- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to the American Express Global Business Travel Third Quarter 2022 earnings conference call.

As a reminder, please note today’s call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Barry Sievert. Please go ahead, sir.

Barry Sievert

Hello, and good morning everyone. us third joining call. earnings for you for quarter our conference Thank morning press and the investors.amexglobalbusinesstravel.com. earnings issued our which at This an on release, we is available website SEC available today’s page. web remarks, accompanies Investor which presentation, Amex GBT slide is A also on the Relations prepared our to the represent duration cost of industry or would and statements like comments savings forward-looking future trends, synergies, you effects advise We expectations among and our about that contain that beliefs including others. acquisition events, COVID-XX, involve statements results from statements call. looking All uncertainties actual made and conference forward may cause risks to that today’s differ the materially on More the issued information and this related October X, prospectus and on our Form risks release registration contained our filed uncertainties on filed SEC statement on is on these and filings. morning, S-X XXXX earnings XXXX, in other X, our originally other September and presenting Throughout non-GAAP Free Adjusted Margin, today’s Adjusted certain Operating Adjusted financial measures, Flow Debt. also we and EBITDA, will as EBITDA, EBITDA Net call, Expenses be such Cash All references adjusted such measures during items. financial to exclude certain to today’s call have been non-GAAP earnings Definitions the this comparable reconciliations and presentation measures materials are most in the non-GAAP of measures and the and GAAP for available of directly in terms these supplemental release. Paul on our Abbott, me today Martine Chief the with and call Chief Executive Officer, Participating our Officer. are Gerow, Financial the for Eric Bock, head M&A. our today joining Q&A Also is and session global Chief Legal of Officer now call to over will Paul. the I turn that, With Paul?

Paul Abbott

for XXX% by the XX% earnings Revenue Martine for our earnings. levels, to from financials. X of revenue percentage second before Thank the you, Revenue third We reviewing us over reported it million, highlights and quarter Barry. quarter quarter reached up kick thank recovery quarter. take through third Welcome XXXX third the points turning third and up quarter totaled to us XXXX. I’d QX strong $XXX joining the like for call. you to off over

financial Transaction results our levels $XX in third pro EBITDA continued the recovery XXXX and are XX% gains fall-through strong segment. recovery million, XXXX on of of the quarter, driven XX% XX% SME in points the business the with forma reached share revenue up levels. two versus pro increasing growth Adjusted forma of These momentum quarter. by a second in was in travel, Our year-over-year

the travel recovery in demand a have gains share business we throughout volume and XX% The revenue continued significant September. meaningfully reach recovery. a demand million. in we volumes million that expected, to give As in segment strongest $XX at on billion strengthened the Adjusted our runway Day XXXX of and EBITDA opportunity. from in full-year drove shows transaction of new growth, to for confidence our wins September SME continued levels. us XX% to reiterate $X.X with The momentum Post-Labor transaction guidance increase recovery, our full-year July October momentum Amex delivering this GBT to $XXX momentum billion strong the growth to guidance are $X.XX travel of and has seen

New XXXX months representing past TTV. Wins over totaled billion, Value $X.X our XX% the twelve of

offering from SME highest and continue fastest the and solutions in Amex Egencia SME the market - accelerate industry. segment margins very wins. unconsolidated a the GBT, also growth benefit in we choice a We In our large, to of with space, leading Ovation

higher savings, coming and which were unmanaged. the complexity with over value New creating new last programs number previously technology travel customers travel and Our by in value more XX% by totaled the demonstrate of prices. greater XX% our SME from Wins Value industry-leading wins today’s billion, are These even really customers months environment $X.X approximately and service, whose value twelve of of

period as through October we and customer with remained XX%, the a last of satisfaction also over increased rate XXXX Finally, remained levels our high disruption. twelve through levels retention at the months stable very of end supported industry customers customer

before, target already remain synergies we in We $XX the on As track the of expected XXXX. to million expect million achieved we’ve XX% synergies. exceed synergies. date, discussed completed $XXX to have of expected Egencia total Based in we on actions

cost permanent cost of million XX% savings been our already to our initiatives Turning $XXX savings, realized. have

ahead, expansion. customers positive permanent SME the for into I’m new about budgets business EBITDA long-term well year. and QX their Egencia Looking Adjusted savings travel for pleased and us wins say to and position momentum, next recovery, continued growth synergies The margin growth, remain travel cost

includes and at as solid. and by all this So, to TTV companies the at look Transaction, which XX% the significantly revenue and softer The the of supply recovery Day, let’s improve was and continued continuing their post-Labor recovery. with levels period, the July increased August quarter. for Transaction disruption customers and of airlines continue business remains take But around bookings a world. recovery in teams impacted higher also a constraints in fourth reconnect outlook XXXX, closer third distributed travel quarter to airports. was

reached XX%, a adjusted transaction October recovery mentioned, on previously As workday basis.

let’s look more recovery at detail. now, So trends the in

being exceeded continue XX% You’ll above recovery, In restrictions third XX around quarter, removed. international customers quarter, for third in the Global of domestic transactions points by first see or XXXX. SME driven were our SME Multinational time relaxed the the and the the recovery. In recovery to the the percentage world bookings lead and recovery level reached

which the the around to open world additional provides and still XXXX. growth quarter fully markets fourth QX, in were for there opportunity into However, in yet

platforms. the and are bookings mix, we to is displays product our significant through Looking content a at of improved the opportunity, hotel hotel good air progress hotel and making Egencia ratio Neo increasing in

We continued above in three September points our also quarter. basis, fully points the were the on see and finally, are And January recovered air. XX very has was transaction in but air hotel recovery outperform despite a dramatically volumes our As strongly. our did XX% improved we’ve percentage progressed, Australia of slower primarily EMEA not having region, second by have regional recovered, Hotel to rebounded the summer Asia-Pacific in above strong year recovery highest yet the India. volumes volumes since third driven this currently China recovery quarter. recovery a see and have reopened, EMEA,

the Americas, to will improvement trillion continues are slower some removed travel-related growth. We QX. leader with for the on a we very industry US restrictions to first in Canada improve in see been and recovery a $X.X the Within recover, of The runway has October significant fragmented large with

win We opportunity a of biggest This continue and with X.X opportunity The is to $X.XB $XXX sales a share. customers. gain large billion. ratio, gaining new consistently of with total base share is SME growth with a and customer underpenetrated loss

managed XX% signed by roughly twelve actually SME is spend spend. the and managed value the over of whose programs Of October We to past only the from are We’ve approximately were travel, XXXX. player today. number one $XXXB through of in new $X.XB travel by but traction value months SME customer travel number converting previously unmanaged, managed really unmanaged this, gaining companies are XX% is we travel demonstrating XX% that wins

new growing, growing value retention this wins value And, So the momentum our strong segment. our underscore we demonstrate customers. recovery wins to globally, faster rate in customer higher our rate margin our deliver and value new our and SME

such Egencia technology come our on So, our new innovation. customer on through of the and value investments and of I in product our power about let’s platform product to features to plans technology upgraded we digital the are content, our highlight proposition. transactions launched would QX. move dynamically channels change, hands so talk some XX% can user’s more travel important travelers. landscape, an the most mobile We approvals trip travel often today’s In we to power where interface in putting managers and of present as changes. the the and into introduced user app trip

Our mobile made make device delays basis. GX review leaving largest recognize Egencia is XX and - companies site. value new without requests enhancement Fortune instantly the approval always can their and and on or connects travelers an schedule to changes, annual this such to trip software that app. decisions approvers for use approval information. More to enhancements fall. the get the most mean full most experience. push trip customers million earned finally, Badges the flight the GX user relevant XX new and to enable Leader mobile notifications updates, device. peer-to-peer requests on instant as The It trusted And the direct see XXX vital than good is receive on change we’ve even guide the people GX

platform, addition enhancements Egencia on to In significant disruption management we the introduced the also re-shopping, the capabilities sustainability third quarter. in to our enhancements mobile and

financial So, That progress. another the to to financial our Martine over would review hand expectations. performance and results of quarter to highlights... our you. completes sum over provides forward-looking quarter strategic, I up, our QX my discuss to and the proof-point commercial continued third like to yet Martine, third it of

Martine Gerow

And Paul. you, hello, everyone. Thank

in by recovery recovery key to fall-through improved metrics, progress X as strong our revenue make EBITDA XXXX. with our X points, you performance priorities. from third by the compared financial improved X Paul, strategic also was to QX cash reduced and points, continue we transaction usage we and by adjusted As improved points, our improvements sequential strong commercial on XX% by four And heard quarter, against

international XXX% to now third increased Transaction our a Growth $X.X strong largely Average of total me in value Let XX%, reported Value bookings. XXX% quarter Total by turn quarter. the driven approximately in increased third a results to billion. the Year-over-year, Transaction recovery basis. was transaction on

growth, and in of Travel the and Events over XXX%, Revenue Within Our quarter, and above of $XXX and up for revenue and drove transaction external third events to half to meetings rebound quarter third continued Product Product the Revenue Meetings total internal Professional increased was XXX% Services, strongly. growth, a Professional revenue demand XX%. increased Services and as million.

reduction compared revenue. protected previous increase more Operating was third As which compares management Expenses demand XXXX, XX% in was the from as component revenue favorably fees from XXX% because to growth in a increased in calls, to shared this on Adjusted quarter, the relatively limited COVID-XX. in

in Free As $XX was million. EBITDA quarter, an to a negative million improvement Cash for $XXX total positive result, third we $XXX of And Adjusted improved the a of million million year-over-year. This transaction $X of Flow to delivered working support largely between quarter recovery by XXXX. which and driven increase build by operating the the to was loss, utilized XXXX quarter offset third third in reduction point back XX cash capital

Now, let’s pro also Egencia third Results acquisition. for third the on were third versus look quarter strong. XXXX results the quite our forma at this basis quarter for quarter

pro XXXX third the recovery recovery forma. transaction one recovery. versus mentioned, XX% reached reached transaction quarter, in XX% point Revenue above As

recovery hotel experience recovery of quarter. continued cancellations, trailing higher We still third to the and level a air in was

XXXX positive quarter XXXX to third by a and pro the higher average $XXX recovery. as the pro versus to fall-through compared basis, in forma, revenue. forma third as improved million TTV with fares improved higher revenue XXX%, basis, XXXX by On forma pro par the XXX%, point to versus increased compared with by XXX%. EBITDA, on $XXX pro improvement transaction recovery. strong now yield Adjusted a prices volumes. favorably and margin by had second driven represents versus comparing which is This a a of international volume XXXX, However, increased consistent improved on ticket revenue on a quarter transaction revenue XX%, impact X recovery, forma quarter. the Total transaction improvement by from million, domestic

me cash Now turn flow. to let

So as expected, quarter at pace third of more the significantly we as in a reduced recovery continued usage steady rate. our the cash

driven was cash working a quarter, second improvement quarter, capital. in the usage lower $XXX third build by from $XX million Our in the million

third our by the an quarter. $XX between capital Paul, July from heard increase in working you which and drove volume increased million September, in XX% As transaction

to the We business XXXX. expect improvement quarters than we consumption forward, decline the experienced to we’ve a continue expect over recovery of pace going three working travel in of moderate capital more first as

to build turn positive recover Cash expect We Flow demand to and capital normalizes. Free continues XXXX during working continue to as

warrant As $XXX to of have And completed cash XXXX, structure. $XXX the of September we XX, balance within exchange stock common of increased we a simpler available of finally, report are shares number for trading our Net that of a and Debt capital we million. million pleased

to holders approximately million legacy that for stock. of be choose the in and will November securities, common And extent shareholders, stock, their also XX, the on resell by B our eligible expect Additionally, XXX shares float we Class will shares exchange these held A sale of improve issuable efficiency of public upon this Class to XXXX. trading

me reiterated. our XXXX turn which to have as now from we heard guidance, full-year Let Paul, you

revenue recovery line us full previously and of in year Our called third confidence XXXX will trends Adjusted $X.XX of $XXX performance current and finish issued we billion give which EBITDA to the with billion guidance, for our our $XX to million $X.X year million. quarter

implies of to revenue a reminder, in guidance I which the on to initial As XXXX. Paul to will to expectations recovery share of forma largely turn line equivalent now essentially quarter. are XX% And revenue, XX% revenue it thinking third we a back a thoughts with for our XXXX about revenue is full-year how pro recovery QX

Paul Abbott

Martine. Thanks

obviously working wanted to into Looking beyond how planning aren’t while of we XXXX this ready year, at guidance end we XXXX And point, process. I establish XXXX through to it the provide are thinking currently challenging XXXX. we’re the the frankly XXXX. some about impact We have insight this is our the but macroeconomic over difficult that for recognize months, has few more become demand to on business travel outlook in last this may predict

have assume slow impact demand above has grown decline. is logical so travel GDP it GDP to or for we shared continues to before, or As business decades, at some if

our XXXX.First October of Stanley of the of Positively, be travel to by remains flat and conducted customer budgets XXXX or XX% up expect an in approximately the in However, top to predicted that Also, survey. our XXX was business we circumstances customers budgets XXXX and that from A survey in of XX% travel midyear XXXX. increase unique October XX% survey and continues, are XXX reported survey recovered their spend respondents XXXX. there outlook travel to half XXXX, stay that versus for are to tailwinds XXXX their versus Morgan strong. travel recovery all, nearly expect global business for strong in increase several buyers

And well Events their we as Second, together XXXX. this & motivation creating customers’ distributed in & as training, are results, collaboration. Meetings hybrid our Events work Meetings companies and for see model and as the bring current business already new travel for teams our demand people forecasts

in supply including travel continued the unmanaged demand. our And and XXs in support segment managed we complete, are to see Third, capacity point, we spend continue incremental we converting planning Overall, improve is at in will do revenue this to share, expect current momentum XXXX. solid gain in not XXXX, spend. this while airline fourth, high increased planning to view recovery is continue throughout expect yet And growth momentum travel will we SME the our that a for XXXX. to and to

and a strategic summary our of priorities Finally progress.

priorities in with priorities what pleased become these on can and business we our returns. executing up set we we on focused we these process priorities. shared are to We say a deliver strategic ensuring public delivering the to model control: expected on our to company XXXX, When I’m is are strategic started investors.

First this continued all, recovery recovery momentum business of into travel Transaction continues. reaching and year has to improve XX%. quarter October each

is of recovery our of the reason delivering. is gains the industry Second, share ahead the because are we

We X.X X outperform proven the ratio billion. which and Wins industry, by $X.X New Value is to share to gain and win/loss our continue of

end the growth, said strong New the focus October of and segment show in through our $X.X Value Third, on we results SME our winning would totaled progress. accelerate the SME for twelve Wins billion. months last

with approximately can unmanaged and of the and of the said XX% And we customers recovery the the our also we are, XX% transaction Fourth, unlock in XX% coming impact opportunity SME segment. new wins unmanaged value synergies. which in on delivering quarter. also XXXX M&A from rate, you reached are the of we SME third We see would the

expect total We Egencia in $XXX synergies. million

$XXXM margin as mentioned, and and as total year. are executed expansion. XX% exceed the have to target on currently on finally, permanent drive XX% we million outlined will To improvement savings. of of Fifth, track expected continues, the $XX margin And $XXX savings of this cost cost million that date, have the the permanent we We expected synergies. realized we I recovery importantly,

stronger us delivered much are means recovery, EBITDA you which and business results of expectations the we business delivering, completed. delivering the a to look XX% in our process are margin planning quarter, model that of with more Adjusted for this is sharing Thank increase, all and We EBITDA deliver revenues growth pre-COVID interest. track to complete very Together, for results third EBITDA Adjusted financial gives even fall-through to view Adjusted XX% up that revenue achieve Our is We profitability. we our is once set annual XXXX the as when your expansion. on model beyond forward target confidence our that. achieve progress

We the comes now Kaplan question will for proceed. first of Instructions] Stanley. The of from [Operator Toni questions. open Please line Morgan

Toni Kaplan

just you because seems the to on optimistic was wanted EBITDA might looks good. I up quarter, to due be like this fall-through if follow just the you're below you. factors Thank that driving on seasonality mentioned, to as XQ. recovery was guidance. XQ the understand midpoint, It what EBITDA continued at just it it in the very guidance like is And wanted or

to Thanks. So the why wanted EBITDA? understand XQ moderation just in

Martine Gerow

Thank for you Toni. the question.

seasonality implicit fourth the has and see if quarter fall two fall-through December. the guidance, So the we is you And for in look some it's in XX%. of at quarter November months really the actually in lowest our fourth is that that

same lower base quarter. because it's trends, So revenue but fourth the a profitability much

Toni Kaplan

also the Terrific. for help ask free the to helped be and know, I of flow and it you wanted I capital. in cash by if you positive XXXX. with Martine, about mentioned could prepared to you expect working remarks, some And us takes puts

with embedded below are what's of the items guess line? regard I some the Thanks. interest headwinds, that tax, to expense Just

Martine Gerow

Sure.

LIBOR positive expect the in place. exactly our we determining planning, XX% We're in swapped, flow seasonality you think is point probably our XX% working as at is of through time And $XXX given of our our through that's some range, take that cash we So there working to have that. equates still working to rates, debt, the if still our XXXX. that million our to that should for next year, With so - year. next in interest of XXXX structure given of during be our interest assume is flow actually when you turn in respect X.X% cash to will mind debt part likely rates well. interest We're

Toni Kaplan

Terrific. Thanks so much. it. Appreciate

Operator

The comes from you. line next question proceed. Deutsche Horowitz of Please of Thank the Bank. Lee

Unidentified Analyst

Horowitz. of taking relative the the us that recovery investments macro you about strikes little is the Sawn concerns think It this the question. incorporates your than on This benign some to with headcount n if fairly And currently place the you're do outlook, color Sharrie macro how Lee obviously seeing challenging your macro And expecting? to for do across managing relatedly, overall additional in environment. XXXX year? expecting the provided to you a think of Thanks And we're for [ph] what that you how that economy. environment the in mind, about extent be Thanks. next proves you're thanks bit that more

Paul Abbott

way look amount a is, of an there's that the in environment where think uncertainty. operating at that I still we're fair we obviously,

we So got And we in to flexibility I past. that have have make sure the in we've flexibility think that model. the demonstrated we've

in As remarks, make revenue revenue absolute can't What of Martine recovery my and the are we level the mentioned prepared going profitability. business is of make to the fall-through. 'XX. predict element appropriate the exactly recovery can the we're in into is precision We that be for and that important that right -- sure us I with that converting what mentioned to we sure is that revenue is that level model is whatever margin delivering

need. that that will the That's expenses we manage fall-through we it. how we at we ensure to our So look essentially deliver

Unidentified Analyst

that to related That's business to you moving made teams distributed about forward. tailwind And another point [ph] just another being also very helpful. your question

the from of going expect working the has there you of us to we're new incremental can curious and of going way this - what any kind hybrid date help of tailwind like see how kind Just that these to forward? that this through better benefits if sort you environment been size understand is

Paul Abbott

we're say a a specifically a we in people. Meetings seeing also levels. on put Look, our under M&E on projections division don't great And it's question. XXXX survey focuses our forecast, know can XX above recent a already Yes. Group, number for XXXX and finite with it. have I did that dollar on we that XXXX. how meetings for Events And above what is that that XXXX to I customers But is

that have being and points trend that So real. data is we the honestly share to definitely I it able the But recovery of isolate challenging. represents is what that exactly size very think prove

Unidentified Analyst

very you. That’s helpful. it. Got Thank

Operator

Ju Thank Credit of you. comes Suisse. The next proceed. Please question from Steve

Steve Ju

you. Thank

So just briefly the segment. SMB on

recovery we larger at the think overall SMBs are do I overall why at for of And say, versus still So think are industry you of it's the clients the does the recovery for, XX% the so that - industry. lagging is mean said this XXXX ahead XX%. the that your far rest

of I So book of use OTAs sort be what I something better using? convince order guess in than the it the to guess serve that ahead for they has products? a there's using recovery. they SMEs is to strategy the to for who what to space replacement, materially perhaps more as your And to white you the may Because Thanks. to really need be one are used

Paul Abbott

of I factors outperforming global a are number is Sure. Yes. think to Well, multinational. why SME the segment as there

I SME the many been faster-growing has actually a segment think segment. years, for

we are gaining share Secondly, segment. that in

that's factor. a So

to have get have kind seeing back just larger of And and slower operating travel, a Third, we managed to to quicker of cautious slower been terms which to to than return a that bit midsized travel. factor. companies some is in this office finally, a been companies model and returning I think from frankly to are unmanaged to small post-COVID conversion more

to are, sure we essentially customer placed solutions innovation expanding and on the customers and I we segment trend through XXXX of why different that's XXXX, the continue. have of those expect the main the base. make SME for the outperforming. reasons we SME to as that a sub-segments market-leading of SME why force But That's to is the bets sales So segment, purchase with series agency think, SME a own really our

there I from customer reasons. are managed airline an Now OTA in terms or program, why proper think move several an of travel direct would to a key from

preferred all, significant savings. access content to extras delivers our of savings, First

most all, you're comprehensive the that access to and has a getting marketplace competitive content in industry. of most the the First

site, a most the time. in to the On going rates negotiated book supplier our XX% customers or you're industry. competitive the SME average, not content getting content our unique You're own of single comprehensive, most

significant getting they're savings. So

far or some don't voice your flights know if Secondly, disruption, facing experience. canceled around support, a getting tried high-quality contact you're they're mobile it's pretty I if the to OTA, integrated superior you've service. We offer XX/X desktop an world. transactional

and supplier So own savings significantly help going that the you're doing entire spend, on their significant getting get and websites. getting employees reporting various you're you're company, getting not And benchmarking if you're also, getting out service. across you're full analytics your improved the spend to company manage the of thing or are there which OTA transparency all your

those are reasons. they're key honestly, the compelling. very So And three very,

you service full your management of transparency company better and you better get You spend. get get savings, and

Steve Ju

Thank you.

Operator

The the comes you. proceed. line question Pfennigwerth Thank from next of of ISI. Please Duane Evercore

Duane Pfennigwerth

corporate recovery. wanted shape of I term the you ask about you. intermediate Thank to

nice you plateau pickup expect actually but So levels geographies in and early can XXXX October. the there improvement not into you into summer sequential seen year where you XQ? we September a new until think cycles? budget Or are sequential things your next into at here theoretical these with since see We've bookings. Do here

Paul Abbott

well. they're mean all the you Xst more as mean I think specifically, was but in QX are the But environment I'd making the quarter, that on if I to I removed October I I the in think relevant at difficult doing earlier. ahead I Well, context Canada. of Yes. accurate and looking in back refer do of in is you look - XXXX, the of predictions. in tailwinds think October, that I restrictions this context I fourth always mentioned travel think

and travel also we restrictions very Japan Singapore recently. We've seen open quarantine Kong. Hong I removed in think saw and up

that, in and fourth so from you're those opening not And going see we've markets quarter, the seen of I think, really to quarter. the the some third up, in routes impact benefit

the kind in so of we far, conditions numbers. recovery are So, the an not of macroeconomic impact seeing

strengthened recovery September. the has in before, again said I It strengthened As October. in

of XX. and at And I through if conditions September tailwinds would have the what continue still were XXXX. is XX quarter But that through October. should different, us say carry can't That's Now speculation. signs we be is or fourth we see we solid recovery what obviously some to think and I into macroeconomic good

Duane Pfennigwerth

hire to on this That Thank time follow-up versus, And relative you Are then in second are optimal just up? you the to it you. on you makes where say, maybe staffing at staffing, point are catching finding easier sense. for my quarter?

Paul Abbott

Yes.

have target headcount point the that number time. absolutely expecting We at in were this of we

We of October. which was staff hiring peak, order for up to the have lot done September, a in really

to focused So we into are now have improving But headcount need on of we organization. broadly through brought and the that that we the we training have the productivity the carry the us people speaking, period. next

of people acquired. I yes, So hire that number mean we've been the we able to

Duane Pfennigwerth

much. very you Thank

Operator

registered time. are time. additional questions questions Thank There [Operator are no registered at this There Instructions] additional currently at currently this you. no

Amex-GBT to across they've future. pass very team our for dedication remarks. our like for joining extend I over finally, team for closing, much I to And to and the thank strong the Thank for closing us customers delivered. back you today. in all to conference continuing results in We So Barry the would you Sievert that us. you to will you the Well, of of management thanks to to all joining their look you, update forward

Operator

concludes the you That Thank participation. conference your for call.

now disconnect may your You lines.

Global Business Travel (GBTG) 10 Nov 222022 Q3 Earnings call transcript