The Web Travel Group Ltd (ASX: WEB) share price is in free fall today.
Shares in the S&P/ASX 200 Index (ASX: XJO) travel industry company closed Friday at $7.03. In morning trade on Monday, shares are swapping for $4.81 apiece, down 31.6%.
For some context, the ASX 200 is up 0.3% at this same time.
This collapse comes following the release of Web Travel's preliminary update on the first half FY 2025 (1H FY 2025) financial results of its WebBeds business for the six months ending 30 September.
As you're likely aware, Web Travel spun off its online travel agency business, Webjet Group (ASX: WJL), last month. Webjet began trading as an independent entity on 23 September.
Web Travel is now focused on the WebBeds, which connects hotels and other travel service providers to travellers across the globe.
Here's what the company reported this morning.
Web Travel share price craters on margin erosion
ASX 200 investors are punishing the Web Travel share price today after the company reiterated some of the negative impacts on its WebBeds' total transaction value (TTV)/revenue margins first noted at its annual general meeting (AGM) on 29 August.
Headwinds over the half year included the collapse of German tour operator FTI Group, the Paris Olympics and the European Football Championship.
Management said that post its AGM update, European margins have remained subdued. Overall margins are further impacted by customer financial incentive agreements (overrides) in place, which are under review.
Due to these negative impacts, the company now forecasts 1H FY 2025 TTV/revenue margins to be around 6.4%. That's down from the 7% expected at the AGM in August.
Also pressuring the Web Travel share price today, the company lowered its WebBeds 1H FY 2025 preliminary underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to around 44%. That's down from the prior guidance of 52%.
Management said this downgrade reflects lower revenue and a 15% year on year increase in operating expenses.
The company said it expects expenses in the second half of the financial year to be similar to those in the first half.
The company highlighted that WebBeds TTV is up 26% from 1H FY 2024, while bookings are up 22% year on year.
Looking ahead, management said:
WebBeds remains committed to its $10 Billion TTV by FY30 and c.50% EBITDA margin targets. Changing geographic and business mix means TTV/revenue margins are expected to stabilise at c.6.5%.
FY26 EBITDA margins are expected to be in line with the c.50% target.
The Web Travel share price is now down 41.5% since Webjet Group began trading separately on the ASX.
Web Travel is scheduled to release its complete first half-year results on 20 November.
