Global Business Travel Group, Inc. Q4 FY2024 earnings call

• The company had a strong fourth quarter 2024, delivering on financial targets and setting up attractive earnings growth in 2025. 2024 was a record year for adjusted EBITDA and revenue. - Adjusted EBITDA exceeded guidance midpoint, up 26% year over year, with a margin expansion of over 300 basis points to 20%. - Customer retention was impressive, with 99% GMN customer retention in 2024. - New wins in 2024 totaled $2.8 billion, with the majority from SME customers. - The company invested in software, AI, and NDC content, with NDC content available to over 15,000 customers and nearly one million NDC tickets processed. - Achieved over $100 million in cost savings in 2024, enabling margin expansion and reinvestment in growth.

In 2024, the company achieved strong financial results. Full-year revenue was $2.42 billion, up 6% year over year. Adjusted EBITDA was $478 million, a 26% year-over-year increase. For customer segments, global multinational customers saw an 8% increase in transactions compared to 2% for SME customers. Air transaction growth was 4% in 2024, including 4% for domestic, 3% for regional, and 3% for international, with total TTV growth for air at 8%. Hotel transactions grew 6%. Regionally, transaction growth was up 5% in the Americas, 2% in EMEA, and 12% in APAC.

• 2025 revenue outlook: constant currency growth of 5 to 7%. - Adjusted EBITDA guidance: $530 million to $560 million, an 11 to 17% increase over 2024, with margin expansion of 120 to 190 basis points. - Underlying free cash flow expected to be approximately $210 million in 2025, but factoring in one-time M&A costs, free cash flow is expected to be relatively flat vs 2024. - FX has a neutral impact on adjusted EBITDA due to natural hedging of revenues and expenses.

• Macroeconomic uncertainties, including muted GDP growth and a strengthening US dollar. - Geopolitical factors and potential delays in customer decisions affecting new business wins. - Risks related to the CWT acquisition lawsuit, including the ongoing legal proceedings and potential impacts on the acquisition timeline.

Q: Expand on the slight downtick in new business wins?

A: I wouldn't read too much into that. The majority of wins come from SME customers, and some very large customer wins were delayed into 2025. Expect some of those decisions pushed to Q1 to help start 2025 faster.

Q: Have you seen recent sentiment or budget changes in the small, midsize business space into the new year?

A: SME growth rates were stable in recent quarters and expected to moderately improve in 2025. SME businesses face pressures from higher interest rates, inflation, etc., but trends are consistent beyond travel.

Q: Expected closing quarter for CWT acquisition and capital allocation?

A: Trial starts September 8th, likely closing in Q4. Focus on investing $65 million in organic growth, looking at other M&A opportunities, and timing share buybacks optimally.

Q: Dynamics of CWT deal and US government travel?

A: Arguments in CMA and US cases are similar. US government travel is not a material part of the business, with no material exposure to US government travel.

Q: Free cash flow guide and M&A component?

A: Underlying free cash flow is strong, but there are one-time M&A-related costs, making free cash flow relatively flat year over year. The number is our best estimate considering various scenarios.

Q: SME trends and new wins in SME?

A: SME new wins are increasing and making up a greater portion of aggregate new wins. 25% of SME new wins are from previously unmanaged customers, with optimism for impact in 2025.