2015 05 05 investor presentation (EN)
Transcript of 2015 05 05 investor presentation (EN)
1993 Creation of TAM Fidelidade
2009 Spin-off from TAM Fidelidade
Feb/2010 Multiplus’ IPO
Aug/2010 New headquarters and IT loyalty platform
Oct/2011 Multiplus presents its new brand
Dec/2011 Multiplus becomes one of TOP 100 most liquid stocks in Bovespa
Mar/2012 Multiplus reaches 200 partners
Apr/2012 Multiplus reaches 10 mn members
May/2013 launched the new‖ campaign on several media vehicles
Jun/2013 Non-air redemptions reached 8% for the first time in a quarter
Oct/2013 Improved corporate governance structure
Mar/2014 Multiplus mobile app for IOS and Android
Sept/2014 Multiplus launches "Points + Money“ and Multiplus Challenge (gamification)
# of months ~10 0
24
3
2
Points selling Redemption
Spread 1
CASH IN CASH OUT
Float
Breakage
1 Spread
3 Breakage
2 Float
Unit revenue minus unit cost
Points expired: No cost
Revenue on interest
´
Coalition TAM
Coalition represents more than 80% of points accumulated
15%
56%
29%
14%
24%
Source: Social Policies Center of FGV-Rio
24%
61%
Early stages - Brazilian loyalty industry has very low penetration and presents solid growth drivers
53.9%
25.3% 24.2% 20.9% 20.5%
14.4%
7.3% 6.3% 6.1% 4.8% 2.4%
Penetration of loyalty programs in total population (%)
Sources: loyalty programs websites and each country statistic data bureau (Updated in Jan/2014)
High growth potential
Average (ex-Multiplus): 18%
Credit card usage
Expected double digit growth for next 3 years
Only 35% of customers understands that they have
enrolled in a bank loyalty program (vs. 31% in
2011)
Consumption
Possible high single digit growth for next 3 years
Loyalty culture still in the early stages
Air transportation
Latin America is the second fastest growing
region in RPK
Average trips per capita is only 0.5 in
Brazil vs more than 3.0 in mature markets
Wealth distribution
A/B classes expected to reach 15% in 2014 (vs
7% in 2003)
Multiplus network focus on A, B and C+
9.7
11.0
12.6
11.0
12.1 12.6
12.9
2012 2013 2014 4Q13 3Q14 4Q14 1Q15
369
472
416
472 465
416 392
2012 2013 2014 4Q13 3Q14 4Q14 1Q15
1,119
1,525
1,871 2,009
2,127
538 567 638
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
Gross billings (BRL mln) Points issued (bn)
53.2
76.2
85.2 85.3 88.5
22.1 23.1 22.0
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
*Includes bonus points
Net revenue (BRL mln) Net income (BRL mln)
429
1,247
1,476
1,651
1,819
441 476 534
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
118.4
274.2
224.3 232.1
325.0
74.6 83.6 100.0
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
Gross margin Net margin
41.6% 32.5% 25.8% 25.7% 29.0% 29,3% 25.2% 22.0% 15.2% 14.1% 17.9% 27.6% 28.0% 29.2% 16.9% 17.6% 18.7%
85% 15%
Current
Air Tickets Others
20%
5%
75%
Current
TAM Retail, Industry and Services Banks
Note: 1Q15
Long term target
Long term target
10 to 15%
20 to 25%
Points redeemed
Points sold
Increased retail share will help to sustain margins and improve members engagement
Non-air redemptions growth supports unit cost control and member experience improvement
Breakage rate (%)
22.6% 24.1%
21.3%
18.2% 17.8% 18.2% 17.8% 18.0%
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
Non-air redemptions (%)
0.4%
2.1%
5.4%
9.2%
11.6%
7.7%
15.6%
11.5%
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
FCF* (BRL mln)
589.0
460.6 418.1
452.6
309.8
99.7
46.8
166.6
2010 2011 2012 2013 2014 1Q14 4Q14 1Q15
*Excluding Dividends, Interest on Capital and variations of Prepaid Expenses and Capital (2012 and 2013 are adjusted with R$ 71.3 of anticipated settlement in Accounts Payable)
We already have a strong partnership network, highlighting LATAM Airlines and all local banks
15 years agreement automatically renewable for additional 5-year periods
Exclusive relationship
Points per seat vary according to flight fare with 100% availability,
improving Multiplus competitive advantage
up to 360 days before flight date
fee exemptions, lowered points requirement, complimentary
upgrades and up to 100% bonus points
High recognition to premium clients
High flexibility
Superior frequent flyer program
lower earn-to-burn ratios redemptions via TAM, LAN and their airline partners
Wide redemption window
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SINGAPORE AIRLINES serves 34 countries
SOUTH AFRICAN: flies to 67 destinations in the world
Accrual partners Coalition partners Redemption partners
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Member`s experience
Value for partner
Business sustainability
Offer intuitive experience , segmented and personalized, facilitating the relationship and interaction with our brand.
Encourage the use of the network, with greater assertiveness, boosting the accrual and redemption of points.
Provide intelligence for our business partners and greater exposure of its brands, products and services .
Smart
More than 80% of the costumers prefer to shop in Loyalty Programs
Source: Research made by Technology Advice, in EUA
82.4%
17.6%
Don’t consider relevant
Proven higher conversion rate by
offering Multiplus points
bonus points per each new credit card activated
Targeted redemption offers
1 Activation
bonus points according to the volume of points transferred
segmented offers to engage an specific member group
2 Spending
3 Targeting
Strong relationships with banks
Increase in volume Member engagement increase Incentive to partners Value to the member
Bonus points in transfer points of credit cards
Perception of value for members
Solid strategy - Our business sustainability is based on network diversification, member engagement and value delivery to partners
Clear prioritization of segments
Network diversification
Anticipate members behaviour
(CRM, analysis of customer
profiles)
Better experience and more members´
engagement
Focus on adding value to comercial
partners
Redemptions diversification,
leading to higher
margins
Solid strategy in force
Appendix