HomeToGo SE

XETRA:HTG

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the conference of HomeToGo Full Year 2022 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Sebastian Grabert. Please go ahead.

[Sebastian Grabert, executive]

Thank you very much. Good afternoon, dear analysts and investors, and welcome to HomeToGo's Fourth Quarter and Financial Year 2022 Earnings Call.

My name is Sebastian Grabert, HomeToGo's new Director of Investor Relations and Corporate Finance. I'm very much looking forward to what's ahead for HomeToGo's trajectory and look forward to meeting you all.

With me today is our Co-Founder and CEO, Dr. Patrick Andrae; and our CFO, Steffen Schneider. Today, Patrick will present our highlights of 2022 and give you all a strategy update on where we stand in terms of HomeToGo Group's targets. Steffen will then walk you through the Q4 and full year 2022 financials, and elaborate on our newly introduced guidance for the financial year 2023.

As always, this call is being recorded and webcast live, and a recording will be available later today on our IR website.

Patrick, I will now hand it over to you. Please go ahead, the floor is yours.

[Patrick Andrae, executive]

Thanks, Sebastian, and welcome, everyone, and thank you for joining our call today. Before we start, let me first take this opportunity to thank our entire HomeToGo team for the amazing passion and dedication that put into last year, making 2022 an outstanding year for HomeToGo.

For the financial year '22, we are pleased to report that we were able to combine strong top line growth rate with a substantial improvement on our profitability levels. We have, again, witnessed the resilience of our business model in a year characterized by uncertainty with rising costs, fears of an upcoming recession and the ongoing war in Ukraine.

When we take a look back to '22, we see that amongst our major highlights we count the following. For the group overall, IFRS revenues exceeded again the twice upgraded guidance and came in well ahead of our initial financial year 2022 outlook.

In terms of progress in our profitability targets, our financial year '22 adjusted EBITDA of minus EUR 20.7 million was near the top of the guidance range and also substantially ahead of the initial outlook for the financial year '22.

On top of that, last year, we also significantly strengthened our marketplace and expanded our Onsite business, increasing the booking revenues Onsite share to 54%, which represents a year-over-year increase of 11 percentage points and is also 1 of our key drivers towards profitability.

The take rate at the same time has climbed to another record figure and reached 9.6% in '22. As you know, our Subscriptions & Services business, including innovations and technology, data and supply solutions, underlines our commitment to building an operating system that will enable the entire alternative accommodation industry to be more successful.

On this, we are thrilled to report a stellar growth of plus 169% year-over-year for Subscription & Services IFRS revenues for last year compared to financial year '21. And in terms of M&A, we have delivered on our promises, laid out at the capital markets at the time of our listing on the Frankfurt Stock Exchange. Last year, we acquired 3 healthy profitable companies, a strategic move to expand our footprint to become the operating system of our industry. We'll take you through more details on the post-merger integrations in a moment.

Let me now give you a final remark. Today, we look very confidently ahead to what we can achieve in 2023. We already had a strong start to the year, finishing '22 with a record booking revenues backlog, followed by a strong trading in the first month of '23. This gives us yet again high confidence to achieve adjusted EBITDA breakeven in financial year '23 at continuous double-digit growth rate.

But now let's dive into a closer review of 2022 and our vision, what we expect this year and beyond. Let me first again remind you all with making incredible homes easily accessible to everyone. This clear vision is enabling us to play a bigger and bigger role for both our travelers and our supply partners.

As an outcome, the idea is simple: To be people's top choice for vacation rentals, may it be for travelers, where we want to create an incredible experience, be they go to the first destination they think of whenever they want to book a vacation rental or on the other side for the supply partners, where we are focused on solely pain points for the entire supply side, providing technology solutions for our partners to help enhance, offer quality, give access to highly valuable demand and drive joint performance on and around our marketplace. So far, we've already established a solid foundation to continue this growth trajectory in the future.

So let's take a look at how our business has evolved over the last few years.

Our marketplace model was an evolution from our start as a metasearch, focusing on making our vacation rental inventory really accessible to our customers by allowing them with our Onsite functionality to not only search and find but also book and pay their dream vacation rental directly on HomeToGo without leaving the platform.

And in 2022, we hit another huge milestone. Our marketplace onsite business alone reached almost the size of the entire home to go Group business in 2019. This proves how successful our evolution has been thus far, and we are only just getting started. What started in 2017 as a development on top of our offsite metasearch platform has now emerged into not only a strong driver of top line growth, but also a valuable contributor to our overarching profitability goal to reach adjusted EBITDA breakeven in financial year 2023.

On the other side, the service activities highlight especially newer business streams of the HomeToGo Group. We are especially proud that in addition to our strongly growing onsite business in our marketplace, we're also seeing the Subscription & Services business performing extremely well.

The Subscription & Services growth is largely driven by our advanced software solutions, Smoobu and SECRA, which besides offering attractive profitability profile and further resilience to our business model.

These and future services business are 1 of the last growth opportunities within the HomeToGo family. So overall, we are very satisfied with our performance during the last year.

Taking a look at our marketplace on the Onsite business side, more specifically, we have seen a tremendous increase in the percentage of Onsite share during the last 2 years. As a reminder, the Onsite share is the part of the overall booking revenues on the marketplace, which stem from bookings directly taking place on our platform, so a traveler search, find, book and pay for their vacation rental directly on HomeToGo. And for the first time, Onsite booking revenues have reached more than 50% of our own entire marketplace booking revenues, coming in at 55% on such share.

In other words, more than half of the booking revenues in our marketplace were already generated with the booking types that offers substantially higher take rates to our group. Our recipe to success here is enhancing the value we offer to our supply partners. We strongly believe if you want to be successful in the vacation rental business, you actually need to work with HomeToGo.

For supply partners, we offer already today a unique and highly attractive customer base characterized by travelers with high average basket size, long booking windows, and finally high purchasing cost. We also offer our partners a high degree of flexibility such as being able to tailor their very specific cancellation policies, which builds long-lasting and especially equal relationships with our partners. The HomeToGo brand stands basically for hassle-free bookings for its more than 60,000 partners.

But now let's take also a look at our successful post-merger integrations of our core acquisitions throughout 2022. Starting with e-domizil, an exciting update, realized as of the end of last year, we successfully migrated e-domizil's marketplace business to our white label solution.

The overall objective was to improve user experience as well as data quality. And as you can see on the next slide how much additional value this drove, bringing e-domizil to our centralized marketplace.

First, renegotiation. We have identified differences in commercial terms from the e-domizil and the HomeToGo platform and aligned them to the benefit of the whole HomeToGo. Secondly, on the integration side. By replacing e-domizil's front end and aggregated inventory with HomeToGo technology, we were able to improve user experience and data quality, which has led to increase in conversions.

Thirdly, focus. After taking over the marketplace business with HomeToGo technology, our resources in e-domizil are now focused on providing services to small partners. And finally, relevancy. With more scale, we have gained further relevance as a demand channel amongst many of our partners.

Speaking of our successes in post-merger integrations, we are also further delighted to report that we are also aligned with AMIVAC, a leading provider of vacation rentals in France. Right? With the e-domizil (sic) [ AMIVAC ] integration, we were able to realize substantial synergies for our group, namely we were able to further expand our inventory supply in France, which allowed us to scale our hosting platform, tech up and operations set up and also created a blueprint for future migrations.

Last but not least, we continue to drive cross-selling between our solutions. In terms of further growth levers for AMIVAC, we are aiming to increase our ambition to target for more subscription sales to French small partners, further look to offer commission for French folks and AMIVAC and complement AMIVAC with HomeToGo's inventory.

And lastly, we want to position AMIVAC as the HomeToGo's lead brand in the French market levering -- leveraging on the already existing brands awareness. So as you can see from the progress in the post-merger integrations for both e-domizil and AMIVAC, we were able to add substantial value to the HomeToGo Group.

As we discussed our performance of our marketplace and the partially connected M&A on the slides before, let me also highlight a few additional details on the Subscription & Services business.

As a reminder, the Subscription & Services activities comprises services like Smoobu, our subscription-based all-in-one SaaS solution for host and smaller businesses as well as our subscription-based listing businesses like AMIVAC or SaaS agency and destination solution, SECRA.

As a special service provider, SECRA continues to follow its own business model while providing services also for group companies and utilizing synergies from the group in terms of technology. When we look at performance, we are glad to report that also driven by the acquisitions of SECRA and AMIVAC, we have witnessed an outstanding 2022 in terms of top-line IFRS revenues growth of plus 169% year-over-year. This equals already more than 16% of our overall IFRS revenues.

We're turning now the focus to our main objective for this year, reaching adjusted EBITDA breakeven on group level. One of the key levers to reach this target, as already highlighted also during the Capital Markets Day in November, is to further grow customer retention since the cost for a repeat customer with more than 1 booking is 87% below a new customer. And with growing customer retention, marketing investments will decrease significantly in relation to revenues over time, reducing the share of more costly new customer acquisition measures.

In quarter 4 of last year, we have made further progress on that end, especially increasing user experience and brand recognition. We improved our machine learning base recommendations, resulting in a significant increase in bookings, while we also launched a TV campaign in the DACH market, with our DACH promise at its core, helping travelers plan for a new year of travel making it easy to find a perfectly unique state for their trip or use case.

Going forward, we will continue to focus on driving repeat demand by smartly recommending tailored inspirational content to existing customers, like the CRM activities, including in our App, and intensifying the post-booking communication experience of travelers. Overall, delivering an incredible experience to our travelers. And these efforts translated into a stellar growth of plus 104% in repeat booking revenues in quarter 4 as well as 68% for the whole year of 2022. This trend has continued to persist during the first quarter year-to-date of 2023.

To summarize the performance for last year. In terms of top line, we have surpassed again our twice upgraded IFRS revenue growth target, which is already in itself a great success. For profitability, we also ended last year with near the top of the guidance range, also much better than the original guidance. And Steffen will shortly elaborate on details on how we derived the guidance for the financial year '23, but please be rest assured that our main priority is to reach adjusted EBITDA breakeven on group level in 2023.

So what we see in terms of current trading year-to-date gives us an ample room to look confidently ahead. We continue on our promises to deliver both double-digit growth paired with further improvement in our profitability levels. So today, we confidently introduced our financial year '23 guidance, which continues to include our target to become breakeven on adjusted EBITDA level as well as to grow our IFRS revenues by 13% to 19%.

To summarize my comments on the outlook, I would like to draw your attention to our long-term ambition on booking revenues on the next slide.

Our 2020 to 2022 booking revenues CAGR clearly outperformed the required CAGR of 32.5% implied by our long-term ambition to reach EUR 1 billion in booking revenues by financial year '28-'29. The key message we would like to reiterate here is that we are fully on track to reach our long-term goal of EUR 1 billion in booking revenues by financial year '28-'29. And this future growth continues to be driven by a mix of take rate expansion, increase of geographical reach, adding new services to position ourselves as the operating system of the vacation rental industry and further rolling out payments and other add-ons to drive additional revenues as well as strategic, and, most importantly, value-enhancing and profitable M&A.

And there's 1 more thing. As we look ahead to our trajectory over the next several years as a vacation rental leader in Europe, of pricing empowerment is being at the forefront of sustainable travel for the industry. On a holistic level, travel companies have a responsibility to improve the sustainability of the tourism ecosystem, and the time to act is now. We are proud to be founded in the European Union, with EU Sustainable Finance Action Plan has positioned the EU as a front runner in terms of action to combat climate change and encourage sustainability.

As the facilitator of a two-sided marketplace, we have the valuable opportunity to impact both supply partners and travelers through our product and service offerings to build a platform that empowers travelers and partners to make more sustainable choices. That means for our supply partners, we are fueled by the mission to develop a product that incentivizes our partners to consider increasing the level of sustainable practices and amenities to their offers and turn these into actionable insights and decision-making criteria for travelers.

And on the other side, for the travelers, we always deliver data-driven products that exactly meet our travelers' needs. And research shows they want the option to choose sustainable travel. We at HomeToGo, aim to enable travelers to easily choose and be better informed about sustainable options they have, and ultimately facilitating and encouraging them to make greener choices.

And lastly, as a team, we foster a culture dedicated to climate action, an increasingly important factor also in retaining staff and attracting new talent. Of note is that, in '22, we reached complete carbon neutrality across the entire HomeToGo group operations. And looking ahead, we are dedicated to implementing new practices to further reduce our footprint.

If you are interested more, we encourage you to read more on our sustainability and ESG efforts in our 2022 annual report published today on our IR website. We have taken many steps to follow the European Non-financial Reporting Director, and we recognize that it is only the beginning.

Looking ahead, we will, of course, ensure that we will closely adhere to the new requirements coming out of the CSRD while continuing to prioritize being a changemaker in sustainable travel.

With that, I would like to pass over to our CFO, Steffen, who will present you an update on the financial. Thank you.

[Steffen Schneider, executive]

Thank you, Patrick, and also welcome from my side. You remember this slide, it was another quarter with a remarkable financial performance where we put our full focus on building up a strong basis for this year, 2023.

Booking revenues grew at a strong rate of 36% year-over-year to EUR 31.4 million, with many travelers already booking their 2023 vacations. As a reminder, most of the booking revenues will only be recognized as IFRS revenues in 2023. Q4 Onsite booking revenues grew 65% year-over-year, reflecting our strategic progress on shifting our business to Onsite, which resulted in a new record booking revenue Onsite share of 62% in Q4 2022, a plus of 19 percentage points compared to the 43% in the prior period.

Due to the already mentioned high share of bookings with 2023 check-ins, IFRS revenues declined slightly by 3% compared to the prior year quarter. This led to a negative adjusted EBITDA of minus EUR 16.1 million in the quarter. I would like, again, to emphasize that while full costs associated with the record booking revenue backlog has already been accounted for, the associated IFRS revenues will be recognized during 2023 with a "100%" margin. So all the costs are in '22, all the benefits will be in 2023.

Looking at the metrics on an annual basis, we also see a strong growth trajectory on all our core metrics in 2022 and even more when you compare to 2019, last year before the pandemic. As we transition our marketplace business towards Onsite, we reached a record Onsite share of 54%, yet again, a strong improvement from the prior year that was 44%. Simultaneously, as a result of the higher take rate associated with our Onsite business as well as the contribution from our Subscription & Services business, we have progressed very well on our adjusted EBITDA margin, with a year-on-year improvement of 8 percentage points to minus 14%, and therefore, at the upper end of our twice upgraded guidance.

Focusing our marketing effort on check-ins in 2023 has worked well. On the right-hand side, we have highlighted our record booking revenues backlog of EUR 32.5 million as per end of December 2022, that was a significant increase by 72% compared to the end of 2021. As these booking revenues will become IFRS revenues in 2023, they are an important profitability building block. And keep in mind, the EUR 32.5 million, we'll come back to that later on.

Looking at the take rate, the CPA take rate increased from 8.3% in 2021 to 9.6% in 2022, an increase of 1.3 percentage points. In December 2022, the CPA take rate even increased to 10.3%. Given the challenges estimating GBV from CPC, and therefore, the implied take rate, we will, going forward, focus on reporting the CPA take rate. It's also worth noting that the volatility in our take rate is a reflection of the crossover from peak season to shoulder season, which can lead to exaggerations on both ends of the spectrum.

Now moving over to more details on the Onsite business. In 2022, we have made continuous progress on the expansion of the global onsite share, reaching the already mentioned record high of 54% as you can see on the top right-hand graph. This is also the case across Europe and North America. As a reminder, in Germany or the DACH region that's actually already 75%. The number of bookings also increased significantly.

To summarize my comments on booking revenues and IFRS revenues. We have seen our marketplace growing nicely during 2022, both in terms of booking revenues as well as IFRS revenues. This development came as a result of the overall continued recovery in the travel industry in '22, our successful integration of e-domizil and thanks to a strong execution of both, attracting more travelers to our platform and increasing their respective share to book directly onsite with us.

For Subscription & Services, we have seen strong growth in Smoobu as well as the successful post-merger integration of SECRA and AMIVAC, leading to a positive contribution.

Let's now turn to profitability. As already indicated at our Q3 '22 earnings call and in our Capital Markets Day in November, it was a conscious decision to focus on building up the booking revenues backlog in Q4 with check-in in 2023. Therefore, we expected profitability in Q4 '22 to be below profitability in Q4 '21. Despite the conscious decision in Q4, the overall positive trajectory on the full year comparison of our adjusted EBITDA, seen on the right-hand side, is very satisfied. Profitability in terms of adjusted EBITDA margin has improved by 8 percentage points year-over-year, clearly paving the way for our goal to reach breakeven on an adjusted EBITDA level in 2023.

Let me give you more color on cost line developments at group level profitability. Gross margins remained flat for Q4 as well as on a relative full year basis. The overall absolute increase in cost of revenues in 2022 compared to the prior year is mainly due to the amortization of order backlog acquired with e-domizil and increased expenses for hosting and domains due to a higher amount of traffic on our platforms.

Second, our marketing cost ratio increased by 70.9 percentage points year-over-year in Q4 as we stepped up our customer acquisition and engagement investments. On a full year basis, however, we have made some significant progress on improving our ad spend investment allocation, reducing sales and marketing expenses by 10.6 percentage points year-over-year as a percent of IFRS revenues.

The other cost lines, including product development, G&A as well as other income and other expenses also deteriorated temporarily during Q4 as the lower revenue levels, as explained in earlier slides, was not able to offset an increased cost basis. That being said, on a full year comparison, we have progressed our adjusted EBITDA quite significantly.

Looking at our cash position, we continue to have a very strong balance sheet with gross cash of EUR 163.8 million, of which EUR 2.3 million are restricted cash, bringing the liquidity to EUR 161 million, including the money market fund, as you can see on the slide.

Deducting interest-bearing debt of EUR 8.5 million brings the net cash position as per end of December '22 to EUR 153 million. Our rock solid liquidity clearly is a differentiator in an environment characterized by increasing interest rates, overall more volatile financing markets and with that, a more difficult environment for growth companies to access funding. So we are very well positioned in that regard.

In terms of cash flow, during the fourth quarter, the overall cash burn during Q4 was low with operating cash outflow of EUR 3 million and another EUR 3 million for investing cash flow. The latter was mainly on the back of capitalized R&D as well as smaller CapEx. The financing cash flow had a minor outflow of less than EUR 1 million, mostly driven by repayments of borrowings.

I would now like to highlight our newly introduced guidance for the financial year 2023 to you. As Patrick already mentioned, we guide IFRS revenues to grow in the range between 13% and 19% year-over-year to EUR 165 million to EUR 175 million. We also confirm our goal and are very comfortable about reaching adjusted EBITDA breakeven in 2023. As before, we use a range of EUR 5 million for adjusted EBITDA. However, the goal is totally clear. It's about reaching adjusted EBITDA breakeven. We also expect booking revenues to increase by 13% to 25% to a range of EUR 185 million to EUR 205 million as well as an improvement of the Onsite booking revenue share by 2 to 7 percentage points to 56% to 61%.

Now looking into the current trading year-to-date. We have benefited from a very strong start to the year in terms of monthly booking revenues. You can see that on the orange line. This positive development has been driven by the traditional early bookers in DACH as well as in the Netherlands. We have also seen a good start into the year in North America. As you know, we usually see bookings from the U.S. customers in Q2.

So let's see what's happening in Q2. As in Q4 '22, we also have strong CPA business in Q1 '23. Therefore, our booking revenues backlog as of March 29 has reached a new record high of EUR 71 million, an increase of 86% compared to last year. As the majority of these bookings will have check-ins in Q3, you will see the IFRS profitability impact later in the year.

With that, I'm closing my remarks and open up to the Q&A session.

[Operator]

[Operator Instructions] The first question comes from the line of Silvia Cuneo with Deutsche Bank.

[Silvia Cuneo, analyst]

Congratulations on the results. The first question is on the backlog. So HomeToGo started 2023 with a strong trading and a booking revenues backlog that is 86% ahead of last year as of end of March. Can you please help us think about the guidance of the backlog, for example, what portion of the growth was driven by number of days, length of the stay or average prices?

Then second question, partly related to the first, wondering what can you tell us about booking trends so far this year? Are you seeing any changes in consumer behavior in light of current macro environment? And can you remind us of how much visibility do you have typically at this time of the year for the big travel season in Q3?

And then maybe just a final question regarding customer acquisition. Can you please tell us a bit more about the new customer acquisition channels? I see in the report, you mentioned that the number of app installs, particularly in the DACH season, has grown significantly. So just wondering if you could share some more thoughts about the different customer acquisition channels.

[Steffen Schneider, executive]

Silvia, this is Steffen. Thanks for your question. So in terms of backlog and the breakdown of the bookings, that's pretty much the same as last year. So there is no significant change in terms of length of stay or ADR. We are actually, at the moment, looking at, what I internally call, our HomeToGo vacation rental inflation index. So stay tuned on that one. But all-in-all, there is no significant deviation in terms of how the bookings come together compared to the prior year.

In terms of macro trends and visibility, what we see is that -- and you remember the slide we showed at the Capital Markets Day about consumer spending and that the summer holidays are the most important consumer spending, and that continues to be the case. So all the fears we had by the end of last year about potential gas shortages, about inflation et cetera., that has not come through. The business is going really strong. And as 1 of your analyst colleagues always said, as long as people have jobs, they will continue to spend on holidays. And as we can see all around the Western world, unemployment is continues to be really low. So all the macro trends are quite going into the right direction.

And therefore, in terms of visibility, I was just doing some very quick back of the envelope calculation for myself. And I already had like -- at this point in time, like 90% of our IFRS revenues visible for me. It's maybe not sufficient to put that in a prospectus. But for me, I have quite a good visibility. So I feel really strong about what we currently see in the market and what's coming in, both in terms of revenues as well as in terms of underlying profitability. So that is also going really nicely.

And if that continues, we are looking very positively. And then hopefully, we can also have some positive surprises on top. But for now, we continue to be conservative.

With regards to your question on customer acquisition, could you please provide a little bit more detail what you're looking for?

[Silvia Cuneo, analyst]

Sure, Steffen. Yes. Just wondering if you could just share a little bit more details in terms of app usage, which I remember was 1 of kind of the heavy drivers potentially to reduce customer acquisition cost.

[Steffen Schneider, executive]

So that also continues to work out well. The actual growth rate for the app, I don't have at hand at now, but can certainly provide that at a later point in time. What we can see is that the app work-load continues to work out very nicely. We are well ahead, and we have a -- how to say, we have mentioned it in our annual report that it continues to be better than what we see in the overall market. And the -- it's growing at 88%. I now have the numbers, sorry about that, 88% between 2019 and 2022, and that trend continues.

[Silvia Cuneo, analyst]

Okay.

[Patrick Andrae, executive]

And Silvia, Patrick here. And as you also saw on our slides in regard to customer retention, this is also a trend that we're continuously seeing in this year. So the increase of retention from customer side on the demand side in general.

[Operator]

The next question comes from the line of Volker Bosse with HomeToGo (sic) [ Baader Bank ].

[Volker Bosse, analyst]

I am Volker Bossed. I'm not from HomeToGo. I'm from Baader Bank. So thanks for the great presentation and the impressive set of figures. I would like to start with a question on your take rate. Could you give us a kind of range also where do you expect the take rate to be in 2023? Given the Onsite share increases, I expect take rates to go, but your take on that would be interesting for me, please?

Second would be on the segment subscription sales. In '22, you benefited from M&A activities, obviously. Could you provide us a kind of organic growth, underlying growth which we can expect for the subscription segment for 2023 to be achieved, of course, in regards to revenues?

And the third question would be on, yes, you mentioned M&A activities. Perhaps could you please elaborate what are you looking for? And what should the potential target look like, so to say? So what are the parameters you're screening the market for -- to have a good fit here as you actively mentioned M&A twice here in your presentation.

And if I may, also a fourth one, it's regarding the competitive environment and how that is involving. If I watch TV, I see commercials of Airbnb and booking focusing on alternative accommodations. So yes, that is USP, but also others try to push into that niche, so to say, but how do you look at the overall competitive situation?

[Steffen Schneider, executive]

Volker, it's Steffen. So I'll answer your first question on the take rate and then hand over to Patrick on Subscription & Services as well as on M&A. So on the take rate, as you have seen that what we had by the end of December was the 10.3%, that's also a trend we see in Q1. We also see that not only by -- with regards to Onsite, but also good development with the Offsite take rate, and therefore, are quite optimistic that we are able to continue this trend in 2023.

So expecting an upgrade. What the -- if you now ask for concrete numbers, I will -- as you can notice from my hesitation to really put a concrete number there is always difficult as we have that mix and in particular, given the focus on profitability, we should -- we want to maximize contribution, et cetera. But all-in-all, that 10.3% you have seen there is something where I feel is a good benchmark to aim for.

[Patrick Andrae, executive]

Volker, Patrick here. So regarding your question in regards to Subscription & Services, obviously, like SECRA contributed and AMIVAC contributed in 2022 as we laid out. So if we look at organic growth, especially like we see very strong growth of Smoobu and this also continues into '23, where we see that monthly recurring revenues like in February are year-over-year more up than 100%. So we believe that this is actually a quite good kind of outlook in general, also on the organic part for these parts of the business.

If we look at further M&A, as you know, that's -- and we also marked right, that's something we are constantly looking. If there are targets that could be interesting. And we will notify obviously the market if there are targets that we are interesting to follow up on as for this. We cannot provide further information. But it's part, as you also can see in regards to our overall idea around like reaching EUR 1 billion in booking revenues by '28-'29. It's part of that strategy.

And so it's something we will continue, but especially with value driving and profitable targets on the M&A side like we did before and also like mainly focusing on our 2 topics around -- strategic topics around Onsite as well as Subscription & Services around the marketplace.

And for your first question on competition and especially TV commercials of Airbnb and so on, let me answer it like this. Obviously, we are not commenting on market participants in general, but it's also good to see that others follow us even with similar ideas on German TV like we did at the end of last year, and as you know. So we feel very confident as HomeToGo with having the largest supply in vacation rentals globally, but especially in Europe and more especially in the DACH region to be a very successful market participant ourselves.

And this is how we look at that situation. And on the other side, as you know, we work with a lot of what you named as competitors in the market anyway in various situations so like on 1 side, obviously, on the marketplace, but also, for instance, with Airbnb, with our service companies.

[Volker Bosse, analyst]

For clarification regarding the subscription sales, segment sales in '23. I mean you mentioned 100%, but that was a figure above 100%, this was the figure in '22, but what is the underlying growth for '23, just roughly, is again 100%, or did I miss something?

[Patrick Andrae, executive]

We are not commenting on that at that time. What I commented on was specifically Smoobu, we're already seeing like more than 100% MRR growth for February year-to-date compared to '22 and '23.

[Volker Bosse, analyst]

That was on Smoobu one you have.

[Patrick Andrae, executive]

Yes.

[Volker Bosse, analyst]

Okay. Fair enough.

[Operator]

[Operator Instructions] The next question comes from the line of [ Felix Salman with Warburg. ]

[Unknown Analyst]

Congratulations on the figures. Just a small question. At the beginning of the call, you mentioned that you also will focus on AMIVAC as a brand for France. I have on the top of my head that you originally planned to focus on solely on HomeToGo go as a brand. Maybe you can elaborate on that topic?

[Patrick Andrae, executive]

It's Patrick here. Thanks for the question. Yes, good that you ask. Happy to clarify. So obviously, HomeToGo is the main global brands of HomeToGo. But on the supply side, we have localized brands in various markets, especially AMIVAC being a brand that we acquired from SeLoger and Axel Springer subsidiary and being like well known in the market for a host that want to list their properties on a subscription-based model. And so this is how we will use AMIVAC further down the line also as a lead generator and not as a lead brand. Maybe this is the thing to clarify on the supply side. So a host of supply-side chasing brand in that regard.

[Operator]

We have a follow-up question from the line of Volker Bosse with HomeToGo (sic) [ Baader Bank. ]

[Volker Bosse, analyst]

I'm still with Baader Bank, Volker speaking. Yes, not too much demand. I would like to come up with a follow-up as said, and I would come back to a question from Silvia from Deutsche Bank. On the customers' booking behavior, mean any changes here, for example, short of days or cheaper offers. In the past you had the chart in the presentation also with the average basket size trends. How is that evolving? You left it out this time, but perhaps you can give us a bit more color on the wording.

[Steffen Schneider, executive]

Volker, it's Steffen again. So well spotted, we didn't include it this time. What we basically see is that the basket size in North America continues to increase. That's more driven by ADR, less by length of stay. We also have a slight increase in Europe, but that's not that significant. But as I mentioned before, the length of stay is pretty similar, and that is only a little bit of ADR. And therefore, also with the higher share of North America, in particular, based on the Q1 bookings we have seen, our average basket size has increased, but that's really a function of the higher U.S. market share.

[Operator]

[Operator Instructions] There are no further questions at this time. I will now hand it back over to management for any closing comments.

[Patrick Andrae, executive]

Thank you, everyone, for joining our call and see you next time at our earnings call for the first quarter.

[Operator]

Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.