Webjet share price jumps 10% on 'spectacular turnaround'

Webjet had a very profitable start to FY 2023…

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Key points

  • Webjet has released its first half results for FY 2023
  • The online travel agent delivered very strong transaction value and revenue growth
  • The key WebBeds business is now trading at pre-pandemic levels

The Webjet Limited (ASX: WEB) share price is jumping on Thursday morning.

At the time of writing, the online travel agent's shares are up 10% to $6.24.

This follows the release of the online travel agent's half year results.

Webjet share price jumps on strong half year results

  • Bookings up 137% to 3.4 billion
  • Total transaction value (TTV) up 223% to $2,143 million
  • Revenue up 217% to $175.7 million
  • Underlying EBITDA up 557% to $72.5 million
  • Underlying net profit after tax of $32 million, up from a loss of $29.2 million
  • Cash balance of $504 million
  • No interim dividend

What happened during the half?

For the six months ended 30 September, Webjet reported a 223% increase in TTV to $2,143 million and a 217% jump in revenue to $175.7 million.

A key driver of this growth was the WebBeds business, which reported a 227% increase in TTV to $1,423 million and a 251% lift in revenue to $114.4 million. This leaves the business trading ahead of pre-COVID levels on a constant currency basis.

The Webjet OTA business also performed positively. It reported a 234% increase in TTV to $614 million and a 185% jump in revenue to $51.8 million. Despite this strong growth, this side of the business is still trading well short of pre-COVID levels.

In respect to earnings, Webjet reported a 557% increase in first half underlying EBITDA and a net profit after tax of $32 million. The latter compares to a loss of $29 million a year earlier.

And while the company was left with a cash balance of $504 million, it has decided against declaring an interim dividend for FY 2023.

'Spectacular turnaround'

Webjet's Managing Director John Guscic appeared delighted with company's "spectacular turnaround." He commented:

This result demonstrates a spectacular turnaround of $88.4 million in underlying EBITDA from the 1H22 loss of $15.9 million. It underpins the efforts we took as soon as the pandemic hit to ensure each business was optimally positioned to recapture demand once travel returned. Recovery is substantially accelerating and WebBeds is leading the charge.

All WebBeds regions saw significant organic growth, particularly Europe which benefited from a strong northern hemisphere summer, and North America which is now more than three times larger than it was when the pandemic began.

Search activity and conversions through the WebBeds platform continue to increase, and EBITDA margins are now higher than they were pre-pandemic. Despite a number of large markets yet to open, since May WebBeds bookings have exceeded what they were before the pandemic hit and profitability is getting close to pre-pandemic levels.

Outlook

Management remains confident that Webjet will build on this strong half during the second part of the financial year.

The company revealed that it is on track to exceed pre-pandemic profitability in FY 2023, with second half EBITDA expected to exceed pre-pandemic levels by at least $10 million.

Second half profitability for the B2C businesses (Webjet OTA and GoSee) is expected to be consistent with first half results, reflecting the macroeconomic environment.

Guscic added:

The landscape has changed and there is massive global opportunity for WebBeds. WebBeds is no longer European summer centric – it is now a truly global business, picking up share in all regions, operating a single technology platform, and with the capability to scale rapidly. We believe these qualities overcome the current macroeconomic pressures. 3Q23 Bookings and TTV are currently tracking more than 30% ahead of pre-pandemic levels and FY23 EBITDA is expected to be higher than it was pre-pandemic.

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 Scott Phillips.

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