Travelport Worldwide Limited (NYSE: TVPT) today announced its financial results for the third quarter and nine months ended September 30, 2018.
Key Points (for the third quarter unless stated otherwise)
- Net revenue increased 2% to $623 million
- Net income increased 25% to $6 million; Adjusted EBITDA increased 2% to $139 million
- Travel Commerce Platform revenue increased 2% to $598 million
- Beyond Air revenue increased 14% to $193 million, contributing 32% of Travel Commerce Platform revenue (Q3 2017: 29%); eNett net revenue increased 58% to $86 million
- Income per share (diluted) increased 4% to $0.04; Adjusted Income per Share (diluted) increased 74% to $0.31
- Net cash provided by operating activities decreased 13% to $83 million; Free Cash Flow decreased 24% to $48 million
- Anticipate 2018 net revenue, Adjusted EBITDA and Free Cash Flow to be at the lower end of guidance ranges
Gordon Wilson, President and CEO of Travelport, commented:
“We delivered net revenue and Adjusted EBITDA growth of 2% each in the quarter. The continued strong performance of Beyond Air, driven by our virtual payments business eNett, helped us overcome the more challenging market and customer environment we anticipated for the second half of the year.
In the quarter, we continued to build the business in line with our strategy. Our Travel Commerce Platform delivered further business successes, especially in the regional corporate and online sectors where we are clearly benefiting from the investments we are making in the quality of our content and the capabilities and efficiency of our technology. We also strengthened our value proposition by concluding long-term deals to distribute the content of Air India and Jet Airways, in both cases as the preferred distributor. These add to our exclusive distribution contract with IndiGo and give us significant additional advantage in India and key markets beyond it. Furthermore, Travelport made history by becoming the first GDS to transact the booking of flights using IATA’s New Distribution Capability (NDC) API protocol. These initiatives will contribute to the onboarding of new business next year, alongside the continued growth of eNett.
Despite these factors and our ongoing focus on the efficiency of our cost base, our business momentum is being tempered by some specific customer headwinds. We remain well positioned for longer term profitable growth given our commercial wins and the ongoing investments we’re making in the key areas that differentiate us, including our industry-leading travel content; our search, merchandising and shopping capabilities; and our leading mobile, data and payments solutions.”
Summary
| Three Months | Nine Months | ||||||||||||||
| Ended September 30, | Ended September 30, | ||||||||||||||
| (in $ thousands, except per share amounts) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||
| Net revenue | 622,585 | 610,842 | 2% | 1,962,431 | 1,873,712 | 5% | |||||||||
| Operating income | 44,115 | 61,585 | (28)% | 164,072 | 235,997 | (30)% | |||||||||
| Net income | 5,870 | 4,681 | 25% | 72,106 | 94,910 | (24)% | |||||||||
| Income per share – diluted | $ | 0.04 | $ | 0.04 | 4% | $ | 0.55 | $ | 0.76 | (28)% | |||||
| Adjusted EBITDA | 139,313 | 136,437 | 2% | 450,413 | 451,996 | — | |||||||||
| Adjusted Operating Income | 79,219 | 76,392 | 4% | 268,211 | 268,465 | — | |||||||||
| Adjusted Net Income | 40,040 | 22,671 | 77% | 146,906 | 137,034 | 7% | |||||||||
| Adjusted Income per Share – diluted | $ | 0.31 | $ | 0.18 | 74% | $ | 1.15 | $ | 1.09 | 6% | |||||
| Net cash provided by operating activities | 83,149 | 95,735 | (13)% | 285,435 | 274,342 | 4% | |||||||||
| Free Cash Flow | 48,379 | 63,372 | (24)% | 176,199 | 195,150 | (10)% | |||||||||
| Cash dividend per share | $ | 0.075 | $ | 0.075 | — | $ | 0.225 | $ | 0.225 | — | |||||
| ________________ | |||||||||||||||
| The Company refers to certain non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss), Adjusted Income (Loss) per Share – diluted, Capital Expenditures, Net Debt and Free Cash Flow. Please refer to pages 10 to 13 of this press release for additional information, including reconciliations of such non-GAAP financial measures. | |||||||||||||||
Discussion of Results for the Third Quarter of 2018
Unless otherwise stated, all comparisons are for the third quarter of 2018 compared to the third quarter of 2017.
Net Revenue
Net revenue is comprised of:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in $ thousands) | 2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||
| Air | $ | 404,643 | $ | 417,371 | (3) | $ | 1,321,525 | $ | 1,315,500 | — | |||||
| Beyond Air | 192,968 | 168,782 | 14 | 566,740 | 476,474 | 19 | |||||||||
| Travel Commerce Platform | 597,611 | 586,153 | 2 | 1,888,265 | 1,791,974 | 5 | |||||||||
| Technology Services | 24,974 | 24,689 | 1 | 74,166 | 81,738 | (9) | |||||||||
| Net revenue | $ | 622,585 | $ | 610,842 | 2 | $ | 1,962,431 | $ | 1,873,712 | 5 | |||||
Net revenue increased by $12 million, or 2%, to $623 million primarily due to growth in Travel Commerce Platform revenue of $11 million, or 2%. Within Travel Commerce Platform revenue, Beyond Air revenue increased by $24 million, or 14%, offset by a decrease in Air revenue of $13 million, or 3%. The increase in Beyond Air revenue was driven by an increase in eNett net revenue of 58% to $86 million, primarily due to an increase in the volume of payments settled with existing customers, that was partially offset by a decline in the remainder of the Beyond Air portfolio. The decrease in Air revenue was mainly due to a decrease in Air Reported Segments that includes the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds, offset by improved pricing and mix. Technology Services revenue remained stable.
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