Global Business Travel Group, Inc.

Good morning and welcome to the American Express Global Business Travel Third 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.

Hello and good morning, everyone. Thank you for joining us for a Third Quarter Earnings Conference Call. This morning we issued an earnings press release, which is available on SEC.gov and on our website at investors.amexglobalbusinesstravel.com. A 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 industry and macroeconomic trends, cost savings, and acquisition synergies, among others. All fuller-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 issued this morning and in 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 GAAP measures and reconciliations for non-GAAP measures are available in the 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 Bach, our Chief Legal Officer and Head of Global M&A. With that, I will now turn the call over to Paul.

Paul? Thank you, Barry, and welcome, and thank you all for joining our third quarter earnings call. In the third quarter, we once again delivered outstanding financial results. driven by our focus on margin expansion, cost savings, agencia synergies, and continued share gains. Our results are ahead of guidance with revenue and adjusted EBITDA growth of 17% and 135% respectively. Importantly, we generated very strong free cash flow in the quarter that was ahead of expectations. I'm pleased to report we are now free cash flow positive on a year-to-date basis. This is an important milestone for the company and an inflection point that demonstrates our continued momentum. Based on this, we have the confidence to reiterate our full year 2023 revenue and adjusted EBITDA guidance, and we are increasing our expectation for free cash flow for the full year. Strong demand for our leading software and services in the quarter resulted in continued share gains. We reported new wins value of 3.3 billion over the last 12 months. We also have continued momentum in our product and our technology leadership with 77% of transactions now coming through digital channels, further contributing to our cost savings. SME customers represent the largest growth opportunity with the fastest growth and the highest margins in the industry. And our results continue to be very encouraging. We reported double-digit SME transaction growth and strong SME new wins value of $2.2 billion over the last 12 months, including a significant contribution from previously unmanaged customers. Finally, our focus on delivering significant margin expansion is clearly evidenced in our third quarter results. Adjusted operating expenses increased just 7% compared to 17% revenue growth. And our adjusted EBITDA margin was up 9 percentage points year over year and 2 percentage points over the third quarter of 2019. Adjusted operating expenses decreased quarter over quarter, and we expect this momentum to continue into the fourth quarter. Turning to transaction growth, the industry is transitioning to more normalized growth rates, but our third quarter transaction and TTV growth remain strong. Third quarter transactions increased 7% driven by demand for business travel, and our ongoing share gains. The reported growth rate in the quarter was negatively impacted by approximately one less workday in the third quarter of 2023. So on a workday adjusted basis, transactions actually increased 9% in the quarter versus 2022. TTV grew 8% or 10% on a workday adjusted basis. Looking at our transaction trends in more detail, we're going to focus here on the workday adjusted growth rates. We continue to see relatively faster growth from SME customers. Our strategy and our focus on SME growth is clearly paying off. And SME transactions were up 10% in the quarter. Global multinational transactions were up 7% in the quarter. Growth in hotel transactions outpaced air by five percentage points, up 11% and 6% respectively. This is driven by a continuation of the trends that we've seen over the last several quarters, as well as our focus on increasing the volume of hotel bookings as we continue to strengthen our hotel content and our hotel display. International air transactions continue to outperform domestic, up 7%. Finally, here on a regional basis, growth in the Americas and EMEA were up 8%, 9% respectively. Asia-Pacific continued to outperform, but starting to show year-over-year signs of normalization with growth of 12%. So turning to the commercial highlights for the quarter, we continue to gain share with a reported 3.3 billion of total new wins. And importantly, we maintained our strong customer retention rate of 95%. Our biggest opportunity remains in the SME segment. And this represents a total opportunity of approximately $950 billion of travel spend. Within the SME segment, we are already 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 that are proven at scale globally, we are very well positioned to capture this significant opportunity, and our results continue to prove this out. SME new wins value over the last 12 months totals $2.2 billion. Of this, approximately 30% has come from previously unmanaged customers, customers who are looking for the service and the savings and the control that our solutions provide. In addition to the strong SME new wins, we continue to gain share across sectors in global and multinational. I'm very pleased to report our recent global multinational new wins include Blackstone, the world's largest alternative asset manager, Fortescue, one of the world's leading mining companies, Warner Brothers Discovery, of course, one of the leading media and entertainment companies in the world. And finally, one of the world's largest global financial services firms. Our growth algorithm is driven by organic growth and net new wins and share gains. Although we can't control the macro environment, we can control the share gains and net new wins. And we are very confident in the strength of our future sales pipeline and expect our strong new sales momentum to continue. As we head into 2024, even if macro events do result in a lower growth environment, we expect new wins alone to provide a baseline of four to five percentage points of volume growth in 2024. And finally here, we were recently awarded EcoVardis Platinum for the second year in a row. This places us in the top 1% of independently assessed companies across the world and demonstrates our commitment to the highest standards of sustainability. Moving on to our product and technology highlights, we have the leading software platforms across all segments of business travel. in Agencia and Neo. These solutions are proven at scale on a global basis, and they bring together the best people and the best technology in the industry. Owning our own software platforms enables us to improve the end-to-end customer experience, to increase automation, and to reduce our operating costs. 77% of our transactions now come through digital channels. And over the last four years, we've seen an increase of approximately 12 percentage points in our share of digital transactions. Transactions on NEO and Agencia increased 13% in the third quarter, which is well above our overall transaction growth of 7%. highlighting more and more share moving to our own software platforms as a direct result of customer demand that we're seeing for our proprietary software solutions. Over 60% of our digital transactions now come through our own proprietary platforms, Agencia and Neo. We are constantly working on new and innovative ways to meet and exceed customer needs. Recently we expanded our live chat services to Microsoft teams and we now have six different chat channels so that customers can efficiently manage their travel in the enterprise solutions that they use every day. This increases customer satisfaction. It promotes more bookings through our marketplace year to date. Our Amex GBT mobile app user growth has nearly doubled. Mobile interactions grew by more than 140%. And chat volumes are up almost 50%. And this is important because it also unlocks a significant opportunity for us through AI-powered solutions for both improving the productivity of our people and improving the customer experience. 40% of our costs are people serving customers in the voice channel. Using AI and automation to drive efficiency is something we've been doing consistently for several years, including our acquisition of 30 Seconds to Fly, a company that specializes in travel artificial intelligence. But looking ahead, we have an even bigger opportunity. With generative AI and large language models, we have the opportunity to drive further efficiency at an accelerated pace. Finally, we continue to ensure that our customers have access to the most comprehensive and the most competitive content in our marketplace, including NDC content. In the third quarter, we continued our expansion of NDC and are now working with 10 airlines on NDC initiatives. So to sum up our third quarter performance, we again delivered outstanding financial results with strong revenue growth and positive year-to-date free cash flow. We remain highly focused on driving margin expansion through cost savings and delivering on the Agencia synergies. This combined with our strong new wins and the growing momentum we have in the SME segment gives us the confidence to reiterate our full year 2023 revenue and adjusted EBITDA guidance and increase our expectation for full year 2023 free cash flow. So that completes my review of the Q3 highlights. I would like to hand it over to Karen to discuss the financial results in more detail before moving on to our balance of year outlook.