Global Business Travel Group, Inc. Q2 FY2025 earnings call

• Q2 results were ahead of expectations with over $500 million in adjusted EBITDA over the last 12 months. - Pending CWT acquisition: U.S. Department of Justice dismissed challenge, expected to close in Q3. $155 million in net synergies expected over 3 years, with ~30% in first 12 months. CWT shareholders to own ~10% of combined company. - Transaction volume: April impacted by macro uncertainty, but May-June improved; hotel transactions up 4% in May-June. Meetings and Events expected 5% year-over-year increase in number of meetings in H2.

Total transaction volume was up 1% on a workday adjusted basis. Total transaction value (TTV) grew 3% on a workday adjusted basis to reach $7.9 billion. Revenue was up 1% to reach $631 million for the quarter. Adjusted EBITDA grew 4% to $133 million with a margin expansion of 70 basis points year-over-year to reach 21%.

• Raised and narrowed full year 2025 guidance: revenue growth 2%-4% year-over-year with midpoint $2.488 billion (up 3 percentage points from previous). Adjusted EBITDA growth 6%-13% to $505 million-$540 million. Free cash flow guidance $140 million-$160 million. - Q3 expected to have higher volumes, Q4 seasonally highest revenue yield, with revenue and adjusted EBITDA equally split between Q3 and Q4.

• Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially. - Macro economic uncertainty can impact travel demand.

Q: Two, if I could. So nice improvement in the back half of the year. You guys are now pacing at low single-digit FX-neutral revenue growth. I guess does that still underwrite ongoing share gains in the back half of the year? And with that sort of growth still below your long-term growth algorithm, are we simply waiting for some of these more depressed customer segments to enter a better macro environment before you guys return to that longer-term growth algo? And then one on sales and marketing. I guess, sales and marketing expense up decently as a percentage of revenue and volume in the front half of the year. You guys are investing against growth plans. Just any more clarity on the types of investments that are being made within that line, the payback periods you expect on that? And if anything is perhaps structurally changing within your business that is perhaps necessitating a more intense sort of sales and marketing investment plan.

A: Yes. Well, look, thanks, Lee. In terms of the share gains, yes, you should definitely expect to see continued share gains in the second half of the year. In fact, the second part of your question links to the first part. We are increasing our sales and marketing investments, as you've seen, as Karen covered in the presentation. And partly, that's because of the significant opportunity that we see, but also partly because we are operating in a lower growth environment, we need to accelerate the impact of net new wins and share gains. So that's why you are seeing that increase in the sales and marketing investments so that we can increase the contribution from net new wins in what is a lower growth environment.

Q: This is Jake Gunning on for Duane. I understand it's still preliminary, but do you have any visibility into CWT's 2025 performance? And then are there any updated views on the timing of synergy capture you could provide?

A: Jake, on the first question, we're not able to provide detailed information about CWT's financial performance until post close. So we will be able to give you an update on that post close when we announce Q3 results in November. No, we've had obviously a little more time to pressure test the synergies. We're still very confident in the previous data that we shared. So $155 million of net synergies. So that's bottom line impact from the transaction. We expect to deliver those over a 3-year period. And we expect to see, I think it's approximately 30% of those synergies in the first 12 months.

Q: This is Yehuda Silverman on for Toni Kaplan. Just curious about the declines in April again. Are those bookings that are -- are those decisions that are being pushed out? Are they able to -- or expected to be recoverable now that there's a little bit more clarity on restrictions and budget decisions? Or is it more cancellations?

A: Well, what you see there are transaction volumes in the month. And I think April was, I would say, at the height of some of the macro uncertainty in terms of both significant GDP revisions and the introduction of tariffs, if you cast your mind back to April. So I think what happened is we saw, frankly, a stabilization in May and June in terms of the macro environment and companies just getting more confident to plan. So I wouldn't necessarily think of those transactions being recoverable. I would just think about it as being a weaker month that was driven primarily by macroeconomic uncertainty.

Q: I guess just sort of following up from this in terms of the transactions chart that you gave, obviously, stabilization in the back half of Q2. How are things trending into July? We heard a number of U.S. airlines talk about some very strong trends in corporate travel that they've seen in the first 3 weeks of July when they reported. Is that something that you're seeing too? And then second question is on what's implied in terms of the guide for transaction growth in H2. I think in the Q1, that was based on flat transaction growth for the rest of the year because that's what you were seeing. So what, I guess, is implied in H2?

A: Yes. Maybe I'll take the first part on July trends, and Karen can shed about the numbers that are implied in the H2 guide. I mean the short answer is yes, we've been pleased with the trends that we've seen in July. And it's consistent with what obviously we are guiding to the second half of the year. I do think, though, it's worth just as a reminder, September is 40% of our Q3 volumes. So whilst it's encouraging to see stronger volumes in July, that sort of post-Labor Day demand in September really is a very important part of delivering the third quarter. And certainly, in terms of your question around transaction and H2 assumptions, obviously, we talked on the call about revenue, but transaction, the midpoint is 2% with a range of 0% to 4.