Webjet (ASX:WEB) share price on watch after reporting huge first half growth

Webjet has handed in its eagerly anticipated first half report card…

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The Webjet Limited (ASX: WEB) share price will be on watch on Wednesday.

This follows the release of the online travel agent’s highly anticipated half year results.

Webjet share price on watch after TTV rebounds strongly

  • Total transaction value (TTV) of $663 million
  • Revenue of $55.4 million
  • Operating expenses of $71.2 million
  • Underlying EBITDA loss of $15.9 million
  • Statutory EBITDA loss of $114.4 million
  • Underlying net loss after tax before acquisition amortisation of $34.2 million
  • Statutory loss after tax of $132.2 million
  • Cash balance of $446 million at the end of September
  • Deferred interim FY 2020 dividend of 9 cents to be paid in December

What happened during the half?

For the six months ended 30 September, Webjet experienced a significant improvement in booking volumes, particularly from its WebBeds business which is now producing positive cash. This led to the company recording TTV of $663 million and revenue of $55.4 million for the period.

This is more than double the TTV of $267 million and revenue of $22.6 million during the six months ended December 31 2020. No direct comparison was provided for the same period last year. This year Webjet changed its financial calendar to a 31 March year-end.

As for earnings, or rather its losses, Webjet reported an underlying EBITDA loss of $15.9 million and a statutory EBITDA loss of $114.4 million. The latter includes $72.3 million in non-operating expenses such as write-offs.

Surprisingly, despite the loss, Webjet’s improving outlook has given management the confidence to pay FY 2020’s deferred interim dividend of 9 cents per share. This will be paid on 23 December.

Commenting on the decision to pay a dividend, Webjet’s Chair, Roger Sharp, said: “Since Covid first impacted our business, we have built a strong capital base to ensure we are well positioned for the recovery. Although markets are recovering at different rates, our global reach means we have been able to leverage those markets recovering first and Webjet is once again generating positive cash. We are therefore paying the interim FY20 dividend that was deferred in April 2020 and would like to thank all our shareholders for their support.”

How does this compare with expectations?

This half year result appears to have been a bit of mixed bag, so it is hard to say which direction the Webjet share price will take today.

For example, Goldman Sachs was forecasting TTV of $668.6 million, revenue of $52.5 million, and an EBITDA loss of $13.4 million. This means Webjet has missed on TTV, beaten on revenue, and missed on EBITDA.

Management commentary

Webjet’s CEO, John Guscic, was pleased with the half and appears confident on the future.

He said “The half year results have demonstrated the power of Webjet’s geographic diversification and ability to sharply focus resources on those markets and customer segments that exhibit the earliest recovery patterns. In WebBeds, November TTV is already tracking at 63% of pre-Covid sales yet many key markets are still to open, and December is expected to eclipse November’s trading.”

Mr Guscic believes the shift to online booking will allow Webjet to win market share in the future.

“We see genuine opportunity to increase market share as consumers continue to shift to buying online and believe the exciting innovations offered by the Trip Ninja technology will play a key role in growing our share of the international flights market,” he added.

Another positive is that the company is approaching profitability in a strong financial position. The CEO revealed that this provides Webjet with potential opportunities to bolster its growth with acquisitions.

He commented: “Our reduced cost base, enhanced technology and strong customer service ethos, in conjunction with a culture of constant product innovation, places us in a powerful position to capture bookings as the recovery continues. Our strong capital base also ensures we can take advantage of strategic opportunities as they arise in a realigned and changing global industry.”

Mr Guscic also revealed that the third quarter has started positively and is tracking ahead of the second quarter, and expects this trend to continue in the quarters to come, before booking volumes eventually reach previous levels in around a year.

He explained: “While there remains short term uncertainty with pockets of new outbreaks around the world, we believe ongoing vaccinations, boosters and anti-viral treatments will stabilise the impact of Covid within the next 6- 12 months. Based on our current trajectory of outperforming the market in our WebBeds and Webjet OTA businesses, we believe we will be back at pre-Covid booking volumes by the second half of FY23 – October 2022 to March 2023.”

No guidance has been given for the second half or full year.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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