GBTG - Earnings call transcript Q3 2024 | Global Business Travel Group, Inc.

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Operator

Good morning, and welcome to the American Express Global Business Travel Third Quarter 2024 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, Jennifer Thorington. Please go ahead.

Jennifer Thorington

Hello, and good morning, everyone. us third joining conference XXXX for call. you for quarter our earnings Thank issued release, earnings on morning, an This we press our at sec.gov website which investors.amexglobalbusinesstravel.com. in available is also Relations web which prepared accompanies A page. the slide Investor remarks presentation, is GBT Amex available today's on

that involve events, and like statements statements including today's All and macroeconomic cost advise savings industry synergies may results certain to or among cause forward-looking beliefs would call. conference from to that our and our We contain uncertainties that differ expectations acquisition others. on comments the risks you forward-looking represent about future actual made statements trends materially

Throughout More flow certain EBITDA, our information issued expenses, our adjusted such this financial risks and these filings. will free operating cash other and measures debt. adjusted earnings call, be also net uncertainties today's is non-GAAP as we presenting release EBITDA and contained EBITDA, morning adjusted in SEC and margin, on other

Legal turn Chief will Paul? and with for I Financial Chief over Karen Officer. Eric to and [indiscernible] me the is non-GAAP the measures most of non-GAAP terms All and that, Executive materials references Definitions Also comparable Global call With now certain such earnings Q&A presentation Abbott, these today are Participating the available financial Officer release. measures are Williams, to Paul adjusted in for our during our this measures have Bock, GAAP to joining and directly of the supplemental and items. M&A. exclude Officer; reconciliations our Chief the call session Paul. in today today's been

Paul Abbott

third to and the call. results. momentum everyone, deliver drive third strong Jennifer. our quarter, Welcome Thank thank earnings you continued to In for and financial strong we XXXX you, quarter joining

reiterate growth Our focus and driving us narrow full EBITDA confidence adjusted and to costs leverage significant the EBITDA operating range midpoint year on adjusted the of guidance. expansion, impressive margin with giving our drove controlling

continued retention share our gains, wins services maintained customer resulted of for new importantly, software our in and rate. pace sustained we high demand Increased and have very our

acceleration flow for cash focus free a remains important very company. Continued the

third to year results strong guidance free quarter Our us our the once raise again. cash full give flow confidence

We've previously capital progress said I'm exactly our what on we executing pleased and about incredibly with our would we strategy, allocation do. talked

significantly finance have interest our the to reduced debt, in a to and CWT and on are the the and the continued balance integration We and strengthen continue pay we closing of growth gains acquisition. investing we and position productivity strong in deleverage sheet

to important This to significant progress us an in cash milestone, shareholders. brought returning our has financial performance

our approved During previously as and new we the I'm of authorization. buyback we announced, to executed a share quarter, Directors Board our has today, first pleased larger share report buyback

highlights the to third Turning some of the quarter. of

Starting up ticket billion, We travel adjusted share and with growth. to X% were hotel continue to driven $X rates. grew execute strategy results driven EBITDA by financial and transaction prices and by Transactions growth our significant gains. demand by reach increased X%, growth. strong on deliver and nearly our transaction higher with room average for business TTV

and TTV increased financial services. by driven the professional was international in growth TTV higher products and like This certain transactions, solid from included a strong TTV in industry for our for quarter, pharma to mix X% verticals services million $XXX benefit and and our growth reach up Revenue demand

reported improved X% to and I'm quarter, more last the growth to leverage modestly the here, X% provide was in slide. multinational strong quarter. with resulted in points. of margin detail EBITDA the on million XXX muted basis our strong we up margin next on Finally, operating going with $XXX customers, at expansion XX% this adjusted focus in but transaction remained X% growth Growth growth growth, global versus of expansion and

face specifically, of SME international up prices was X% businesses in the quarter, last air X%. Regional SME This and a described trend interest X%. rates. higher As Growth we sustained international have up domestic travel. remains and for with was controls higher in beyond combined customers transactions spending broader tightened growth

Growth This reflects transactions. with hotel our display increasing choice. hotel well as provide in outpaced more growth was X% and and strengthen as the to which in volume more focus transactions of X% hotel our as value continue industry we Air hotel content trends and bookings intentional on customers our

Pacific. Asia softer Olympics in regional X%, was a impacted on at by X% Americas, in XX% transaction France. basis, growth the Finally, EMEA was in the growth

multinational We X a divide As small categories. into organizational use X into enterprises. categories. customers and annual our Global and base customer to these expected general generally reminder here, medium divide purposes, we TTV

do Although may prefer different this solutions. that we not measure services all size have solely of to We by find of need, tend are customer and products that to sizes or country offered customer. by customers can X vary

global Some larger some more solution. customers high-touch may customers prefer approach a a may bespoke, simpler smaller prefer while

customer Looking maintained rate of last high we XX value customers, demonstrating important this we the set. retention specifically customer over multinational global very to months, that at the XX% bring

stronger up growth global automotive pharma, and in We with GMM multinational financial services X%, relative performance Total with double-digit continue our see industries. customers. to transactions were

to quarter XX%. TTV up solid normalized outpaced the GMN third same-store was the in We the over we regional saw category, cycles growth quarter all very of ramp saw industry technology growth the international was top of verticals. almost air international up X% TTV strong, percentage levels across Technology returned and sales growth XX%. and TTV transaction by X our more And growth growth up in the within particularly was points. as XXXX.

solid most year. remains up XXX spend be the that shows our customers expect travel we in of X% fourth recent to It balance that the the our demand look indicates over top ahead, approximately quarter. as customer Looking survey

turning the So highlights. to here commercial

with months. over We billion XX of last new total value wins gain continue share to the $X

XX on retention, months. Importantly, last at these foundation the are maintained customer very over a share gains we've impressive strong of which XX%

travel growth Our approximately which opportunity customers, represents SME with biggest billion remains $XXX spend. of

but managed opportunity in not segment, leader program. in this is this a XX% managed already in a currently of travel travel are We

including benefit a of managed care. are new is customer and course, control their value This travel of more XX/X of resonating. to proposition Our service SME the demonstrate preferred wins program, and significant clearly our more duty and more that rates, clearly spend extras travel over savings recognizing customers

SME Our $X.X new the year-over-year last XX wins value totaled of in XX% number billion with customer months the wins. over growth unmanaged

year-over-year, advantage significant we of because own owning software platforms digital We came In our the third and improve on of quarter, up believe software digital XX% and our through control transactions the points experience. bookings XX% Egencia. percentage came now our can own X through NEO channels, and platforms, user competitive is a our

NEO Growth on XX% platform our up year-over-year. was particularly strong,

enhanced We provide choice content. continue more in marketplace our more and with customers through to value

working our year-over-year. doubled American The over effective management on also our Express with We retail and collaboration NDC XX platforms help customers airline to Card NeoX well, partners way. our to our more with are NeoX airlines the most customer in base progressing premium spend than have we

to We also make more business sustainable. travel continue

the are in achieve We business carbon SBTI reduction first our among the validation emission travel to of targets. industry

and customers and our services invest to value more with provide in choice. more continue products to We

uses benchmarking key in company's other tool. in against industry. dashboards our insights New the peers features peer include travel their this This compare customers performance program to quarter indicators for travel

and XX the platform. that received been Egencia largest decisions. has people GBT say trusted our We're GX proudly focused We Egencia user product this recognized I'm to has use the companies more pleased also user And very also management leadership to make which launched managers. to reviews peer-to-peer intuitive Fortune best on solution verified awards XX travel to are than experience. Neo a quarter, GX, Amex travel providing on review made new million the fall, many more experience. the most improvements traveler by group site we software In from based third experience. we travelers updated deliver trip Egencia the and are checkout and the the process mobile app a on Egencia from XXX

X AI As we areas. areas in X our quarter, The and efficiencies X efficiencies investing represent operating deliver expenses. streamlining increasing increasing across include engineering our we XX% operational our enabling these and of processes And mentioned workforce. areas and velocity, to financial adjusted service last automation are

progress Let of on each me our X areas. provide a quick on these update

that requests. AI we based travel First, on proprietary e-mail e-mail piloting generating counselors offers incoming by customer saves time solution are our

Second, software development our the to now use to required expanded and used have of accelerate corporate our we it the website. new GitHub launch copilot

our the customers' faster, Third, reducing program we by have we've to requests reconciliation deployed AI by approximately automation for fourth, our average deployed handling change credit time XX%. respond XX%. to And lines these reducing approximately card process, time

you see, continue opportunity So measurable see to to drive improvements. productivity and as huge progress AI can making as a we're

like transaction the financial to through the processes, of CWT the now first to XXXX. the hand results approval discuss regarding more expect XXXX the to to continue we acquisition, Finally, in and it relevant to close over to And I'd detail. and work quarter we outlook regulatory in continue Karen

Karen Williams

Thank reminder, driving a expansion, capacity accelerating leverage long-term organically when you, margin about they and creating flow are through hello, invest managing And to as key and drive comes I've sustained growth, operating continued and Paul, priorities talked it my X both financial previously our everyone. and M&A. performance. cash generation, to strategic and importantly,

the the X quarter, made areas. I of in am in have again, third these we all with And happy really progress

more year-over-year. million, detail. let's turn $XXX performance now So X% financial in to our Revenue up reached

the more year as growth our adjusted transaction revenue in consistent rigorous Although the with and line we growth much thanks of EBITDA did we control. to first our as cost accelerate half expected was still delivered not with expectations,

revenue TTV was exceeded our as And cash Revenue we importantly, flow by yield, X.X%. divided define which free expectations.

model TTV by transaction product As and a professional XX% revenue. and revenue reminder, services XX% our is volume. driven

benefits So only of our XX% and hotel air higher pricing. from revenue

grows on important it's it the to yield faster highlight negative has TTV the as transactions in so a quarter, impact And saw than metrics. as we

expect to has with The for on decline digital components adjusted the look EBITDA XX our I full points you annualized our basis, continued we line And basis driven XX overall performance down the our yield a impact to which much positive in at to base reflects basis and expectations. shift was This to year. on revenue point the an be which year-over-year encourage of margin. non-TV XX very transactions,

And our quarter. there as yield seasonality highest being in QX yield revenue discussed, with previously is our

we are operating to on focus am area costs turn are with a increasing seeing focus enterprise comes across the when pleased of total momentum we us our which productivity. to for the I and As it incredibly key expense,

are not reinvest expansion million drive we only margin are savings an $XX CapEx. growth. to cost net growth in this investing XXXX, delivering expense operating incremental X%. impact growth of which expectation X% a and CapEx Together, represents versus a XX-XX in of of now with adjusted between year-over-year resulted slightly our revenue to lower the Importantly, year OpEx $XXX In that us future enable we over million, for these

free million growing Adjusted EBITDA $XXX an margin XXX acceleration EBITDA happy when lower flow with interest basis cash lower million been our impressive continued generation. and we driven comes points grew generation XX% the to cash CapEx of to flow addition incredibly spend significantly XX%, of In an with to this it working in quarter, has momentum achieved the I'm capital initiatives, optimization by expense. $XX adjusted year-over-year.

As a that refinancing a July costs. lowered executed in debt we significantly reminder, our interest

derivative savings the achieved we reduction our previously lower approximately our tied to represent costs. through in interest further cash leverage, achieved XXXX. swaps, interest rate our strategy, $XX XX% though, or and consider million When a run recent reduced our in versus and savings this have we addition rate hedges to refinancing expected Importantly, the

our net of ratio ratio just is leverage step of This adjusted X.Xx by September is significant XX September EBITDA X.Xx. XX, XXXX our XXXX. down and a finally, of divided target the the in very X.Xx below represents months debt as last of leverage And to X.Xx midpoint from

our have how with industry-leading you returns. powerful previously for We positions shared financial and all model us it

grow First, for above customer travel demand premium we our to expect base business GDP.

continue expect driving gains the grow our by differentiated market to of with Second, proposition. value ahead to we share

focus our is on expansion. margin Third

on a are margin cost structure We laser disciplined growth. focused and continued

XXXX. drive XX% in EBITDA XX% operating to adjusted is Our growth forecasted leverage to

CWT deployment on focused M&A, our shortly. that I reflecting can acquisition. range incremental our detail capital discuss including We opportunities pending are cash fund more free Fourth, flow we're significant positive guidance will creation from and accelerating value optimizing growth incredibly narrowed important in the in

finally, a strong we to in return are shareholders. to position very And cash

year And to guidance. full the so let's turn XXXX

ahead what of control margin adjusted lower of end the hitting flow we although all are mark of at EBITDA, revenues can cash are our guidance, and free the expectations. are We

start macro at uncertainty interest the of about the Given as the environment rates, continues to softer provided range revenue we've previously, talked year. and to the guidance of the track growth lower related towards end

the end for to represents reflective approximately the which currently midpoint are to X.X% growth X.X% guidance the low year now to year-over-year a consistent and are seeing billion, We with our we full of range performance. prior $X.XXX of narrowing terms revenue and of X%, $X.XXX of billion what of a in

fourth operating performance thresholds a excess growth $XXX our carryover revenue implies savings the the in guidance driven new remain certain focused and of continued timing line the of our million acceleration, by revenue For with This We model. plus year. from on of includes driving actions improvements yield seasonality this related higher modest productivity quarter, of and cost XXXX initiatives largely to cost in in leverage. taken

Executing growth. XXX making while deliver basis points to these investments of to XXX savings strong us enabled expansion future in margin still significant

representing we of we've into our million, year narrowed our again, adjusted EBITDA guidance and year-to-date EBITDA seen are already demonstrating full of the midpoint XX%. $XXX strong have reiterating margin guidance, confidence range We $XXX to to XX% performance our And to the adjusted QX. growth million

very represents finally, this $XXX our to compared under triples million to our cash, am And We of and at guidance of than in generate million. least the a second now $XXX EBITDA. and focus raise to free year. importantly, last adjusted from the just cash our expect XXXX more of This but I XX% on free time for given flow conversion flow guidance approximately delighted cash rate of previous year

by end allocation priorities laid to accomplishments to out this the earlier want our year. I we capital respect with highlighting

cash demonstrate have accelerating is clearly priority we which first accomplished. results our Our generation

deleverage. to continuing Second,

ratio leverage in our now target. lower is of 'XX the X.Xx of QX half Our

$XX previously discussed, just under as expected achieved interest And savings. of have run million we rate

and the the continue cooperatively our people, business, engine gives to stock platform, AI we to as and our transaction the primarily productivity and organic to invest XXXX. drive M&A, remain Third, respect flow it to in quarter with expect we Fourth, target with CWT see sales the to financing acceleration deleverage, acquisition cash expansion. first work leverage and of optionality software regulators following growth, naturally including us close Because close. the and SME we to to continue margin expect in our within is range marketing

selling shares from an business share a party we confidence to up first our way third our a model private and able an was efficient Directors heard shares I'm in discount, from share buyback repurchased as that X Paul, of open thrilled additional announced And of while market. from now strategy our position million. approximately transaction strong return risks repurchase to you could buyback has shareholders. cash This being $XX to have in to a Board quarter, an the that and very at puts them we our managing representing potential of overhang in authorized the share resulted us third today million in million. In $XXX buyback unaffiliated

return And cash expect with to place, authorization this we to new in shareholders.

So to up, was performance third things quarter wrap strong. our

our year in and confident delivering are XXXX full clearly priorities are We our on guidance.

outlook quarter. XXXX our provide will We next

by Legal of Bock can Q&A. our who please now Head Global Operator, open into and Officer and line. Paul ahead joined move is Chief go are Eric we I and So the M&A.

Operator

first Peter [Operator question from Peter? Christiansen Instructions] from Citi. Our comes

Peter Christiansen

flow cash more Karen, savings on potential margin cash efficiencies or or working a really here. current yield granted. think you basis, that cash run flow free the efficiencies cost CapEx the increase stand-alone finding as Or investing impressive should on rate we even you we cap is further? the are a that it guess to generation still the -- rank think of flow considering free function If a and do about I free

runway of on it to good stand-alone flow get a cash free recognize be sense would forward. see for the basis, going a expansion this is you but I

Karen Williams

Thanks for the question.

as in happy, as component. from would in very your the that But chip in see. making terms we're continuing our spend CapEx continue expense. interest focus We're cost the say, in terms also continued terms certainly. we're terms and productivity continuing in the of in side, just So first think of terms I to focus growth given of that and go addition point, expansion, really a the big we And That making just will margin be to our productivity. off, of of further our will that to second that contribute around to you momentum investments to about CapEx that away profit

we've expense, about you And we this us that reductions given the but swaps obviously, have a done terms there's so on heard from being call feel that terms of good in interest the derivatives of, of perspective, that. and refinancing, further in some

Peter Christiansen

We the on Paul, of helpful. That's wanted activity. obviously quarters. SMB to some ask in X fair. slowed And That's the I down last about

you're verticals? that certain soft broadly across, Just Or that should areas are we be industry if seeing of? all I curious guess, mindful there

Paul Abbott

the thanks Pete. question, Yes, for

quarter, point SME still move I But kind the the below at decline actually growth the quarters. few stabilization that think that last versus in rate growth last you it quarter, of a we've in the over -- look if rates the hopefully, a did the over up of is seen global multinational. decline last

And feeling interest said midsized last reported rates. higher I higher have small, think if quarter, much prices very and well you of across industries, obviously that I could as pressure it's look the been certainly businesses different

the now the the down we're rates U.S. Eurozone interest move gradually seeing And the that so in U.K., in

as we Hopefully, will And decline. rates that we to and into inflation go keep small think can with confidence businesses control those we under improve XXXX. to interest continue midsized

third the point spending base the stabilized with U.S. -- across large I that the businesses card at this also card at think shared I a quarter. spending small in you in very before If data Amex look we look

gradual stabilization. conditions start down. and improvement. I a And to improve the to we'll rates interest continue seeing move macro So that think, as see we're hopefully,

Peter Christiansen

helpful. Super

Operator

ISI. from comes Duane from Evercore Pfennigwerth The next question

Duane Pfennigwerth

but between about growth. revenue faster SMEs. function and this that customer than a Is just Is at about this multinationals large of Is quarter, the Operating of driver. the curious TTV growing leverage your all part spread growth mix? that

Karen Williams

Duane, thanks for question. the

And back what although we're to QX that. have in driven the terms spread, helping component about mix you so it that it's what of much we what terms front seen. international is traditionally seeing is really, but a in by seen look being price, of then drive higher when think And we've you this if is of with really very than also is the more that at essentially plane the in line

say well, is in It's the remember, of would a I just Duane, it revenue perspective, as from up What terms growth. -- TTV XX%. makes

have denominator component component And can so you numerator that it. that that skew

Duane Pfennigwerth

investment And then on specifically, think just you about flow, outlook. you it But cash free gave year? the pursuing, of a more driving timing as that should improved projects -- lower detail longer the the any a what of on and appreciate little in maybe bit you're we flow this it cash free the I improved the is just could more drivers Is expand presentation. drivers no or detail us

Karen Williams

sure, Duane. Yes,

in driven of primarily it's expense. interest So terms the

So is just the interest refinancing quarter the that the you'll and lower, the significantly accrued which of in quarter. result a interest part expense of had second see it as was in the

driver. that the is So biggest

investing. CapEx we terms of are In the spend, still

investments. on that of in the such in focused in saves, in about earlier of of haven't us making of of shift further just roles. our terms changed call, being terms of be a and we're mix We those go those hiring where continuing in It some low-cost I priorities locations talked very to dollars continuing in as productivity is those terms or terms

about much is but there a component it's of phasing, interest In just small addition to the story. expense more

Duane Pfennigwerth

question client maybe we just then this morning. And from one one, it. last a this and got a Got is

of actually in close about a that lag your timing between We think consumption and nature at week is the that to is as do the tend when the about thinking are you quarter or travel business representative in transactions third Or you Just your consumed. of business quarter? travel sort activity so say transactions as in and -- fairly within would XQ all? third view leading it in --

Paul Abbott

travel. It's right. window between you're tight a pretty transactions No, actual and

certainly think should transaction performance relating to in activity our September. you about August and So July,

Operator

next The Bank. Deutsche Instructions] from from comes [Operator Lee question Horowitz

Lee Horowitz

of drive beyond, So by demand maybe than maybe returning up grow sticking from versus It's and year. healthier a with your environment. been constrained of is year end. to it that SME sense as range to macro high touching year going guess deliver perhaps your this this the year near the the you the SME SME quickly. I to and the lever sort gets next end more the stronger you out that we base for backdrop Is look be that to you're long-term obviously reason growth would low

Paul Abbott

think I fair. that's Look, Yes.

across I is think think to that more would conditions I the sensitive SME certainly, help Economic obviously the But segment [indiscernible] those base. the do conditions.

an the investments see will Karen of in made think, rates. order the to accelerate in our referenced in, SME quarter. this rates you we've fourth that And the I growth improvement in some half SME So year of second the growth

think We've and further we that channels we also rates in of into as terms and will our gains marketing share 'XX. SME in investments growth sales help move made

the of and greater it's marketing our can we're all we not to results We control, that greater channels SME as focus on So and things making conditions. from all sales productivity obviously sure that that's the driving have well. and macro about

a But as is for question a look we I one. lever definitely good your us into XXXX. think It's

Lee Horowitz

cost by business actually to and that think these real your But the time you've of going you is of And of we've you I nice tick-up leverage your can Great. about forward? point, time things been and what date of to how any metrics XX% base talking lot cost been can across able technologies of that opportunity the cost. you Like much gave you ability XX% highlighting quantification then taken much or cost you've a there. out cost -- going savings leveraging this guess, base, on to of achieve that affect your the actually the at AI change how some forward?

Paul Abbott

expansion. see look our think for it you margin we runway Yes. opportunity, expansion at margin a significant Look, as I if continued in

up think annum mentioned automation role I mid-XX. we XXX basis about It's critical moving the has a points broadly not Karen And just AI. playing before, that. the minimum to per in see do

We we digital transactions software the different of business, have margin certain in taking in platforms, higher and using is to generative and channel business. use across and the have voice where RPA cases it's that our our channels we have then parts out into our a we're moving using which also of ROI demand higher AI AI using a

I specifically we've So XXX a see think way to expansion think best that look, important it's help in expansion of points on the continued basis AI quarter, the committed at tough you deliver is lever use to to. put generated third you look number it And that a it see dollar very margin but I year-over-year. margin cases it's us to

our capabilities, SME growth OpEx investing we're on in our with business. revenues. more AI more channels, more X% platforms. Investing You in our more that growth see versus the in X% But growth in in also software parallel investing in investing

that expense significantly is a through of levers, operating productivity including that coming So AI. through driven being coming by series productivity are gains gains reductions different not automation investment through

Operator

[Operator I'll Paul Abbott. call the hand As no questions, to so we have further Instructions] back

Paul Abbott

is more very us customers gains, thank finally to We share flow, quarter. thank joining you shareholders. return for results for they've remain very confident expansion of cash delivered year our us. strong margin course, want this to everyone cash which, Well, to dedication to accelerating to that and is to continued the that growth, XXXX team again I enabling their of another going be our

us So Thank continued today Travel. thank Business in and your much you you. for American very joining Express interest Global

Operator

your call. for Thank very much today's concludes This you attendance.

lines. your disconnect now may You

Global Business Travel (GBTG) 5 Nov 242024 Q3 Earnings call transcript