Solstice Travel: Is the Growth Worth What It Costs?
Solstice Travel sells online travel subscriptions in Southeast Asia. Growth has been strong and the board has asked whether it is profitable growth.
Marketing spends $100 M a month and acquires about 2,218 new customers in that time. Average revenue per user is $2394 a month at a 55% gross margin. Monthly logo churn runs at 5.3%.
Roughly 58% of new customers come through paid channels; the rest arrive organically but are counted in the same blended figure. The CMO reports a healthy LTV/CAC and wants to double the budget.
spend
- new customers per month
- 2218
- monthly marketing spend m
- 100
- paid share of new customers pct
- 58
economics
- arpu monthly
- 2394
- gross margin pct
- 55
- monthly churn pct
- 5.3
derived hints
- blended cac
- 45086
- payback months
- 34.2
- ltv gross margin basis
- 24886
- implied lifetime months
- 18.9
Advise the board. Your answer should provide:
- Analysis — CAC, LTV on a margin basis, the ratio, and payback in months. Show the working.
- Risks — what the blended number is hiding.
- Recommendation — scale, hold or cut, and where.
State any assumptions you make.
80 points, 60% to pass.
- recommendation20
- market analysis20
- risk assessment15
- financial analysis25
Reveal suggested structure
CAC = spend / customers acquired. LTV = ARPU x gross margin x 1/churn. Judge on payback period and on unblended channel economics.