Amadeus maintains solid growth supported by its diversification strategy and business resilience

Amadeus IT Group S.A maintained its positive financial evolution in the first nine months of the year, supported by the solid operating performances of its Distribution and IT Solutions businesses, the consolidation of TravelClick (since October 4, 2018) and positive foreign exchange effects. These factors helped to achieve double-digit growth both in revenue and EBITDA, and an adjusted profit² of €992.5 million, which represents an increase of 11.9%¹ compared to the same period of 2018.

Highlights for the first nine months of the year 

• Revenue grew by 15.0%¹, to €4,236.6 million.
• EBITDA increased by 11.1%¹, to €1,763.8 million 
• In Distribution, our travel agency air bookings grew 0.5%, to 447.0 million.
• In IT Solutions, our passengers boarded expanded 7.1%, to 1,496.6 million.

Amadeus IT Group S.A maintained its positive financial evolution in the first nine months of the year, supported by the solid operating performances of its Distribution and IT Solutions businesses, the consolidation of TravelClick (since October 4, 2018) and positive foreign exchange effects. These factors helped to achieved double-digit growth both in revenue and EBITDA, and an adjusted profit² of €992.5 million, which represents an increase of 11.9%¹ compared to the same period of 2018. 

Luis Maroto, President & CEO of Amadeus, commented: 

“Amadeus maintained its growth trend in the first nine months of the year, achieving double-digit expansion in revenue, EBITDA and adjusted profit. This positive financial performance was driven by the healthy evolution of our diversification strategy, particularly Hospitality, as well as the resilience of our core segments.

“In Distribution, our booking volumes outperformed the industry, driven by market share gains in all regions except Asia-Pacific. In IT Solutions, we continued supporting our customers with new partnerships and solutions, such as our new agreement with Visa to secure payments for the travel industry and our passenger disruption solutions which were contracted by several airlines during the quarter.

“The strength and resilience shown by our businesses allow us to continue to reiterate our confidence in the outlook we issued at the beginning of the year”.

^{[1] Adjusted to exclude TravelClick’s acquisition related costs (amounting to €7.3 million before taxes) and PPA effects (which reduce revenue and EBITDA by €7.8 million and €5.5 million, respectively. Adjusted profit is not impacted by PPA effects).} 

^{[2] Excluding after-tax impact of the following items: (i) accounting effects derived from PPA exercises and impairment losses, (ii) non-operating exchange gains (losses) and (iii) other non-recurring items.}

Business highlights for the first nine months of the year

Distribution

Revenue in this segment rose 5.1% to €2,394.8 million. An increase of 0.9% in bookings, along with an expansive average revenue per booking driven by a positive mix and the double-digit expansion delivered by our Payments distribution business, drove revenue growth, which was also supported by a positive foreign exchange effect.

The travel agency air booking industry declined by 0.8% (excluding India, it remained flat). North America and Central, Eastern and Southern Europe were the fastest growing regions. In turn, Western Europe, Asia-Pacific and Middle East and Africa showed a contraction, impacted by several effects, including macroeconomic developments and geopolitical events. Latin America reported limited growth in the period.

Amadeus’ bookings once more showed resilience and continued to grow despite this challenging environment. Our travel agency air bookings increased by 0.5%, supported by continued market share expansion across all regions, except for Asia-Pacific (excluding India, Amadeus’ bookings grew by 3.2% and global competitive position³ expanded by 1.3 p.p.).

^{[3] Competitive position: our travel agency air bookings in relation to the travel agency air booking industry, defined as the total volume of travel agency air bookings processed by the three major global reservation systems (Amadeus, Sabre and Travelport). It excludes air bookings made directly through airlines’ direct distribution channels (airline offices and websites), single country operators (primarily in China, Japan, Russia and Turkey), other content aggregators and direct connect applications between airline systems, travel agencies, corporations and meta-bookers, which together combined represent an important part of the industry.} 

Amadeus TA air bookings (figures in millions)

During the third quarter, Amadeus signed seven new contracts or renewals of content agreements with airlines, including the low-cost carrier Thai Lion Air, reaching a total of 19 for the first nine months of the year. Subscribers to Amadeus’ inventory can access more than 110 low cost and hybrid carriers’ content worldwide.

During the third quarter, we expanded and strengthened partnerships with key customers. In August, Southwest announced a distribution agreement as a result of which travel managers and travel management companies will be able to book, change, and modify reservations through the Amadeus Travel Platform. This agreement further builds on our relationship with the carrier following its migration to Altéa in 2017.

Amadeus reached a distribution agreement with TAP Air Portugal that includes distribution through a Private Channel. The agreement also sees TAP Air Portugal joining the Amadeus NDC[X] program with a view to making the airline’s future NDC sourced content available through the Amadeus Travel Platform. As the industry evolves, to address different players’ needs, Amadeus is helping airlines to sell the way they want, and travel sellers to access content in the way they need to.

In October, we announced a strengthened partnership with Japan Airlines, which includes an extended distribution and IT agreement. Japan Airlines will benefit from enhanced technology as Amadeus becomes the carrier’s recommended distribution partner in the Japanese market. The airline’s content, including the full range of international, as well as preferred and negotiated fares, will now be available for travel sellers to shop, book and service through the Amadeus Travel Platform.

We also made important progress in our NDC [X] program⁴. In August, we deepened our partnership with United Airlines by developing, testing and bringing to market new content offerings, such as United Airlines' new Corporate Bundles and Dynamic Bundled Fares. That month, we announced that American Express Global Business Travel and American Airlines, both partners of our NDC [X] program, had processed live bookings using American’s NDC-enabled content through the new Amadeus Travel API.

In October, we announced that Amadeus Selling Platform Connect now allows travel sellers to shop, order, pay and service airline travel offers via an NDC connectivity. Travel sellers can now view and compare all available airline flights and related services for any given trip on one single screen, whether they are sourced from EDIFACT, NDC or other APIs.

Another key feature of our Distribution portfolio, our merchandising solutions, continued to gain interest from our customers. During the third quarter, nine airlines signed up for Amadeus Fare Families, including Tunisair, and three airlines contracted Amadeus Ancillary Services for the indirect channel. In total, at the close of September, 95 airlines had signed up for Amadeus Fare Families (of which 76 had implemented the solution) and 154 had contracted Amadeus Airline Ancillary Services (of which 130 had implemented it). 

IT Solutions

Revenue from January to September grew 31.1%, to €1,841.8 million, supported by the positive operating performance of Airline IT and our new businesses. 

IT Solutions – Airline IT

Passengers boarded increased 7.1% in the first nine months of the year, supported by organic growth of 6.5% and the positive impact from customer implementations (including S7 Airlines, Maldivian Airlines, Cyprus Airways and Aeromar in 2018, and Philippine Airlines, Bangkok Airways and Flybe in 2019).

These implementations allowed us to offset the negative impact of several customers ceasing operations, including Germania; bmi Regional; Avianca Brasil; Avianca Argentina; Thomas Cook UK; Aigle Azur; Adria Airways and XL Airways France, and the de-migration of LATAM Airlines Brasil from our platform during the second quarter of 2018. Excluding these impacts, Amadeus passengers boarded grew 7.8% from January to September.

^{[4] This program aims to bring together all the NDC efforts across Amadeus - as an IT provider and as a distributor - under one roof, and is a continuation of Amadeus' previous work towards the digitalization of the travel industry.  NDC[X] is part of the evolution of Amadeus' travel platform which brings together all relevant content - including air, hotel and other travel content - from any source (EDIFACT, NDC, proprietary APIs and other aggregated content) to be distributed via any user interface or device}.

Total passengers boarded (figures in millions)

At the close of September, 216 customers had contracted either of the Amadeus Passenger Service Systems (Altéa or New Skies) and 207 had been implemented.

During the third quarter, Mauritania Airlines contracted for the full Altéa Suite, including the Reservations, Inventory and Departure Control System modules, and payments solutions

Our upselling and cross-selling efforts continued during the third quarter. Finnair signed for Dynamic Intelligence Hub and Amadeus Airline Cloud Availability. Aegean Airlines contracted for Amadeus Customer Experience Management, Ural Airlines signed for Amadeus Altéa NDC and Luxair contracted for Amadeus Revenue Accounting. airBaltic signed for disruption technology. Montenegro Airlines implemented Amadeus Revenue Accounting.

Malaysia Airlines contracted Amadeus to set up a competency center to enrich the carrier’s digital landscape and enhance its customer experience.

IT Solutions – New Businesses

Our new businesses grew strongly in the first nine months of the year, boosted by the TravelClick consolidation and a double-digit revenue growth rate delivered by our businesses excluding TravelClick. Within our new businesses, both Hospitality excluding TravelClick, and TravelClick standalone, grew at a double-digit growth rate.

New Businesses – Hospitality

We continued to add customers to our portfolio of solutions in this segment. During the quarter, Sindhorn Midtown in Bangkok contracted TravelClick’s iHotelier and Business Intelligence solutions, as did Kwarleyz Residence Accra in Ghana. We also renewed our long-term partnership with Crown Hotels in Australia.

In September, we expanded our strategic alliance with Marriott International. The company will recommend its more than 7,000 properties across 132 countries and territories to use TravelClick’s Travel Agent GDS Advertising, Agency360 and Rate360 to drive additional revenue and improve profitability. 

New Businesses – Airport IT

During the third quarter, we reinforced our footprint in the United States. Memphis International Airport (Tennessee) contracted EASE, while Orlando-Stanford International Airport (Florida) signed up for Amadeus Biometric Integrator.

In August, Narita International Airport in Japan announced it will install 72 self-service auto-bag drop units from ICM across its four terminals. These units will help the airport to enhance passenger check-in efficiency and bag drop times ahead of next year’s Tokyo Olympic and Paralympic Games.

New Businesses – Payments

In August, we announced a new collaboration with CyberSource, Visa’s payment management platform, through which we will offer the global travel industry a range of advanced fraud and payment management capabilities. As part of this partnership, the CyberSource’s 3-D Secure (3DS) 2 authentication solution has been integrated with Amadeus’ payments platform. 3DS 2 includes significant enhancements that lay the foundation for travel merchants and their banking partners to support SCA (Strong Customer Authentication), without sacrificing a quick and simple payments experience.

Other announcements

In October, Sylvain Roy was appointed new Head of Technology, Platforms & Engineering (TPE), replacing Dietmar Fauser. In his new role, Sylvain will be responsible for delivering consistently stable and reliable platforms across all of Amadeus’ businesses, with a strong focus on continuing to automate operations and drive innovation within Amadeus’ cloud-based architecture. Sylvain has joined Amadeus’ Executive Committee.

In September, our continued efforts on sustainability were once more recognized by the Dow Jones Sustainability Indices (DJSI), in both the World and Europe categories. This is the eighth consecutive year we have been included in the index. The DJSI evaluates sustainability practices from the economic, environmental and social perspectives.

Financial highlights for the first nine months of the year

In June 2019, our shareholders approved a final gross dividend of €1.175 per share during the General Shareholders’ Meeting. This represents a 3.5% increase compared to the 2017 dividend and 50% of the reported profit, adjusted to exclude TravelClick acquisition related effects. An interim dividend of €0.51 per share (gross) was paid in full on January 17, 2019, and a complementary dividend of €0.665 per share (gross) was paid on July 12, 2019.

Net financial debt, as per the terms of our credit facility agreement, amounted to €2,940.1 million at September 30, 2019 (representing 1.34x times last-twelve-months EBITDA). 

Summary of operating and financial information

[1] Adjusted to exclude TravelClick’s acquisition related costs (amounting to €7.3 million before taxes) and PPA effects (which reduce revenue and EBITDA by €7.8 million and €5.5 million, respectively. Adjusted profit is not impacted by PPA effects).  

[2] Excluding after-tax impact of the following items: (i) accounting effects derived from PPA exercises and impairment losses, (ii) non-operating exchange gains (losses) and (iii) other non-recurring items.

[3] EPS corresponding to the Adjusted profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. 

[4] Defined as EBITDA, minus capex, plus changes in our operating working capital, minus taxes paid, minus interests and financial fees paid. Adjusted to exclude TravelClick’s acquisition related costs paid of €10.7 million. Also, impacted by an increase in taxes paid in the first quarter of 2019. Excluding TravelClick’s acquisition related costs, pre-tax free cash flow increased by 10.5%.

[5] Based on our credit facility agreements’ definition.