Release Date: May 06, 2022
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amadeus IT Group SA (XMAD:AMS, Financial) reported strong revenue recovery, reaching 65% of 2019 levels in Q1 2022.
- The company saw significant market share gains, particularly in North America.
- Free cash flow generation was robust, with EUR 143 million excluding implementation costs.
- The hospitality segment showed strong performance, reaching 85% of 2019 revenue levels.
- Amadeus IT Group SA (XMAD:AMS) signed 21 new distribution contracts or renewals with airlines in Q1 2022.
Negative Points
- Revenue per booking was 0.8% lower than in 2019 due to higher domestic travel and booking cancellations.
- The company’s leverage remains high, closing the quarter at 3.4x last 12 months EBITDA.
- APAC remains the slowest region in terms of recovery, impacting overall performance.
- The company faces ongoing macroeconomic and geopolitical uncertainties that could affect future travel volumes.
- Cost of revenue and fixed costs have increased, driven by higher R&D investment and discretionary spending.
Q & A Highlights
Highlights of Amadeus IT Group SA (XMAD:AMS) Q1 2022 Earnings Call
Q: Can you elaborate on the market share gains and the competitive landscape in the GDS sector?
A: Luis Maroto Camino, President, CEO & Executive Director: We have seen strong market share gains despite regional mix effects. While we don't provide specific figures due to subjectivity, our performance compared to competitors indicates significant gains. We are pleased with our commercial traction across various regions.
Q: How are you managing cost plans and customer demand for projects post-COVID?
A: Luis Maroto Camino, President, CEO & Executive Director: Our cost increases are aligned with opportunities and customer signings. We are investing in new customer implementations and areas that provide growth opportunities. We remain optimistic about the industry's recovery and are prepared to invest accordingly.
Q: Can you comment on the visibility for the remainder of the year and the impact of staff shortages on your business?
A: Till Streichert, CFO: IATA's updated forecast shows a better outlook with a minus 17% for 2022 in terms of growth expectations. We are pleased with our current volumes and see positive signals in the market. However, we remain cautious about macroeconomic and geopolitical uncertainties.
Q: How is inflation impacting your business, particularly on pricing and wage costs?
A: Till Streichert, CFO: We have inflation-linked clauses in our contracts that allow us to pass on some inflationary costs. On the cost side, we are assessing the situation on a country-by-country basis to remain competitive in terms of wages, which is our largest cost line.
Q: What is your capital allocation plan regarding dividends, deleveraging, and M&A?
A: Till Streichert, CFO: We are on track for profit generation this year, which allows us to consider dividends. However, we may prioritize further deleveraging before resuming dividend payments. We will update you as we achieve our objectives for the year.
Q: Can you provide more color on market share gains outside North America?
A: Luis Maroto Camino, President, CEO & Executive Director: We are seeing good traction across various regions, not just North America. We have signed significant customers like ATPI outside North America, indicating broad-based market share gains.
Q: What is the expected trend for revenue per booking in the medium term?
A: Till Streichert, CFO: We expect revenue per booking to trend back to 2019 levels, adjusted for inflationary increases over the past two years. This will depend on commercial negotiations and market dynamics.
Q: How is the hospitality segment performing, and can it reach pre-pandemic levels by year-end?
A: Luis Maroto Camino, President, CEO & Executive Director: The hospitality segment has been resilient and is showing positive trends in occupancy rates. We are optimistic about its recovery and potential to reach pre-pandemic revenue levels by year-end.
Q: Can you provide a regional breakdown of bookings and PBs evolution in April?
A: Till Streichert, CFO: Asia Pacific led the step-up in April, followed by Western Europe. Some regions like the Middle East Africa saw consistent performance, but overall, we observed month-on-month improvement globally.
Q: How are you addressing the appetite for IT investments among your customers?
A: Luis Maroto Camino, President, CEO & Executive Director: There is a strong appetite for IT investments as customers seek to optimize and enhance their digital capabilities. We are well-positioned to provide the necessary solutions to meet these demands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
