Good morning, and welcome to the American First Global Business Travel First Quarter 2020 Earnings Conference Call. As a reminder, please note today's call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Jennifer Thorington. Please go ahead.

Hello, and good morning, everyone. Thank you for joining us for our first quarter 2024 earnings conference call. This morning, we issued an earnings press release, which is available on sec.gov and our website at investors.amexglobal businesstravel.com. A slide presentation, which accompanies today's prepared remarks is also available on the mxGVT Investor Relations web page. We 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 the 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 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. Definitions of these terms in 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&A session today is Eric Fox, our Chief Legal Officer and Heiden Global M&A. With that, I will now turn the call over to Paul. Paul?

Thank you, Jennifer, and welcome to everyone, and thank you for joining our first quarter 2024 earnings call. In the first quarter, we delivered strong financial results with continued share gains, significant margin expansion and 24% adjusted EBITDA growth to reach the highest first quarter adjusted EBITDA in our company's history. Total transaction value of TTV grew 9% in the quarter and revenue grew 6%. Adjusting for fewer work days in the first quarter this year versus last year, growth would be 10% and 7%, respectively. These strong results were in line with our expectations and put us on track to deliver against our full year guidance. Increased demand for our leading software and services resulted in continued share gains. We reported new wins value of $3.3 billion over the last 12 months. This includes $2 billion of SME new wins, demonstrating continued progress with this large profitable customer segment. Our focus on driving operating leverage is also clearly evidenced in our Q1 financial results. Adjusted operating expenses increased just 2% compared to 6% revenue growth, and we drove significant adjusted EBITDA margin expansion of 300 basis points year-over-year. Our progress to positive and accelerating free cash flow remains an important focus for the company, providing us additional opportunities to invest in our growth and drive shareholder returns. We generated positive free cash flow of $24 million in the quarter, an improvement of $133 million year-over-year, and we continue to lower our leverage ratio. Importantly, in the first quarter, we announced that we have entered into an agreement to acquire CWT. The transaction value of approximately $570 million represents a highly attractive post-synergy multiple of 2.5x adjusted EBITDA, including approximately $155 million of identified annual run rate cost synergies. This accretive transaction is expected to close in the second half…

Thank you, Paul, and hello, everyone. I've previously talked about my 3 key priorities when it comes to managing our financial performance, which are focused on 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&A. I'm really happy with the progress we have made in all 3 areas. Our solid revenue growth substantially higher earnings, significant margin expansion and positive free cash flow are testament to this. So now let's turn to our financial performance in more detail. As you heard from the call, revenue reached $610 million, up 6% year-over-year, largely driven by transaction growth. This was in line with our expectations for the first quarter and reflects known factors, including the calendar effect from Workday timing. TTV grew 9% in the quarter, primarily driven by transaction volume and also reflecting increased average airline ticket prices and hotel room rates. Revenue yield, which we define as revenue divided by TTV declined modestly in the quarter due to 2 factors: First, non-TTV-driven components of the revenue base. As a reminder, our revenue model is driven 50% by transaction volume, 30% by TTV and 20% by product and professional services revenue, which is largely recurring. So only 30% of our revenue benefits from higher sales prices. Second, the continued shift to digital transactions is in line with our strategy and have a positive impact to adjusted EBITDA margin, but lower revenue yield. These factors were anticipated and incorporated into our full year 2024 guidance that we provided last quarter. Turning to expenses, which are a key area of focus for us. Cost saving initiatives and productivity improvements helped offset the investments we are making in technology and content, including our software platforms…

[Operator Instructions]. We now have Peter Christiansen from Citi.

Thank you. Good job on some of the EBITDA margin efficiencies showing through there. It's good to see. I'm curious, I wanted to dig a little bit back into travel yield a little bit. And Karen, that was helpful to your explanation there. I'm just curious if there was any incremental impact from GMN being a bit more higher share relatively versus SME. I'm wondering if there was any impact on travel yield with that? And then I have a follow-up.

So thanks for the question. From a yield perspective, there's no real impact. I mean as you think about Q1, Q1 is always our lowest yield quarter with Q4 being the highest. And as you think about the Q1 performance, there is an element in terms of this timing. As you look at our full year guidance, really, you see a very small deterioration in the yield, and that's really being driven by the shift to online and the fixed components that we talked about in terms of our revenue.

That's helpful. And then, Paul, I guess, new wins still $3.3 billion, still a very robust kind of number there. I guess as we think about anticipation for the CWT acquisition to close, do you foresee new wins being a little bit under pressure temporarily ahead of that deal closing and subsequent integration. And just curious if you also had any early feedback from potential clients on the acquisition.

Yes. No, I think the pipeline for new wins is still really strong. If you look at the overall market, we talked about scale of the opportunity. We're in a $1.4 trillion industry. And even after the CWT acquisition, we'll have $45 billion of that $1.4 trillion. And of course, SME is the biggest opportunity within that. There's $900 billion of TTV of which $300 billion sits with, if you like, professional managed travel programs, and $600 billion is in unmanaged. So we certainly see significant runway for growth, and we expect to continue to gain share. If you look at the new wins for the last 12 months ending the first quarter our win-loss ratio is at 2.4%. So for every dollar of business we lose, we win $2.4 of new business. So we're consistently gaining share, and we expect that to continue.

Our next question is from Lee Horowitz from Deutsche Bank.

Can you talk a bit more about the strength you're seeing in global multinational now outpacing SME for the first time since the recovery. Maybe just a bit more on the sort of the underlying covers of the evolving shape of your volume growth and how you think about the sustainability of these factors moving forward? And then from a regional perspective, obviously, APAC remains a big source of strength. Can you maybe just give us an update on how you're thinking about the overall recovery in that region? How much more do you think is left to go relative to, say, other regions? And how you think about APAC sort of carrying sort of the overall volume growth moving forward?

Yes, sure. So we're really pleased to see the strength in global multinational. I think one of the advantages of our business is we have this diversified revenue model and diversified growth profile, we have just over 50% of the revenues from SME, but just under from global multinational. Also, there's a really good balance between customer and supplier revenues. And so I think that balance really helps. If you dig a little deeper into global multinational, I think what's encouraging there is that we're seeing strong growth across multiple sectors. Technology was certainly the standout in the quarter, and we've heard that, I think, from some of the airlines that reported in the U.S. That was up 30% in the quarter, but we saw double-digit growth in professional services, pharma, also energy and utilities. So pretty broad bets to grow. In terms of how that's trending, the survey that I shared in the call just now, we won't go out every quarter to our top 100 customers. So I think it's a really good data point for global multinational outlook. And that most recent survey showed a strengthening of the overall spend projections for this year up to 8%. And also the number of customers expecting an increase in travel volume in the balance of the year also is up another 3 points. So that would certainly kind of indicate that I think that we'll see pretty strong growth from that segment for full year. If you'd ask me back in Q4, I would have actually thought our growth rates for global multinational net would would have been closer together. And so global multinational was a little higher than expected, SME lower than I expected. I think I mentioned some of the reasons for that on the call. I…

[Operator Instructions]. Our next question is from Duane Pfennigwerth from Evercore .

Do you is open now. Please go ahead. Can you just remind us how you define SME? What is the cutoff to be classified as SME? And certainly appreciate it's highly fragmented, but any particular industries you're keeping an eye on? Just wondering about kind of drivers there and really do appreciate that the vast majority of this is unmanaged, and it's a very large opportunity for you, but we are interested in kind of this incremental SME commentary.

Yes, for our kind of SME definition, we actually have -- the way we're structured, we have a division that is dedicated to SME customers. And so we essentially report looking at the customers that are in that part of our business. But broadly speaking, it's customers that are spending a kind of, let's say, $30 million on the less in travel, but the box majority of those are much smaller. But there are some exceptions to that as we try to be needs driven rather than purely volume driven. But directionally, that's a good guide. And it represents about $14 billion of our TTV. So that's the definition question. In terms of industries, I think SME is so broad based that it's really difficult to pick out a specific industry. I think when you look at the SME performance, actually, is a mirror kind of what we see in Global Moltinational, the results are stronger in the larger companies within SME, and they are kind of a little softer as you go down into the smaller companies. So I would say that's the general trend that we're seeing. The smaller of the business, perhaps the tighter controls that were all spending. And I think that does connect back to the comments I made earlier about lending costs and higher inflation and price inflation. And we have to keep in mind that if you look at domestic airline prices in the U.S., for example, our average ticket price for the first quarter was up, I mean 8% year-over-year, but it's up 24% versus 20.2%. So there has been some pretty significant price inflation that I do think is contributing to some of those spending controls that you see in the SME segment.

That's great. And then just a follow-up there. I think you said that your U.S. air transaction volume was up 14%. I don't know if you have it handy, but how does that compare to hotel transaction growth for the same geography? And sorry to put you on the spot, but again, it's just something we're interested in. Do you have any insight into how trip length or trip duration may be changing as the close-in corporate starts to perk back up.

Yes, I think on the air, we were 10% up on a workday-adjusted basis globally. Air was 11% up globally. And the U.S. was the strongest region from an air perspective, actually at 14% growth. So very strong overall sales growth on air. I think it's worth noticing that about 2/3 of that growth was price and yield related. So you've got about 8 points of pricing and yield growth and about 6 points of transaction growth. So hopefully, that sort of additional color helps a little bit on the air side. U.S. hotel transactions, I think I know hotel sales were up 10%. So I think that's probably in the U.S. So that's probably the comparable number to the 14% because both of those include, if you like, pricing and yield impact. So U.S. Air up 14, U.S. hotel sales up 10%, but you've seen a little less price inflation on hotel. If you look at U.S. average daily rates for hotel year-over-year, they're up 4%, where, as I mentioned before, per is up 8% on domestic. And if you go back to 2022, as I mentioned before, domestic air is up 24% at hotels up 14%.

Our next question is from Toni Kaplan from Morgan Stanley.

I wanted to ask another follow-up on SME. I know you mentioned the slowdown is really driven by macro factors. Just wondering what are some of maybe the sales initiatives or strategies that you could deploy to maybe mitigate some of the macro factors, I'm sure that this has happened a number of times in the past. And so just wanting to understand if there's anything that can help mitigate some of the macro slowdown.

Yes. Good question, Toni. Absolutely. I mean certainly, there are a number of levers that we can pull in an environment where organic is slower. The first is you make sure that your retention remains really, really strong. And unfortunately, that's certainly been the case. Then we have been making investments in our SME sales organization, both in the sales and the marketing channels and increasing those investments in our sales and marketing channels, obviously, is an important lever for us to pull. And then there is what we call share of wallet from existing customers, making sure that we're doubling down on growing those existing relationships and taking advantage of the expansion opportunities that we have with the existing base. And then the final lever is, of course, always being very focused on profitability and making sure that we're taking actions that improve the profitability of the segment. And I think Karen referenced before the work that we've been doing to improve working capital management across the business. A lot of that work has been focused in the SME segment, moving customers onto our preferred payment processes and payment options to improve working capital. And so there's obviously an important profitability lever that needs to be a focus in addition to the growth levers that I just mentioned.

Terrific. And I just wanted to ask about April. Any sort of divergence in trends that you saw in April versus the first quarter maybe not, but just wanted to see -- I thought you did a really good job in talking about seasonality for the year. So maybe this is duplicative of that, but just wanted to see if there's any improvement or the reverse in April versus 1Q?

Yes. I think difficult to say at this point because March, as you know, Easter fell into March this year as opposed to April last year. So that creates a little bit of noise. And we also have some additional work dasein April this year versus the adjustment we talked about for Q1. And so I think honestly going to take a few more weeks to kind of work through that and see what the trends are. But as Karen said, our full year guidance is, what, 6% to 9% on revenues on a workday adjusted basis, we came in at 7% in the first quarter. Our guide to TTV was selling to 10 -- 8% to 12%. We came in at 10% work be adjusted. So from our point of view, we're sort of bang on track for where we want it to be in terms of our full year guidance. And we'll obviously be able to update you on Q2 in more detail at a later date.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect your lines.

Well, in closing, thank you to everyone across our team for their dedication to our customers and the strong results they've delivered. We are very confident that 2024 will be another year of share gains, strong growth in profits, improved cash flow...