Experience Co Reports 10% Underlying EBITDA Growth in Q3 FY25
Experience Co Limited reported a resilient 10% growth in underlying EBITDA for Q3 FY25, overcoming significant weather disruptions that impacted its Adventure Experiences segment. Skydiving operations, particularly in New Zealand, drove the positive momentum, while April trading showed all units profitable.
- Q3 FY25 underlying EBITDA up 10% versus prior year
- Skydiving segment revenue and volumes grew, led by New Zealand
- Adventure Experiences hit by weather, Reef Unlimited volumes down 17%
- April trading profitable across all business units
- Management focused on free cash flow and holiday season readiness
Strong Q3 Performance Amid Weather Challenges
Experience Co Limited (ASX: EXP), a leader in adventure tourism, delivered a solid trading update for the third quarter of fiscal 2025, reporting a 10% increase in underlying EBITDA compared to the prior corresponding period. This growth was achieved despite adverse weather conditions that notably disrupted the Adventure Experiences segment, particularly Reef Unlimited.
The quarter began strongly in January but faced headwinds in February and March due to a low-pressure system off the Far North Queensland coast coinciding with Lunar New Year festivities and Tropical Cyclone Alfred impacting South East Queensland and Northern New South Wales. These events dampened tourist demand and sentiment, especially for outdoor adventure activities.
Skydiving Segment Leads Recovery
The Skydiving segment was the standout performer, with revenue rising 6% to $20.1 million in Q3 and volumes growing significantly in New Zealand by 18%. Although Australian skydiving volumes declined slightly due to two sites being placed on care and maintenance, operating sites still saw a 5% volume increase. Improved site efficiencies and cost reduction initiatives contributed to enhanced operating margins, underscoring management's focus on boosting segment returns.
Adventure Experiences Face Weather-Driven Setbacks
In contrast, the Adventure Experiences segment saw a 7% revenue decline to $14.9 million, primarily driven by a 17% drop in Reef Unlimited volumes. Weather disruptions, particularly heavy rainfall in Sydney and Northern NSW, also affected Treetops Adventure, which experienced a 7% volume decline despite a 6% revenue increase due to higher average spend per customer. Wild Bush Luxury delayed the start of some seasonal offerings to optimise performance, impacting short-term revenue.
Positive April Trading and Outlook
April trading showed encouraging signs with all business units profitable and an unaudited underlying EBITDA of $3.1 million, up $1.6 million on the prior year. Skydive Australia and New Zealand volumes exceeded prior year levels, supported by favourable weather and strong holiday demand. Reef Unlimited’s new vessel, Aquarius II, began operations, attracting strong demand from cruise and charter providers. Management remains focused on free cash flow generation and preparing for the upcoming holiday season, traditionally a peak period for adventure tourism.
Looking ahead, Experience Co is optimistic about capitalising on positive market sentiment, including opportunities arising from recent US trade tariff changes. While weather remains a variable, the company’s strategic initiatives and operational improvements position it well for continued recovery and growth.
Bottom Line?
Experience Co’s ability to grow EBITDA despite weather challenges signals resilience, but weather volatility remains a key risk to watch.
Questions in the middle?
- How will Experience Co mitigate weather-related risks in Adventure Experiences going forward?
- What impact will the new Aquarius II vessel have on Reef Unlimited’s long-term revenue growth?
- Can Skydiving segment efficiencies sustain margin improvements amid competitive pressures?
