopened, we have realized that the world has moved on from the pre-COVID arrangements that existed as a travel intermediary. And what has happened is as opposed to concerns about our ability to be relevant, we've recognized and accepted the proposition that hotels require greater global reach, and we're able to provide that. We have a broader array of travel partners we sell into. A particular focus has been on growing our B2C channels. Our customers still require seamless content and efficient systems to enable them to get inventory and provide it to their end consumer. And as a consequence of everything that's happened in the last 2 years, we've seen a significant decrease in the competitors out there, providing significant opportunities for people like ourselves who have a strong balance sheet, superior technology and the global infrastructure to address the market. We're taking advantage of this capability by expanding our offering. As we called out in the half, the push into domestic has proven to be a boon for the business. We have invested significantly in the North American region, and we have substantial organic opportunities in all of our other regions. Under -- as Tony will talk about in his section later on, the ERP process and the robotic streams that are underway are nearing completion. We are tracking at 31% ahead of our cost base pre-COVID. And when we get to full scale, expect to be at least 20% more cost efficient. Our offering continues to be differentiated. We made an acquisition during -- a partial acquisition of ROOMDEX during the year of 49%, which is going to give us a unique point of differentiation as we talk to our hotel partners. The financials show that the second half, we were profitable for the business. The most important points from the financial slide, our TTV margins continue to improve, primarily driven by the increased contribution in the second half from Europe. All regions in the second half were profitable except for APAC. The primary driver being that APAC markets still remain closed. And we are seeing that the push into primary and short haul -- sorry, domestic and short-haul travel is driving underlying business. And international travel has picked up, particularly in the last quarter of the financial year. Going to the profitability of what drove the second half profitability. You've got some graphs that represent the bookings and the TTV demonstrating on a month-by-month basis, that as markets opened, we start to see increased penetration across the board. What we're now seeing is that our North American business is trading at 2x pandemic levels. Europe has increased growth. Domestic sales are up 37%. We're seeing new regions -- sorry, all regions have new clients with new destinations being booked. And the momentum that we saw initially at the start of Q3 was impacted by Omicron. And with the dissipation of concerns around Omicron from February onwards, we've seen a strong return to momentum over that period. We go to the next slide. Expenses are significantly lower than pre-pandemic levels. The major operational efficiencies have been driven as a combination of tech programs that have been underway; the simplification of our tech infrastructure, which has enabled us to minimize the complexity associated with our business. Robotic process is underway to take away manual processes that have been in place throughout the organization and the ERP system that is now live and is scheduled for completion during the balance of this calendar year. The most important element of our objective, which is to get to 8/3/5, which is our post cover target, is that we've streamlined our tech platform to a single contracting platform. For those that have followed the journey with WebBeds over the years, we've had 4 technology platforms that we've sold to customers. That's contracted to 2 at the moment, of which 90% of all of our business goes through one of those platforms. We'll have a single platform within 12 months. What we do have in place today, which is the most substantial change to the operational elements of our business, is that whether you're a directly-contracted hotel, a third-party hotel or an international hotel chain, you have a single point of entry into the WebBeds tech platform. That's the major driver that's going to ensure that we maintain our cost efficiency and is going to enable us to drive an outcome that improves our overall EBITDA margins from the circa 50% EBITDA margins that were operating pre-COVID to greater than 60% EBITDA margins in a post-COVID-scaled world. Moving on to the next slide. What we're seeing is great growth opportunities in most of our markets. As of April, 10 of our top 25 markets were trading at or above pre-pandemic sales levels. In Europe, the 4 key markets are up. Most -- the biggest improvement for us was Germany, which were up circa 66% over pre-pandemic levels. Holland is up 22%. And France and Spain, 2 of our larger markets, are up pre-pandemic levels. The war has impacted the northern parts of Europe, most particularly the Nordics and Finland. Again, for those who've been with us for a long time, we've always had Sweden and Norway in our top 10 countries. They are no longer in that. They have been impacted by everything that's going on in the Ukraine at the moment. On the Americas side, we are now substantially larger than the pre-pandemic business that we had. The U.S.A. is up in the month of April, 200% over pre-pandemic levels. Canada is up 350%. Brazil and Argentina are up 64% and 58%, respectively. So seeing a substantial portion of the Americas coming to fruition as per the plan. Asia Pacific has been, in many ways, the laggard on a global scale for opening up. When markets do open up, we see a substantial rebound. The 2 notables, Thailand in the month of April is up 148% over pre-pandemic levels, and Australia is up over 200%. Having said that, there are still substantial opportunities for our business to continue to significantly exceed our pre-COVID numbers. The markets that are highlighted at the bottom of the page, Russia, Ukraine, China, Japan and Saudi, still have meaningful travel restrictions in place. Pre-COVID, they represented circa 15% of our sales. There is substantial opportunity for catch-up in most of those markets. There are still another 10 or so markets that are still operating significantly below pandemic levels that gives us great confidence that when those markets open up and we continue to outperform across the board that there's substantial upside available to the WebBeds business over the course of the medium term. Let's move across to our OTA business. Webjet had a very strong year profitable for the full year. Profitability, as everyone listening on the call is a predominantly Australian audience will know, driven by domestic bookings, up massively over last year. And the fact that we were still impacted by border closures and Omicron highlights the strength of the brand and that we're able to drive substantial improvement against the market over the course of financial year 2022. One of the questions in a changed environment, which we are operating, is that revenue models are impacted as a consequence of changed behavior by some of our supply partners, the most notable being that overrides and commissions on international travel have changed over the course of the last 2 years. The financial impact for us is expected to be around $10 million to $12 million on an ongoing basis, that means that our TTV margins are expected to normalize around 9% to 10%. So for example, in financial year '22, we finished at 9.8%. To put that into context and give a little bit more color Pre-COVID, the earnings by international travel accounted circa 15% of our bookings, 40% of TTV and 45% of revenue. So you saw a slightly higher revenue -- TTV revenue margin out of our international bookings. Going forward, it's expected to be in that 9% to 10% range, so slightly lower than it was pre-COVID. Our EBITDA margins are expected to normalize around 40%, which is not dissimilar to what we were doing pre-COVID. The key variable that we do control are people costs associated with our business. There are, as we've seen globally, salary pressures as a consequence of inflationary data. There's some topical data going out of the U.K. this morning. So it is a constant issue across all of our businesses, and it's no different in Australia that there are wage and inflationary pressures. We still believe that we are on track to reduce our overall cost. The primary driver for us in the WebBeds OTA business is the reduced marketing costs, which are circa down 25% of what they were pre-COVID at scale, again, reflecting the strength of the brand and also reflecting that in the interim, the competitive landscape has shifted and also reflecting the results of our business in that environment have been very, very strong over the course of the last 2 years. As represented by the following slide, domestic borders reopening has driven the return to profitability. As we can see, we're breaking it out by month. You can see significant periods of low levels of international and trans-Tasman flight bookings as a consequence of borders being shut. And as soon as borders open and consumer confidence returns post Omicron, you're seeing a significant increase in the level of activity of both international flights and trans-Tasman. We see substantial growth opportunities for the Webjet OTA business, primarily because pre-COVID, we were a domestic flight oriented business. And over the course of the last 2 years, we have thought long and hard about how do we ensure that in a post-recovery world, as consumers shift online and complex travel patterns and itineraries shift online, we're as well placed as possible to ensure that we can address that market opportunity. To that end, we acquired Trip Ninja, a business that will be integrated into the Webjet OTA tech stack in the second quarter of this financial year. It will bring world-leading capability to our OTA model and will substantially differentiate our offering compared to every other global OTA. We are very confident and optimistic that the integration of Trip Ninja into our international offering will substantially improve the volume of international bookings and trans-Tasman bookings that we will receive and improve the user experience within the Webjet OTA environment. So we look forward to reporting on that when we get together for our half year results, and I will be in a position to talk about it in a little bit more detail at our AGM on the 31st of August this year. Moving to the next slide. We are seeing significant market shares as represented by the numbers on the right. The largest component, which we have spoken about previously, is the structural shift to online plays to our strength. Our unique mix-and-match offering enables us to provide the most comprehensive and easy-to-use display for consumers looking to maximize their travel spend, in particular on the domestic offering in an environment where we have yet to reach full domestic coverage by all the airlines. Our payment -- our broadest range of payment options makes it increasingly user-friendly for our consumers to purchase on Webjet. And we have continued to increase our share, which was circa pre 50% of the OTA markets in the online market pre-pandemic, and we have grown that share during the pandemic. Let's talk about what has happened as we have operated our business. Post-booking servicing is substantially more complex as a consequence of the hundreds of millions of dollars of travel credits that are sloshing around in the travel ecosystem. To put that into context of the Webjet business, in financial year 2022, we had more than 700,000 customer interactions, which is more than 10x -- we're in a third-party location during this presentation. So we apologize for that. The irony is before we started the call, we said, "Remember when we used to do this in our building, and they would do the evacuate in the middle of our -- in your presentation," and sure enough, sure enough, 20 minutes later, we've got it. So moving back to the presentation, we're on Slide 14 for those playing along at home. Substantially more customer interactions, more than 10x the pre-pandemic volumes. This reflects what has been well documented around the challenges of suppliers and intermediaries providing answers in the appropriate time frame for people who want to use the credits that are in the system. Every airline has different rules on how to apply it. It's a manual process, and it's been an unfortunate element that has impacted the extremely high levels of service that we have prided ourselves on over the last 20-odd years. To put that into context, we have more than doubled our customer servicing levels. We have continued to work on automating processes where possible. The technology has been streamlined in the customer engagement process. Someone said that we've won awards, but that doesn't take away from the difficulty that some customers have had in contacting us, primarily because of the volume of activity that we've had to deal with, which has been unprecedented and has spiked over the course of the last 2 to 3 months. Going forward, we think that we'll come out of that excess. Travel credits will come out of the system. The vast majority will come out in the next 3 to 6 months. And a normal reversion to superior levels of customer service is our objective, and we believe that we will get better outcomes over the course of the next couple of months. Moving forward to GoSee. We're very excited with the rebranding and the great opportunities that are ahead for this particular business. As you can see, the business was at an EBITDA level, pretty constant half-on-half. The important point to note about this business, it used to include a cruise business pre-pandemic. It's now only a cars and motorhomes business. Booking volumes are up substantially. Delighted to say that in the month of March that the Cars TTV is ahead of pre-pandemic levels, and that continues to play out in April and May. The business has, as we have highlighted in our 2 previous businesses, substantially -- operating at substantially lower expense level than it is pre-COVID. Our EBITDA margins will continue to operate and normalize in the current band, which is between 9% and 10%. And the key driver for this business is that it's primarily an inbound market operator. And as such as tourism returns to Australia and New Zealand, we would expect this business to revert to its normal volumes. The key impact is clearly our Motorhomes business, which does require inbound tourism to drive that activity and a substantial period of being open and high levels of confidence that nothing untoward will happen during your journey. When that occurs, we will see a substantial rebound in Motorhomes. Our cars business, as I already mentioned, is doing a great job, primarily driven not so much by volume in this case, by higher average booking values representative of the scarcity of car supply on a global basis. Going to the next slide. We rebranded the business in October '21. We believe it provides us with a transformative opportunity to deliver on our broader strategic goals of ensuring that anyone who interacts with our GoSee business ends up with a Webjet-like experience over the course of the next 5 years. One of the key strengths of Webjet is the fact that the vast majority of our traffic comes organically to the website. That's our objective with GoSee. We want to -- we are the largest provider of Motorhomes on a global basis. We want that to become the default standard. We want to improve the presence of cars across the board. So underlying to achieve all of that, we've rebranded to enable us to build a better website, have greater marketing capability and grow in our target markets in combination with the values that we think are important, which include world-class customer experience and build on our strong partnerships at both supply and demand, demonstrating that at the end of our objective that we will have a business that will significantly exceed what we were able to achieve pre-COVID. So on the next slide, just to give you a look and feel of our brand. We predate the current color obsession of some of the independents in Australian political landscape with teal, there I say it, color scheme, not Webjet red, but teal. The brand is focused on improving our ability to get organic search results and pay less for our client acquisition. So that's been the mantra and the underlying philosophy of why we went through those particular changes with a view that there is a substantial opportunity for that business going forward. And we'll start to see that, and we are starting to see that, in the results over the course of the last 100 days. So with that, we will move to our innovation piece just to talk a little bit about what we're doing in addition to what we do within our standard businesses to ensure that we are successfully able to build moats around our respective operational businesses. So on Slide 20, you'll see that there are 5 businesses that -- which have complementary elements to those business that we believe are useful in our business becoming both protected on the downside risk and growth opportunities on the upside. The first one I'll just call out is Taguchi Marketing, which is a 20% ownership stake that we've had now for 13 years. We spent $200,000 back in 2009. Our cash dividends over that journey have been $1.6 million on our $200,000 investment. And we still own 20% of the business, and it continues to grow. It's a digital marketing business that we have used and has been integral to our EDMs on the Webjet side, and we think it's got great potential. The reason we're calling it out in particular is we don't go into any of the incremental opportunities on this list lightly. As many of our investors know, in particular over the last 12 months as we have had substantial cash in the business, there are always opportunities that are presented to us. And put that into context, we would look at more than 100 opportunities a year, and we typically would invest in 1 out of those 100. The last 18 months, in particular, has been one of the most innovative and creative periods in travel tech, and there are lots of things that we think that could be transformative to the way that supply and consumers interact, and we've made a number of strategic bets around that. First one, which we announced last financial year was our investment in the blockchain B2C travel marketplace called Locktrip, which continues to build out its capability. Trip Ninja, which I spoke about earlier, which we have made a 100% investment in. And ROOMDEX, our latest investment, which enables our hotel partners to optimize their ability to upsell and to improve the guest experience is a unique offering that we will have compared to other B2B bed banks. We are starting to see some early traction in that particular opportunity, which I'll highlight on the next slide. Last week, the vast majority of the WebBeds management team and ROOMDEX were at the Arabian travel mart in Dubai. You can see a pretty picture of our stand, and it was great to be back in a physical environment again in which we have exhibited over the course of the last 10 years. And in particular, in the ROOMDEX automated solution that we have in -- over the course of that particular week, we have a substantial pipeline of opportunities to pursue for the ROOMDEX guys to close. And to put that into context, the ROOMDEX track record is you sign up, get a free trial, and we have 100% conversion of anyone who signs up with a free trial to actually implementing the ROOMDEX technology to enable them to maximize the revenue for that particular business. So we're very excited about what that does, and we have an opportunity to an agreed position with the founders of ROOMDEX to acquire the remaining 51%, should the business be successful as we anticipate over the course of the next few years. So with that, I will hand across to Tony Ristevski, who will give us a summary of what happened in FY '22.

Thank you, John, and good morning, everyone. Firstly, I'll kick off with Slide 23 and go through the statutory P&L for the 12 months ending March '22 as compared to the 9 months ending March '21. At a statutory EBITDA level, the loss was just shy of $43 million, included within it was approximately $19 million of noncash items, namely $9.6 million of share-based payments expense, which when debts will be equity settled alongside nonoperating noncash items were approximately $9.3 million. Turning your attention to the right there in underlying color. We look through the lens of underlying because it does represent a recurring commercial perspective of our business. The EBITDA loss there is $15 million. What we've also excluded there is acquired amortization, which is an accounting-based expense. Alongside of that, inside the net interest line, we've also excluded the accounting expense for interest as a consequence of the commercial note and its accounting requirements, that also contained in our annual report on Page 66 for those interested. That then resulted in an NPAT loss of around $38 million or $0.101 per share. Our effective tax rate at the underlying level was approximately 19% for the year. Pre-COVID, we're guiding to approximately 15%, and we see that same percentage apply post-COVID as we return to profitability. Turning to the next slide, on Slide 24. The waterfall of our cash flow. As John called out earlier, it's been a phenomenal 12 months the organization. We've turned around circa $10 million per month from a deficit per month of 5.5% to a positive $4 million per month. Also in the year, we did make quite a few investments and paid the deferred dividend. The key investments in the second half are ROOMDEX and Trip Ninja, coupled with the deferred dividend in December, collectively about $30 million in the second half in outflows. So all in all, a great closing position in which we can then return into the FY '23 year. Turning to the next slide. This is an aggregation of the underlying components of the result of the year of the minus $15 million loss. John went through B2B and B2C. Included the underlying results is the proportionate P&L performance of Trip Ninja, which is approximately 100% alongside ROOMDEX of 49%. On the corporate expense line, we closed the year just shy $16 million up on the preceding 12 months. The key drivers there is insurance continues to increase quite a bit year-on-year, and we don't see that is continuing into the new year. Unfortunately, equally in the compare period, the staff, KMP and the Board took a 20% haircut for a 6-month period, and the MD took a 60% haircut for salaries in the compare period, they've resumed to 100% in that year that was. So when looking at FY '23, the $19 million that we're guiding towards, the key drivers there are threefold. One is insurance. Secondly, the increased investment that we proactively make around infrastructure and group security as volumes materially return to pre-COVID levels. And equally, the inclusion of an STI being the first in 3 years. Turning to the next slide, a summary of nonoperating items. The key call out there is, as John alluded to earlier, is the investment in the ERP system, circa $9 million. That investment predominantly is in the WebBeds world. We're always briefly taking opportunity in the last 12 months to undertake a similar investment into the B2C and the corporate finance team. So collectively, at the conclusion of FY '23, all financial platforms across the Webjet Group would have been transformed, thereby providing the basis in which we can then materially recover into the years ahead. To give you a perspective, in pre-COVID terms, we're doing 4.3 million bookings in B2B and about 2.1 million bookings in B2C. And particularly in the B2B world, we anticipate having the infrastructure there to comfortably do more than 10 million bookings per annum. So it's important to have the right baseline there in terms of financial platforms. As we look for FY '23, we anticipate we'll spend circa $6 million on concluding those ERP investments, and we expect that will be the only item you would see coming through the nonoperating line in that year. Turning to the next slide and FY '22 balance sheet. Since September into March in the last 6 months, the most material movement has been the increase in trade receivables and trade payables. Obviously, that aligns to the earlier chart that demonstrated B2B worlds as bookings and TTV resumes closer to pre-COVID levels. The key call out equally is that's quite pleasing is our credit dates haven't changed from where they were pre-COVID, but our debtor days have. We were trending pre-COVID, circa 35 days. Post-COVID and with the adherence to our group credit policy, they're tracking closer to the mid to high 20 days. So it's a marked improvement year-on-year, and the pleasing thing there is equally it hasn't been a hindrance towards the growth of the business as well. So that's been quite positive. Moving forward to the next slide, the cash flow half-on-half on Slide 28. The key call out there is cash from operations did improve into second half as earnings started to turn from negative to positive alongside the contribution from working capital with ever increasing TTV. As mentioned earlier, we paid the deferred dividend in December. And equally, we've made the 2 investments in Trip Ninja and ROOMDEX in the second half period. There's no dividend declared in FY '22. Moving forward to the next slide being CapEx. All in all, we spent close to what we guided to at the half, $21.4 million, we guided to '22. The investment in the current year, John talked about was the WebBeds business was primarily around unification of the underlying booking engines and the operational systems that then hang off that, and that thereby helps facilitate the growth in booking volumes in a material level. The investment going forward in FY '23 does step up from the current levels, which still materially down on the calendar year '19 of $35 million. The spend there is predominantly as it relates to cementing the current infrastructure foundations in the B2B/B2C space and incrementally add capability around the robotics and AI componentry that helps us better deliver on the service in a more scalable and efficient way. And lastly, before I hand it back to John, I do encourage the review of the appendix slide. There is a slide there in Slide 35, which I did include 12 months ago, which is the seasonality slide and surmises how to think about our earnings first half and second half and then the rationale as to why we changed our year-end to March from June, where B2B does have a material contribution in the first line driven by the Northern European summer. Close to 3/4 of that earnings comes in the first half versus the last half, which is 1 quarter. So I do encourage you to pay attention that's why when you think about outlook overall. And we're not seeing any deviation from that seasonality as we think about the recovery into FY '23 and FY '24. So on that note, I'll hand back to John.

Thank you, Tony. I guess the travel industry should have been decimated over the last 2 years, but those that have survived have the resilience to be outstanding businesses. We believe we are the custodians of an outstanding business. Put that into perspective, in April, the last -- April of 2022, the first month of the new financial year, all 3 of our businesses, WebBeds, Webjet OTA and GoSee were profitable. As Tony just covered, we've got substantial cash reserves and a great runway to continue to invest in our business, and we have a high degree of confidence going forward about what that opportunity looks like. As more markets open and travel restrictions ease, we continue to see a dramatic recovery profile across our global businesses. Our objectives remain consistent: WebBeds to become the #1 global B2B provider; Webjet OTA to increase its market share; and as described earlier, the transformational opportunity within GoSee gives that the possibility to become a global niche OTA operating in the Motorhome and cars business. As we have touched on and as I have spoken about, there is an incredible resilience associated with the travel business and incredible resilience from many of the people who work within our organization. The challenge we have going forward is attracting and retaining the best talent to enable us to achieve our financial objectives and provide the best experience for both our partners on the supply and the customers with their business customers -- B2B customers or consumers. The organization continues to focus on an opportunity for all of our employees to participate in the growth, that is the broader Webjet enterprise, and we are thankful for everything that they have done in very, very difficult and trying conditions. The loyalty that they've demonstrated to the business surpasses anybody's expectation, and we are delighted with their ability to participate in the rebounding and more successful business that we now operate compared to where we were 12 months ago. So we move on to the final slide, and we talk about what does FY '23 look like from our perspective. Clearly, Q1 trading is substantially ahead of Q4 trading of last financial year at every metric, whether it's booking, TTV, revenue and EBITDA. Delighted to say that the WebBeds business in May of 2022, our TTV and bookings are ahead of pre-pandemic levels, and we've been able to achieve that with only 14 of our top 25 markets now at or exceeding those pre-pandemic levels. So to put that into context for you, our top 25 markets account for 90% of our sales, and we still have substantial growth in almost half of that -- of those market opportunities. And notwithstanding what I've just said, we are already at our pre-pandemic levels. Northern Hemisphere summer, as Tony has talked about, is a seasonal spike for our business. We are predominantly a leisure-based intermediary. We're expecting a robust Northern Hemisphere summer based on the booking window. The booking window for us has changed, and it's important for investors to note because in the past, I would have had a much higher degree of confidence in putting out a forecast, primarily because our booking window was circa 6 to 7 weeks. It's now less than 3 weeks. So the booking window has changed. What does that mean? It means that if you think about our business during the peak period of summer bookings, which was January and February, we're impacted by Omicron. So vast majority of bookings weren't occurring for that summer period. But what we are seeing now, and we're seeing consistently over the last 6 weeks is substantial daily booking volume and TTV numbers well in excess of pre-pandemic levels. So the hole that we have in the summer booking period is rapidly being filled. So we have enough confidence to say it's a robust number, but we don't have enough confidence to tell you exactly what it's going to be because of the change in booking profile and the unpredictable nature of the recovery and other elements that are more macro-driven as opposed to Webjet, broaderWeb Beds in this case, broader influence. The Webjet OTA continues to improve. The OTA business is starting to pick up at both the international and trans-Tasman level, and we're operating at circa 80% of pre-pandemic levels there. GoSee business, TTV is improving. Again, we are well ahead of the Cars business and substantially below the Motorhomes business. But we, in aggregate, are at 75% of pre-pandemic levels. As I called out earlier, all of our businesses were profitable in April. The profitability in May will be significantly higher than that of April, and April was our most profitable month since the pandemic began. As we think about the balance of the year, we are on track to achieve pre-COVID booking volumes in the second half of our financial year. So with that, operator, I am delighted to take any questions if there are any on the call.

[Operator Instructions] We will take our first question.

John O'Shea from Ord Minnett. Can you hear me?

We can.

Two questions from me. Firstly, in relation to the cost reduction initiatives that you've implemented during the pandemic, pre-COVID versus post-COVID. Previously, you were sort of indicating sort of 30% kind of cost savings, and noted in some of your commentary, you're kind of moving that down towards 20%. Is that sort of what you're meaning? And secondly, just on the B2B side, if you give us some sense of -- you've made a statement that your aim is to be the #1 OTA. Tell us exactly why in simple terms that you think you can do that and give us some sense of what's happening with market share. In other words, what is it in the B2B space that gives you confidence that you can get to #1 and increase share? So they're the 2 questions from me, guys, if you could.

All right. So we'll start with the first one, John. We always said across the group that we'd be 20% more efficient at scale on the cost side. The driver would be skewed to WebBeds. You referenced 30%, we're at 31% there. So we're consistent in the language of how we will get to the 20%. We're more than 20% on GoSee. We're at circa 25% today, and WebBeds will be influenced by the marketing costs. It will help -- Webjet will be influenced by the marketing costs being reduced. So we are consistent with what we've said previously. We think we will be, once we get to scale across all of our businesses, 20% more cost efficient. So the second element. Pre-COVID, we're the fastest growing B2B business with WebBeds. With everything that's happened in the competitive landscape, we've seen a number of our competitors who have disappeared. That gives us greater market opportunities immediately, and we're seeing that in the 14 markets where we're back at pre-pandemic levels. And in every one of those cases, market conditions based on metrics like international flights and hotel occupancies are less than 100%. So clearly, we have picked up share in those 14 markets, and we believe we'll continue to pick up share. Where we have had deficiencies in global distribution, the biggest one for us was North America. We've been able to address that by putting in a new management team, greater capability of sourcing inventory that's relevant to North American consumers and an ability to distribute that to the appropriate customers. The intervening sort of 2-year period from where we were, the fastest-growing B2B business to our aspiration to be the #1 B2B business, is that we've looked at what are the technology impediments to getting that done, we believe we've addressed that. Where there are opportunities for us to improve our capabilities internally, we've done that by restructuring our business to a singular head in Daryl Lee running that business. We believe that contributes to greater internal efficacy than it did previously. And if we tuck that in with our ability to recruit and retain the best people, we think we're in a great position to continue to drive that. Now beyond that, if we look at the investments going forward, and I've touched on ROOMDEX already during the presentation, we believe that as we round out our overall offering to hotels, that would put us in a unique position. So it's with a high degree of confidence that we have many of the elements in place to continue to aggressively over index on our market recovery position, but it will take time to see how we're going. Now as to the market share data, I think we're the first public company to describe what's happened to our business over the course of the last 12 months when it comes to the WebBeds intermediary space, wholesaling space. So we'd have to wait and see for other companies to publish data as that comes to the fore. But clearly, on any index we're overachieving in the recovery.

We'll take the next question.

Tim Plumbe from UBS. Just a couple of questions from me, if that's all right, John, and apologies if you've touched on this a little bit. But in terms of the WebBeds B2B TTV ahead of pre-pandemic levels, can you give a little bit more detail in terms of where the European summer bookings are now versus before? And should we be thinking any significant difference in the revenue to TTV margin compared to what you were delivering before, I think pre-pandemic, somewhere in the order of about 8.7%?

As we -- well, I'll deal with the second part because I think, Tim, to be fair, I answered the first part earlier, which is that we're expecting a robust summer, but we don't have the same long-range forecasting accuracy that we had pre-pandemic because the booking window has compressed from 7 weeks to circa 3 weeks. So that's more challenging. We think it's going to be -- well, I'll phrase it in this following context. April in TTV absolute -- let's talk absolute numbers, April is better than May -- better than March. May will be better than April. June will be better than May, and July will be better than June. Now what the quantum of those versus what's going to happen in the summer, it's very difficult to expect. May, we're ahead. And I wouldn't be able to tell you, and I will tell you -- I will give you a guide to what that looks like in August when we do our AGM. At the moment, it will be -- I'd be lacking in confidence and so in precise in the number to be able to give you anything more than what I've just given you there. We have a high degree of confidence that if the market rebounds as expected for the summer that we will be well positioned. So that would be my overarching summary. To go back to the second part of the question, which is, as we have indicated and as we operated, we're expecting an 8% revenue to TTV margin going forward. The pre-COVID number might have been 8.7% or 8.8% or whatever it was. But going forward, the strategic goal for us over the medium term is to go 8/3/5, and that is a 62% EBITDA margin on the back of an 8% revenue to TTV margin. That still remains our objective, and we think we're well on track to achieve that.

Got it. And then just the last question, kind of a follow-on from that 62% EBITDA margin. Presumably, the biggest -- one of the biggest drivers to that is when you can finally collapse into single platform. I think you mentioned 12 months. So do we interpret that as kind of May '23 that should be implemented, so you'd be delivering those sort of margins second half FY '24, obviously, adjusting for seasonality differential between the halves?

Yes, you're correct. That would be the expectation, that sort of time frame.

We will take the next question.

This is Darshana calling from Goldman Sachs. Can you hear me?

We can.

My first question is on the Americas business. Even the domestic foray that you've made, can you give us a sense of how you're thinking about the Americas business at full recovery in terms of travel activity?

Okay. So let's put this into context. The flights -- the activity of current levels in America is circa 75% of pre-pandemic flight volumes of domestic and international in aggregate. And we're traveling at 200% of our pre-pandemic volumes, and we have only scratched the surface of what is possible in the Americas. We would be disappointed if we roll forward a year or 2 and weren't at least double the run rate that we have today. So the 100% growth should be at least 200% over the course of the next year or 2. There are plenty of opportunities for us, in particular in North America where the customer base is still relatively untapped, and we are still improving our supply to ensure that we have the right product on the shelves for our customers in that particular market.

Okay. Just a quick follow-on about GoSee as well. On a pre-pandemic basis, you had a cruise business. Can you give us -- can you remind us how much of the Online Republic business back then was cruise in terms of both TTV as well as profitability?

Look, the TTV level will probably be approximately about 1/3, and profitability was marginal at best.

We'll get you the data, Darshana, but we don't have it in front of us. But directionally, it wasn't the most profitable part of our business, that wasn't the most difficult decision for us to close that division down. And I can't remember the TTV composition compared to the other 2 business units.

We will take our next question.

Sam Seow from Citi. Just further on the U.S., you're obviously watching your cost that one area you're growing has been that region. Can you maybe talk about the size of the investment there and the expected growth?

It still fits within the 31% of lower costs in aggregate across our business. So there'll be other regions where we have collapsed costs. We have more people on the ground in the States, but it's a profitable business already. So I'm not going to call out the specifics, but it's directionally a substantial increase in the number of bodies. But we're already well ahead of the -- our expectations around profit for that region. So that's sort of where we've landed. But to give you a guide to where the majority of the costs are taken out, we haven't taken them out at the front end, the people interacting with our travel partners or the people interacting with our hotel contractors. The value is created primarily through the aggregation of supply, and we have kept that in place. The number of people on the ground, in particular in America, have increased with regards to selling to our partners. That's been fine. Where we've touched on in the earlier commentary around robotics, ERP and the singular entry point into our tech platform through our contracting base, they're taking back-end costs out, and that's much more meaningful than the incremental costs that we've added into America.

And just on revenue margin...

I think we've time for one more question, operator, whoever that is.

Sure, we will take a final question.

Wei-Weng here from RBC. Maybe my question will be on the overrides and commissions impact that you talked about. If I take the midpoint of kind of what you're talking about 9% to 10%, so call it 9.5%, and I applied that to say, FY '20 and FY '19 TTV, adjusting the impact in those years of about $12 million and $21 million, so was just wondering about the calculus around that $10 million to $12 million guidance?

Yes, the world has changed since pre-COVID. So I'll put it into context. The revenue number is down as a consequence of the reduction in commissions from the airlines, and that's the larger number. The second, as you may recall, Wei-Weng, is that we used to run an exclusive business and which we closed down at the start of the pandemic. So there would be revenue associated with that exclusive business. So if you take exclusives out, take the 10% to 12% that we're guiding towards is the reduction in commission and you take your midpoint, which is not unreasonable, yes, we get to 9.5% margins. And the more important element for me is that recovery thematic going to see a higher volume going through that, and then can we drive the 40% EBITDA margins. And what we're saying is that, yes, we believe that we will exceed our pre-pandemic numbers with a heavy skew towards international, albeit at lower margins than we would have had before the pandemic. But our EBITDA margins will still be 40% of our revenue. So we've got a changed composition of what will be a strong growth OTA recovery story over the course of the next 2 to 3 years.

Okay. So thinking the question about OTA market share gains or are you done?

Wei-Weng, I did not understand what you just said.

Forget about it. I'll make another question for your. But maybe can you remind me what's included and what's included from the GDS booking metric that you've given? And who are you picking up share from in terms of market share? And what level of share do you think is achievable if we think about a shift of consumer behavior online and lower competition?

There's a lot in that question, and we sort of run out of time. We're happy to take that off-line with you. Who are we taking share from? It's very difficult. I've never been able to accurately answer that until 6 months after the event when I see everybody else's data, so we can pick up all of that off-line. Thank you, operator, and thank you, everyone, for participating and listening in on our call. And with that, we wish you all a great day.

This concludes today's event. Thank you for your participation. You may now disconnect.