DAVY VIEW

Hostelworld has updated on year-to-date (ytd) trading this morning. Net revenue for the nine months is “broadly flat” year-on-year (yoy), although there has been an acceleration in generated revenue (revenue normalised for cancellations) in Q3. EBTIDA margin trends are more encouraging, owing to lower direct marketing costs as a percentage of revenue. Revenue trends are tracking a little behind our expectations for FY25. However, Hostelworld has reiterated its full year EBITDA guidance, which is in line with our expectations. We believe an acceleration in top line trends on the back of its investments will be key to a rerating of the shares.