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Welcome to the Amadeus First Quarter 2024 presentation webcast. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. You can ask questions via the phone lines by dialing star 1 on your telephone keypad at any moment during the presentation. I'm pleased to hand you over to Luis Maruto, President and CEO of Amadeus. Please go ahead, sir.

Good afternoon. Welcome to our first quarter results presentation and thank you for joining us today. Joined by Till, I will review our most important developments this quarter and Till will elaborate on the key financial details. As you know, Till will be departing Amadeus to pursue a new career opportunity. We wish him well and we are grateful for his contribution to Amadeus since his arrival in September 2020. The process to hire Amadeus' next CFO has been launched by our board of directors and is underway. Until further notice, I will be acting as CFO. Till will also continue to support us for some time. We will update you on this matter further down the line. We are looking forward to our investor day on June 18 in London. During the day, my leadership team and I will provide you with a strategic update across our businesses. We will also be providing you with our views on our financial evolution for the mid-term. The plan we will present to you has been built by the Amadeus Senior Leadership Team together, and we are all committed to delivering on it. We look forward to seeing you at our investor day, or alternatively, we welcome you to connect to the webcast. Let's turn to slide four, and let me start with an overview of our results. In the first quarter, our steady financial evolution continued. Amadeus Group revenue increased by 14%, EBITDA growth grew 14%, EBIT grew faster by 19%, and adjusted profit expanded by 19%. This positive development was supported by the double-digit growth evolutions at each of our reported segments, air distribution, air IT solutions, and hospitality and other solutions. Our financial performance in the quarter dropped solid pre-cash flow generation of $336 million. In late February 24, we announced the completion of our latest set-by-back program launched in November 23. And in March, we announced our acquisition of Voxel Media, a leading provider of electronic invoicing and a B2B electronic payment specialist. As a result, our leverage at March 31 was 1.1 times last 12-month EBITDA, a net financial debt amounting to $2.46 billion. To complete our developments on demand in front, we were pleased that having obtained all the regulatory approvals in early April, we closed our Q1 announced acquisition of VisionBox, a leading provider of biometric solutions for airports, airlines, and border control customers. This year has kicked off well and in line with the expectation we serve with you for 2024 early in the year, and we confirm our outlook for 2024. Additionally, this quarter, we have made some important business announcements. Amadeus will be deploying its NDC technology for Expedia Group. This represents a significant endorsement for our NDC industry-wide rollout and reflects Amadeus' commitment to the industry's evolution towards modern retailing. Also, we were very pleased to announce that British Airways has chosen Amadeus as technology partner for Amadeus Niveo. Amadeus Nibio is a new portfolio of modular solutions built on open and AI technology. The agreement is a milestone in the airline's path to modern retailing and the use of dynamic offers and orders, and it puts British Airways at the forefront of the retailing transformation. Finally, I would also like to highlight that in payment, Amadeus Jolion subsidiary Outpace has been granted the e-money license it applied for in 22. Our base intends to offer prepaid virtual card issuing with this B2B wallet solution which travel agencies use to pay travel providers. Let's now review the key developments at each of our reported segments. Please turn to slide five, starting with air distribution. In the first quarter, we continue to strengthen our content offering and sign 16 new contracts for renewals of distribution agreements with airlines. We are also advancing on NDC. This quarter, China Eastern Airlines became the first airline in mainland China to sign with Amadeus for international NDC distribution. The U.S. travel platform will also be distributing the full range of tire works NDC first. At March 31st, we had over 50 NDC-related distribution agreements signed with airlines, which we are in the process of implementing. We aim to make MDC possible for the travel industry at scale through the GDS. Carriers adopting MDC require the global reach. We enable to distribute their content both under the traditional EDFAC and under the MDC standard. The Amadeus Travel Platform extends the airline selling reach, the geographical and customer set reach, and is the primary distributor for the higher yield volumes. For the travel sellers, Amadeus offers a fully orchestrated multi-source content provision. We aggregate content from both NDC and EDIPAC technologies in a single interface, promoting simplification, transparency, comparability, and serviceability of the content, independent of the NDC version for the technology use. Our technology is end-to-end, including strong for servicing capabilities. We build deep integrations into the TravelSellers ecosystem, including end-to-end, mid-back-office integration, automated payment reconciliation automation, and omnichallenge As the NDC content made available through our platform increases, we will be capturing more and more NDC bookings. Our goal is to become the undisputed NDC aggregator for airlines and travel agencies. In this regard, we are making progress with travel agency and in the large online OTA space as well. In the travel agency side, as I was saying, Amadeus will be deploying NDC technology for one of the largest OTAs in the world, Expedia Group. Within the large OTA space in the U.S., Expedia joins the list of our NDC agreements with Pricelines and Perth Portal and other travel agencies worldwide, such as Apple Laser Group, Travix, and Espegard. With regards to our volume evolution, in quarter one, our bookings grew 3%, and our air distribution revenue grew by 13%. Our fastest growing region was Asia Pac, and our largest regions remain Western Europe and North America. As we should expect, we see a normalization of our booking growth into 24 compared to the 23 evolution, which benefited from a stronger recovery effect. IATA projects 10% global air traffic growth for 24 on the back of 38% in 23. We have two specific effects on our booking this quarter. As we anticipated, our booking performance was negatively impacted by the timing of Easter and Ramadan, which in 24 took place mostly in the first quarter, whereas last year it happened in the second quarter. Also, as we saw in quarter four, our bookings in quarter one of this year were impacted by the evolution of our local bookings in Noram. And in Noram, we are seeing local bookings with channel through direct connects between one very large OTA and a few of the larger carriers. If we exclude the holiday timing differences and the local booking effect in Noram, I mentioned we estimate our booking role in the first quarter was at around 8%. As we described last quarter, direct connects between big airlines and large online travel agencies in large domestic consolidated markets are a possibility. They are costly to build and to maintain. Therefore, to be economically viable, they require large volumes. Those, they typically affect local bookings where we generate low fees. The impact on our early distribution revenue growth from these direct connects in Noram in quarter one was marginal. We stand to slide six now for a review of our IT solutions. Our key announcements this quarter in Noram IT, as I was saying before, is British Airways contracting to become an EVO customer. Fineral Saldia also signed for Amadeus Nibio, and we aim to continue to expand this list. With Amadeus Nibio, we are leading the way for the retailing transformation of the airline industry. It is a traveler-centric retailing platform offering next-generation retailing capabilities to the airlines, including but beyond offers and orders, but by a fully flexible, future-proof cloud-native solution in 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 well positioned to drive this transformation and to support the industry's transition. Additionally, in the quarter, several airline customers signed for additional Altea components, such as Taron and Rwanda Air. In Airport IT, we continue to expand our customer base the scope of solutions we provide to existing customers, as with several signatures in the Americas, such as with Los Angeles International Airport.

and disruption at the airport.

The site is an app for Microsoft Teams, airlines, airports, border control, and service providers will be able to cooperate in a fully digitalized airport operations center to guide right time decisions and deliver smooth operations at the airport. Airport stakeholders will benefit from Microsoft Azure machine learning capabilities that stimulate the impact of potential plans so they can be continually fine-tuned. Finally, as I mentioned earlier, we close our airport IT acquisition of April 5th of this year. We are excited about incorporating VisionBox. Biometric in travel enable process digitalization and stakeholders interconnectivity improving airlines and airports operational efficiency and the passenger experience. VisionBox is a leader in biometrics and bring us new capabilities on biometrics hardware and software, also adding border control solutions to Amadeus portfolio. Relation to our passengers boarded volumes in the first quarter, Amadeus PVs increased by 16% driven by organic growth of 14 on the back of global air traffic growth in the period. This growth was complemented by a net positive non-organic effect as a result of customer implementation, the main ones being Etihad Airways, ETA Airways, Hawaiian, Bamboo Airways, and Allegiant in 23, slightly offset by airline customers phishing or suspending operations. In the first three months of 24 by PVs, Asia-Pac and Middle East and Africa were our best performing regions, and Asia-Pac and Western Europe remain our largest region. Let's turn to slide seven for an update on our hospitality segment. Hospitality and other solutions revenue grew by 13% in the first quarter. Both hospitality, which generated the majority of the revenues in this segment, and payments delivered strong growth supported by new customer implementations and volume expansion. For the quarter, we expanded and created several new agreements and partnerships in the hospitality space. Remington Hospitality, the U.S.-based hotel management company with more than 134 hotels in 26 states, has expanded its technology partnership with Amadeus to include our business to intelligent solution demand 360 plus adding to its current use of Amadeus Delphi agency 360 plus, and travel seller media. During the quarter, we had several other customers, wins for our business intelligence solutions, including 200 bright chains that have expanded their business intelligence relationship with Amadeus. TTIP.com group will incorporate Amadeus mobility solutions. Muse, an industry-leading hospitality management system, will be adding Amadeus Delphi, Amadeus Guest Management, and Amadeus Demand 360 to the existing agreement, including iOtelia. I will now pass on to Till for further details on our financial performance in the quarter.

Thank you, Luis. Hello, everyone. Please turn to slide nine to review our revenue evolution. In Q1 2024, our group revenue grew 14.1% versus Q1 2023, supported by strong revenue growth across our segments. In air distribution, revenue in the quarter was 12.6% above Q1 2023, primarily driven by the booking evolution Luis described, and by a revenue per booking which was 9.5% higher than in Q1 2023. Fundamentally driven by a lower weight of local bookings in the quarter compared to Q1 2023 and pricing effects, including impacts from inflation and yearly price adjustments, contract renewals, and new agreements. We expect a softening in the revenue per booking growth in the coming quarters, driven by a gradual moderation in the booking mix effect relative to 2023 booking mixes. With regards to ARIT solutions, revenue in the quarter was 17% higher than in Q1 2023, driven by the PV volumes evolution, coupled with a 0.6% higher revenue per PV. The increase in the revenue per PV in the quarter was primarily driven by positive impacts on the Altea Newsguys customer mix, inflationary or price adjustment, and from upselling of incremental solutions partly offset by a proportion of RIT revenues not linked to PVs growing at a softer growth rate than PVs. In the following quarters, we expect higher growth in revenue per PV supported by customer mix and positive pricing impacts, as well as by the consolidation of vision box. Regarding hospitality and other solutions, Revenue in Q1 2024 was 13.2% above Q1 2023, driven by strong performances of both hospitality and payments on the back of customer implementations and volume expansion. Within hospitality, hotel IT revenues increase was mainly driven by sales and event management, service optimization, and Amadeus CRS. Media and distribution revenues continue to grow strongly, backed by an increase in transactions, and business intelligence revenue expanded, driven by customer implementations. And within payments, all its revenue lines reported strong growth rates, supported by higher payment transactions and customer implementations. Please now turn to slide 10 for a review of our EBITDA, EBIT and profit evolution. Please note, we are excluding acquisition transaction costs associated with vision box and box sales acquisitions of 0.6 million euro in aggregate incurred in Q1 2024. In Q1 2024, our EBITDA was 14.2% higher than Q1 2023. EBITDA margin was stable at 38.9%. Our EBITDA performance resulted from the revenue evolution we explained before, a higher cost of revenue, and an increase in our combined personnel and other operating expenses cost lines. Cost of revenue grew 19.3% in the quarter versus Q1 2023, resulting from volume expansion across our businesses and several factors impacting air distribution variable costs, including customer and country mixes. Cost of revenue over revenue was 25.9% in the first quarter, as expected, impacted by business mix quarterly seasonality, as the air distribution segment typically has a higher weight on revenues in the first quarter of the year. Cost of revenue over revenue is consequently expected to decrease in the coming quarters. Our P&L fixed costs in Q1 2024 compared to the same quarter last year were 10.5% higher. This cost evolution mainly resulted from increased resources, particularly in our development activity to support our R&D investment, coupled with a higher unitary cost resulting from our global salary increase and higher transaction processing and cloud costs caused by the volume expansion and the progressive migration of our solutions to the public cloud. Fixed cost growth is expected to grow faster from Q2, impacted by the vision box consolidation into Amadeus Books. Let me remind you of our stated expectations for the year, excluding the vision box impact. We expect our fixed cost growth in 2024 to be lower than in 2023. Below the EBITDA line, DNA expense in the quarter versus Q1 2023 was 2.9% higher, mainly resulting from a higher expense from internally developed assets and depreciation from the reassessment of the useful life of certain assets, partly offset by a lower depreciation expense from a reduction in hardware investment driven by our shift to the cloud. The increase in EBITDA coupled with our D&A expense evolution drove EBIT up by 19.1% in Q1 2024 versus Q1 2023, and EBIT margin expanded in the quarter by 1.2 percentage points versus Q1 2023. Net financial expense increased in the quarter by 5.2 million euro or 35.9%, as a result of non-operating FX losses, the lower interest income, and an increase in interest expense by 5.2% as a consequence of higher cost of debt relative to the same quarter last year. Income taxes increased by 13.1% in the quarter versus the same period in 2023, largely driven by higher taxable income. Finally, resulting from all these effects, adjusted profit grew by 18.8% in Q1 2024 versus Q1 2023. Please turn to page 11 to review our R&D investment in CapEx. R&D investment grew by 8.6% in Q1 2024 versus Q1 2023 and focused on the evolution of our portfolio for airlines, including Amadeus Navio, of our hospitality platform, enhancing our solutions for travel sellers and corporations as well as for airports end of our payment solution portfolio our migration to the cloud and our partnership with microsoft and of course also bespoke and consulting services provided to our customers and customer implementations in q1 2024 our capex increased by 10.1 million euro or 6.8 compared to q1 2023 mainly driven by a higher capitalized R&D investment and to a lesser extent investments in our offices and hardware. CapEx represented 10.6% of our revenue in Q1 2024. In the coming quarters, we expect R&D investment and thus CapEx to grow faster than in Q1, driven primarily by RIT and hospitality and other solutions related R&Ds. We turn to slide 12 for a review of our free cash flow generation and leverage. With regards to free cash flow, we generated €336.1 million in Q1 2024, 23.1% higher than in Q1 2023, resulting from the increase in EBITDA and improving change in working capital outflow and higher capex and taxes. For our second quarter free cash flow evolution, let me remind you of the 42.8 million euro non-recurring collection we had in Q2 last year from the Indian tax authorities. In turn, in Q2 this year, as I was saying, due to the progress and timings of our larger R&D projects, we will see R&D and CapEx grow faster than in Q1. We also expect that our usual change in working capital, working capital outflow in Q2 will be higher this year, mainly due to the Easter seasonality effects and growth in variable personnel related expense. Due to these effects, we do not expect our free cash flow in Q2 this year to be above Q2 last year. This is expected and we confirm our 1.2 to 1.25 billion euro free cash flow expectation for 2024. Net debt amounted to 2.46 billion euro at the end of March, 319.6 million higher than at the end of December. The increase in net debt in the quarter was driven by the acquisition of treasury shares under the share repurchase program that we announced in November 2023, The interim dividend payment and the acquisition of Voxel partly offset by our free cash flow generation in the quarter. Leverage amounts to 1.1 times net debt to EBITDA at quarter end. And with this, we have finished the presentation and we are ready to take any questions you may have.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. The first question comes from the line of Alex Oven from Bernstein. Please go ahead.

Hi, good morning, gentlemen. Hope all is well. Three for me, if I may, please. First on Navio and then on bookings. Starting with Navio, I'd like to know a bit more about the economics here. Could you please help us to understand what the incremental economics look like as an airline implements Navio? And is this something you expect to be meaningfully accreted to revenue of passenger boarded in the next couple of years? Second, on competitive dynamics, while there are other order management systems in the market, those look to be focused more on simpler airlines that might otherwise have been, say, Navitair customers rather than Altea ones. Is there any real competition to your order management system currently for more complex network airlines? And then third, on bookings, please, CRF bookings grew 2.9% year on year. Could you tell us what the growth rate was for EDIFACT bookings and NDC bookings, please? Thank you.

Okay, so let me start with Nevio. I mean, look, we are making investments into, as we have explained, into moving into offer and order management. We feel this is going to create value to the industry. And when you create value, of course, we aim to generate incremental value to us as a result of that. It is going to take years, so this is not going to happen tomorrow, and you mentioned in the next couple of years. No, it will not happen in the next couple of years. It will be very progressive implementation. As a result of what we are doing with airlines, we will start implementing modules as a result of that. But in the medium term, yes, we expect that Nebio should be a credit to our P&L and should generate incremental revenues in the relationship that we have with our customers. Second question is competition. I mean, there are always competition. Of course, it's not just about Altea. We also deal with or offer an order with Naviter, even if when we talk about simple carriers, the technology required is different. As you know, the Lotus carriers are not working exactly the same as the full-service carriers. But yes, I mean, definitely, we'll expect always competition to try to become to our customers. There will be other players and what we need to do It's really to provide the best technology and be very competitive in the market, but it happens with Altea and with Navitel these days. We don't expect to be the only one, but we feel we are strongly positioned both with full-service carriers and focus carriers to face whatever competition will be coming in the medium term. With regards to our bookings, we have not disclosed in exact details. I mean, as we mentioned, still NDC bookings are low. They are in the low single digit, growing extremely fast, and increasing as a percentage of the total a single, any single quarter. So increasing well, growing, and look, moving well. That's the only thing I can say. But still, I mean, the impact in our economics is small due to the weight over the total bookings.

All right. Thank you very much.

The next question comes from the line of Adam Wood from Morgan Stanley. Please go ahead.

Hi, Louise. Hi, Till. Thanks for taking the question. And Till, best wishes in the new role as you move on. Maybe just first of all, you talk in the slides again about wanting to be the undisputed NDC aggregator. We know that non-GDS players have taken share on NDC bookings in the earlier stages of NDC. As NDC volumes ramp, could you just help us go through the key reasons that you think you have a big differentiation versus those players? You mentioned a few of the services that you can provide on the call, but if you could flag the kind of key things that you think you bring that those GDS aggregators would not be able to bring to the airlines and travel agents. Maybe just a quick follow-up on Nevio. Would it also be a per PB model that you'd be implementing there versus a subscription model And then finally, just on hotels, so you've signed some partnerships with Muse and Duetto. It looks like they cover areas that you might think Amadeus would cover within its hotel suite over time. Could you talk a little bit about the strategy here? Is there a willingness to partner to give hotels choice between a complete suite solution from you and best of breed individual products? Or is that more of a need to address some gaps in the functionality short term? Thank you.

Let me start with the last one. Three questions. I mean, we work internally and with partners. I mean, the scope of solutions that we have in the market in many areas of hospitality is very broad, as you know well. We feel we have a very broad scope of solutions, but of course, we also try to see things that we can do internally, and in many cases, use partners, such as the cases that you mentioned. This will keep going in the future. In some cases, we'll develop more organically, and we will extend our range of solutions and do internally in other cases we keep working with partners as again there are many solutions we need to integrate in the wall and our goal is to serve the majority of the customers of the customers there with regards to navio is a transaction fee quite similar to the beefy so you should expect transaction is not a subscriber model okay And with regards to the difference with aggregators, we have mentioned before, I think as things scale, you need size, you need a better servicing capabilities, which is not so easy to offer consistent and strong after sales services. We believe there we have you know the capability to really offer that also how we are going to really deal with the scale the scale is going to represent something that everybody will need to fix and of course our integration with our IT solution is important and also our capabilities to provide technology that is not going to really go through the inventory of the airlines on an ongoing basis so there are a number of and then of course what we are working is the integration of NDC with EDFACT content, with the meet-back office of the travel agencies. So our solution is not just including the NDC piece, but the whole flow and process within the travel agency that is needed to connect to the airline. So overall, again, this is a journey where we are in the process of implementing. We feel extremely confident that with what we are doing, we will see an increase in our volume, both in NDC as well as the total Amadeus bookings in Amadeus in the years to come.

Okay, thank you very much. Thank you, Alan.

The next question comes from the line of Sven Merkt from Barclays. Please, go ahead.

Good afternoon and thank you for taking my questions. First, can you maybe comment on the pipeline for Navio and whether Navio has an impact in the near term on the cross-selling of your other modules within Airline AP? Because maybe some airlines revaluate their plans now there. And then secondly, can you provide us a bit more color on why the cost of sales has gone that much ahead of revenues and especially what have been the precise effects within air distribution?

Okay, let me cover an area. I mean, the pipeline is strong. That's what I can say. I mean, more than that is difficult. Why? I mean, look, everyone in the industry, and this is an initiative led at one point by IATA and airlines moving into model retailing, and therefore moving into offer and order is part of the journey. Some airlines are, you know, being more advanced than others in that it takes years. But that means that we are having discussions about the evolution of the industry and about how to move to Nebio with the majority of the airlines, both customers and non-customers. Saying that, of course, hopefully you will see further news on additional customers in the following quarters. But it's very difficult to really be more concrete until you have a specific contrast. But the pipeline is healthy because it's part of the normal evolution of the industry.

The second question in terms of cost of sale and cost of sale over revenue. In Q1, we obviously had a slightly faster growth. And as I explained, I do expect that going forward in the quarters to come, that this is actually moderating. The reason being is that in the first quarter, we have got a higher weight. If you just look at the revenue mixes, and you can see that the air distribution side, the GDS side, has obviously taken quite a bigger share. And that usually obviously comes with the incentives associated, which drives up your overall cost of revenue over revenue to a higher level. But again, over the portals to come, I expect this to moderate. And yeah, that's really it.

And were the incentive fees higher purely because of mix, or has there been some underlying pressure perhaps as well?

No, look, I mean, what you always have is on your incentive side, the usual share of wallet competition. And you have customer mixes underneath. But again, if you step back, which I was highlighting, and you look at your overall cost of revenue over revenue for the business over the portals to come, I expect this to moderate and be fairly similar to what we had in prior year.

Okay, thank you.

The next question comes from the line of Michael Brees from UBS. Please, go ahead.

Yes, good afternoon. Two from me. On the Expedia relationship, can you say is that a global rollout and is this something that could impact the negative headwinds in distribution from Direct Connect technology or is it sort of separate to that? And then on Altea NDC, I think you're up at nearly 20 customers now. Can you talk a bit about the revenue model And I think most of these are non-US airlines. So given you're saying that NDC Direct Connects are only really relevant to large consolidated domestic markets, why are airlines like SAS and Singapore and TAP and Portugal taking Altea NDC? Thanks.

Okay, let me deal with that. I mean, Altea NDC, I know we have more than what you mentioned, but Altea NDC is the is the technology piece of that, okay? So it's not the part of the travel agency, which is what we call NDCX, which is more the technology that is required to work with the travel agencies with the inventory. So the fact that an airline... Altea NDC is an additional module that we offer as part of our solution. Of course, it has many advantages, like we have explained to you that the airlines using Altea use also Altea NDC, but they may use something different than us for Altea NDC. It's an incremental module, and the business model, again, is a transaction fee, depending on the airline, of course, and and adding to our total revenues that we get from the airlines. That's with regards to Altair NDC. And again, you can do direct connects if you wish with Altair NDC or without Altair NDC. Of course, Altair NDC is providing this capability too if this is needed. With regards to the first question, Yes, I mean, it's very important for us to work with. This proves that our technology is going to really be valid. This is a journey again. We are working with them to really be ready for the implementation. We will start getting volume some of course our goal. at one point is that all the volume that today is being done in alternative channels will come through us. Of course, it will take time. It's not going to happen tomorrow, but that's our objective of working with Expedia and the same with working with the rest of travel agencies in the world.

But will it, once it's deployed, end the headwinds in North America from Direct Connect?

I mean, again, look, we will start implementing that and Look, I'm not going to really disclose specific customers today. We are working to be ready with the technology. And as I said, it will take some time, but hopefully at one point we will be able to manage everything. I mean, the fact we have deals with trial agencies around the world usually are not exclusive to us, as you know, because trial agencies work with us or with alternative providers of the solution. moving to that journey, complementing our solutions with Expedia, with Priceline, with the rest of the travel agencies, not just on the OTA space, but also for DMCs and retail. And as we get volume and our capabilities improve, our goal definitely is to move back part of the volume that today is not in the GDS. So the objective is there, but I will not commit today that all this volume that is out of the system is going to come back in the years to come. That's our goal. and hopefully there will be some upside. Thank you.

The next question comes from the line of Victor Cheng from Bank of America. Please go ahead.

Hi, thanks for taking my questions. Just going back on the gross margin side, can you talk a bit more about the cost of sales progression? Obviously, I've mentioned distribution mix being a bit higher this quarter. But even then, when I look at prior quarters and especially Q1 last year and the year prior as well, it seems like that cause of revenue is still growing a bit faster. So can you provide a bit of color on that? And how should we think? And specifically with regards to bookings that have moved to Direct Connect in the U.S., Aren't they gross margin dilutive and presumably that will become a tailwind in this quarter? And then secondly, can you provide us with a bit of color on April and May trends on bookings? What are you seeing differently compared to Q1? It looks like, you know, at least for Q1, corporate bookings have been very strong whilst leisure is being impacted by Direct Connect. And with Amadeus, I believe, It's fair to say that maybe you have a less than ideal mix compared to your peers and maybe a bit of pressure on the bookings growth for the rest of the year as well.

Okay, let me just reiterate, Victor. On the gross margin side, again, for the quarters, I expect what you see right now in the first quarter is an elevated level. to decrease and come down a little bit across all of the segments. So if you look at it in totality, and again, at the moment, this is driven very much by just the higher weight of the revenues that distribution takes in the first quarter. Other than that, it is as it has been before, depending up on customer mix, segment mix, and these dynamics play a role in that. But again, if you look at it on a full year basis and therefore also when you step through the different margins that we have guided on, we are comfortable in confirming our outlook margin targets as well when you get to EBITDA margin, when you get to EBIT margin comfortably.

Okay, so let me give you some color of the volumes. I mean, as you can imagine, into April, our volume performance improved considerably from the first quarter. And this is supported by the positive holiday seasonality impact and a positive working days effects compared to the first quarter. I mean, we take together combined the first quarter plus our best estimate for April. We see an evolution which is close to plus 4% in the year today. May and June will have negative working day effect, but we expect to deliver growth in the second quarter at least slightly higher than in the first quarter. And throughout the year, we expect growth to progressively pick up and to accelerate in the fourth quarter, driven by the softening of certain industry effects pertaining to 24, our commercial activity results, and also due to a softening of the base.

Understood, thank you.

The next question comes from the line of Toby Oak from JPMorgan. Go ahead.

Yeah, hi, thanks for taking the question. Perhaps just following up on the gross margin there, obviously 74% down 100 bps year over year. I know the air distribution segment is that lower gross margin segment, but normally if the air distribution is segment is smaller in the mix year over year, which it was, that should be helpful for the group gross margins. So was the gross margin pressure all concentrated within the air distribution segment? And what were some of the specifics in that that can explain that type of a move in the gross margin? And then how do you expect those specific factors within air distribution to evolve over the next few quarters? And then just following up on the regional volume picture on the air distribution side, it looks like Western Europe continues to see pressure there running at 64% of 2019 levels. So down from the run rate that it was tracking at in 2023. Is there anything you'd call out specifically outside of the holiday seasonality to explain these dynamics in Western Europe? and why this region is still running pretty significantly below 2019 levels. Thank you.

Okay, let me take the first one. Look, what I said before, just take it as kind of reiterated, but I'm adding, when you look at the long-term trend, of course, you're right, as basically your distribution and your ARIT business mixes evolve, you do have a little bit of a benefit, absolutely, but that's when you look at it over the longer term. One point which I would equally like to remind you of is when you look at the entire fold or envelope of the cost of revenue, within hospitality, the media distribution business also grew strongly, which carries an incentive payment too. And the payments business as such, we've spoken about it before, performed very well. And that also has got an element of variable cost And that together gives you the overall picture for Q1. And again, what I said before stands. When you look at it and you take the cost of revenue over revenue over the quarters, I would expect this to moderate.

With regards to Western Europe, I mean, mainly we mentioned already is the impact of Eastern. There were also a number of strikes in some of the airlines here in Europe, and they are, in my view, the main two effects when you compare the first quarter with the last quarter of last year.

Understood. Thank you.

The next question comes from the line of Gianmarco Conti from Deutsche Bank. Please go ahead.

Yeah, thank you for taking my questions. I have a few on my side as well. Maybe starting and reiterating on the North American direct connections, from where you stand now in the quarter, should we expect this to continue throughout Q2 and perhaps in the rest of the year, or do you see this as more of a one-off effect? And secondly, could you talk a little bit about the visibility you have in each of the segments with regards to both new contracts you expect to sign as well as upcoming renewals? And then finally, if you could give me some color on your plan for capital use, either in regards to share buybacks for future M&A. Is there anything in the pipeline that you anticipate using funds throughout the year to perform or perhaps do more share buybacks? Thank you.

Let me start again with the first question. I mean, look, we have provided you some views of how we see the evolution of the volumes. And of course, this considers that the impact of these effects. And therefore, yes, there is some impact in the growth. Of course, it's not one quarter. I mean, usually you have the impact in the growth is for four quarters. But then we have considered already in the figures that we have provided before. And it is already there.

on the financial policy question in relation to cash leverage and way forward. So everything that we've said stands. I would just reiterate for the second quarter, as a reminder, the VisionBox acquisition has been falling into that. So for the second quarter, I'll expect a marginal increase in net debt to EBITDA and from zero to decrease. And as we've said before, when we reach the lower level of our net debt to EBITDA, one to one and a half times, and again, barring M&A, because obviously we are continuing to look for opportunities to use also our cash resources and strength of balance sheet to grow the core, but barring M&A, we would also consider, again, to return back to shareholders through a share buyback further down the line.

I believe your second question was related to the contract situation. It's difficult to be very concrete. The situation is healthy. We keep signing deals. As we are announcing on an ongoing basis, I mean, our goal is to keep growing, and we are very pleased with how things are evolving. And our pipeline in all our different businesses is healthy. And as they become a reality, we will keep informing you to keep the growth of the company in the years to come. But I will say very happy this year with those prospects.

Okay, just to be very clear on the first question, you do expect it to have a similar or somewhat of an impact in Q2, right? with regards to the reconnections. It's going to be absolutely clear.

Yes, yes, the answer is yes. Thank you.

The next question comes from the line of Nicola David from Odoo BHS. Please go ahead.

Yes, hi. Thank you for taking my question. The first one is regarding NDC. Now that you are embarking more and more airlines and you haven't signed this contract, contract with Expedia. Could you give us an update on your view on the impact of the move towards NDC on the gross profit at group level? Do you still think that it's at least neutral or positive? And my second question would be further upon this direct connect, so I understand that you have taken assumption of equal impact on Q2, but you see on the market some more initiatives, which are not live yet, but which could, in H2O next year, have further impact on your local bookings. And my last one is a very easy question for Thiel about DNA. Should we see the reduction of DNA as passenger of sales in Q1 as a good indicator for the trend going forward? Thank you.

Good. Let me start with the P&L impact of NDC. So look, what we've explained before, from a logic point of view is applicable in stance. At the unitary level, you may see certain changes at the revenue level, at the revenue per booking or booking fee level, then countered by the incentive side. At the net level, and this is also what we have explained before, as NDC starts scaling more and more, we will talk about that more frequently, At the net level, I expect it to be neutral to slightly positive. But as Luis has already introduced, in terms of volumes and volume contribution in our booking mix, NDC is at the moment still very small. Therefore, you won't have much of an effect in that. But going forward, I expect that we'll speak more about that and give you also more color as volume scale. But that's, as of today, not the case yet.

With regards to the question about direct connects, I mean, as we have explained to you, this is something that may always happen. We don't see that or to have a sizable impact this year, and this is why we have provided you the views of how we see things. I mean, again, this may happen, but we don't expect that to have an impact in our projections for this year.

Nicola, you had a third question, which we weren't fully able to understand about cost of revenue again, or as an indicator, would you mind?

Yeah, it was about depreciation and amortization, which is down as percentage of sales in Q1. Is it a good indicator of the trend for the next quarters, next years, or it was a bit of a one-off about depreciation and amortization?

No, so as I said before, you can, from where we are in Q1 at the moment, I expect a deceleration or moderation if you just look at cost of revenue over revenues, okay?

I'm talking about depreciation and amortization, which are quite low.

Depreciation, now we've got it. Apologies. Sorry for that. Depreciation and amortization, okay, exactly. So, look, you can start off from where we are right now and then basically follow a little bit the trend as basically CapEx evolves. And as I said also, we've had certain effects in our depreciation and amortization lines that are related to our migration to cloud where we've taken certain accelerations over the past quarters. Of course, once they come to an end, you would also see the benefit of that coming through, okay?

Okay, that's clear. Thank you.

Our last question comes from the line of Victor Cheng from Bank of America. Please go ahead.

Hi. I just have a quick follow-up on thinking about revenue for booking. Maybe can you talk a bit about the dynamics there? Thinking about the direct connect impact, is that positive or negative? And then slightly separate one is thinking about, you know, AMAX GBT merging with CWT. And so broadly, just consolidation within the TMC space, how do you think that will impact maybe the competitive positioning and bargaining power with GDSs and Amadeus specifically.

Thank you. Let me start with the first one. And look, on the revenue per booking, it's true, and we've said that before, you have a positive effect from customer mixes in the revenue per booking evolution, which is benefiting also from the trends that we've seen over the past two, three quarters. But let me add as well, I do expect that in the quarters to come pretty much purely due to the comps. If you look at last year and you see the step-up evolution from Q1 into Q2, Q3, Q4, I expect that revenue per booking is moderating as a growth rate, okay? It will still be strong, but due to the comps versus last year, I expect the growth rate to come down a bit, okay?

With regards to Amex and Carlson, both of them are customers of us. We have a very close relationship with them. And therefore, we need to see how the future looks like. But they are already big enough. Of course, the bigger the travel agency, the tougher the negotiation. But this is not, you know, it's always been the case in the past that they are already big enough. So we will deal with them and hopefully we'll be able to convince them to give us incremental business.

Understood. Thank you very much.

There are currently no further questions. I hand the conference back to you, speakers.

So thanks a lot for joining the call. I'm looking forward to seeing you in our Capital Markets Day. Thank you.

Thank you. This now concludes our presentation. Thank you all for attending. You may now disconnect.