ASMALLWORLD AG announces 2020 full year results at upper end of its guidance18.03.2021
ASMALLWORLD AG / Key word(s): Annual Results
ASMALLWORLD AG (SWX:ASWN) announces 2020 full year results at upper end of its guidance
Zurich, 18.03.2021 - ASMALLWORLD AG announced its full year results for 2020 which came in at the upper end of its previously communicated guidance. Despite a challenging market environment, the company managed to increase its EBITDA by 3%, from CHF 1.45M to CHF 1.49M. The operating cash flow increased by 67%, from CHF 0.4M to CHF 0.6M. Primary drivers for the positive result were strong sales from the company's Subscriptions segment and strict cost control measures across all businesses.
The COVID-19 pandemic created a difficult market environment for ASMALLWORLD in 2020 which resulted in lower demand for travel services and events. As a result, sales declined by 7%, from CHF 12.9M to CHF 12.0M. Despite the adverse market environment and a corresponding decline in sales, the company still managed to increase its EBITDA by 3%, from CHF 1.45M to CHF 1.49M. The overall EBITDA margin increased by 1.8% percentage points from 10.6% to 12.4%.
The company had previously issued a guidance of CHF 11.5-12.0M in sales and CHF 1.3-1.5M in EBITDA. The actual results came in at the upper end of this guidance.
ASMALLWORLD also increased its operating cash flow by 67%, from CHF 0.4M to CHF 0.6M, generating more cash from its business than in the previous year.
The improved profitability in the face of a challenging market environment demonstrated the resilience of the company's business model and supports a positive outlook for the company once travel and social distancing restrictions will be eased.
"2020 was a difficult year for any company in the travel and leisure space, but with clever sales efforts and a clear focus on cost control, we have managed to offset a short-term weakness in demand and ultimately even increased our EBITDA for the year. I believe this is an achievement we can be proud of and that will build confidence in our management team," comments ASMALLWORLD CEO Jan Luescher.
Subscriptions segment grew by 10.5% in 2020
Despite the pandemic, the Subscriptions segment increased its revenues by 10.5% to CHF 8.0M, compared to CHF 7.2M in the previous year. The ASMALLWORLD social network experienced slower demand from new customers due to travel restrictions and a lack of events due to social distancing restrictions. As a result, new signups were lower than anticipated at the beginning of the year. At the same time, renewal rates were comparable to 2019, indicating a certain loyalty among existing members, even in difficult times.
ASMALLWORLD's premium memberships, Prestige and Signature, which come with many travel benefits like air miles from Miles & More or Etihad, and hotel status levels from Jumeirah and Discovery, experienced strong demand during the year and significantly contributed to the growth of the segment.
First Class & More, the group's smart luxury travel business, experienced a similar dynamic as the ASMALLWORLD community, with slightly lower demand for its entry-level memberships but higher sales of its more expensive "Diamant" membership, offered at EUR 999. With clever marketing campaigns, First Class & More managed to sell its higher-price memberships in combination with loyalty and status strategies, which gave members access to in-demand airline status levels.
The World's Finest Clubs, the world's leading nightlife concierge, experienced a challenging year as global nightlife came to a virtual standstill during the pandemic. The company therefore focused on the improvement of its CRM system and a website redesign which will be launched in Q2 2021 to offer customers a higher service level once nightlife activity resume.
Services segment experienced temporary dip due to pandemic
The Services segment experienced a decline in revenue by 29.9%, from CHF 5.7M to CHF 4.0M. The primary reason was a reduced demand for the company's travel services and drastically reduced event activity due to social distancing restrictions.
Despite the reduction in sales, the EBITDA margins improved for the segment, from 1% to 7%, primarily due to a reduction in cost for the company's travel department. These cost reductions are permanent and will also increase the company's profit in the future.
ASMALLWORLD Private, the company's personalised luxury travel service, saw a significant decline in travel revenue due to global travel restrictions. The business is expected return to higher sales volumes once global travel restrictions will be lifted.
The newly launched ASMALLWORLD Collection experienced a slow start. As a new business, however, it did not have any negative impact on the year-on-year comparison. The ASMALLWORLD Collection is expected to grow in revenue and contribution once travel restrictions are lifted.
The number of in-person events for the ASMALLWORLD social network decreased by 73% from over 1'000 events in 2019 to just over 300 in 2020. Attendance declined in a similar fashion. In April, the company introduced multiple online events to make up for the loss in in-person events. In total, close to 400 online events took place over the course of 2020. Members have embraced the new online format and ASMALLWORLD will keep online events in its offering, even when in-person events will return more broadly.
First Class & More managed to grow its services business with the sale of loyalty strategies and travel services as the pandemic created multiple opportunities for its customers to save on travel costs with the right travel strategies.
Cautiously optimistic outlook for 2021
For 2021, ASMALLWORLD provides a cautiously optimistic outlook. Unfortunately, the market environment will remain difficult for now and is only expected to improve once travel and social distancing restrictions are relaxed. However, as countries around the world are ramping up their vaccination efforts, restrictions will gradually be lifted and the demand for ASMALLWORLD's services will increase again. As a result, ASMALLWORLD expects the first half of the year to remain challenging and comparable to the second half of 2020 but anticipates a steady improvement in the second half of the year. Correspondingly, the company anticipates moderate year-on-year revenue growth, expecting sales of CHF 12.5-13.0M for the year. This increase in sales will also lead to higher profitability and EBITA is expected to improve to CHF 1.7-2.2M for the year. At the same time, the number of members is expected to grow by 5-10% to 65'000-68'000 members by then end of 2021.
Earnings call and further information
CEO Jan Luescher will hold a conference call later today, March 18, to provide additional details and commentary for the 2020 results. The call starts at 3pm CET.
To participate in the call, please use the confirmation code 9716819 and one of the following dial-in numbers:
Switzerland: +41 (0)43 550 0294
United Kingdom: +44 (0)330 027 1846
Germany: +49 32214219720
United States: +1 334-777-6978
The 2020 Annual Report as well as the presentation for the 2020 Earnings Call are available for download on the ASMALLWORLD AG website at: https://www.asmallworldag.com/financial-reports
This press release and further information can be found at www.asmallworldag.com.
Definition of EBITDA as alternative performance measure: Earnings before interest (including all financial income and expenses), taxes, depreciation and amortization.
ASMALLWORLD is the world's leading travel & lifestyle community, focusing on experiences: the modern-day definition of luxury.
Centred around the ASMALLWORLD social network, the company operates a digital travel & lifestyle ecosystem which enables and inspires members to travel better, experience more and make new connections.
Members of the ASMALLWORLD social network connect through its app and website, where they can meet other members, engage in online discussions, receive travel and lifestyle inspiration, and enjoy a wealth of travel privileges.
Members also meet in person at over 1'000 global ASMALLWORLD events every year, ranging from casual get-togethers in major cities around the world, access to exclusive launches, shows, galas, soirees, exhibitions, major global sporting events, and larger flagship weekend experiences hosted in iconic destinations such as Saint-Tropez and Gstaad.
Other businesses of the ASMALLWORLD travel & lifestyle ecosystem include:
ASMALLWORLD Private, a high-end travel agency offering personalised travel curation service
ASMALLWORLD Collection, an online hotel booking engine focused on the world's most admired hotels, offering the unique "ASMALLWORLD Preferred Rate" (expected to go live in Q1 2020)
ASW Hospitality, a hotel management company that operates and manages the iconic North Is-land resort in the Seychelles
First Class & More, a subscription-based smart luxury travel service that allows members to enjoy luxury travel at insider prices
The World's Finest Clubs, the world's leading nightlife concierge offers its members VIP access to the most exclusive nightlife venues around the world
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