Global Business Travel Group, Inc. Q1 FY2024 earnings call

• Strong first quarter financial results with 24% adjusted EBITDA growth, 9% TTV growth, and 6% revenue growth. Adjusting for work days, growth would be 10% TTV and 7% revenue.
• New wins totaled $3.3 billion over 12 months, with $2 billion in SME new wins. Customer retention is 96%.
• Focus on operating leverage: adjusted operating expenses up 2% vs 6% revenue growth, driving 300 basis points of adjusted EBITDA margin expansion.
• Generated positive free cash flow of $24 million, an improvement of $133 million year-over-year. Leverage ratio is 2.2x.
• Announced acquisition of CWT ($570 million) with $155 million annual run rate cost synergies, expected to close in H2 2024.
• Global multinational transactions up 11%, F&E up 5%; SME growth slowed by 3 percentage points due to higher interest costs and inflation. Top 100 customers expect travel spend up 8% in 2024.
• 79% of transactions through digital channels, over 60% via Neo and Egencia; Neo spend management platform saw 10% customer count growth.

In the first quarter, total transaction value (TTV) grew 9% and revenue grew 6%. Adjusted EBITDA increased 24% to reach $123 million, the highest first quarter adjusted EBITDA in the company's history. Revenue for the quarter was $610 million. On a workday-adjusted basis, TTV was up 10% and revenue up 7%. Air transactions were both up 5%, with Air TTV up 11% (U.S. air TTV up 14%), and hotel transactions grew 9%. Regionally, transaction growth was 7% in both the Americas and EMEA, and 13% in Asia Pacific. Revenue contribution: transaction volume drives 50%, TTV 30%, and product/professional services 20%.

• Full year 2024 revenue guidance: $2.43 billion to $2.5 billion (6%-9% growth).
• Adjusted EBITDA guidance: $450 million to $500 million (18%-32% growth), with adjusted EBITDA margin 18%-20%.
• Expect revenue growth to accelerate in H2 2024 due to new wins rolling on and positive workdays timing impact.
• Target free cash flow conversion of ~25% of adjusted EBITDA, aiming for over $100 million in 2024.
• Guidance does not include CWT acquisition impact.

• Macroeconomic factors including higher interest costs and inflation affecting SME spending.
• Regulatory risks related to the acquisition of CWT, including obtaining necessary approvals.
• Seasonal working capital movements that may impact cash flow in different quarters.

Q: Curious about travel yield impact from GMN vs SME and new wins pressure ahead of CWT acquisition.

A: No real yield impact from GMN vs SME; Q1 is lowest yield quarter. New wins pipeline remains strong with $1.4 trillion industry and significant runway for growth.

Q: Talk about global multinational outpacing SME and APAC recovery.

A: Global multinational showing strong growth across sectors; SME growth slowed due to inflation and price controls. APAC structurally growing faster with strong performance in key markets.

Q: Define SME and drivers of its slowdown.

A: SME is customers spending less than $30M on travel; slowdown driven by higher inflation, price inflation, and tighter spending controls. Larger SME companies perform better than smaller ones.

Q: Any divergence in April trends vs Q1?

A: Difficult to say yet due to seasonality (Easter timing, work days), but on track with full year guidance.