This update is for the three months to September 2023.
Corporate Travel share price falls following FY24 first quarter update
At the 2023 Morgans conference, the business gave a market update, revealing its growth compared to the first quarter of FY23:
- Revenue and other income rose 36% to $187.9 million
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 157.3% to $56.6 million
- EBITDA margin improved to 30.1%, up from 15.9%
With each of these financial metrics, the company said it's on track to meet market analyst consensus.
Corporate Travel said that it's "off to a great start" for FY24 thanks to new client win momentum in FY23. In the first quarter of FY24, it has won $0.35 billion of new clients, including verbal wins. Activity for large clients in North America, ANZ and the EU is "gradually improving" – this segment had been a "recovery laggard".
The incremental revenue to profit conversion is "going to plan" – it's delivering profit acceleration as revenue increases.
In terms of automation and artificial intelligence (AI), the company said that projects are "well underway" and expected to have a positive productivity impact for many years.
The ASX travel share noted that the first quarter is historically a soft quarter because of the northern hemisphere summer holiday season. The first-half profit skew is now expected to be stronger than the 1/3 skew originally forecast.
Seeing as it was presenting at the Morgans conference, the company outlined some investment thesis points.
It pointed out the strong growth it has achieved since its initial public offering (IPO) in 2010. The company said capital management is actively being discussed, and it's paying dividends of around 50% of net profit after tax (NPAT). Its balance sheet is reportedly in "strong" shape, with no debt.
Corporate Travel Management said it's targeting mid-teen earnings per share (EPS) compound annual growth rate (CAGR) "beyond FY25". The global corporate travel market is estimated to grow at 7.9% per annum between FY23 to FY26.
In FY24, the company is expecting every one of its operating geographic regions to surpass the annual total transaction value. Its 5,700 clients are expected to make over 17 million transactions in FY24. Around 40% of its client base are government and 'essential travel' clients.
Corporate Travel Management share price
Over the past year, the ASX travel share is down 3%.