Many stories in this edition revolve around the initial stages of growth and innovation, ranging from early-stage SaaS startups to how large incumbents are evolving. Discover insights that could spark ideas, drive conversations, or influence your next big decision. I hope you enjoy it, and as always, thanks for your attention.
Regarding eDreams, note that looking at adjusted EBITDA is not the best way to look at it, as Prime revenue is received up front, but recognized over time. The fairer, and more accurate, way to look at this is via cash EBITDA margins., which are clearly going up, and should continue to go up as long as the percent of Prime members that are at least one year old grows relative to first year Prime members. This gets to you other point on variable costs. In the early days of Prime (we are still in early days in my opinion), variable costs will run high as they are paying google, etc., to help them find new Prime members. It's in the second year, that performance marketing drops off, for the most part. See the Prime tab in the quarterly financials spreadsheet they release for a more clearer view on Prime. LTM Prime Marginal Profit Margin went from 30.6% five in Q3 23 vs 37.8% in Q3 24. This proves out that performance marketing drops off as Prime members cross the first year threshold.
Regarding eDreams, note that looking at adjusted EBITDA is not the best way to look at it, as Prime revenue is received up front, but recognized over time. The fairer, and more accurate, way to look at this is via cash EBITDA margins., which are clearly going up, and should continue to go up as long as the percent of Prime members that are at least one year old grows relative to first year Prime members. This gets to you other point on variable costs. In the early days of Prime (we are still in early days in my opinion), variable costs will run high as they are paying google, etc., to help them find new Prime members. It's in the second year, that performance marketing drops off, for the most part. See the Prime tab in the quarterly financials spreadsheet they release for a more clearer view on Prime. LTM Prime Marginal Profit Margin went from 30.6% five in Q3 23 vs 37.8% in Q3 24. This proves out that performance marketing drops off as Prime members cross the first year threshold.