GLOBAL BUSINESS TRAVEL GROUP, INC. FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words such as "estimates," "projected," "expects," "estimated," "anticipates," "suggests," "projects," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "would," "should," "could," "future," "propose," "target," "goal," "objective," "outlook" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us and not guarantees of future performance, conditions or results. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those expressed or implied by the forward-looking statements. Important factors that may affect actual results or outcomes include, among others:
? changes to projected financial information or our ability to achieve our
anticipated growth rate and execute on market opportunities;
? our ability to achieve cost savings plans;
our ability to maintain our existing relationships with customers and suppliers
? and to compete with existing and new competitors in existing and new markets
and offerings;
? various conflicts of interest that could arise among us, affiliates and
investors;
? our success in retaining or recruiting, or changes required in, our officers,
key employees or directors;
? intense competition and competitive pressures from other companies in the
industry in which we operate;
? factors relating to our business, operations and financial performance,
including market conditions and global and economic factors beyond our control;
the impact of the COVID-19 pandemic,
? base interest rates, inflation and significant market volatility on our
business, the travel industry, travel trends and the global economy generally;
? the sufficiency of our cash, cash equivalents and investments to meet our
liquidity needs;
? the effect of a prolonged or substantial decrease in global travel on the
global travel industry;
political, social and macroeconomic conditions (including the widespread
? adoption of teleconference and virtual meeting technologies which could reduce
the number of in person business meetings and demand for travel and our
services);
? the effect of legal, tax and regulatory changes; and
? other factors detailed under the heading "Risk Factors" in this Form 10-Q and
our Registration Statement.
Should one or more of these risks or uncertainties materialize, or should any of
our assumptions prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. We undertake no
obligation to update or
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revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements, and the related notes, included elsewhere in this Form 10-Q. The discussion and analysis below presents our historical results as of and for the periods ended on, the dates indicated. The historical financials below, for the period prior to the Business Combination, are those ofGBT JerseyCo Limited and its subsidiaries that became predecessors of GBTG upon the consummation of the Business Combination and, depending on the context, "we," "us," or "our," could mean GBT JerseyCo and its subsidiaries or GBTG and its subsidiaries.
Overview
We are the world's leading platform serving travel for business purposes that is
purchased and fulfilled through a company-sponsored and managed channel ("B2B
travel") providing a full suite of differentiated, technology-enabled solutions
to business travelers and clients, suppliers of travel content (such as
airlines, hotels, ground transportation and aggregators) and third-party travel
agencies. We differentiate our value proposition through our commitment to
deliver unrivalled choice, value and experience to our customers.
We are at the center of the global B2B travel ecosystem, managing the end-to-end logistics of business travel and providing an important link between organizations, their employees, travel suppliers and other industry participants. We service our clients in the following ways:
Our travel management solutions (delivered through the portfolio of our brands,
including
? Egencia) provide our clients with extensive access to flights, hotel rooms, car
rentals and other travel services, including exclusive negotiated content,
supported by a full suite of services that allows them to design and operate an
efficient travel program and solve complex travel requirements.
GBT Partner Solutions extends our platform to third-party travel management
companies and independent advisors ("
to our differentiated content and technology. Through GBT Partner Solutions, we
? aggregate business travel demand serviced by our
incremental cost, which we believe enhances the economics of our platform,
generates increased return on investment and expands our geographic and segment
footprint.
GBT Supply MarketPlace provides travel suppliers with efficient access to
business travel clients serviced by our brands and
this access allows travel suppliers to benefit from premium demand (which we
? generally view as demand that is differentially valuable and profitable to
suppliers) without incurring the costs associated with directly marketing to,
and servicing, the complex needs of our business clients. Our travel supplier
relationships generate efficiencies and cost savings that can be passed on to
our business clients.
InJune 2014 , American Express Company ("American Express") established a joint venture ("JV") comprising the legacy GBT JerseyCo operations with a predecessor ofJuweel Investors (SPC) Limited ("Juweel") and a group of institutional investors led by an affiliate of Certares. Since the formation of the JV in 2014, we have evolved from a leading travel management company into a complete B2B travel platform, becoming one of the leading marketplaces in travel for business clients and travel suppliers. BeforeJune 2014 , our operations were owned by American Express and primarily consisted of providing business travel solutions for business clients. OnDecember 2, 2021 , we entered into a Business Combination Agreement withApollo Strategic Growth Capital ("APSG"), a special purpose acquisition company, listed on theNew York Stock Exchange . The Business Combination closed onMay 27, 2022 and GBT JerseyCo became a direct subsidiary of APSG. Further, APSG was renamed as "Global Business Travel Group, Inc. " GBTG is aDelaware corporation and tax resident in theU.S. GBTG conducts its business through GBT JerseyCo in an Up-C structure. GBT JerseyCo is tax resident in the U.K. Prior to the closing date of the Business Combination, we operated our business travel, business consulting and meetings and events businesses under the brands American Express Global Business Travel and American Express Meetings & Events pursuant to an exclusive and worldwide license from American Express. Effective as of the closing date of the Business Combination, we executed long-term commercial agreements with American Express, including the amended and restated trademark license agreement, 37
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pursuant to which we continue to license the American Express trademarks used in the American Express Global Business Travel brand, continue to license the American Express trademarks used in American Express Meetings & Events (solely during a 12-month transition period) brand, and license the American Express trademarks used in the American Express GBT Meetings & Events brand for business travel, meetings and events, business consulting and other services related to business travel, in each case on an exclusive and worldwide basis. The term of the amended and restated trademark license agreement is for 11 years from the closing date of the Business Combination, unless earlier terminated or extended. The American Express brand, consistently ranked as one of the most valuable brands in the world, brings with it a reputation for service excellence. We believe our partnership with American Express has been an important component of our value proposition. Under our commercial agreements with American Express, we exclusively provide business travel and meetings and events services to American Express personnel, subject to limited exceptions, engage in mutual global lead generation activities with American Express for our respective services and continue to exclusively promote American Express payment products to our clients and to make those products available for use by our own personnel in connection with our business.
As of
Key Factors Affecting Our Results of Operations
As a result of a number of factors, our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Industry Trends
The travel industry can generally be divided into two sectors: (i) the leisure travel sector, which serves individuals who make reservations for vacation and personal travel, and (ii) the business travel sector, which serves organizations that require travel by employees and other travelers for business needs and meetings. We focus primarily on the business travel sector, which is approximately twice as valuable as the leisure travel sector because business travel customers purchase more premium seats, more flexible tickets, more long-haul international trips and more last-minute bookings.
Impact of the COVID-19 Pandemic
SinceMarch 2020 , the outbreak of the novel strain of the coronavirus, COVID-19 ("COVID-19"), severely restricted the level of economic activity around the world and had an unprecedented effect on the global travel industry. Government measures implemented to contain the spread of COVID-19, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forgo time outside of their homes, limited business travel significantly below 2019 levels. While many countries have vaccinated a reasonable proportion of their population, the rate and pace of vaccination globally, the severity and duration of resurgence, as well as uncertainty over the efficacy of the vaccines against new variants of the virus, may contribute to delays in economic recovery. Overall, the ultimate impact and duration of the COVID-19 pandemic remains uncertain and will depend upon future developments, which are difficult to predict. However, with the spread of COVID-19 now being contained to varying degrees in certain countries during different times, travel restrictions have been lifted and clients have become more comfortable traveling, particularly to domestic locations. This has led to a moderation of the more severe declines in business travel bookings experienced at certain points since the pandemic began. Starting in the second half of 2021 and continuing into the first half of 2022, global travel activity has shown a recovery trend, but, as ofSeptember 30, 2022 , it remained below 2019 largely due to COVID-19 variants and subvariants. During the three months endedSeptember 30, 2022 , we continue to see momentum in business travel recovery with an increase in our Total Transaction Value (as defined below) and Transaction Growth (as defined below) compared to the three months endedSeptember 30, 2021 . Impact of Acquisitions
We regularly evaluate and pursue accretive acquisitions and have realized
substantial growth through our acquisition strategy. In
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Further, on
Our consolidated financial statements for the nine months endedSeptember 30, 2022 include the results of the acquisitions discussed above from the respective closing date of each acquisition. These acquisitions have been a significant driver of our revenue, cost of revenue and other operating expenses (including integration, restructuring and depreciation and amortization). Further, purchase accounting under GAAP requires that all assets acquired and liabilities assumed in a business combination be recorded at fair value on the acquisition date. As a result, our acquisition strategy has resulted in the past and could result in the future in a significant amount of amortization of acquired intangibles (or impairments, if any) recorded in our results of operations following acquisition by GBTG, which may significantly impact our results of operations.
Key Operating and Financial Metrics
We monitor the following key operating and financial metrics to help us evaluate
our business, measure our performance, identify trends affecting our business,
prepare financial projections and make strategic decisions. The following key
operating and financial metrics, which we believe are useful in evaluating our
business, are used by management to monitor and analyze the operational and
financial performance of our business:
Three months ended Change favorable / Nine months ended Change favorable /
September 30, (unfavorable) September 30, (unfavorable)
(in $ millions,
except percentages) 2022 2021 $ %
2022 2021 $ %
Key Operating
Metrics
TTV $ 6,585 $ 1,778 $ 4,807 270 % $ 17,054 $ 3,649 $ 13,405 367 %
Transaction Growth
(Decline) 207 % 137 % n/m n/m 291 % (33) % n/m n/m
Key Financial
Metrics
Revenue 488 197 291 147 % 1,324 476 848 178 %
Total operating
expense 533 321 (212) (66) % 1,484 843 (641) (76) %
Net loss (73) (106) 33 30 % (166) (275) 109 39 %
Net cash used inoperating activities (81) (107) 26 24 %
(390) (343) (47) (14) %
EBITDA (12) (90) 78 87 % (2) (260) 258 99 %
Adjusted EBITDA 41 (75) 116 154 % 60 (239) 299 125 %
Adjusted Operating
Expenses 446 272 (174) (64) % 1,261 713 (548) (77) %
Free Cash Flow (112) (117) 5 4 % (463) (371) (92) (25) %
As of As of
September 30, December 31,
2022 2021
Net Debt $ 909 $ 507
n/m - percentage calculated not meaningful
Key Operating Metrics
We consider Total Transaction Value ("TTV") (as defined below), followed by
Transaction Growth (Decline) (as defined below), to be two significant
non-financial metrics that are broadly used in the travel industry to help
understand revenue and expense trends. These metrics are used by our management
to (1) manage the financial planning and performance of our business, (2)
evaluate the effectiveness of our business strategies, (3) make budgeting
decisions, and (4) compare our performance to the performance of our peer
companies. We also believe that TTV, followed by Transaction Growth (Decline),
may assist potential investors and financial analysts in understanding the
drivers of growth in our revenues and changes in our operating expenses across
reporting periods.
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TTV
TTV refers to the sum of the total price paid by travelers for air, hotel, rail, car rental and cruise bookings, including taxes and other charges applied by suppliers at point of sale, less cancellations and refunds. For the three months endedSeptember 30, 2022 , TTV increased by$4,807 million , or 270%, to$6,585 million compared to the three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2022 , TTV increased by$13,405 million , or 367%, compared to the nine months endedSeptember 30, 2021 . The increase in TTV was primarily due to (i) full quarterly inclusion of Egencia's TTV, which contributed 94% and 121% of TTV for the three and nine months endedSeptember 30, 2022 , respectively, and (ii) continued recovery of our business from a period of significant COVID-19 pandemic travel restrictions, which were introduced by governments in response to the COVID-19 pandemic. The increase in TTV, in part, reflects increasing numbers of companies returning to business travel and reductions in international travel restrictions.
Transaction Growth (Decline)
Transaction Growth (Decline) represents year-over-year growth or decline as a percentage of the total transactions, including air, hotel, car rental, rail or other travel-related transactions, recorded at the time of booking, and is calculated on a gross basis to include cancellations, refunds and exchanges. To calculate year-over-year growth or decline, we compare the total number of transactions in the comparative previous period/ year to the total number of transactions in the current period in percentage terms. For the three months endedSeptember 30, 2022 , Transaction Growth was 207% compared to three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2022 , Transaction Growth was 291% compared to the nine months endedSeptember 30, 2021 . Transaction Growth during these periods was primarily due to (i) full quarterly inclusion of Egencia's transaction volume, which contributed 105% and 133% of Transaction Growth for the three and nine months endedSeptember 30, 2022 , respectively, and (ii) the increase in number of transactions due to continued easing of travel restrictions that were introduced by governments in response to the COVID-19 pandemic.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. Our non-GAAP financial measures are provided in addition to, and should not be considered as an alternative to, other performance or liquidity measure derived in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and you should not consider them either in isolation or as a substitute for analyzing our results as reported under GAAP. In addition, because not all companies use identical calculations, the presentations of our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. Management believes that these non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance or liquidity across periods. In addition, we use certain of these non-GAAP financial measures as performance measures as they are important metrics used by management to evaluate and understand the underlying operations and business trends, forecast future results and determine future capital investment allocations. We use two of our non-GAAP financial measures as indicators of our ability to generate cash to meet our liquidity needs and to assist our management in evaluating our financial flexibility, capital structure and leverage. These non-GAAP financial measures supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and/or to compare our performance and liquidity against that of other peer companies using similar measures.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses
We define EBITDA as net income (loss) before interest income, interest expense,
loss on early extinguishment of debt, benefit from (provision for) income taxes
and depreciation and amortization.
We define Adjusted EBITDA as net income (loss) before interest income, interest
expense, loss on early extinguishment of debt, benefit from (provision for)
income taxes and depreciation and amortization and as further adjusted to
exclude costs that management believes are non-core to the underlying business
of the Company, consisting of restructuring costs, integration costs, costs
related to mergers and acquisitions, separation costs, non-cash equity-based
compensation, long-term incentive plan costs, certain corporate
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costs, fair value movements on earnouts and warrants derivative liabilities, foreign currency gains (losses), non-service components of net periodic pension benefit (costs) and gains (losses) on disposal of businesses.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
We define Adjusted Operating Expenses as total operating expenses excluding depreciation and amortization and costs that management believes are non-core to the underlying business of the Company, consisting of restructuring costs, integration costs, costs related to mergers and acquisitions, separation costs, non-cash equity-based compensation, long-term incentive plan costs and certain corporate costs. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses are supplemental non-GAAP financial measures of operating performance that do not represent and should not be considered as alternatives to net income (loss) or total operating expenses, as determined under GAAP. In addition, these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP measures have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of the Company's results or expenses as reported under GAAP. Some of these limitations are that these measures do not reflect:
? changes in, or cash requirements for, our working capital needs or contractual
commitments;
? our interest expense, or the cash requirements to service interest or principal
payments on our indebtedness;
? our tax expense, or the cash requirements to pay our taxes;
recurring, non-cash expenses of depreciation and amortization of property and
? equipment and definite-lived intangible assets and, although these are non-cash
expenses, the assets being depreciated and amortized may have to be replaced in
the future;
the non-cash expense of stock-based compensation, which has been, and will
? continue to be for the foreseeable future, an important part of how we attract
and retain our employees and a significant recurring expense in our business;
? restructuring, mergers and acquisition and integration costs, all of which are
intrinsic of our acquisitive business model; and
impact on earnings or changes resulting from matters that are non-core to our
? underlying business, as we believe they are not indicative of our underlying
operations.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses
should not be considered as a measure of liquidity or as a measure determining
discretionary cash available to us to reinvest in the growth of our business or
as measures of cash that will be available to us to meet our obligations.
We believe that the adjustments applied in presenting EBITDA, Adjusted EBITDA,
Adjusted EBITDA Margin and Adjusted Operating Expenses are appropriate to
provide additional information to investors about certain material non-cash and
other items that management believes are non-core to our underlying business.
We use these measures as performance measures as they are important metrics used
by management to evaluate and understand the underlying operations and business
trends, forecast future results and determine future capital investment
allocations. These non-GAAP measures supplement comparable GAAP measures in the
evaluation of the effectiveness of our business strategies, to make budgeting
decisions, and to compare our performance against that of other peer companies
using similar measures. We also believe that EBITDA, Adjusted EBITDA, Adjusted
EBITDA Margin and Adjusted Operating Expenses are helpful supplemental measures
to assist potential investors and analysts in evaluating our operating results
across reporting periods on a consistent basis.
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Set forth below is a reconciliation of net loss to EBITDA and Adjusted EBITDA.
Three months ended September 30, Nine months ended September 30,
(in $ millions) 2022 2021 2022 2021
Net loss $ (73) $ (106) $ (166) $ (275)
Interest expense 26 13 69 37Benefit from income taxes (10) (31) (39) (126) Depreciation and amortization 45
34 134 104
EBITDA (12) (90) (2) (260)
Restructuring (a) (2) 4 (5) (5)
Integration costs (b) 8 4 25 9
Mergers and acquisitions (c) 19 2 21 13
Equity-based compensation (d) 15 - 23 1
Fair value movements on earnouts and warrants
derivative liabilities (e) 6 - (30) -
Other adjustments, net (f) 7 5 28 3
Adjusted EBITDA $ 41 $ (75) $ 60 $ (239)
Net loss Margin (15) % (54) % (13) % (58) %
Adjusted EBITDA Margin 8 % (38) % 5 % (50) %
Set forth below is a reconciliation of total operating expenses to Adjusted
Operating Expenses:
Three months ended September 30, Nine months ended September 30,
(in $ millions) 2022 2021 2022 2021
Total operating expenses $ 533 $ 321 $ 1,484 $ 843
Adjustments:
Depreciation and amortization (45)
(34) (134) (104)
Restructuring (a) 2 (4) 5 5
Integration costs (b) (8) (4) (25) (9)Mergers and acquisitions (c) (19) (2) (21) (13) Equity-based compensation (d) (15) - (23) (1) Other adjustments, net (f) (2) (5) (25) (8) Adjusted Operating Expenses $ 446 $ 272 $ 1,261 $ 713
(a) Represents severance and related expenses due to restructuring activities.
(b) Represents expenses related to the integration of businesses acquired.
Represents expenses related to business acquisitions, including potential
business acquisitions, and includes pre-acquisition due diligence and related
(c) activities costs. The three and nine months ended
a charge of
event that existed as of the Egencia acquisition date.
(d) Represents non-cash equity-based compensation expense related to the GBTG/GBT
JerseyCo equity compensation plans.
(e) Represents fair value movements on earnouts and warrants derivative
liabilities during the periods.
Adjusted Operating Expenses excludes (i) long-term incentive plan expense of
2021, respectively,
services costs of
the nine months ended
of
and 2021, respectively, and
ended
of our net periodic pension benefit related to our defined benefit pension
plans of
2021 and
2021.
For a discussion of Free Cash Flow and Net Debt, see "Liquidity and Capital Resources - Free Cash Flow" and "Liquidity and Capital Resources - Net Debt."
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Components of Results of Operations
Revenue
We generate revenue in two primary ways - (1) Travel Revenues received from
clients and travel suppliers and (2) Product and Professional Services Revenues
received from clients, travel suppliers and
Travel Revenues: Travel Revenues include all revenue relating to servicing a travel transaction, which can be air, hotel, car rental, rail or other travel-related bookings or reservations, cancellations, exchanges or refunds. The major components of our Travel Revenues are:
? Client Fees: We typically charge clients transaction fees for arranging travel.
Supplier Fees: Travel suppliers pay us for distributing and promoting their
? content. The mechanism varies by supplier, but the amount is usually a
volume-linked fee. This includes fees from the three major providers of global
distribution systems.
Product and Professional Services Revenues: We receive revenue from clients,
travel suppliers and
Management Fees: Many clients request a contractually fixed, dedicated staffing
pool to serve their travelers for part or all of their business travel. In
? these cases, we use a cost-recovery-plus-margin pricing structure. Client
management resources and overhead allocations are also included in this management fee.
Products Revenues: We provide a broad range of business travel management tools
? used by clients to manage their travel programs. Revenue for these solutions
usually takes the form of recurring subscriptions or management fees.
Consulting and Meetings and Events Revenues: Consulting revenues (including
outsourcing to us of part, or all, of a client's travel program management) are
? usually a fixed fee for delivery of a certain engagement (such as company
travel policy design). Meetings and events revenue is based on fees for
booking, planning and managing meetings and events.
Other Revenues: Other revenues typically include certain marketing and
? advertising fees from travel suppliers, as well as direct revenues from our
Costs and Expenses Cost of Revenue
Cost of revenue primarily consists of (i) salaries and benefits of our travel counsellors, meetings and events teams and their supporting functions and (ii) the cost of outsourcing resources in transaction processing and the processing costs of online booking tools.
Sales and Marketing
Sales and marketing expenses primarily consists of (i) salaries and benefits of
employees in our sales and marketing function and (ii) the expenses for
acquiring and maintaining client partnerships, including account management,
sales, marketing and consulting, as well as certain other functions that support
these efforts.
Technology and Content
Technology and content expenses primarily consists of (i) salaries and benefits
of employees engaged in our product and content development, back-end
applications, support infrastructure and who maintain security of our networks
and (ii) expenses associated with licensing software and information technology
maintenance.
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General and Administrative
General and administrative expenses consists of (i) salaries and benefits of our
employees in finance, legal, human resources and administrative support,
including expenses associated with the executive non-cash equity plan and
long-term incentive plans, (ii) integration expenses related to acquisitions,
costs related to mergers and acquisitions primarily related to due diligence,
legal and related professional services fees and (iii) fees and costs related to
accounting, tax and other professional services fees, legal and related costs,
and other miscellaneous expenses. We have incurred, and expect to continue to
incur, additional expenses as we grow our operations as a newly public company,
including higher legal, corporate insurance, accounting and auditing expenses,
and the additional costs of enhancing and maintaining our internal control
environment through the adoption of new corporate policies. We also expect that
general and administrative expenses will continue to increase in absolute
dollars as we expand our operations.
Results of Operations
Three Months Ended
The following is a discussion of our results of the consolidated statements of
operations for the three months ended
Three months ended Change
September 30, favorable/(unfavorable)
(in $ millions) 2022 2021 $ %
Revenue $ 488 $ 197 $ 291 147 %
Costs and expenses:
Cost of revenue (excluding depreciation and
amortization shown separately below) 217 127 (90) (72) %
Sales and marketing 81 51 (30) (59) %
Technology and content 98 63 (35) (55) %
General and administrative 94 42 (52) (122) %
Restructuring (2) 4 6 165 %
Depreciation and amortization 45 34 (11) (32) %
Total operating expenses 533 321
(212) (66) %
Operating loss (45) (124) 79 64 %
Interest expense (26) (13) (13) (94) %
Fair value movements on earnouts and warrants
derivative liabilities (6) - (6) n/m
Other income, net (5) - (5) n/m
Loss before income taxes and share of losses
from equity method investments (82) (137) 55 40 %
Benefit from income taxes 10 31 (21) (71) %
Share of losses from equity method investments (1) -
(1) n/m
Net loss $ (73) $ (106) $ 33 30 %
n/m - percentage calculated not meaningful
Revenues
Three months ended Change
September 30, favorable/(unfavorable)
(in $ millions) 2022 2021 $ %
Travel revenue $ 387 $ 120 $ 267 224 %
Products and professional services revenue 101 77
24 29 %
Total revenue $ 488 $ 197 $ 291 147 %
For the three months endedSeptember 30, 2022 , our total revenue increased by$291 million , or 147%, due to incremental revenue resulting from Egencia consolidation and recovery in both Travel Revenue and Products & Professional Services revenue.
Travel Revenue increased by
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Product and Professional Services Revenue increased $24 million , or 29%,
primarily due to (i) $18 million of increased management fees and meetings and
events revenue as increasingly relaxed COVID-19 restrictions drove increased
business meetings, (ii) $8 million in other revenue across other products,
services and consulting as business volumes returned, and (iii) $3 million
resulting from Egencia consolidation.
Cost of Revenue
Three months ended Change
September 30, favorable/(unfavorable)
(in $ millions) 2022 2021 $ %
Cost of revenue (excluding depreciation and
amortization) $ 217 $ 127 $ (90) (72) %
For the three months ended September 30, 2022 , cost of revenue increased by $90
million , or 72%, due to additional cost of revenue resulting from Egencia
consolidation and increase in both salaries and benefits expenses and other cost
of revenue.
Salaries and benefits expenses related to cost of revenue increased by $52
million , or 51%, primarily due to (i) increase in the number of travel care
employees employed to meet the increased travel demand as the recovery in
business travel from the COVID-19 pandemic continues resulting in additional $25
million of salaries and benefits, (ii) $19 million incremental salaries and
benefits resulting from Egencia consolidation and (iii) a decrease in funds of
$7 million received from governments in connection with programs designed to
minimize employment losses related to the COVID-19 pandemic, which were recorded
as a reduction of salaries and benefits expenses.
Other cost of revenue increased by $38 million , or 178%, due to (i) inclusion of
$18 million of other cost of revenue resulting from Egencia consolidation and
(ii) $20 million of other revenue primarily relating to data processing and
merchant and professional fees to meet the increase in transaction volume driven
by the recovery from the COVID-19 pandemic.
Sales and Marketing
Three months ended Change
September 30, favorable/(unfavorable)
(in $ millions) 2022 2021 $ %
Sales and marketing $ 81 $ 51 $ (30) (59) %
For the three months endedSeptember 30, 2022 , sales and marketing expenses increased by$30 million , or 59%, due to additional sales and marketing cost resulting from Egencia consolidation and increase in both, salaries and benefits expenses and other sales and marketing costs. Salaries and benefits expenses related to sales and marketing increased by$21 million , or 49%, primarily due to (i)$15 million of incremental salaries and benefits resulting from Egencia consolidation, (ii)$5 million increase primarily due to the restoration of full salaries and benefits during the three months endedSeptember 30, 2022 compared to reduced salaries and benefits resulting from mandatory salary reductions that were in place during the three months endedSeptember 30, 2021 , and (iii) a decrease in funds of$2 million received from governments in connection with programs designed to minimize employment losses related to the COVID-19 pandemic. Other sales and marketing expenses increased by$9 million , or 119%, due to (i)$5 million of Egencia consolidation and (ii)$4 million in other sales and marketing spend primarily driven by marketing and professional services costs as business volumes return. 45 Table of Contents Technology and Content Three months ended ChangeSeptember 30 ,
favorable/(unfavorable)
(in $ millions) 2022 2021 $
% Technology and content$ 98 $ 63 $ (35) (55) %
For the three months ended
Salaries and benefits expenses related to technology and content increased by$11 million , or 37%, primarily due to (i)$8 million of incremental salaries and benefits resulting from Egencia consolidation, (ii)$3 million increase due to the restoration of full salaries and benefits during the three months endedSeptember 30, 2022 compared to reduced salaries and benefits resulting from the mandatory salary reductions that were in place during the three months endedSeptember 30, 2021 and (iii) a decrease in funds of$1 million received from governments in connection with programs designed to minimize employment losses related to the COVID-19 pandemic. Other technology and content costs increased by$24 million , or 73%, due to (i)$15 million increase resulting from Egencia consolidation and (ii)$9 million other technology costs primarily driven by platform usage costs as a result of volume increases, cloud implementation and vendor price increases. General and Administrative Three months ended Change September 30, favorable/ (unfavorable) (in $ millions) 2022 2021 $ % General and administrative$ 94 $ 42 $ (52) (122) %
For the three months ended
Salaries and benefits expenses related to general and administrative increased by$24 million , or 112%, due to (i) incremental salaries and benefits of$9 million resulting from Egencia consolidation and (ii)$15 million increase in the non-cash equity plan. Other general and administrative expenses increased by$28 million , or 134%, primarily due to (i)$13 million resulting from Egencia consolidation and (ii)$19 million charge relating to a loss contingency in relation to a contingent event that existed as of the Egencia acquisition date, offset primarily by (iii) lower integration costs relating to mergers and acquisitions incurred in 2021.
Depreciation and Amortization
For the three months endedSeptember 30, 2022 , depreciation and amortization increased by$11 million , or 32%, primarily due to additional depreciation and amortization resulting from the Egencia acquisition, including due to higher fair value of property and equipment and additional other intangible assets, recognized from purchase price allocation upon the Egencia acquisition.
Interest Expense
For the three months endedSeptember 30, 2022 , interest expense increased by$13 million , or 94%, primarily due to higher amount of outstanding term loan debt and higher interest rates during the three months endedSeptember 30, 2022 compared to the three months endedSeptember 30, 2021 . 46
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