Earnings call transcript: HBX Group Q3 2025 sees revenue growth, stock dips

HBX Group International PLC reported a 3% year-over-year increase in revenue for the third quarter of 2025, reaching 182 million euros. Despite positive revenue growth, the company’s stock fell by 2.57% in recent trading, closing at 7 euros. According to InvestingPro data, the stock has declined 38% year-to-date and is currently trading near its 52-week low. Analysis suggests HBX is undervalued based on InvestingPro’s Fair Value model, despite investor concerns about the challenging macroeconomic environment and competitive pressures. HBX’s management remains optimistic, projecting mid-single digit revenue growth for the full year and emphasizing investments in AI and machine learning to drive future performance.

Key Takeaways

• HBX reported Q3 revenue of 182 million euros, a 3% increase year-over-year.
• Total Transaction Value (TPV) grew by 5%.
• Stock price declined by 2.57% after the earnings announcement.
• The company is targeting mid-single digit revenue growth for the full year.
• Investments in AI and machine learning are a strategic focus.

Company Performance

HBX Group showed resilience in the third quarter, with a 3% year-over-year revenue increase, supported by a 5% rise in Total Transaction Value. The company maintains impressive gross profit margins of 91.4% according to InvestingPro data, though its current ratio of 0.77 indicates some liquidity challenges. The company benefited from its strong global network and agile response to market changes, despite facing a challenging macroeconomic environment. Domestic travel outperformed international corridors, contributing to the company’s growth.

Financial Highlights

• Revenue: 182 million euros, up 3% year-over-year.
• Total Transaction Value (TPV): Increased by 5%.
• Nine-month revenue growth: 7% overall, 8% in constant currency.

Outlook & Guidance

HBX Group is projecting mid-single digit revenue growth for the full year, with expectations of mid to high single-digit TPV growth. The company narrowed its adjusted EBITDA guidance to at least 8% annual growth. InvestingPro analysis reveals that analysts maintain a strong buy consensus, with forecasts suggesting a return to profitability this year. Get access to 8 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription. Positive early signs for 2026 bookings have been noted, with expectations of stabilization in the US and Northern European markets.

Executive Commentary

Nicholas Hood, HBX’s CEO, emphasized the company’s experience in navigating market cycles, stating, "We have twenty years of experience trading through cycles." He also highlighted the unpredictable nature of the current market, saying, "The market has been changing fast. It was unpredictable." Despite these challenges, Hood remains confident in the company’s growth potential.

Risks and Challenges

• Macroeconomic pressures: The global economic environment remains uncertain, impacting consumer spending and travel patterns.
• Competitive market: Increased promotional activities and competitive pressures in the mobility and experiences market.
• Shorter booking windows: A shift towards shorter booking cycles could impact revenue predictability.
• Geopolitical factors: Ongoing geopolitical tensions may affect international travel and business operations.

Q&A

During the earnings call, analysts inquired about the impact of foreign exchange rates on the company’s guidance and the competitive pressures in the mobility and experiences market. Management addressed concerns about regional performance variations and explained the shift towards shorter booking cycles. For detailed analysis of HBX’s financial health and future prospects, including expert insights and comprehensive valuation metrics, check out the exclusive Pro Research Report available on InvestingPro.

Full transcript - HBX Group International PLC (HBX) Q3 2025:

Ellie/Kelly, Conference Call Moderator: Hello, and welcome to HBX Group Trading Statement Third Quarter twenty twenty five Conference Call. Please note that this call is being recorded. I’d now like to hand the call over to Isabelle Green, head of investor relations. You may now go ahead, please. Thank you, Ellie, and thank you everyone for joining us today on our q three trading update call.

With me today are Nicholas Hood, our CEO, and Brendan Brennan, our CFO. We’re gonna start the call today with a short overview of trading for the quarter and also the outlook for the remainder of the year. And after that, we’re gonna open the call for your questions. If you’re listening on the webcast, you can type your questions into the q and a box. And if you’re on the conference call, you can register for a question at any time by pressing star one on your keypad.

Finally, before I hand over to Nicholas, a reminder that in our call today, we will be making forward looking statements, which are by their nature uncertain as actual outcomes may differ. Thank you very much. Over to you, Nicholas.

Nicholas Hood, CEO, HBX Group: Morning, everyone. HPX Group delivered a robust performance in q three despite the challenging macroeconomic and geopolitical environment underpinned by strategic execution, commercial activity and our commitment to long term growth. Group revenue for the quarter reached €182,000,000 representing a 3% increase year on year or 6% in constant currency. The timing of Easter contributed approximately to one percentage point to this growth. For the nine month period, revenue grew 7% or 8% in constant currency.

Total transaction value or TPV grew 5% in q three, slightly ahead of revenue. Constant currency growth of 8% was well ahead of the accommodation market, which was up just under 5% on the same day. Revenue growth was driven by increased accommodation volumes, which grew faster than average daily rates. ADR reflected deeper discounting in faster market, a shift in geographic mix towards markets with a lower ADR, Latin America, Asia Pacific, and the transactional impact, of course, of the weaker US dollar. Despite the market challenges, activity was resilient with a new peak of 7,400,000,000 daily searches on our platform in the quarter.

We also saw a material increase in short lead time searches as consumer confidence started to return and promotional activities were affecting in generating demand. This dynamic favored the larger PAs with their ability to drive high volumes of b two c activity at the last minute. In comparison, our booking data shows stronger growth for arrival in the three to six months window, reflecting the strength of our business model with a higher valued customers who boost earlier, stay longer, and spend more. In our mobility and experiences product, performance was impacted by competition in the b to b space, where scale and connectivity are increasingly important. The software performance in m and e had around a 1% headwind effect on our group revenue growth in the quarter, and performance in this area is something we are very focused on improving.

We acted early in the quarter to capture growth opportunities. Our actions included targeted geographic expansion. For example, the addition of a superior branded hotels in Spain. We have also joined forces with Bakun to integrate its channel management into our distribution. This will help hotels to connect and grow faster with less complexity.

In total, we onboarded around 3,000 new hotels in q three. Cross selling and branding of ancillary products such as signing a new partnership with the travel insurance specialist in to enable our travel tech rollback hotels to offer cancellation insurance and travel assistance to guests. Tactical pricing actions using our extensive data and insight to support commercial decision that optimize overall profitability and continued investment in new product, which included the acquisition of SafeTime to enhance our ability to automate the guest experience with features such as mobile checking, the launch of our AI powered luxury product, the luxury in new markets, and its successful integration into our retail platforms based online, making it now accessible to all partners via web and API. We will, of course, continue to seek opportunities to develop and expand our business with a particular focus on the scale, geographic reach, and technical capabilities that differentiate us in the competitive marketplace. I’ll now hand over to Brandon to discuss our q three performance and your outlook in more detail.

Thank you, Nicolas. We have delivered 3% revenue growth in q three, 6% in constant currency with significant regional variations. Taking each region in turn, firstly, Spain saw a 4% revenue increase driven by strong growth in arrivals from The UK of 13% and China, which almost doubled year on year from a fairly low base, partly offset by weaker domestic travel in the quarter and fewer visitors from Germany. Secondly, rest of Europe was down 3%. Good growth in France was more than offset by lower growth in destinations such as Greece, Portugal, and Turkey and reduced the travel to The UK down 1% and Germany down 12%.

US revenues declined 3% reflecting lower demand and translational impact of a weaker dollar. Domestic travel outperformed international corridors with double digit declines in arrivals for Canada, Spain, France, and Germany. The rest of The Americas grew 15% with strong growth in domestic and interregional travel. Mexico was up 12%, while Brazil and The Dominican Republic both increased by around a third on the prior year, helped by our recent agreement with Depakar. Canada was up 9% mostly due to a strong increase in domestic travel that replaced US trips.

Miepak delivered 14% growth, supported by economic growth, airline expansion, and operational investments in Japan. However, growth in The Middle East deteriorates during the quarter with double digit declines traveled to Saudi Arabia and Jordan due to the increased unrest and conflict in the region. These shifts in chronic orders are challenging the industry and highlighting the importance of our global network and the agility of our systems and teams to respond quickly to changing travel patterns. Please notice changes and large swings in demand to lead to short booking windows and less differentiation in the near term. However, the lower visibility can help us to build market share longer term with our SPA model and global network.

In q three, we added 400 hotels to our SPA network. Being laser focused on profitable growth is even more important in times like these. We are leveraging AI and machine learning to enhance decision making and operational efficiency. 7% of customer service volumes are now automated, and we have built new models that generate content for the hotels. This has enabled us to achieve historically high customer satisfaction scores while also reducing costs.

Next steps will be activating the voice box for some of our hotel interactions. We’ve tightened cost controls, particularly around variable and discretionary spend, while con continuing to invest in strategic initiatives to keep us at the top of our game. As a result, we’ve protected our margin expansion and continue continue to see strong cash conversion. This brings me to our full year guidance. We have seen volatile trading this year, but we are performing resiliently and working to capture the available growth opportunities.

We have twenty years of experience trading through cycles, and we have been quick to respond to the incremental opportunities and get agile on the elements within our control, like pricing and costs. We now expect mid to high single digit TPV growth and mid single digit revenue growth for the full year, both lower than previous guidance to reflect the market headwinds and currency impacts. We have narrowed our adjusted EBITDA guidance at the lower end of previous range, implying annual growth of at least 8%. Our cash conversion guidance of circa 100% is unchanged, and we are on track to end the year with leverage of around 1.7 times adjusted net debt to adjusted EBITDA. In this dynamic industry, our midterm outlook is unchanged, supported by our strategic initiatives and operational discipline.

It’s early days, but bookings for ’26 are encouraging. In closing q three, we demonstrated the resilience of our business, the strength of our platform, and the value value of our strategic focus. We’re confident in our ability to navigate near term challenges and continue delivering sustainable, high profitable, and cash generative growth. Thank you. We’ll now open the floor to questions.

Ellie/Kelly, Conference Call Moderator: Thank you. We are now opening the floor for question and answer session. Your first question comes from the line of Michael Reif of UBS. Your line is now open.

Michael Reif, Analyst, UBS: Yes. Good morning. In a busy day for results, apologies if

Nicholas Hood, CEO, HBX Group: I I missed some of

Brendan Brennan, CFO, HBX Group: those comments you you made at the beginning. But just in terms

Michael Reif, Analyst, UBS: of the currency impact for q four, you’re obviously giving TTV growth for the year in euros. But can you maybe say how much of a an FX affecting q four we should we should be anticipating in that? And then in terms of next year, you talk about getting back to trend volume growth. You you mentioned just now, I think, that booking for for early twenty five or ’26 looks encouraging. Can you say whether in the first half you would expect to be back at that trend rate?

Nicholas Hood, CEO, HBX Group: Thank you. Yeah. I’ll take that one. Thanks, Michael, for your question. At the moment, we’re we’re anticipating in our guidance and not dissimilar levels of FX impacts from q three into q four.

Obviously, you saw in the quarter a 5% to eight percent back from a TPV perspective and three to 6% on our group revenue in in the quarter. And while we do see the the dollar strengthening, obviously, that, you know, we do know that markets are quite volatile on the FX ranges at the moment. And so we’ve kind of anticipated in our guidance a similar out to turn in terms of the q four effects impact. And, yeah, in certain days, in terms of our our our ’26 outlook, it’s been a quick changing market, and we believe that we have reacted to that fast paced market particularly to insulate our results from an EBITDA perspective as I think you’ll appreciate in our renewed guidance. And we’re gonna keep a close eye.

The initial signs are positive. But, of course, we’ll come back to you with more details around ’26 as we as we close out our our current year fiscal year, which will be in the obviously, out September and give you much more detail at that point given the dynamic nature of the market.

Michael Reif, Analyst, UBS: Thanks. And and then just as a follow-up on the experience and mobility market. Nicholas, you you made some comments about large players having some sort of advantage. Can you maybe quantify the level of slowdown you’ve you’ve seen in that business? I think pre IPO, it was quite weak in in fiscal twenty four.

And and what what you’ve done and and how that’s maybe affected the performance since the end of the quarter?

Nicholas Hood, CEO, HBX Group: Sorry. Could you just repeat the so we we know the question is in relation to the M and E business and the large players impacting performance. And there was a second part as well. My apologies. Yeah.

Yeah. What what have

Michael Reif, Analyst, UBS: you done to sort of try and address that? And has there been any impact positively already or or is it too early?

Nicholas Hood, CEO, HBX Group: Oh, no. We we so I mean, we’ve been very volatile in in this market, you know, with a shorter lead time. We saw, for instance, current hold for that team being more aggressive on prices and therefore impacting the overall prices from the business, but also other activities. What what we’ve done is that we have focused lot on the more important business, the one that have a strong track record, like in past packages, And we’ve also focused on negotiating long term deals with key players that hopefully we will be able to to announce soon. So we try in in a nutshell to to not only to address the tactical situation for the quarter, but to make sure that we also have the right growth rate for the future and the coming years to your question before.

Thank you.

Ellie/Kelly, Conference Call Moderator: Question comes from the line of Victor Chang of Bank of America. Your line is now open.

Nicholas Hood, CEO, HBX Group: Hi. Good morning. Thanks for taking my questions. Maybe two from my side. I guess if I look at your TGP guidance for full year kinda implies at midpoint, maybe roughly 3% growth for q four.

Are you kind of seeing I think that the like, h one, you see some stabilization in US already. The kind of guidance for q four implies maybe a bit of a slow growth as well. Kind of what what latest frame you’re seeing in the quarter? Are you just being a bit more conservative or any other factors you’re considering? And then secondly, on, you know, again, on M and E.

If I heard correctly, you said there was a 1% quite headwind to group. I guess that’s slowed down quite materially. And I’m thinking about long term though, you talk a bit about, you know, more competition that phase. Are you still positive on MNU potentially growing faster in the medium term and still kind of and

Brendan Brennan, CFO, HBX Group: have

Nicholas Hood, CEO, HBX Group: a positive contribution to take place in the medium term as well? So listen. If I start maybe by what we see in q four from a growth perspective, I think that the the July trends in terms of CTV are supportive with improvements in demand for from US and Northern Europe compared to June. However, what we were saying is that the timing of the trading disruption, the fact that it happened when we were building our, you know, books for the summer through a long lead time was helpful in building the base demand for q four. And therefore, we have more reliance on the short lead times booking, which typically, we said that also less differentiated and probably with lower margin a competitive environment.

And that’s why, Brandon, I think we’re being also cautious on the q four numbers. Yeah. I think yeah. Just to add to that, obviously, as we said, we saw quite a dynamic market shift during the course of the our book building period, an important period for us in the spring time into the summer. We reacted to that, but some of those market pieces were more of that shortly time piece.

And, of course, we are, you know, really kind of experts in the the slightly longer lead time curated experience. And so, you know, consumer pattern shifted slightly away from us during that point. I do think it is fair to to emphasize and reemphasize Nicholas’ point, which is we have seen, you know, stabilizing trends in the in the in the very recent past, albeit it continues to be a dynamic environment. And as I said on my earlier comments, we very much looked at what we can do, what’s in our control in terms of maximizing the mark that we we look to. You saw us go very well in in the rest of America and the APAC, which were both in the mid teens in terms of our growth even in q three year over year.

So we’re seeing to continue to see some some of this, obviously, in in some of our more traditional markets, good growth in in our newer markets. I would also just to to finalize on the comment that, you know, we have taken a hard look at our guidance profile now as you guys can see. And, obviously, reflected in that, you know, that, yeah, as you mentioned, that that more cautious outlook for for q four. That is kind of very much in line with where we kind of, you know, think is a relatively conservative position at this point. So mortgage and expenses, I think we addressed this in Michael’s question before.

So there was a more volatile environment, you know, in the last quarter, which we think was driven by shorter lead times, which forced some of the mobility and experiences operators to react. It was I think it impacted our volume. But as I was saying earlier on, I think we have both short term tactical actions to recover over the summer that also longer actions, longer term actions to make sure that we keep growing this business, which you will remember as a good profitability for us and therefore is important. So I should have said that we also saw you you guys are certainly aware of that. We also saw some new entrants into this field with being probably more aggressive on pricing on a tougher quarter.

So a lot has been happening, but once again, we have been in this for for some time now. We know that this market is too far accommodation, it’s too far mobility and expenses, it’s sometimes very volatile, but we also know that it recovers very quickly. And we are convinced that we have strong fundamentals as a company.

Michael Reif, Analyst, UBS: Maybe if I can follow-up on a

Nicholas Hood, CEO, HBX Group: bit on that. You said about, you know, some of the new entrants coming with a bit more aggressive on pricing. Are they sort of small players or large players entering that space? I think you mentioned earlier as well that scale matters in this business. Yeah.

I think we for instance, the one that I have in mind between others, the fact that Expedia, as you may have seen, is entering this field, which is by definition, Expedia is one of the key players in the market. They also, of course, as usual, new entrants. It’s a mix of the two. No. But the the key event of the quarter was, of course, they’re answering the field.

Got it. Thank you.

Ellie/Kelly, Conference Call Moderator: Your next question comes from the line of Fernando Abreu Martial of Alantra. A

Nicholas Hood, CEO, HBX Group: couple of questions from my side. So first, you mentioned that you suffered from weaker US arrivals into Europe and and negatively impacted your your revenue in rest of Europe. However, I’ve seen that one of your b two b peers actually cited a strong US US travel trends into Europe in April and May. I don’t know if this point to a tougher also competitive environment for HBX and what are you doing to attract more U. S.

Demand? And then second, on the EBITDA guidance and cost flexibility. So the midpoint of your revised guidance suggests probably flat OpEx in H2 compared to a plus six percent in h one. So could you elaborate a little bit on which cost items are more flexible or being actively reduced? How confident you are in delivering on this revised EBITDA outlook?

Thank you. Thank you very much for the the second question. It’s a very important topic for us because clearly, delivering on our EBITDA and and and commitment something that has been very important for us in terms of focus in q two. So we’ll address that maybe we can start by by The US. I think that’s I cannot have in mind the the the competitor that you’re referring to.

Well, I think it’s a probably a different situation. I don’t know the the very specific details, but what we we see actually, what we saw in The US, ourself is that domestic travel outperformed international corridors. And we saw a a strong decline at the beginning of the quarter and some recovery afterwards, which I think could go in the same direction that you were just mentioning. And I was saying earlier on that in July, we saw some we see so I don’t know. It’s the last day of the month, some positive number on this side.

Do do we want to focus on EBITDA, maybe delivering a level of confidence? Yeah. Absolutely. So, yes, we did I mean, it was very important. So Nicholas said at the outset, I think as we said, I’ll refer back to our comments that the half one position, we were very clear that we said that, you know, if we did not see the market moving the direction that we would like, that we would remain very focused on cost control and delivering our EBITDA.

And I think that’s exactly what we have been doing. We obviously saw some unfavorable market trends as we as we referenced during the the first few minutes of this call. And but what we have done is made sure that we have been efficient across our organization in terms of our cost base. In terms of those discretionary elements, obviously, we’re looking at good control from a cost perspective, both in terms of headcount, in terms of the, you know, kind of other discretionary costs, travel costs, other elements like that. But I’ll bring you back to some of the more important pieces that we’re really moving as an organization that I mentioned in my script, which is around our use of active intelligence and machine learning.

And we’ve seen a significant improvement as I as I referenced in terms of some of our interactive chatbots and also, you know, web web based bots that we have in terms of managing the flow of our information to our organization. The efficiency has increased in terms of delivery, but also significantly from a cost base perspective. This is an area where we think we are really just, you know, I kinda referenced here, we’re now dealing with seven percent. So we really feel that this has been ramping quickly and will continue to ramp indeed during the second half of the year. So, yes, we are absolutely doing all of the things you would expect.

Looking closely at headcount, looking closely at discretional calls, looking closely at items like travel and other pieces like that. We we are also changing the shape of the organization. And actually, the time of the IPO, this is something we spoke to, that this is an ambition of ours and something we really want to try to deliver on in really leveraging our cost base. You quite rightly point out that our expectation on the second half of the year is flat in terms of our our cost base perspective having grown actually in in the first half. However, we feel that this is a a manageable goal and actually something that beyond ’25, we want to continue to challenge ourselves with to ensure that we are really leveraging that EBITDA, and it’s part of our course, our our long term story, remains unchanged.

Mhmm. Just thank you very much for the answer. Just just only one follow-up. You’ve also maintained the operating cash flow conversion at 100%. However, with, I would say, softer TTV growth, and therefore, I understand that softer working capital inflows.

So I don’t know if you are, you know, managing better the working capital, or are you reducing your CapEx expectations for the year to to to keep the guidance unchanged? No. We’re certainly not reducing our our capital expenditure, continuing to debt, as I said, whether it’s internally in the organization or ensuring that we have market leading platforms. It’s extremely important to us as a as a tech organization, of course. So it’s not that we certainly think we have end of pieces within our working capital mix to be able to manage to the 100% expectation.

And as you know, coming into this year, we’ve often done well and accessible 100% in terms of cash conversion in the past. So it still feels like a target that’s doable. We’re still seeing the solid growth year to date. So our expectation is that we should be able to cover that. Take off.

Yeah. So maybe, Fernando, because I see your questions. I think the the the key comment that I have in mind is the market has become, at least in this quarter, more volatile, and we have reacted in trying to protect the p and l. The way I look at it, you know, we have this high single digit top line CTV quote, which I think is, I would say, Robert versus what we’ve seen, for instance, from looking in terms of room nights yesterday, etcetera. We had a take rate which is only going down by 20 beats when the market has moved to something which is, you know, a shorter lead times.

Therefore, a lower level of differentiation for us. We’ve always been very clear and very transparent of that and and probably a more competitive market. And we’re protecting us into our EBITDA commitment. We have key focus on on cash. We we keep our eyes on the board really on a very volatile market.

Mhmm. Okay. Thank you very much. Your

Ellie/Kelly, Conference Call Moderator: next question comes from the line of Carlos J. Trevino of Banco Santander. Your line is now open.

Brendan Brennan, CFO, HBX Group: Yes, sir. Good morning. Thanks for taking my questions. I missed some of your initial comments. I’m sorry you have explained before.

I will have to question the first one. Which part of the reviews of the guidance reduction is coming purely by Forex? This one is explained by ForEx and which one will be explained by the business environment? And my second question will be in accommodation, you have said that your opinion is coming from volumes more than from prices. I would like to

Nicholas Hood, CEO, HBX Group: ask you if how do

Brendan Brennan, CFO, HBX Group: you see this in comparison with the industry? Do you see that this is a general trend or this has been impacted more by what you are doing with this? Thank you.

Nicholas Hood, CEO, HBX Group: Yeah. I I think so. You’ve come and show we are focused on driving the business. And we I think we we try to avoid, you know, the comments on the the the environment, etcetera, but it is absolutely true that the market has been changing fast. So it’s relatively unpredictable on the back, as you know, of the macroeconomic changes, the geopolitical tension.

And most of our competitors are reporting in dollars, which is probably they are seeing more selling and working more headwind right now. But, you know, these things, you know, they they evolve as time goes by. So what you will see is that the foreign exchange has had a significant impact for us in this quarter results. And it’s the same for the prices. We we mentioned it briefly, and I’m conscious that you guys are in terms of growth at the same time.

But, actually, our growth overall was slowed down by prices going down in some countries, you know, like The US. It’s a mix for the foreign exchange and some of the global trends and other trends being more aggressive on price. Brandon, maybe we can yeah. I’ll tell you. Yeah.

Yeah. See, certainly, maybe I’ll start off on the the FX piece, and then we’ll come to the orange of the pricing piece. Just just to mention because you you asked the question in terms of the split of the FX elements versus the operational performance, the the outlook for the guidance. And I think what we still are obviously in the in the quarter just to refer to the TTV with a 3% headwind in the quarter in q three. I mentioned earlier that we expected a similar outturn in terms of our guidance.

And of course, I’ll remind you guys that you know that our second half of the year is much more impactful than the first half. So we do see that being a, you know, that that drag effect being significant enough in terms of the overall revenue generation and outlook for for the for the company. So certainly, something in that two to 3% range for the full year is probably not not or to be expected. And in terms of the the pricing piece, yes, I think it’s been a it’s been a competitive market, and we have certainly been reactive to that market. But, you know, one of the points that Nicola made at the earlier part of the conversation is that our our margins and our takeaways have been relatively robust.

And so we’ve been very efficient at actually finding the growth. As I mentioned earlier, Ron, some good growth in in in in Western America, EMEA pack, and also being able to optimize our our margin flows even in a more competitive pricing environment. And I think that’s that’s really kudos to the experience of the company and the ability of ours to flex in our markets either through a different supply and distribution channels. I wanna be, as I said, the true the different geographical pieces that we have as a global organization. So I do think even though we have seen them, we’re certainly, you know, dealing with a very dynamic marketplace.

I think we have reacted quickly and reacted well from a shielding our EBITDA and our overall pricing environment perspective. Thank you.

Ellie/Kelly, Conference Call Moderator: Your next question comes from the line of Andrew Roth of Barclays. Your line is now open.

Brendan Brennan, CFO, HBX Group: Great. Good morning all. My first one is just to double check a bit on you’re describing about the shorter booking cycle and more volume flowing through

Nicholas Hood, CEO, HBX Group: the OTAs. Can you just help us

Brendan Brennan, CFO, HBX Group: to understand as to kind of why you’re weak in that area, what you can do to fix that longer term, and then anything you’re thinking about shorter term or tax keeps trying to rise share in that area? That’s the first question. Second question, I I appreciate the you’re not here to talk about FY ’26 today. When we kind of look at consensus, 10% TCD growth kind of four eight five EBITDA, I also appreciate a lot of the FY ’26 year is not gonna be made until next summer. But how do you feel about back in 10% as it sits today given the kind of exit run rate in the business and then the the bit that you have around cost?

Thank you.

Nicholas Hood, CEO, HBX Group: Yeah. Thank you, Andrew. So maybe I’ll take the first one, Brandon. So if if I look at the sequence of events, if you remember, we started to see some impact in The US in March, a lot in April and May, etcetera, and then, you know, like, some form of recovery June and and July. And for us, the impact was absolutely not ideal because you may remember that we insisted on the fact that we have no early signs, and therefore, we are building our books three to six months before this.

And so the the we have stated previously that we have a very strong order a book of orders when we entered the calendar q two, our financial q three, and then we saw some drops on the on the demand, and that’s what we were saying last time we spoke. The the second comment is what happened there because of the macroeconomic uncertainty, because of all of the events that you see from a trade perspective, and also some geopolitical events in in The Middle East, what we saw is that people expected longer before buying, possibly expecting to see a lower price or to be able to decide where to go and and how to travel. And and the third aspect that happened is that in significant countries, people shifted to domestic travel rather than international travel. It’s the case, for instance, in The US or Canada, etcetera, as we commented. But also, often in in times of uncertainty, people don’t travel that far away from home.

And this combination of a higher shopping time and domestic travel or or nearby travel makes it more difficult for us. You may remember that that we insisted on that during IPO time. We have a differentiation on longer time, long haul troubles, our clients book long in advance, etcetera. And that’s common. And, of course, in a market which is less differentiated, we again insisted on that again and again as many time as we could at IPO time.

The way to differentiate is pricing and also which is putting probably more pressure on revenue for possibly most of the players. That’s the way I would expect it. I don’t know if it’s clear, Andrew.

Brendan Brennan, CFO, HBX Group: Yeah. But that is helpful. And I guess as a follow-up to that, is there anything you can do to change that, or are we just kinda stuck now in this tricky cycle until the macro gets a bit easier for you guys?

Nicholas Hood, CEO, HBX Group: No. What what we do is two folds, of course. The first one is to work on grabbing as much as the short lead time demand as we can. And I have the feeling that we have done this in q three. We have reacted.

We mentioned that, and and we grabbed some of it. At the same time, what is very important, if you if you think about it, is that we want to make sure that we keep on rebuilding our boost for next year as Brandon was saying. And for the moment, we see a very positive trend on this. Well, last comment that you know is that I wouldn’t want this to sound at all as an excuse because it is not, but the substitution away from long lead booking to also a shorter lead time driven by the events of this year, then they have taken some demand away from some of our key channels of of clients. So that’s a industry event.

Maybe just to comment on your second question, Andrew, on the the twenty sixth consensus position and outlook. I think it is early as you could imagine for us to be commenting too much on 2026, and you’re quite right. Our bookings will be developed certainly over the which period into summer, spring for for the ’26 period. And what we do see, of course, and I referenced in my prepared remarks, you know, we see positive trends in relation to our ’26 bookings period at this point. And we do feel that we are a resilient organization in a resilient marketplace.

We have a lot of experience in dealing with that. We have seen the fast movement. It has been a very dynamic marketplace over the last couple of months. We feel that we’ve responded to that. It is not perhaps the the second half of the year that we would have liked.

However, we do feel that we are responding. We are being agile. And that, as I said, the outlook for ’26 is is looking better. Yeah. And to to I think just to one last sentence on that to to Andrew’s point, and I think we’re closing the loop here.

Domestic and short lead times, we always see this pressure when pressure when things go wrong. You know, we saw that in COVID times a lot. But we also know that the normal market recovery leads normally to longer hold travel and also a longer lead time. So we’re confident for ’26. Thank you.

Ellie/Kelly, Conference Call Moderator: Your next question comes from the line of Nizia Najir of Deutsche Bank. I have two questions on the first one. Annika, I think you partially answered, but it was really on, have you seen a volatile market like this in HBX’s recent history? And how long did it take for those short term booking shares to sort of normalize and for the longer lead bookings to come back? So maybe a bit more elaboration on that would be great.

And I guess connected to that, in terms of what you’re seeing right now, the stronger growing markets like near pack, the rest of America outside of The US, they grew by double digits. They continue to grow at these levels even in q four, sort of supporting maybe the rest the weakness in other markets? So that would be question one. And question two is in terms of your EBITDA margin expansion in the midterm, you’re you’re still referring to that guidance and it was sort of 62% or north of 60% going forward. And the implied midpoint for this year is already at around 59 when I look at your guidance range, if I’m right.

So what more measures do you have in place to sort of reach that 60% plus? Some color there would be great. Thank you.

Nicholas Hood, CEO, HBX Group: Okay. Maybe I’ll start by the market recovering and what we see in in recent trends. So as I was saying earlier on, I think that the the July trends in CTV are supportive in terms of top line. We see improvements from some of the markets that were impacted for us, like US and Northern Europe compared to to June. And we have seen encouraging signs for next year in the recent weeks, like strong double digit increase in booking for FY ’26.

So that’s something which I I feel is is important in terms of sustainable growth. When it comes to volatile markets, you know, this is our industry. We have been there for a long time, and and some of you have been following this industry for a long time. There is some volatility, and it happens often. It’s driven by a lot of different reasons, and we are seeing some of them here.

But we also know that usually the recovery doesn’t take more than a season and which means give or take a window of six months historically. We’ve seen that during COVID, where in ’21, we had a beginning of recovery with a lot of domestic, a lot of shortfalls, travel, if you remember, and then a very strong acceleration. My last comment, if I may, to to nuance from the market perspective is that the market is stabilizing for the moment at very high levels. You may remember that last year was one of the pictures in the market history. So I would say that there is a market resistance.

And, of course, you are being impacted differently based on the structural demand. That’s very normal. EBITDA? Yeah. And just actually before I go to EBITDA, you also asked around the the regional performance in relation to the APAC and LATAM, which was very strong during the quarter.

As I I mentioned, it’s kind of both in the mid teens where we saw a very solid performance both from those regions being hot regions from the perspective of of of travel, but also from some of our new relationships that we’ve developed over time. And, obviously, that’s regarding a a part of that story in the rest of the Americas region. We still see continued good trends from them, and so we do think that in q four, they will continue to be help us very much so in terms of the balance of our growth and, again, reflects the importance of our our global nature of our organization. So thank you for that question. On EBITDA, yes, we are making obviously probably faster progress actions than we probably initially anticipated from a margin EBITDA expansion.

Of course, some of that is related to the fact that we said we would be, you know, more careful with our cost base in the second half if we did not see the trends that we were looking for from a growth perspective. And, obviously, we are now implementing those changes and seeing that flow through EBITDA. You’re quite right that we said that in the medium term that we would be in the low sixties from our margin profile perspective. That’s still very much on track. Our expectation is we can still develop our leverage in our business as we go forward into ’26 and into ’27.

And, obviously, the the EBITDA trend is one that’s actually making good progress towards hitting that objective. I think in terms of the additional pieces, it echoes some of the points I made earlier on. We will continue to look at our machine learning. We will continue to look at AI. We are a technology driven company.

And so we’re really trying to be as efficient as we possibly can be. Don’t forget, you know, the numbers of of searches or the number of transactions that we transact on a daily basis. It is there’s an element of relationship of what we do, but there’s a, you know, huge huge part of our company that is very much platform based and technology driven. And it’s the automation and further automation through AI of that platform where we feel that we can really continue to drive that leverage ability. So we still have a feel that we have a lot of ability to continue to look at that and continue to variabilize this whole corporate, but then also make sure we get significant good leverage out of the fixed element that we do have.

Ellie/Kelly, Conference Call Moderator: Very helpful. Thank you. Next question comes from the line of Thomas Petrou of BNP Paribas. Your line is now open.

Nicholas Hood, CEO, HBX Group: Hi. Good morning. Thanks for taking the question. I have a couple of questions, if I may. First of all, maybe on the sequence of of growth within the third quarter.

I think you mentioned in May when you reported the H1 results that Apple was trending in line with h one with from a top line perspective, and I think the message was also quite constructive on May. So I just want wanted to make sure. Does that mean that that June was just flat year on year on the top line basis of constant currency? And then secondly, on promotional activity. You mentioned promotional activity from from hotels as a headwind to revenue growth in US in particular in in the quarter.

But on the h one result call, you mentioned how important HDX platform was for hotels to optimize their promotional offer. So what has changed in the quarter versus h one for promotions to come from a the tearing of the rest of your business in h one to what what had we need in the third quarter? Yeah. Maybe I’ll start by the the sequence of global picture. Remember what what we explained back then is that we have entered a sale with a very strong book of orders, but the on the month booking were well lower than what we have seen on previous year.

And I think we had the the same sequence for May. We were back then on May, so it was hard to predict the the ten month. Do we want to yeah. Can this one then we go on to the promotional activities? Yeah.

Yeah. I think that was, you know, some of some of those pieces that that trend, obviously, you know, as as you reference this, you know, Peter Evans, we came into June. It was a much more challenging month for us, and and I suppose that really set up the sequence of our caution around or sorry, some of the headwinds we saw particularly in in the in the third quarter and obviously then collect our our kind of bookings period as we came into the fourth quarter as well. So, yeah, the trend was becoming more positive. You recall we talked about it earlier in the year where we said, you know, we had seen, I think, obviously, around early April, which was a challenging period.

We did say we had some tailwind in April, of course, because of the timing of Easter, and that May was recovering. We just never saw it kind of come back to that as we would have wanted to, and and June was with a much flatter period. So that unfortunately was the the the sequence of events. As I said earlier in my comments, it was a very dynamic change in the marketplace. And there was that element of speed that impacted our ability to make our previous guidance.

Michael Reif, Analyst, UBS: And on on the promos, actually, if

Nicholas Hood, CEO, HBX Group: you remember, we we we did say back then that we saw a lot of promotional activities from the the hotels going on trying to to adapt and adjust, which I think is reflected in the average daily rates impact that we’ve mentioned earlier on. Our intention and and support is always to help hotels to optimize, but they can only optimize to the extent that there is a a demand and they have to do their own arbitrage between volume and margin optimization. So we need this to to them to to answer. On our side, what we see is that we will discuss that afterwards, but we have a strong demand for 2026, like a strong pipeline when it comes to FDA, you know, our our financial agreement, which I think is a a good sign of what you were just mentioning right now. Alright.

Understood. Thank you.

Ellie/Kelly, Conference Call Moderator: Thank you. I will now pass the call over to Isabelle to read the questions from the webcast. Thank you very much, Kelly. And, yes, we’ll be the verbatim to to honor the analyst’s advice with them in. But in some cases, they’ve written a little while ago, so if you think you’ve already answered, they can repeat.

It’s not that they’re asking you for a repeat. It’s just that that now we’re getting to the better. So I’m gonna start with Nick Kushner from Redburn who is asking what led to weaker trading in Europe in more detail, looking last night reported from EU environment. So I think it covers some of those points if you have anything extra to add to the next.

Nicholas Hood, CEO, HBX Group: I’ll start off on that one. I I spoke to it a little bit in the script. We do see a mix of performance across our European territory. And what we saw specifically was very good trading in France, obviously, which had a very good season. But, obviously, that wasn’t enough reason to offset some of the weaker elements of what we saw across that book of business, particularly in places like Turkey and Greece were impacted during the course of this season, and it has been a more difficult season for them.

And there’s an important markets for us in terms of our overall geographical distribution from a from a coverage perspective. So while we did see a mix of performance, I would say that some of our primary markets just weren’t quite where we would have liked to see them during the course of this one. Yeah. And it’s true that for Turkey, of course, being in Europe, then it it does play a role. Yeah.

Ellie/Kelly, Conference Call Moderator: There’s a more. I know we’re we’re running it in a long time, but I’m we’ll see that the ones we’ve got for for the sales side of the beach. So we’ve got Ian Sampeo from Asia. He says, could you provide some more color of what is considered for the low and the high end of guidance in terms of underlying demand? Mhmm.

Can we quantify the FX fact in the guidance cut? And is the fiscal q four run rate good reference for the coming quarters based on visibility you have at at the moment?

Nicholas Hood, CEO, HBX Group: Okay. So I’ll I’ll ask you maybe to repeat the last one. But in terms of the low and high end of our guidance, we obviously feel that, you know, as as always, we’re looking towards the midpoint and trying to achieve that those numbers. While on particularly on the top line, we need to see continued, you know, decent trading. We’ve seen that, you know, we have had a quick to change environment.

We’re gonna have a keep a close eye to that. There’s obviously only a couple of months left in the year to go, but we need to see a continued positive trend, I would say, to to get to the to that mid to high end of our range. Obviously, the other end of the spectrum is what you would expect. So if we continue to see or if I should say we should see a slowdown again, as I mentioned in my previous comments, June was relatively flat and July has been, you know, better. If we need to see that continuing trend as we go through August and September to to fill out the year.

And in in terms of sorry. Second question. FX impact on the guidance? The FX impact, we’ve said, obviously, in the quarter, we were impacted by, like, a 3% from an FX perspective. Obviously, we we we included in guidance something similar in terms of our mindset for what will happen in q four.

Given the proportion of our h two versus our h one, that has a more of a a 3% overall, certainly two and a half to 3% overall impact to our full year guidance. So that has not been an unsubstantial element to the to the overall impact on good. And in q four, maybe I’ll start and then you go through the numbers. So I think q four is always a tougher quarter for us. I think we we had explained that last year.

We see usually that in h two, we have a lower margin because of the usually, organic occupancy, because of the geo mix. Some of the regions like mid trend, Mediterranean having a higher share, etcetera. And so I don’t think that you should take q four as a proxy for FY twenty fifth, and we mentioned it a couple of times. The new financial year is performing significantly better than q four as we update. Yeah.

Ellie/Kelly, Conference Call Moderator: And the the last question I’m gonna pick in today, in fact, is a, like, a a full part question. But the first part is on one theme and the the last question is a little of theme. So the first part is, has there been a channel shift as opposed to VA carrying some of city? Has there been a channel shift at the demand level? The late bookings tend to come through direct or OTA channels, but by far, they should be excluded.

And can you so I got the third part in the coming I’m give it three days, but I’ll I’ll stop with that one to start. I would

Nicholas Hood, CEO, HBX Group: say that the the second part of the question is accurate. We’ve always been very clear that when you go into short early times, it’s usually because it’s a less complex travel, and therefore, it’s usually more domestic, more short haul, and people would need less of our traditional intermediaries and would be only directly for b two c. And we saved ourselves in the original opening that we think that this favors OTAs versus ourselves. Is there an industry and market shift? I’m not certain.

What we see is that, first of all, I said that earlier on, when the market gets tougher, people tend to revert to flying closer from home or or putting some time not even flying, staying to in the same regions of some country. And then when when there there is a better macro or geopolitical, then they start to go long haul, which I think plays in our favor. If you allow me just one additional comment, we see, for instance, that the younger generation, they tend to do at a shorter lead time, but with a very different characteristic than the one that we’ve heard. They do not trust very much established brands. They have this brand which is very important.

They fly more often and it’s currently this is a key part of the the of the the travel. And therefore, we see that we travel. A lot of them, you remember, we said that they are already a very important part of our bookings.

Ellie/Kelly, Conference Call Moderator: And the final part of Leo’s question, and our last question that we have time for today is does competition in mobility and experience just change the appetite to invest in

Nicholas Hood, CEO, HBX Group: the sector? Short answer is no. That’s all. We still see mobility and experiences as a very interesting market for the future. We see that the connected trip is part of it.

Every time when we launch our ecosystem approach two years ago, not everyone of the key players was interested in distributing more detail experiences. But today, what we see is that we have a strong demand for various Spanish players that like the fact that they have a contract with us. We work well together, and they’re asking us if they could buy this from from us. So we see it’s summarizing a shift in the market, which is probably important for a further acceleration. We want to keep investing in that market.

Ellie/Kelly, Conference Call Moderator: Thank you very much, guys. I’m I’m gonna leave the q and a from the web there. But if anybody wants to come back with extra questions to the investor relations team, please do send me an email directly or via our inbox, and I’ll be happy to help. If there’s any final words before we finish the call. Yeah.

Nicholas Hood, CEO, HBX Group: I think summarizing what the the key messages that we have tried to to pass on and hopefully to answer to the question, the market has been changing fast. I think it was unpredictable, this evolution on the and this is on the back of the macroeconomic uncertainty and the geopolitical tension. As we just stated in the last question, domestic travel and traffic times outperformed international corridors and longer lead times. And this evolution, I think, for the summer, as we were saying, maybe have taken away some demand from our key channels. What we did at HDX is that we reacted fast to protect the p and l.

We as I said in q three, in constant currency, we have a high single digit TV growth, which I think is good if I compare with some of the other players. Our take rate has been going down very slightly versus last year, which was a very strong q three for the travel industry. And this is despite a more competitive market and some promotional activities that we have done. So I think that we’ve managed it. And as Brendan was saying, we’re absolutely focused on protecting our agency commitments and the the cash flow as we’ve been saying.

So last comment, if I may, I think that we have a solid EBITDA outlook for for the year. Our company is profitable, and that’s important. And if I look at ’26, I think my key message here is that fundamentally, the growth potential for business is there. It’s based on very strong fundamentals, and that’s something that we’d want to reiterate to close this call.

Ellie/Kelly, Conference Call Moderator: Thank you very much, and thanks everyone for dialing in. We’ll now disconnect.

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