B2B travel services company Global Business Travel (NYSE:GBTG) missed Wall Street’s revenue expectations in Q3 CY2024 as sales rose 4.6% year on year to $597 million. The company’s full-year revenue guidance of $2.43 billion at the midpoint came in slightly below analysts’ estimates. Its GAAP loss of $0.28 per share was also 251% below analysts’ consensus estimates.
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Global Business Travel (GBTG) Q3 CY2024 Highlights:
- Revenue: $597 million vs analyst estimates of $613.5 million (2.7% miss)
- EPS: -$0.28 vs analyst estimates of -$0.08 (-$0.20 miss)
- EBITDA: $118 million vs analyst estimates of $115.9 million (1.9% beat)
- The company dropped its revenue guidance for the full year to $2.43 billion at the midpoint from $2.47 billion, a 1.6% decrease
- EBITDA guidance for the full year is $475 million at the midpoint, in line with analyst expectations
- Gross Margin (GAAP): 60.3%, up from 58.5% in the same quarter last year
- Operating Margin: 4.5%, up from -0.7% in the same quarter last year
- EBITDA Margin: 19.8%, up from 16.6% in the same quarter last year
- Free Cash Flow Margin: 9.9%, up from 7.8% in the previous quarter
- Transaction Value: 7.75 billion, up 629 million year on year
- Market Capitalization: $3.63 billion
Paul Abbott, Amex GBT’s Chief Executive Officer, stated: "We continue to execute on our strategy and deliver strong results with a focus on share gains, margin expansion and investing for growth. Our recent share buyback and larger scale authorization demonstrate our confidence in our long term strategy. "
Company Overview
Holding close ties to American Express, Global Business Travel (NYSE:GBTG) is a comprehensive travel and expense management services provider to corporations worldwide.
Spend Management Software
The adoption of financial technology software is propelled by an ongoing drive to reduce costs. The combination of rising transaction volumes and global supply chain complexity is driving demand for cloud-based spend management platforms able to integrate the two.
Sales Growth
Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Over the last three years, Global Business Travel grew its sales at an incredible 57.7% compounded annual growth rate. This is a useful starting point for our analysis.
This quarter, Global Business Travel’s revenue grew 4.6% year on year to $597 million, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 7.7% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and shows the market believes its products and services will see some demand headwinds.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Global Business Travel has shown mediocre cash profitability over the last year, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 6.9%, subpar for a software business.
Global Business Travel’s free cash flow clocked in at $59 million in Q3, equivalent to a 9.9% margin. The company’s cash profitability regressed as it was 8.9 percentage points lower than in the same quarter last year, but it’s still above its one-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends trump temporary fluctuations.
Key Takeaways from Global Business Travel’s Q3 Results
It was good to see Global Business Travel beat analysts’ EBITDA expectations this quarter. On the other hand, its revenue missed and its full-year revenue guidance fell short. Overall, this quarter could have been better, but the stock traded up 3.8% to $7.95 immediately following the results.
Is Global Business Travel an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
