Amadeus It Group Sa Ord

Good day, ladies and gentlemen, and welcome to the Amadeus first quarter, sorry, first half of 2025 results conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference call over to Luis Moroto, President and CEO of Amadeus. Please go ahead.

Good afternoon. Welcome to our 25 first half results presentation. Thank you for attending today. I am joined by our CFO, Carol Bor, who will be presenting Amadeus results for the first time. Carol has had the opportunity to meet a lot of you as part of her onboarding and is ready to address your questions. We have made some changes to our quarterly presentation and may make some more in the future. We aim to simplify how we communicate and to ensure that the strengths of our business are clear to the broadest group of investors. To start, I will focus on our most important business developments in the period, and Carol will elaborate on key financial aspects. Let's turn to slide 4 for our headlines in the first half. The first six months of business in 2025 evolved in a challenging macro and geopolitical environment. Despite this context, Amadeus delivered steady and profitable growth throughout the period. Our top line grew 8% at constant currency, and our profit grew faster than our revenues, while we continued to drive our strategic plans forward. As a leading IT provider to the travel industry, we continued to invest decisively to support future revenue generation. For the first six months of the year, we invested about $700 million in R&D, over 20% of group revenue. We are just completing one of the largest and most complex cloud transformations with 90% of our applications now activated in the public cloud. Our cloud transformation unlocks greater flexibility, scalability, speed, and innovation potential. In the first six months of the year, we continue to expand our relevance in travel. We won't renew to extend the business deals across our businesses. We advance in negotiations with others. and we progressed on our industry-transforming strategic customer implementations of leading industry players, such as British Airways, Air France KLM, Marion International, and Car-Anne Akoi. We have long-standing strategic partnerships with world-leading technology players to boost our strengths. We were pleased to announce our newest strategic partnership with Google, which together with Microsoft, supports our multi-cloud strategy. Additionally, Amadeus will explore AI-driven innovations by leveraging Google Cloud's AI technologies. And we are also collaborating to enhance flight search accuracy and airline offer management by integrating Amadeus Navio and MetaConnect with Google's offer management system and Google Flights, which will improve user experience and market presence for airlines. It's time to slide five for a brief strategy update. Amadeus is leading the airline industry's retail transformation. We are advancing with the implementation of our first Amadeus Nebio customers. Nebio is our next-generation early IT platform, offering advanced retailing capabilities beyond offer and orders, consisting of fully flexible modular cloud-native solutions and the latest advances in AI. Nebio has a distinct value proposition which allows us to offer our customers the possibility of doing much more than before and to attract new customers thanks to Nebio's deep modularity. We continue to advance negotiations with potential Nevio customers. Finnair, an early Nevio customer, has become the world's first airline to create a native order aligned with IATA's one-order init directives. In the Middle East, Saudi Arabia is leading the industry by adopting our smart bridging capabilities, a first step towards offer and orders implementation. The French KLM, the latest airline to select Nevio, has already started the program to implement the solution. Additionally, Bridge Service has completed the transition from its in-house revenue management system to our Amadeus Network revenue management. This marks a major milestone in VI's transformation program and retailing strategy supported by Amadeus. We also aim to become the IT provider of reference to the hospitality industry. We believe the Amadeus hospitality platform offers the most comprehensive portfolio of core capabilities to the hotel industry and is the most broadly connected ecosystem of partners. We are uniquely placed to address industry needs and expand in this large and growing market. We are progressing well with the implementation of Marriott International and Accor to the Amadeus hospitality platform, following Intercontinental Hotel Groups and MGM Resorts International. We are creating a global community of world-leading hotels on a mission to transform relationships with guests that will run their core technology on our platform. Amadeus also praised the Amadeus Travel Platform, a leading platform that enables travel providers around the world to retail through third parties everywhere on the globe. In the first six months of the year, Amadeus partners strengthened its leadership in airline content distribution by adding new travel seller customers and increasing our set of wallets at existing customers, as well as expanding the content bookable on our platform. In the first half of the year, Amadeus has signed 29 new contracts or renewals of distribution agreements with airlines. On the NDC evolution, we continue to implement and expand the NDC content made available through the Amadeus Travel Platform. At present, we have 74 NDC agreements signed with our flights. Our goal is to become the undisputed aggregator of NDC content. We believe Amadeus has the most advanced and comprehensive NDC technology in the industry and we aim to do NDC at scale. We are bringing the global travel industry together on a modern technology platform to connect the entire travel ecosystem. In addition to our ongoing cloud transformation, we are continuously harnessing the power of AI, data, and modern technologies. AI and machine learning are key to improving user experience, breaking trial trends, personalizing customer journeys, and optimizing operations. We have integrated GenAI on our platform, offering our customers a solid path to deploying gigantic AI solutions. Technologically, we aim to power the largest most vibrant ecosystem of open, connected and flexible solutions in travel. Please turn to slide 6 to review our commercial developments and operations in RIT solutions. Our most recent commercial developments in RIT included upselling Wins with Gold, one of Brazil's leading airlines, and also with flag carrier Bulgarian Airlines. We renewed our Altea agreement with Luxair, which brought adoption of incremental solutions. and also our New Skies Agreement with Ryanair, marking 25 years of collaboration. During this quarter of a century, New Skies has supported Ryanair's impressive growth trajectory and expansion, enhancing the airline's operational efficiency, customer experience, and revenue generation capabilities. With our new Google partnership, we are implementing a collaboration on QPX, the Google Offer Management System, through Amadeus Navio, which will create the opportunity for more airlines to leverage Amadeus Navio. In Airport IT, London Gatwick, the UK's second busiest airport, is expanding its use of Amadeus Biometric technology. With this rollout, all outbound passengers at London Gatwick's terminal will be processed through the Amadeus Singlet Journey platform, enhancing passenger experience. Also, Amadeus has expanded its collaboration with the Australian Department of Home Affairs, supporting enhanced automated border processing capabilities at the departures of the country's 10 international airports. Italy alone expanding Altea Departure Control System has further expanded the use of the leading solution to include Florence and Pisa airports. Expanding the use of our biometrics technology into an adjacent Space, a casino operation in France, has deployed Amadeus' seamless gate and seamless journey platform, delivering a premium contactless VIP entry experience. Our biometric solution has reduced checking times by 30% and significantly improved customer satisfaction. Moving on to our volume performance, in the first half, Amadeus passengers boarded grew by 4.6%, driven by the global traffic evolution in the period, supported also by the Vietnam Airlines implementation in April 24. Screwed timing effects in the first half, we estimate Amadeus PV growth at 5.2%. In the first half, global traffic growth was impacted by geopolitical situations in different regions, such as the Middle East and South Asia, by a moderation in travel demand to and within the U.S., and other events such as aircraft incidents both in first quarter and second quarter. In the first months of this year, all of our regions, excluding North America, reported solid growth. Asia Pac was our fastest growing region, reporting 10% PV growth. In the first few weeks of July, we have seen volumes trending slightly below the second quarter. However, there have been several extraordinary events that may have impacted early July traffic in various regions, such as the controller strike in France, and the Israel and Iran conflict in the Middle East. Please turn to slide 7 to review our operating performance in hospitality and other solutions. This segment's revenue increased by 8% in the first half at constant currency, where the majority of our business deployed strong growth throughout the period supported by transactions and new customer implementations. We had new commercial wins in this quarter across our business domains. To highlight a few, Accor, will expand its use of Amadeus industry, leading sales and catering solution Delphi in its premium brands. Delphi empowers sales and catering teams to more efficiently sell, organize, and manage events. B2 Hotels, an hotel chain in Thailand, will adopt a comprehensive suite of Amadeus solutions, even on seamless, personalized shopping and booking experience to guests, from initial search through to post-stay engagement. In the U.S., New York-based Soho 54 Hotel has selected a hotelier suite and Sunset Tower, a landmark hotel in California, contracted Amadeus Digital Media for hotels. Amadeus Destination Marketing Organization signed for Amadeus Digital Media for destinations. And United Arab Emirates, based on Mayor Travel Agency, will access hotel content through Amadeus Value Hotels, our laser-oriented distribution solution beyond the GDS. In partnership with Microsoft and leveraging OpenAI's model on Azure, we have introduced advanced AI tools, including AdvisorChat, integrated into Demand360 for instant marketing sites, and a new email RFP feature, Emitting Broker, to automate and accelerate group booking responses. These innovations empower hoteliers to make faster data-driven decisions and streamline group sales, marking a significant step towards more efficient AI-powered hospitality operations. Paneling payments, we have launched a next-generation fully automated payments reconciliation system for airlines leveraging smart algorithms and synchronized data to match sales and payments across channels. Amadeus Casco developed the solution with British Airways, which is now scaling the deployment of the module across its operations. OutPace is also making the solution available to the wider airline industry. Let's turn to slide 8 for our air distribution highlights. In the second quarter, we signed 17 new contracts or renewals of distribution agreements with airlines, taking a total to 29 for the first half. We also had 74 NDC agreements signed today with airlines. As Catholic Pacific NDC content became available through the Amadeus Travel Platform to travel sellers in selected markets, we now have NDC content from certified airlines accessible through the Amadeus Travel Platform. We had commercial wins over the period with major travel agencies. In Europe, Idris Odigeo has extended its long-term partnership with Amadeus for its content distribution. Travel Perk, a business travel management platform, also extended its scope which now includes access to Amadeus NDC content. In Asia Park, we signed via Philippines, the Philippines' leading travel seller, to migrate all of its international bookings to the Amadeus travel platform. And we have successfully expanded key strategic partnerships with long-standing customers such as with Perk Hansen and CBC Corporation. We have also expanded our non-air content offering for travel sellers on the Amadeus travel platform, adding content from Brightline, a passenger railroad in the state of Florida in the US, and from each Irio, Spain's first private high-speed rail company. Amadeus and Google have also announced an agreement that will fit Amadeus MetaConnect into Google Flights, more easily improving flight search accuracy. For airlines, this means greater control over their commercial strategy by distributing dynamic offers more efficiently, with increasing pricing accuracy and enhancing the overall user experience on Google flights. We continue to see strong momentum regarding our corporation business with new customers such as Deutsche Telekom signing for our self-booking tool-related solutions. As we continue to strengthen our partnerships with Kia Madeo's Cyprix reseller partners such as VCD Travel and Globospan Travel Management, GlobeSpan issued the first live for Canada NDC booking via Citric in the Canadian market, expanding access to premium content for corporate travelers. We are glad to share that Amadeus has won the Gold Award for Amadeus Citric EC in the Customer Experience category at the 25 National Marketing Awards in Spain. To review our volume performance, in the first half Amadeus bookings grew by 2%, supported by Amadeus' continued commercial success across regions. We are starting to see some of our travel agency customers bringing volumes from aggregators, most recently in Europe. We estimate first half bookings growth, excluding timing effects, at 2.7%. As I described before, during the first half, global air traffic growth was impacted by geopolitical situations in several regions, a moderation in travel demand, to one within the US, and several events, including airline incidents. In the first six months of this year, our fastest growing region was Asia-Pac, where our bookings increased by 10%. In the first few weeks of July, we have seen a strong performance in bookings ahead of second quarter, with bookings growth picking up in many regions, most strongly in Middle East, Western Europe and Latin. With this, I will now pass on to Carol for further details on our financial performance.

Thank you, Luis. I'm delighted to be presenting the Half One 2025 results on behalf of Amadeus. During the last 12 weeks, I've been doing a lot of listening, meeting people, and really getting a deeper understanding of this amazing business. As you know, I joined Amadeus as I was attracted to a tech-driven people business, working alongside a high-caliber team with the objective of creating further value, particularly building on our potential, capacity, and appetite for further growth. What has positively surprised me is how unique the travel industry really is and the role that Amadeus plays in being the technology partner for airlines, travel sellers, airports and hoteliers. I'm convinced that those who will succeed are those who deliver reliably, at scale and in sync with the travel ecosystem, all of which are features of Amadeus' strategy. Now let me present a new look to our H1 results. Please turn to slide 10. As you know, in the first half of the year, the exchange rate between the US dollar and the euro has been notably volatile, with the US dollar depreciating significantly in the last months. 40% to 50% of our group revenue is generated in US dollars, and we also have exposure to foreign currencies in our cost base, with 35% to 45% of our operating expenses generated in US dollars. Foreign exchange effects have been negative for us on both revenue and EBIT in the first six months and more notably in the second quarter. As referenced in Q1, we will now show our performance of revenue, EBITDA, adjusted EBIT and free cash flow versus the previous year at constant currency as we believe this information is more useful in evaluating Amadeus' underlying financial performance. More details on our constant currency calculations as well as complete information on IFRS figures and their evolution are available in the appendix of this presentation and the Amadeus first half 2025 management review. In the first six months of the year, we delivered strong growth across all of our key metrics, namely revenue of €3,260 million, 8% growth at constant currency, 7% reported growth. EBIT of €938 million, 8% reported growth, and adjusted EBIT of €973 million, 8% growth at constant currency, 7% reported growth. Profit of €727 million, 12% growth, and diluted EPS also at 12% growth. Adjusted profit of €739 million, 9% growth, and diluted adjusted EPS also at 9% growth. Free cash flow of €469 million, 12% below the previous year, as expected, and leverage stood at 0.7 times net debt to last 12 months EBITDA at the end of the period. As you know, we have an ongoing share buyback program for a maximum investment amount of €1.3 billion, which was launched in March. Our 2025 outlook at constant currency remains unchanged. As Luis mentioned, We have experienced a challenging macro and geopolitical environment. However, despite this, we continue to deliver steady and profitable growth and expect to deliver revenue growth at the lower end of our guided range of 7.4% to 11.4%, with EBITDA and EBIT growing faster than revenue. Please turn to slide 11 to review our revenue evolution. Our group revenue at constant currency grew by 7.6% as a result of revenue expansion across all of our segments. Air IT Solutions' revenue growth of 7.9% was driven by the PB volumes evolution Louise has described previously and a 3.1% higher revenue per PB, which largely resulted from positive pricing impacts from new agreements and negotiations, upselling of incremental solutions and inflation, fast growth of our airline expert services revenues, and strong performance of our airport IT business, which includes VisionBox, which we acquired in April 2024. These effects were partially offset by a negative platform mix as Navitare New Skies outperformed Altea. Revenue per PB growth accelerated in Q2 relative to Q1 when excluding vision box consolidation impact and FX effects, driven by the positive pricing effects I've mentioned previously. Hospitality and other solutions, revenue growth of 7.5% was driven by hotel IT and distribution, particularly the Amadeus, CRS and hotel distribution, transaction-driven business and business intelligence. supported by customer implementations. Digital media revenue growth has been experiencing some weaknesses since the beginning of the year, mainly due to a reduction in media spend by our customers, particularly in North America. Our hospitality revenue growth was also driven by payments, where both our merchant services and payout services businesses expanded notably. Air distribution revenue growth of 7.5% was driven by the booking evolution, again, as Louise described previously, coupled with an unusually high revenue per booking growth of 5.4%, primarily resulting from positive pricing impacts, including contract renewals, new agreements and inflation. Please turn to slide 12 for a review of our adjusted EBIT evolution. At constant currency, our adjusted EBIT grew 7.6%, resulting from the 7.6% revenue evolution discussed on the previous slide. And cost of revenue grew as a result of revenue expansion across the business. Reported fixed cost growth of 9.3%, mostly resulting from an increase in resources, particularly in our R&D activity, coupled with a higher unitary cost. higher cloud costs due to volume expansion and the migration of our solutions to the public cloud, and the vision box consolidation impact in Q1. Ordinary DNA expense increased by 3.1%, mainly driven from higher amortization of internally developed software, partly offset by a lower depreciation expense at our data center as a result of the migration of our systems to the public cloud. At constant currency, EBITDA margin was 38.9%, slightly below prior year, and adjusted EBIT margin was 29.8%, in line with prior year. So now let's turn to slide 13 for a review of our contribution by segment at constant currency. Air IT Solutions contribution increased by 5.5%, resulting from the revenue evolution described previously, offset by cost growth of 13.9%, fundamentally driven by increased R&D investment focused on the enhancement of our portfolio for airlines and airports, customer implementations, and our fast-growing airline expert services business, variable cost growth driven by airport IT's business expansion, and the consolidation of VisionBox. Air IT Solutions contribution margin was 69.8%, 0.8 percentage points below the previous year, excluding the vision box consolidation impact due to business mix. Hospitality and other solutions contribution was 5.5% above the previous year as a result of the revenue growth described previously, offset by cost growth of 8.5% which resulted from higher variable costs driven by the volumes expansion in both hospitality and payments and an increase in fixed costs caused by an increase in resources and higher unitary personnel costs to serve this growing segment. Hospitality's contribution margin was 33.6%, 0.6 percentage points below the previous year. Air Distribution's contribution grew by 12.4% as a result of the revenue growth described previously, offset by a 3% cost increase, which mainly resulted from Booking's evolution. The contribution margin of this segment expanded by 2.2 percentage points to 50.7%. Now on to slide 14 for a review of our adjusted profit evolution. Adjusted profit grew by 8.5% as a result of our adjusted EBIT growth, lower net financial expenses and higher taxes than the previous year. Diluted adjusted EPS grew by 8.5% in the period. Net financial expenses declined, driven by lower average gross debt and cost of debt, and taxes increased as a result of higher taxable income and a slightly higher tax rate at 21.6%. Now on to R&D and capital expenditure on slide 15. In half one, 2025, R&D investment grew by 14.9%. Half of our investment was dedicated to the evolution of our portfolio, including Amadeus Nevio and Navates Stratos for airlines. Our hospitality platform, NDC technology for airlines, travel sellers and corporations, and solutions for airports and payment services. A quarter to a third was dedicated to customer implementations across our businesses, such as Marriott International and Accor for ACRS. new Nevio customers and airline portfolio upselling, and customers implementing NDC technology, as well as efforts related to bespoke consulting services provided to our customers. And the remainder was dedicated to our migration to the cloud and our partnership with Microsoft, including developments on our own internal technology systems. In half one 2025, our capital expenditure increased by 71.2 million euros, or 22.1%, mainly driven by higher capitalisations from software development. Capital expenditure represented 12.1% of revenue in half one. And now on to free cash flow generation and net debt evolution on slide 16. In half one 2025, we generated 468.6 million euros of free cash flow. As expected, free cash flow was below the previous year by 11.6%, as a result of increases in our capital expenditure, change in working capital outflow and taxes, and partially offset by the EBITDA expansion and lower interest payments. Net debt amounted to €1,715 million at the end of June, €396.3 million lower than the end of December, due to our free cash flow generation, the conversion of bonds into shares, partially offset by the acquisition of treasury shares under the share buyback programs, including our ongoing $1.3 billion program, which is currently 45% complete. Also included in that is the interim dividend payment and a small acquisition in the travel intelligence space. So our solid cash flow generation and balance sheet management has resulted in a leverage of 0.7 times net debt to EBITDA as at the end of June. And finally, please turn to slide 17 for our current view for 2025. So despite a challenging macroeconomic and geopolitical environment, we delivered steady and profitable growth, demonstrating the resilience and diversity of our business. We enter the second half with confidence to deliver our group results within our 2025 outlook guidance at constant currency, albeit with revenues growing at the lower end of the range based on the current industry outlook. And EBITDA and EBIT growing faster than revenues. We continue to remain extremely relevant for our customers as a leading IT provider to the travel industry, deploying effective resource management. We continue to invest decisively to support future revenue generation and deliver our expected EBITDA and free cash flow. Thank you. And with that, the presentation is finished and we'll open the call to take any questions.

Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the 1 on your telephone keypad. Should you wish to cancel your request, please press the star followed by the 2. And if you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star 1 should you wish to ask a question. Our first question is from Michael from UBS. Your line is now open.

Great. Thank you. Good afternoon, and welcome, Carol. I just have a question on the 2026 outlook. Obviously, you gave that a year or so ago. I'm just curious with the currency movements, would you suggest we look at that on some sort of currency-adjusted basis, or do you think the 9 to 12.5% is achievable? And then in terms of the Altea and Navatea business, the airline IT, just curious, do you still sell Altea or is it all new customers would come on to Nevio and similarly for Navatea and its successor? And just an update on the pipeline of migrations. I believe ANA Domestic is yet to move. Is there any timeline for that? or any other airlines that we should be factoring into our models for migrations. Thank you.

Hi, Michael. Thanks for the warm welcome. I'll take the question on the outlook, and Louise will talk about Altea and the pipeline of migrations. As we announced in our investor day, yes, we have given Outlook, a 2026 Outlook guidance, and we remain holding those guidance at constant currency as we communicated in Q1. We're welcome to come back to you in the new year with our full year results on revised guidance or an update on that. But at this stage, our guidance, as previously communicated, still holds at constant currency.

Altea Naviter, I mean, look, the future clearly is often an order. That's what the industry is moving and will move. And therefore... Many of the engagements we are having today are about the future. There may be some cases, however, where still airlines may be keen to really come to Altea. I would say this is more temporarily because the whole industry in years from now will move to Nevio or whoever alternative is in the market. So offer and order is a trend. I mean, as we have announced, for instance, we have renewed Ryanair, which is in Naviter, so not yet in Stratos, but there are conversations ongoing, especially for renewals and also for new customers moving more into the new world. And that means, in my view, that we should announce more deals on Nebio and Stratos than the ones that we will announce for the current Altea or Naviter. And with regards to new customers on Altea, yes. I mean, again, ANA will come into the platform in 2026, in mid of 2026. And this is a customer, of course, that we signed many years ago and is still going through Altea. And hopefully, at one point, we'll start migrating to Nebio. But the deal with ANA is about Altea today.

Thank you. I mean, there haven't been many deals recently for either platform. Do you think that this transition to one order is causing a bit of an air pocket in customers as they evaluate or wait for the technology to mature?

I think this will accelerate. Of course, they want to see things running. They want to see who is coming to the table. What I can tell you is that the pipeline is strong. We are engaged in many conversations. and hopefully we should be able to announce some of them in the coming months. So the pipeline is good. The airlines know that this is going to bring a lot of benefits to the industry. Of course, we have signed, I mean, four customers now, but I think, again, as we start delivering the solution and as customers start making their minds, and of course they also need to make their own investments and their own internal processes, but I think this will clearly accelerate in the coming years. Thank you. Thank you.

Thank you. And your next question is from Adam Wood from Morgan Stanley. Your line is now open.

Hi. Good morning. Thanks for taking the question. This festival is obviously a good price increase on the GDS side of the business. I wonder if you could just talk us through a little bit, you know, the component parts of that, what you're seeing maybe competitively and whether they move to MDC, you know, just the moving parts that are enabling you to get such strong pricing. And secondly, obviously, I think we're all aware of the disruption that's gone through the second quarter. But could you maybe reassure or speak to us around how much you think of the slowdown you've seen across the businesses as basically 100% macro, or are there any structural changes that you see? And maybe just finally, on the July commentary, I mean, in the past, the bookings has always been the leading indicator and PVs follow. Is there any reason this wouldn't be the case this time around? Thank you.

Thanks, Adam. Let me take the revenue booking question first. So as you all know, the elements that impact this metric are booking mix, customer mix, and customer renewals and renegotiations. And predominantly in Q2, we had some really positive impacts from ongoing customer renewals and renegotiations, which, as you can appreciate, can be lumpy in nature. They don't tend to follow a sequence. So the very high or the unusually high, as I said, revenue per booking in the first half was really driven by the lumpiness of customer renewals and renegotiations that happened in the first half. I think it's probably fair to say that we don't expect the same growth in H2 than we saw in H1, so that will moderate. We don't see any abnormal effects coming in the second half of the year.

With regards to impacts, we feel really it's macro. Still, demand is there. Yes, I mean, the delivery of aircraft has improved despite the fact still we found constraints due to the engine situation. But the main impact we have seen is macro. Again, in the second quarter, there were many, many impacts. I mean, in this industry, there are always impacts, but probably a bit more based on what was going on in the world. And what we have seen, yes, is in July bookings better in most of the regions. PV is more in line with June June was not a good month but of course you had the situation in the Middle East that worsened at one point seems to be better now So, look, PVs for the time being are not recovering, but as you said, in principle, the bookings should be an anticipation of a recovery of passengers at one point, but the bookings are performing well in July. Again, I am cautious because the uncertainty these days is higher than other years, but uh after seeing a second quarter uh where we saw some weakness uh i mean the the july figures uh seems to be positive and we are cautiously optimistic that we have reached the bottom and we are a bit more optimistic about the future but again with all the caveats that you can understand very helpful thank you

Thank you. And your next question is from Alex Irving from Bernstein. Your line is now open.

Good afternoon. Two from me, please. First of all, air distribution. Are you seeing any changes in the intensity with which airlines are trying to alter their distribution mix? I mean, it feels like we haven't had as many big surcharge and content removal announcements from airlines this year as in the previous two years. You've seen some, like American and Southwest, coming back towards more indirect distribution. Do you think this is a sustained trend? Does it make you more positive on the medium-term outlook for GDS bookings? Second question, hospitality. Growth slowed down this quarter. Is there anything non-underlying that has driven that slower revenue growth in this segment? And then when should we think about an acceleration with the migrations you've got coming? Is that Q3? Is that Q4? Is that more 2026? Thanks.

With regards to booking intermediations, you are right. If you see today how PVs are evolving and bookings, you cannot compare month by month because you have different effects like Easter or, you know, as we mentioned about the anticipation of the bookings. But overall, yes, we see the airlines much more constructive with regards to NDC and with regards to the collaboration with the GDSs. We also see in general the realization that, you know, moving that outside of, of the GDS has cost and complexity. So this is completely the reality in the industry we are seeing today. And this is why we feel our investment in NDC is going to really, you know, play well in the medium term. And we have always said that. With regards to hospitality, we have seen weakness in some parts of hospitality, but mainly in media. Media is based on specific campaigns and is very dependent on the US market. And overall, The U.S. market was weak in the second quarter. Again, July seems to be better overall, and hopefully this will translate also into the hospitality figures, but media, which is mainly, you know, the campaigns that the hotels are doing to promote their properties have been weaker than anticipated. saying that we expect an acceleration, both if this, you know, becomes more confident about the U.S. evolution of travel, and second, with some of the migrations that we mentioned, especially Mario, that will start having an impact. The payment situation that we have previously mentioned at one point, payment is growing well. We have been looking for an acceleration. This should happen, you know, during third quarter and fourth quarter. Fourth quarter, for sure, third quarter. It depends how, you know, the customers that we have signed will come into reality and will be implemented. But we expect an acceleration in both parts of the segment.

All right.

Thank you.

Thank you. And your next question is from Charles Brennan from Jefferies. Your line is now open.

Great. Thanks very much for taking my questions. I've got two actually just on guidance. Firstly, this year I think you started expecting EBITDA to grow slower than revenue. It looks like that's now the reverse with you expecting EBITDA to be faster than revenue growth. Is that a function of business mix that's changing that dynamics, or are you actively working on investment plans in the second half to try and manage faster EBITDA growth? And then secondly, can I lift the horizons back to 2026? I know you suggested that the existing guidance is broadly unchanged on a constant currency basis, but that obviously assumes an acceleration in 2026. particularly on the air IT and hospitality side. I guess if we go into 26, we might get industry volumes that are a little bit better. But can you give us some tangible building blocks of your own company actions to try and drive that accelerated growth? And I guess what I'm trying to understand is how much of that acceleration is visible today versus something that's a little bit more speculative. Thank you.

I'll go with the EBITDA growth first and then we can take the 26 outlook. So you're right, Charles. I think we mentioned actually in the Q1 that when we started – well, let's just take a step back. When we came out with the Q1 results, the IATA outlook was not yet available. They announced in June. But we guided to the market through the discussions that we had that we had room within our revenue guidance range. for a deterioration in the outlook. That has come to fruition as we've seen in June with the IATA. So we also said that we had some things in our toolkit to kind of moderate fixed cost growth to try to deliver the EBITDA margin independent of our revenue implications due to volume as well as FX. So you're exactly right. It's a combination of both the things that you said. which is business mix as well as management intervention to drive EBITDA growth, which we are saying will outperform our revenue growth in FY25.

Let me talk about FY26 conceptually. I mean, again, in urban IT, of course, we have ANA that we mentioned before. We expect to have some acceleration or some growth. of the nebio contracts that we have signed with some incremental revenues. And again, look, we are also taking the assumptions of the traffic and expectations for next year. So this is with regards to RIT. And again, our airport business doing well. So part of that is already like the contract of ANA and part of the Nebula deliveries. Part of that will depend on our capability to really keep signing incremental customers, mainly in other parts of the business. Services has also been doing well, but we'll need to see how things evolve next year. With regards to The host segment is what I mentioned before about the last part of this year. We expect an acceleration in hospitality as we have the migration mainly Marriott. The main piece, Accor, will also start, but the full impact will be 27, plus the acceleration of payments. And with that, we should be able to really achieve our targets. Of course, some of that is in our budget. projections and secure because the contracts are signed. Some of that will require that we keep signing customers as we have done in 25.

Great. Thank you.

Thank you. And your next question is from Victor Chung from Bank of America. Your line is now open.

Hi. Thanks for taking my questions. Hi, Luis, and welcome, Carol. A couple on distribution, if I may. I guess, first of all, looking at your new distribution agreements, I noticed some of the OTAs and TMCs that already have a high mix of NDC bookings themselves through Direct Connect or other NDC aggregators, notably looking at Travel Perk. Now, obviously, you've announced an expanded agreement with them. Is it right to think that this agreement with Amadeus For them, it's to consolidate different either Direct Connect or other NDC pipelines and converge it to Amadeus or either using Amadeus to fill NDC content that they currently do not have. And then related to that, look at the contribution margin as well in distribution that have, you know, expanded. As I said, Is that related to NDC as well, and what's the current NDC mix, and how should we think about that contribution might be put wrapped in as NDC volume or mix shift?

regards to travel perk i mean yes this is an expansion with what we have today we they have been working with us and we are expanding the capabilities and of course as you mentioned they produce a significant volume of ndc bookings and of course we expect to get you know these bookings with us as i mentioned before there is always you know the possibility for any travel agency to do whatever, that are connected or use alternatives to us. But this is a sign that we keep signing customers and provide our technology to process their NDC volumes.

I can take the contribution margin. Okay, go ahead. Hi, Victor. Thanks for the welcome. As you rightly said, the distribution segment margin did expand by 2.4 percentage points driven by pricing effect. As I mentioned, there was an unusual lumpiness in Q2. So we expect to still stay within a small margin expansion for that segment, but it will be at a lower rate than the first half as we don't have the same revenue per booking mix in the second half going forward. So I don't think it's necessarily as a result of any mix change. It's really around pricing effects and customer negotiations.

Thank you. And maybe any updates on NTC volumes as a percent of Amadeus bookings?

I mean, still we are growing a lot. But again, for the airlines that have migrated, we are in the mid-teens. Some airlines are much tired than that, but as we are bringing new airlines into the platform, of course, they have started to really operate. So we see good traction, keeps increasing as a percentage of the total of Amadeus, and again, keep implementing them. So I would say this is an ongoing and continuous process that will take some years, but good traction, good... agreements with both airlines and travel agencies, and more and more we will see some mix of volumes with Edifact and NDC that overall hopefully will generate a good growth of that business in the years to come. So we are more or less at the same, but saying that, with more airlines today and more or a higher percentage of our total volume, but still, you know, not big enough to have a significant impact. But again, every month we see an increase of NDC bookings over the total and keep, you know, growing very strongly.

Very clear. Thank you.

Thank you, and your next question is from Toby Ogg from JP Morgan. Your line is now open.

Yeah, hi. Thanks for the question, and welcome from me as well, Carol. A few questions just back on the hospitality segment. So constant currency growth slowed from 9 in Q1 to 6, and I know you've called out a moderation in digital spend there as a driver, but any other areas that were incrementally weaker that could explain almost a three-point slowdown. And then just thinking about the hospitality guidance, you know, how confident are you in achieving the low end here? Because it does imply quite a big acceleration from the Q2 exit rate. And should we start to see some Marriott contribution in Q3? And then just last one on the passengers boarded, obviously the comment in the presentation that the first few weeks of July is slightly worse than Q2 on the PB side. What do you think is driving that and, you know, given the traffic growth, you know, potentially could continue to normalize, you know, what would drive any re-acceleration in the PBs in the second half? Thank you.

Okay. Let me start with the last one. PBs. I mentioned during my presentation or answering one question that yes, it was below Q2, but in July was similar to June. And that means that what we have seen during this year is starting very strongly in January. I mean, as you have seen, IATA, and IATA just published today the June figures. I mean, there has been a progressive deterioration of the traffic. It has not been you know, the same in the different months. Of course, you can argue about the amount of incidents and things that have happened during the June, but the reality is that there was also a deceleration of the traffic. In July, it was more or less in line with June. So our view, if we think about the bookings and how we see the evolution of the regions, is that hopefully we have seen the bottom of this acceleration and that things may improve from there. So again, things are not deteriorating. They are deteriorating when you take the average of the quarter 2, but the quarter 2 April was better than May and May was better than June. So if we take July as a point of June, hopefully there will be an evolution. And in some parts, like the US, we have seen some improvement and hopefully this will translate in better figures in August and September.

I can take hospitality. Toby, thanks again for the warm welcome. But on hospitality, you're right. We did show a deceleration Q1 to Q2 in our hospitality and other solutions revenue. But if I draw your mind back, I think we said in the Q1 that we would expect the acceleration to happen in the second half of the year. So that acceleration in the pace of growth is coming from, as Louise mentioned previously, some mitigating measures that we put in place to address the revenue growth delays in payments. The payments business is growing notably in the first half, but we did put in some measures. We have put in some measures that we will see come through in the second half. Louise also mentioned the revenue ramp-up from the MARI implementation, which we'll see coming that's more skewed into the second half of the year. I mean, the big reason for the deterioration from Q1 to Q2 is media, and we believe largely media, as Louise mentioned, linked to U.S. and US sentiment and customer spend. We think that that will start to moderate in the second half. And, of course, the distribution of our hotel content, as we also mentioned, will accelerate in the second half. So we feel confident on the hospitality numbers to deliver a growth and accelerated growth in the second half versus the first half.

Just to add one comment, I mean, there was also a lower growth rate in our hotel distribution business, but nothing to do with any underlying performance. I mean, we have this turn in the middle, which is impacting, you know, airline bookings and also hotel bookings. We exclude some of the, you know, holidays effects. It has been pretty much in line, but it was having a small impact, saying that the media was the main point. And as Carol said, look, we expect this to really evolve positively in the rest of the year. Great.

Thank you.

Thank you. And your next question is from from Kaishabag. Your line is now open.

Hello. Thank you for taking my questions. And welcome, Carol. The first one on fixed costs. You mentioned that you're doing some adjustments this year. I was just wondering whether part of this savings this year could mean incremental costs in 2026, if you could provide a bit more color on this, which would be great. And the second, you mentioned also a more constructive environment by airlines on GDS negotiations, and that volumes are moving out of aggregators in Europe into the GDS. How about the situation in the U.S.? Could you provide us some additional comment on this? Thank you.

My comment was general. What we see in concrete terms is some volume coming from some travel agencies doing NDC in Europe already. But hopefully, I mean, as we have always said, we expect to really bring some of the volume that is not part of our system into the platform. So it has been more now in Europe, but hopefully will be in the rest of Europe.

Yeah, and on the fixed cost, again, thank you for a warm welcome. I feel very loved today. You're right that we have represented fixed cost growth, but however, quarter on quarter in the half, we've seen a reduction. And moving into half two, our growth will moderate due to the lapping of vision box consolidation impact and the lapping of the resource ramp up that we had in the prior year. So effectively, timing effects. And to extend that to your question about, well, what do we see for FY26, I expect that we'll still see a slowdown in our underlying cost growth in FY26 as we continue to finish our migration to the cloud. Thank you.

Thank you. And your next question is from Sven Merck from Barclays. Your line is open.

Good afternoon. Thank you for taking my questions, and welcome to Carol for me as well. Maybe one follow-up question on the pipeline for Navio. Can you perhaps comment what the main obstacles are to converting these deals that you still have in the pipeline? Is it commercial terms? Is it ease of migration? And can you perhaps also comment on what type of airlines you have in the pipeline? Is it really broad-based across geographies and sizes of airlines? Thank you.

Across the board. It's everywhere. Again, airlines will move there. And if you see, yes, we have signed more European carriers, but we also have Saudi. And the conversations are with all kinds of airlines. What is preventing? Look, negotiations are always about conditions, pricing, migration, so it's like always. I mean, these are long-term decisions, so it's a matter of priorities for the carriers, and yes, also engagement with us and negotiations to convince them that we have the right solution. So I would say, look, there is nothing really preventing them. I think it's a matter of priorities timing and finishing negotiations of IT contracts that are never easy. But I would say, look, the conversations are moving in the right direction. And again, hopefully we should be able to sign some of that pipeline or convert into contracts.

Perfect. Thank you. Thanks.

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

Thank you very much for attending the call in this end of July, and I wish you all good summer season, and we'll talk for the third quarter results. Thank you.

Thank you, ladies and gentlemen. The conference call has now ended. Thank you for participating, and may all disconnect your lines.