A few months ago, we reported on the then-imminent IPO of eDreams Odigeo, a major Spain-based online travel agency.

It marked one of the first technology initial public offerings in Europe of the year and the first IPO in Spain since Bankia went public in 2011.

The flotation happened on April 4th at 10.25 euros a share, giving eDreams Odigeo an IPO valuation of $1.5 billion.

After several months of oscillation, shares started to plummet in June and have been in free fall mode ever since. The shares are currently trading at 2.56 euros, falling about 74% since the IPO, wiping out around 730 million euros of market cap in the process.

eDreams Odigeo shares

In June, the company released a statement warning that stiff competition was hurting its business.

Immediately after, analysts cut their profit forecasts and shares dropped. Two weeks ago, the company released their income statement which confirmed that the company was taking heavy losses, and the market punished the travel tech firm by slashing 25% of its market value.

Screen Shot 2014-09-10 at 18.13.02
eDreams Odigeo income statement 2014

The investor presentation highlights some interesting facts. One of the first things that stands out is that, despite minor growth in revenues (5%), EBITDA is down considerably due to “a number of sudden industry developments”. One of them was Google’s search algorithm change and competitive pressure which made eDreams Odigeo’s user acquisition cost rise 10% from last year.

eDreams Odigeo User Acquisition costs 2013-2014

While other brick-and-mortar companies like Grupo Barceló or Viajes El Corte Inglés have increased their revenue last year, it seems eDreams Odigeo is struggling to keep up with the rest.

Increased expenses seems to indicate that they’re trying to push a big innovation change but one has to wonder if it isn’t too late. New incumbents are popping every day, specially targeting mobile, a channel that has eluded the company for a while now.

eDreams Odigeo Operating income (expenses) 2013-2014

This isn’t good news for the technology industry in Europe, and it’s bad tidings for Spain in particular. The recent Gowex fraud scandal and the questioning of alternative markets like MAB are quickly killing any hope of Spanish tech IPOs in the near future.

With the IPOs of German Internet giants Zalando and Rocket Internet around the corner, let’s hope eDreams Odigeo’s performance isn’t setting any performance benchmarks.

Featured image credit: Mario7 / Shutterstock

  • jacopogio

    Hi good post! But do you have more infos concerning their Financial Costs that seems quite huge….

    • abarrera

      You have the whole cost structure including an explanation of the financial debt structure on the income statement link (last pages of the doc). And yes, they’ve been inheriting a very complex financial structure that’s killing them. Thanks for the comment :)