EDREAMS ODIGEO S.A. 
The Spanish group is making a successful transition to a profitable model, with three-quarters of its profits now derived from its Prime subscription model, which entitles its 6.5 million members to exclusive discounts on the company's various services, including flights, hotels, packages, car rental and travel insurance.
A brief overview of the company in the first half of its 2024/25 financial year (source: eDreams Odigeo)
eDreams Odigeo was floated on the stock market in early 2014 at €10.25m per share. For shareholders present from the outset, the balance sheet is quite negative. The stock is still below its IPO level and pays no dividends. But the future could be different. eDreams was probably floated a little too early, at a time when visibility on future profits was low. The company had no Prime membership program and was too dependent on advertising and other revenues. The market was not yet big enough, even though several players were already raising capital to take market share among online tour operators.
But things have changed. Covid-19, new consumer needs including, for example, the ability to organize their own trips, and inflation driving the use of travel comparators (particularly for flights and hotels) have enabled pure-players such as Trip.com, Kayak, Expedia, Booking, eDreams and many others to become major players over the past few years.
Finally, this fundamental momentum was confirmed by the publication of excellent results at the end of November. The Group posted a net profit of €2.5 million, and is on target to reach 7.25 million Prime subscribers by the end of 2025. Good news also comes from the financial situation, since fixed costs are now well under control and visibility on future results is better.
As a direct consequence, eDreams has soared 41% since publication, with 23 sessions in the green in the last 31 trading days. Yet at the current price, the free cash flow yield is still high, at between 7% and 8%. Other valuation ratios remain affordable (PER less than 20 times in 2025) for a company with strong expected growth and renewed visibility. This is due to the fact that the business is still subject to a number of significant risks. Of course, the Prime program is working well. But the situation is different for non-prime revenues (35% of total sales): marginal cash profit, which is equal to revenues minus (-) variable costs, has fallen sharply for non-prime revenues.
What's more, eDreams is experiencing a number of setbacks, such as the interruption with Ryanair. More generally, the group has to deal with geopolitical issues, such as changes of direction for flights linked to the wars in Ukraine and the Middle East.
Taken together, these factors are creating a risk for our share price, which is evolving in a market that is being turned upside down by the introduction of artificial intelligence solutions. Competition is also fierce. On the whole, however, the travel market is holding up well, and subscription-based revenues provide visibility that should not be overlooked. If the Spanish group is to continue its good run this year, it will be essential to meet its target of 7.25 million Prime members and pursue its policy of cost control.
