Q4 2024 Global Business Travel Group Inc Earnings Call

February 27, 2025

This call is being recorded.

Speaker Change: I will now turn over the call to the Vice President of Finance George Anderson Brown. Please go ahead.

Speaker Change: Hello, and good morning, everyone. Thank you for joining us for our fourth quarter 2024 earnings Conference call. This morning, we issued an earnings press release, which is available on SEC Gov and on our website investors Amex global business travel Dot com.

Speaker Change: Slide presentation, which accompanies today's prepared remarks is also available on the Amex GBT Investor Relations webpage.

Speaker Change: We would like to advise you that our comments contain forward looking statements that represent our beliefs or expectations about future events, including industry and macroeconomic trends cost savings acquisitions and acquisition synergies amongst others.

Speaker Change: Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call.

Speaker Change: More information on these and other risks and uncertainties is contained in our earnings release issued this morning.

Speaker Change: Our SEC filings.

Speaker Change: Throughout today's call. We will also be presenting certain non-GAAP financial measures such as EBITDA.

Speaker Change: Adjusted EBITA adjusted EBITA margin adjusted operating expenses free cash flow and net debt.

Speaker Change: All references during today's call to such non-GAAP financial measures have been adjusted to exclude certain items.

Speaker Change: Definition of these terms and the most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the supplementary materials of this presentation and in the earnings release.

Speaker Change: Participating on the call today are Chief Executive Officer, and Karen Williams, our Chief Financial Officer.

Good morning, and welcome to the American Express global business travel fourth quarter and full year tranche tranche four earnings conference call.

Speaker Change: Also joining for the Q&A session today is Eric book, our Chief Legal officer, and global head of M&A.

As a reminder, please note today's call is being recorded.

Paul: With that I will now turn the call over to Paul.

Speaker Change: I will now turn over to closer to Vice President of Finance George Anderson Brown. Please go ahead.

Thank you George welcome everyone and thank you for joining our fourth quarter 2024 earnings call.

Paul: We executed a strong quarter to finish 2020 for delivering on our financial targets and setting up continued attractive earnings growth in 2025.

Speaker Change: I don't know website.

Paul: Our goal every year is to deliver earnings growth well ahead of revenue growth driven by technology enabled productivity gains and a scalable cost base, all while generating strong free cash flow and investing in our future growth.

Speaker Change: Amit its global business travel Darko.

Speaker Change: Slide presentation, which completes today's prepared remarks is also available on the Amex GBT Investor Relations webpage.

Speaker Change: I'd like to advise you that all comments contain forward looking statements that represent our beliefs or expectations about future events.

Paul: And that's exactly what we did in 2024. This was a record year for adjusted EBITDA and revenue for the company.

Speaker Change: Industry and macroeconomic trends cost savings acquisitions and acquisition synergies amongst others. All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call.

Paul: Adjusted EBITDA exceeded the midpoint of our original guidance range up 26% year over year.

Paul: 2024 highlights our powerful financial model with impressive growth on the bottom line as we drive adoption of our software solutions and automated our processes adjusted EBITDA margin expansion was over 300 basis points, reaching 20%.

Speaker Change: More information on these and other risks and uncertainties is contained in our earnings release issued this morning, and other SEC filings.

Speaker Change: Throughout today's call. We will also be presenting certain non-GAAP financial measures such as EBITDA.

Paul: Investments in our software and services are delivering topline growth as we continued to win new customers and importantly maintained very high customer retention 2024 was a record year for GM and customer retention at an impressive 99%.

Speaker Change: Adjusted EBITA adjusted EBITA margin adjusted operating expenses free cash flow and net debt.

Speaker Change: All references during today's call to such non-GAAP financial measures have been adjusted to exclude certain items definition of these terms and the most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the supplementary materials at this presentation and in the earnings release.

Paul: We also reached important milestones strengthening our balance sheet accelerating free cash flow and investing in growth and returning cash to shareholders.

Paul: We more than tripled free cash flow in 2024, ending well above our original guidance for the year, we have lowered our leverage ratio below two times and we continue to lower our interest costs with a repricing completed after the fourth quarter closed.

Paul Abbott: Participating on the call today are Paul Abbott.

Karen Williams: Our Chief Executive Officer, and Karen Williams, our Chief Financial Officer.

Speaker Change: Also joining for the Q&A session today is Eric book, our Chief Legal officer, and global head of M&A.

Paul: Our increasing flexibility with capital allocation allowed us to make our first share repurchase in a private transaction in the third quarter, followed by a $300 million buyback authorization.

Karen Williams: With that I will now turn the call over to Paul.

Paul Abbott: Thank you George welcome everyone and thank you for joining our fourth quarter 2024 earnings call.

Paul Abbott: We executed a strong quarter to finish 2020 for delivering on our financial targets and setting up continued attractive earnings growth in 2025.

I'm pleased to say, we are starting off 2025 with good momentum to achieve another year of double digit earnings growth and our strategy and investments provide us with a long runway to continue this level of attractive growth.

Paul Abbott: Our goal every year is to deliver earnings growth well ahead of revenue growth driven by technology enabled productivity gains and a scalable cost base, all while generating strong free cash flow and investing in our future growth.

Paul: And I really wanted to take a moment here to thank all of our colleagues across amex GBT for their exceptional commitment to serving our customers and the strong results that they have delivered.

Paul Abbott: And that's exactly what we did in 2024. This was a record year for adjusted EBITDA and revenue for the company.

Paul: Okay.

Paul: In 2024, we continued to execute on our strategy and deliver outstanding financial results. The momentum is evident in our financial metrics.

Paul Abbott: Adjusted EBITDA exceeded the midpoint of our original guidance range up 26% year over year.

Paul: Starting with transaction growth full year 2020 for transaction volumes were up 5% driven by increased demand for business travel and share gains.

Paul Abbott: 2024 highlights our powerful financial model with impressive growth on the bottom line as we drive adoption of our software solutions and automated processes. Adjusted EBITDA margin expansion was over 300 basis points, reaching 20%.

Paul: <unk> increased 8% driven by transaction growth plus increases in average ticket price and hotel rates.

Paul: Revenues increased 6% to reach 242 billion driven by solid growth in transactions in CTV. In addition demand for our products and our professional services.

Investments in our software and services are delivering top line growth as we continued to win new customers and importantly maintained very high customer retention 2024 was a record year for <unk> and customer retention at an impressive 99%.

Paul: Our focus on cost control and operating leverage drove strong adjusted EBITDA margin expansion with an increase of 310 basis points for the full year.

Paul Abbott: We also reached important milestones strengthening our balance sheet accelerating free cash flow and investing in growth and returning cash to shareholders.

Paul: This all translates into impressive adjusted EBITDA growth of 39% for the fourth quarter to end the year with $478 million an increase of 26%.

Paul Abbott: We more than tripled free cash flow in 2024, ending well above our original guidance for the year, we have lowered our leverage ratio below two times and we continue to lower our interest costs with a repricing completed after the fourth quarter closed.

Paul: Drilling down into full year transaction trends in more detail.

As a reminder, here for organizational purposes, we divide our customer base into two general categories global multinational on small and medium enterprises, we generally use expected annual CTV to divide customers into these two categories. Although this metric can vary by country and by customer need.

Paul Abbott: Our increasing flexibility with capital allocation allowed us to make our first share repurchase in a private transaction in the third quarter, followed by a $300 million buyback authorization.

Paul: And we do not have.

Paul Abbott: I'm pleased to say, we are starting off 2025 with good momentum to achieve another year of double digit earnings growth and our strategy and investments provide us with a long runway to continue this level of attracted growth.

Paul: Products or services that are offered solely to one size of customer.

Paul: As you can see growth was stronger this year with global multinational customers and 8% increase compared to 2% for SME customers.

Paul Abbott: And I really wanted to take a moment here to thank all of our colleagues across amex GBT for their exceptional commitment to serving our customers and the strong results that they have delivered.

Paul: Estimate transaction growth has.

Paul: Its been muted, but stable for several quarters, reflecting tightened spending controls driven by higher prices and lower macroeconomic growth.

Okay.

Paul: This is a trend that we can clearly see with SMA businesses beyond travel.

Paul Abbott: In 2024, we continue to execute on our strategy and deliver outstanding financial results. The momentum is evident in our financial metrics.

Paul: Air transaction growth was 4% in 2024, including 4% for domestic 3% for regional and international factoring in higher ticket prices, our total CTV growth for air was 8%.

Paul Abbott: Starting with transaction growth full year 2020 for transaction volumes were up 5% driven by increased demand for business travel and share gains.

Paul Abbott: <unk> increased 8% driven by transaction growth plus increases in average ticket price and hotel rates.

Paul: Growth in hotel transactions was 6%.

Paul: This reflects our efforts to increase hotel bookings by strengthening our content and providing customers with more hotel value and choice.

Paul Abbott: Revenues increased 6% to reach 242 billion driven by solid growth in transactions and <unk>. In addition to demand for our products and our professional services.

Paul: And finally on a regional basis transaction growth was up 5% in the Americas, 2% in EMEA and 12% in APAC.

Paul Abbott: Our focus on cost control and operating leverage drove strong adjusted EBITDA margin expansion with an increase of 310 basis points for the full year.

Paul: Now, let's turn to the commercial highlights.

Paul: By offering customers more value and more choice, we continue to win new business and gain share.

Paul Abbott: This all translates into impressive adjusted EBITDA growth of 39% for the fourth quarter to end the year with $478 million an increase of 26%.

Paul: The total estimated value of our new wind signed during 2024 is $2 8 billion.

Paul: This is down slightly versus the trailing 12 month number that we shared last quarter as we did see some global multinational prospects delay decisions into 2025.

Paul Abbott: Yeah.

Paul Abbott: Drilling down into full year transaction trends in more detail.

Paul Abbott: As a reminder, here for organizational purposes, we divide our customer base into two general categories global multinational and small and medium enterprises, we generally use expected annual CTV to divide customers into these two categories.

Paul: The majority of our new wins continue to come from SME customers.

Paul: New SME wins increased to $2 2 billion for the trailing 12 months SMA.

Paul: <unk> also remains our biggest growth opportunity with 950 billion of total travel spend and 70% of that currently unmanaged.

Paul Abbott: Though this metric can vary by country and by customer need.

Speaker Change: And we do not have.

Paul: 25% of our estimate new wins in 2024 with previously unmanaged customers, reflecting increased demand for the savings service and control of our managed travel program with Amex GBT.

Speaker Change: Products or services that are offered solely to one size of customer.

Speaker Change: As you can see growth was stronger this year with global multinational customers and 8% increase compared to 2% for SME customers.

Paul: We are also off to a good start in Q1 and the overall sales pipeline remains strong customer retention was an impressive 97% of CTV for 2024 at 19, 9% for global multinational.

Speaker Change: Estimate transaction growth has been muted, but stable for several quarters, reflecting tightened spending controls driven by higher prices and lower macroeconomic growth.

Speaker Change: This is a trend that we can clearly see with SME businesses beyond travel.

Paul: Our commercial success is underpinned.

Speaker Change: Air transaction growth was 4% in 2024, including 4% for domestic 3% for regional and international factoring in higher ticket prices, our total <unk> growth was 8%.

Paul: By the value of the GBT marketplace for customers and suppliers.

Paul: Delivering the most comprehensive content.

Paul: And the most competitive prices for customers and the most valuable distribution platform for suppliers.

Speaker Change: Growth in hotel transactions was 6%.

Paul: And we continue to enable NBC content at scale with our airline partners. We recently announced an enhanced agreement to expand the availability of MDC fares with Lufthansa.

Speaker Change: This reflects our efforts to increase hotel bookings by strengthening our content and providing customers with more hotel value and choice.

Speaker Change: And finally on a regional basis transaction growth was up 5% in the Americas, 2% in EMEA and 12% in APAC.

Paul: We are now working with more than 20 airlines in our NBC program with NBC content available to more than 15000 customers and we have processed almost $1 million MDC tickets.

Now, let's turn to the commercial highlights.

Speaker Change: By offering customers more value and more choice, we continue to win new business and gain share.

Paul: Our development capacity of MDC now allows us to deploy a new airline or a new country connection every two weeks.

Speaker Change: The total estimated value of our new wind signed during 2024 is $2 8 billion.

Paul: We continue to be recognized as a leader in software solutions and for making business travel more sustainable.

Speaker Change: This is down slightly versus the trailing 12 months number that we shared last quarter as we did see some global multinational prospects delay decisions into 2025.

Paul: Nx GBT Egencia was recognized as a leader with 19 batches in the Q2 2020 for awards and we recently launched emission space carbon pricing to enable companies to influence traveler decisions and to generate investment funds for low carbon solutions like sustainable aviation fuel.

Speaker Change: The majority of our new wins continue to come from SME customers.

Speaker Change: New SME wins increased to $2 2 billion for the trailing 12 months.

Speaker Change: <unk> also remains our biggest growth opportunity with 950 billion of total travel spend and 70% of that currently on managed.

Paul: We are embracing AI and automation to improve the customer experience and improve productivity.

Speaker Change: 25% of our estimate new wins in 2024 with previously unmanaged customers, reflecting increased demand for the savings service and control of our managed travel program with Amex GBT.

Paul: In 2024, we have continued to invest in our proprietary AI architecture.

Paul: A secure privately hosted platform to scale AI initiatives with the appropriate data privacy and governance.

Speaker Change: We are also off to a good start in Q1 and the overall sales pipeline remains strong customer retention was an impressive 97% of <unk> for 2024 at 19, 9% for global multinational.

Paul: We launched new generative AI use cases in finance product engineering, and servicing including large language model chat functionality for Amex GBT Egencia in 18 countries.

Our commercial success is underpinned.

Paul: Okay.

Speaker Change: By the value of the GBT marketplace for customers and suppliers.

Paul: Before I hand, it off to Karen I want to comment on the status of the CWT acquisition.

Speaker Change: Delivering the most comprehensive content.

Paul: We have now cleared a significant milestone towards approval of the transaction with the UK competition and markets authority, having now provisionally concluded that it has not identified any competition concerns with Gbt's proposed acquisition of CWT.

Speaker Change: And the most competitive prices for customers and the most valuable distribution platform for suppliers.

Speaker Change: And we continue to enable NBC content at scale with our airline partners. We recently announced an enhanced agreement to expand the availability of MDC fares with Lufthansa.

Karen Williams: The Cma's final decision is required to be made by March the ninth.

Speaker Change: We are now working with more than 20 airlines in our NBC program with NBC content available to more than 15000 customers and we have processed almost 1 million MDC tickets.

Karen Williams: Although we are disappointed by the U S Department of Justice's decision to challenge the merger.

Karen Williams: The CMA findings reinforce the company's belief that the doj's lawsuit is fundamentally flawed.

Speaker Change: Our development capacity of MDC now allows us to deploy a new airline or a new country connection every two weeks.

Karen Williams: And we expect to prove that <unk> if required.

Speaker Change: Yeah.

Karen Williams: As we've previously stated if approved this transaction will accelerate investment and innovation and business travel it will create more choice and more value for customers and suppliers and more opportunities for CWT employees.

Speaker Change: We continue to be recognized as a leader in software solutions and for making business travel more sustainable.

Speaker Change: <unk> was recognized as a leader with 19 batches in the Q2 2020 for awards and we recently launched emissions based carbon pricing to enable companies to influence traveler decisions and to generate investment funds for low carbon solutions like sustainable aviation fuel.

Karen Williams: In the meantime.

Karen Williams: We remain laser focused on executing our strategy and delivering another year of strong results in 2025.

Karen Williams: And now I'll hand, it off to Karen to discuss our results in more detail.

Speaker Change: We are embracing AI and automation to improve the customer experience and improve productivity.

Karen Williams: Thank you Paul and Hello, everyone.

Karen Williams: Before I get into the numbers I want to repeat my three key priorities when it comes to managing our financial performance.

Speaker Change: In 2024, we have continued to invest in our proprietary AI architecture.

Karen Williams: Accelerating cash flow generation, driving operating leverage and continued margin expansion.

Speaker Change: A secure privately hosted platform to <unk>.

Speaker Change: Scale AI initiatives with the appropriate data privacy and governance.

Karen Williams: And creating capacity to invest and drive long term sustained growth organically and through strategic M&A.

Speaker Change: We launched new generative AI use cases in finance product engineering, and servicing including large language model chat functionality for Amex GBT Egencia in 18 countries.

Karen Williams: Once again in the fourth quarter I am happy to report continued momentum and progress in all three of these areas. We are delivering on what we can control.

Speaker Change: Yeah.

Speaker Change: Before I hand, it off to Karen I want to comment on the status of the CWT acquisition.

Karen Williams: So now, let's turn to our financial performance in more detail.

Speaker Change: We have now cleared a significant milestone towards approval of the transaction with the UK competition and markets. So authority, having now provisionally concluded that it has not identified any competition concerns with Gbt's proposed acquisition of CWT.

Karen Williams: Revenue reached 591 million in the fourth quarter.

Karen Williams: 8% year over year.

Karen Williams: Which was in line with our expectation.

Karen Williams: Revenue yield, which we define as revenue divided by TTP with eight 6% in line with the expectations, we set last quarter.

Speaker Change: The Cma's final decision is required to be made by March the site.

Karen Williams: It was down 15 basis points year over year.

Speaker Change: Although we are disappointed by the U S Department of Justice's decision to challenge the merger.

Karen Williams: And with prior quarters, driven by a shift to online.

Karen Williams: Component of our revenue.

Speaker Change: The CMA findings reinforce the company's belief that the doj's lawsuit is fundamentally flawed.

Karen Williams: Still importantly, our seasonally highest quarter, but is that correct.

And as a reminder, our revenue model is driven by 50% transaction volume.

Speaker Change: And we expect to prove that in coal if required.

Speaker Change: As we've previously stated.

Karen Williams: TV and.

Speaker Change: Approved this transaction will accelerate investment and innovation and business travel it will create more choice and more value for customers and suppliers and more opportunities for CWT employees.

Karen Williams: In 2010% product and professional services revenue.

Karen Williams: So the meaningful and hotel pricing increases driving a majority of the <unk> TV growth flowed through to only 30% of that revenue.

Karen Williams: Therefore, lowering the yield metric.

Speaker Change: In the meantime.

Speaker Change: We remain laser focused on executing our strategy and delivering another year of strong results in 2025.

Karen Williams: Turning to expenses in 2024, we achieved our target of more than $100 million in cost savings, which enabled us to realize attractive margin expansion, while also freeing up resources to reinvest in future growth.

Karen Williams: And now I'll hand, it off to Karen to discuss our results in more detail.

Karen Williams: Thank you Paul and Hello, everyone.

Karen Williams: Before I get into the numbers I want to repeat my three key priorities when it comes to managing our financial performance.

Karen Williams: Our disciplined focus on cost control and productivity enhancement constrain the increase in our adjusted operating expenses.

Karen Williams: Accelerating cash flow generation, driving operating leverage and continued margin expansion and creating capacity to invest and drive long term sustained growth organically and through strategic M&A.

Karen Williams: 3% in the fourth quarter, driving significant leverage compared to revenue of 8%.

Karen Williams: Fourth quarter adjusted EBITDA was also within our guidance range at $110 million.

Once again in the fourth quarter I am happy to report.

Karen Williams: 39% year over year with an impressive margin expansion of 420 basis points.

Karen Williams: Momentum and progress in all three of these areas we are delivering on what we can control.

Karen Williams: So now, let's turn to our financial performance in more detail.

Karen Williams: We generated 33 million and free cash flow in the fourth quarter, which was above our guidance.

Karen Williams: Revenue reached 591 million in the fourth quarter.

Karen Williams: And so the continued momentum and outperformance and the strong fourth quarter result, led to full year revenue of $2 $14 billion up 6% year over year.

Karen Williams: 8% year over year, which was in line with our expectation.

Revenue yield, which we define as revenue divided by <unk> was eight 6% in line with the expectations, we set last quarter.

Karen Williams: And adjusted EBITDA of $478 million.

Karen Williams: Up 26% year over year.

Karen Williams: This was down 15 basis points year over year.

Karen Williams: Not only was there an all time high for GBT is a company full year adjusted EBITDA was above the midpoint guidance for the year.

Karen Williams: And with prior quarters, driven by a shift to online.

Karen Williams: Fixed component of our revenue.

Karen Williams: It's still importantly, our seasonally highest quarter.

Karen Williams: And I'll continue to focus throughout the year unexpected some productivity drove operating leverage.

Karen Williams: Correct.

Karen Williams: And as a reminder, our revenue model is driven by 50% transaction volume.

Karen Williams: And impressive 310 basis points margin improvement and operating expense growth was two 2% compared to revenue right.

Karen Williams: T T V.

Karen Williams: And 22% product and professional services rapidly.

Karen Williams: So the meaningful and hotel pricing increases driving a majority of the <unk> TV growth flowed through to only 30% of that revenue.

Karen Williams: Jim.

Karen Williams: We generated $165 million in free cash flow.

235% this was more than three times, our free cash flow in 2023, reflecting cost savings and the adenosine Watson capped to an extent.

Karen Williams: Therefore, lowering the yield metric.

Karen Williams: So turning to expenses in 2024, we achieved our target of more than $100 million in cost savings, which enabled us to realize attractive margin expansion, while also freeing up resources to reinvest in future growth.

Karen Williams: This was well above our original guidance for the year of $100 million.

Karen Williams: Our leverage ratio on net debt divided by last 12 month's adjusted EBITDA now stands at one eight times at the close of 2024.

Karen Williams: Our disciplined focus on cost control and productivity enhancement constrain the increase in our adjusted operating expenses.

Karen Williams: Right.

Karen Williams: 3% in the fourth quarter, driving significant leverage compared to revenue of 8%.

Karen Williams: Down from two three times, a year ago, and nearly nine times two years ago.

Karen Williams: So turning to cash flow and capital allocation, we laid out these priorities last year.

Karen Williams: Fourth quarter adjusted EBITDA was also within our guidance range at $110 million.

Karen Williams: Incredibly proud of our accomplishments.

Karen Williams: 39% year over year with an impressive margin expansion of 420 basis points.

Karen Williams: Again, we are delivering on what we can control.

Karen Williams: I am, particularly happy with the momentum in our free cash flow, which turned positive as planned in 2023, and then nearly tripled in 2024.

Karen Williams: We generated 33 million and free cash flow in the fourth quarter, which was above our guidance.

Karen Williams: And so the continued momentum in our performance and the strong fourth quarter result, led to full year revenue.

Karen Williams: Previously mentioned, we generated $165 million in free cash flow.

Karen Williams: This represents a conversion ratio of approximately 35% of our adjusted EBITDA.

Karen Williams: $2.42 billion up 6% year over year.

Karen Williams: And adjusted EBITDA of $478 million.

Karen Williams: Our original target of 25% and compared to 13% in 2023.

Karen Williams: 26% year over year.

Karen Williams: Not only was there.

Karen Williams: It's an all time high for GBT is a company full year adjusted EBITDA was above the midpoint guidance for the year.

Karen Williams: So our second priority is deleveraging of maintaining a strong balance sheet.

Karen Williams: Our leverage ratio now stands at one eight times at the close of 2024. This is tracking towards the lower end of our targeted leverage range of one five times to two five times, giving us significant balance sheet flexibility.

Karen Williams: And I'll continue to focus throughout the year unexpected some productivity drove operating leverage.

Karen Williams: And impressive 310 basis points margin improvement as operating expense growth was 2% compared to revenue right.

As Paul mentioned, we refinanced the entire oxy bought that again after the quarter closed.

Karen Williams: <unk>.

Karen Williams: We generated $165 million in free cash flow.

Karen Williams: Refinancing lowers our interest rate margin by 50 basis points with the new Cadillac facility priced sofa, plus two 5%.

Karen Williams: 235% this was more than three times, our free cash flow in 2023, reflecting cost savings at me I didn't see it working capital initiatives.

Karen Williams: It's important to note our.

Karen Williams: Refinancing with once again oversubscribed.

Karen Williams: This was well above our original guidance for the year of $100 million.

Karen Williams: The comfort and GBT and the momentum we continue to drive in terms of our performance.

Karen Williams: Our leverage ratio or net debt divided by last 12 month's adjusted EBITDA now stands at one eight times at the close of 2024.

Karen Williams: I am incredibly happy with this outcome.

Karen Williams: So combining this with the previous refinancing in July plus savings tied to our lowest leverage ratio, we have significantly reduced our run rate net interest costs by a total of $60 million, which is nearly 40% lower than our interest cost in 2023 on about the same level of debt.

Karen Williams: Stepped down from two three times, a year ago, and nearly nine times two years ago.

Karen Williams: So turning to cash flow and capital allocation, we laid out these priorities last year.

Karen Williams: Incredibly proud of our accomplishments.

Karen Williams: And think that our highest cash flow and lower leverage has provided us with optionality to reinvest in our business, including our people software platforms estimate sales and marketing engine and AI in order to drive organic growth productivity and margin expansion, we have invested an incremental 35.

Karen Williams: We are delivering on what we can control.

Karen Williams: I am, particularly happy with the momentum in our free cash flow, which turned positive as planned in 2023, and then nearly tripled in 2024.

Karen Williams: Previously mentioned, we generated $165 million in free cash flow.

Karen Williams: Millions of dollars in 2024.

Karen Williams: This represents a conversion ratio of approximately 35% overall adjusted EBITDA that is our original target of 25% and compared to 13% in 2023.

Karen Williams: First with respect to M&A, the strength of our balance sheet and level of liquidity within the business creates flexibility for us to pursue M&A.

Karen Williams: The industry remains highly fragmented so we see plenty of M&A opportunity ahead.

Karen Williams: So our second priority is deleveraging of maintaining a strong balance sheet.

Karen Williams: And lastly, a.

Karen Williams: Our strong cash flow puts us in a position to have flexibility to return cash to shareholders. After our other priorities on that.

Karen Williams: We made our first buyback in the third quarter repurchasing 8 million shares in a private transaction for $55 million.

Karen Williams: Additionally, we have the full $300 million worth of buybacks available under the new board authorization, which expires in three years.

Paul Abbott: As Paul mentioned, we refinanced the entire she thought that again after the quarter closed.

Paul Abbott: This refinancing lowers our interest rate margin by 50 basis points with the new Cadillac facility priced sofa plus two 5%.

Karen Williams: We clearly executed on our capital allocation priorities in 2024, and they will continue to guide US this year now.

Karen Williams: Now I will hand back to Paul to set the stage for our 2025 outlook.

Paul Abbott: It's important to note our refinancing with once again over subscribed.

Paul: Thank you Karen looking ahead to 2025, the demand outlook remains solid we see muted, but stable GDP growth, which remains below historical norms and we also see a strengthening U S dollar.

Paul Abbott: Which speaks to the club.

Paul Abbott: And J P T.

Paul Abbott: We continue to drive in terms of our performance.

Paul Abbott: I am incredibly happy with this outcome.

Paul Abbott: So combining this with the previous refinancing in July plus savings tied to our lowest leverage ratio, we have significantly reduced our run rate net interest costs by a total of $60 million, which is nearly 40% lower than our interest cost in 2023 on about the same level of debt.

Paul: A survey of our top 100 customers indicates 80% expect their travel spend to be flat or up in 2025.

Paul: And 66% of respondents said their budgets for meetings and events are increasing in 2025.

Paul: Another third party surveys paint a similar picture of solid business travel growth, which supports our 2025 outlook.

Paul Abbott: And third a higher cash flow and lower leverage has provided us with optionality to reinvest in our business, including our people.

Paul: As I said earlier our goal every year is to deliver earnings growth well ahead of revenue growth driven by technology enabled productivity gains on a scalable cost base.

Paul Abbott: Poems estimate sales and marketing engine and AI in order to drive organic growth productivity and margin expansion, we have invested an incremental $35 million in 2024.

All while generating strong free cash flow and investing in our future.

Paul Abbott: Fourth with respect to M&A, the strength of our balance sheet and level of liquidity within the business creates flexibility for us to pursue M&A.

Paul: We are starting the year with strong commercial momentum.

Paul: New wins in 2024 with $2 8 billion of which $2 2 billion is from SME.

The industry remains highly fragmented so we see plenty of M&A opportunity ahead.

Paul: Our retention rate was 97% overall, including 99% global multinationals.

Paul Abbott: And lastly.

Paul Abbott: Our strong cash flow puts us in a position to have flexibility to return cash to shareholders. After all other priorities are met we.

Paul: We are accelerating our investments in software and services and our digital transformation enables us to advance our automation and AI initiatives.

Paul Abbott: We made our first buyback in the third quarter repurchasing 8 million shares in a private transaction for $55 million.

Paul: Putting it all together, we have a powerful financial model that can deliver consistent hyper efficient growth.

Paul Abbott: Additionally, we have the full $300 million worth of buybacks available under the new board authorization, which expires in three years.

Paul: This model drove strong results in 2024 and is also the foundation for our 2025 outlook.

Paul Abbott: We clearly executed on our capital allocation priorities in 2024, and they will continue to guide us this year.

Paul: We expect the business travel industry to continue to grow at or above GDP as it historically has.

Paul Abbott: Now I will hand back to Paul to set the stage for our 2025 outlook.

Paul: And we expect to continue to grow faster than the industry with our net new wins and share gains driven by our differentiated value proposition.

Paul Abbott: Thank you Karen looking ahead to 2025, the demand outlook remains solid we see muted, but stable GDP growth, which remains below historical norms and we also see a strengthening U S dollar.

Paul: The third driver is our relentless focus on cost control and margin expansion, we continue to invest in automation and AI to boost the scalability of our cost base and drive productivity, while also improving the customer experience.

Paul Abbott: Our survey of our top 100 customers indicate 80% expect their travel spend to be flat or up in 2025.

Paul: In 2025, we expect to leverage mid single digit constant currency revenue growth and delivered double digit adjusted EBITDA growth.

Paul Abbott: And 66% of respondents said their budgets for meetings and events are increasing in 2025.

Paul: On top of this earnings growth our acceleration in free cash flow. This year creates incremental opportunities to boost shareholder returns through investing in future growth accretive M&A and buying back shares.

Paul Abbott: Another third party surveys paint a similar picture of solid business travel growth, which supports our 2025 outlook.

Paul Abbott: As I said earlier our goal every year is to deliver earnings growth well ahead of revenue growth driven by technology enabled productivity gains on a scalable cost base.

Paul: As we scale our business, we can scale efficiently growing our margins and our investment capacity.

Paul Abbott: All while generating strong free cash flow and investing in our future.

Paul: We are consistently expanding margins, while also investing more in our products and our services to create more value for customers.

Paul Abbott: We are starting the year with strong commercial momentum.

Paul: This year, we expect to achieve gross cost savings of $95 million from process improvement expanding shared services and location optimization and of course supported by our AI and automation initiatives.

Paul Abbott: New wins in 2024 with $2 8 billion of which $2 2 billion is from SME.

Paul Abbott: Our retention rate was 97% overall, including 99% global multinationals.

Paul: $95 million in savings.

Paul Abbott: We are accelerating our investments in software and services and our digital transformation enables us to advance our automation and AI initiatives, putting it all together, we have a powerful financial model that can deliver consistent hyper efficient growth.

Representing over 300 basis points and potential margin improvement, if we decided to drop at all to the bottom line.

Paul: But it also gives us the capacity to make investments that create more value for customers and drive longer term growth.

Paul: We are reinvesting $65 million of savings this year on top of our prior investment run rate.

Paul Abbott: This model drove our strong results in 2024 and is also the foundation for our 2025 outlook.

Paul: While the remainder drives approximately 150 basis points of adjusted EBITDA margin expansion at the midpoint of our 2025 guidance.

Paul Abbott: We expect the business travel industry to continue to grow at or above GDP as it historically has.

Paul Abbott: We expect to continue to grow faster than the industry with our net new wins and share gains driven by our differentiated value proposition.

Paul: Broadly speaking these investments will be made across three areas.

Firstly, improving the customer experience.

Paul Abbott: The third driver.

Paul: <unk> expanded chat with automation and harnessing the UX for Egencia, Neo and mobile and rolling out carbon pricing.

Paul Abbott: Our relentless focus on cost control and margin expansion, we continue to invest in automation and AI to boost the scalability of our cost base and drive productivity.

Paul: Second is delivering more value for customers and suppliers from our marketplace.

Paul Abbott: While also improving the customer experience.

Paul: Vesting and more content from all sources.

Paul Abbott: In 2025, we expect to leverage mid single digit constant currency revenue growth and delivered double digit adjusted.

Paul: Spending NBC content, improving rail content and integrating our content platform into more third party solutions.

Paul Abbott: EBITA growth.

Paul Abbott: On top of this earnings growth, our acceleration of free cash flow. This year creates incremental opportunities to boost shareholder returns through investing in future growth accretive M&A and buying back shares.

Paul: And finally driving growth.

Paul: <unk>, an increasing demand generation scaling our sales channels.

Paul: And driving sales efficiency.

As you can see we are making investments to drive revenue growth and improved productivity.

Paul Abbott: As we scale our business, we can scale efficiently growing our margins and our investment capacity.

Paul: But the power of our model is that many of our investments achieved both of these objectives.

Paul Abbott: We are consistently expanding margins, while also investing more in our products and our services to create more value for customers.

Paul: For example, expanding the content in our marketplace.

Paul: Improving the digital experience leveraging AI.

Paul Abbott: This year, we expect to achieve gross cost savings of $95 million from process improvement expanding shared services and location optimization and of course supported by our AI and automation initiatives.

Paul: All of these investments increase the number of transactions on our software solutions.

Paul: They also create a better customer experience and they reduce our operating costs.

Paul Abbott: $95 million in savings represents over 300 basis points in potential margin improvement, if we decided to drop at all to the bottom line.

Paul: A very powerful combination.

Paul: And now I'll hand, it back to Karen to walk through our 2025 guidance.

Karen Williams: Thank you Paul.

Paul Abbott: But it also gives us the capacity to make investments that create more value for customers and drive longer term growth.

Karen Williams: Our strong financial algorithm allows us to generate double digit profit growth with solid single digit revenue growth, while accelerating free cash flow conversion.

Paul Abbott: We are reinvesting $65 million of the savings this year on top of a prior investment run rate.

Karen Williams: Our guidance prudently takes into account the continued environment of muted but stable growth.

Paul Abbott: While the remainder drives approximately 150 basis points of adjusted EBITDA margin expansion at the midpoint of our 2025 guidance.

Karen Williams: And we are not making any assumptions about potential broad macroeconomic impacts from tariffs or other policy speculation.

Paul Abbott: Broadly speaking these investments will be made across three areas.

Karen Williams: We will adjust to the environment as necessary and execute on what is within our control just as we did in 2024.

Paul Abbott: Firstly, improving the customer experience, including expanding chat with automation and harnessing the UX for Egencia, Neo and mobile and rolling out carbon pricing.

Karen Williams: Our revenue outlook in 2025 crews the constant currency growth of 5% to 7%.

Paul Abbott: Second is delivering more value for customers and suppliers from our marketplace.

Karen Williams: With what we experienced in 2024, and again, reflecting steady industry growth above GDP.

Paul Abbott: Investing in more content from more sources.

Paul Abbott: Expanding NBC content, improving rail content and integrating our content platform into more third party solutions.

Karen Williams: Our continued share gain.

Karen Williams: We expect a 15% to 20 basis points revenue yield decline, which again consistent with the trend we saw through 2024, given the recurring element slot revenue and the continued shift to digital transactions.

Paul Abbott: And finally, driving growth investing and increasing demand generation.

Paul Abbott: Kaling, our sales channels and driving sales efficiency.

Paul Abbott: As you can see we are making investments to drive revenue growth and improved productivity.

Karen Williams: We remain focused on driving continued operating leverage we expect continued productivity gains and our scalable technology to continue to drive margin expansion, while also increasing our investment level in future growth.

Paul Abbott: But the power of our model is that many of our investments achieved both of these objectives.

Paul Abbott: For example, expanding the content in our marketplace.

Karen Williams: As a result, we expect limited adjusted operating expense growth of just 3% to 4% on a constant currency basis.

Paul Abbott: Improving the digital experience leveraging AI.

Paul Abbott: All of these investments increase the number of transactions on our software solutions.

Karen Williams: Our 2025, adjusted EBITDA guidance is $530 million to $560 million.

Paul Abbott: They also create a better customer experience and they reduce our operating costs.

Paul Abbott: A very powerful combination.

Karen Williams: An impressive increase of 11% to 17% over 2024.

And now I'll hand, it back to Karen to walk through our 2025 guidance.

Karen Williams: This continued strong double digit growth demonstrates the power of our financial model to leverage high returns and a stable growth industry environment.

Karen Williams: Thank you Paul.

Karen Williams: Our strong financial algorithm allows us to generate double digit profit growth.

Karen Williams: Single digit revenue growth, while accelerating free cash flow conversion.

Karen Williams: And this represents margin expansion of 120 to 190 basis points on a constant currency basis.

Karen Williams: Our guidance prudently takes into account the continued environment of muted, but stable great and.

Karen Williams: We expect to continue to drive underlying momentum and cash generation in 2025, driven by the strong adjusted EBITDA growth plus lower net interest expense.

Karen Williams: And we are not making any assumptions about potential broad macroeconomic impacts from tariff.

Karen Williams: Other policy speculation.

Karen Williams: We will adjust to the environment as necessary and execute on what is within our control just as we did in 2024.

Karen Williams: Underlying free cash flow is expected to be approximately $210 million.

Karen Williams: Our revenue outlook in 2025 crews the constant currency growth of 5% to 7%.

Karen Williams: However, I do want to flag some onetime costs in 2025, which are nonrecurring in nature and associated specifically with M&A.

Karen Williams: With what we experienced in 2024, and again, reflecting steady industry growth above GDP.

Karen Williams: And so factoring this in on a reported basis, we expect to hold free cash flow relatively flat this year versus 2024.

Karen Williams: Our continued share gain.

Karen Williams: We expect a 15 to 20 basis points revenue yield decline, which again consistent with the trend we saw through 2024, given the recurring element slot revenue and the continued shift to digital transactions.

Karen Williams: On currency exchange rates.

Karen Williams: The headline to take away is the FX does not affect our adjusted EBITDA.

Karen Williams: We have a natural hedge because of the currencies of our revenues and expenses or approximately matched.

Karen Williams: We remain focused on driving continued operating leverage we expect continued productivity gains and all scalable technology to continue to drive margin expansion, while also increasing our investment level in future growth.

Karen Williams: Even though the recent rise in the U S dollar and any future fluctuations in exchange rates may impact our reported revenue numbers that will be an offset on expenses and therefore, the adjusted EBITDA impact will be neutral.

Karen Williams: As a result, we expect limited adjusted operating expense growth of just 3% to 4% on a constant currency basis.

Karen Williams: We also have hedges that neutralize the impact of rate changes on cash held in euros on our balance sheet.

Karen Williams: Our 2025, adjusted EBITDA guidance is $530 million to $560 million, an impressive increase of 11% to 17% over 2024.

Karen Williams: And so based on exchange rates at the end of January 2025, FX would be a 2% headwind to revenue this year, which would lower underlying 5% to 7% constant currency growth to 3% to 5% on a reported basis.

Karen Williams: Continued strong double digit growth demonstrates the power of our financial model to leverage high returns and a stable growth industry environment.

Karen Williams: This is factored into our revenue guidance range of two five to $2 $5 $5 billion.

Karen Williams: And this represents margin expansion of 120 to 190 basis points on a constant currency basis.

Karen Williams: Our adjusted EBITDA guidance range is $530 million to $560 million and does not change between constant currency and latest FX rates.

Karen Williams: We expect to continue to drive underlying momentum and cash generation in 2025, driven by the strong adjusted EBITDA growth plus a lower net interest expense.

Karen Williams: More detail of our revenue and adjusted operating expenses is included within the appendix.

Karen Williams: As we look forward to closing the first quarter, we expect revenue and earnings profile across the quarters in 2025 to be consistent with the 'twenty 'twenty four phasing.

Karen Williams: Underlying free cash flow is expected to be approximately $210 million.

Karen Williams: However, I do want to flag some onetime costs in 2025, which are nonrecurring in nature and associated specifically with M&A.

Karen Williams: Now it's important to note from a growth perspective that will be a one percentage point impact on revenue from one less working day in the quarter.

Karen Williams: So factoring this in on a reported basis, we expect to hold free cash flow relatively flat this year versus 2024.

Karen Williams: And on a reported basis.

Karen Williams: Assuming current FX rates, we expect a two percentage point impact from the strong dollar.

Karen Williams: Currency exchange rate.

Karen Williams: The headline to take away is the FX does not affect our adjusted EBITDA.

Karen Williams: But previously discussed adjusted EBITDA will not be impacted given the natural hedges, we have between revenue and expense.

Karen Williams: We have a natural hedge because of the currencies of our revenues and expenses or approximately matched.

Karen Williams: On a reported basis in the first quarter, we expect revenue growth of approximately 3%.

Karen Williams: 6% on a constant currency and what day adjusted basis.

Karen Williams: Approximately 25% of full year 2025 adjusted EBITDA.

Karen Williams: We expect free cash flow seasonality to have greater weighting to H two with the first quarter broadly in line for an absolute dollar perspective.

Karen Williams: We also have hedges that neutralize the impact of rate changes on cash held in euros on our balance sheet.

Karen Williams: With cash generation from the first quarter of 2024.

Karen Williams: And so as I've already highlighted we expect to continue to drive underlying momentum in cash generation in 2025.

Karen Williams: We are controlling what we can control and on an underlying basis free cash flow is expected to be approximately $210 million.

Karen Williams: And this is factored into our revenue guidance range of two $5 billion to $255 billion.

But with the specific one time M&A expenses in 2025 on a reported basis, we expect free cash flow relatively flat to 2024 and to be in excess of $160 million.

Karen Williams: Our adjusted EBITDA guidance range is $530 million to $560 million and does not change between constant currency and latest FX rates.

Karen Williams: All of them.

Karen Williams: Free cash flow generation continues and we are confident in the future path to approximately 50% free cash flow conversion over the medium term.

Karen Williams: More detail of our revenue and adjusted operating expenses is included within the appendix.

As we look forward to closing the first quarter, we expect revenue and earnings profile across the quarters in 2025 to be consistent with the 'twenty 'twenty four phasing.

Karen Williams: We will continue to execute on our capital allocation priorities in 2025 to maximize our long term growth and.

Karen Williams: Now it's important to note that from a growth perspective that will be a one percentage point impact on revenue from one less working day in the quarter.

Karen Williams: And optimize shareholder returns.

Karen Williams: We expect to continue to drive underlying momentum and cash generation in 2025.

Karen Williams: And on a reported basis, assuming current FX rates, we expect a two percentage point impact from the strong dollar.

Karen Williams: We continue to maintain a strong balance sheet and expect to leverage ratio without M&A at the low end of our one five to two five times target range and have benefited from the refinancing actions. We have taken while we expect net interest expense of approximately 80 to 80.

Karen Williams: But previously discussed adjusted EBITDA will not be impacted given the natural hedges, we have between revenue and expense.

Karen Williams: On a reported basis in the first quarter, we expect revenue growth of approximately 3%.

Karen Williams: $5 million.

Karen Williams: We're also able to increase our investment in technology and organic growth.

Karen Williams: 6% on a constant currency and what day adjusted basis, and approximately 25% of full year 2025 adjusted EBITDA.

Karen Williams: Our guidance includes incremental investments of $65 million as Paul mentioned.

Karen Williams: The strength of our balance sheet and level of liquidity within the business creates flexibility for us.

Karen Williams: We expect free cash flow seasonality to have greater weighting to H two with the first quarter broadly in line for now.

Speaker Change: To pursue M&A.

Speaker Change: And our strong cash flow puts us in a position to have flexibility to return cash to shareholders. After all other priorities on that.

Karen Williams: With cash generation from the first quarter of 2024.

Speaker Change: Before closing I would like to add to the comments that Paul made on the status of the CWT acquisition.

Karen Williams: And so as I've already highlighted we expect to continue to drive underlying momentum in cash generation in 2025.

Speaker Change: We have cleared a significant milestone towards the consummation of the transaction with the UK competition and markets authority.

Karen Williams: We are controlling what we can control and on an underlying basis free cash flow is expected to be approximately $210 million.

Speaker Change: So it's important to understand that we have capital allocation capacity and flexibility in any scenario.

Karen Williams: But with this specific one time M&A expenses in 2025 on a reported basis, we expect free cash flow relatively flat to 2024 and speed in excess of $160 million.

Speaker Change: The kids the CWT acquisition Finance is primarily stock we expect to remain within our target leverage range. Following the transaction close.

Karen Williams: All of them.

Karen Williams: Free cash flow generation continues and we are confident in the future path to approximately 50% free cash flow conversion over the medium term.

Speaker Change: So in closing.

Speaker Change: We successfully delivered on our financial targets and priorities in 2024.

Speaker Change: And we're looking forward to another strong year in 2025, a significant margin expansion.

Karen Williams: We will continue to execute on our capital allocation priorities in 2025 to maximize our long term growth.

Speaker Change: Double digit earnings growth and underlying free cash flow acceleration.

Karen Williams: And optimize shareholder returns.

Karen Williams: We expect to continue to drive underlying momentum in cash generation in 2025.

Speaker Change: Now we can move into Q&A Paul.

Speaker Change: When I joined by Eric Box, who is our chief legal officer and global head of M&A. Operator. Please go ahead and open up the line.

Speaker Change: Thank you.

Speaker Change: I'd like to ask a question. Please press star followed by one on your telephone keypad, if you will.

Speaker Change: To withdraw your question. Please press star followed by Terry.

Speaker Change: When preparing to ask your question isn't showing a device is on nutrition Luckily.

Karen Williams: $5 million.

Karen Williams: We are also able to increase our investment in technology and organic growth of.

Speaker Change: First question comes from Toni Kaplan with Morgan Stanley. Your line is open. Please go ahead.

Paul Abbott: Guidance includes incremental investments of $65 million as Paul mentioned.

Speaker Change: Hi, Good morning. This is Yehuda Silverman on the line for Toni Kaplan.

The strength of our balance sheet and level of liquidity within the business creates flexibility for us to.

Speaker Change: Can you expand on the slight downtick in new business wins.

Speaker Change: What were some of the reasons that companies push that some of their wins out there in our business out to 2025 and when can we expect to see that in terms of cadence for the year.

Paul Abbott: To pursue M&A.

Paul Abbott: And our strong cash flow puts us in a position to have flexibility to return cash to shareholders. After all other priorities on that.

Speaker Change: Before closing I would like to add to the comments that Paul made on the status of the CWT acquisition.

Speaker Change: Yeah, I wouldn't read too much into that as you can see the majority of our wins come from SME customers and we actually saw a slight uptick in SME wins in the quarter the nature of the sort of very large customer wins.

Speaker Change: We have cleared a significant milestone towards the consummation of the transaction with the UK competition and markets authority.

Speaker Change: <unk> win in a particular quarter can make a difference up or down and you've seen that in previous quarters.

Speaker Change: So it's important to understand that we have capital allocation capacity and flexibility in any scenario.

Speaker Change: Not really pointing towards the end here.

Speaker Change: I would expect some of those decisions that are pushed into into Q1 to enable us to have a faster start to 'twenty five.

Speaker Change: The kids the CWT acquisition Finance is primarily stock we expect to remain within our target leverage range. Following the transaction close.

Speaker Change: Thank you and just a follow up so you've mentioned that you've seen from the small and mid sized businesses feeling the pressure of higher interest rates that turns continued are.

Speaker Change: So in closing.

Speaker Change: We successfully delivered on our financial targets and priorities in 2024.

Speaker Change: We're looking forward to another strong year in 2025, a significant margin expansion.

Speaker Change: There's been a couple of recent hotter than expected economic trends, especially on the consumer side have you seen any recent sentiments or budget changes into the new year, particularly in the small and midsize business.

Speaker Change: Double digit earnings growth and underlying free cash flow acceleration.

Speaker Change: Now we can move into Q&A.

Speaker Change: Space.

Speaker Change: Well I think if you go back to sort of.

Eric Box: When I joined by Eric Box, who is our chief legal officer and global head of M&A. Operator. Please go ahead and open up the line.

Speaker Change: Q4 of 2023, we did see is a reduction in the growth rates Q4, and then Q1 Q2. So for the last couple of quarters, we've seen stable growth in SME and.

Eric Box: Thank you.

Eric Box: Like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: And we are expecting that to improve moderately as we go through two.

Eric Box: If you would like to withdraw your question. Please press star followed by two.

Speaker Change: <unk> thousand 25 so.

Speaker Change: When preparing to ask your question. Please ensure your device is on the nutritional Luckily.

Speaker Change: I think we are expecting that growth rate to go from being sort of fairly stable at the moment.

Toni Kaplan: First question comes from Toni Kaplan with Morgan Stanley. Your line is open. Please go ahead.

Speaker Change: Slight improvement as you go through the second half of 2025.

Speaker Change: But I still think that the trends that we're seeing from SME customers is consistent your average.

Yehuda Silverman: Hi, Good morning. This is Yehuda Silverman on the line for Toni Kaplan.

Yehuda Silverman: Can you expand on the slight downtick in new business wins.

Speaker Change: U S domestic airfares over 20% more expensive than it was two years ago, and obviously that combined with other pressures in terms of interest costs and inflation across the supply chain for small to midsize businesses definitely creates some dampening of demand.

Yehuda Silverman: What were some of the reasons that company news pushed some of their wins out there in the business out to 2025 and when can we expect to see that in terms of cadence for the year.

Yehuda Silverman: Yeah, I wouldn't read too much into that.

Speaker Change: And as I said in my remarks, it's a trend that we see beyond travel if you look at the payment state to procure.

Yehuda Silverman: As you can see the majority of our wins come from SME customers and we actually saw a slight uptick in SMA wins in the quarter. The nature of the sort of very large customer wins is the one win in a particular quarter can make a difference up or down and you've seen that in previous quarters. So I'm not really pointing towards the end here.

Speaker Change: Procurement data across a range of spend categories. It's a consistent trend that you see.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: We now turn to try and front of course with Evercore ISI. Your line is open. Please go ahead.

I would expect some of those decisions that are pushed into into Q1 to enable us to have a faster start to 'twenty five.

Jack: Hey, Good morning. This is Jack on it on for Duane.

Speaker Change: I understand the uncertainty, but do you have an expected closing.

Speaker Change: Thank you and just a follow up so you've mentioned that you've seen some of the small and midsized businesses feeling the pressure of higher interest rates that turns continued.

Jack: Order for CWT and then.

Jack: You alluded to capital allocation priorities, but.

Jack: While you wait for that transaction to close them and build free cash. This year would you look to hold onto that accelerate the buyback or even maybe a complete other tuck in acquisitions.

Speaker Change: Yeah, Eric I'll take the first part of that and then Karen will take the second part.

Speaker Change: Space.

Speaker Change: Well I think if you go back to sort of.

Speaker Change: Great. Thanks for the question. The trial is scheduled to start September eight.

Speaker Change: Q4 of 2023, we did see is a reduction in the growth rates Q4, and then Q1 Q2. So for the last couple of quarters, we've seen stable growth in SME.

Speaker Change: So youre looking at.

Speaker Change: Third or fourth quarter closing at this point due to more likely in the fourth quarter.

Speaker Change: And we are expecting that to improve moderately as we go through.

Speaker Change: It goes to trial there are a number of other different scenarios, but.

Speaker Change: 2025 so.

Speaker Change: I think for planning purposes.

Speaker Change: I think we are expecting that growth rate to go from being sort of fairly stable at the moment to slight improvement as you go through the second half of 2025.

Speaker Change: Sumit trial in September 8th in the trial last two to three weeks and the judge will render a decision thereafter, which get probably gets you into the October time.

Speaker Change: Yeah.

Speaker Change: But I still think that the trends that we're seeing from SME customers is consistent you elaborate.

Speaker Change: From in terms of your the second part of your question in terms of capital allocation.

Speaker Change: U S domestic airfares over 20% more expensive than it was two years ago, and obviously that combined with other pressures in terms of interest costs and inflation across the supply chain for small to midsized businesses definitely creates some dampening of demand.

Speaker Change: We've laid out those priorities and as you think about it we're really happy with the momentum that we have created and that the underlying performance continues and our priority is around investing in organic growth and so we have an incremental $65 million this year.

Speaker Change: And as I said in my remarks, it's a trend that we see beyond travel if you look at the payment state to procure.

Speaker Change: Additionally, we will look at other M&A opportunities as they come up and from a share buyback perspective again, we will look at.

Speaker Change: Procurement data across a range of spend categories. It's a consistent trend that you see.

Speaker Change: Yeah.

Speaker Change: The timing of that as as.

Speaker Change: Thank you.

Speaker Change: As the situation is right. So and we certainly have opportunities ahead of us and continue to look at that in terms of what is optimal from from a return perspective.

Speaker Change: Okay.

Speaker Change: We now turn to try and clinical work with Evercore ISI. Your line is open. Please go ahead.

Jake: Hey, Good morning, this is Jake on for Duane.

I understand the uncertainty, but do you have an expected closing maybe quarter for CWT and then.

Speaker Change: Okay.

Speaker Change: Thank you and then not sure how relevant government travel is to your business, but have you disclosed that maybe as a percentage of total transactions in the past and are there any notable trends you're seeing in that segment.

Jake: You alluded to capital allocation priorities, but.

Jake: While you wait for that transaction to close them and build free cash. This year would you look to hold on to that accelerate the buyback or even maybe a complete other tuck in acquisitions.

Speaker Change: It's not a large part of our business and no we don't disclose it.

Speaker Change: So I can't really provide any specific insights.

Eric Box: Yeah, Eric I'll take the first part of that and then Karen will take the second part.

Speaker Change: If your question is more.

Speaker Change: Related I would imagine to the U S government travel trends.

Jake: Right.

Speaker Change: Thanks for the question. The trial is scheduled to start September eight.

Speaker Change: We don't have any material exposure to the U S government travel.

Jake: So youre looking at.

Jake: Third or fourth quarter closing at this point due to more likely in the fourth quarter.

Speaker Change: It was okay. Thank you.

Jake: If it goes to trial there are a number of other different scenarios, but.

Jake: I think for planning purposes.

Speaker Change: Our next question comes from Lee Horowitz with Deutsche Bank. Your line is open. Please go ahead.

Jake: Sumit trial in September 8th in the trial last two to three weeks and the judge will render a decision thereafter, which get probably gets you into the October time.

Lee Horowitz: Great. Thanks, maybe just one on the CWT.

Jake: Yeah.

Lee Horowitz: CMA mirrors is obviously, a positive and presumably should help the case in the U S. But are there sort of any precedent cases, and you maybe have to court as to where you had this kind of dynamic where a U K or Europe was positive that idea of the U S was trying to.

Jake: From in terms of your the second part of your question in terms of capital allocation. Yeah. We've we've laid out those priorities and as you think about it.

Jake: We're really happy with the momentum that we have created and that the underlying performance that continues on.

Lee Horowitz: Blocker deal, but ultimately.

Jake: The park is around investing in organic growth and so we have an incremental $65 million. This year. Additionally, we will look at other M&A opportunities as they come up and from a share buyback perspective again, we will look at the timing of that as you as.

Lee Horowitz: So a couple of years you have the leverage decision out of the CMA can strike vacation the U S. And then maybe just general.

Business travel business grants enthusiasm coming out of Washington.

Lee Horowitz: There's been a lot said about U S businesses, even more enthusiastic about overall growth as you look at just 25 to 26, given some perceived policy changes from the new.

Jake: As the situation is right so and we suddenly have opportunities ahead of us and continue to look at that in terms of what is optimal from from a return perspective.

Lee Horowitz: Sure sure have you seen that show up.

Lee Horowitz: In.

Speaker Change: Your surveys as it relates to expectations for business travel.

Jake: Okay.

Lee Horowitz: That may be factored are not factored into the guide for 2025.

Speaker Change: Yes.

Speaker Change: Thanks Lee for your first question most specific press on the dynamic where in I can point to obviously it is a positive factor in the facts of the case, we have a regulatory body that has provisionally found that on a global basis. There is a lot of credible competitors in this.

Speaker Change: It's not a large part of our business and no we don't disclose it.

Speaker Change: So I can't really provide any specific insights.

Speaker Change: Space today, so certainly it is positive and indicative of what our belief in the marketplace. So that is good.

Speaker Change: If your question is more.

Speaker Change: Related I would imagine to the U S government travel trends.

Speaker Change: Should ultimately in the <unk>.

Speaker Change: We don't have any material exposure to the U S government travel.

Totality of things would be helpful to us.

Speaker Change: So we'll continue to press our case, so where we can and will continue to have dialogue.

Speaker Change: It was okay. Thank you.

Speaker Change: With the Doj before enduring through this whole process before we get to trial in September eight and we still are very you know we're confident that we earn the right side of this argument.

Speaker Change: Our next question comes from Lee Horowitz with Deutsche Bank. Your line is open. Please go ahead.

Speaker Change: Great. Thanks, maybe just one on the CWT.

Speaker Change: And the second part of your question, we did see.

Speaker Change: CMA news is obviously, a positive and presumably should help your case in the U S. But are there sort of any precedent cases, and you maybe have to court as to where you had this kind of dynamic where a U K or Europe was positive that idea of the U S was trying to.

Speaker Change: An increase in the growth rates after the U S election in fact, our growth rates in November and December were two percentage points higher than they were for the full quarter.

Speaker Change: So we did see that dynamic that you referenced in your your question.

Speaker Change: So blocker deal, but ultimately.

Speaker Change: In terms of how that's translating to some forward.

Speaker Change: So a couple of years you have to leverage a decision out of the CMA can strike vacation in the U S. And then maybe just general.

Speaker Change: Looking.

Speaker Change: Trends.

Speaker Change: I think it was certainly encouraging to see that uptick in November and December but of course.

Speaker Change: Business travel business class enthusiasm coming out of the U S. Washington, Theres been a lot said about U S businesses, even more enthusiastic about overall growth as you look at just 25 to 26, given some perceived policy changes from the New administration have you seen that show up in.

Speaker Change: There is still a fair amount of uncertainty in terms of the geopolitical environment.

Speaker Change: Businesses in order to plan longer term stability is very important and so I think in a number of areas. There is still a.

Speaker Change: Yes.

Speaker Change: Our surveys as it relates to expectations for business travel.

Speaker Change: And a higher degree of uncertainty and so I think that the balances some of the the optimism also exists.

Speaker Change: These factors are not factored into the guide for 2025.

Speaker Change: Yes.

Speaker Change: And I think your question was how does that feed into our 225 outlook, we're essentially assuming a sort of continuation of the current conditions that the GDP growth.

Speaker Change: In all regions actually is below historical norms.

Speaker Change: And we have assumed the current levels of GDP growth in really all three regions.

Speaker Change: Today, So certainly it is positive and indicative of what our belief in the marketplace. So that is good.

Speaker Change: Continue at their current levels and that the industry grows.

Speaker Change: At or slightly above those growth rates.

Speaker Change: Should ultimately.

Speaker Change: And that on top of that we help oversee our our share gains and that's what gets us to the constant currency.

Speaker Change: Totality of things would be helpful to us.

Speaker Change: So we'll continue to press our case, where we can and will continue to have dialogue with the Doj before and during this whole process before we get to trial in September eight and we still are very you know we're confident that we earn the right side of this argument.

The range that the current CIT earlier, so hopefully that's helpful.

Speaker Change: Helpful. Thank you both.

Speaker Change: We now turn to Peter Christiansen with Citi. Your line is open. Please go ahead.

Speaker Change: And the second part of your question, we did see an.

Peter Christiansen: Good morning. Thanks for the question Great results solid solid outlook here first question I guess for Eric.

Speaker Change: That increase in the growth rates.

Speaker Change: After the U S election in fact, our growth rates in November and December or two percentage points higher than they were for the full quarter. So.

Speaker Change: On the CWC.

Peter Christiansen: Situation.

Peter Christiansen: So it's a little peculiar I guess this time because the challenge was was issued under the previous administration.

Speaker Change: So we did see that dynamic that you referenced in your question.

Speaker Change: In terms of how that's translating to some forward.

Peter Christiansen: Just wondering if there's.

Peter Christiansen: Any dynamics to.

Speaker Change: Looking.

Peter Christiansen: That you could you could speak to.

Speaker Change: Trends.

Speaker Change: I think it was certainly encouraging to see that uptick in November and December but of course, there is still.

Peter Christiansen: Now and then and then also.

Peter Christiansen: As was the original complaint was that using the similar effects that I think the CMA was originally using in there.

Speaker Change: Fair amount of uncertainty in terms of the geopolitical environment and I think businesses in order to plan longer term stability is very important and so I think in a number of areas. There is still a.

Peter Christiansen: Initial contestation.

Speaker Change: Yes, hi, thanks for the question, yes, the arguments are very similar.

Speaker Change: The.

Speaker Change: Arguments for the lessening competition on both regulatory fronts are very similar.

Speaker Change: A higher degree of uncertainty.

Speaker Change: I think that the balances some of the the optimism that also exists.

Speaker Change:

Speaker Change: So we never really know we have to CMA in its filing and we will continue to work with the Doj as I mentioned, yes with the change of administration. Our case was broad and literally the final days of the by the administration.

Speaker Change: And I think your question was how does that feed into our 225 outlook.

Speaker Change: We're essentially.

Speaker Change: <unk> I sort of continuation of the current conditions that the GDP growth.

Speaker Change: We do have the Trump administration is now in place.

Speaker Change: All regions actually is below historical norms.

Speaker Change: They may have a different point of view on this we don't know we can't speculate.

Speaker Change: And we have assumed that the current levels of GDP growth in really all three regions.

Speaker Change: But we will continue to talk to.

Speaker Change: Continue at their current levels and that the industry grows.

Speaker Change: To the U S government about this case.

Speaker Change: And move forward as is appropriate.

Speaker Change: So slightly above those growth rates.

That's helpful and then Karen.

Speaker Change: On top of that we help oversee our our share gains and that's what gets us to the constant currency.

Speaker Change: We think about the free cash flow guide I understand that you're provisioning a bit for M&A is that does that primarily.

Speaker Change: The range that the current CIT earlier, so hopefully that's helpful.

Speaker Change: Potential legal costs associated with the case in <unk>.

Speaker Change: Would that be the primary reason.

Speaker Change: Helpful. Thank you both.

Speaker Change: Reason for the flat year over year free cash flow or is there another component perhaps capex.

Speaker Change: We now turn to Peter Christiansen with Citi. Your line is open. Please go ahead.

Speaker Change: No I mean, yeah. There are puts and takes as you look year over year as you think about lower interest expense offset the higher profit, but then investing in capex, but it.

Speaker Change: Good morning, Thanks for the question Great results solid solid outlook here.

Speaker Change: First question I guess for Eric.

Speaker Change: On the CWT.

Speaker Change: Underlying we're seeing $210 million, a 39% cash.

Speaker Change: Situation.

Speaker Change: So it's a little peculiar I guess this time because the challenge was was issued under the previous administration.

Speaker Change: Cash conversion, which is up but we've called out specifically.

Speaker Change: M&A component and it's exactly as you spell out it's yes, it is in relation to that and and as far as onetime in nature. So we just wanted to be transparent quite honestly.

Speaker Change: Just wondering if there's.

Speaker Change: Any dynamics to that.

But you could you could speak to.

Speaker Change: Now and then and then also.

Speaker Change: Is was the original complaint was that using the similar facts that I think the CMA was originally using in there.

Speaker Change: That is helpful.

Speaker Change: And quick one one last one.

Speaker Change: Yeah.

Speaker Change: Okay. If I can just add one thing.

Speaker Change: And so that just that that is there a range of different scenarios frankly that could play out and that that number is our best estimate at this point in time.

Speaker Change: Mitchell contestation.

Speaker Change: Yes, hi, thanks for the question, yes, the arguments are very similar.

Speaker Change: The.

Speaker Change: Thank you. Thank you pause I was just going to sneak one last one in on on SME.

Speaker Change: Arguments for the lessening competition on both regulatory fronts are very similar.

Speaker Change: I'm just curious.

Speaker Change:

Speaker Change: So we never really know we have to CMA and it's finding and we will continue to work with the Doj as I mentioned, yes, with a change of administration I mean, our case was broad and literally the final days of the by the administration.

Speaker Change: If you're seeing any of the dynamics in terms of retention.

Speaker Change: Our demand on the SME side have you seen any any I don't know underlying.

Speaker Change: Green shoots there just was curious on.

Speaker Change: We do have a Trump administration is now in place.

Speaker Change: The the underlying trends that you might be seeing there.

Speaker Change: They may have a different point of view on this we don't know we can't speculate.

Speaker Change: Thank you.

Speaker Change: Right.

Speaker Change: Yes.

Speaker Change: But we'll continue to talk to.

Speaker Change: Yes, I mean look we did see a kind of a point.

Speaker Change: To the U S government about this case.

Speaker Change: Up.

Speaker Change: And move forward as is appropriate.

Speaker Change: In the SME growth rates in November and December.

Karen Williams: That's helpful and then Karen.

Speaker Change: As I mentioned before we're expecting sort of moderate improvement as we go through 2025.

Speaker Change: We think about the free cash flow guide I understand that you're provisioning a bit for M&A is that does that primarily.

Speaker Change: I don't know if I'd go as far as to say, it's green shoots at this point I think we have to see a few more months of data.

Karen Williams: Potential legal costs associated with the case in <unk>.

Speaker Change: Would that be the primary.

Speaker Change: Come through but I'm optimistic that as we go through 2025.

Speaker Change: The reason for the flat year over year free cash flow or is there another component perhaps capex.

Speaker Change: We will see the impact of our new wins start to have a greater impact on the overall growth rates retention is very stable.

Speaker Change: No I mean, yeah. There are puts and takes as you look year over year as you think about our interest expense, obviously higher profit, but then investing in capex, but it.

Speaker Change: On SMA. So it really is the organic organic growth rate that was really two or three points lower than we anticipated at the beginning of 2024, new wins are on track retention is on track.

Speaker Change: Underlying we're seeing $210 million a 39%.

Speaker Change: Cash conversion, which is up but we've called out specifically.

Speaker Change: So as I said, we are at.

Speaker Change: M&A component and it's exactly as you spell out it's yeah. It is in relation to that and.

Speaker Change: Optimistic that we'll see some gradual improvement as we go through 'twenty five.

Speaker Change: As far as onetime in nature. So we just wanted to be transparent quite honestly.

Speaker Change: That's super helpful credit execution guys good quarter. Thank you.

Speaker Change: That is helpful.

Speaker Change: Thank you.

Speaker Change: And quick one one last one entity.

Speaker Change: Yeah.

Speaker Change: And our final question comes from Stephen Ju with UBS. Your line is open. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Okay. If I can just add one thing.

Speaker Change: And so that just that that is there a range of different scenarios frankly that could play out in that that number is our best estimate at this point in time.

Speaker Change: Hi, Good morning. This is Vanessa on for Stephen So Paul just looking at your new win value from Anthony those have been picking up and you know theyre accounting for a greater proportion of your aggregate new win so I just wanted to ask about the pace at which that is showing up in transaction value.

Speaker Change: Thank you. Thank you pause I was just going to sneak one last one in on on SME.

Speaker Change: I'm just curious.

Speaker Change: If you're seeing any of the dynamics in terms of retention.

Speaker Change: Just given their travel budgets are probably more volatile than larger.

Speaker Change: Our demand on the SME side have you seen any any I don't know underlying.

Speaker Change: Q.

Speaker Change: Green shoots there just was curious on some of the underlying trends that you might be seeing there.

Speaker Change: Yeah, it's encouraging to see the new wins are steadily improving and it is becoming a larger share of our overall new wins.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes, I mean look we did see a.

Speaker Change: With seeing I think 25% of those SME new wins.

Speaker Change: Kind of a point tick.

Speaker Change: Kick up.

Speaker Change: Coming coming from unmanaged customers, which.

In the SME growth rates in November and December.

Speaker Change: Just as a reminder, that's by far the biggest opportunity for US estimates of 950 billion opportunity and the largest share of that is still customers that doesn't have a professionally managed travel programs. So we like we like those trends.

Speaker Change: Honestly as I mentioned before we're expecting sort of moderate improvement as we go through 2025.

Speaker Change: I don't know if I'd go as far as to say, it's green shoots at this point I think we have to see a few more months of data.

Speaker Change: Yes.

Speaker Change: Come through but I'm optimistic as we go through 2025.

Speaker Change: I think the key thing for US is to make sure that we're translating those wins.

Into growth and that we're implementing those winds foster.

Speaker Change: We will see the impact of our new wins start to have a greater impact on the overall growth rates retention is very stable.

Speaker Change: And as I said, we are optimistic that we're going to see some impact from that as we go through the balance of 2025.

Speaker Change: On SMA. So it really is the organic organic growth rate that was really two to three points lower than we anticipated at the beginning of 2024, new wins are on track retention is on track.

Speaker Change: This concludes our Q&A I'll now hand back to Paul Abbott's, let's see young for any final remarks.

Speaker Change: So as I said, we are optimistic that we will see some gradual improvement as we go through 'twenty five.

Paul Abbott: Well, yes in closing I just want to thank all of our teams around the world for their hard work and dedication in 'twenty, four and providing industry, leading service and experiences to our customers. That's really enabled us to deliver the strong financial results that we shared with you today.

Speaker Change: That's super helpful credit execution guys good quarter. Thank you.

Speaker Change: Thank you.

Speaker Change: Yeah.

Paul Abbott: Confident that the momentum that we've driven in 'twenty four is going to continue into 2025.

Speaker Change: And our final question comes from Stephen Ju with UBS. Your line is open. Please go ahead.

Paul Abbott: Results in another year of share gains while continued margin expansion strong free cash flow.

Paul Abbott: On capital allocation that also drives shareholder returns. So thank you very much for joining us today and your continued interest in American Express global business travel. Thank you everyone.

Paul Abbott: Ladies and gentlemen, today's call is now concluded with lots of Montreal participation. You may now disconnect your lines.

Speaker Change: Just given their travel budget are probably more volatile than larger.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Bridging to see the new wins are steadily improving and it is becoming a larger share of our overall new wins and with seeing I think 25% of those SME new wins.

Speaker Change: Coming from unmanaged customers, which.

Speaker Change: As a reminder, that's by far the biggest opportunity for us estimates of $950 billion opportunity.

Speaker Change: The largest share of that is still customers that doesn't have a professionally managed travel programs. So we like we like those trends.

Speaker Change: But yes I think.

Speaker Change: The key thing for us is to make sure that we're translating those wins.

Speaker Change: Into growth and that we're implementing those wins foster.

Speaker Change: And as I said, we are optimistic that we're going to see some impact from that as we go through the balance of 2025.

Speaker Change: This concludes our Q&A I'll now hand back to collaborate let's see young for any final remarks.

Speaker Change: Well, yes in closing I just want to thank all of our teams around the world for their hard work and dedication in 'twenty, four and providing industry, leading service and experiences to our customers. That's really enabled us to deliver the strong financial results that we shared with you today, we are confident that the momentum that we've driven in 'twenty four.

Speaker Change: Or is it going to continue into 2025.

Speaker Change: Results in another year of share gains while continued margin expansion strong free cash flow.

Speaker Change: On capital allocation that also drives shareholder returns. So thank you very much for joining us today and your continued interest in American Express global business travel. Thank you everyone.

Speaker Change: Ladies and gentlemen, today's call is now concluded wed like to thank you for your participation you may now disconnect your lines.

Speaker Change: [music].

Q4 2024 Global Business Travel Group Inc Earnings Call

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