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Amadeus It Group Sa Ord
11/7/2023
Welcome to the Amadeus Q3 2023 presentation webcast. The management of Amadeus will run you through the presentation, which will be followed by a question and answer session. You can ask a question on the phone by dialling star 1 on your telephone keypad at any moment during the presentation. I'm now pleased to hand you over to Mr. Luis Maroto, President and CEO of Amadeus.
Please go ahead, sir. Thank you. Good afternoon. Welcome to our third quarter results presentation.
Thank you for joining us today. As usual, I will start with an overview of our most important developments and deal with our rate on the key financial details. Please turn to slide four to start with the overview of our results. For the first nine months of 23, Amadeus continued to deliver steady financial performance. Group revenue increased by 23%, EBITDA grew 34%, and adjusted profit expanded by 68%, supporting a 50% increase in free cash flow generation compared to prior year. A strong free cash flow generation resulted in net financial debt amounting to 2.1 billion at September 30th, representing 1.1% times last 12-month EBITDA. As you know, shareholder remuneration is important for us, and having received our generic dividend earlier in the year, as well as announcing our sell-by-back program completed in September, we are pleased to announce a new share and purchase program to acquire a maximum of 8.8 million Amadeus shares, equivalent to 1.95% of Amadeus share capital, representing a maximum investment of 625 million. In terms of our views for the near term, although we are monitoring the macroeconomic and geopolitical situation very closely based on the trading conditions we are seeing today, I would like to confirm our outlook for 23. I would add, in terms of forecast flow, in 23, we will deliver beyond the high end of the range we have for the year. And this is with and without the positive India tax impact deal we'll refer to later. In the mid-term, we remain optimistic about the growth opportunities that lay ahead for Amadeus. We continue to be highly focused on our investment plans. Industry initiatives such as NDC and offers and orders are a great opportunity for us to bring value to our customers and to expand our leadership. We have unique expertise in travel, technology, and a much track record of delivery as well as the ability and conviction to invest for the future. We'll review the key developments at each of our reported segments, starting with air distribution. In the past quarter, we signed 11 new contracts or renewals of distribution agreements, taking the total to 47 for the first nine months of the year. We are pleased to announce that India has extended its partnership with Amadeus to now also include local domestic content for travel sellers at points of sale in India through Amadeus. In addition, India's NDC content will be integrated into the Amadeus travel platform with the content being made available to travel centers in 24. India is an important market for Amadeus, and we look forward to continuing our close collaboration with the nation's Black Carrier, which recently adopted the full Amadeus Altea passenger service system suite. We continue to progress with our NDC strategy. In the third quarter, we enlarge our distribution agreements with several additional carriers to include their NDC content, enriching our content offering and bringing travel sellers more diverse and personalized offers from these carriers on the Amadeus Travel Platform. We have also continued to upsell distribution technology to a number of our travel agency and corporate customers. We are working with Microsoft and Accenture to develop generative AI power integrations for corporate travel, such as digital travel assistance through streamlined tasks for corporate travelers within site frequency, or travel and expense management tool embedded in Microsoft Teams. The new travel assistant will leverage Microsoft technologies to assist corporate travelers with elements of their journey. With regards to our volume evolution over the past nine-month period, we have seen a progressive strengthening of global air traffic growth, including through the third quarter, although in this case at a milder pace than in prior quarters of the year. Also in terms of global air traffic mix, as in the past quarters, the weight of international traffic remains below historical levels. In the first nine months of the year, Amadeus bookings grew by 16% relative to prior year. Asia-Pac was our fastest-growing region, where our bookings expanded by 75%, followed by Western Europe, which grew by 16%. For the period, North America and Western Europe were our largest regions. In October, we have seen our bookings evolution being impacted by an increase in cancellation in several regions, namely NORAM, Middle East, but also APAC and Western Europe, likely leading to the Middle East geopolitical situation. Generally, in the past, in these situations, cancellations concentrate up front, but it is early to tell how the conflict may develop. In the past few days, we have seen our booking evolution coming closer to the levels pre the geopolitical event. We'll turn to slide six now for a review of RIT solutions. In the third quarter, we disclosed that Vietnam Airlines carrying 25 million passengers annually is the name of the new Altea PSS contract we announced last quarter. In this quarter, we successfully migrated Aligian Air and Bamboo Airways to New Skies and Altea, respectively, completing the list of large migrations we have planned for this year. Also, several airlines' customers signed for additional solutions or implemented new solutions such as EVA Air, Thai Airways, Mauritania Air, and Kuwait Airways. Following Finnair, our first customer for Amadeus Nibio, we were pleased to recently announce that Amadeus and Saldia will work together on Saldia's transition from the Amadeus Altea PSS, based on today's existing standards, to Amadeus Nibio built around new offer and other principles. We're very pleased to recently introduce Amadeus Nibio in the marketplace. With this, we are leading the way for the retailing transformation of the era industry. It is a travel-centric retailing platform offering next-generation retailing capabilities to airlines, including, but beyond, offers and orders, backed by fully flexible, future-proof cloud-native solutions and the latest advances in AI. As we have discussed in the past, this is an industry evolution that will require years of focus and dedication, but we are very well positioned to drive this transformation and to support the industry's transition. This industry evolution will further drive the penetration of NDC. We believe we have the most advanced NDC technology in the industry, and that we will play a key role in scaling NDC adoption. Regarding airport IT, we continue to expand our customer base with the signature of several new agreements, and we continue to sign up-selling agreements with players such as John Kennedy International Airport Operator, Ontario International Airport, Salt Lake City International Airport, and Airport de Paris, to name a few. In relation to our volumes, in the first nine months of the year, Amadeus passengers ordered increased by 30% in the same period of 2022, driven by continued progress in the travel industry and new customer implementations. We had net positive non-organic effects as a result of customer implementations, the main ones being Etihad, ITA, Hawaiian Airlines, Bamboo, and Adelian Air in 2023, and Elindia in 2022. partly offset by airline customers ceasing or suspending operations or demigrating from our platform, including the demigration of Russian carriers in 2022. In the nine months, Asia-Pac was our best performing region, delivering 68% growth, and Western Europe was our last year's region, accounting for a third of Maneuver's passenger borders. With respect to October, our PV evolution continued to improve over past quarters. for an update on our hospitality segment. Our hospitality and other solutions segment continue to advance well through the third quarter, supported by new customer implementations and volume expansion. Our revenues in this segment grew by 18% in the first nine months of 23 relative to prior year. Both hospitality, which generates the majority of the revenues in this segment, and payments deliver a strong growth versus prior year. We also saw continued interest during the period from customers for our solutions across our portfolio. For example, we extended our business intelligence solutions partnership with Hilton. Lanham Hospitality Group added our digital media solution. Both Pan Pacific Hotel Groups and H-Hotels will implement Amadeus Business Intelligence Solutions. Also, the Department of Culture and Tourism from Abu Dhabi signed for Amadeu Media and Business Intelligence Solutions for destinations. With this, I will now pass on to Thiel for further details on our financial performance in the quarter.
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