GBTG Q1 Earnings Call: Revenue Misses Expectations as Management Cuts Full-Year Guidance

B2B travel services company Global Business Travel (NYSE:GBTG) fell short of the market’s revenue expectations in Q1 CY2025 as sales only rose 1.8% year on year to $621 million. On the other hand, the company expects next quarter’s revenue to be around $625 million, close to analysts’ estimates. Its non-GAAP profit of $0.16 per share was 6.6% below analysts’ consensus estimates.

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StockStory’s Take

Global Business Travel’s Q1 results reflected the impact of a softer macroeconomic environment, as management pointed to slower-than-anticipated organic transaction growth and flat demand across several customer segments. CEO Paul Abbott highlighted that growth was stronger among global multinational clients and in premium travel services, while small and medium enterprise (SME) customers continued to tighten spending. Abbott stated, “Transaction growth was relatively stronger with global multinational customers, up 6% in the quarter… SME growth remained slower at 2%.”

Looking ahead, the company lowered its full-year outlook, citing persistent economic uncertainty and stabilized but subdued transaction growth trends. CFO Karen Williams noted that despite incremental cost savings and productivity gains—including increased automation and AI investments—the revised guidance assumes current demand conditions persist. Williams explained, “Our approach to guidance is based on a weaker economy and built on the assumption that the flat transaction growth we have seen over March and April continues.”

Key Insights from Management’s Remarks

Management attributed the quarter’s underperformance to weaker organic transaction growth, particularly among SME customers, and a moderated demand environment. Despite these challenges, the company reported margin expansion and highlighted operational efficiencies as key positives.

• Premium travel demand: Growth in premium and international travel outpaced domestic volumes, with higher average ticket prices and premium hotel occupancy supporting revenue per transaction.
• SME segment softening: SME customers remained cautious, with tightened budgets leading to lower organic transaction growth, although new customer wins provided some offset.
• Digital adoption and efficiency: 81% of transactions occurred via digital channels, with a growing mix of higher-margin bookings through proprietary platforms such as Neo and Egencia. Management emphasized that this digital shift has driven both productivity and cost savings.
• Cost control measures: Adjusted operating expenses declined despite ongoing investments in technology and sales, as management increased its annual cost savings target to $110 million for 2025, up from $95 million previously.
• CWT merger update: The company amended its merger agreement with CWT, reducing the number of shares to be issued and extending the transaction timeline. Management reiterated confidence in closing the deal by the end of 2025, pending litigation outcomes.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on cautious assumptions: stable but muted demand, further cost containment, and continued investment in digital transformation to drive margin expansion and maintain competitiveness.

• Macro-driven demand risk: Ongoing economic uncertainty is expected to keep transaction growth flat, with management watching for any material changes in corporate travel policies or broader economic indicators.
• Margin expansion focus: Increased automation and AI investments are projected to support further operating leverage and offset headwinds from softer top-line growth. The company expects to maintain high-single-digit operating margins.
• Share gains from new wins: Management anticipates continued share gains from new contract wins, especially in the SME segment, to partially offset weaker organic growth.

Top Analyst Questions

• Peter Christiansen (Citigroup): Asked about signs of clients trading down to less expensive travel options. CEO Paul Abbott replied that premium travel demand remained stable, with no significant shift to cheaper alternatives observed.
• Lee Horowitz (Deutsche Bank): Inquired about the trajectory of macro trends and whether conditions had stabilized. Abbott noted most clients are in a "wait-and-see mode," with only moderate changes in travel budgets or policies.
• Stephen Ju (UBS): Questioned how GBTG can strengthen its value proposition amid elongated sales cycles. Abbott emphasized the company's ability to deliver cost savings and complete spend visibility, which becomes more attractive during economic slowdowns.
• Duane Pfennigwerth (Evercore ISI): Sought details on regional performance differences, particularly between the U.S. and other markets. Abbott said international and premium travel segments outperformed domestic, with overall trends stable across regions.
• Yehuda Silverman (Morgan Stanley): Asked about potential changes in customer budget restrictions and investment levels. Abbott explained that unless macro conditions worsen, further tightening is unlikely; Williams clarified that investment reductions reflect productivity gains, not decreased commitment.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the pace of new contract wins, particularly among SME customers, (2) the success of digital channel adoption and associated margin improvements, and (3) the resolution of the CWT merger process, including regulatory and legal developments. Additionally, we will track any shifts in corporate travel budgets or demand patterns that could alter the company’s revenue trajectory.

Global Business Travel currently trades at a forward price-to-sales ratio of 1.2×. Should you load up, cash out, or stay put? The answer lies in our free research report.

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