Prime Subscription Expansion Will Unlock Untapped European Markets

Key Takeaways

• Expansion of the Prime subscription model and digital-first approach are driving recurring, high-margin revenues and strong user growth across new and existing markets.
  
• Investments in automation and AI are improving efficiency, while strong free cash flow supports buybacks and strengthens per-share shareholder value.
  
• Heavy reliance on subscription growth, discounting, and costly tech investments, combined with sector risks and uncertain expansion, threatens profitability, revenue diversification, and long-term stability.

Catalysts

Operates as an online travel company in France, Southern Europe, Northern Europe, and internationally.

• Ongoing expansion of the Prime subscription model, supported by evidence of strong renewal rates and consistent overachievement of member targets, sets the stage for sustainable, high-margin recurring revenues and improved net margins as Prime share of profit continues to climb (expected to be the primary driver of revenue and net margin growth).
  
• Penetration in current and new markets remains low (3.7% household penetration with a runway up to 10% or more), indicating significant untapped market potential both in core European geographies and in trial markets, which could drive substantial topline growth and support long-term earnings.
  
• The accelerating transition from offline to online travel booking and increasing consumer migration to mobile and app-based channels expand eDreams ODIGEO's addressable market, creating a favorable backdrop for continued user, booking and revenue growth, especially as the company's digital/mobile-first platform captures outsized share.
  
• Continued investment in automation, AI, and product range (notably in dynamic packaging and hotels) is not only expected to enhance customer experience and cross-sell rates, but also to drive operational efficiency and cost leverage-resulting in a structurally improved cost base and enhanced net earnings over time.
  
• Exceptional free cash flow generation and improving cash flow yields (11–13% versus peers at 4–6%) provide resources for ongoing buybacks and potential deleveraging, which are likely to boost EPS and create additional per-share value for shareholders.

eDreams ODIGEO Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming eDreams ODIGEO's revenue will grow by 9.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.7% today to 12.5% in 3 years time.
• Analysts expect earnings to reach €109.0 million (and earnings per share of €0.88) by about August 2028, up from €45.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €98 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.4x on those 2028 earnings, down from 22.4x today. This future PE is lower than the current PE for the GB Hospitality industry at 16.4x.
• Analysts expect the number of shares outstanding to decline by 6.7% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.2%, as per the Simply Wall St company report.

eDreams ODIGEO Future Earnings Per Share Growth

Risks

• The company's rapid transformation into a subscription-driven business is heavily reliant on sustained Prime member growth, but increasing saturation in core markets and the anticipated, ongoing decline of the non-Prime segment introduce the risk that incremental subscriber growth will slow, threatening both topline growth and future revenue scalability.
  
• Discounting and lower ARPU per Prime member is being used to support renewal and retention, but persistent ARPU reductions (guided to fall further in FY '26) suggest margin compression risk if LTV/CAC discipline cannot be maintained, potentially constraining future net margin and earnings expansion.
  
• Expansion into new international markets and categories is still at a trial stage, with management admitting it is too early to select focus areas or prove product-market fit, which raises execution risks and may impede the company's ability to diversify revenue and reduce geographic concentration-potentially impacting longer-term growth and earnings stability.
  
• Heightened exposure to travel sector headwinds-including climate regulations, rising consumer demand for direct booking, and potential for travel disruption from geopolitical instability or macroeconomic shocks-could suppress transaction volumes or alter user behavior, leading to lower subscription renewals and reduced revenue.
  
• Increasing investment in software development and personnel to maintain technology leadership is required to retain competitiveness against larger OTA rivals and direct supplier channels; failure to match industry innovation pace or control rising costs could erode gross margins and impact sustained profitability.

Valuation

• The analysts have a consensus price target of €11.419 for eDreams ODIGEO based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €12.75, and the most bearish reporting a price target of just €8.3.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €871.3 million, earnings will come to €109.0 million, and it would be trading on a PE ratio of 13.4x, assuming you use a discount rate of 11.2%.
• Given the current share price of €8.75, the analyst price target of €11.42 is 23.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.