Release Date: February 24, 2023
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 a strong recovery in global traffic, reaching 77% of December 2019 levels.
- The company achieved 87% of Q4 2019 revenue, slightly higher than the prior quarter.
- Free cash flow generation in Q4 2022 was EUR 177 million, allowing continued deleveraging.
- Amadeus IT Group SA (XMAD:AMS) resumed shareholder remuneration with a proposed gross dividend of EUR 0.74 per share.
- The company announced new partnerships and renewals, including with Ryanair, Aeroméxico, and Finnair, indicating strong commercial traction.
Negative Points
- The pace of traffic recovery in Q4 was slower than in the previous quarter.
- Adjusted profit reached only 66% of 2019 levels, indicating room for improvement.
- The company faced higher negative workday effects and a higher cancellation ratio in December.
- Western Europe lagged behind other regions in recovery, impacted by geopolitical factors and the faster growth of low-cost carriers.
- Fixed costs are expected to grow by 10% to 14% in 2023, driven by R&D investments and high inflation.
Q & A Highlights
Q: Can you discuss the gross profit margins for 2023 and any significant factors that might influence them?
A: Till Streichert, CFO: We expect the gross profit margins to remain stable, similar to 2022 levels. The evolution will depend on business mix and pricing adjustments. Luis Maroto Camino, CEO: As we recover closer to the 2019 mix, margins should progressively align with pre-COVID levels.
Q: What is your current share of NDC bookings, and how do you expect it to evolve in 2023?
A: Luis Maroto Camino, CEO: NDC bookings were a small percentage of our total in 2022, but we expect an increase in 2023. However, it will still be a relatively small portion of our overall bookings.
Q: How will the fixed cost guidance for 2023 be managed, and what factors influence the high and low ends of this range?
A: Till Streichert, CFO: The fixed cost range is driven by R&D investments, inflation, and cloud migration costs. These factors are not directly linked to revenue but are essential for supporting our strategic initiatives and customer implementations.
Q: Can you provide an update on the long-term outlook for revenue per booking, considering pricing, mix, and NDC impacts?
A: Till Streichert, CFO: We expect positive pricing evolution to continue, supported by inflationary price increases and upselling. The booking mix is expected to recover, which should positively impact revenue per booking.
Q: What are the main drivers behind the improved bookings performance in early 2023?
A: Luis Maroto Camino, CEO: The improvement is driven by a recovery in international traffic and strong performance in Asia. The mix is returning to pre-pandemic levels, with both leisure and business travel showing positive trends.
Q: How do you view the unit economics of NDC bookings in terms of top line and margins?
A: Luis Maroto Camino, CEO: We do not expect a negative impact on the economics of NDC bookings. The volumes are still small, so there should be no significant effect on our P&L in 2023.
Q: What is the outlook for the Hospitality segment in 2023, and what factors contribute to margin dilution?
A: Luis Maroto Camino, CEO: The mix within the Hospitality segment, including the faster recovery of hotel bookings and the growth of our payment business, contributes to margin dilution. However, we expect healthy revenue growth supported by new customer implementations.
Q: Can you elaborate on the pipeline for new PSS customers, particularly in the U.S.?
A: Luis Maroto Camino, CEO: We continue to engage with potential customers worldwide, including in the U.S. While we had a strong year in 2022, we aim to maintain this momentum and secure new contracts in 2023.
Q: How should we think about the phasing of the 70 million PB run rate by the end of 2023?
A: Till Streichert, CFO: We expect an additional 45 million to 55 million PBs from customer migrations in 2023, which will be phased throughout the year.
Q: What are the main factors behind Western Europe's slower recovery compared to other regions?
A: Luis Maroto Camino, CEO: The slower recovery in Western Europe is due to the faster growth of low-cost carriers and the impact of geopolitical factors, particularly in countries around Russia. We expect further recovery in this region as conditions improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
