The Webjet Ltd (ASX: WEB) share price has jumped 8% after reporting a strong FY24 result and revealing it’s planning to separate its businesses.
Webjet operates the customer-facing online travel agency (OTA) business Webjet and the business-to-business (B2B) company WebBeds.
Webjet FY24 result
Here are some of the highlights for the 12 months to 31 March 2024. The growth continued after the HY24 result.
- Bookings increased by 21% to 8.66 million
- Total transaction value (TTV) grew by 29% to $5.59 billion
- Revenue increased 29% to $471.5 million
- Underlying EBITDA jumped 40% to $188.1 million
- Underlying net profit after tax (NPAT) grew by 84% to $128.4 million
- Statutory NPAT went up 401% to $72.7 million
- Cash flow generated of $116 million
- No dividend
The WebBeds TTV reached $4 billion, with booking volumes up 26% year on year. It achieved an EBITDA margin of 49.5% and delivered EBITDA growth of 39% to $162.4 million.
Webjet OTA has seen a material increase of its international market share – it rose 14% in FY23 and it’s 33% higher than pre-pandemic. The EBITDA margin reached a record level of 44.7%, enabling EBITDA to rise 25% to $54.2 million.
Outlook
Webjet says it’s on track to deliver significant growth for FY25. Growth is helpful for the Webjet share price.
As at 19 May 2024, WebBeds’ bookings and TTV are both up around 35%, with the EBITDA “significantly ahead” of the same period last year. Meanwhile, Webjet OTA’s bookings were “flat” while TTV is “down” around 5%, but EBITDA is “tracking ahead”.
Separation plans
Webjet said it’s exploring the separation of WebBeds and the business to consumer side of Webjet (online travel agent, GoSee and Trip Ninja) through a demerger.
If pursued, the demerger will create two ASX listed companies. They’d be leaders in their respective industries and have their own strategies and growth opportunities.
Management believe there are attractive but divergent growth opportunities available to each business, requiring independent capital structures to enable them to make optimal investment decisions.
Any potential transaction is expected to be completed during FY25. But, the decision is still subject to final board approval, ‘third party’ consents and regulatory and shareholder approvals.
Final thoughts on the Webjet share price
If management think splitting the business up is the best thing to do, then I’ll take their word for it. WebBeds seems to have an exciting future, with it continuing to generate strong growth. The fact that Webjet OTA is seeing flat booking levels in FY25 is not as appealing, though it’s good to see that it’s winning market share of Aussies travelling.
If I were a shareholder, I’d want to keep exposure to WebBeds, but I’d probably prefer to sell shares of the separate Webjet OTA business.
For me, there are other ASX growth shares I’d rather invest in after Webjet share price’s jump today.
