After reaffirming its FY24 guidance of becoming cash flow positive across multiple reports, the online travel aggregator Jayride (ASX: JAY) is revising the narrative. The Company, dealing with declining profit margins and lower net revenue per trip, is no longer expecting to be cash flow positive. What’s more, it is looking for a buyer to acquire Jayride.

Jayride has found itself in a challenging positive, with its Executive Chairman Rod Cuthbert claiming that its plans to boost booking volumes—partnerships with big travel brands, price optimisation for Asian markets, growth of travel agent channels and more—have proven ineffective. It is witnessing unattractive margins in Q2 FY24, and its US and European go-to markets are yet to see momentum. 

Due to the increased cost of living, fewer people seem to be planning lavish trips, with Jayride’s net revenue per trip also declining. Because of that, Cuthbert is no longer confident of what’s to come. 

Executive Chairman Rod Cuthbert said, “A strategic review at this time captures the opportunity that a change in leadership presents us to work together towards improved outcomes and will help us to align and focus on the most expedient path to profitability and self-sustainability.”

One of those improved outcomes the Company is hoping for is being acquired. Cuthbert said that the online travel market is highly acquisitive, with mergers and acquisitions being common. So, Jayride’s strategy is to build a business attractive to potential acquirers. 

In Q1 FY24, the Company’s contribution profit margin declined from 44% to 42% due to lower net revenue per trip, falling from about $8.89 in Q1 FY23 to $7.34. Its revenue growth has been narrowing for the past year.

Its standstill EBITDA marked a $15k loss after a $17k profit in the prior quarter. Initiating cost savings, Jayride reduced its customer service team by 20 roles and looked to streamline its business. It ended the quarter with $739k in cash.

Cuthbert added, “Our strategic and operational review is intended to be wide-ranging – with a ground-up assessment of the Company’s core strategy, operating structure, and the market fit of its offerings. We will look at the experience we deliver to travellers, the channels we operate in, the supply we operate with, the margins we command, the investing costs we carry, and more.”

Till now, Jayride’s approach has been quite broad, catering to B2B, B2C and B2B2C offerings. It was gunning for the largest addressable market instead of having a targeted approach. 

Jayride will adopt a more focused approach to its business as it edges into the new year, hopefully making it more attractive to potential acquirers. The Company is also casting for a new CEO to take the helm and replace Rod Bishop, who will step down to focus on launching a startup. 

Cuthbert said, “Although we don’t have all the answers today, we are committed to continuing this review and implementing its outcomes within the next ninety days.”

The global economy is facing many challenges, but travel is resurgent. Within travel, Jayride notes that the online market for airport rides will grow strongly in the coming years. The Company is confident that the sector has long-term potential; all it needs to do is focus.