Amadeus IT Group, S.A. (AMS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Amadeus Full Year 2024 Results Conference Call. [Operator Instructions] This call is being recorded on Friday, February 28, 2025. I would now like to turn the conference over to Mr. Luis Maroto, President and CEO of Amadeus.

Good afternoon. Welcome to our '24 full year results presentation, and thank you for joining us today. Our business heads, Decius and Paco are also participating today, and they will cover our business of Amadeus. I will first recap on '24 and later, I will review our financial performance and our expectations for '25. Before we get started, as you may know, we recently announced that Carol Borg has been appointed CFO at Amadeus. Carol will start on May 5, and she brings over 30 years' of experience in finance and has held executive roles in various industries. I'm confident Carol will have a good fit with the team and that she will bring great value to our evolution in the coming years. Please turn to Slide 4 to recap on '24. We continued evolving strongly through the fourth quarter, closing the year with solid results, delivering double-digit growth and expanding profitability. '24 was a highly productive year for Amadeus in which we successfully delivered on our outlook and commitments. On full year, revenues grew by 13%, EBITDA increased by 13%, operating income expanded 18%, adjusted profit grew by 20%. Free cash flow generation expanded to EUR 1.3 billion, growing 16% versus prior year. And we finished the year with leverage of 0.9x EBITDA. We saw a strong performance across our reported segments. Air Distribution grew by 11% in the year. In the fourth quarter, air distribution revenue growth accelerated, expanding a remarkable 14% year-on-year. Bookings processed through the Amadeus Travel platform in the fourth quarter experienced year-on-year growth of 9% and revenue per booking also advanced in the quarter to close to 5%. Airlines continue to sign NDC distribution agreements with Amadeus to distribute their NDC content through the Amadeus Travel platform. We aim to become the undisputed aggregator of NDC content. We believe Amadeus has the most advanced and comprehensive NDC technology in the industry. Our Air IT Solutions revenue grew by 16% in '24, supported by air traffic growth and the positive impact from new customer implementations over '23 and '24. We're pleased to announce that Air France-KLM has contracted for Amadeus Nevio. With Amadeus Nevio, Amadeus is leading the way for the retailing transformation of the airline industry. Air France-KLM follows British Airways, Saudi and Finnair, who have already contracted for Nevio. Amadeus also aims to become the IT provider of reference for the hospitality industry. We are uniquely placed to address industry needs and expand in a large and growing market. In '24, our hospitality and other solutions revenue increased by 12%. MGM Resorts International has now completed the deployment of ACRS, our next-generation central reservation system for the industry. We are also advancing well on the implementation of Marriott International and Accor to our platform. Amadeus is creating a global community of world-leading hotels on a mission to transform relationships with guests. We remain highly focused on investing for the future. We are undertaking one of the largest and most complex cloud transformations to further unlock flexibility, scalability, speed and innovation. 60% of our applications are now activated in the public cloud, and we aim to complete this transformation by early '26. We are harnessing the power of AI, data and modern technologies with best-in-class partners. At Amadeus, we have a long history with AI. Our journey began with operations research, machine learning and deep learning, revolutionizing essential functions like flight scheduling and search, airport resource management, passenger disruption handling and revenue management systems. Today, AI and machine learning are key to improving user experience, predicting travel trends, personalizing customer journeys and optimizing operations. Amadeus leverages these technologies and generative AI brings even greater potential, especially with the rise of Generative AI. We have integrated GenAI in our platform, offering our customers a solid path to deploying AI solutions, and we aim to power the largest, most vibrant ecosystem of open, connected and flexible travel solutions in travel. Finally, we are pleased to announce that the Board of Amadeus has agreed to launch a share repurchase program in due course for a maximum investment amount of EUR 1.3 billion to be executed over the next 12 months. The program follows our previous share repurchase programs over '23 and '24 aimed at addressing the conversion of our convertible bond coming to term in April '25. Amadeus also raised capital through the issue of new shares in 2020. We now aim to repurchase and redeem a large part of the shares then issued. Let me pass now on to Decius and Paco, who will run us through the key developments at each of our reported segments.

Thanks, Luis. Hello, everyone. This is Decius. Let me start by saying that 2024 has been a highly successful year for Air Distribution. We grew 11% in revenue and 13% in contribution. We have delivered on our goals and expectations, and we are very optimistic about 2025 and beyond. Our aim is to continue to strengthen our position as the leading enabler of airline distribution, and this includes on NDC. On NDC, as Luis was saying, we are advancing steadily. We are aggregating more and more NDC content from full-service carriers and low-cost carriers onto the Amadeus travel platform. This quarter -- last quarter, I'm sorry, Q4, we have signed LATAM Airlines and Saudia, and we have now over 70 NDC agreements with all types of airlines. We have implemented 31, and we are working hard to grow this number during 2025. As Amadeus expands its NDC content offering, we'll be capturing more and more NDC bookings in the future. Also, the vast majority of our travel agencies have now access and can service NDC content available through our platform. The overall adoption pace of NDC on our platform will progress gradually. Adoption is growing in all regions and across all types of travel sellers, including the corporate world. We also believe that as we see Nevio grow and expand, bringing its advanced dynamic pricing capabilities, it will further promote the adoption and the value of NDC distribution. Now let's review our volume performance. Amadeus bookings grew 4.7% in 2024, supported by air traffic growth and Amadeus commercial gains in many parts of the world. Although our bookings growth in [indiscernible] was impacted in the first 9 months of the year, if we exclude this effect and also if we exclude the positive effect from the booking cancellation spike caused by geopolitics in the Middle East, in Q4 2023, we estimate our booking growth in 2024 at 7.9% versus prior year. In Q4, the bookings processed through the Amadeus travel platform increased by 9% over prior year. We saw an acceleration in many regions, in particular, in the Americas and Asia Pacific, supported by air traffic growth and Amadeus commercial gains. Excluding again the cancellation spike last year in Q4 2023, which enhanced our performance versus Q4 2024, Amadeus booking growth is estimated at 7% in Q4 versus prior year. So with that, let's please turn to Slide 6, and now we're going to review Airline IT Solutions. Air IT Solutions also had a strong 2024 with revenue growing by 16% in the year. Our positive performance was the result of the growth in our passengers boarded, coupled with an expanding revenue per passenger boarded as well as our growth in airport IT. Our passengers boarded increased by 11% in 2024, driven by global air traffic growth and the positive impact from new customers implementations we performed in '23 and '24. Through the year, we continue upselling airline IT solutions to customers such as Cathay, Aegean, Icelandair as well as increasing our airport IT customer base through the year, including Kansai Airports, Navi Mumbai, Huntsville and Montgomery Regional Airport in Q4. Nevio, as you know, it is our new modular airline IT portfolio built on cloud technology and AI meant to unlock the benefits of modern airline retailing. We are pleased that Air France-KLM has signed for Nevio, making it our fourth customer and advancing the pace of the industry evolution to a customer-centric retailing. Nevio will support Air France-KLM in its ambition to modernize its systems and to move to a modern offer order native system. It will elevate the customer experience by allowing customers to track all travel details in one accessible order to receive more personalized offers and to do more self-service. We're working hard, and we're looking forward to further expanding our Nevio customer base. I'll now pass on to Paco.

Thank you, Decius. Good afternoon. This is Paco. I'm pleased to be here. As Luis was saying, we are uniquely placed to support the hospitality industry in transforming relationships with guests, and we are actively expanding our footprint. In 2024, Hospitality and Other Solutions revenue grew by 12%, supported by new customer implementations and volume expansion. And the Host segment's contribution grew by 15%. We continued to add customers across our hospitality portfolio through Q4. We cross-sold hospitality solutions to several airlines such as Iberia, Vueling and Air Europa and established new partnerships such as with Salesforce for our new hotel-oriented service and call center. We were pleased to announce that MGM Resorts International has completed the deployment of our next-generation central reservation system, allowing MGM to benefit from highly advanced distribution capabilities and enhanced operational performance. ACRS also offers a differentiated attribute-based selling technology, which transforms the way hotels can provide personalized merchandising to their guests, empowering hotels to increase revenues, elevate the guest experience and improve operational efficiency. Being cloud native, ACRS ensures ultra-high availability and ultra-fast response times. Its architecture provides a single source of truth and its scalability allows us to support any hotelier's growth ambitions. By working closely with MGM, we have also tailored the ACRS platform to address specific needs and goals of MGM, developing several innovative ACRS capabilities. This, in turn, strengthens our community model as it will benefit all our customers and it has made our technology more relevant to a broader customer base, including sophisticated resort properties and midsized hotels. We look forward to further exploring new customer opportunities in these expanded segments as well. Thank you, and I will now hand back to Luis.

Thank you, Paco. So turn please to Slide 9 to review our revenue evolution. So group revenue grew 12.9%, supported by double-digit growth across all our segments. Air Distribution, the net revenue was growing almost 11%, primarily driven by booking evolution, we described by revenue per booking growth of 6%, driven by positive pricing effects, including from inflation, yearly price adjustments, contract renewals and new agreements and a positive booking mix effect compared to prior year. Air IT Solutions revenue grew by 16%, driven by PB volumes evolution discussed and a 4.4% higher revenue per booking, which primarily resulted from positive impacts from inflationary or price adjustments and upselling of incremental solutions as well as fast growth of our airline expert services business and growth in airport IT revenues, including Vision-Box' revenues. Regarding hospitality and other solutions, as Paco described before, revenue was 12.3% above prior year, driven by strong performances of both hospitality and payments. In hospitality, our fastest-growing business were our transactional businesses, driven by volume expansion supported by customer implementations. On Slide 10 for a review of our contribution by segment and evolution of net indirect costs in '24 versus '23. Air Distribution contribution grew by 12.5% and the margin expanded by 0.7 percentage points in '24 to 47.3%, sorry. The cost increase we had in Air Distribution came from higher variable costs driven by the bookings evolution and an increase in our average unitary distribution cost impacted by customer and country mix. And we also had increased R&D primarily dedicated to our NDC technology and solutions for corporations as well as to customer implementations. In IT Solutions, the segment contribution increased by 14.6%, and the contribution margin was 70.9% in '24. Excluding the Vision-Box acquisition, Air IT Solutions contribution margin expanded by 0.6 percentage points in the year. The cost evolution in IT Solutions was driven by R&D focused on the enhancement of our portfolio for airlines and airports, customer implementations and our fast-growing airline expert services business and variable cost growth largely driven by the expansion in airline IT and the consolidation of Vision Box. Regarding Hospitality and Other Solutions, the segment contribution in '24 grew by 15.4% and the margin expanded by 0.9 percentage points to 34.5%. Cost advanced in '24 from higher variable costs, primarily driven by a higher number of hospitality transactions as well as the expansion of our payment B2B wallet solution, the consolidation of Voxel and an increase in fixed costs resulting mostly from R&D dedicated to the evolution of our hospitality and payment solutions portfolio and to customer implementations to support the business expansion. Finally, net indirect costs were 15.3% higher in '24, mainly resulting from an increase in cloud transaction processing and migration costs as a result of our volume growth and our progressive shift to the cloud as well as, to a lesser extent, increased resources in transversal functions and unitary personnel cost increase. We talk about the EBITDA, EBIT and profit evolution in Slide 11. In '24, our EBITDA grew 13.2% versus prior year, resulting from the 12.9% revenue evolution discussed and cost of revenue growth of 13.8%, which primarily resulted from variable cost growth in air distribution, driven by the booking growth and higher unitary distribution costs, variable cost growth in hospitality through higher volumes in media and distribution, among others and also in payments due to the B2B wallet expansion as well as from our growth in airport IT, including the Vision-Box acquisition consolidation. We also had P&L fixed cost growth of 11.9%, mostly driven by an increase in resources, particularly in our development activity, coupled with a higher unitary costs, higher cloud costs and the M&A consolidation impact. As a result of these dynamics, our EBITDA margin was 38% in '24, slightly above '23. Below the EBITDA line, D&A expense increased by 2.9%, mainly derived from higher amortization and internally developed assets, partly offset by a lower depreciation expense. The increase in EBITDA, coupled with our D&A expense evolution drove EBIT up by 18% and EBIT margin expanded by 1.2 percentage points to 26.6%. Finally, adjusted profit grew by 19.9% as a result of our EBIT growth and the higher net financial expenses and taxes we have cut relative to prior year. Page 12 for a review of our free cash flow generation and CapEx. In '24, we generated EUR 1.335 billion of free cash flow, representing a 15.9% increase over prior year. Free cash flow growth mainly resulted from the increase in EBITDA and an improved change in working capital inflow and growth in CapEx. Year-on-year growth was enhanced by net positive nonrecurring effects, both in '24 and '23. These were collections stemming from the positive resolution of tax proceeding of EUR 43 million in '23, EUR 45 million in '24, a refund related to taxes from previous years that we received in the last quarter of '24 amounted to EUR 71 million and a payment to a distributor of EUR 11 million we made in '23. Excluding these effects, free cash flow increased by 8.8% year-on-year. In '24, our CapEx increased EUR 173 million or by 28.9% and represented 12.5% of revenue. CapEx growth came primarily from software capitalizations, which in the year mainly focused on customer implementations across our businesses such as Marriott, Accor and MGM for ACRS, Nevio customers and across our IT portfolio as well as customers implementing NDC technology. Also the evolution of our portfolio, including Amadeus Nevio and Navitaire Stratos for airlines, hospitality platform, NDC technology for airlines, travel sellers and corporations and our migration to the cloud and our partnership with Microsoft. Please turn to Slide 14 to cover our expectations for '25. Our 2025 outlook consists of the following: our group revenue in '25 should be between EUR 6.69 billion and EUR 6.94 billion, which implies a growth range of 9% to 13%, supported by strong evolution at all our segments. I will describe our expectations for our segment's performance in the next slide. Our EBITDA in '25 should be between EUR 2.49 billion and EUR 2.61 billion, which implies a growth range of 7% to 12%. We expect some fixed cost growth moderation in '25 versus '24, but we will see this more evidently next year in '26 versus '25. In '25, we will advance at a fast pace with our cloud transformation. 60% of our applications are activated in the public cloud today, and we are aiming to raise this gradually to 100% by early '26. As a result of this, our cloud transaction processing costs are still outpacing our business evolution. We also have nonrecurring costs associated to our cloud transformation as we are sustaining at the same time, our own infrastructure and the project cost to migrate. All these elements increase our fixed cost growth in '25. In '26, we will complete our cloud transformation project and require less costs and thus, we expect a moderation in fixed cost growth. In '25, we expect mid-single-digit depreciation and amortization growth. Therefore, EBIT growth should -- will outperform EBITDA growth. With regards to free cash flow, we expect to generate around EUR 1.27 billion to EUR 1.35 billion in '25 on the back of growing EBITDA and increased CapEx and cash taxes. CapEx as a percentage of sales in '25 will be similar to '24, although likely below. Note, we expect free cash flow in the first quarter of '25 to be below free cash flow in quarter 1 last year due to higher capital expenditure, which increased quarter-on-quarter throughout '25 and due also to higher cash taxes. This is our outlook for '25, our strong evolution in '24 and the continued good expectations we have for '25 puts us well on track to achieve the 3-year outlook we provided you with at our '24 Amadeus Investor Day. Let me finish with some color on our generally expected dynamics at segment level. You see that on Slide 15. As you know, global traffic growth is expected to be slower in '25 than in '24 as it continues to normalize. In Air Distribution, we believe our revenues in '25 could grow 8% to 11%, backed by Amadeus booking growth, supported by global traffic growth and Amadeus commercial gains together coupled with an expanding unitary revenue, supported by positive pricing effects. In terms of contribution in '25, we could see a small margin expansion in the air distribution contribution margin. Note, our booking performance year-to-date in quarter 1 has been softer than in the quarter 4 last year, impacted by an increase in cancellation post the aircraft incidents in NORAM and APAC and the weather disruptions in the U.S. These effects, together combined with the ongoing gradual normalization in traffic growth and a negative working worthy effect will impact our booking growth in the first quarter, but we expect to be lower than prior quarter. In Air IT Solutions, we should see revenues growing between 10% to 14% based on a PB evolution that will be driven by global air traffic growth, coupled with an increase in revenue per PB, supported by positive pricing effects, continued upselling as well as higher Airline Expert services and airport IT revenues. In terms of contribution, we expect the Air IT Solutions contribution margin to be dilutive versus prior year, impacted by business mix from faster growth airline Expert Services and Airport IT as well as still some consolidation impact from our Vision-Box acquisition. For the whole segment, we are expecting revenue growth to accelerate throughout the year and to deliver between 12% and 18% growth, supported by volume expansion and new customer additions across our hospitality and payments portfolios as well as for contribution margin to expand relative to prior year. Regards to our potential '23 to '26 year evolution, given the slower growth than expected that we are currently generating in payments, we see Hospitality and Other Solutions revenue CAGR coming out closer to the lower end of our 15% to 18% range. Thank you. With this, we have finished the presentation and are ready to take any questions you may have.

[Operator Instructions] Your first question comes from the line of Alex Irving from Bernstein.

Two from me, please, both on order management. So it seems we're starting to get some momentum on signings here for the OMS. Can you please share any details on how the commercial model is evolving and how you think revenue per passenger boarded, therefore, evolves over the medium term? Second question also on the OMS. There's a few airlines, notably 4 big network carriers that still haven't outsourced their PSS. How likely do you think it is that some of these begin to outsource the OMS as the migration continues industry-wide?

This is Decius. So let's start with the first question around the momentum, let's call it this way, on revenue management and other solutions. I think we're making lots of progress. We have some Tier 1 airlines that are adopting the system, giving us very good feedback about let's say, increase in top revenue, thanks to the solution. So the effect on our average PB fee, I think it has been already mentioned within the guidance, which is as we move forward, we expect both expansion in terms of growth in PB numbers as well as on the average per PB as the new modules are added to the PB fee. On the second question around airlines that haven't outsourced yet their PSS solutions into the move to offer an order. We are optimistic. We feel that there is a number of tech trends that are happening that airlines need to invest in cloud, in AI and revamping their applications. We believe that every airline will have limited resources in order to do all of those investments. And then one module or another, we feel that, that is always an opportunity for them to outsource because not all modules are critical. And now with the cloud and our modular approach, we believe that we have a lot of flexibility. So far, we don't have anything more concrete than that, but we are optimistic.

And your next question comes from the line of Sven Merkt from Barclays.

Congratulations on the strong quarter. Maybe first a question on Air Distribution that has been very strong and you have a strong outlook. Can you just provide us a little bit more color what underpins the strong booking growth? Any specific regions, type of bookings, type of airlines that drive that? And how do the NDC agreements that you're in the process of implementing impacting that booking growth? Is it more that they drive just a like-for-like replacement of the EDIFACT booking? Or are you adding any kind of incremental booking as well? And then maybe secondly, it would be also great if you could give us a bit more color on the end of the cloud transition. I hear that it will slow down the fixed cost growth but how much of the cost savings that you have overall will drive that lower fixed growth versus the proportion that you're reinvesting?

Okay. Let me take -- so in the guidance of distribution, we have taken both effects I already mentioned, the increase in bookings, which, of course, includes the evolution of NDC and will keep growing next year. This is part of our assumption. And then the fact that there will be an increase in the booking fee. Of course, again, in terms of concrete numbers, I mean, we need to see how things evolve and how the evolution of the traffic is evolving. I mean we expect more and more normalization in the volumes, as we have already mentioned because the expectation of passengers. And you know what IATA has issued in terms of estimation for the full year is coming back to more normality to more pre-COVID figures. So we have taken that as a starting point to make our assumptions. But both our bookings and our booking fee are expected to grow. Then we will need to see the mix. We have taken our own assumption of the evolution of NDC bookings, which is included in the guidance. And with that, we are confident about the range of revenues that we have provided that assume both growth in bookings and in booking fee there. With regards to the fixed costs, again, we already mentioned the fact that we expect a lower growth of our fixed cost during the last years, we have had an impact of both the increase in the cloud payments to the public cloud providers as well as the investments we have done to really migrate to the cloud. Of course, the cloud costs will still be there, and we are in the ramping up and still -- in '26, there will be some ramp-up because, as I mentioned, we are at 60% at this moment, and we plan to go to the 100% at the beginning of next year. But in terms of all the costs related to the migration and the duplication of costs that we have, we should optimize that next year. And therefore, our cost should grow less than what we are assuming this year.

And your next question comes from the line of Adam Wood from Morgan Stanley.

It's actually from [ Laura Mittal, ] but I'm also from Morgan Stanley. Can you hear me?

Yes.

Okay. Two questions, please. The first one is, at the CMD, you talked about the opportunity to potentially reintermediate some GDS bookings. Could you please give us an update on how you're doing on this and if you're still hoping that you can reintermediate some bookings? And then second question, please, on the potential uplift from Nevio. As you're signing more and more customers, do you have a sense of the pricing uplift from Nevio versus the other Amadeus systems?

Okay. Let me start with the second one which is once we move from PSS to Nevio, we're not discussing the same scope. Nevio has a much broader scope than what is the PSS. So it is difficult for us to do the comparison of a customer that used the PSS versus a customer using to Nevio, what is going to be the exact difference in terms of PB. So what we have guided has been that we believe that in all of these transitions, we're going to increase in scope. And by increasing scope, we're going to be able to increase the average fee that we charge the customer because we are picking up more modules. There is a reference of T2RL where it talks about on similar scope, what could be that difference, and they guide a difference in the teens in terms of positive moving for offer an order. But again, I think this is a public reference, just to give an idea. But I think for us, it really depends on the scope of each of the customers. Regarding reintermediation. So I think that when we provided our guidance at Investor Day, we said that reintermediation was an upside opportunity, but it has never meant or has been part of what is our guidance for overall results in distribution, okay? Nonetheless, what we have seen is more new content being the driver now of growth, where we see carriers that were not participating that they now decide to participate. We have a couple of public announcements where we have IndiGo, who will be joining the system and distributing. We had the announcement of Southwest and Expedia that are now going to be distributing through the GDS. So we see positive momentum on the new content part. Now regarding the reintermediation, we're having lots of conversations. We expect that eventually this is going to be brought into the fold as well. And whenever we have that ready, we'll share with all of you.

And your next question comes from the line of Christopher Wang from UBS.

Yes. It's Michael. Sorry, I had some problems getting on. Just I think on last quarter, Luis, you gave us some indication of the proportion of bookings on the GDS channel that were NDC for the airlines that have been onboarded, I think it was teens. Could you give an update on that? I'm curious you've signed, I think, 70 deals nearly in the year, on distribution. Are most airlines now including an NDC element to that? Or are you still seeing quite a few of them prefer to keep their NDC bookings in alternative channel? And then just continuing on the GDS business. I think your main listed competitor talked about winning some market share and some quite high-profile travel agents. Can you confirm if you've lost any sort of important agents in 2024?

Okay. This is Decius. Let me start with the commercial and market share element, which is the easiest. I mean, we're making progress in terms of winning more customers, both in North America and Asia Pacific. So I would say from our point of view, we don't see any meaningful or significant customer moving away from our customer base. In terms of the NDC evolution, that is one thing that we said that will evolve gradually. It's going to be in the teens for quite a while. Why is that? As we have mentioned, we have 70 NDC-specific agreements. So when we talk about agreements with airlines, we have over 400 agreements that are specifically doing NDC 70, which covers a very large base of the seats that we have and the NDC offer in general. So we have 31 of those 70 implemented. So this means that we are on the teams with the 31 that we have implemented. But every other month, we are adding airlines. So as an example, we are now adding Emirates. So it's like when I add Emirates to the base, it means that it's going to be difficult for us on the percentage-wise to progress in terms of adoption because Emirates starts from a low adoption point. So that's what we are meaning that in absolute terms, we have NDC bookings growing in triple digits. But in terms of percentage, it's going to take a while and gradually evolve for this to be, let's say, above the teens until we have those 70 carriers implemented. We have so far for a few years, implemented 31, and we believe that it's going to take at least another couple of years for us to get to all of these 70 implemented. So adoption will be gradual.

But do airlines say -- come up for renewal and say, well, I'm going to do a contract with you, but I just want to interact with you because I'm choosing Direct Connect for NDC? Or are those airlines that don't do an NDC contract with you just not using NDC?

I would say the only major airline that we have today that does not have NDC with us is Turkish Airlines. I would say every other major airline that has signed with us does both, those effects and NDC. But you still have a large number of carriers that do not have an NDC program because NDC is typically for a large airline.

Understood. And the commercial terms are the same for both? Or do you see a recognizable difference in pricing or cost?

As we discussed, our pricing, it is much more related to the reach rather than to the technology. So it means -- and we have a wide range of business models with many carriers, so what we try to provide you is with an average of all of that in the guidance. So we see positive evolution, which what we're saying is we see positive mix both in terms of reach and in terms of richness and the deals. So I think we remain confident on the relevance of the channel moving forward.

And your next question comes from the line of Victor Cheng from Bank of America.

Congrats on the quarter. Three questions, if I may. First, on distribution, you guided 8% to 11% revenue growth. And I think I had mentioned roughly 6% volumes growth. And you alluded earlier, it will be a mix of volumes and revenue per booking growth. But I guess -- I guess it still implies a pretty decent kind of revenue per booking growth. So my question is sort of we continue to see revenue per booking probably growing relatively strong into '25. How sustainable is that going forward? And what do you see are the key drivers to that? And then my second question is on payments. I think previously, you talked about reacceleration in '25. I think in Q4, it was maybe a bit slower than expected. Do you still see that happening? Is it more H2 biased? And then thirdly, on -- well, certainly, I would say, maybe some of the -- well, the 2 largest OTAs in U.S. have been expanding their B2B services, maybe a bit more focus on hotels right now. But do you see any risk of them kind of overlapping in your space, either in hospitality distribution or maybe over time in airlines as well?

Okay. Let me start with the first one, and Decius can provide you more color about payments and the business. I mean, yes, you're right. I mean we are assuming the booking fee growth will still be here in '25. And this is a result of the mix, the ongoing negotiations, the renewals that -- we are having where we discuss EDIFACT and NDC bookings, the mix. And as we have done in '24, we feel we have the capability to really continue working the same way and having a positive impact in '25. Therefore, yes, there is an assumption that the booking fee will increase in '25 and will be doing well. And again, we are talking about a globality of the market. So different deals, different agreements overall between some of our price increases that we apply, the mix that we are getting from bookings also from different kind of NDC versus EDIFACT and the fact that you have global versus regional and local, putting all together, we are reaching the final figures that brings us to this revenue growth. Of course, at the end of the day, I mean, as you can imagine, things may evolve in terms of bookings, booking fee, mix but we feel confident that the mix of both concepts, booking fee and bookings are going to bring us to the revenue range that we have provided you. With respect to payments, if you can provide a bit more color, Decius?

Yes. Just I will start with the OTA question, the B2B question, which is we see the OTAs moving into B2B space as partners because they continue sourcing content from us and they consume more technology when they go into those spaces. So typically, what they're doing is that they are powering brands and what they're doing is they're doing customizations, they're doing biasing, they are doing servicing. So I think this has been very common, specifically with banks and loyalty schemes where usually you have an agency behind. The difference is maybe in the past, that agency was an offline agency, and now we're talking about an OTA because everything has moved to digital, but we see that as positive, okay? And it is not a competition. It's a partnership. In regards to payments, we have 3 areas of expansion. Our business is growing well and mostly in Europe. So we see 2 regions that we can expand geographically. One is Asia Pacific. The other one is the Americas. And we have as well in Europe, the possibility now of doing self-issuing, which will bring us flexibility and better take rates, let's call it this way, on all of the business that we have in Europe. So I think these are the 3 projects that we are delayed and we are picking up. So we see evolution, and we're going to see evolution of payments during the 2025. It is hard for me to precise when exactly everything is going to put -- be on the P&L and on the numbers. But we continue onboarding customers on both regions, North America and Asia Pacific. We are doing the integration with the partners. We are making progress on our self-issuing. So I think payments will be providing during 2025, good news. And we have a little bit of delay, but things are coming and growth is going to pick up.

And your next question comes from the line of Charles Brennan from Jefferies.

Could I just ask on hospitality as well, particularly on the FX side, I think there's FX tailwind in Q4 relative to a headwind in Q3 on a constant currency basis, that implies a slightly greater slowdown in growth in the fourth quarter. Is my math correct there? And is it just payments contributing to that slowdown? Or does some of that relate to hotel IT as well? And then when we look out to 2025, what are you baking into your hospitality assumptions with regard to FX? I think it could be potentially another 2% benefit. And if I look at the range, the range is relatively wide. Is that just to take account of FX variability? Or are there timing issues with Marriott and Accor that feed into some of the uncertainty this year?

Okay. With regards to FX, I mean, in general, as you know, we don't report specific FX numbers because sometimes it's positive, sometimes it's negative, unless there is a big difference. If we see during '24 for the full year, the impact has been neutral mainly at revenue at EBITDA level. Yes, in the fourth quarter, there is -- there was some positive, not very significant, but it was positive. And with regards to hospitality, yes, the revenues were a bit behind the third quarter, but nothing to do with underlying issues as we have explained in payments, it had more to do, and I have Paco with me with some seasonality matters in the case -- in this case of media revenues and DMOs that were higher on one quarter or the other, but this is very common during the year for part of the hospitality business, which is not so much linked for transaction. With regards to '25, the guidance and the range is not related to ForEx variation at all. I mean it has to do more with how the speed of growth of payments is going to come into the equation that Decius mentioned. Yes, I mean, we have the migration of Marriott in '25. But so far, it's under control. So we don't expect that. Of course, there could be always a delay at the end of the project because we are not yet there, and we are in the process of testing. So there may be some risk. But at this point, it's not the case. And therefore, the range is more related to the payment ramp-up and how this is going to really play into our P&L than really thinking about variation of ForEx in the 2025 figures.

And your next question comes from the line of Toby Ag from JPMorgan.

A few questions from my side. Perhaps just on the group revenue growth guidance for 2025, so 9% to 13%. Could you help us with the magnitude of the FX and M&A contribution to growth that you're expecting within that? And then just following up on the M&A, I know you've announced the buyback. Does this mean we shouldn't expect any more bolt-on M&A this year? And then just on the free cash flow and the CapEx trajectory. Clearly, the CapEx has been ramping each quarter through 2024, and you've indicated Q1 free cash flow to be down year-over-year on the CapEx and taxes. How should we think about the CapEx evolution through the course of 2025? Is there a point during the year where you expect the CapEx to peak and then start to moderate? And then for the '25 guidance of CapEx as a percentage of sales to be in line with '24, but likely slightly below. To what extent does that fully capture any implementations that could materialize at some point in 2025?

Okay. Let me start with the CapEx. I mean the CapEx assumes, of course, what we have today, including France-KLM that we have just announced and all the projects that we have in our pipeline with the majority of what we know I mean, look, of course, things may change during the year if we are able to really say something very significant, but we should be in the ballpark of what we have provided you as guidance. I mean, it should be at the level that we have set. With regards to the quarterly, I mean, we have provided you with the full year. Yes, there has been a ramp-up during '24. So as we move forward during the year, I mean, the growth versus last year should be decreasing because we have an increase in the first part of the year and progressively to really reach the final number that we have provided to you, you should see that moving forward in the following quarters. With regards to the question on ForEx and M&A for the group revenue, I mean, there is some impact, but it's not very significant. I mean, if you take the average of last year, yes, there has been a movement, I think, between different quarters of '24. But when you see the average of '24 versus what we are seeing today, I mean, the impact is not significant. I mean there is some movement, but it's not much. And with M&A, it's the same. I mean we are talking about some months, but in terms of the size of the acquisitions that we did and in terms of the -- if you take that into account and then you take just the months where the companies were not consolidated in '24, I mean, the impact to our revenues is going to be pretty small. So both ForEx and acquisitions, I mean, have some impact, but it's not very significant in our P&L. And with regards to bolt-on, yes, there may be acquisitions during '25 -- Look, we don't know. We are looking into that continuously. We are trying to see companies that may add value for the medium term of the company. So this may happen during this year, but this is not part of our figures because we don't know how this may evolve in the year in 2025.

Your next question comes from the line of Nooshin Nejati from Deutsche Bank.

I'm just going to pick up on air distribution, if I may. So the growth that you are giving us for 2025 and then the amount that you have grown in 2023 and 2024 kind of makes your -- the CAGR that you gave us in CMD very, very conservative in a sense. I was wondering, so it just basically implies mid-single digits. I was wondering if this is now just conservative and you're going to revisit this? Or this is -- you are thinking of some further deceleration on the back of travel bookings, normalization, et cetera?

I mean, look, we provided you 3 years. I mean it's very difficult to be more concrete than that. We have had a very good performance in the first year. We are guiding you for the second year. Of course, it will depend a lot on how the traffic, the booking evolution is going to happen in the years to come. So look, we feel comfortable with the range, but I don't think we are at the point today to really change any of the guidance of Air Distribution at this point. Saying that, let's see how the year evolves in terms of traffic and bookings. And at the right moment, we will see if we need to revisit 2026 figures, which is the one that we'll be missing in the guidance.

And your next question comes from the line of Laurent Daure from Kepler Chevreux.

I have 3 quick questions. The first is on the end of the cloud transformation program. I was just wondering why you were standing on the decommission of the data centers? And also, if all the cost reduction you're going to have at the end of the program, if some of it might be reinvested into new investments? The second one is on the CAGR '26 on the [ HOA, HOA, ] you commented you may be on the lower end of your initial guide from the CMD. I was just wondering if it was just payment that was running behind. And if the hotel alone were on the other hand, banking line? And the final one is an easy one. It's just a shorter tax rate next year -- this year, next year, we'll be back to like normal 21%, 22%?

Let me start with the last one, tax rate. I mean, it will be slightly above our estimation today of what we have achieved this year, excluding all these one-offs, a matter of mix of countries, but pretty much in line with what we have had in '20 -- I'm talking about the tax rate for the P&L. In terms of cash, it's much more volatile because we received some payments and we do some of the credits and we do some payments during the year. But our assumption is that the tax rate will be slightly above, but quite similar to '24. Let me see the other 2 questions. If I remember, it's about the Hospitality, look, the fact that we are mainly giving you a new guidance or with new guidance. We are talking to you about the low part is the delay, we have had mainly during '24 as we expect the revenues to be in line in '25 and '26 with the risk that we already mentioned. The only risk we can have there is the payments implementation that Decius already explained well, plus the fact that in hospitality, we have a couple of big migrations, which are impacting somehow, which are Marriott mainly and then Accor, some impact in '26. We are going through the migration. As always, there may be some risk. But in principle, we are still assuming this will be on time and therefore, will be part of our guidance. And overall, the CAGR of hospitality should be in line with our original expectations. So the combination of both payment and hospitality is close to the range, so very close to the low part of the range. And the main reason has been the shortfall in '24. And I think the last question is the end of cloud. The answer is yes. Part of that will be reinvested. But of course, on both areas, P&L and CapEx, we should see a positive impact from the fact that, okay, there is the end of this migration and some costs will not be there next year. But yes, part of that will be reinvested in projects in the company.

And the decommissioning of data centers?

Yes, that's what I mentioned. I mean it's all together because you have the costs related to the data center. You have the people dedicated to the migration that is very progressive because some applications have been already migrated, so they are already working in other projects. Some of that is going to really stay in '26. So part of that has been already moved, but not the full amount. And part of that will be done as we finish this migration in '26. That's why we said, look, our cost growth in '26 is going to be less because we don't have this impact, but part of the cost of the company and the investment will stay here.

There are no further questions at this time. I will now hand the call back to Mr. Luis Maroto for any closing remarks.

Thank you very much for attending the call and for your questions. I'm looking forward for the first quarter results. Thanks a lot.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.