The Webjet Limited (ASX: WEB) share price has gone 9% higher after the ASX travel share revealed an exciting update.
Webjet is a significant global player in the travel sector. Not only does it have the online travel agency (OTA) segment called Webjet, but it also has a division that serves businesses called WebBeds and GoSee, a place for people to search globally for cars and campervans.
Webjet’s strong FY23 update
The company revealed that its bookings are currently tracking at 95% of pre-pandemic levels and that all three businesses are profitable looking at FY23’s trading to date.
Webjet revealed that it’s expecting its ‘cash surplus from operations’ to be more than $100 million for the six months to 30 September 2022.
WebBeds
The ASX travel share revealed that WebBeds has had an “exceptional” northern hemisphere summer trading period.
Bookings have been ahead of pre-pandemic levels since May and July was a record for total transaction value for WebBeds. August has beaten July.
Management have focused on efficiencies and are targeting growth. Its market share has grown and its EBITDA (EBITDA explained) margin is on track to be over 50% in the first half of FY23. In July and August, it hit its goal of revenue being 8% of TTV, costs being 3% of TTV and EBITDA being 5% of TTV – that translates into an EBITDA margin of 62.5%. Webjet believes that the EBITDA margin will be stronger than pre-pandemic levels as it scales.
Webjet OTA
The OTA business is also increasing its market share and it’s seeing “genuine opportunity” in the international arena. It’s expecting to launch its Trip Ninja technology next month for multi-stop journeys.
Webjet OTA is on track to achieve an EBITDA margin of more than 35% for FY23. It’s expected to return to pre-pandemic profit levels once international airline capacity returns to 2019 levels.
GoSee
Webjet has rebranded Online Republic to GoSee. It’s expected to return to pre-pandemic earnings when inbound tourism into the largest markets of Australia and New Zealand return to historic levels.
Final thoughts on the Webjet share price
Webjet said that, based on current performance, it’s expecting the company to exceed pre-pandemic earnings in FY24, well ahead of when the broader travel market is anticipated to return to 2019 levels.
I’m not surprised that Webjet has jumped 9% in reaction to this. Profit generation is important for most businesses. I think the company has a very promising future, particularly with a prediction of stronger margins.
While it would have been better to buy shares before this jump, I’d be happy to buy a small parcel today for the long-term.
