NYSE:GBTG Global Business Travel Group Q3 2024 Earnings Report $6.85 +0.08 (+1.23%) As of 10:10 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Global Business Travel Group EPS ResultsActual EPS-$0.22Consensus EPS -$0.08Beat/MissMissed by -$0.14One Year Ago EPS-$0.02Global Business Travel Group Revenue ResultsActual Revenue$597.00 millionExpected Revenue$611.89 millionBeat/MissMissed by -$14.89 millionYoY Revenue GrowthN/AGlobal Business Travel Group Announcement DetailsQuarterQ3 2024Date11/5/2024TimeBefore Market OpensConference Call DateTuesday, November 5, 2024Conference Call Time9:00AM ETUpcoming EarningsGlobal Business Travel Group's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Global Business Travel Group Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 5, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good morning, and welcome to the American Express Global Business Travel Third Quarter 2024 Earnings Conference Call. As a reminder, please note today's call is being recorded. I will now turn the call over to Vice President of Investor Relations, Jennifer Derrington. Please go ahead. Speaker 100:00:14Hello, and good morning, everyone. Thank you for joining us for our Q3 2024 earnings conference call. This morning, we issued an earnings press release, which is available on sec.gov and our website at investors. Amexglobalbusinesstravel.com. A slide presentation, which accompanies today's prepared remarks, is also available on the Amex GBT Investor Relations webpage. Speaker 100:00:39We would like to advise you that our comments contain certain forward looking statements that represent our beliefs or expectations about future events, including industry and macroeconomic trends, cost savings and acquisition synergies, among others. All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from statements made on today's conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today's call, we will also be presenting certain non GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, free cash flow and net debt. All references during today's call to such non GAAP financial measures have been adjusted to exclude certain items. Speaker 100:01:36Definitions of these terms and the most directly comparable GAAP measures and reconciliations for non GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me today are Paul Abbott, our Chief Executive Officer and Karen Williams, our Chief Financial Officer. Also joining for the Q and A session today is Eric Bach, our Chief Legal Officer and Head of Global M and A. With that, I will now turn the call over to Paul. Paul? Speaker 200:02:07Thank you, Jennifer. Welcome to everyone and thank you for joining our Q3 2024 earnings call. In the Q3, we continued to drive strong momentum and deliver strong financial results. Our focus on controlling costs and driving operating leverage drove impressive adjusted EBITDA growth with significant margin expansion, giving us confidence to narrow the range and reiterate the midpoint of our full year adjusted EBITDA guidance. Increased demand for our software and services resulted in continued share gains. Speaker 200:02:43We have sustained our pace of new wins and importantly maintained our very high customer retention rate. Continued free cash flow acceleration remains a very important focus for the company. Our strong third quarter results give us the confidence to raise our full year free cash flow guidance once again. We've previously talked about our capital allocation strategy and I'm incredibly pleased with our progress on executing exactly what we said we would do. We have significantly reduced the interest we pay on our debt, continued to deleverage and strengthen the balance sheet, and we are in a strong position to continue investing in growth and productivity gains and finance the closing and integration of the CWT acquisition. Speaker 200:03:33This significant progress in our financial performance has brought us to an important milestone, returning cash to shareholders. During the quarter, as we previously announced, we executed our 1st share buyback. And today, I'm pleased to report our Board of Directors has approved a new larger share buyback authorization. Turning to some of the highlights of the Q3. We continued to execute on our strategy and deliver strong financial results with significant adjusted EBITDA growth. Speaker 200:04:06Starting with transaction growth. Transactions were up 5% driven by increased demand for business travel and our share gains. TTV grew by 9% to reach nearly $8,000,000,000 driven by transaction growth and higher average ticket prices and hotel room rates. This included a mix benefit from higher international TTV and strong TTV growth in certain industry verticals like Financial Services and Pharma. Revenue was up 5% to reach £597,000,000 for the quarter, driven by solid growth in transactions, TTV and increased demand for our products and our professional services. Speaker 200:04:47Finally here, our focus on margin expansion and operating leverage resulted in adjusted EBITDA growth of 23 percent to $118,000,000 with strong margin expansion of 300 basis points. Growth was strong with global multinational customers, up 8% in the quarter, and I'm going to provide more detail on this in the next slide. SME transaction growth remained muted at 2% growth, but improved modestly versus the 1% growth we reported last quarter. As we described last quarter, SME customers have tightened spending controls in the face of sustained higher prices and higher interest rates. This remains a broader trend for SME businesses beyond travel. Speaker 200:05:39Growth in domestic Air transactions was 4%, regional and international growth combined was up 3% with international specifically up 6%. Growth in hotel transactions was 6%, which outpaced the 4% growth in air transactions. This reflects industry trends as well as our intentional focus on increasing our volume of hotel bookings as we continue to strengthen our hotel content and display and provide customers with more hotel value and more choice. Finally, on a regional basis, transaction growth was 6% in the Americas, 11% in Asia Pacific. EMEA growth was softer at 2% impacted by the Olympics in France. Speaker 200:06:28As a reminder here, for organizational purposes, we divide our customer base into 2 general categories, global multinational and small and medium enterprises. We generally use expected annual TTV to divide customers into these categories. Although this measure can vary by country and by customer need. We do not have products or services that are offered solely to one size of customer. We tend to find that customers of all sizes may prefer different solutions. Speaker 200:06:59Some larger customers may prefer a simpler approach, while some smaller customers may prefer a more bespoke high touch global solution. Looking specifically at global multinational customers, we maintained very high customer retention rate of 98% over the last 12 months, demonstrating the value that we bring to this important customer set. We continue to see stronger relative performance with our global multinational customers. Total GMN transactions were up 8% with double digit growth in Pharma, Automotive and Financial Services Industries. We saw very solid growth across almost all of our top industry verticals. Speaker 200:07:42Technology growth returned to more normalized levels as the same store sales cycled over the technology ramp up we saw in the Q3 of 2023. TTV growth in the quarter was 9% and outpaced transaction growth by 4 percentage points. GMN TTV growth was particularly strong, up 13%. And within the regional and international category, international air TTV was up 11%. Looking ahead, our most recent customer survey indicates that demand remains solid as we look over the balance of the year. Speaker 200:08:24It shows that our top 100 customers expect travel spend to be up approximately 5% in the Q4. So turning here to the commercial highlights, we continue to gain share with total new wins value of $3,000,000,000 over the last 12 months. Importantly, these share gains are on a very strong foundation of impressive customer retention, which we've maintained at 97% over the last 12 months. Our biggest growth opportunity remains with SME customers, which represents approximately €950,000,000,000 of travel spend. We are already a leader in managed travel in this segment, but 70% of this opportunity is not currently in a managed travel program. Speaker 200:09:12Our new wins clearly demonstrate that more and more SME customers are recognizing the benefit of a managed travel program including significant savings to our preferred extras rates, more control over their travel spend and of course 20 fourseven customer service and duty of care. This value proposition is clearly resonating. Our SME new wins value totaled €2,100,000,000 over the last 12 months with 14% year over year growth in the number of unmanaged customer wins. In the 3rd quarter 80% now of our transactions came through digital channels, up 3 percentage points year over year. Came through digital channels, up 3 percentage points year over year and 60% of our digital bookings came through on our own software platforms, Neo and Egencia. Speaker 200:09:59We believe owning our own software platforms is a significant competitive advantage because we can control and improve the user experience. Growth on our NIO platform was particularly strong up 18% year over year. We continue to provide customers with more value and more choice in our marketplace through enhanced content. We are working with over 20 airlines on NDC to help our airline partners retail to our premium customers in the most effective way. The collaboration with American Express Card and our NeoOne Spend Management Platform is also progressing well. Speaker 200:10:37We have more than doubled our NeoOne customer base year over year. We also continue to make business travel more sustainable. We are among the first in the business travel industry to achieve SBTI validation of our carbon emission reduction targets. We continue to invest in our products and services to provide customers with more value and more choice. New features this quarter include benchmarking dashboards in our peer travel insights tool. Speaker 200:11:14This uses key performance indicators for customers to compare their company's travel program against other peers in their industry. We also launched a new group travel solution on the Egencia platform. I'm pleased to say our product leadership has been recognized by G2, the largest and most trusted peer to peer review site that more than 60,000,000 people and many Fortune 500 companies use to make software decisions. Amex GBT Egencia has proudly received 19 awards from G2 this fall, which are based on verified user reviews from travelers and travel managers. We're also focused on providing the very best traveler experience. Speaker 200:12:01In the Q3, we updated the Egencia mobile app to deliver a more intuitive user experience. And we made improvements to the NIO checkout process and the Egencia trip management experience. As we mentioned last quarter, we are investing in automation and AI to deliver operational efficiencies across 4 areas. And these 4 areas represent 70% of our adjusted operating expenses. The four areas include increasing service efficiencies, increasing engineering velocity, streamlining our financial processes and enabling our workforce. Speaker 200:12:50Let me provide a quick update on our progress on each of these four areas. First, we are piloting our proprietary email AI solution that saves travel counselors time by generating offers based on incoming customer email requests. 2nd, we have now expanded our use of the GitHub Copilot and used it to accelerate the software development required to launch our new corporate website. 3rd, we have deployed automation for our credit card reconciliation process reducing the average handling time by approximately 50%. And 4th, we've deployed AI to respond to our customers' program change requests faster, reducing these timelines by approximately 80%. Speaker 200:13:41So as you can see, we're making measurable progress and continue to see AI as a huge opportunity to drive productivity improvements. Finally, regarding the CWT acquisition, we continue to work through the relevant regulatory approval processes and we continue to expect the transaction to close in the Q1 of 2025. And now I'd like to hand it over to Karen to discuss the financial results and 2024 outlook in more detail. Speaker 300:14:15Thank you, Paul, and hello, everyone. I've previously talked about my 3 key priorities when it comes to managing our financial performance. And as a reminder, they are accelerating cash flow generation, driving operating leverage and continued margin expansion and importantly, creating capacity to invest and drive long term sustained growth, both organically and through strategic M and A. And again, in the Q3, I am really happy with the progress we have made in all three of these areas. So now let's turn to our financial performance in more detail. Speaker 300:14:56Revenue reached $597,000,000 up 5% year over year. Although revenue growth was more consistent with the first half of the year and transaction growth did not accelerate as much as we expected, we still delivered adjusted EBITDA in line with our expectations, thanks to our rigorous cost control. And importantly, free cash flow exceeded our expectations. Revenue yield, which we define as revenue divided by TTV, was 7.7%. As a reminder, our revenue model is driven by 50% transaction volume, 30% TTV and 20% product and professional services revenue. Speaker 300:15:42So only 30% of our revenue benefits from higher air and hotel pricing. And so it's important to highlight as TTV grows faster than transactions, as we saw in the quarter, it has a negative impact on the yield metrics. The 30 basis points year over year decline was very much in line with our expectations. And I encourage you to look at our overall yield performance on an annualized basis, which we expect to be down 15 to 20 basis points for the full year. This reflects the non TTV driven components of the revenue base and continued shift to digital transactions, which had a positive impact on our adjusted EBITDA margin. Speaker 300:16:28And as previously discussed, there is seasonality in our yield with Q4 being our highest revenue yield quarter. As we turn to total operating expense, which were a key area of focus for us, I am incredibly pleased with the momentum we are seeing across the enterprise when it comes to our focus on costs and increasing productivity. Importantly, we are delivering over €100,000,000 in cost savings this year that not only drive our margin expansion, but enable us to reinvest for future growth. In 2024, we are investing an incremental €35,000,000 which represents a slightly lower CapEx expectation now with a 70 five-twenty 5 split between OpEx and CapEx. Together, the net impact of these resulted in adjusted operating expense growth of 1% year over year versus revenue growth of 5%. Speaker 300:17:33Adjusted EBITDA grew 23 percent to $118,000,000 with an adjusted EBITDA margin of 20%, growing an impressive 300 basis points year over year. I'm incredibly happy with the continued momentum and acceleration when it comes to cash flow generation. In the quarter, we achieved free cash flow generation of €59,000,000 This has been driven by our working capital optimization initiatives, lower CapEx spend in addition to significantly lower interest expense. As a reminder, we executed a debt refinancing in July that significantly lowered our interest costs. Importantly though, through our derivative strategy, we have further reduced our costs. Speaker 300:18:23When we consider this recent refinancing and our interest rate hedges and swap, in addition to the previously achieved savings tied to our lowered leverage, the expected run rate cash interest savings achieved were approximately $50,000,000 and represent a 35% reduction versus 2023. And finally, our leverage ratio on net debt divided by last 12 months adjusted EBITDA is 1.9 times as of September 30, 2024. This represents a very significant step down from the 2.7 times in September 2023 and is just below the midpoint of our target leverage ratio of 1.5 to 2.5 times. We have previously shared our powerful financial model with you all and how it positions us for industry leading returns. First, we expect business travel demand for our premium customer base to grow above GDP. Speaker 300:19:272nd, we expect to continue to grow ahead of the market by driving share gains with our differentiated value proposition. 3rd is our focus on margin expansion. We are laser focused on a disciplined cost structure and continued margin growth. Our operating leverage is forecasted to drive 24% to 26% adjusted EBITDA growth in 2024, reflecting our narrowed guidance range that I will discuss in more detail shortly. 4th, we're incredibly focused on optimizing our capital deployment. Speaker 300:20:04Our positive and accelerating free cash flow can fund important incremental growth opportunities in M and A, including significant value creation from the pending CWT acquisition. And finally, we are in a very strong position to return cash to shareholders. And so let's turn to the full year 2024 guidance. We are hitting the mark of what we can control. Although revenues are at the lower end of our guidance, adjusted EBITDA, free cash flow and margin are all ahead of expectations. Speaker 300:20:42Given the softer macro environment and uncertainty related to interest rates as we have talked about previously, revenue growth continues to track towards the lower end of the guidance range provided at the start of the year. We are now narrowing our guidance for the full year revenue to GBP 2.415 billion to GBP 2.435 billion, which represents a year over year growth of approximately 5.5% to 6.5% and a midpoint of 6% consistent with the low end of the prior range and reflective of what we are currently seeing in terms of performance. For the Q4, our guidance implies a modest revenue growth acceleration, largely driven by higher yield related to timing of certain performance thresholds and in line with the seasonality of our revenue model. We remain focused on driving continued operating leverage. This includes in excess of $100,000,000 of cost savings from the carryover actions taken in 2023 plus new cost initiatives and productivity improvements this year. Speaker 300:21:56Executing these savings enables us to deliver strong margin expansion of 290 to 310 basis points, while still making significant investments in future growth. We have narrowed our full year adjusted EBITDA guidance range to 4.70 dollars to $480,000,000 representing growth of 24% to 26%. And again, we are reiterating the midpoint of our adjusted EBITDA guidance, demonstrating the strong margin performance we've already seen year to date and our confidence into Q4. And finally, but very importantly, given our focus on cash, I am delighted to raise our guidance of free cash flow for the 2nd time this year. We now expect to generate approximately $160,000,000 in 2024 compared to the previous guidance of at least $130,000,000 This more than triples our free cash flow from last year and represents a conversion rate of just under 35% of adjusted EBITDA. Speaker 300:23:07I want to end by highlighting our accomplishments with respect to the capital allocation priorities we laid out earlier this year. Our first priority is accelerating cash generation, which our results clearly demonstrate we have accomplished. 2nd, continuing to deleverage. Our Q3 'twenty four leverage ratio of 1.9 times is now in the lower half of our target. And as previously discussed, we have achieved just under $50,000,000 of expected run rate interest savings. Speaker 300:23:433rd, as we continue to see cash flow acceleration and naturally deleverage, it gives us optionality to invest in our business, including our people, software platform, SME sales and marketing engine and AI to drive organic growth, productivity and margin expansion. 4th, with respect to M and A, we continue to work cooperatively with the regulators and expect the CWT acquisition to close in the Q1 of 2025. Because the financing is primarily stock, we expect to remain within our target leverage range following the transaction close. And as you heard from Paul, our confidence in our business model and strategy puts us in a very strong position of now being able to return cash to shareholders. In the Q3, we repurchased 8,000,000 shares in a private share buyback from an unaffiliated third party, representing approximately $55,000,000 This transaction was our 1st share buyback and an efficient way to repurchase shares at a discount while managing potential overhang risks that could have resulted from them selling in the open market. Speaker 300:25:04I'm thrilled that today we announced our Board of Directors has authorized an additional share buyback of up to $300,000,000 and with this new authorization in place, we expect to return cash to shareholders. So to wrap things up, our Q3 performance was strong. We are clearly delivering on our priorities and are confident in our full year 2024 guidance. We will provide our 2025 outlook next quarter. So we can now move into Q and A. Speaker 300:25:37Paul and I are joined by Eric Bock, who is our Chief Legal Officer and Global Head of M and A. Operator, please go ahead and open the line. Operator00:26:02And our first question comes from Peter Christiansen from Citi. Peter, please go ahead. Your line is open. Speaker 400:26:09Thank you. Good morning. Thanks for the chance to answer questions. Karen, really impressive on the free cash flow generation here. If we think about current run rate and I guess on a stand alone basis, do you think that we should rank cost savings as a potential to increase the free cash flow yield or the free cash flow margin further? Speaker 400:26:36Or is it more a function of finding working cap efficiencies or even the CapEx efficiencies considering that you still are investing? Granted, I recognize this is on a standalone basis, but would be good to get a sense of the runway you see for free cash flow expansion going forward? Thank you. Speaker 300:26:59So, Pete, thanks for the question. So certainly, my we're very happy, I would say, first off, in terms of the momentum that we're continuing to see. And our profit growth in terms of that market continued margin expansion, given our focus around cost, will continue to be a big component. But to your second point, as you think about the CapEx side, as we focus in terms of really that productivity and making our CapEx spend go further in terms of the investments that we're making from AI and just that productivity. That will also contribute in addition to just continuing to chip away in terms of the interest expense. Speaker 300:27:49And you heard us on this call in terms of obviously, we have the refinancing, but there's further reductions in terms of that interest expense given some of the swaps that we've done from a derivative perspective. And so then we feel good about Speaker 400:28:06That's fair. Thank you. That's helpful. And Paul, I wanted to ask about SMB on some of the activity. We obviously slowed down last 2 quarters. Speaker 400:28:18Just curious if you're seeing that broadly across, I guess, all industry verticals? Or are there certain soft areas that we should be mindful of? Thank you. Speaker 200:28:31Yes. Thanks for the question, Pete. I think if you look at the SME growth rate in the quarter, it did actually move up a point versus last quarter, still below global multinational. But hopefully that is a kind of stabilization of the decline that we've seen over the last decline in the growth rates over the last few quarters. And I think as I said last quarter, if you could look across different industries, it's very well reported that small, midsized businesses have certainly been feeling the pressure of higher prices and obviously much higher interest rates. Speaker 200:29:13And so now that we're seeing interest rates gradually move down in the Eurozone, in the UK and the U. S, hopefully, we can keep inflation under control and those interest rates continue to decline. And We think that will improve confidence with small to midsize businesses as we go into 2025. If you look at I think I shared this data point before we look at the Amex card spending with small businesses across a very large base in the U. S. Speaker 200:29:48That card spending also stabilized in the Q3. So I think hopefully we're seeing that stabilization and as the macro conditions improve and interest rates continue to move down, we'll start to see a gradual improvement. Speaker 400:30:07Super helpful. Thank you, Paul. Thank you, Karen. Operator00:30:12The next question comes from Duane Pfennigwerth from Evercore ISI. Duane, your line is open. Please go ahead. Speaker 500:30:20Hey, thanks. Nice operating leverage this quarter, but just curious about the spread between TTV growth and revenue growth. Is that at all a function of your customer mix? Is this about large multi Speaker 300:30:44question. And for the question. And see, it is higher than what we have traditionally seen in terms of that spread. Although when you look back to Q1, it's very much in line with what we've seen. And really, what we're seeing drive this is essentially a component is being driven by the international mix, but then also price, if you think about more at the front of the plane that is really helping in terms of that. Speaker 300:31:15What I would say as well, Duane, is just remember in terms of the TTV growth, it's from a revenue perspective, it makes up 30%. And so you have that denominator component that numerator component that can skew it. Speaker 500:31:39Thanks. And then just maybe you could expand a little bit on the drivers of improved free cash flow and appreciate the detail you gave us in the presentation. But specifically, what is driving a lower investment this year? Is it should we think about it more as timing or projects that you're no longer pursuing? But just any more detail on the drivers of the improved free cash flow outlook? Speaker 500:32:07Thank you. Speaker 300:32:09Yes. Sure, Duane. So it's primarily driven in terms of the interest expense. So part of it is just as a result of the refinancing, and you'll see that the interest expense in the quarter was significantly lower because you had the accrued interest in the Q2. So that is the biggest driver. Speaker 300:32:30In terms of the CapEx spend, we are still investing. We haven't changed in terms of or shifted our priorities in terms of those investments. It is a mix of us just being continuing, as I just talked about earlier on the call, continuing to be very focused in making that those dollars go further in terms of productivity saves, low cost locations and such in terms of where we're hiring some of those roles. In addition to there is a small component of just phasing, but it's much more about the interest expense story. Speaker 500:33:13Got it. And then maybe just one last one, and this is a question we got from a client this morning. Just thinking about the timing lag between your transactions and when that sort of business travel is actually consumed. We tend to think about business travel as fairly close in within a week or 2. So is would you say that your 3Q transactions are representative of activity in the Q3 and consumption in the Q3? Speaker 500:33:46Or do you view it as leading in nature at all? Speaker 200:33:53No, you're right. It's a pretty tight window between actual transactions and travel. So you should certainly think about our transaction performance relating to activity in July, August and September. Speaker 500:34:09Thank you. Operator00:34:15The next question comes from Lee Horowitz from Deutsche Bank. Lee, your line is open. Please go ahead. Speaker 200:34:21Hi, thanks. So maybe sticking with the SME growth for Speaker 600:34:24the year, it's obviously been constrained by the macro environment. I guess as we look at the next year and beyond, tends to reason that maybe a healthier backdrop would drive SME demand to be stronger than it is this year and perhaps grow more quickly. Is SME returning sort of the base lever that gets you from the low end of your long term range that you're going to deliver this year versus touching up near the high end? Speaker 200:34:51Yes. Look, I think that's fair. I think macroeconomic conditions would obviously help across the base. But certainly, I do think that the SME segment is more sensitive to those conditions. So, you will see, an improvement in, I think, the SME growth rates in the Q4. Speaker 200:35:13And Karen referenced some of the investments that we've made in the second half of this year in order to accelerate our SME growth rates. We've made further investments in our SME sales and marketing channels that we think will also help in terms of share gains and growth rates as we move into 2025. So it's not all about the macro conditions. We obviously have to focus on the things that we can control and that's making sure that we're driving greater productivity and greater results from all of our SME sales and marketing channels as well. But I think your question is a good one. Speaker 200:35:47It's definitely a lever for us as we look into 2025. Speaker 600:35:53Great. Thanks. And then we've been talking a lot about your ability to leverage Generative AI across your cost base, highlighting what 70% I think of cost. I guess at this point, can you give some nice metrics on time savings and the things that you've been able to achieve there. But any quantification of how much time or cost you've actually taken out of the business by leveraging these technologies to date? Speaker 600:36:18And what you think the opportunity is going forward? Like how much of that 70% of your cost base can you actually affect the real cost change going forward? Speaker 200:36:33Yes. Look, I think if you look at our margin expansion opportunity, we see it as a significant continued runway for margin expansion. I think Karen has mentioned before 100 basis points per annum minimum moving up to the mid-20s. And we do see automation broadly playing a critical role in that. It's not just about AI. Speaker 200:36:58We have RPA that we're using in certain parts of our business. We have moving transactions to our software platforms, which is taking demand out of the voice channel into our digital channels where we have a higher margin and a higher ROI. And it's also then using AI and using generative AI in different use cases across the business. So I think it's tough to put a dollar number specifically on generative AI use cases. But I think the best way to look at it is it's a very important lever to help us deliver that continued margin expansion that we've committed to. Speaker 200:37:43And look, you see it in the Q3, you see 300 basis points of margin expansion year over year. You see 1% growth in OpEx versus 5% growth in revenues. But we're also in parallel with that investing more in the business, investing more in our AI capabilities, investing more in our SME growth channels, investing more in our software platforms. So that operating expense is coming through productivity gains, not through investment reductions, coming through productivity gains that are being driven significantly by a series of different automation levers, including AI. Helpful. Speaker 200:38:23Thank you. Operator00:38:44As we have no further questions, I'll hand the call back to Paul at the book. Speaker 200:38:52Well, thank you to everyone for joining us. I want to finally kind of thank our team for their dedication to our customers and the very strong results that they've delivered again this quarter. We remain very confident that 2024 is going to be another year of growth, share gains, continued margin expansion, accelerating cash flow, which of course is enabling us to return more cash to shareholders. So thank you very much for joining us today and your continued interest in American Express Global Business Travel. Thank you. Operator00:39:24This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGlobal Business Travel Group Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Global Business Travel Group Earnings HeadlinesQ4 Earnings Outperformers: Global Business Travel (NYSE:GBTG) And The Rest Of The Finance and HR Software StocksApril 25 at 11:18 AM | finance.yahoo.comAmerican Express Global Business Travel to Report First Quarter 2025 Financial Results on May 6, 2025April 22, 2025 | businesswire.comMassive dollar overhaul underway in D.C.?Trump's plan to save the U.S. Dollar The U.S. Dollar is crashing, and our reserve currency status is now in serious jeopardy leaving some to wonder – is this being done by design? A 25-year economist and investor answers here... and details the exact steps you should be taking with your money to prepare.April 28, 2025 | Stansberry Research (Ad)Global Business Travel Stock Price, Quotes and Forecasts | NYSE:GBTG | BenzingaApril 15, 2025 | benzinga.com3 Reasons to Sell GBTG and 1 Stock to Buy InsteadApril 10, 2025 | msn.comAmerican Express GBT, CWT amend terms of merger agreementMarch 22, 2025 | markets.businessinsider.comSee More Global Business Travel Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Global Business Travel Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Global Business Travel Group and other key companies, straight to your email. Email Address About Global Business Travel GroupGlobal Business Travel Group (NYSE:GBTG) provides business-to-business (B2B) travel platform in the United States and internationally. The company's platform offers a suite of technology-enabled solutions to business travelers and clients; travel content suppliers, such as airlines, hotels, ground transportation, and aggregators; and third-party travel agencies. It also provides consulting, meetings and events planning, and outsourced services. 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There are 7 speakers on the call. Operator00:00:00Good morning, and welcome to the American Express Global Business Travel Third Quarter 2024 Earnings Conference Call. As a reminder, please note today's call is being recorded. I will now turn the call over to Vice President of Investor Relations, Jennifer Derrington. Please go ahead. Speaker 100:00:14Hello, and good morning, everyone. Thank you for joining us for our Q3 2024 earnings conference call. This morning, we issued an earnings press release, which is available on sec.gov and our website at investors. Amexglobalbusinesstravel.com. A slide presentation, which accompanies today's prepared remarks, is also available on the Amex GBT Investor Relations webpage. Speaker 100:00:39We would like to advise you that our comments contain certain forward looking statements that represent our beliefs or expectations about future events, including industry and macroeconomic trends, cost savings and acquisition synergies, among others. All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from statements made on today's conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today's call, we will also be presenting certain non GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, free cash flow and net debt. All references during today's call to such non GAAP financial measures have been adjusted to exclude certain items. Speaker 100:01:36Definitions of these terms and the most directly comparable GAAP measures and reconciliations for non GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me today are Paul Abbott, our Chief Executive Officer and Karen Williams, our Chief Financial Officer. Also joining for the Q and A session today is Eric Bach, our Chief Legal Officer and Head of Global M and A. With that, I will now turn the call over to Paul. Paul? Speaker 200:02:07Thank you, Jennifer. Welcome to everyone and thank you for joining our Q3 2024 earnings call. In the Q3, we continued to drive strong momentum and deliver strong financial results. Our focus on controlling costs and driving operating leverage drove impressive adjusted EBITDA growth with significant margin expansion, giving us confidence to narrow the range and reiterate the midpoint of our full year adjusted EBITDA guidance. Increased demand for our software and services resulted in continued share gains. Speaker 200:02:43We have sustained our pace of new wins and importantly maintained our very high customer retention rate. Continued free cash flow acceleration remains a very important focus for the company. Our strong third quarter results give us the confidence to raise our full year free cash flow guidance once again. We've previously talked about our capital allocation strategy and I'm incredibly pleased with our progress on executing exactly what we said we would do. We have significantly reduced the interest we pay on our debt, continued to deleverage and strengthen the balance sheet, and we are in a strong position to continue investing in growth and productivity gains and finance the closing and integration of the CWT acquisition. Speaker 200:03:33This significant progress in our financial performance has brought us to an important milestone, returning cash to shareholders. During the quarter, as we previously announced, we executed our 1st share buyback. And today, I'm pleased to report our Board of Directors has approved a new larger share buyback authorization. Turning to some of the highlights of the Q3. We continued to execute on our strategy and deliver strong financial results with significant adjusted EBITDA growth. Speaker 200:04:06Starting with transaction growth. Transactions were up 5% driven by increased demand for business travel and our share gains. TTV grew by 9% to reach nearly $8,000,000,000 driven by transaction growth and higher average ticket prices and hotel room rates. This included a mix benefit from higher international TTV and strong TTV growth in certain industry verticals like Financial Services and Pharma. Revenue was up 5% to reach £597,000,000 for the quarter, driven by solid growth in transactions, TTV and increased demand for our products and our professional services. Speaker 200:04:47Finally here, our focus on margin expansion and operating leverage resulted in adjusted EBITDA growth of 23 percent to $118,000,000 with strong margin expansion of 300 basis points. Growth was strong with global multinational customers, up 8% in the quarter, and I'm going to provide more detail on this in the next slide. SME transaction growth remained muted at 2% growth, but improved modestly versus the 1% growth we reported last quarter. As we described last quarter, SME customers have tightened spending controls in the face of sustained higher prices and higher interest rates. This remains a broader trend for SME businesses beyond travel. Speaker 200:05:39Growth in domestic Air transactions was 4%, regional and international growth combined was up 3% with international specifically up 6%. Growth in hotel transactions was 6%, which outpaced the 4% growth in air transactions. This reflects industry trends as well as our intentional focus on increasing our volume of hotel bookings as we continue to strengthen our hotel content and display and provide customers with more hotel value and more choice. Finally, on a regional basis, transaction growth was 6% in the Americas, 11% in Asia Pacific. EMEA growth was softer at 2% impacted by the Olympics in France. Speaker 200:06:28As a reminder here, for organizational purposes, we divide our customer base into 2 general categories, global multinational and small and medium enterprises. We generally use expected annual TTV to divide customers into these categories. Although this measure can vary by country and by customer need. We do not have products or services that are offered solely to one size of customer. We tend to find that customers of all sizes may prefer different solutions. Speaker 200:06:59Some larger customers may prefer a simpler approach, while some smaller customers may prefer a more bespoke high touch global solution. Looking specifically at global multinational customers, we maintained very high customer retention rate of 98% over the last 12 months, demonstrating the value that we bring to this important customer set. We continue to see stronger relative performance with our global multinational customers. Total GMN transactions were up 8% with double digit growth in Pharma, Automotive and Financial Services Industries. We saw very solid growth across almost all of our top industry verticals. Speaker 200:07:42Technology growth returned to more normalized levels as the same store sales cycled over the technology ramp up we saw in the Q3 of 2023. TTV growth in the quarter was 9% and outpaced transaction growth by 4 percentage points. GMN TTV growth was particularly strong, up 13%. And within the regional and international category, international air TTV was up 11%. Looking ahead, our most recent customer survey indicates that demand remains solid as we look over the balance of the year. Speaker 200:08:24It shows that our top 100 customers expect travel spend to be up approximately 5% in the Q4. So turning here to the commercial highlights, we continue to gain share with total new wins value of $3,000,000,000 over the last 12 months. Importantly, these share gains are on a very strong foundation of impressive customer retention, which we've maintained at 97% over the last 12 months. Our biggest growth opportunity remains with SME customers, which represents approximately €950,000,000,000 of travel spend. We are already a leader in managed travel in this segment, but 70% of this opportunity is not currently in a managed travel program. Speaker 200:09:12Our new wins clearly demonstrate that more and more SME customers are recognizing the benefit of a managed travel program including significant savings to our preferred extras rates, more control over their travel spend and of course 20 fourseven customer service and duty of care. This value proposition is clearly resonating. Our SME new wins value totaled €2,100,000,000 over the last 12 months with 14% year over year growth in the number of unmanaged customer wins. In the 3rd quarter 80% now of our transactions came through digital channels, up 3 percentage points year over year. Came through digital channels, up 3 percentage points year over year and 60% of our digital bookings came through on our own software platforms, Neo and Egencia. Speaker 200:09:59We believe owning our own software platforms is a significant competitive advantage because we can control and improve the user experience. Growth on our NIO platform was particularly strong up 18% year over year. We continue to provide customers with more value and more choice in our marketplace through enhanced content. We are working with over 20 airlines on NDC to help our airline partners retail to our premium customers in the most effective way. The collaboration with American Express Card and our NeoOne Spend Management Platform is also progressing well. Speaker 200:10:37We have more than doubled our NeoOne customer base year over year. We also continue to make business travel more sustainable. We are among the first in the business travel industry to achieve SBTI validation of our carbon emission reduction targets. We continue to invest in our products and services to provide customers with more value and more choice. New features this quarter include benchmarking dashboards in our peer travel insights tool. Speaker 200:11:14This uses key performance indicators for customers to compare their company's travel program against other peers in their industry. We also launched a new group travel solution on the Egencia platform. I'm pleased to say our product leadership has been recognized by G2, the largest and most trusted peer to peer review site that more than 60,000,000 people and many Fortune 500 companies use to make software decisions. Amex GBT Egencia has proudly received 19 awards from G2 this fall, which are based on verified user reviews from travelers and travel managers. We're also focused on providing the very best traveler experience. Speaker 200:12:01In the Q3, we updated the Egencia mobile app to deliver a more intuitive user experience. And we made improvements to the NIO checkout process and the Egencia trip management experience. As we mentioned last quarter, we are investing in automation and AI to deliver operational efficiencies across 4 areas. And these 4 areas represent 70% of our adjusted operating expenses. The four areas include increasing service efficiencies, increasing engineering velocity, streamlining our financial processes and enabling our workforce. Speaker 200:12:50Let me provide a quick update on our progress on each of these four areas. First, we are piloting our proprietary email AI solution that saves travel counselors time by generating offers based on incoming customer email requests. 2nd, we have now expanded our use of the GitHub Copilot and used it to accelerate the software development required to launch our new corporate website. 3rd, we have deployed automation for our credit card reconciliation process reducing the average handling time by approximately 50%. And 4th, we've deployed AI to respond to our customers' program change requests faster, reducing these timelines by approximately 80%. Speaker 200:13:41So as you can see, we're making measurable progress and continue to see AI as a huge opportunity to drive productivity improvements. Finally, regarding the CWT acquisition, we continue to work through the relevant regulatory approval processes and we continue to expect the transaction to close in the Q1 of 2025. And now I'd like to hand it over to Karen to discuss the financial results and 2024 outlook in more detail. Speaker 300:14:15Thank you, Paul, and hello, everyone. I've previously talked about my 3 key priorities when it comes to managing our financial performance. And as a reminder, they are accelerating cash flow generation, driving operating leverage and continued margin expansion and importantly, creating capacity to invest and drive long term sustained growth, both organically and through strategic M and A. And again, in the Q3, I am really happy with the progress we have made in all three of these areas. So now let's turn to our financial performance in more detail. Speaker 300:14:56Revenue reached $597,000,000 up 5% year over year. Although revenue growth was more consistent with the first half of the year and transaction growth did not accelerate as much as we expected, we still delivered adjusted EBITDA in line with our expectations, thanks to our rigorous cost control. And importantly, free cash flow exceeded our expectations. Revenue yield, which we define as revenue divided by TTV, was 7.7%. As a reminder, our revenue model is driven by 50% transaction volume, 30% TTV and 20% product and professional services revenue. Speaker 300:15:42So only 30% of our revenue benefits from higher air and hotel pricing. And so it's important to highlight as TTV grows faster than transactions, as we saw in the quarter, it has a negative impact on the yield metrics. The 30 basis points year over year decline was very much in line with our expectations. And I encourage you to look at our overall yield performance on an annualized basis, which we expect to be down 15 to 20 basis points for the full year. This reflects the non TTV driven components of the revenue base and continued shift to digital transactions, which had a positive impact on our adjusted EBITDA margin. Speaker 300:16:28And as previously discussed, there is seasonality in our yield with Q4 being our highest revenue yield quarter. As we turn to total operating expense, which were a key area of focus for us, I am incredibly pleased with the momentum we are seeing across the enterprise when it comes to our focus on costs and increasing productivity. Importantly, we are delivering over €100,000,000 in cost savings this year that not only drive our margin expansion, but enable us to reinvest for future growth. In 2024, we are investing an incremental €35,000,000 which represents a slightly lower CapEx expectation now with a 70 five-twenty 5 split between OpEx and CapEx. Together, the net impact of these resulted in adjusted operating expense growth of 1% year over year versus revenue growth of 5%. Speaker 300:17:33Adjusted EBITDA grew 23 percent to $118,000,000 with an adjusted EBITDA margin of 20%, growing an impressive 300 basis points year over year. I'm incredibly happy with the continued momentum and acceleration when it comes to cash flow generation. In the quarter, we achieved free cash flow generation of €59,000,000 This has been driven by our working capital optimization initiatives, lower CapEx spend in addition to significantly lower interest expense. As a reminder, we executed a debt refinancing in July that significantly lowered our interest costs. Importantly though, through our derivative strategy, we have further reduced our costs. Speaker 300:18:23When we consider this recent refinancing and our interest rate hedges and swap, in addition to the previously achieved savings tied to our lowered leverage, the expected run rate cash interest savings achieved were approximately $50,000,000 and represent a 35% reduction versus 2023. And finally, our leverage ratio on net debt divided by last 12 months adjusted EBITDA is 1.9 times as of September 30, 2024. This represents a very significant step down from the 2.7 times in September 2023 and is just below the midpoint of our target leverage ratio of 1.5 to 2.5 times. We have previously shared our powerful financial model with you all and how it positions us for industry leading returns. First, we expect business travel demand for our premium customer base to grow above GDP. Speaker 300:19:272nd, we expect to continue to grow ahead of the market by driving share gains with our differentiated value proposition. 3rd is our focus on margin expansion. We are laser focused on a disciplined cost structure and continued margin growth. Our operating leverage is forecasted to drive 24% to 26% adjusted EBITDA growth in 2024, reflecting our narrowed guidance range that I will discuss in more detail shortly. 4th, we're incredibly focused on optimizing our capital deployment. Speaker 300:20:04Our positive and accelerating free cash flow can fund important incremental growth opportunities in M and A, including significant value creation from the pending CWT acquisition. And finally, we are in a very strong position to return cash to shareholders. And so let's turn to the full year 2024 guidance. We are hitting the mark of what we can control. Although revenues are at the lower end of our guidance, adjusted EBITDA, free cash flow and margin are all ahead of expectations. Speaker 300:20:42Given the softer macro environment and uncertainty related to interest rates as we have talked about previously, revenue growth continues to track towards the lower end of the guidance range provided at the start of the year. We are now narrowing our guidance for the full year revenue to GBP 2.415 billion to GBP 2.435 billion, which represents a year over year growth of approximately 5.5% to 6.5% and a midpoint of 6% consistent with the low end of the prior range and reflective of what we are currently seeing in terms of performance. For the Q4, our guidance implies a modest revenue growth acceleration, largely driven by higher yield related to timing of certain performance thresholds and in line with the seasonality of our revenue model. We remain focused on driving continued operating leverage. This includes in excess of $100,000,000 of cost savings from the carryover actions taken in 2023 plus new cost initiatives and productivity improvements this year. Speaker 300:21:56Executing these savings enables us to deliver strong margin expansion of 290 to 310 basis points, while still making significant investments in future growth. We have narrowed our full year adjusted EBITDA guidance range to 4.70 dollars to $480,000,000 representing growth of 24% to 26%. And again, we are reiterating the midpoint of our adjusted EBITDA guidance, demonstrating the strong margin performance we've already seen year to date and our confidence into Q4. And finally, but very importantly, given our focus on cash, I am delighted to raise our guidance of free cash flow for the 2nd time this year. We now expect to generate approximately $160,000,000 in 2024 compared to the previous guidance of at least $130,000,000 This more than triples our free cash flow from last year and represents a conversion rate of just under 35% of adjusted EBITDA. Speaker 300:23:07I want to end by highlighting our accomplishments with respect to the capital allocation priorities we laid out earlier this year. Our first priority is accelerating cash generation, which our results clearly demonstrate we have accomplished. 2nd, continuing to deleverage. Our Q3 'twenty four leverage ratio of 1.9 times is now in the lower half of our target. And as previously discussed, we have achieved just under $50,000,000 of expected run rate interest savings. Speaker 300:23:433rd, as we continue to see cash flow acceleration and naturally deleverage, it gives us optionality to invest in our business, including our people, software platform, SME sales and marketing engine and AI to drive organic growth, productivity and margin expansion. 4th, with respect to M and A, we continue to work cooperatively with the regulators and expect the CWT acquisition to close in the Q1 of 2025. Because the financing is primarily stock, we expect to remain within our target leverage range following the transaction close. And as you heard from Paul, our confidence in our business model and strategy puts us in a very strong position of now being able to return cash to shareholders. In the Q3, we repurchased 8,000,000 shares in a private share buyback from an unaffiliated third party, representing approximately $55,000,000 This transaction was our 1st share buyback and an efficient way to repurchase shares at a discount while managing potential overhang risks that could have resulted from them selling in the open market. Speaker 300:25:04I'm thrilled that today we announced our Board of Directors has authorized an additional share buyback of up to $300,000,000 and with this new authorization in place, we expect to return cash to shareholders. So to wrap things up, our Q3 performance was strong. We are clearly delivering on our priorities and are confident in our full year 2024 guidance. We will provide our 2025 outlook next quarter. So we can now move into Q and A. Speaker 300:25:37Paul and I are joined by Eric Bock, who is our Chief Legal Officer and Global Head of M and A. Operator, please go ahead and open the line. Operator00:26:02And our first question comes from Peter Christiansen from Citi. Peter, please go ahead. Your line is open. Speaker 400:26:09Thank you. Good morning. Thanks for the chance to answer questions. Karen, really impressive on the free cash flow generation here. If we think about current run rate and I guess on a stand alone basis, do you think that we should rank cost savings as a potential to increase the free cash flow yield or the free cash flow margin further? Speaker 400:26:36Or is it more a function of finding working cap efficiencies or even the CapEx efficiencies considering that you still are investing? Granted, I recognize this is on a standalone basis, but would be good to get a sense of the runway you see for free cash flow expansion going forward? Thank you. Speaker 300:26:59So, Pete, thanks for the question. So certainly, my we're very happy, I would say, first off, in terms of the momentum that we're continuing to see. And our profit growth in terms of that market continued margin expansion, given our focus around cost, will continue to be a big component. But to your second point, as you think about the CapEx side, as we focus in terms of really that productivity and making our CapEx spend go further in terms of the investments that we're making from AI and just that productivity. That will also contribute in addition to just continuing to chip away in terms of the interest expense. Speaker 300:27:49And you heard us on this call in terms of obviously, we have the refinancing, but there's further reductions in terms of that interest expense given some of the swaps that we've done from a derivative perspective. And so then we feel good about Speaker 400:28:06That's fair. Thank you. That's helpful. And Paul, I wanted to ask about SMB on some of the activity. We obviously slowed down last 2 quarters. Speaker 400:28:18Just curious if you're seeing that broadly across, I guess, all industry verticals? Or are there certain soft areas that we should be mindful of? Thank you. Speaker 200:28:31Yes. Thanks for the question, Pete. I think if you look at the SME growth rate in the quarter, it did actually move up a point versus last quarter, still below global multinational. But hopefully that is a kind of stabilization of the decline that we've seen over the last decline in the growth rates over the last few quarters. And I think as I said last quarter, if you could look across different industries, it's very well reported that small, midsized businesses have certainly been feeling the pressure of higher prices and obviously much higher interest rates. Speaker 200:29:13And so now that we're seeing interest rates gradually move down in the Eurozone, in the UK and the U. S, hopefully, we can keep inflation under control and those interest rates continue to decline. And We think that will improve confidence with small to midsize businesses as we go into 2025. If you look at I think I shared this data point before we look at the Amex card spending with small businesses across a very large base in the U. S. Speaker 200:29:48That card spending also stabilized in the Q3. So I think hopefully we're seeing that stabilization and as the macro conditions improve and interest rates continue to move down, we'll start to see a gradual improvement. Speaker 400:30:07Super helpful. Thank you, Paul. Thank you, Karen. Operator00:30:12The next question comes from Duane Pfennigwerth from Evercore ISI. Duane, your line is open. Please go ahead. Speaker 500:30:20Hey, thanks. Nice operating leverage this quarter, but just curious about the spread between TTV growth and revenue growth. Is that at all a function of your customer mix? Is this about large multi Speaker 300:30:44question. And for the question. And see, it is higher than what we have traditionally seen in terms of that spread. Although when you look back to Q1, it's very much in line with what we've seen. And really, what we're seeing drive this is essentially a component is being driven by the international mix, but then also price, if you think about more at the front of the plane that is really helping in terms of that. Speaker 300:31:15What I would say as well, Duane, is just remember in terms of the TTV growth, it's from a revenue perspective, it makes up 30%. And so you have that denominator component that numerator component that can skew it. Speaker 500:31:39Thanks. And then just maybe you could expand a little bit on the drivers of improved free cash flow and appreciate the detail you gave us in the presentation. But specifically, what is driving a lower investment this year? Is it should we think about it more as timing or projects that you're no longer pursuing? But just any more detail on the drivers of the improved free cash flow outlook? Speaker 500:32:07Thank you. Speaker 300:32:09Yes. Sure, Duane. So it's primarily driven in terms of the interest expense. So part of it is just as a result of the refinancing, and you'll see that the interest expense in the quarter was significantly lower because you had the accrued interest in the Q2. So that is the biggest driver. Speaker 300:32:30In terms of the CapEx spend, we are still investing. We haven't changed in terms of or shifted our priorities in terms of those investments. It is a mix of us just being continuing, as I just talked about earlier on the call, continuing to be very focused in making that those dollars go further in terms of productivity saves, low cost locations and such in terms of where we're hiring some of those roles. In addition to there is a small component of just phasing, but it's much more about the interest expense story. Speaker 500:33:13Got it. And then maybe just one last one, and this is a question we got from a client this morning. Just thinking about the timing lag between your transactions and when that sort of business travel is actually consumed. We tend to think about business travel as fairly close in within a week or 2. So is would you say that your 3Q transactions are representative of activity in the Q3 and consumption in the Q3? Speaker 500:33:46Or do you view it as leading in nature at all? Speaker 200:33:53No, you're right. It's a pretty tight window between actual transactions and travel. So you should certainly think about our transaction performance relating to activity in July, August and September. Speaker 500:34:09Thank you. Operator00:34:15The next question comes from Lee Horowitz from Deutsche Bank. Lee, your line is open. Please go ahead. Speaker 200:34:21Hi, thanks. So maybe sticking with the SME growth for Speaker 600:34:24the year, it's obviously been constrained by the macro environment. I guess as we look at the next year and beyond, tends to reason that maybe a healthier backdrop would drive SME demand to be stronger than it is this year and perhaps grow more quickly. Is SME returning sort of the base lever that gets you from the low end of your long term range that you're going to deliver this year versus touching up near the high end? Speaker 200:34:51Yes. Look, I think that's fair. I think macroeconomic conditions would obviously help across the base. But certainly, I do think that the SME segment is more sensitive to those conditions. So, you will see, an improvement in, I think, the SME growth rates in the Q4. Speaker 200:35:13And Karen referenced some of the investments that we've made in the second half of this year in order to accelerate our SME growth rates. We've made further investments in our SME sales and marketing channels that we think will also help in terms of share gains and growth rates as we move into 2025. So it's not all about the macro conditions. We obviously have to focus on the things that we can control and that's making sure that we're driving greater productivity and greater results from all of our SME sales and marketing channels as well. But I think your question is a good one. Speaker 200:35:47It's definitely a lever for us as we look into 2025. Speaker 600:35:53Great. Thanks. And then we've been talking a lot about your ability to leverage Generative AI across your cost base, highlighting what 70% I think of cost. I guess at this point, can you give some nice metrics on time savings and the things that you've been able to achieve there. But any quantification of how much time or cost you've actually taken out of the business by leveraging these technologies to date? Speaker 600:36:18And what you think the opportunity is going forward? Like how much of that 70% of your cost base can you actually affect the real cost change going forward? Speaker 200:36:33Yes. Look, I think if you look at our margin expansion opportunity, we see it as a significant continued runway for margin expansion. I think Karen has mentioned before 100 basis points per annum minimum moving up to the mid-20s. And we do see automation broadly playing a critical role in that. It's not just about AI. Speaker 200:36:58We have RPA that we're using in certain parts of our business. We have moving transactions to our software platforms, which is taking demand out of the voice channel into our digital channels where we have a higher margin and a higher ROI. And it's also then using AI and using generative AI in different use cases across the business. So I think it's tough to put a dollar number specifically on generative AI use cases. But I think the best way to look at it is it's a very important lever to help us deliver that continued margin expansion that we've committed to. Speaker 200:37:43And look, you see it in the Q3, you see 300 basis points of margin expansion year over year. You see 1% growth in OpEx versus 5% growth in revenues. But we're also in parallel with that investing more in the business, investing more in our AI capabilities, investing more in our SME growth channels, investing more in our software platforms. So that operating expense is coming through productivity gains, not through investment reductions, coming through productivity gains that are being driven significantly by a series of different automation levers, including AI. Helpful. Speaker 200:38:23Thank you. Operator00:38:44As we have no further questions, I'll hand the call back to Paul at the book. Speaker 200:38:52Well, thank you to everyone for joining us. I want to finally kind of thank our team for their dedication to our customers and the very strong results that they've delivered again this quarter. We remain very confident that 2024 is going to be another year of growth, share gains, continued margin expansion, accelerating cash flow, which of course is enabling us to return more cash to shareholders. So thank you very much for joining us today and your continued interest in American Express Global Business Travel. Thank you. Operator00:39:24This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.Read morePowered by