Global Business Travel Group, Inc. Q4 FY2022 Earnings Call

Hello, and good morning, everyone. Thank you for joining us for our fourth quarter earnings conference call. This morning we issued an earnings press release, which is available on the SEC and our website at investors.amexglobalbusinesstravel.com. A slide presentation, which accompanies today’s prepared remarks, is also available on the Amex GBT Investor Relations web page. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry 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 also 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 and 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 on the call today are Paul Abbott, our Chief Executive Officer; and Martine Gerow, our Chief Financial Officer. Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Head of Global M&A. With that, I will now turn the call over to Paul.

Thank you, Barry. Welcome and thank you for joining our fourth quarter earnings call. I’d like to kick off by reviewing the fourth quarter highlights before turning it over to Martine to take us through the financials. We will then go through our outlook and guidance for 2023. So before I cover Q4 earnings, I would like to address the 8-K we filed on Tuesday. Martine Gerow, our CFO, will step down from her role to take a position outside of the company. Karen Williams, who joined Amex GBT as Deputy CFO in May of last year as part of our succession planning process for the CFO role, will take over effective July 1st. Karen joined us from IHG, as well as prior to that working at Avios, which is part of IAG, and also American Express. Karen has held a series of senior financial leadership roles. Martine is going to be with us until the end of June. So we have plenty of time for a very thoughtful and orderly transition. I do want to extend my sincere thank you to Martine for her leadership and her significant contribution to our business in her five and a half years as CFO. Martine helped navigate the organization through the financial impact of the global pandemic and, of course, was instrumental in leading the successful listing of the company. So welcome and congratulations to Karen, and of course, Martine. So turning back to the fourth quarter, we reported a strong finish to 2022, driven by continued recovery, record new wins, and margin expansion. Our full year revenue and adjusted EBITDA were both ahead of guidance at $1.85 billion and $103 million, respectively. Revenue recovery for the fourth quarter reached 75% of pro forma 2019 levels and that was up from 72% in the third quarter. Our fourth quarter adjusted EBITDA was $43 million, with an 8% adjusted EBITDA margin. Pleased to say we’re also on the path toward positive free cash flow with significantly reduced cash usage in the fourth quarter. Free cash flow usage in the quarter declined significantly to $25 million. We also continue to accelerate our momentum in SME. The SME space, we benefit from offering a choice of market-leading solutions, Amex GBT and Egencia and Ovation, in what is a very large and unconsolidated segment, a segment that has the fastest growth rates and the highest margins in the industry. Our SME transaction recovery reached 82% in Q4 and that was up from 80% in Q3. Our SME new wins value totaled $2.1 billion in the full year 2022 and that is at the current recovery levels. Now that we have reached what is a meaningful point in the travel recovery, please note that we are reporting our new wins for SME and overall using the current recovery levels instead of the previous 2019 pre-COVID levels. And that’s to make it easier for analysts and investors to model the impact of those new wins on our current volumes. So in addition to the strong SME momentum, I am pleased to report that new wins value and customer satisfaction levels are also both at all-time highs, which I think really demonstrates the value of our industry-leading service and technology and software and savings. Our strong momentum positions us well for continued strong growth ahead. Transaction recovery reached 72% of pro forma 2019 in the fourth quarter. That was up from 71% in Q3, and importantly, up 26 points year-over-year. Our new wins momentum shows that we continue to deliver on the significant organic growth opportunity that we have. Total new wins value for the full year 2022 was $3.5 billion. Again, that’s at current recovery levels. And finally, and obviously, equally importantly, our customer retention rate for the full year remains stable at 95%. So, overall, we exceeded our 2022 guidance for both revenue and adjusted EBITDA. We delivered on the share gains on SME acceleration and exceeded the $25 million synergy target that we had from the Egencia acquisition. And so as we look ahead to 2023, I feel that we are well positioned for continued strong growth. So on slide six, let’s just take a closer look at the continuing recovery where our performance continued to improve throughout the quarter. Transaction recovery was at 72% in 2019. That was up 1 point sequentially and 25 points versus Q1. And we’re clearly outpacing the broader market. 72% transaction recovery compares to the GBTA January survey that found the recovery of domestic business travel at 67% and international at 54%. So that compares to our 72% transaction recovery and 75% revenue recovery in the fourth quarter, clearly outpacing the broader market. Looking at Q4, December was softer than expected across the industry, but we have seen a significant rebound of transaction volumes in January and February. And as I’m going to discuss in more detail, the outlook for business travel demand in 2023 remains strong. TTV recovery reached 70% in the fourth quarter. That was consistent with Q3 and it was up 31 points versus Q1. And finally, revenue recovery was 75% in Q4, up 3 points from Q3 and up 25 points from the first quarter. So here, we just take a look at the recovery trends in more detail. First of all, you’ll see by customer segment, global multinational customer recovery remained pretty steady in the fourth quarter versus the third quarter, while SME customers continued to lead the recovery. Q4 transactions were 21 percentage points above global multinational and reached 82% of 2019, driven by obviously a faster recovery in that segment, but also by our significant share gains in the SME segment. Air recovery was stable in the fourth quarter at 66% and hotel recovery was up 2 points versus Q3. Hotel transaction recovery was 14 percentage points above air in the fourth quarter and this is an important strategic priority for us. We’re making good progress increasing that ratio of hotel to air bookings and we’re doing that through improved hotel content and hotel displays in both our Egencia and Neo software platforms. And finally, here on a regional basis, both the Americas and EMEA continued to improve in Q4. Within the Americas, if you unpack that, U.S. recovery actually reached 71% in the fourth quarter. Canada was a little slower to recover. EMEA recovered by 2 percentage points versus Q3 and reached 74% of 2019 levels. And now that the travel restrictions have been certainly either relaxed or removed in China, Hong Kong, and Singapore, it provides additional opportunity for growth and recovery in Asia in 2023. So let’s turn to our commercial highlights for the fourth quarter. We delivered record new wins. We received further recognition of our ESG, technology, and people leadership. We are the clear leader in a $1.2 trillion industry, with a significant runway for growth and we continue to gain share with $3.5 billion of total new wins value in 2022, again, based on the current recovery levels, and of course, supported by strong customer retention of 95%. Of course, as I mentioned, our biggest growth opportunity is with SME customers. This represents a total opportunity of $950 billion of travel spend. We are already the number one player in managed travel for SME customers, but only 30% of that $950 billion is actually managed, providing us with a significant future growth opportunity. And you can see here that we’re making good progress; we signed $2.1 billion of SME new wins value in 2022. Approximately 25% of that value of the number of customers is actually from companies whose travel programs were previously unmanaged. So I think it demonstrates we are gaining more and more traction converting this unmanaged customer travel spend into managed spend. We are also recognized as an industry leader in ESG in the quarter. We were awarded Platinum EcoVadis Status. This actually places us in the top 1% of independently assessed companies across the world and I think it demonstrates how we are helping our customers and our partners achieve their sustainability goals. Another sustainability example, we’ve integrated with CHOOOSE climate tech. This allows us to actually integrate carbon emissions data at the point of sale across all of our channels, whether it’s voice, whether it’s Egencia, Neo. We present our carbon emission data consistently and accurately across all channels so that both travelers and travel managers can track and be more aware of their carbon emissions data. So supporting our technology leadership, Egencia was ranked number one in two categories of the G2 Winter 2023 report, most implementable solution and best results. G2 is the largest and most trusted peer-to-peer review site. It has more than 60 million people viewing it, with many Fortune 500 companies using it to inform their software decisions. In addition, Egencia also ranked as a leader in 15 categories in the G2 study. So I think it’s just validation that we’re providing excellent software solutions and an excellent experience to our customers. Additionally, in the quarter, Egencia was named a Leader in corporate travel applications by IDC MarketScape. IDC is an independent voice that evaluates travel tech solutions and again, it’s an important influence over the B2B buying process. IDC specifically recognized, and I quote here, our data-led intuitive product experience and our ability to embed machine learning and AI into the user experience. And finally, here, we were voted the number one Business Services company in Forbes’ America’s Best Large Employers report in February of this year. And I would like to extend a sincere thank you to all of my colleagues around the world for their commitment and their leadership that makes this valuable recognition possible. So moving on to our strategic priorities. When we became a public company, we shared these strategic priorities, and I’m pleased to say we are clearly delivering on these priorities and it’s creating strong momentum for 2023. First of all, business travel recovery continues. Q4 revenue recovery reached 75%, up 3 points from Q3 and a dramatic improvement from the start of 2022. Second, our recovery is significantly ahead of the industry due to continued share gains, new wins value of $3.5 billion at current recovery levels. Third, we set our focus on winning in the SME segment to accelerate growth, and our results show exactly that. Q4 SME transaction recovery reached 82%. We reported SME new wins value of $2.1 billion for the full year, with approximately 25% of those wins coming from unmanaged customers. Fourthly, we’re clearly delivering on the Egencia synergies. We continue to expect a total opportunity of $109 million in synergies. In full year 2022, we achieved approximately $45 million of synergies from the Egencia acquisition, which exceeded our target of $25 million. Fifth, our business model is clearly delivering significant operating leverage. In the fourth quarter, we delivered 71% revenue growth, with only 16% growth in adjusted operating expenses. And finally, all these results combined to deliver significant margin expansion. In the fourth quarter, we reported 66% adjusted EBITDA fall-through and an adjusted EBITDA margin of 8%, delivering financial results ahead of guidance. So to sum it up, I think our fourth quarter performance provides yet another proof point of our continued strategic, commercial, and financial progress. So that completes my review of the Q4 highlights. I’d like to hand it to Martine to discuss the financial results in more detail before we move on to our 2023 outlook.

Thank you, Paul, and good morning, good afternoon, everyone. As Paul mentioned, on page 10, we are successfully achieving our strategic and financial goals, and we concluded 2022 strongly. Our revenue recovery reached 75% of 2019 pro forma, which is 3 points higher than the third quarter and 3 points above the fourth quarter transaction recovery of 72%. In the fourth quarter, our yield, calculated as revenue divided by total transaction value, was 8.9%. We saw improved yields in both air and hotel sectors. The revenue for Products and Professional Services increased by 14% sequentially compared to the third quarter, fueled by robust growth in Management Fees, especially in Meetings and Events. Our total transaction value recovery reached 70% in the fourth quarter, with a transaction recovery of 72%, marking a 1 percentage point improvement from the previous quarter. On a constant currency basis, our total transaction value recovery aligned with the transaction recovery. Although we observed some softening trends as we approached the holiday season, we are happy to report a strong rebound in volumes for January and February, aligning with our expectations for the first quarter of this year. Looking at year-over-year results on a pro forma basis, the fourth quarter total transaction value increased by 93% to $5.9 billion. Our average transaction value grew by 19%, mainly driven by a robust recovery in international bookings compared to the previous year. Total revenue for the fourth quarter rose by 71% to $5.7 million, with travel revenue increasing by 101%. The revenue yield exceeded other quarters due to exceptional year-end performance in air travel and hotels, and Q4 is typically our strongest yield quarter because of certain incentives or annual performance measurements. Revenue from Products and Professional Services grew by 12% year-over-year. As we have indicated in prior calls, growth in this category is more limited when compared to 2021, as this revenue segment was relatively insulated from the demand decline in that year. Our adjusted operating expenses rose by only 16% in the quarter, a favorable comparison to the 71% increase in revenue during the same period. Consequently, we achieved positive adjusted EBITDA of $43 million in the fourth quarter, improving by $145 million year-over-year. The adjusted EBITDA margin was 8%, reflecting a 41% year-over-year increase. On page 11, looking at the full year, as Paul noted, our 2022 results were above guidance. Our full-year revenue exceeded the top of our guidance range of $1.8 billion to $1.85 billion, and our adjusted EBITDA surpassed our guidance range of $90 million to $100 million. Compared to 2021 pro forma, our total transaction value increased by 187% to around $23 billion. Our total revenue grew by 108% to $1.85 billion, with travel revenue up by 159%. Products and Professional Services revenue rose by 23%, again showing limited growth in this line due to its protection from 2021 demand fluctuations. Our adjusted operating expenses increased by 23% for the full year, while revenue grew by 108%. As a result, our adjusted EBITDA reached a turning point, remaining positive from the second quarter of 2022 onward. For the full year, adjusted EBITDA was $103 million, marking a substantial year-over-year improvement of $623 million, with an adjusted EBITDA margin of 6%, an increase of 64 percentage points compared to 2021. We maintained a high level of efficiency, achieving an adjusted EBITDA fall-through of 65% for the full year, demonstrating our robust operational leverage and effective execution of our cost-saving initiatives, including achieving synergies from Egencia. Moving on to cash flow, as Paul mentioned, our cash consumption significantly decreased in the fourth quarter. Our free cash flow usage was $25 million during this period, reflecting an $87 million improvement from the third quarter, largely due to a decrease in working capital build. We expect to achieve positive free cash flow in 2023 as EBITDA continues to recover substantially and as working capital build normalizes. As of December 31, 2022, we reported an unrestricted cash balance of $303 million, with net debt totaling $99 million. Finally, we are in a strong liquidity position, with total available liquidity of around $500 million, pro forma for the new term loan and revolver expansion we completed in January this year. The proceeds from this additional financing will be dedicated to general corporate purposes, which include finalizing the Egencia integration, accelerating growth in SME, and enhancing efficiency. I will now turn it back to Paul to discuss our outlook for 2023.

Okay. Thank you, Martine. Let’s talk about 2023. As we said last quarter, there are several tailwinds that set us up for growth in 2023. First of all, the business travel recovery continues, and the outlook remains positive with our customers. Industry experts predict business travel spend will continue to grow and capacity will continue to increase, all supporting continued growth in 2023. Secondly, as we predicted, distributed teams and hybrid work are clearly creating new business travel, Meetings and Event demand, and we see this, particularly in our Meetings and Events results. Third, airline capacity is expected to improve throughout 2023, and this incremental supply will, of course, support increased demand. And fourth, our sales pipeline leads us to be confident in continued share gains in the year ahead, specifically continued momentum in the SME segment. So all in all, I think these results and expectations for strong revenue and earnings growth in 2023 are very promising. Now I think importantly, these tailwinds and our expectations for the year ahead are supported by data from customers and data from suppliers and data from across the industry. According to GBTA’s Q1 2023 Business Travel Outlook Poll, this was published at the end of January, domestic and international bookings are currently at 67% and 54% at 2019 levels, and this is up from 63% and 50% in October. So industry momentum continues and you can see that we are clearly outpacing the industry with Q4 revenue recovery at 75%. Turning to customers, 78% of travel managers expect more or a lot more trips in 2023 versus 2022. Eighty-six percent of travel suppliers are expecting higher spending from corporate customers in 2023, and that’s an improvement versus 80% in the survey in October, finance, insurance, professional services, consulting, and other sectors where we’re seeing the strongest growth trends for the year ahead. So GBTA expects total business travel spending to grow by 24% in 2023 to reach over $1 trillion. This expected increase in demand will be met by increased supply. IATA expects capacity growth of 18% globally. This looks a little different by region. You’ve got a 5.5% increase in North America, 6.1% in Europe, and then 48% growth in capacity in Asia-Pacific, largely driven by the opening of China. So you can see here that there is strong evidence from customers, from suppliers, from industry experts, supporting our confidence in solid industry growth for the year ahead. And of course, very importantly, we expect to augment these tailwinds with further share gains driven by our industry-leading software and services. So let’s just go through our strategic priorities again and really highlight how they are positioning us to deliver strong growth in 2023. So as I just said, business travel recovery continues. The GBTA survey found 78% of travel managers expect more business trips in 2023, and I also expect more capacity across all regions. Share gains. We reported $3.5 billion of total new wins in 2022 and we expect to continue this strong growth in 2023, and we have a pipeline to support that strong growth. SME acceleration; we have moved to a new global segment-driven operating model and structure for the company, and that is going to intensify our focus on scaling the SME business around the world. Our segment, with the fastest growth and the highest margins, represents by far the largest addressable opportunity for us, and we are now taking a much more consistent and even greater focused approach to capturing this opportunity around the world. On Egencia synergies, in 2023, we plan to deliver additional synergies through exiting additional TSAs, realizing additional technology, and real estate savings. And on operating leverage, we are going to continue to operate our business with really strong focus on operating leverage. We expect single-digit operating expense growth in 2023, and that is going to drive strong margin expansion with 17% to 20% revenue growth. And finally, these efficiencies, of course, lead to continued strong margin expansion in the year ahead. So this will result in full-year 2023 expectations. As you can see here, 17% to 20% revenue growth, 220% to 259% adjusted EBITDA growth, with approximately 10 percentage points of adjusted EBITDA margin expansion. Importantly, as growth continues beyond 2023, when we look at the financial and commercial drivers of the business, we remain on track to deliver pre-COVID adjusted EBITDA of approximately $500 million at the 86% revenue recovery level, or achievement of $2.4 billion in revenue. So I’m now going to turn it over to Martine to go over our 2023 guidance in more detail. Martine, over to you.

Thank you, Paul. So on page 17, in 2023, we expect to deliver double-digit revenue growth and margin expansion, and we project to turn free cash flow positive during the year and actually come within our target net leverage of 2 times to 3 times adjusted EBITDA. Now let me review with you what are the key drivers for our 2023 guidance, in which we assume a measured view of the macro environment this year. So starting with the components of our expected 17% to 20% revenue growth, 12 points of that growth really results from carrying forward the fourth quarter run rate, and another 5 points to 8 points of additional growth is expected to come from a combination of share gains and organic growth. We project an overall revenue recovery of 77% to 79% in 2023. That’s about 2 points above where we project transaction recovery. On the cost side, as you heard from Paul, we expect single-digit growth in operating expenses as we improve operational efficiencies, fully realize cost synergies, and achieve benefits from the reorganization we announced in January. Now in 2022, particularly in the second half, and that impacted the fourth quarter as well, our operational productivity was negatively impacted, really a consequence of having to recruit and train a significant number of new agents, travel agents, and a consequence of the travel disruptions as the industry was facing very similar challenges. Now in 2023, we expect to achieve significant productivity gains as we improve our operating metrics from where they were in the fourth quarter. And as a result, we expect to continue to deliver high operating leverage with an adjusted EBITDA fall-through of about 70% in 2023, and a margin expansion of 9 points to 11 points. As previously mentioned, we anticipate reaching positive free cash flow during the year. We expect this to take place in the second half of the year given the seasonality of our working capital. And finally, we expect to execute 2023 with a leverage ratio that will be at the high end of our 2 times to 3 times long-term leverage target. The assumptions I just shared with you result in the following full-year 2023 guidance. So revenue comprised between $2.17 billion and $2.22 billion. That equates to revenue growth of 17% to 20% year-over-year and adjusted EBITDA between $330 million to $370 million. That equates to an adjusted EBITDA margin of 15% to 16%, and a margin expansion of 9 percentage points to 11 percentage points as compared to 2022. Now let’s turn to the first quarter guidance and the key driver is our underlying this first quarter guidance. As you would expect, we anticipate a much higher rate of growth in the first quarter as we overlap the first quarter of 2021, which had a lower recovery because of Omicron. Before the first quarter, we expect a transaction recovery in the mid-70%s and TTV recovery to be a couple of points below transaction recovery, very consistent with what we have seen in the previous quarters. Our quarter-to-date transaction recovery through January and February is trending in line with our expectations for the quarter. We expect our revenue recovery to be six weeks ahead of volume recovery in the first quarter, which is above what we project on a full-year basis and this is really driven by a quarterly phasing of revenue in the 2019 baseline, which is different from what we expect to be in 2023. Because if you think about our revenue yield, our revenue yield, sorry, in the first quarter is actually largely in line with our full year expectations. So much more a function of the 2019 baseline than our trend. Moving to expenses, we anticipate operating expenses to be flat to the fourth quarter of 2022 as the cost to support the first quarter volume really ramps up in the fourth quarter of last year and as we achieve higher productivity in our operation as I mentioned. Finally, we expect operating leverage to result in a very significant improvement in adjusted EBITDA and margin was about 23 points to 24 points year-over-year. So our first quarter 2023 guidance has a revenue that is comprised between $550 million and $570 million. That’s a revenue growth of 57% to 63% year-over-year. We expect adjusted EBITDA to be between $75 million to $90 million. That’s a margin of 15% to 16%, and growth in adjusted EBITDA margin of 23 percentage points to 24 percentage points versus prior year. And so in summary, we are delivering on our strategy, we’re delivering our commitments to customers and shareholders, and we are positioned for strong growth in 2023 and beyond. We exceeded our 2022 revenue and adjusted EBITDA guidance. The business travel recovery has strong momentum. We are delivering on our share gains and SME acceleration. We are executing on the Egencia synergies and delivering high operating leverage. We are positioned for strong revenue and adjusted EBITDA growth in 2023, and we remain on track to deliver an adjusted EBITDA of approximately $500 million, with a revenue recovery of 86%, which equates to approximately $2.4 billion in revenue. So we’re delivering on what we committed to, and we are confident in our position for continued momentum ahead. So thank you very much for your interest, and we will now open for questions.

Thank you. We have a first question from Duane Pfennigwerth of Evercore ISI. You may proceed.

Hey. Thank you. Just with respect to your outlook for transaction volume recovery, can you talk about maybe the regions or the geographies where you’re seeing the biggest sequential improvement and understand maybe January wasn’t the hottest month? But maybe mark kind of where we are in the month of March versus the levels that you saw in the fourth quarter?

Do you want me to take that one?

Sure.

I will take that, Duane. In terms of geographies, we expect a somewhat higher recovery in countries that were the slowest to open, such as some in Southeast Asia and Canada. In China, the impact is relatively small because we don’t consolidate or target that market. Outside of those areas, we anticipate a steady recovery in both Europe and the U.S. Regarding trends, based on what we’ve seen in January and February, there has been an improvement in recovery that aligns with our expectations for the first quarter, indicating a strong rebound after the holiday season.

It may be more of a U.S. phenomenon, but I would guess that March is the strongest month of the quarter in terms of corporate travel recovery. Any thoughts on kind of where March stands relative to fourth quarter and no problem if that’s not a level of detail that you want to get into?

I will discuss January and February since March is just beginning. We are very encouraged by what we observed in February, which represents an improvement over the fourth quarter, particularly after the holiday impact the industry experienced.

Thanks. And then...

Yeah.

Thank you. Thank you. And…

And we are okay.

Just for my follow-up, on the seasonality of working capital, nice improvement in that line over the balance of 2022. But can you help us think about kind of the seasonality of that working capital build around the bookings build here into 2023? And thanks for taking the questions.

Sure. So in terms of working capital, we tend to have the working capital build going into the first quarter and the second quarter, because that’s where most of the, let’s say, volume seasonality is. We tend to then get back down in the third quarter, and the fourth quarter result is usually favorable as well from the working capital. That’s usually very low working capital quarter. So we expect it to come up in the first half and then the use going into the fourth quarter.

Okay. Thank you very much.

Thank you. And we now have an analyst from Morgan Stanley.

Hi. Thanks for taking the question. I just want to kind of come back to the remaining 20% of the permanent cost savings you guys are waiting on. I know you said in the past you expect it to come back on as volumes returned to around 100% and recovery nearing high 70%s in 2023. Just wondering if you could kind of give what you expect for cadence in realizing those savings and could you kind of give approximation of how much you would expect to realize at say, 8% of pro forma versus 95%?

We expect to realize the remaining 20%, which is about $40 million, starting this year as we are seeing recovery levels in the high 70%. The remainder will be recognized in 2024 and 2025, aligning closely with the recovery in volume.

Okay. Great. Thanks. And just one more question for me and you guys talked about the $3.1 billion in new wins. I guess could you just kind of give an idea of how much it takes for those wins to ramp and turn that into revenue on your guys' income statement?

Sure. To think about it, it takes two years to three years depending on the customers. You don’t have necessarily 100% of conversion contribution, some of that is what we call partner volumes, so not up prior to the market but our partner market, and some of that is a leakage. So we typically have around a 70% conversion, and that conversion broadly takes place as a majority over a two-year period, and by the third year, we have all of that 70% volume converted.

Okay. Great. Thank you.

Thank you. We now have Lee Horowitz of Deutsche Bank. You may proceed.

Great. Two, if I may. I’d like to dig into the full year 2022 guide. You guys highlighted that GBTA spend expectation growth of 24%, and your guidance suggests, call it, 20% revenue growth at the high end and 5 points to 8 points of share gains or plus organic growth for the year. It seems to sort of stand in contrast to what is a high degree of confidence in driving incremental share this year. Can you just help us better understand the discount between those two?

Yeah. Martine, maybe I’ll start on that one. Look, I think the GBTA prediction is a prediction at this point, but it’s actually also travel spend. And if you look at our plan, that’s sort of the equivalent of our TTV and also TTV plan for 2023 is somewhere in that low to mid-20s as well. So our kind of TTV plan is pretty consistent with that GBTA outlook.

Helpful. Thank you. And then maybe take a step back, a question we often get from investors is around the outlook you’re seeing from distributed teams. Can you help us maybe quantify what you saw in 2022 regarding distributed teams driving incremental event volume? And maybe what you’re thinking about in terms of expectations as we look out to 2023 and 2024?

I’m sorry, I didn't quite hear the question. You cut out. I apologize if it was on my end. Could you please repeat that?

No worries. It’s in regards to the uplift you’re seeing from distributed teams. We had this question from investors a lot. How much incremental meeting demand from distributed teams is offsetting some degree of compression across the industry due to proliferation of zero and those sorts of things? So if you can have us better understand maybe what you saw in 2022 in regards to incremental volume coming from distributed workforces and/or what your expectations are for that to sustain as we look out to 2023 and 2024, that would be super helpful.

Yeah. Sure. No. Thank you. And so as we exited 2022, so you look at the fourth quarter, the number of Meetings and Events that we were managing was actually above 2019 levels. So that gives you a sense of the level of demand. But it does have a slightly different mix. We have a division that deals with meetings for under 50 people to smaller meetings, and that is the fastest-growing part of the business. So the number of meetings is at 2019 levels as we exited. But the mix has moved more towards a larger number of smaller to midsized meetings. As we look out to 2023, our adjusted EBITDA from our Meetings and Events division, we will see that at or above 2019. That’s how we kind of see the year ahead. And it’s one of the businesses where we have, frankly, a better view of the future, because the booking windows are so much further in advance for Meetings and Events. So we’re pretty confident in the outlook for 2023 for Meetings and Events.

Helpful. Thank you.

Thank you. And we now have Stephen Ju of Credit Suisse. Your line is open.

Thank you. I'd like to shift our focus to the SME segment. Given the significant fragmentation in this area, there seems to be ample opportunity for both your company and others to gain market share. I'm curious if you've noticed any increase in competitive intensity within the industry as the sector recovers. Additionally, regarding the booking types you've shared, particularly noted on slide seven, I'm interested in understanding client behavior—specifically, why hotel dollar recovery appears to be advancing more rapidly than expected at this time. Thank you.

Yes. I think, in terms of the SME competitive landscape, I think you hit on both points there, Stephen. I mean, yes, there are some new entrants and there’s increased competitive activity, but very few have gained any significant share or scale. And when you look at that alongside the sort of size of the opportunity, we don’t see any change. In fact, if you look at 2022, we had a record win-loss rate in the SME segment. And looking at our pipeline for the year ahead, I’m confident we’ll set a new record. So, yes, there’s activity, but it’s certainly not impacting our ability to aggressively grow in that segment. And I think one of the major advantages that we have is the range of solutions that we offer. It’s not one single segment with one homogenous set of needs. If a customer is looking for a high-touch, white-glove service that includes both business travel and access to premium leisure, we have a fantastic solution for them. If they’re looking for a turnkey SaaS solution with an intuitive customer experience with access to fantastic content, we have Egencia. And if they’re looking for that more sophisticated outsourcing of travel end-to-end, perhaps on a regional or global basis, then that really tends to fit Amex-GBT more. So one of the major advantages that we have is going out into this very large segment is being able to offer that choice to customers, because there are different needs in different sub-segments of the SME space, and I think we’re uniquely positioned with the solutions that we have there. I mean, I’d say hotel, one of the key elements that’s driving the increased recovery is that it has been a strategic priority for us to increase content and what we call attachment rates. So to increase the number of hotel bookings in relation to air bookings and bringing in all of the content from Expedia, for example, which we do through APIs, we bring it into our supply management platform and we are able to present that content through our Egencia platform, through our Neo platform. So improving the content, improving the displays is definitely increasing in conversion and increasing that attachment rate. But it is a broader trend as well across the industry where we have seen hotel recovery above air, and I think one of the trends supporting that is what we talked about before in terms of Meetings and Events. There’s a lot more demand for small Meetings and Events, which often are more localized and more hotel-driven than air driven. So I’d say those are the two key trends.

Thank you.

One other trend that perhaps is more specific to Europe is we are seeing growth in rail. And I think there’s obviously certain dynamics in Europe where there’s on certain routes, significant increased efficiency and frequency of rail and so that is a factor when you look at Europe specifically.

Thank you. There are no questions at this time, so I would like to pass it back to the management team.

Great. Well, look, thank you very much for your questions. In closing, I just want to thank our team across Amex GBT for their dedication to our customers and the strong results they’ve delivered. We are excited about the year ahead and very confident in our position and our outlook for growth in 2023. So thanks for joining us and your continued interest in the company. Thank you very much.