American Express Global Business Travel, which is operated by Global Business Travel Group, Inc. (NYSE: GBTG) (“Amex GBT” or the “Company”), the world’s leading B2B travel platform, today announced financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
Outstanding Q2 Results
- Financial results exceeded Q2 2023 guidance
- Revenue totaled $592 million, an increase of 22% versus Q2 2022.
- Adjusted EBITDA1 totaled $106 million, an increase of 126% versus Q2 2022, with an Adjusted EBITDA Margin2 of 18%. Net loss totaled $(55) million, with a net loss margin of (9)%.
- Net cash provided by operating activities totaled $46 million. Free Cash Flow3 totaled $19 million.
Significant New Wins and Continued Share Gains
- Total transactions grew 12% versus Q2 2022.
- LTM Total New Wins Value4 totaled $3.4 billion per annum.
- 95% LTM customer retention rate.
Excellent SME Growth
- SME transactions grew 15% versus Q2 2022.
- LTM SME New Wins Value4 totaled $2.3 billion per annum, a record for the Company.
- Approximately 30% of LTM SME New Wins Value came from the unmanaged category.
Raised Full-Year 2023 Guidance
- Raised revenue guidance to a range of $2.25 billion – $2.28 billion, representing 22% – 23% year-over-year growth.
- Raised Adjusted EBITDA1 guidance to a range of $365 million – $385 million.
Paul Abbott, Amex GBT’s Chief Executive Officer, stated: “We reported strong second quarter 2023 results, including the highest quarterly revenue in our company’s history and strong Adjusted EBITDA growth, and reached a huge milestone returning to positive Free Cash Flow ahead of projections. Specifically, we delivered strong SME growth, including yet more traction in the unmanaged segment, and record SME new wins. This positive momentum gives us the confidence to raise our full-year 2023 guidance.”
Second Quarter 2023 Financial Summary
(in millions, except percentages; unaudited) | Three Months Ended | % B/(W) | |
June 30, | |||
2023 | 2022 | ||
Total Transaction Value (TTV) | $7,349 | $6,527 | 13% |
Transaction Growth | 12% | ||
Revenue | $592 | $486 | 22% |
Travel Revenue | $479 | $388 | 23% |
Product and Professional Services Revenue | $113 | $98 | 16% |
Total operating expenses | $590 | $505 | (17)% |
Net loss | $(55) | $(2) | NM |
Net loss margin | (9)% | 0% | NM |
Net cash provided by (used in) operating activities | $46 | $(155) | NM |
EBITDA5 | $27 | $63 | (55)% |
Adjusted EBITDA1 | $106 | $47 | 126% |
Adjusted EBITDA Margin2 | 18% | 10% | 8ppt |
Adjusted Operating Expenses6 | $486 | $438 | (11)% |
Free Cash Flow3 | $19 | $(176) | NM |
NM = Not Meaningful | |||
Second Quarter 2023 Financial Highlights
Revenue increased $106 million, or 22%, versus the same period in 2022. Within this, Travel Revenue increased $91 million, or 23%, primarily due to growth in Total Transaction Value driven by continued growth in business travel and an improvement in yield driven by supplier performance incentives and strong growth in international transactions. Product and Professional Services Revenue increased $15 million, or 16%, primarily due to increased management fees and meetings and events revenue driven by strengthened demand.
Total operating expenses increased $85 million, or 17%, versus the same period in 2022, primarily driven by strong transaction growth that resulted in increased cost of revenue and technology and content costs, as well as increased sales and marketing expenses. Additionally, restructuring charges increased $12 million year-over-year due to the reorganization announced in January 2023.
Net loss increased $53 million versus the same period in 2022, primarily due to negative fair value movements on earnout derivative liabilities and higher interest expense, partially offset by increased operating income.
Adjusted EBITDA1 increased $59 million, or 126%, versus the same period in 2022, resulting in an Adjusted EBITDA margin of 18%. Strong revenue growth resulting from improved yield and transaction growth was partially offset by increased Adjusted Operating Expenses6.
Adjusted Operating Expenses6 increased $48 million, or 11%, versus the same period in 2022, primarily driven by strong transaction growth that resulted in increased cost of revenue and technology and content costs, as well as increased sales and marketing expenses. For the full-year 2023, the Company expects high-single digit growth in Adjusted Operating Expenses.
Net cash provided by (used in) operating activities totaled $46 million, an improvement of $201 million versus the same period in 2022, primarily due to a (i) decreased usage of working capital associated with (a) the normalization in volume growth, (b) benefits from the Company’s working capital optimization program and (ii) reduced net losses before considering non-cash charges, partially offset by (iii) higher cash interest and (iv) a reduction in cash received on termination of a derivative contract in 2022.
Free Cash Flow3 totaled $19 million, an improvement of $195 million versus the same period in 2022, due to the increase in net cash provided by operating activities, partially offset by increased use of cash for the purchase of property and equipment.
Net Debt7: As of June 30, 2023, total debt was $1,359 million, compared to $1,222 million as of December 31, 2022. Net Debt was $1,024 million as of June 30, 2023, compared to Net Debt of $919 million as of December 31, 2022.
Raised Full-Year 2023 Guidance
Q3 2023 Guidance | Full-Year 2023 Guidance | |
Transaction Growth (Year-over-Year) | ~9% | ~20% |
Revenue | $545M – $560M | $2.25B – $2.28B Prior $2.17B - $2.22B |
Revenue Growth (Year-over-Year) | 12% – 15% | 22% – 23% Prior 17% - 23% |
Adjusted EBITDA1 | $85M – $95M | $365M – $385M Prior $330M - $370M |
Adjusted EBITDA Margin3 | 16% – 17% | 16% – 17% Prior 15% - 17% |
Karen Williams, Amex GBT’s Chief Financial Officer, stated: “Based on our strong first half performance and what we are hearing from our customers, we are confident in our 2023 trajectory and are therefore raising our full-year guidance. We expect to deliver strong revenue growth, significant year-over-year Adjusted EBITDA margin expansion, and importantly, generate positive Free Cash Flow in the back half of the year.”
The Company’s Q3 2023 and full-year 2023 guidance considers various material assumptions. Because the guidance is forward-looking and reflects numerous estimates and assumptions with respect to future industry performance under various scenarios as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the business of Amex GBT, all of which are difficult to predict and many of which are beyond the control of Amex GBT, actual results may differ materially from the guidance due to a number of factors, including the ultimate inaccuracy of any of the assumptions described above and the risks and other factors discussed in the section entitled “Forward-Looking Statements” below and the risk factors in the Company’s SEC filings.
Adjusted EBITDA guidance for the three months ending September 30, 2023 consists of expected net loss for the three months ending September 30, 2023, adjusted for: (i) interest expense of approximately $35-40 million; (ii) benefit for income taxes of approximately $5-10 million; (iii) depreciation and amortization of property and equipment of approximately $45-50 million; (iv) restructuring costs and charges resulting from facilities consolidation of approximately $5 million; (v) integration expenses and costs related to mergers and acquisitions of approximately $10-15 million; (vi) non-cash equity-based compensation of approximately $20-25 million, and; (vii) other adjustments, including long-term incentive plan costs, litigation and professional services costs, non-service component of our net periodic pension benefit related to our defined benefit pension plans and foreign exchange gains and losses of approximately $5-10 million. We are unable to reconcile Adjusted EBITDA to net income (loss) determined under U.S. GAAP due to the unavailability of information required to reasonably predict certain reconciling items such as impairment of long-lived assets and right-of-use assets, fair value movement on earnout derivative liabilities and/or loss on early extinguishment of debt and the related tax impact of these adjustments. The exact amount of these adjustments is not currently determinable but may be significant.
Adjusted EBITDA guidance for the year ending December 31, 2023 consists of expected net loss for the year ending December 31, 2023, adjusted for: (i) interest expense of approximately $140-145 million; (ii) benefit for income taxes of approximately $25-30 million; (iii) depreciation and amortization of property and equipment of approximately $185-190 million; (iv) restructuring costs and charges resulting from facilities consolidation of approximately $40-45 million; (v) integration expenses and costs related to mergers and acquisitions of approximately $45-50 million; (vi) non-cash equity-based compensation of approximately $80-85 million, and; (vii) other adjustments, including long-term incentive plan costs, litigation and professional services costs, non-service component of our net periodic pension benefit related to our defined benefit pension plans and foreign exchange gains and losses of approximately $30-35 million. We are unable to reconcile Adjusted EBITDA to net income (loss) determined under U.S. GAAP due to the unavailability of information required to reasonably predict certain reconciling items such as impairment of long-lived assets and right-of-use assets, fair value movement on earnout derivative liabilities and/or loss on early extinguishment of debt and the related tax impact of these adjustments. The exact amount of these adjustments is not currently determinable but may be significant.
Webcast Information
Amex GBT will host its second quarter 2023 investor conference call today at 9:00 a.m. E.T. The live webcast and accompanying slide presentation can be accessed on the Amex GBT Investor Relations website at investors.amexglobalbusinesstravel.com. A replay of the event will be available on the website for at least 90 days following the event.
Glossary of Terms
See the “Glossary of Terms” for the definitions of certain terms used within this press release.
Non-GAAP Financial Measures
The Company refers to certain financial measures that are not recognized under GAAP in this press release, including EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Expenses, Free Cash Flow and Net Debt. See “Non-GAAP Financial Measures” below for an explanation of these non-GAAP financial measures and “Tabular Reconciliations for Non-GAAP Financial Measures” below for reconciliations of the non-GAAP financial measures to the comparable GAAP measures.
About American Express Global Business Travel
American Express Global Business Travel is the world’s leading B2B travel platform, providing software and services to manage travel, expenses, and meetings & events for companies of all sizes. We have built the most valuable marketplace in B2B travel to deliver unrivalled choice, value and experiences. With travel professionals in more than 140 countries, our customers and travelers enjoy the powerful backing of American Express Global Business Travel.
Visit amexglobalbusinesstravel.com for more information about Amex GBT. Follow @amexgbt on Twitter, LinkedIn and Instagram.
GLOBAL BUSINESS TRAVEL GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in $ millions, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 592 | $ | 486 | $ | 1,170 | $ | 836 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown separately below) | 242 | 199 | 483 | 372 | ||||||||||||
Sales and marketing | 102 | 85 | 205 | 159 | ||||||||||||
Technology and content | 102 | 97 | 200 | 187 | ||||||||||||
General and administrative | 88 | 84 | 164 | 147 | ||||||||||||
Restructuring charges | 7 | (5 | ) | 30 | (3 | ) | ||||||||||
Depreciation and amortization | 49 | 45 | 95 | 89 | ||||||||||||
Total operating expenses | 590 | 505 | 1,177 | 951 | ||||||||||||
Operating income (loss) | 2 | (19 | ) | (7 | ) | (115 | ) | |||||||||
Interest expense | (35 | ) | (24 | ) | (69 | ) | (43 | ) | ||||||||
Fair value movement on earnouts and warrants derivative liabilities | (19 | ) | 36 | (16 | ) | 36 | ||||||||||
Other (loss) income, net | (5 | ) | 2 | — | 2 | |||||||||||
Loss before income taxes and share of losses from equity method investments | (57 | ) | (5 | ) | (92 | ) | (120 | ) | ||||||||
Benefit from income taxes | 2 | 4 | 10 | 29 | ||||||||||||
Share of losses from equity method investments | — | (1 | ) | — | (2 | ) | ||||||||||
Net loss | (55 | ) | (2 | ) | (82 | ) | (93 | ) | ||||||||
Less: net loss attributable to non-controlling interests in subsidiaries | (41 | ) | (23 | ) | (66 | ) | (114 | ) | ||||||||
Net (loss) income attributable to the Company’s Class A common stockholders | $ | (14 | ) | $ | 21 | $ | (16 | ) | $ | 21 | ||||||
Basic (loss) earnings per share attributable to the Company’s Class A common stockholders | $ | (0.23 | ) | $ | 0.44 | $ | (0.27 | ) | $ | 0.44 | ||||||
Weighted average number of shares outstanding – Basic | 61,852,280 | 48,867,969 | 61,118,570 | 48,867,969 | ||||||||||||
Diluted loss per share attributable to the Company’s Class A common stockholders | $ | (0.23 | ) | $ | — | $ | (0.27 | ) | $ | (0.21 | ) | |||||
Weighted average number of shares outstanding – Diluted | 61,852,280 | 444,320,221 | 61,118,570 | 444,320,221 | ||||||||||||
GLOBAL BUSINESS TRAVEL GROUP, INC. CONSOLIDATED BALANCE SHEETS | ||||||||
(in $ millions, except share and per share data) | June 30, 2023 | December 31, 2022 | ||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 335 | $ | 303 | ||||
Accounts receivable (net of allowance for credit losses of $26 and $23 as of June 30, 2023 and December 31, 2022, respectively) | 953 | 765 | ||||||
Due from affiliates | 38 | 36 | ||||||
Prepaid expenses and other current assets | 161 | 130 | ||||||
Total current assets | 1,487 | 1,234 | ||||||
