Earnings call transcript: Web Travel Group FY 2026 showcases strong growth

Web Travel Group Ltd (WEB) reported impressive financial results for the fiscal year 2026, with significant growth in revenue and profitability. The company’s earnings call highlighted a 20% increase in revenue to AUD 394.1 million and a 24% rise in EBITDA at the WebBeds operating level. The stock responded positively, rising 3.57% following the announcement, though shares remain down approximately 48% over the past six months. According to InvestingPro analysis, the stock currently trades below its Fair Value, suggesting potential upside for investors willing to look past near-term volatility.

Web Travel Group demonstrated robust performance in FY 2026, achieving market-leading growth without compromising margins. The company’s Total Transaction Value (TTV) increased by AUD 1 billion, supported by a 20% rise in revenue and a 24% increase in EBITDA. This growth was driven by improved conversion rates and strategic initiatives in AI and direct contracting.

The company did not declare a dividend for FY 2026, citing geopolitical uncertainties as a reason to preserve financial flexibility. Web Travel Group remains optimistic about future growth, with strategic initiatives in AI and direct contracting expected to continue driving performance. InvestingPro data indicates analysts anticipate net income growth this year, with EPS forecast at $0.37 for FY2026, supporting management’s positive outlook despite current headwinds.

Shelley Beasley, Global Chief Operating Officer, emphasized the company’s focus on leveraging AI tools to enhance conversion rates and improve margin profiles. The deployment of AI pricing tools across 40% of the product inventory is expected to drive further growth.

During the earnings call, analysts inquired about the impact of geopolitical tensions on future performance and the company’s strategy to mitigate these risks. Executives highlighted ongoing efforts to expand direct contracting and leverage AI technology to maintain competitive advantages.

Web Travel Group’s strong financial results and strategic focus on innovation and market penetration position it well for continued growth, despite external challenges.

John Guscic, Managing Director, Web Travel Group: I’d like to hand the conference over to Mr. John Guscic, Managing Director. Please go ahead. Thank you, Caleb. Welcome, everybody, to the Web Travel Group full year 2016 results. Joining me today is our CFO, Tony Ristevski. In a change to the advertised run sheet, Shelley Beasley, our Global Chief Operating Officer, will also present. If we have a look at slide three, the most satisfying component of our results this year is our market-leading growth without margin compromise. As we can see, our TTV is up 20% to AUD 5.8 billion. We’ve continued to increase our market share. In particular, we’ve been able to do that across the Americas and Europe, we’ll talk about that during the presentation. We’ve been able to do that while expanding our margins.

Our revenue is up 20%, and it’s particularly gratifying to see that the second half margin was 7.1% up on the corresponding period in FY 2025. EBITDA is up 24%, demonstrating our operating leverage coming through the business. As we get to WEB Travel Group and we consolidate the corporate costs against our high-performing WebBeds business, you see that EBITDA is up 23% to AUD 148.4 million. Reflects the corporate overheads of AUD 24.3 million, which is in line with guidance. Net profit after tax, AUD 84.9 million. It reflects the full year of standalone costs post demerger and underlying EPS AUD 0.238, up 16% on FY 2025. Most importantly, we retained significant liquidity of cash at the end of the year with that 107% cash conversion number. Moving on to slide five. We almost cracked 10 million bookings in the year, up 18% on FY 2025.

The key contributor was the significant organic growth that we were able to demonstrate in both the Americas and Europe. TTV up in line with bookings, up 20% to AUD 5.8 billion. Revenue up to 20% at AUD 394.1 million. TTV margins expanding. I’ll give some clarity around how that’s occurred and what’s been the driver. EBITDA up 24% to AUD 172.7 million, reflecting our operating leverage. Let’s get into a little bit more detail on slide six. As we can see, and we’ve already confirmed, bookings are up 18%. The three-year CAGR for our business is up 21%, demonstrating consistent high-quality growth that the business has undertaken and continues to deliver. TTV is up 20%, as I’ve already mentioned, consistent in line with bookings growth, with a three-year TTV growth CAGR of 27%. Revenue is up 20%, and that’s reflecting continued margin expansion.

The FY 2025 number had a DMC business that was subsequently sold in April of 2025, and so the margin was a touch lower than it would’ve been. We’ll talk about how we get to the increased revenue margins in a second. What we have been able to do in FY 2026 is continue to invest in our business. We’ve invested in hotel contracting, which we’ve spoken about at the half year and at last year’s results. In particular, we said this would be a driver of margin expansion. I’m delighted to confirm that has occurred. We also, on the expenses side, reintroduced bonuses in FY 2026, which is obviously a reflection of our normal cadence. Obviously, in the disappointing year that was 2025, we didn’t have bonuses.

Notwithstanding the investment in the business, the reintroduction of our bonus scheme, the additional costs associated with merchant of record business, we increased expenses 10% at a functional currency level, which translated to 17% in AUD, driving a higher EBITDA growth rate of 24%, demonstrating the operating leverage that exists in the business and will continue to exist in the business as we maintain our investment thesis in direct contracting within the organization and continue to outperform the market with superior market growth driving an EBITDA growth business that will continue for the foreseeable future. Let’s get into the most satisfying element of our performance in FY 2026. As we’ve said, we’ve increased our TTV by AUD 1 billion, and we’ve been able to deliver that at an improved margin. As you can see from the table on page seven, first half of 2025 was 6.4%.

We did 6.5% in the corresponding period this financial year. The second half of FY 2025 was 6.9%, and we were able to deliver 7.1% in this financial year in the second half, giving a full-year number of 6.8%. The reason we were able to deliver our TTV at improved margin is we have demonstrated disciplined growth. We have optimized initiatives across the portfolio of supply that we have. We’ve continued to invest in hotel contracting resources, and we’ve leveraged those direct contracts to give us a greater capability of selling more stuff and selling more stuff at a higher margin. In addition, the secret sauce that’s driven some of our superior outperformance of AI pricing continues to deliver that, and we will talk about that when we get to our conversion numbers in the next slide. To round out the mechanics, 6.7% margin last year at a reported level.

Take out the DMC sale of margin contribution of 0.1%, 0.2% growth, giving the TTV margin of 6.8% for FY 2026. First half and second half show that we were actually growing our business, and we were growing our business at both a TTV and at a bookings level. If you look at the table on the right, bookings grew 18% in the first half and 19% in the period October to February. At a constant currency level, it grew from 16% to 18%. You’ve got the comparisons in EUR and AUD below, and AUD is obviously what we’re reporting in. The impact of the conflict in the Middle East was immediate and was felt within our business. Two things happened in conjunction. The first is a much higher cancellation rate than we’ve had historically and a shift to shorter length of stay bookings.

The Middle East is disproportionately a larger component of our business than it is of many other comparable global travel businesses. Many of our supply partners and competitors who have called out their results have circa somewhere between low single digits of exposure to the Middle East. 11% of our total TTV is in the Middle East. It’s going to have an impact when the war started late February, and it impacted us into March’s results. We were positive March, and we’re still positive today. That’s primarily driven similar to the outperformance of FY 2026 in the continued growth that we’re experiencing in the Americas and in Europe. Whilst APAC and the Middle East have both been more significantly impacted as a consequence of the war that commenced in late February. Moving on to slide nine.

I spoke about the most gratifying and satisfying elements of our presentation and of our results. As we drill into the componentry of what’s driving it, if we take an assumption that the market grew at circa 5%, for us, that’s just keeping the lights on, and we need to ensure that that’s the bare minimum. We’ve always driven the organization to superior results, and the measurement of that superiority is in growing at many times the underlying market. We continue to do that in two factors and across two different dimensions. One is adding new customers, new supply, penetrating new markets. It’s the horizontal expansion of our business. The second element is selling more stuff to the same clients on an annualized basis. As you can see, we grew at 21% for TTV. That’s excluding the DMC operation from FY 2025.

It’s 20% at a reported level. Staying flat with the market meant that we had to grow at five. You separate out the 16% less. We have new customer supply and markets that contributed 5%, the other 11% is from increasing conversion. That’s a reflection of multiple efforts within our organization to improve the quality of information that we’re providing to our customers, improving the quality of bookability of our inventory for our customers.