Amadeus It Group Sa Ord

This call is being recorded on Friday, February 28, 2025. I would like to turn the conference over to Mr. Luis Moroto, President and CEO of Amadeus. Thank you. Please go ahead.

Good afternoon. Welcome to our 24 full-year results presentation, and thank you for joining us today. Our business heads, Desius and Paco, are also participating today, and they will cover our business overviews. I will first recap on 24 and later I will review our financial performance on expectations for 25. Before we get started, as you may know, we recently announced that Carol Borch has been appointed CFO at Amadeus. Carol will start on May 5th and she brings over 30 years experience in finance and has held executive roles in various industries. I'm confident Carol will have a good fit with the team and that she will bring great value to our evolution in the coming years. Please turn to slide four to recap on 24. We continued evolving strongly through the fourth quarter, closing the year with solid results, delivering double-digit growth and expanding profitability. 24 was a highly productive year for Amadeus in which we successfully delivered on our outlook and commitments. On full year, revenues grew by 13%, EBITDA increased by 13%, operating income expanded 18%, adjusted profit grew by 20%, free cash flow generation expanded to 1.3 billion, growing 16% versus prior year. And we finished the year with leverage of 0.9 times EBITDA. We saw a strong performance across our reported segments. Air distribution grew by 11% in the year. In the fourth quarter, air distribution revenue growth accelerated, expanding a remarkable 14% year-on-year. Bookings processed through the Amadeus Travel Platform in the fourth quarter experienced year-on-year growth of 9%, and revenue per booking also advanced in the quarter to close to 5%. Airlines continued to sign NDC distribution agreements with Amadeus to distribute their NDC content through the Amadeus Travel Platform. We aim to become the undisputed aggregator of NDC content. We believe Amadeus has the most advanced and comprehensive NDC technology in the industry. Our RIT solution revenue grew by 16% in 24, supported by air traffic growth and the positive impact from new customer implementations over 23 and 24. We're pleased to announce that Air France KLM has contracted for Amadeus Navio. With Amadeus, Nevio Amadeus is leading the way for the retailing transformation of the airline industry. Air France KLM follows British Airways Saudi and Finnair, who have already contracted for Nevio. Amadeus also aims to become the IT provider of reference for the hospitality industry. We are uniquely placed to address industry needs and expand in a large and growing market. In 2024, our hospitality and other solutions revenue increased by 12%. MGM Resorts International has now completed the deployment of ACRS, our next-generation central reservation system, for the industry. We are also advancing well on the implementation of Marriott International and Accor to our platform. Marriott is creating a global community of world-leading hotels on a mission to transform relationships with guests. We remain highly focused on investing for the future. We are undertaking one of the largest and most complex cloud transformations to further unlock flexibility, scalability, speed, and innovation. 60% of our applications are now activated in the public cloud, and we aim to complete this transformation by early 26. We are harnessing the power of AI, data, and modern technologies with best-in-class partners. At Amadeus, we have a long history with AI. Our journey began with operations research, machine learning, and deep learning, revolutionizing essential functions like flight scheduling and search, airport resource management, passenger disruption handling, and revenue management systems. Today, AI and machine learning are key to improving user experience, predicting travel trends, personalizing customer journeys, and optimizing operations. Amadeus leverages these technologies And generative AI brings even greater potential, especially with the rise of agentic AI. We have integrated GenAI in our platform, offering our customers a solid path to deploy agentic AI solutions. And we aim to power the largest, most vibrant ecosystem of open, connected, and flexible travel solutions in travel. Finally, we are pleased to announce that the Board of Amadeus has agreed to launch a shared repurchase program in due course for a maximum investment amount of $1.3 billion to be executed over the next 12 months. This program follows our previous shared repurchase programs over 2023 and 2024 aimed at addressing the conversion of our convertible bond commit to term in April 2025. Amadeus also raised capital through the issue of new shares in 2020 20, we now aim to report chase and redeem alerts part of the sales then issued. Let me pass now on to Desius and Paco who will run us through the key developments at each of our reported segments.

Thanks, Luis. Hello, everyone. This is Desius. Let me start by saying that 2024 has been a highly successful year for air distribution. We grew 11% in revenue and 13% in contribution. We have delivered on our goals and expectations, and we are very optimistic about 2025 and beyond. Our aim is to continue to strengthen our position as the leading enabler of airline distribution, and this includes on NDC. On NDC, as Luis was saying, we are advancing steadily. We are aggregating more and more NDC content from full-service carriers and low-cost carriers onto the Amadeus travel platform. This quarter, last quarter, I'm sorry, Q4, we have signed LATAM Airlines and Sodia, and we have now over 70 NDC agreements with all types of airlines. We have implemented 31, and we are working hard to grow this number during 2025. As Amadeus expands its NDC content offering, we'll be capturing more and more NDC bookings in the future. Also, the vast majority of our travel agencies have now access and can service NDC content available through our platform. The overall adoption pace of NDC on our platform will progress gradually. Adoption is growing in all regions and across all types of travel sellers, including the corporate world. We also believe that as we see Navio grow and expand, bringing its advanced dynamic pricing capabilities, it will further promote the adoption and the value of NDC distribution. Now let's review our volume performance. Amadeus bookings grew 4.7% in 2024, supported by air traffic growth and Amadeus commercial gains in many parts of the world. Although our bookings growth in Noram was impacted in the first nine months of the year, if we exclude this effect, And also, if we exclude the positive effect from the booking cancellation spike caused by geopolitics in the Middle East in Q4 2023, we estimate our booking growth in 2024 at 7.9% versus prior year. In Q4, the bookings process through the Amadeus Travel Platform increased by 9% over prior year. We saw an acceleration in many regions, in particular in the Americas and Asia-Pacific. supported by air traffic growth and Amadeus commercial gains. Excluding, again, the cancellation spike last year in Q4 2023, which enhanced our performance versus Q4 2024, Amadeus booking growth is estimated at 7% in Q4 versus prior year. So with that, let's please turn to slide six, and now we're going to review airline IT solutions. Air IT solutions also had a strong 2024, with revenue growing by 16% in the year. Our positive performance was the result of the growth in our passengers boarded, coupled with an expanding revenue per passenger boarded, as well as our growth in airport IT. Our passengers boarded increased by 11% in 2024, driven by global air traffic growth and the positive impact from new customers' implementations we performed in 23 and 24. Through the year, we continue upselling airline IT solutions to customers, such as Cathay, Agen, Icelandair, as well as increasing our airport IT customer base through the year, including Kansai Airports, Navi Mumbai, Huntsville, and Montgomery Regional Airport in Q4. Navi, as you know, it is our new modular airline IT portfolio built on cloud technology and AI, meant to unlock the benefits of modern airline retailing. We are pleased that Air France-KLM has signed for Navio, making it our fourth customer and advancing the pace of the industry evolution to a customer-centric retailing. Navio will support Air France-KLM in its ambition to modernize its systems and to move to a modern offer-order native system. It will elevate the customer experience by allowing customers to track all travel details in one accessible order to receive more personalized offers and to do more self-service. We're working hard and we're looking forward to further expanding our Navio customer base. I'll now pass on to Paco.

Thank you, Desius. Good afternoon. This is Paco. I'm pleased to be here. As Luis was saying, we are uniquely placed to support the hospitality industry in transforming relationships with guests, and we are actively expanding our footprint. In 2024, hospitality and other solutions revenue grew by 12%, supported by new customer implementations and volume expansion, and the host segment's contribution grew by 15%. We continued to add customers across our hospitality portfolio through Q4, We cross-sold hospitality solutions to several airlines, such as Iberia, Whaling, and Europa, and established new partnerships, such as with Salesforce, for our new hotel-oriented service and call center. We were pleased to announce that MGM Resorts International has completed the deployment of our next-generation central reservation system, allowing MGM to benefit from highly advanced distribution capabilities and enhanced operational performance. ACRS also offers a differentiated attribute based selling technology, which transforms the way hotels can provide personalized merchandising to their guests, empowering hotels to increase revenues, elevate the guest experience and improve operational efficiency. Being cloud native, ACRS ensures ultra high availability and ultra-fast response times. Its architecture provides a single source of truth, and its scalability allows us to support any hotelier's growth ambitions. By working closely with MGM, we've also tailored the ACRS platform to address specific needs and goals of MGM, developing several innovative ACRS capabilities. This, in turn, strengthens our community model, as it will benefit all our customers and it has made our technology more relevant to a broader customer base, including sophisticated resort properties and mid-sized hotels. We look forward to further exploring new customer opportunities in these expanded segments as well. Thank you, and I will now hand back to Luis.

Thank you, Paco. So please to slide nine to review our revenue evolution. So group revenue grew 12.9%. supported by double-digit growth across all our segments. In our distribution, the revenue was growing almost 11%, primarily driven by booking evolution, we described, and by revenue per booking growth of 6%, driven by positive pricing effects, including from inflation, yearly price adjustments, contract renewals, and new agreements, and a positive booking mix effect compared to prior years. Air IT solutions revenue grew by 16%, driven by PV volumes evolution discussed, and up 4.4 higher revenue per booking, which primarily resulted from positive impacts from inflationary price adjustments and upsell of incremental solutions, as well as fast growth of our airline expert services business and growth in airport IT revenues, including vision box revenues. Regarding hospitality and other solutions, as Paco described before, revenue was 12.3% of prior year, driven by strong performances of both hospitality and payments. In hospitality, our fastest growing business were our transactional businesses, driven by volume expansion, supported by customer implementations. On slide 10, for a review of our contribution by segment, an evolution of net indirect costs in 24 versus 23. Air distribution's contribution grew by 12.5%, and the margin expanded by 0.7 percentage points in 24 to 47.3%. The cost increase we had in air distribution came from higher variable costs driven by the bookings' evolution and an increase in our average unitary distribution costs impacted by customer and country mix, And we also have increased R&D primarily dedicated to R&DC technology and solutions for corporations as well as to customer implementations. In RIT solutions, the segment contribution increased by 14.6% and the contribution margin was 70.9% in 24. Excluding the VisionBox acquisition, RIT solutions contribution margin expanded by 0.6 percentage points in the year. The cost evolution in RIT solution was driven by R&D, focused on the enhancement of our portfolio for airlines and airports, customer implementations, and our fast-growing airline expert services business. And variable cost growth, largely driven by the expansion in airline IT and the consolidation of VisionBox. Regarding hospitality and other solutions, the segment contribution in 24 grew by 8%. 15.4%, and the margin expanded by 0.9 percentage points to 34.5%. Costs advanced in 24 from higher variable costs, primarily driven by a higher number of hospitality transactions, as well as the expansion of our payment B2B wallet solution, the consolidation of Voxel, and an increase in fixed costs resulting mostly from R&D dedicated to the evolution of our hospitality and payment solutions portfolio, and to customer implementations to support the business expansion. Finally, net indirect costs were 15.3% higher in 2024, mainly resulting from an increase in cloud transaction processing and migration costs as a result of our volume growth and our progressive shift to the cloud, as well as, to a lesser extent, increased resources in transversal functions and a unitary personal cost increase. We talk about EBITDA, EBITDA and profit evolution in slide 11. In 24, our EBITDA grew 13.2% versus prior year, resulting from the 12.9% revenue evolution discussed and cost of revenue growth of 13.8%, which primarily resulted from variable cost growth in our distribution, driven by the booking growth and higher unitary distribution costs. Variable cost growth in hospitality through higher volumes in media and distribution, among others, and also in payments due to the B2B wallet expansion, as well as from our growth in airport IT, including the VisionBox acquisition consolidation. We also had P&L fixed cost growth of 11.9%, mostly driven by an increase in resources, particularly in our development activity, coupled with a higher unitary cost, higher cloud costs, and the M&A consolidation impact. As a result of these dynamics, our EBITDA margin was 38% in 24, slightly above 23. Below the EBITDA line, DNA expense increased by 2.9%, mainly divided from higher amortization and internally developed assets, partly offset by a lower depreciation expense. The increase in EBITDA coupled with our DNA expense evolution drove EBIT up by 18%, and EBIT margin expanded by 1.2 percentage points to 26.6%. Finally, adjusted profit grew by 19.9% as a result of our EBIT growth and the higher net financial expenses and taxes we have cut relative to prior year. Page 12 for our review of our free cash flow generation and capex. In 24, we generated 1.335 billion of precast flow, representing a 15.9% increase over prior year. Precast flow growth mainly resulted from the increase in EBITDA and an improved change in working capital inflow and growth in CAPEX. Year-on-year growth was enhanced by net positive non-recurrent effects, both in 2024 and 2023. These were collections stemming from the positive resolution of tax proceeding of $43 million in 2023, $45 million in 2024, a refund related to taxes from previous years that we received in the last quarter of 2024 amounted to $71 million, and a payment to a distributor of $11 million we made in 2023. Excluding these effects, free cash flow increased by 8.8% year-on-year. In 24, our CapEx increased 173 million or by 28.9% and represented 12.5% of revenue. CapEx growth came primarily from software capitalizations, which in the year mainly focused on customer implementations across our businesses, such as Marriott, Accor, and MGM for ACRS, Nebio customers, and across our IT portfolio, as well as customers implementing NDC technology. Also, the evolution of our portfolio, including Amadeus Nebio and Naviter Stratos for Airlines, our hospitality platform, NDC Technology for Airlines, travel sellers and corporations, and our migration to the cloud and our partnership with Microsoft. Please turn to slide 14 to cover our expectations for 2025. Our 2025 outlook consists of the following. Our group revenue in 2025 should be between $6.69 billion and $6.94 billion, which implies a growth range of 9% to 13%, supported by strong evolution at all our segments. I will describe our expectations for our segment's performance in the next slide. Our EBITDA in 2025 should be between $2.49 billion and $2.61 billion, which implies a growth range of 7% to 12%. We expect some fixed cost growth moderation in 25 versus 24, but we will see this more evidently next year in 26 versus 25. In 25, we will advance at a faster pace with our cloud transformation. 60% of our applications are activated in the public cloud today, and we are aiming to raise this gradually to 100% by early 26. As a result of this, our cloud transaction processing costs are still outpacing our business evolution. We also have non-recurring costs associated to our cloud transformation as we are sustaining at the same time our own infrastructure and the project cost to migrate. All these elements increase our fixed cost growth in 25. In 26, we will complete our cloud transformation project and require less costs and thus we expect a moderation in fixed cost growth. In 25, we expect mid-single digit depreciation and amortization growth. Therefore, EBITDA growth will outperform EBITDA growth. With regards to precast flow, we expect to generate around 1.27 to 1.35 billion in 2025 on the back of growing EBITDA and increased CAPEX and cash taxes. CAPEX as a percentage of sale in 2025 will be similar to 2024, although likely below. Note we expect free cash flow in the first quarter of 2025 to be below free cash flow in Q1 last year due to higher capital expenditure, which increased quarter-on-quarter throughout 2025, and also to higher cash taxes. This is our outlook for 2025, our strong evolution in 2024, and the continued growth expectations we have for 2025 puts us well on track to achieve the three-year outlook we provided you with at our 2024 Amadeus Investor Day. me finish with some color on our generally expected dynamics at segment level you see that on slide 15. as you know global traffic growth is expected to be slower in 25 than in 24 as it continues to normalize in our distribution we believe our revenues in 25 could grow 8 to 11 percent backed by amadeus booking growth supported by global traffic growth and amadeus commercial gains together together coupled with an expanding unitary revenue supported by positive pricing effects. In terms of contribution, in 25, we could see a small margin expansion in their distribution contribution margin. Note our booking performance year-to-date in quarter one has been softer than in the quarter four last year, impacted by an increase in cancellation of post-the-aircraft incidents in NORAM and APAC and the weather disruptions in the U.S. These effects, together combined with the ongoing gradual normalization in traffic growth and a negative workday effect, will impact our booking growth in the first quarter, what we expect to be lower than prior quarter. In RIT solutions, we should see revenues growing between 10% to 14% based on a PV evolution that will be driven by global air traffic growth coupled with an increase in revenue per PV, supported by positive pricing effects, continued upselling, as well as higher airline expert services and airport IT revenues. In terms of contribution, we expect the air IT solutions contribution margin to be dilutive versus prior year impacted by business mix from faster growth airline expert services and airport IT, as well as still some consolidation impact from our vision box acquisition. For the whole segment, we are expecting revenue growth to accelerate throughout the year and to deliver between 12% and 18% growth, supported by volume expansion and new customer additions across our hospitality and payments portfolios, as well as for contribution margin to expand relative to prior year. Regards to our potential 23 to 26-year evolution, given the slower growth unexpected that we are currently generating in payments, we see hospitality and other solutions revenue CAGR coming out closer to the lower end of our 15 to 18% range. Thank you. With this, we have finished the presentation. I'm ready to take any questions you may have.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Alex Irving from Bernstein. Please go ahead.

Hi. Good afternoon. Two from me, please, both on order management. So it seems we're starting to get some momentum on signings here for the OMS. Can you please share any detail on how the commercial model is evolving and how you think revenue for passenger boarders therefore evolves over the medium term. Second question also on the OMS. There's a few airlines, notably four big network carriers, that still haven't outsourced their PSS. How likely do you think it is that some of these begin to outsource the OMS as the migration continues industry-wide? Thank you.

Hi, this is Desius. So let's just start with the first question around the PSS. the momentum, let's call it this way, on revenue management and other solutions. I think we're making lots of progress. We have some tier one airlines that are adopting the system, giving us very good feedback about, let's say, increase in top revenue, thanks to the solution. So the effect on our average PB fee. I think it has been already mentioned within the guidance, which is as we move forward, we expect both expansion in terms of growth in PB numbers as well as on the average per PB as the new modules are added to the PB fee. On the second question around the airlines that haven't outsourced yet their PSS solutions into the move to offer an order. We are optimistic. We feel that there is a number of tech trends that are happening that airlines needs to invest in cloud, in AI, and revamping their applications. We believe that every airline will have limited resources in order to do all of those investments. And then one module or another, we feel that that is always an opportunity for them to outsource because not all modules are critical. And now with the cloud and our modular approach, we believe that we have a lot of flexibility. So far, we don't have anything more concrete than that, but we are optimistic.

All right. Thank you.

Thank you. And your next question comes from the line of Sven Merck from Barclays. Please go ahead. Thank you.

Grace, good afternoon. Thank you for taking my questions and congratulations on the strong quarter. Maybe first a question on air distribution that has been very strong and you have a strong outlook. Can you just provide us a little bit more color what underpins a strong booking group, any specific regions, type of bookings, type of elements that drive that? And how do the NDC agreements that you're in the process of implementing, impacting that booking group? Is it more that they drive just a like-for-like replacement of the EDFacts booking, or are you adding any kind of incremental booking as well? And then maybe, secondly, it would be also great if you could give us a bit more color on the end of the cloud transition. I hear that it will slow down the fixed growth growth. how much of the cost savings that you have overall will drive that lower fixed growth versus the proportion that you're reinvesting. Thank you.

Okay, let me take. So in the guidance of distribution, we have taken both effects I already mentioned, the increasing bookings, which of course includes the evolution of NDC and will keep growing next year. This is part of our assumption. and then the fact that there will be an increase in the booking fee. Of course, again, in terms of concrete numbers, I mean, we need to see how things evolve and how the evolution of the traffic is evolving. I mean, we expect more and more normalization in the volumes, as we have already mentioned, because The expectation of passengers, and you know what IATA has in terms of estimation for the full year, is coming back to more normality, to more pre-COVID figures. So we have taken that as a starting point to make our assumptions. But both our bookings And our booking fee are expected to grow. Then we'll need to see the mix. We have taken our own assumption of the evolution of NDC bookings, which is included in the guidance. And with that, we are confident about the range of revenues that we have provided that assume both growth in bookings and in booking fee there. With regards to the fixed costs, again, we already mentioned the fact that we expect a lower growth for fixed costs. During the last years, we have had an impact of both the increase in the cloud payments to the public cloud providers, as well as the investments we have done to really migrate to the cloud. Of course, the cloud cost will still be there, and we are in the ramping up, and still in 26, there will be some ramp up, because as I mentioned, we are at 60% at this moment, and we plan to go to the 100% at the beginning of next year. But in terms of all the costs related to the migration and the duplication of costs that we have, we should optimize that next year, and therefore, our costs should grow less than what we are assuming this year.

Great. Thank you.

Thank you. And your next question comes from the line of Aiden Wood from Morgan Stanley. Please go ahead.

Hi. It's actually from Laura, but I'm also from Morgan Stanley. Can you hear me?

Yes.

Okay. Two questions, please. The first one is, at the CND, you talked about the opportunity to potentially reinforce some GDS bookings. Could you please give us an update on how you're doing on this and if you're still hoping that you can re-intermediate soft bookings? And then second question, please, on the potential uplift from Nevio. As you're signing more and more customers, do you have a sense of the pricing uplift from Nevio versus the other Amadeus systems? Thank you very much.

Okay. Let me start with the second one, which is once we move from PSS to Nevio, We're not discussing the same scope. Navio has a much broader scope than what is a PSS. So it is difficult for us to do the comparison of a customer that used the PSS versus a customer using to Navio, what is going to be the exact difference in terms of PB. So what we have guided has been that we believe that in all of these transitions, we're going to increase in scope. And by increasing scope, we're gonna be able to increase the average fee that we charge the customer because we are picking up more modules. There is a reference of Teach URL where it talks about on similar scope of what could be that difference and they guide a difference in the teams in terms of positive and moving for offer and order. But again, I think this is a public reference just to give an idea, but I think for us it really depends on the scope of each of the customers. Regarding re-intermediation, so I think that when we provided our guidance at Investors Day, we said that re-intermediation was an upside opportunity, but it has never meant or has been part of what is our guidance for overall results in distribution. Okay, nonetheless, What we have seen is more new content being the driver now of growth, where we see carriers that were not participating that now decide to participate. We have a couple public announcements where we have Indigo, who will be joining the system and distributing. We had the announcement of Southwest and Expedia. They are now going to be distributing through the GDS. So we see positive momentum. on the new content part. Now, regarding the re-intermediation, we're having lots of conversations. We expect that eventually this is going to be brought into the fold as well. And whenever we have that ready, we'll share with all of you.

Thank you very much.

Thank you. And your next question comes from the line of Christopher Tong from UBS. Please go ahead.

Yes, it's Michael. Sorry, I had some problems getting on. Just I think on last quarter, Luis, you gave us an indication of the proportion of bookings on the GDS channel that were NDC for the airlines that have been onboarded. I think it was teams. Could you give an update on that? And I'm curious, you've signed, I think, 70 deals nearly in the year on distribution. Are most airlines now including an NDC element to that? or are you still seeing quite a few of them prefer to keep their NDC bookings in alternative channels? And then just continuing on the GDS thing, I think your main listed competitor talked about winning some market share and some quite high-profile travel agents. Can you confirm if you've lost any sort of important agents in 2024? Thank you. Okay, this is Desius.

Let me start with a commercial and market share element, which is the easiest. I mean, we're making progress in terms of winning more customers, both in North America and Asia Pacific. So I would say from our point of view, we don't see any meaningful or significant customer moving away from our customer base. In terms of the NDC evolution, that is one thing that we said that will evolve gradually. It's going to be in the teams for quite a while. Why is that? As we have mentioned, we have 70 NDC-specific agreements. So when we talk about agreements with airlines, we have over 400 agreements that are specifically doing NDC, 70, which covers a very large base of the seats that we have and the NDC offer in general. No? No. So we have 31 of those 70 implemented. So this means that we are on the teams with the 31 that we have implemented. But every other month, we are adding airlines. So as an example, we are now adding Emirates. So it is like when I add Emirates to the base, it means that it's going to be difficult for us on the percentage-wise to progress in terms of adoption. No, because Emirates starts from a low adoption point. So that's what we are meaning that, In absolute terms, we have NDC bookings growing in triple digits. But in terms of percentage, it's going to take a while and gradually evolve for this to be, let's say, above the teens until we have those 70 carriers implemented. We have so far for a few years implemented 31, and we believe that it's going to take at least another couple of years for us to get to all of these 70 implemented carriers. So adoption will be gradual. Thank you.

But do airlines come up for renewal and say, well, I'm going to do a contract with you, but I just want to end the fact with you because I'm choosing Direct Connect for NDC? Or are those airlines that don't do an NDC contract with you just not using NDC?

I would say the only major airline that we have today that does not have NDC with us is Turkish Airlines. I would say every other major airline that has signed with us does both, does Air Effect and NDC. But you still have a large number of carriers that do not have an NDC program because NDC is typically for a large airline.

Understood. And the commercial terms are the same for both, or do you see a recognizable difference in pricing or cost?

As we discussed, our pricing, it is much more related to the reach rather than to the technology. So it means, and we have a wide range of business models with many carriers. So what we try to provide you is with an average of all of that in the guidance. So we see positive evolution, which what we're saying is we see positive mix, both in terms of reach and in terms of richness and and the deals. So I think we remain confident on the relevance of the channel moving forward.

Thank you for bearing with me.

Thanks.

Thank you. And your next question comes from the line of Victor Chang from Bank of America. Please go ahead.

Hi, good afternoon. Congrats on the quarter. Three questions, if I may. First, on distribution, you got an 8 to 11% revenue growth. And I think I had to mention roughly 6% volumes growth. And you alluded earlier, it will be a mix of volumes and revenue per booking growth. But I guess it still implies a pretty decent kind of revenue per booking growth. So my question is, we continue to see revenue per booking probably growing relatively strongly into 25%. How sustainable is that going forward, and what do you see are the key drivers to that? And then my second question is on payments. I think previously you talked about reacceleration in 25. I think in Q4 it was maybe a bit slower than expected. Do you still see that happening? Is it more X2 bias? And then thirdly, I would say, Maybe some of the two largest OTAs in the U.S. have been expanding their B2B services, maybe a bit more focused on hotels right now. But do you see any risk of them kind of overlapping in your space, either in hospitality distribution or maybe over time in airlines as well?

Okay, let me start with the first one. And this is going to provide you a more colorful payment on the business side. I mean, yes, you're right. I mean, we are assuming the booking fee growth will still be here in 2025. And this is the result of, you know, the mix, the ongoing negotiations, the renewals that we are having where we discuss EDIFAC and NDC bookings, the mix. And as we have done in 2024, We feel we have the capability to really continue working the same way and having a positive impact in 2025. Therefore, yes, there is an assumption that the booking fee will increase in 2025 and we'll be doing well. And again, we are talking about a globality of the market, so different deals, different agreements. So we're all between some of our price increases that we apply, the mix that we are getting from bookings, also from different kind of NDC versus CDFact and the fact that you have global versus regional and local. Putting all together, we are reaching the final figures that brings us to this revenue growth. Of course, at the end of the day, I mean, as you can imagine, things may evolve in terms of bookings, booking fee mix, but we feel confident that the mix of both concepts, booking fee and bookings, are going to bring us to the revenue range that we have provided you. With respect to payments, if you can provide a bit more color, Tessius.

Yes. I will start with the OTA question, the B2B question. which is we see the OTAs moving into B2B space as partners because they continue sourcing content from us and they consume more technology when they go into those spaces. So typically what they're doing is that they are powering brands and what they're doing is they're doing customizations, they're doing biasing, they're doing servicing. So I think this has been very common specifically with banks and loyalty schemes, where usually you have an agency behind. The difference is maybe in the past that agency was an offline agency, and now we're talking about an OTA because everything has moved to digital. But we see that as positive, okay? And it is not a competition. It's a partnership. In regards to payments, we have three areas of expansion. Our business is growing well and mostly in Europe. So we see two regions that we can expand geographically. One is Asia-Pacific. The other one is the Americas. And we have as well in Europe the possibility now of doing self-issuing, which will bring us flexibility and better take rates, let's call it this way, on all of the business that we have in Europe. So I think these are the three projects that we are delayed and we are picking up. So we see evolution and we're going to see evolution of payments during the 2025. It is hard for me to precise when exactly everything is going to be on the P&L and on the numbers. But we continue onboarding customers on both regions, North America and Asia Pacific. We are doing the integration with the partners. We are making progress on our self-issuing. So I think payments will be providing during 2025. Good news. And we have a little bit of delay, but things are coming and growth is going to pick up.

Got it. Very clear. Thank you.

Thank you. And your next question comes from the line of Charles Brennan from Jefferies. Please go ahead.

Hi there. Thanks for taking my questions. Can I just ask on hospitality as well? particularly on the FX side. I think there's a FX tailwind in Q4 relative to a headwind in Q3 on a constant currency basis. That implies a slightly greater slowdown in growth in the fourth quarter. Is my maths correct there? And is it just payments contributing to that slowdown? Or does some of that relate to hotel IT as well? And then when we look out to 2025, what are you baking into your hospitality assumptions with regard to FX? I think it could be potentially another 2% benefit. And if I look at the range, the range is relatively wide. Is that just to take account of FX variability, or are there timing issues with Marriott and Accor that feed into some of the uncertainty this year? Thank you.

Okay, with regards to FX, I mean, in general, as you know, we don't report specific FX numbers because sometimes it's positive, sometimes it's negative, unless there is a big difference. If we see during 24 for the full year, the impact has been neutral, mainly at revenue at EBITDA level. Yes, in the fourth quarter, there was some positive impact. Not very significant, but it was positive. And with regards to hospitality, yes, the revenues were a bit behind the third quarter, but nothing to do with underlying issues, as we have explained in payments. It had more to do, and I have Paco with me, with some, you know, seasonality matters in this case of media revenues and DMOs that were higher on one quarter of the other, but this is very common during the year for part of the hospitality business, which is not so much linked for transaction. With regards to 25, the guidance on the range is not related to forex variation at all. I mean, it has to do more with how the speed of growth of payments is going to come into the equation that Desir mentioned. Yes, I mean, we have the migration of Marriott in 25, but so far it's under control, so we don't expect that. Of course, there could be always a delay at the end of the project because we are not yet there, and we are, you know, in the process of testing, so there may be some risk, but at this point it's not the case, and therefore the range is more related to the payment ramp-up and how this is going to really play into our P&L than really thinking about variation of Forex in the 2025 figures.

Perfect. Thank you. Thank you.

And your next question comes from Toby Ock from J.P. Morgan. Please go ahead.

Yeah, hi. Thanks for taking the question. A few questions from my side. Perhaps just on the group revenue growth guidance for 2025, so 9% to 13%, could you help us with the magnitude of the FX and M&A contribution to growth that you're expecting within that. And then just following up on the M&A, I know you've announced the buyback. Does this mean we shouldn't expect any more bolts on M&A this year? And then just on the free cash flow and the CapEx trajectory, clearly the CapEx has been ramping each quarter through 2024 and you've indicated Q1 free cash flow to be down year over year on the CapEx and taxes. How should we think about the CapEx evolution through the course of 2025, is there a point during the year where you expect the capex to peak and then start to moderate? And then for the 25 guidance of capex as a percentage of sales to be in line with 24, they're likely slightly below. To what extent does that fully capture any implementations that could materialize at some point in 2025? Thank you.

Okay, let me start with the CAPEX. I mean, the CAPEX assumes, of course, what we have today, including our fresh KLM that we have just announced, and all the projects that we have in our pipeline with the majority of what we know. I mean, look, of course, things may change during the year if we are able to redesign something very significant, but we should be in the bull part of what we have provided you as guidance. I mean, it should be at the level that we have set. With regards to the quarterly, I mean, we have provided you with a full year. Yes, there has been a ramp up during 24. So as we move forward during the year, I mean, the growth versus last year should be decreasing because we have an increase in the first part of the year and progressively to really reach the final number that we have provided to you, you should see that moving forward in the following quarters. With regards to the question on Forex and M&A for the group revenue, I mean, there is some impact, but it's not very significant. I mean, if you take the average of last year, yes, there has been a movement, I think, between different quarters of 24. But when you see the average of 24 versus what we are assuming today, I mean, the impact is not significant. I mean, there is some movement, but it's not much. And with M&A, it's the same. I mean, we are talking about some months but in terms of the size of the acquisitions that we did and in terms of the did you take that into account and then you take just the months where the companies were not consolidated in 24 i mean the impact to our revenues is going to be pretty small so both forex and acquisitions i mean have some impact but it's not very significant in in our p l And with regards to Bolton, yes, there may be acquisitions during 2025. Look, we don't know. We are looking into that continuously. We are trying to see companies that may add value for the medium term of the company. So this may happen during this year. But it's not, you know, part of our figures because we don't know how this may evolve in the year, in 2025.

That's great. Thank you.

Thank you. Your next question comes from the line of Nushi Niyati from Deutsche Bank. Please go ahead.

Hi. Thanks for having me on. I'm just going to pick up on air distribution, if I may. So the growth that you are giving us for 2025 and then the amount that you have grown in 2023 and 2024 kind of, makes the CAGR that you gave us in CMD very, very conservative in a sense. I was wondering, so it's just basically implies mid-single-digit. I was wondering if this is now just conservative and you're going to revisit this, or you are thinking of some sort of deceleration on the back of travel, bookings, normalization, et cetera. Thank you.

I mean, look, we provided you three years. It's very difficult to be more concrete than that. We have had a very good performance in the first year. We are guiding you for the second year. Of course, it will depend a lot on how the traffic, the booking evolution, is going to happen in the years to come. So look, we feel comfortable with the range, but I don't think we are at the point today to really change any of the guidance of air distribution at this point. Saying that, let's see how the year evolves in terms of traffic and bookings. And at the right moment, we will see we need to revisit the 2026 figures, which is the one that will be missing in the guidance.

Thank you.

Thank you. And your next question comes from the line of Laurent Duret from Kapler-Chevreux. Please go ahead.

Yes, thank you. Good morning, gentlemen. I have three quick questions. The first is on the end of the cloud transformation program. I was just wondering where you were standing on the decommission of the data centers and also if all the cost reduction you're going to have at the end of the program if some of it might be reinvested into new investments. The second one is on the CAGR 26 on the HOA. HOA, as you commented, you may be on the lower end of your initial guide from the CMD. I was just wondering if it was just payment that was running behind and if those hotels alone were, on the other hand, bang in line. And the final one is an easy one. It's just be sure the tax rate next year, this year and next year will be back to like normal 21, 22%. Thank you.

Let me start with the last one, tax rate. I mean, it will be slightly above our estimation today of what we have this year, excluding all these one-offs. A matter of mix of countries, but pretty much in line with what we have had in 20... I'm talking about the tax rate for the P&L. In terms of cash, you know, it's much more... you know volatile because we receive some payments and we do some some of the credits and we do some payments during the year but our assumption is that the tax rate will be slightly above but quite similar to 24. uh the let me see the other two questions um if i remember it's about the the Hospitality, look, the fact that we are mainly giving you a new guidance or new guidance. We are talking to you about the low part is the delay. We have cut mainly during 24 as we expect the revenues to be in line in 25 and 26 with the risk that we already mentioned. The only reason we can have there is the payments implementation that this year's already explained. Well, plus the fact that in hospitality, we have a couple of big migrations, which are impacting somehow, which are Marriott mainly. And then, of course, some impact in 26, we are going through the migration as always. There may be some risk, but in principle, we are still assuming this will be on time and therefore. will be part of our guidance, and overall the CAGR of hospitality should be in line with our original expectations. So the combination of both payment and hospitality is close to the range, or very close to the low part of the range, and the main reason has been the shortfall in 24. And I think the last question Is the end of cloud? The answer is yes. Part of that will be reinvested. But of course, on both areas, P&L and CapEx, we should see a positive impact from the fact that, okay, there is the end of this migration and some costs will not be there next year. But yes, part of that will be reinvested in projects in the company.

And the decommissioning of data centers?

Yes, that's what I mentioned. I mean, it's all together because you have the costs related to the data center. You have the people dedicated to The migration that is very progressive because some applications have been already migrated, so they are already working on other projects. Some of that is going to really stay in 26. So part of that is being already moved, but not the full amount. And part of that will be done as we finish this migration in 26. That's why we said, look, our cost growth in 26 is going to be less because we don't have this impact. But part of the cost of the company and the investment will stay here.

Very clear. Thank you.

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Luis Moroto for any closing remarks.

Thank you very much for attending the call and for your questions. I'm looking forward for the first quarter results. Thanks a lot.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.