Amadeus (OTC) ((AMADY)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Amadeus (OTC) painted a broadly positive picture, highlighting robust financial performance and strategic advancements, particularly in cloud and AI technologies. Despite these successes, challenges such as booking growth and increased costs associated with cloud transformation were noted. Overall, the sentiment was optimistic, with strong forward guidance, though certain areas require attention.
Strong Financial Performance
Amadeus reported impressive financial results for fiscal year 2024, with revenues growing by 13%, EBITDA increasing by 13%, operating income expanding by 18%, and adjusted profit rising by 20%. These figures underscore the company’s robust growth trajectory and operational efficiency.
Air Distribution Growth
The air distribution segment saw an 11% growth, with an accelerated revenue increase of 14% in the fourth quarter. Bookings processed experienced a year-on-year growth of 9%, reflecting strong demand and market presence.
Air IT Solutions Success
Revenue from Air IT Solutions grew by 16% in 2024, supported by air traffic growth and new customer implementations. Notably, Air France KLM joined the ranks of British Airways, Saudi, and Finnair in contracting Amadeus Neveo, showcasing the segment’s expanding influence.
Hospitality and Other Solutions Expansion
The hospitality and other solutions segment reported a 12% revenue increase, highlighted by significant deployments such as MGM Resorts International completing the deployment of ACRS, indicating a solid expansion in this area.
Cloud Transformation Progress
Amadeus has made significant strides in its cloud transformation, with 60% of applications now activated in the public cloud. The company aims to complete this transition by early 2026, focusing on AI and machine learning to enhance user experience and operations.
Share Repurchase Program
The Board of Directors has approved a share repurchase program, with a maximum investment of $1.3 billion over the next 12 months, reflecting confidence in the company’s financial health and future prospects.
Challenges in Booking Growth
Despite a 4.7% growth in bookings in 2024, geopolitical events and cancellations impacted this figure, with a normalized estimate suggesting a potential 7.9% growth, highlighting areas for improvement.
Hospitality Segment Slower Growth
The hospitality segment’s revenue growth lagged slightly behind expectations due to seasonality and delays in payment re-acceleration in certain regions, indicating challenges that need to be addressed.
Impact of Cloud Transformation Costs
Higher costs associated with cloud transaction processing and migration have affected fixed cost growth and EBITDA margins, presenting a financial challenge as the company transitions to cloud-based operations.
Forward-Looking Guidance
Looking ahead, Amadeus projects group revenue growth of 9% to 13% for 2025, with EBITDA growth expected between 7% and 12%. The company anticipates generating between $1.27 billion and $1.35 billion in free cash flow, signaling confidence in continued financial strength and strategic execution.
In summary, Amadeus’s earnings call conveyed a positive outlook with strong financial performance and strategic advancements, particularly in cloud technology. While challenges remain, particularly in booking growth and cloud transformation costs, the company is well-positioned for future growth, as reflected in its optimistic forward guidance.