Apollo Strategic Growth Capital - Ordinary Shares - Class A Aktie

Good morning, and welcome to the American Express Global Business Travel Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, please note today's call is being recorded. And I'll turn the call over to the Vice President of Investor Relations, Jennifer Thorington. Please go ahead.

Hello, and good morning, everyone. Thank you for joining us for our fourth quarter and full year 2025 earnings conference call. This morning, we issued an earnings press release, which is available on sec.gov and our website at investor.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 industry and macroeconomic trends, cost savings and acquisition synergies, among others.

All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today's call, we will also be presenting certain non-GAAP financial measures such as adjusted gross profit, adjusted gross profit margin, 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 today are Paul Abbott, our Chief Executive Officer; Evan Konwiser, our Chief Product and Strategy Officer; and Karen Williams, our Chief Financial Officer. Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Global Head of M&A.

With that, I will now turn the call over to Paul. Paul?

Thank you, Jennifer. Welcome, everyone, and thank you for joining us this morning. In 2025, we delivered strong results and expect even stronger momentum in 2026. We are executing on our growth strategy. We continue to gain share and maintain an impressive customer retention rate. Product innovation is accelerating. Our strategic partnership with SAP Concur is well underway as we roll out Complete, a new flagship solution for travel and expense. We are launching next-gen Egencia in April with a new AI-powered user experience and full integration into Concur expense.

And we closed on the acquisition of CWT in September of 2025. We are now at a very exciting inflection point where AI is delivering real revenue and cost benefits, and we are leveraging our platform to power the future of Agentic AI and business travel. More on that shortly. Finally, we doubled our share repurchase authorization to $600 million, supported by our strong balance sheet and robust cash flow. Given the current share price and our conviction in our long-term growth trajectory, we believe this represents a compelling driver of shareholder value.

Before I talk in more detail about the value that we are delivering with AI, let me quickly review our strong 2025 performance. Here are the highlights. Total transaction value or TTV grew 17%. Revenue growth accelerated to 12%. Adjusted gross profit margin was 60%. Adjusted EBITDA grew 11%, and we generated $104 million of free cash flow.

Finally, here, excluding CWT, new wins value accelerated to $3.3 billion, and we maintained very strong customer retention rate of 96%. So Amex GBT continues to grow and continues to gain share. Our new wins performance, increased demand from our premium customer base, high customer retention rate and the acquisition of CWT resulted in impressive top line performance. And our focus on operational efficiency and cost synergies enabled us to drive strong adjusted gross profit and adjusted EBITDA margin performance.

So I now want to address market sentiment related to AI. Let me start by being clear on this. We have proven that automation is a tailwind for our business, a tailwind that is being accelerated by AI. We have already proven that digital adoption drives higher margins and drives higher profits. Over the last 5 years, we've increased our mix of digital transactions from approximately 60% to over 80%, with over 60% of those digital transactions on our own technology platforms. Over the same period, our adjusted EBITDA margin has gone from 17% to 20%, driven directly by increased automation. And AI is accelerating this positive trend.

Our broader AI strategy is focused on 3 key priorities: revolutionizing the customer experience, powering the agentic transformation of B2B travel and reducing operating expenses. Why are we so confident that AI will supercharge value creation for our customers and our shareholders? Because we're already seeing it happen today. And here are some examples. AI is increasing self-service. And even for issues that still require a live agent, our agents are using AI tools to reduce handling times, giving a better experience for the customer and reducing operating costs.

AI is also delivering higher revenue conversion in our products through enhanced personalization. Our tech teams are using AI to design and build products, improving both speed and quality. Agentic AI is a decision-making and execution layer with the potential to reshape channels and workflows. The opportunity that we have in managed travel is to integrate Agentic AI with all of our other services, including the supply inventory, company data, traveler data, duty of care processes, disruption management and the end-to-end workflow to deliver the control and the experience that our customers demand.

And we can deliver this consistently and securely on a global basis. Our platform is being used today to power Agentic AI experiences, both proprietary and through integration with third parties. In all these cases, Amex GBT is providing the essential assets required to power the Agentic AI experience at scale.

And now I'd like to introduce Evan Konwiser, our Chief Product and Strategy Officer, to share some specific examples of how we are executing on our AI strategy. Evan, over to you.

Thank you, Paul. As Paul said, we have deep conviction that AI is a clear tailwind in transforming our business by enhancing both the customer value prop and our profitability. Our central role in building and operating a platform that integrates enterprise workflows into the very real and dynamic world of travel represents a clear competitive advantage for us to lead in the AI transformation in corporate travel.

To maximize this opportunity, we're investing for AI-powered growth and value creation across 3 key priorities. The first is revolutionizing the customer experience, incorporating AI and agentic capabilities into the way we service and support our customers and their travelers by delivering personalization, contextualization and user delight.

The second is taking our platforms to power the agentic transformation of B2B travel. Amex GBT's platforms have been designed to execute travel at scale globally, and such a platform is an essential foundation to enable the Agentic AI tools that companies are launching for many use cases today. Finally, AI is a generational opportunity to redefine our operating model and cost base, allowing us to expand margins and create more capacity to invest in one and two. I want to highlight one example of how we're looking at revolutionizing the customer experience with AI. We know travelers want to conduct business from the channels that they're already using daily, and we know that both companies and their travelers want integration into existing business workflows with immediate personalized responses and proactive actions to solve their needs.

Next month, we expect to launch Egencia AI, a tool that allows travelers to search, book and change travel by responding to natural language interactions, all while adhering to company policy, personal preferences and context and of course, sourcing from the comprehensive and competitive inventory in the Amex GBT marketplace. This foundation is anticipated to grow to more proactive actions over time, including fully agentic capabilities. Already on Egencia, we have an average booking time of under 3 minutes, which is expected to go down even more with these new tools as AI agents complete more of the workload.

We're able to source the majority of hotels within the top 5 options based on many years of training our models, making these experiences better. We're having success increasing self-service and the new Egencia AI experience is projected to further accelerate that progress. And in short order, this will be available in a multitude of channels, the web, Egencia mobile as well as the major enterprise collaboration tools that most of our customers are using today. And we have similar solutions arriving on Complete, our joint solution with SAP Concur as well as Neo.

And with our service promise, there is always a live agent for travelers to access if the AI does not deliver what they need or if they simply prefer some human interaction. This is only one example of how AI is helping us dramatically advance the customer and traveler experience, enhancing our ability to retain and win customers and importantly, reduce bookings made outside the program by giving travelers tools that make it much easier and faster to book travel from Amex GBT.

We believe our platform is central to transforming B2B travel with AI. We are expecting AI agents to do a lot of the heavy lifting in business travel, but those AI agents will need access to the data, global inventory, workflows and orchestration that has authority to fulfill travel bookings, manage approvals and payments, issue invoices, file expenses and reconcile data. Unlike consumer travel, business travel requires data and trusted transaction authority from both travelers and companies, including data ranging from personal loyalty preferences and history all the way to company policy and approval rights.

Amex GBT can already do this at scale globally, and we are architecting an agent-to-agent framework to deliver these capabilities. AI agents will also need access to the best marketplace and travel that sources content from all over the globe, negotiates bespoke content for savings, wires in company negotiated content and aggregates it all seamlessly. Using our centralized inventory is significantly more advantageous and cost effective than agents doing independent scraping themselves.

Finally, AI agents are only as good as the data they are trained on. And in our industry, our proprietary data is the gold standard. It includes, in part, millions of enterprise policy rules, hundreds of ecosystem partners, hundreds of supplier connections and millions of transactions, e-mails and hours of call recordings. Today, we're working in several ways to already bring this to life. Let me provide 3 examples. First, we're currently collaborating with a major technology company customer on integrating into their proprietary Agentic platform to ensure managed travel experiences can be available seamlessly through existing and new enterprise channels.

Even major technology customers are acknowledging the value Amex GBT provides by bringing capabilities like expert-driven cost savings, 24/7 duty of care and policy compliance fully baked into their new AI workflows. Second, as previously announced, we're collaborating with SAP Concur to bring our platform to full use across our joint customer base. In the flagship solution complete by SAP Concur and Amex GBT, we are combining SAP's AI solution, Joule, with our travel capabilities to streamline travel and expense management through natural language conversations.

So this is an example of a leading enterprise application software player collaborating with Amex GBT and AI for travel. Finally, we're working to partner with AI native players to bring new experiences to our customers. In one example, we integrated an AI product for a large customer to create a new Agentic channel. In summary, we have both proprietary and partner Agentic experiences powered by the Amex GBT platform. These partners include a major technology company, one of the largest European software companies and an AI-native venture-funded new entrant.

And in all of these cases, Amex GBT is providing extreme value with orchestration, workflows and the marketplace as well as acting as the trusted transaction authority on behalf of the company and its travelers. This is how we expect B2B travel to work in an increasingly agentic world, and we're fully prepared.

Finally, I want to highlight the significant cost reduction opportunity that AI presents. We have 2 primary levers for reducing operating costs. The first is reducing the need for human intervention. The progress we've made on digital self-service to date, coupled with the current path on AI solutions, gives us a clear road map to serve more travelers in digital channels, creating a better experience and reducing costs. We've already seen this in how our Egencia product is able to handle more self-service needs, and we're building these features into Complete and Neo now.

The second lever is ensuring our amazing travel counselors are as productive as possible in delivering exceptional service. To that end, we're building an AI agent assistance tool that will supercharge the ability of our travel counselors to serve travelers in a personalized, contextual and efficient way. This is a win for both our travelers and Amex GBT. We believe the successful formula for managed travel is both high tech and high touch. And while AI agents are increasingly capable, marrying that with experienced travel counselors remains core to our servicing strategy.

Human agents will interact with fewer transactions over time. But when they do, it will be critical to revenue retention and growth. Even the savviest digital traveler cannot predict when any given trip may require some human help. And we're seeing this play out in real time as our traveler counselors work tirelessly to repatriate travelers from the Middle East.

AI-driven efficiency gains aren't just an idea. They're having real-time meaningful effects on our P&L, and AI is a primary driver for long-term operating leverage and margin expansion. We expect adjusted gross profit margin to increase by 150 to 200 basis points per annum over the next 5 years, reaching the high 60s by 2030, which represents material margin expansion versus where we are today.

In summary, our strategy is very clear. We are developing AI to revolutionize the customer experience, our platform to power the agentic future in B2B travel and using AI to accelerate cost reduction and margin expansion.

Now I'd like to pass it on to Karen for the financial overview.

Thank you, Evan, and hello, everyone. Before we get into the specifics for the quarter, I want to reflect on the incredible progress we made in 2025. We delivered strong financial results, closed on the acquisition of CWT and are continuing to make outstanding progress in terms of the integration of CWT into our business. The strength of our balance sheet provides us with opportunities to deploy capital in a disciplined, value-accretive manner. We generated over $100 million in free cash flow, refinanced our debt and doubled our share repurchase authorization. We continue to deliver on our commitments and are confident in our outlook and the continued momentum in the business.

So now let's turn back to the fourth quarter and the financial highlights, which shows strong underlying growth and the addition of CWT into our results. The corporate travel demand environment continued to accelerate in the fourth quarter despite a short-term negative impact from the U.S. government shutdown. TTV, which reflects both volume and price, grew 45% to reach $10 billion. Transaction growth was 37%, driven by the contribution from CWT and growth in our core business as we continue to drive share gains and impressive customer retention.

Revenue was up 34% to reach $792 million. And within this, travel revenue increased 36%, in line with the transaction growth. Product and professional services revenue increased 27%, primarily driven by the acquisition of CWT and strong growth from our dedicated client revenues as well as meetings and events. Excluding CWT, revenue grew 8% in the quarter. And finally, adjusted EBITDA grew 17% to reach $130 million, driven by the top line performance and continued focus on driving productivity, operating leverage and cost optimization.

Let's now turn to margins. Last quarter, we introduced adjusted gross profit margin as a key metric, which we believe helps measure the success of our automation and AI initiatives. Adjusted gross profit margin was 60% for the full year. Now excluding CWT, full year adjusted EBITDA margin of 21% was up 144 basis points year-over-year and benefited from our continued focus on cost transformation.

Our reported full year adjusted EBITDA of 20% and fourth quarter margins were down modestly. Whilst the core business continued to deliver on productivity initiatives, the year-over-year reduction in margins is simply driven by the consolidation of CWT into our numbers, which pre-synergies operates at lower margins. And importantly, we project material expansion in both adjusted gross profit margin and adjusted EBITDA margin over the medium term as we deliver on the CWT synergies and AI-powered cost transformation.

Free cash flow for the full year totaled $104 million, which when normalized for the CWT and M&A expenses result in 40% free cash flow conversion as a percentage of adjusted EBITDA. Free cash flow in the fourth quarter declined year-over-year, again, due to seasonality of working capital outflow and cash restructuring costs related to the CWT synergies.

And finally, I'm incredibly proud of the strength of our balance sheet. Our leverage ratio or net debt divided by last 12 months adjusted EBITDA is 1.9x and remains below the midpoint of our target leverage ratio range even after funding the cash portion of the CWT acquisition. As a reminder, with the CWT acquisition, we have a clear path to a bottom line synergy opportunity of $155 million, entirely driven by what we can control, which is cost.

I am pleased to share we are tracking in line with the expectations we have previously shared. We expect to deliver $55 million of in-year synergies in 2026. To date, we have actioned $45 million of these and have confidence in realizing the full year number. The actions taken to date primarily include workforce reductions, real estate consolidation and vendor savings.

So now moving to our outlook. We are reiterating our guidance for the full year 2026. We are guiding to full year 2026 revenue of $3.235 billion to $3.295 billion, which reflects 19% to 21% year-over-year growth and adjusted EBITDA of $615 million to $645 million, which reflects 16% to 21% growth. And as a reminder, there will be a temporary impact on our margins related to CWT. On a pro forma basis, including the full projected CWT synergies of $155 million, we would expect adjusted EBITDA of $715 million to $745 million.

And looking at free cash flow, we expect to generate $125 million to $155 million. Excluding the cash impact of restructuring and CWT integration, we would expect to generate $235 million to $265 million of underlying free cash flow, which represents a conversion rate similar to 2025 of approximately 40% of adjusted EBITDA at the midpoint. We expect an acceleration in our free cash flow conversion beyond this year as we drive growth, roll over the onetime items and realize the CWT synergies.

Now it's important to draw your attention to the expected shape of our performance in 2026 and cadence of our revenue and adjusted EBITDA outlook. Year-over-year growth rates will start out higher due to CWT until the acquisition anniversary during Q3 at the beginning of September. The seasonality of the combined business looks different in 2026 versus prior years due to CWT. We expect to generate approximately 51% of full year 2026 revenue in the first half of the year, with approximately 25% in Q1.

We also expect to generate approximately 53% of full year 2026 adjusted EBITDA in the first half of the year with approximately 24% in Q1. And this is driven by the phasing of the synergies benefits that ramp post Q1. From a free cash flow perspective, we expect Q1 free cash flow to be largely breakeven but accelerate in Q2 due to the phasing of the cost synergies and net working capital. We've provided more detail in the appendix on free cash flow and quarterly seasonality to help you guide your models. Now it's important to note that our guidance does not include a prolonged impact from the Middle East conflict as it's too early to establish any facts.

But for context, the region represents around 5% of revenue. Crisis management is a critical component to our value proposition, and I am incredibly proud of how our team is handling frontline servicing. Now I want to end by reiterating our capital allocation priorities and what we are doing to drive shareholder value. We are continuing to generate cash, which enables us to execute against our capital allocation priorities. Our first capital allocation priority is maintaining a strong balance sheet with a target leverage ratio of 1.5 to 2.5x.

In January, we successfully refinanced our debt and achieved a 50 basis point reduction in our borrowing rate. Second, because of the productivity gains, we can invest in sustainable growth within our medium-term target CapEx envelope of approximately 4% of revenue. We are focused on discipline in our AI spend to drive profitable growth. And I would encourage you to think about this beyond the CapEx envelope as we think about the AI opportunity being a mix of build, partner and buy.

This leads nicely to our third priority, which is to pursue accretive, highly synergistic M&A. Because the CWT acquisition financing was primarily stock, we maintain a strong balance sheet to pursue additional M&A. And finally, given our leverage and cash position, we are in a position of strength to execute accretive share buybacks. Doubling our share buyback authorization from $300 million to $600 million in February reflects our confidence in the underlying strength of the business and our commitment to driving long-term shareholder value.

In total, we have returned $103 million to shareholders under the share buyback program to date with $73 million in 2025 and an additional $30 million year-to-date through March 5, 2026. In summary, we delivered strong results to close out 2025 and expect even further momentum into 2026 and beyond. We look forward to sharing more at an Investor Day later this year.

So we can move into Q&A. Paul, Evan and I are joined by Eric Bock, who is our Chief Legal Officer and Global Head of M&A. Operator, please go ahead and open the line.

[Operator Instructions] First question comes from Stephen Ju with UBS.

So Evan, I wanted to dig in a little bit more on the underlying data you have disclosed on Page 9 of the deck, particularly as it comes to how good AI has gotten and how quickly things may be improving for Egencia. So 57% of chats are resolved without humans being involved. So can we get some idea of the slope of the improvement that you were driving here throughout 2025?

And stepping back and looking at things from a more bigger picture perspective, and I apologize, Paul, for asking you a question about running before walking, but how can we think about the benefits of what you're already seeing from a customer service perspective that's already being demonstrated for Egencia being rolled out to CWT also?

Great. Thanks so much for the question, Stephen. Happy to take that. This is Evan. So the 57% on deflection away from chat is largely based on nontransactional inquiries that we've had over the last year or 2 as we've deployed more tech into that channel. This year, with the full agentic launch of full transactions on hotel and air and later rail and ground. We're really bullish that, that number is going to go up pretty significantly. But we also know the denominator will go up a lot as well as we get more customers, more travelers rather coming into this channel on all the different channels that we're going to expose this to.

So I think that both numerator and denominator are going to change, but in ways that will start really showing up in the metrics across the business versus more of a help desk style approach that we've had thus far. So I think we're at a pivot point, and we'll be excited to share progress of that as that launch happens and we continue to evolve that channel.

Stephen, maybe just to add a couple of comments to the second part of your question. And you're absolutely right. Egencia is the most advanced platform in terms of the AI capabilities and the self-serve capabilities. And so that sets the pace, and our objective is to get Complete and Neo up to the same levels of performance, and we have plans in place to do exactly that, including, of course, the CWT customers as they move across on to those solutions.

I think in terms of the metrics to kind of keep an eye on, you asked about how you can expect this to trend going forward. If you look at our gross margin, it's for Amex GBT stand-alone, gross margin was up 200 basis points over the last 12 months. And obviously, a lot of our AI and automation initiatives are driving that improvement in gross margin. Also, if you look at the percentage of self-serve, we've taken that up 300 basis points over the last 12 months. So we were at about 80% of our transactions coming through digital channels. That's gone up to 83%. And so these are some of the key metrics that we track to make sure that we are not just making progress, but also that progress is flowing through to deliverable impact in the P&L.

We now turn to Duane Pfennigwerth with Evercore ISI.

This is Jake Gunning on for Duane. Just first, big picture, are there any regional and/or industry highlights you could share for the fourth quarter and early 2026? And any improvement in the government business as well?

Yes. Obviously, for Q4, we did see an impact on not just the government business, but more broadly in the U.S. from the U.S. government shutdown. But we were able to mitigate that impact and still deliver on our expectations for Q4 and full year. And so yes, we have seen an improvement, now that the government shutdown is mostly resolved. So those volumes have improved into the first quarter. Obviously, the big regional trend stating the obvious is the situation in the Middle East. If you look at our demand through January and February, it was actually pretty solid across all regions and for both months, very much tracking in line with our plan.

Obviously, over the last week, we have seen an impact to volumes in the Middle East. Of course, you would expect. Initially, for us, that impact creates more demand because we have a lot of customers that are disrupted, a lot of changes and cancellations. So in the short term, it actually results in an increase in transaction volumes. But obviously, depending on how long the situation lasts, we are going to see some impact to forward bookings in the region. And that's why Karen in her prepared remarks there sized the Middle East at approximately 5% of our revenues. Obviously, at this point, it's far too early to be able to assess how long the situation may continue, but we are trying to be helpful in sizing the travel that is -- where the Middle East is the point of origin or the final destination represents 5% of our revenues.

Okay. That's very helpful. And then -- just on the SAP Complete partnership, are there any early stats or anecdotes you could speak to, to just indicate any early successes?

Yes. Yes, we're having a great progress on rolling out our joint customers on to Complete. So we have a rollout plan that started in the fourth quarter and continues at pace, and we're expecting to have 90%, 95-plus percent of all of our joint customers using Complete this year. Early feedback has been positive, and you're going to hear some new updates on our product launches at the SAP Concur Fusion Conference, which is next week in New Orleans. We're going to be talking about the next step of our product joint release. So overall, the momentum is in full swing, and we're really excited to see that progress this year.

We now turn to Greg Parrish with Morgan Stanley.

I want to ask about this the 150 to 200 basis points annually of gross profit margin expansion through 2030. It's quite robust. I know, Paul, you mentioned done that over the last 12 months. Maybe I just want to kind of want to unpack the drivers. It sounds like, at least from the slide, this is primarily AI efficiency savings. If you could kind of confirm that. And then should this -- should we expect this to start in '27? I know '26 is a little noisy here with the acquisition. And then sorry for perhaps a 3-parter, but maybe just from a philosophical standpoint, I mean, do you expect clients will perhaps want to share in some of these AI savings? Or do you think you're in a really good position to have the benefits accrue to you?

Okay. So in terms of -- from a gross margin perspective, we're incredibly excited in terms of the runway ahead of us. And Evan spoke to some of it. But ultimately, as you look at particularly that cost of revenues and from a servicing perspective, we expect an opportunity from the demand deflection that he spoke about, but also from an agent productivity perspective. And so feel great in terms of the momentum and that pathway as we look out over the short and medium term as to delivering against that -- in terms of 2026 in particular, you do see the combination in terms of the 2 organizations together. But in terms of the underlying, we're continuing to see that progress and feel really good about it.

Maybe I'll pick up on the last part of the question. I think one of the really positive things about our business model is that we already have a structure that incentivizes self-serve. And we already have pricing structures with customers that are lower for 100% digital transaction, 100% touchless transaction. And if you look back over the last 4 or 5 years, we've taken our digital penetration from 60% to 83%. And that is one of the main tailwinds that has been driving our profit growth and our gross margin and our adjusted EBITDA margin expansion.

And so I think we are very confident that the pricing structure that we have in place and because we've proven it over the last few years, yes, it does pass back savings to customers for self-serve transactions, but our operating costs are even lower. So that automation tailwind improves our profits and improves our margins. And frankly, AI is just going to supercharge that trend. And so we see it as being very, very positive for us.

Okay. Great. Maybe just a follow-up. Could we maybe just unpack the 8% growth, excluding CWT in the quarter, pretty strong number. I think FX was a little bit of a tailwind. Can you maybe break that down? Anything else to call out if air, travel, GMN sort of what was strong versus light in the quarter?

So we saw strong growth both in the SME and in the global multinational from a sales perspective. We saw that continuation in the fourth quarter. Yes, there's probably a point from the FX. But also, you will recall during the Q3 earnings call, we encourage everyone to look at Q3 and Q4 together. And we do typically see in that fourth quarter just from a supplier perspective, some of the timing. And so we see the yields were much more akin to what we saw in Q2 at a higher level. So that is also playing into it. But really confident in terms of that momentum that we saw in the underlying business, not only from the top line, but also then the continuation in terms of that margin story and 210 basis points expansion.

Okay. I just wanted to confirm, you said FX was only 100 basis points.

At one point, yes.

We have no further questions. So I'll hand back to Paul Abbott, CEO, for any final remarks.

Great. Well, look, thank you very much to everyone for joining us. And thank you to all of our teams around the world that contributed to such a successful year in 2025. Thanks very much.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Good morning, and welcome to the American Express Global Business Travel Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note today's call is being recorded.

I'll now turn the call over to Vice President of Investor Relations, Jennifer Thorington. Please go ahead.

Hello, and good morning, everyone. Thank you for joining us for our third quarter 2025 earnings conference call. This morning, we issued an earnings press release, which is available on sec.gov 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 certain forward-looking statements that represent our beliefs or expectations about future events, including industry and macroeconomic trends, cost savings and acquisition synergies, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings.

Throughout today's call, we will also be presenting certain non-GAAP financial measures such as adjusted gross profit, adjusted gross profit margin, 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 today are Paul Abbott, our Chief Executive Officer; and Karen Williams, our Chief Financial Officer. Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Global Head of M&A.

With that, I will now turn the call over to Paul. Paul?

Thank you, Jennifer. Welcome to everyone, and thank you for joining our third quarter 2025 earnings call.

In the third quarter, we delivered outstanding results. Here are the highlights. Total transaction value or TTV grew 23%. Revenue growth accelerated to 13%. Adjusted gross profit margin was 60%. Adjusted EBITDA grew 9%. We generated $38 million of free cash flow, and we continued to win share with $3.2 billion in total new wins value over the last 12 months.

Finally, year-to-date through November 6, our strong performance has enabled us to return $54 million to shareholders through share buybacks. These results reflect 2 things. First, continued strong execution within our core business, which performed in line with our expectations and is tracking in line with the midpoint of our previous full year guidance.

Second, incremental growth from the acquisition of CWT, which closed on September 2. This is an important milestone for growth and value creation. As Karen will discuss in more detail, we are raising our full year 2025 guidance. This reflects the acquisition of CWT, and we are reaffirming the midpoint of our previous guidance range for our core business. Importantly, we also have the confidence to provide preliminary expectations for 2026.

Before we get into the quarterly details, I want to explain why this is such an important moment for our business with multiple levers for growth and value creation in place. We continue to demonstrate the strong execution in our core business. Proof points include our very high customer retention rate, significant new wins value, disciplined operating leverage and strong cash generation. We are consistently delivering on our commitments.

We have made bold moves to transform Amex GBT into a software-driven leader in travel and expense. We've now reached an exciting moment with several significant milestones achieved that we expect will accelerate growth and margin expansion.

First, we closed the acquisition of CWT, a global business travel and meeting solutions company. This transaction immediately grows our top line substantially, and we are already executing on the $155 million synergy target to create significant shareholder value.

Second, we recently announced a long-term strategic alliance with SAP Concur to strengthen our value proposition, accelerate growth and develop a larger expense revenue stream.

Third, we expect to launch a next-gen Egencia Travel and Expense solution in Q1 2026, including full integration into SAP Concur Expense and a new AI-powered booking experience.

Fourth, we have an enormous runway in the SME space with even stronger products and distribution to continue to win share.

And finally, we are driving AI to further accelerate the digital transformation of our business. Putting it all together, we have a significant long-term opportunity for consistent double-digit adjusted EBITDA growth and margin expansion, and we look forward to sharing more at our March 2026 Investor Day.

Turning to CWT. We are delighted to welcome CWT customers and employees to Amex GBT. This transaction grows revenues by approximately 30%, grows our SME business by approximately 20% and brings in new industry verticals to Amex GBT. This is a highly accretive transaction.

We expect to deliver approximately $155 million in net cost synergies over the next 3 years, and we have a proven track record of achieving synergy targets. Our experienced integration team has made good progress in the first 60 days, and we expect to achieve $55 million of synergies in 2025 and 2026.

Importantly, this transaction diversifies our shareholder base. CWT shareholders, which are primarily investment funds, now own approximately 10% of the combined company, and our leverage stays within the target range of 1.5x to 2.5x.

Turning to our new long-term strategic alliance with SAP. Let me first describe how significant this alliance is, and then I will share 2 new ways that our customers and suppliers will benefit. SAP is the world's largest provider of enterprise application software. To put some numbers on it, 98 out of the 100 largest companies in the world are SAP customers and approximately 80% of SAP's customers are SMEs.

SAP Concur is the world's largest travel and expense software solution with over 104 million users. By joining forces, we will deliver a step change in our travel and our expense capabilities.

First of all, we are co-developing a new solution called Complete, a new flagship solution for travel and expense that will offer an AI-powered user experience. Complete features include richer content, a booking experience that will feel like shopping on your favorite website, one app for everything end-to-end and a seamless customer support from industry leaders. We launched last week to the first customers, so the impact is already starting now.

Second, we are integrating SAP Concur Expense with Egencia. This is exciting because it will provide our Egencia customers a seamless travel and expense experience. And additionally, the strategic alliance creates the opportunity to accelerate our growth by marketing a new flagship solution to the large SAP customer base.

In Q1 2026, we plan to launch a next-gen Egencia Travel & Expense solution. It will feature SAP Concur expense integration, new Agentic AI search capabilities and a redefined customer experience. Egencia is our all-in-one travel and expense platform that continues to compete very effectively against other software solutions.

Egencia is already operating at scale with approximately $8 billion of TTV in the last 12 months, over 90% online transactions and approximately 7,000 corporate customers, all supported by world-class service from American Express GBT.

Furthermore, it has gross margins that are higher than our average and very importantly, it is profitable and generating cash. We have an unrivaled value proposition for SMEs. savings, control and service. This strong value proposition drives profitable growth in the over $800 billion SME segment and an estimated $625 billion of the global SME opportunity is unmanaged, representing a long runway for future growth.

Over the last 12 months, excluding CWT, our SME new wins totaled $2.2 billion. With the enhancements that we're making to our products and our sales strategy, we think we can further accelerate new wins and capture more share with SME customers. Our overall total new wins value also remained strong at $3.2 billion with an impressive customer retention rate of 95% over the last 12 months, excluding CWT.

Finally, when it comes to AI, we are a clear beneficiary. AI is delivering results, increasing revenue, conversion and productivity. Let me give you some examples. The Egencia AI experience is solving customers' needs faster and delivering savings. Egencia Chat powered by AI is driving a 23% reduction in the need for human intervention in chats.

Our AI-powered hotel dynamic rate cap delivers average savings of approximately $60 per booking for Egencia customers. And AI is increasing hotel attachment rates, which provides increased revenue opportunity with 85% of booked hotels chosen from the top 10 AI-driven display.

We're also driving AI to deliver cost savings and margin expansion. We've previously spoken about the significant opportunity with travel counselor productivity. Excluding CWT, over 40% of our calls are now assisted by AI, driving efficiency gains. And we've seen a 40% quarter-over-quarter increase in daily users of our internal AI productivity tool called AI Assist. This results in a 60% adjusted gross profit margin in the third quarter with significant runway for continued margin expansion. And we continue to increase the share of digital transactions, which now totals 82% with over 60% on our proprietary software platforms.

Now let's turn back to the third quarter and the financial highlights. Last quarter, we talked about green shoots that gave us confidence in an improved corporate travel demand environment, and that is exactly what we saw. TTV, which reflects both volume and price, grew 23% to reach $9.5 billion, driven by CWT and 9% growth in the core business.

The core growth was driven primarily by higher average ticket prices and hotel room rates in addition to transaction growth and a favorable FX impact. Transaction growth was up 19%, driven by the 1-month contribution from CWT post close and 4% growth in the core business. Within the 4%, same-store sales were up 2% and our net new wins drove 2 percentage points of growth.

Revenue was up 13% to reach $674 million. Excluding CWT, revenue growth of 3% was in line with our expectations and largely in line with transaction growth, which drives the majority of our revenue model.

Finally, adjusted EBITDA grew 9% to reach $128 million. Excluding CWT, underlying adjusted EBITDA growth was 5%, which was in line with expectations and outpaced revenue growth as a result of our continued focus on driving margin expansion and operating leverage.

Going forward, Amex GBT and CWT are one business. But we wanted to give you the breakout between our core business and the impact of CWT this quarter to help you understand the underlying performance.

And now I'd like to hand it over to Karen to discuss the financial results and the updated outlook in more detail.

Thank you, Paul, and hello, everyone. Before we get into the specifics for the quarter, I want to reflect on the progress we have made in Q3. I am incredibly pleased with our continued momentum in driving the business forward.

We delivered financial results for the core business that were in line with expectations. We closed on CWT and are already making outstanding progress on the integration. And we executed on our share repurchases to deploy capital in a disciplined, value-accretive manner. We continue to deliver on our commitments.

So let's turn to our financial performance in more detail. Revenue reached $674 million, up 13% year-over-year. Travel revenue increased 10% due to the acquisition of CWT, underlying transaction and TTV growth and favorable foreign exchange impact. Product and professional services revenue increased 23% from the acquisition of CWT as well as strong growth from dedicated client revenues and consulting.

Excluding CWT, transaction growth of 4% was in line with our expectations. TTV growth of 9% had an additional 3 percentage points benefit from higher average ticket prices and 2 percentage point benefit from FX. As a reminder, transactional growth drives 50% of our revenue and TTV drives 30%. The core revenue growth of 3%, was very much in line with our expectations for the quarter.

Now it's important to note that our core business revenue guidance of 5% at the midpoint for the second half, which we're reiterating today, assumed lower growth in Q3 versus Q4 due to phasing. If you look specifically at our revenue yield, it declined 40 basis points year-over-year, driven by the prior year baseline, hence, why I would encourage you to look at H2 rather than the quarter in isolation.

And from a year-to-date perspective, revenue yield is trending in line with our full year guidance, which is down less than 20 basis points, excluding CWT due to the intentional continued shift to digital transactions and the fixed components of our revenue.

So moving to expenses. We continue to drive strong momentum with our focus on driving efficiency and increasing productivity. We are introducing adjusted gross profit margin as a key metric this quarter, which we believe helps measure the success of our automation and AI initiatives and makes us much more comparable to other software-led companies.

Adjusted gross profit margin was 60% in the quarter, down modestly due to the impact of CWT, but up 70 basis points for the core business. Importantly, we believe there is a runway for this to go up significantly over time. Adjusted operating expenses were up 14% year-over-year, largely reflecting incremental costs driven by the acquisition of CWT.

Excluding CWT, adjusted operating expenses were up 3% in the quarter. And on a constant currency basis, adjusted operating expenses grew slower than revenue for the core business, reflecting our continued focus on driving productivity and efficiency gains. And as a reminder, we expect to drive $110 million of cost reductions in 2025, partially offset by the $50 million in investments we are making to drive growth, and I am pleased to say we are on track with both of these.

Putting it together, adjusted EBITDA grew 9% to $128 million. Our adjusted EBITDA margin was 19%, down 70 basis points year-over-year due to the impact of the CWT acquisition. Although the combination with CWT's lower-margin business will temporarily step down our margins on a blended basis, we are confident in the path to return to and then far surpass prior levels, thanks to the significant synergies, additional efficiency potential and scalable revenue growth for the combined businesses.

Excluding CWT, our adjusted EBITDA margin was up 40 basis points. And again, I encourage you to look at core business margin expansion of 120 basis points year-to-date instead of the quarter in isolation due to phasing.

As Paul mentioned, we wanted to provide this financial detail on the core business versus CWT impact to be helpful. However, going forward, we will be operating reporting as one business. We generated $38 million of free cash flow in the quarter, which declined year-over-year, largely due to the impact of CWT. Free cash flow generation for the core business, excluding CWT, was $54 million, down modestly year-over-year due to investing in the business.

Finally, I am incredibly proud of the strength of our balance sheet, our leverage ratio or net debt divided by last 12 months adjusted EBITDA is 1.9x, up slightly from last quarter, given our funding of the cash portion of the CWT acquisition, but still below the midpoint of our target leverage range of 1.5x to 2.5x.

With such a strong balance sheet, we are in a position to continue executing on our capital allocation priorities, including additional opportunistic M&A while returning cash to shareholders through share repurchases. Year-to-date through November 6, we have repurchased $54 million of shares. Our share buyback reflects our confidence in the underlying strength of the business and our commitment to driving long-term shareholder value.

Now taking a closer look at CWT, this is an incredible synergy story. We have a clear path to a bottom line synergy opportunity of $155 million, entirely driven by what we can control, which is costs. We have significant savings by consolidating the cost base of CWT and Amex GBT, including a large opportunity with AI and automation. This is a highly accretive transaction with a 3.5x multiple on synergies alone.

We have previously shared we expect to achieve approximately 35% of our total $155 million synergy target in year 1. While I'm pleased to share we are tracking in line with the expectations we have previously shared. We expect to deliver $55 million in synergies across 2025 and 2026, split between $5 million and $50 million, respectively. These actions primarily include workforce reductions, real estate consolidation and vendor savings. We have a clear and established playbook for M&A.

I will now share 2 examples of that track record of highly accretive acquisitions and significant value creation. With HRG in 2018, we added approximately 24% incremental revenue with approximately $80 million in synergies. And with Egencia, in 2021, we added approximately 24% incremental revenue with approximately $110 million in synergies. This proven track record gives us confidence in our ability to deliver the identified synergies from CWT.

Now moving to guidance. We are very pleased to raise and narrow our full year 2025 guidance to reflect the acquisition of CWT, which closed on September 2, 2025. There are no changes to our expectations for the core business. We are confident in the midpoint of our previous guidance. We are now guiding to full year 2025 revenue of $2.705 billion to $2.725 billion, which reflects approximately 12% year-over-year growth and adjusted EBITDA of $523 million to $533 million. Versus our previous guidance midpoint, this is $227 million increase in revenue with a $5 million increase in adjusted EBITDA, all driven by the CWT overlay.

CWT assumptions for Q4 included an impact on our government business from the current U.S. government shutdown and a continuation of current trends for domestic travel. Please note that CWT is not currently baked into consensus or any sell-side analyst estimates. So this is all extremely exciting top line growth that is not currently reflected in any of the numbers out there and therefore, entirely incremental.

Looking at free cash flow, we now expect to generate free cash flow of $90 million to $110 million. At the midpoint, the $50 million change in free cash flow guidance is driven by the cash impact of CWT. Excluding the cash impact of CWT and approximately $60 million in onetime M&A-related cash costs, we would expect to generate approximately $210 million in underlying free cash flow for the core business.

And so turning to next year, we also want to share our preliminary expectations for full year 2026 to help you set up your models now that we have closed the CWT acquisition.

We have made bold moves to transform Amex GBT into a software-driven leader in travel and expense. We have now reached an exciting moment with several significant milestones achieved that we expect will accelerate growth. We expect to continue to demonstrate strong execution in our business with significant new wins, disciplined operating leverage, delivering on the CWT synergies, introducing our new flagship complete T&E product with SAP, rolling out our industry-leading next-gen Egencia T&E solution and continuing to drive productivity and efficiency across the enterprise whilst investing in the business.

Our guidance philosophy continues to be based on the trends that we have seen. Our preliminary expectations for full year 2026 is 19% to 21% revenue growth and adjusted EBITDA of $615 million to $645 million, which represents growth of 16% to 22% year-over-year. And as usual, our official full year 2026 guidance will be provided on our next earnings call in early March.

I want to end on why we are so excited about our future and the long-term outlook for the company. We have reached a critical moment with the CWT acquisition and the additional levers for long-term growth and value creation. We have a clear path to consistent double-digit adjusted EBITDA growth, margin expansion and free cash flow conversion, which we will use to drive continued shareholder value. We look forward to providing more detail on the opportunity we see ahead at our Investor Day in March.

So we can move into Q&A. Paul and I are joined by Eric Bock, who is our Chief Legal Officer and Global Head of M&A. Operator, please go ahead and open the line.

[Operator Instructions]. First question comes from Lee Horowitz with Deutsche Bank.

Two if I could. Maybe as it relates to your 2026 outlook, I wonder what you're hearing from your customers in terms of their expectations on what the big beautiful bill could mean for corporate spending broadly and how that perhaps informs your preliminary outlook?

And then maybe one on the new SAP Concur relationship strikes is quite interesting. I wonder how you're thinking these tools may serve to help unlock the unmanaged segment in SME more greatly so that we could see that part of your business continue to come online and take share there.

Well, thanks, Lee. Thanks for the questions. First of all, in terms of the outlook for 2026, the most recent survey that we did, showed either the same or moderate improvements in terms of the travel budgets for 2026. So I would say we're cautiously optimistic about a slight uptick in organic growth in 2026. We're also seeing a noticeable increase in the number of Meetings and Events. I know I've mentioned before, Lee, that that's an area of our business where we get a longer-term view given the booking patterns for Meetings and Events.

And in the last quarter, we've actually seen a double-digit increase in the number of forward bookings for Meetings and Events into 2026. So again, that's an encouraging sign as well. So we'll provide more details on the '26 outlook when we give formal guidance in February. But I would say that we are cautiously optimistic about a moderate improvement in organic growth in 2026.

Yes, on the SAP Concur partnership, I think I mentioned in my prepared remarks that 80% of the SAP customer base are actually SME customers and we have over 100 million users. And so with this new flagship solution that we are co-developing with SAP Concur, we will have the ability to market that solution into the SAP customer base, which obviously, as I said, a very, very large established SME customer base. So we do think that, that's going to really help us to accelerate SME growth.

And then secondly, Egencia has been our primary product for bringing customers in within the SME segment and also more specifically the unmanaged segment and the ability to integrate now Egencia into Concur Expense, so that it becomes a seamless all-in-one travel and expense solution for those 100 million users is also a significant step forward in terms of our value proposition in that segment. So both those developments should help us to accelerate our SME new wins in 2026 and beyond.

We now turn to Duane Pfennigwerth with Evercose ISI.

You touched on it with your comments just now. But can you comment maybe just on where we are in the underlying macro for business travel? We were having a pretty vigorous recovery in the U.S. off of the tariff shocks into the government shutdown. Now it appears the clouds are maybe parting on that front. How would you characterize business travel demand trends now versus maybe the lows of this year back in April or May, and I'm not sure if you agree with that as a trough period.

Yes. I think we said last quarter that we were expecting to see an improvement in demand into Q3, and that's frankly exactly what we saw. And you see that in the numbers that we've just shared. If you look at our sort of guide for Q4, we're also expecting to see some improvement in the organic growth rate into Q4. So I think what we signaled last quarter in terms of an improvement in the demand environment is exactly what we have seen.

Okay. Great. And then on CWT, obviously, you're acquiring customers, a deeper presence in some industries and a significant synergy opportunity. But I wonder if you could just remind us, is there anything on the technology front or on the software front where you feel like they may have had a relative advantage?

I think there are some areas of the business, particularly in the hotel space and also some of the traveler care, travel counselor tools that we are looking at that we think are interesting and that may help us to create more value for customers and also help us to improve productivity in our servicing teams.

But when you look at the software solutions, obviously, the main software solutions that we will be going to market with, will be the Egencia solution, which, of course, now will have full integration into SAP Concur Expense, the Neo suite of solutions and of course, now the flagship product that we are developing with SAP Concur, which is complete, which again will be an integrated travel and expense solution. So those will remain the 3 core software solutions in addition to, of course, third-party software that we integrate with as well.

And then just on Concur, I'll sneak one more in. Sorry about that. Just on Concur, obviously, you've worked with Concur for some time. Can you just maybe highlight what is different now about this partnership?

Yes, sure. So I think what's different about this is that we are now actually co-developing a new flagship solution that will lead the industry for travel and expense. We have teams that are working together to fully integrate the solutions. And that is going to mean improved content for customers. It's going to mean improved savings for customers, and it's without question, going to be an improved experience. We're bringing the expertise of both teams together in travel and expense to create a more integrated experience for the user. That experience will be AI-powered. It will be more integrated across travel and expense. There will be one app essentially for everything.

And there will be an improved [ UX and improved ] retailing experience for both travel and expense. So those are the key changes that customers can expect going forward on the Complete product. And then, of course, what's also new is Egencia will have that integration into Concur Expense.

Our Egencia customers really likes the user experience on Egencia, the content, the AI-powered experience. But some customers that are operating in that SAP environment want full integration into SAP Concur Expense, and that's what we're going to give them going forward.

We now turn to James Goodall with Rothschild and Co-Redburn.

So firstly, just coming back to the SAP Complete and Egencia T&E solutions. What are the key metrics or milestones that you'll be watching and hoping to achieve as these products roll out to the market?

I am sorry, would you repeat the question? I think we lost you at the beginning.

Sorry, sorry. So just coming back to the SAP Complete and Egencia T&E solution. What are the key metrics or milestones that you guys are going to be watching and hoping to achieve as these products roll out to the market?

Yes. I think what we're expecting, frankly, from the new strategic alliance with SAP is to accelerate our growth. And we're going to have a flagship product that gives us competitive advantage. And therefore, we're expecting that to accelerate the growth of our business. We're obviously going to be cross-selling both the Complete product and the Egencia product into the SAP customer base. So again, we'll be looking for increased growth.

We'll also be looking for improved customer retention because we're going to be able to deliver customers with a better experience. We're also going to be bringing more content to customers and more savings. So looking at the savings that we're delivering to customers as well, will be an important metric to track.

And then, of course, it tracks very much to the overall digitization of the business and continuing to increase the share of digital transactions, which we referenced in the presentation is now at 82%. And obviously, we expect that metric to continue to grow. And that ultimately feeds into improved gross margin and overall margin expansion for the business. So those are the key metrics that you should expect us to track and report.

Great. And then just secondly, just thinking about the synergy number of $155 million. I mean that number hasn't now changed for 2 years, I guess, since you first almost 2 years since you outlined the acquisition. But now that you've got a bit more under the numbers with CWT, I mean, do you see any potential for incremental synergies to be unlocked, whether that's incremental cost savings or revenue synergies as well?

Well, I think what we've been able to do really post close is to obviously pressure test that synergy number in more detail. And when you own and operate the business, you have the ability to do that. And so we now have just a very high confidence level of delivering that $155 million of synergies. That, just as a reminder, is 100% cost synergies. So that is a net cost synergy number.

There, of course, can be opportunities to increase revenues, and we're certainly looking to cross-sell our products and services into the CWT customer base, but we have not baked any of those revenue synergies into our business case or our outlook. But we absolutely have a very high confidence level on $155 million of synergies. And as Karen mentioned in her remarks, $55 million of that, we already have been able to identify an action. And of course, $100 million in additions still ahead of us.

[Operator Instructions]. We now turn to Stephen Ju with UBS.

So on the Egencia TTV disclosure, I think, trailing 12 months of about $8 billion, has this segment more or less recovered back to the pre-pandemic levels? And I think secondarily, at the same time, the $8 billion of TTV is on potentially an addressable market of $800 billion plus. I mean that's just 1% of the market. So availability of online and software solutions for travel is something that's probably not lost on anybody. So I mean, between Egencia and competitors, we're probably still at less than 10% penetration. So what do you think the unlock here is to get the SMBs onboarded and using Egencia?

Yes. Thanks, Stephen. Good question. And it's worth remembering that Egencia is a very important part of our SME segment, but our SME segment is approximately 50% of our overall SME volume. So our SME volumes are also on other solutions outside of Egencia.

But your point is absolutely correct. There is a significant runway for growth in the SME segment. The investments that we're making in Egencia to evolve that product into a travel and expense solution will obviously, I think, be an opportunity for us to accelerate growth in the SME segment.

If you look at the partnership that we just announced with SAP Concur, that gives us the ability to sell our solutions into that SAP customer base that I mentioned earlier. So we expect both of those developments to help us accelerate growth. But look, your point is absolutely valid. There is a huge opportunity to grow in what is still a very, very large and very fragmented segment.

Okay. And secondarily, I get that there's probably a relatively higher failure rate among SMEs, but has Egencia and indeed your entire portfolio now, has there been any signs that you've been able to hold on to some of these SMEs as they grow and continue to become bigger companies?

Yes, absolutely. You're right, there is more churn in the SME customer base. Our retention is around 94% in SME versus global multinational is around 98%, which obviously brings us to our average, which has been tracking around 95%, 96%. So you're always going to have more churn within the SME customer base. But our retention rates are very high. And I think what we did see at the back end of last year and the beginning of this year is we did see some softening in the organic performance, the same-store sales in SME. And I think it's been well documented that, that's driven primarily by macroeconomic conditions.

And I'm pleased to say that we have seen a steady improvement in that organic performance as we've gone through 2025. So again, we're cautiously optimistic about Q4 and into 2026, continuing to see an improvement in the organic performance, but also the investments we're making in our sales and marketing channels, plus the investments we're making in Complete and the investments in Egencia set us up to accelerate our growth in the SME segment.

We now turn to Toni Kaplan with Morgan Stanley.

And thanks for your comments on the AI stuff in the prepared remarks. We've been seeing some new platforms in the space. And we're wondering where do you see the place for sort of those platforms in the market versus -- and I know that you have AI embedded in yours as well. But do you expect that the AI platforms will be more sort of targeted in the SME part of the market? And what type of customer would benefit from using a platform that is like essentially AI forward versus Egencia, for example?

Well, I think what's really exciting about where we are now on AI and our digitization program is that we're seeing real results, both in terms of revenue performance and cost performance, and I referenced some of those results in my prepared remarks. We're seeing an impact to revenue and conversion through the AI-enabled features that we have in Egencia.

We're also seeing cost reduction from the AI solutions that we're implementing across our servicing channels. And so I think AI is very much a tailwind for us in both improving revenue and conversion, improving the customer experience and also taking cost out of the business. And as I said, I think we are starting to see results and real P&L impact on both fronts.

In terms of how the broader competitive environment is going to evolve, we are already developing our own Agentic AI capabilities and also working with third-party Agentic solutions, and what we're seeing is that Agentic AI is definitely going to start to become an important channel. But it's going to be one of, I think, many channels that customers use, and they're going to want Agentic AI to be integrated into whether it's chat, whether it's voice and all of the other channels that those customers use to interact with us. And it's going to be important for all of those channels to make sure that they are connected up to the same marketplace and the same content, the same traveler data and traveler preferences, the same company data and company policy data.

And what we're finding is that the fact that we essentially orchestrate all of that end-to-end, and we are the ones that actually hold and manage all of that data that it's actually our technology stack and data that is incredibly important in order to actually make that Agentic experience work, whether it's our Agentic AI experience or third-party Agentic AI.

So I think you're going to see it grow as a channel. I think you're going to see many different versions of Agentic AI that are powering that channel. But I think you're going to see that effectively all integrate into the technology stack and data that we have, so that customers have a fully integrated and entirely consistent experience across all channels.

Great. And just thinking about -- you shared preliminary expectations for 2026. The adjusted EBITDA growth there, are you embedding cost savings from AI in that number? And could you actually do better than that? It's a nice number, but can you do better than that if you are able to find even more AI efficiencies next year?

So thanks for the question, Toni. We've given the preliminary expectations based upon what we see today. And there is margin improvement along with obviously then the synergies embedded in them that we've mentioned from a CWT perspective. So it is based upon everything that we feel confident about at this point.

This concludes our Q&A. I'll now hand back to Paul Abbott for any final remarks.

Well, look, thank you very much to everyone. Before closing, I do want to thank our team for their tremendous commitment to our customers and the strong results that they have delivered throughout this year and including the third quarter. Thank you to all of you for joining us today and your continued interest in American Express Global Business Travel. Thank you, everyone.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.