Amadeus (OTC) ((AMADY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Amadeus (OTC) recently held its earnings call, revealing a generally positive sentiment driven by robust revenue and profit growth. The company showcased strong performances in key segments and highlighted successful strategies involving NDC and AI. However, challenges such as volume performance, exchange rate impacts, and increased costs, particularly in North America, were also discussed.
Strong Revenue and Profit Growth
Amadeus reported a significant increase in its financial metrics, with group revenue up by 9% and both operating income and adjusted operating income rising by 10%. The company’s profit and adjusted profit saw growth of 13% and 12%, respectively, underscoring its solid financial performance.
Positive Performance in Key Segments
The company experienced notable growth across its segments, with Air Distribution revenue increasing by 8%, Air IT Solutions revenue by 11%, and Hospitality & Other Solutions revenue also up by 11%. This performance highlights Amadeus’s strength in its core business areas.
Successful NDC Strategy
Amadeus’s strategic focus on NDC technology paid off with the signing of 70 agreements with airlines, including major players like Emirates and Etihad. This positions the company as a leader in NDC technology, enhancing its competitive edge.
AI and Cloud Integration
The integration of AI and cloud technology is progressing well, with over 70% of applications now activated in the public cloud. Full migration is expected by early 2026, which will further streamline operations and improve efficiency.
Free Cash Flow Generation
The company generated €262 million in free cash flow during the first quarter, demonstrating its strong cash generation capabilities and financial health.
Slight Decline in Volume Performance
Despite the overall positive results, volume performance was softer than expected, with bookings growing by only 2.5%. This was attributed to external factors such as severe weather and geopolitical events.
Impact of USD/EUR Exchange Rate
The volatility in the USD/EUR exchange rate is anticipated to negatively impact Amadeus’s performance starting in Q2, posing a challenge to its financial outlook.
Challenges in North American Market
Amadeus faced challenges in the North American market, where booking growth was affected by U.S. domestic events and a less robust market performance.
Increase in Fixed Costs
Fixed costs rose by 12.4%, driven by increased investments in resources, particularly in R&D, and higher cloud-related expenses, which could impact short-term profitability.
CapEx Increase
Capital expenditures increased by 30.9% to support strategic initiatives, potentially affecting short-term cash flow but positioning the company for future growth.
Forward-Looking Guidance
Amadeus maintained its fiscal year 2025 outlook, projecting group revenue growth of 7.4% to 11.4% and EBITDA growth of 5.7% to 11%, excluding foreign exchange effects. The company remains focused on becoming the leading aggregator of NDC content, despite macroeconomic uncertainties.
In conclusion, Amadeus’s earnings call reflected a positive sentiment with strong revenue and profit growth, driven by strategic initiatives in NDC and AI. While challenges such as exchange rate impacts and increased costs were noted, the company’s forward-looking guidance remains optimistic, projecting continued growth across its segments.