Global Business Travel Group, Inc.

Good morning and welcome to the American Express Global Business Travel Second Quarter 2023 Earnings Conference Call. As a reminder, please note today's call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Barry Sievert. Please go ahead, sir.

Hello and good morning, everyone. Thank you for joining us for our Second Quarter Earnings Conference Call. This morning, we issued an earnings press release, which is available on the SEC and our websites. at investors.amexglobalbusinesstravel.com. The slide presentation, which accompanies today's prepared remarks, is also available on the Amex GBT investor relations webpage. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry trends, cost savings, and acquisition synergies, among 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. More information on these and other risks and uncertainties is contained in our earnings release issue this morning and our other SEC filings. Throughout today's call, we will also be presenting certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, free cash flow, and net debt. All references during today's call to such non-GAAP financial measures have been adjusted to exclude certain items. Definitions of these terms and the most directly comparable gap measures and reconciliations for non-gap measures are available in supplemental materials of this presentation and in the earnings release. Participating with me today are Paul Abbott, our Chief Executive Officer, and Karen Williams, our Chief Financial Officer. Also joining for the Q&A session today is Eric Fogg, our Chief Legal Officer and head of Global M&A. With that, I'll now turn the call over to Paul.

Well, thank you, Barry, and welcome to everyone and thank you for joining our second quarter earnings call. We are the clear leader in a $1.2 trillion industry with a significant runway for growth. And in the second quarter, we continue to deliver on our strategic priorities and create strong momentum for the future. First of all, we delivered outstanding financial results in the second quarter. The demand for our software and services drove results ahead of guidance, including record quarterly revenues, strong revenue yield, continued margin improvements, and very importantly, a return to positive free cash flow ahead of our previous forecast. This is a huge milestone for the company and an inflection point that demonstrates our strong momentum. Based on these positive trends, we are raising our 2023 guidance. Second, we are positioned for strong growth ahead. I am confident that our momentum will continue, driven by the growth in business travel, the demand for our software and services, and our ongoing share gains. Our view of industry growth is supported by both direct feedback from our top customers as well as external industry forecasts. And our confidence in continuing to gain share is underpinned by our sales performance and a robust sales pipeline that's powered by our leading software and services. Third, we continue to win in SME. Our results demonstrate excellent momentum in this very large customer segment with the fastest growth and the highest margins in the industry. We reported record SME new wins that continue to include a significant contribution from previously unmanaged customers. Record new wins in the SME segment positions us well for continued strong growth ahead and clearly demonstrates the demand for our software and services in this very important segment. Finally, we continue to act on investor feedback and we're focused on making it easier to buy and trade our shares. We joined Russell 3000 and Russell 2000 indices in June. And in July we converted our class B to class A shares, eliminating the dual class structure. We believe this has improved market data integrity. It increases the ability for inclusion and higher weighting in certain indices. and also reduces barriers to increased holdings by investors. So as you know, transaction growth is an important driver of our performance. And I'm now going to provide more insights into the continued strength and demand that we are seeing year over year. Second quarter transactions increased 12%. TTV grew 13%, driven by continued transaction growth and also an increased mix of international bookings. Looking at our transaction growth trends in more detail, you'll see faster growth from SME customers. Our strategy and focus on SME growth is clearly paying off. And SME transactions were up 15% in the quarter. And importantly, of this 15% growth, 50% of it was driven by net new wins and share gains. Global multinational transactions were up 8% year-over-year in the quarter. International growth also very strong in the quarter, with transactions up 17%. On a regional basis, we saw double-digit growth across all regions, with Asia Pacific, the clear standout, with 23% growth. Transaction growth in the Americas and EMEA both increased 11%. Finally, you'll also see here growth in hotel transactions outpace air by four percentage points in the quarter, up 13% and 9% respectively. This is driven by a continuation of the trends that we've seen over the past several quarters, as well as our focus on increasing the ratio of hotel to air bookings as we continue to strengthen our hotel content and value. Second quarter revenues increased 22%. Here you can see that we highlight growth in business travel and managed business travel compared favorably to other large global travel and business services peers. Growth rates across the travel industry are beginning to normalize year over year with the impact of the pandemic receding and pent up demand for leisure travel showing some signs of leveling off. Demand for business travel combined with our ongoing share gains delivered strong second quarter revenue growth. So turning to the commercial highlights for the quarter, we continue to gain share with a reported $3.4 billion of total new wins value that's over the last 12 months, including record new wins with SME customers. Our biggest growth opportunity remains in the SME segment. This represents a total opportunity of approximately $950 billion of travel spent. Within the SME segment, we are the number one player in managed travel. But 70% of this SME opportunity is not currently in a managed travel program. And with our leading software and services, we're particularly well positioned to capture this significant opportunity, and our results are proving this out. So I'm very pleased to report that we've reached record SME new wins value over the last 12 months, and that totaled $2.3 billion of new wins. Of this, approximately 30% has come from previously unmanaged customers who are looking for the service, the savings, and the control that our leading solutions provide. In addition to the record SME new wins, we continue to gain share in the global multinational segments. with major wins across sectors, including a leading media and entertainment company, one of the world's largest global financial services firms, and one of the world's leading mining companies. Therefore, we remain confident in the strength of our future sales pipeline. Importantly, we also maintained strong customer retention of 95%, Over the last 12 months, we've also renewed $4.6 billion of existing customer contracts. I'm also very proud to say that our industry leadership continues to be recognized externally. Customers want confidence that their suppliers are operating to the highest possible standards. And I'm very pleased to share that we have been awarded Compliance Program of the Year designation by Compliance Week. recognition of the really strong operating controls we have across our business. And finally, we were also recognized in the quarter as one of the best employers for women by Forbes. This is a testament to our commitment to create a diverse and inclusive environment where everyone has equal opportunity to succeed. I'd like to extend a sincere thank you to all of my colleagues around the world for their commitment and their leadership that make these valuable recognitions possible. Moving on to our product and technology highlights. We have the leading software platforms across all segments of business travel, including the leading B2B travel software platforms, Agencia and NEO. These solutions are proven at scale on a global basis. and they combine the best technology and the best people. Transactions on our Neo and Agencia software platforms increased 20% year over year in the quarter, which is well above our overall transaction growth of 12% and a direct result of a strong customer demand for our proprietary software solutions. 77% of our transactions now come through digital channels and over 60% of them are coming on our own software platforms, Agencia and Neo. We're constantly working on new and innovative ways to meet and exceed customer needs. Recently, we expanded our live chat services to Slack, so customers can efficiently manage their travel in the enterprise solutions that they use every day. This increases customer satisfaction, and it also promotes more bookings in the Amex GBT marketplace. We recently received our fifth patent for an invention that uses AI to monitor and improve customer satisfaction. This groundbreaking use of AI comes through large amounts of data and customer communications to gather and display historical sentiment scores. It then displays that data in an interactive graphical user interface that we can use to easily visualize trends and then deploy actions to improve customer satisfaction across our business. Agencia was awarded 16 G2 badges, including easiest to use platform for small business travel management in the G2 Summer 2023 report. As a reminder, G2 is the largest and most trusted peer to peer review site. More than 60 million people and many Fortune 500 companies use G2 to make their software decisions. These 16 badges recognize our commitment to providing travel solutions that are cutting edge, that are proven at scale globally, and are easy to implement and easy to use. Last quarter, we announced a standard that can be used by the managed travel industry to ensure a successful and scalable launch of NDC content in a way that meets the needs of business travel customers. We expanded our NDC pilots in the second quarter and now have approximately 1,500 companies who are accessing NDC content through Amex GBT from four airlines in the US and Europe, American Airlines, Air France, KLM, and Lutensa. Finally, here we continue to help customers reach their sustainability goals. Supporting this effort Bank of America joined a growing list of participating companies as the first financial institution to sign on to our sustainable aviation fuel program, which is led by AmEx GBT in partnership with Shell Aviation. So to sum up our second quarter performance, it provides yet another proof point of our continued financial, commercial, and technological progress. We clearly reported strong financial results. including record revenues, positive free cash flow, and record SME new wins. As a result, we are raising our full year 2023 guidance. Continued business travel growth and share gains also give us confidence as we look ahead to the balance of 2023 and beyond. So that completes my review of the Q2 highlights. I would like to hand it over to Karen now to discuss the financial results in more detail before we move on to our full year and our Q3 outlook.