GBTG - NYSE

Good morning. And welcome to the American Express Global Business Travel First Quarter 2023 Earnings Conference Call. As a reminder, please note today’s call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Barry Sievert. Please go ahead, sir.

Hello, and good morning, everyone. Thank you for joining us for our first quarter earnings conference call. This morning we issued an earnings press release, which is available on the SEC and our website at investors.amexglobalbusinesstravel.com. A slide presentation, which accompanies today’s prepared remarks, is also available on the Amex GBT Investor Relations web page. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry trends, cost savings and acquisition synergies, among others. All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today’s conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today’s call, we will also be presenting certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, free cash flow and net debt. All references during today’s call to such non-GAAP financial measures have been adjusted to exclude certain items. Definitions of these terms and the most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me on the call today are Paul Abbott, our Chief Executive Officer; Martine Gerow, our Chief Financial Officer and Karen Williams our Deputy Chief Financial Officer. Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Head of Global M&A. With that, I will now turn the call over to Paul. Paul?

Thank you, Barry and welcome to everyone and thank you for joining our first quarter earnings call. Before I begin, I'd like to extend a sincere thank you to Martine Gerow, our Chief Financial Officer, for her strong leadership and significant contribution to our business. As I mentioned on our previous quarter's call, this is actually Martine's last earnings call with us as she steps down from the CFO role at the end of June to join Accor as Group CFO. Karen Williams, who has been working very closely with Martine over the last year since she joined Amex GBT as Deputy CFO last May, is going to take over as CFO effective July 1 and of course, Karen is here with us on the call today. Just as a reminder, Karen joined us from IHG. She also worked at Avios and American Express, where she held several senior finance leadership roles and I am very confident that we are going to have a smooth and successful transition. So I'm going to kick things off by reviewing the quarterly highlights before then turning it over to Martine, who will take us through the financials. Karen will then go through our outlook and our guidance for 2023. So we reported a strong start to 2023 in the first quarter, driven by continued growth in business travel, significant new wins, continued momentum in the SME segment and significant margin expansion. Our first quarter revenue and adjusted EBITDA were both ahead of guidance and showed strong year-over-year growth. Revenue totaled $578 million, up 65% year-over-year. Q1 adjusted EBITDA totaled $99 million, nearly reaching our adjusted EBITDA total for all of 2022, and we delivered an adjusted EBITDA margin of 17%. And with these strong first quarter results, we remain very confident in delivering our full year guidance. Our results also demonstrate continued momentum with SME customers. In the SME customer segment, we benefit from offering a choice of market-leading solutions, Amex GBT, Egencia and Ovation in a very large and unconsolidated customer segment, a segment with the fastest growth and the highest margins in the industry. SME transactions grew 61% year-over-year, reaching 88% of 2019 levels. Our last 12 months SME new wins value reached $2.2 billion of annual TTV and that's based on the current recovery levels. Within this, approximately 30% of our SME new wins value over the last 12 months is now from the unmanaged category. So both our last 12 months SME new wins value in total and the share coming from unmanaged customers increased versus the fourth quarter of 2022. Total transactions grew 61% year-over-year to reach 76% of 2019 levels, clearly ahead of the broader travel management industry. On a workday adjusted basis, total transaction recovery was actually 74%. Now unlike previous quarters, the first quarter of 2023 had 1.5 additional workdays versus 2019, which benefited the Q1 2023 reported recovery by about 2 points. Our significant new wins position us well for continued strong growth ahead and clearly demonstrate that we continue to deliver on the significant organic growth opportunity we have ahead of 1 billion. And finally, our customer retention rate over the last 12 months remains very stable at 95%. So overall, we delivered strong revenue and adjusted EBITDA, continued growth in business travel, combined with share gains, SME momentum and proven operating leverage gives us confidence as we look ahead to the balance of 2023 and beyond. So on Slide 7, let's take a closer look at our strong year-over-year growth. As I mentioned, Q1 transactions increased 61% to reach 76% of 2019 or 74 or work day adjusted basis. That 74% transaction recovery represents a 2-point sequential increase in transaction recovery versus the fourth quarter of 2022, which is consistent with what we have guided in previous discussions. TTV increased 88% year-over-year in the first quarter and benefited from really strong international growth year-over-year. Finally, revenues grew 65% year-over-year in the quarter to reach 83% of 2019 levels. On next page, I'm going to look at the growth trends in more detail. You'll see by customer segment here, global multinational transaction growth was level with SME customer transaction growth in the quarter with both up 61% year-over-year. International growth, as I just mentioned, very strong in the quarter. International transactions up 81% year-over-year. We have said in previous calls that travel restrictions around the world are listed, strong growth follows. And we're clearly seeing that in our results, particularly in our international recovery. Growth in hotel transactions outpaced air by 2 percentage points, up 62% and 60%, respectively. And as mentioned previously, we are making very good progress, increasing the ratio of hotel to air bookings. We've achieved this by continuing to improve the hotel content and the displays in our proprietary software platforms, both Egencia and Neo. We're seeing particular strength in the SME segment and important to note, Egencia hotel transactions were 111% of 2019 levels in the first quarter. On a regional basis, you can see that Asia Pacific was the clear standout with 114% year-over-year growth in the quarter driven by the relaxation and removal of travel restrictions in China, in Hong Kong and Singapore. EMEA transactions increased 63%. We estimate that industrial actions that took place across France, Spain, Belgium, Germany, had approximately a 1 percentage point negative impact on the global transaction recovery in March. Finally, the Americas was up 52%. So let's now turn to our commercial highlights for the quarter. We delivered strong new wins and continue to progress our product and our technology leadership. We are the clear leader in a $1.2 trillion industry with a significant runway for growth. We continue to gain share with $3.4 billion of total new wins value over the last 12 months, supported, of course, by very strong customer retention of 95%. Our biggest growth opportunity, of course, remains in the SME segment. This represents a total opportunity of $950 billion of travel spend. Within the SME customer segment, we are the number 1 player in managed travel. But only 30% of that $950 billion opportunity is actually managed today, providing a significant growth opportunity in the managed and memos in the unmanaged segment. And you can see we're making good progress. We signed $2.2 billion of SME new wins value over the last 12 months. Of this, approximately 30% of the value of that $2.2 billion, and 55% of the customers of from companies whose travel programs were previously unmanaged, which I think really demonstrates that we continue to gain traction, and we're converting this unmanaged customer travel opportunity into managed travel spend. Also supporting our technology leadership, we recently announced customer pilots and rollouts for the booking of Air France-KLM NDC content across our proprietary software platforms, NEO and Egencia. This new NDC content will be enabled through Amadeus in a way that fully meets the needs of our corporate clients. And it's an important milestone because we have set a standard here that can be used by the managed travel industry to ensure a successful and scalable launch of NDC content in a way that fully meets the needs of corporate customers. We continue to advance our technology to help our customers to reach their sustainability goals. This quarter, in Egencia, for example, the moment of traveler searches for rail content, they'll now see carbon emission details across all available routes to help travelers make more sustainable choices. Travelers and arrangers can now effortlessly sort, locate and book hotels with environmental certifications. And we also added additional carbon emission data into NEO, our proprietary online travel and expense platform through a new partnership that we have with a leading client tech company choose. We reported record transactions on the Neo travel and expense software platform in the first quarter. 76% of all of our transactions now come through digital channels. And we continue to increase the share of this volume coming through our own proprietary software solutions, both NEO and Egencia. Increasing the number of transactions, on our own software platforms is really important because it improves the customer experience and it increases productivity and margins in our business. I'm very pleased to say that Q1 was the highest quarter of all time in terms of Neo transaction volumes. So on Slide 10, when we were on the path towards becoming a public company, we shared our strategic priorities to nearly one year since going public later this month. I am very pleased to say that we are clearly delivering on these commitments and creating strong momentum for the future. First of all, business travel momentum indeed continues. Q1 year-over-year revenue growth was 65%, transaction growth, 61%. Strong start to the year that gives us confidence that we're on track to achieve our full year guidance. Secondly, our new sales pipeline, strong new wins, continued share gains position us for continued strong growth in the future. Our new wins value reached $3.4 billion over the last 12 months based on the current recovery levels. Third, we said our focus on winning in the SME segment would accelerate growth and our results clearly show strong progress in this area. Q1 SME transaction recovery reached 88%. We reported SME new wins value of $2.2 billion over the last 12 months, up from $2.1 billion in the fourth quarter and we also announced accelerated new wins coming from the unmanaged segment, $660 million of new wins from the unmanaged segment, 30% of the new wins. And that $660 million of new wins from the unmanaged segment is 25% higher than it was in the fourth quarter. Fourth, we are delivering on the Egencia of synergies. We're on track to deliver approximately $60 million of Egencia synergies in the full year 2023 based on actions we've already completed some expected synergies from Egencia at the full recovery level. Fifth, our business model is clearly delivering the operating leverage we committed to. Last quarter, we said we added costs to support incremental volumes heading into Q1. In the first quarter of this year, we actually reported over 100% adjusted EBITDA fall-through versus Q4. Meaning, sequentially versus Q4, we delivered incremental adjusted EBITDA that actually exceeded incremental revenue. And finally, all these results combined to deliver significant margin expansion. In the first quarter, we reported a 17% adjusted EBITDA margin with volume growth, higher online adoption and structural changes creating operating efficiencies. So to sum up our first quarter performance, I think it provides yet another proof point of our continued strategic commercial and financial progress. So that completes my review of the Q1 highlights, I'd now like to hand it over to Martine, who will discuss the financial results in more detail. Martine?

Thank you, Paul, and hello, everyone. As you heard from Paul, we continue to deliver on our strategic and financial priorities, and we started in 2023 with a strong first quarter. Our total transaction value, or TTV increased 88% year-over-year in the first quarter to reach $7.4 billion. And this is well above our 61% growth in transaction volume and is driven by the 81% growth in international volume in the quarter. Revenue increased 65% to $578 million, driven by stronger-than-expected supplier results. Revenue was $8 million above the top end of our first quarter guidance driven by a $10 million favorable carryover in supplier revenue. Our yield, which is measured as revenue over TTV reached 7.8% in Q1, and this is in line with our expectation for the full year and the second quarter, and it followed a different seasonality than in 2019. We are now seeing a timely reporting of realized supply performance and we can recognize revenue earlier as compared to 2019. This makes our revenue seasonality better aligned with our volume seasonality. When comparing our year-over-year results, do remember that the first quarter of 2022 yield was favorably impacted by a higher component of fixed product and professional services revenue over a depressed volume base due to Omicron. Travel revenue increased 82%, which is broadly in line with TTV growth. Product and professional services revenue increased 19% primarily due to increased management fees and growth in meeting and advance revenue driven by strengthened demand. Our adjusted operating expenses increased 27% in the quarter, which compares favorably to the 65% increase in revenue and highlights the operating leverage in the model. As expected, volumes were 26% higher in Q1 as compared to Q4, but our expenses were flat as compared to Q4 as we ramped up our cost base last quarter in advance of the expected incremental first quarter volume. As a result, we delivered $99 million of adjusted EBITDA in the first quarter, which is an improvement of $127 million year-over-year. Our adjusted EBITDA margin was 17%, which is up 25 percentage points year-over-year and this demonstrates a strong operating leverage as well as the execution of cost savings and Egencia synergies. As we announced in January, we have moved to a global customer segment operating model, which is centered around our global multinational and SME customers to better position us for accelerating growth, drive consistency, increase efficiencies and deliver unrivaled value to our customers. Associated with this, we booked a $23 million restructuring charge in the first quarter, which will start delivering benefits from second quarter onwards with an acceleration in the second half of the year when we complete our European restructuring actions. Let's now turn to cash flow. As expected, cash usage increased in the first quarter of 2023 and totaled $109 million, driven by continued recovery, our volume and working capital seasonality as well as the timing of annual employee incentive [indiscernible]. Our AR and AP balances are correlated to volume driving the working capital build in the first quarter. Our TTV seasonality, which Solar's business travel demand is strongest in the first quarter and lowest in the fourth quarter. TTV in the first quarter was up 26% sequentially versus the fourth quarter of 2022. This combined with the payment of our no incentives, resulted in an increase of $101 million in working capital in the first quarter. And for more insights into our cash flow seasonality, I would like to point you to the supplemental materials section of this presentation, where we have included slides outlining our historical TTV, revenue, adjusted EBITDA and working capital seasonality. And while I will not review the slides on our call today, they are intended to be a resource to help with your modeling. As of March 31, we have an unrestricted cash balance of $320 million and total available liquidity of $37 million. And our net debt is $1.035 billion. To accelerate cash flow generation in the balance of the year, we have launched a working capital optimization program that we expect will drive material benefits over the next 12 months. As a matter of fact, looking at the balance of year, we expect to approach free cash flow breakeven in the second quarter and to generate positive free cash flow in the third and fourth quarter. And before I hand it off to Paul, I want to welcome Karen to her new role as CFO effective 1st of July. I'm very grateful for the past six years at AMXGBT and confident that successfully navigating through a global pandemic and taking the company public, we are well positioned for strong work ahead. I have worked side-by-side with care for nearly a year, and I am confident we will have a smooth, seamless and successful transition. And I will now turn it back to Paul and Karen to review our outlook for full year 2023 and share our second quarter guidance.

Thank you, Martine. Before I hand it to Karen to go through our outlook and guidance for the balance of the year, I just wanted to share some data points here that I think demonstrate several tailwinds that set us up for strong continued growth in the year ahead, including continued business travel recovery, improved airline capacity, our significant share gains and the increasing meetings and events demand. What you see here on the page is GBTA business travel outlook pole that we've shared with you in the past, this was published at the end of April. You'll see domestic and international bookings at 72% and 63% to 2019 levels, respectively, or approximately 68% combined. This is up from 62% that we shared with you in the January survey, so a 6 point improvement in the GBTA outlook between January and April. So it's clear that industry momentum continues, and you can also see that we are clearly outpacing the industry with our Q1 transaction recovery of 76%, driven by our share gains. We've talked in the past how distributed teams and the hybrid work model are creating a new type of business travel meetings and events demand with workforces increasingly distributed, the predicted increase in meetings and events is certainly gaining traction. Our small meetings division is the fastest-growing area of our meetings and events team, and we're seeing growing demand for our services as companies increase their investment in these types of meetings. Drilling down on our meetings and events pipeline, recovery in the number of meeting and events projects in the first half of this year is trending at about 85% of 2019 levels and therefore, outpacing the broader corporate travel recovery. The spend for the first half of this year has already reached over 100% of '19 levels, driven by an increase in larger events, an increase in international destinations and of course, price inflation. So overall, we believe that these data points from industry experts and from customers support our expectations for continued growth in the balance of 2023 and beyond. So I'm now going to hand it over to Karen to go through our 2023 guidance in more detail. Karen, over to you.

Thank you, Paul. Before we jump into the details, let me give you the headlines. We are reaffirming our full year guidance. We expect to deliver strong revenue growth significant year-over-year margin expansion and importantly, to return to positive free cash flow in the back half of the year. So let's take a closer look at the figures and review the key drivers for our 2023 guidance. We continue to expect revenue to between $2.17 billion and $2.22 billion, which represents 17% to 20% revenue growth. As Martine said, our revenue seasonality is now better aligned with volume seasonality, which we have reflected in our implied revenue guidance for H1 and H2. We expect revenue yield for the full year to be in line with Q1 at 7.8%. On the cost side, we expect single-digit growth in operating expenses as we have improved our operational efficiencies, realize cost synergies and achieve benefits from the reorganization, which we announced in January. We expect savings to accelerate in the second half of the year, driving a reduction in expenses compared to the first half projection of $950 million. Our productivity gains and high operating leverage are still expected to deliver 9 to 11 points of full year adjusted EBITDA margin expansion with a margin of 50% to 70%. We acknowledge that if current trends continue, we may reach the upper end of our revenue guidance. But at the same time, whilst our expense exit rate is in line with our previous expectations, we may perhaps some delayed execution of our European restructuring plan, which could impact the phasing of our cost reductions. Additionally, we have several attractive opportunities for incremental product and technology investments, which we may choose to take advantage of in the balance of the year. And frankly, whilst we recognize Q1 was a strong quarter, we are just one quarter into the year. Therefore, we reaffirm our full year adjusted EBITDA guidance of $330 million to $370 million. As previously mentioned, we anticipate reaching positive free cash flow during the year, which is an important milestone. We expect to approach breakeven free cash flow in the second quarter of 2023 and to generate positive free cash flow in Q3 and Q4. We are confident in our ability to deliver this given the seasonality of our working capital, which is outlined in the supplementary materials of this presentation and the working capital optimization plan, we have recently initiated specifically in relation to Egencia as we continue to integrate them into our business. Finally, we continue to exit 2023 with a leverage ratio in line with our long-term target of leverage target of two times to three times. So now let's turn to guidance and key drivers for the second quarter of 2023. We expect to deliver revenue of between $555 million and $575 million, representing a growth of 14% to 18%. This is built on our expectations for low double-digit TTV growth and revenue yield largely in line with the first quarter. We expect operating expenses to start trending down sequentially in the second quarter net of salary inflation. This is driven by the changes we announced in January relating to our reorganization, which will create operational efficiencies and as a result of our continued focus on COGS. This results in expectations for $85 million to $100 million in adjusted EBITDA with an adjusted EBITDA margin of 15% to 17%, representing year-over-year adjusted EBITDA margin expansion of 5 to 7 percentage points. Finally, as previously mentioned, Q2 will be a pivotal turning point as we expect to approach breakeven free cash flow, moving to positive free cash flow in the back half of the year. In summary, we delivered strong first quarter revenue and adjusted EBITDA. The business travel recovery continues, and we are delivering on share gains and SME momentum. We continue to execute on Egencia synergies and cost savings to drive operating leverage. We are well positioned to deliver strong second quarter and significant revenue growth and margin expansion in 2023. So we are delivering on what we said we would do and are confident in continued momentum ahead. I look forward to stepping into the CFO role on July 1 and getting to know all of you in the months and years ahead. So we can now move into Q&A. Paul, Martine and I are joined by Eric Bock, who is our Chief Legal Officer, Global Head of M&A and Compliance and Corporate Secretary. Operator, please go ahead and open the line.

[Operator Instructions] The first question we have comes from Stephen Ju with Credit Suisse.

Okay. Thank you so much. So Paul, the transaction recovery overall stands at 76% for you guys. I don't know if you have the regional data handy, but can you talk about where the Asia Pacific recovery may be as that region is still seems to be growing the highest year-over-year amongst your, I guess, regional comparisons? Thank you.

Yes, Stephen, hi. Yes, thanks for the question. I don't have the regional recovery rates in front of me. Maybe Martine, have you got those handy there?

So Asia was transaction recovery for APAC was 87%. That's a reported that you'd have to adjust that by a couple of points [indiscernible].

Thank you.

Stephen, you probably saw as we go through the presentation, we're trying to focus more on the year-over-year performance going forward and start to move away from recovery rates versus 2019, was obviously 2019 as four years ago now and we run into sometimes some reporting challenges with quarter-over-quarter analysis. So you will see us focus more on the year-over-year growth rates and quarter-over-quarter growth rates going forward.

Understood, thank you. Yes, because the higher APAC traction recovery is a little bit odds versus what I was thinking, given that region is growing at the highest rate for you right now. So -- but I guess the good news here is that some of the other potentially larger regions are still lagging in the recovery, so there's still a lot more [indiscernible] in front of the recovery. Is that a correct characterization?

What it's worth remembering, though, that the Asia Pacific region for us, we don't consolidate domestic China volumes because it's a joint venture market. And so when you look at our Asia Pacific results, they are primarily driven by the recovery in Australia and India that's been actually pretty very strong and actually has been ahead of the curve in terms of the other markets in Asia. What we're seeing more recently is the recovery of international volumes to and from China, but those recovery rates actually will register in the point of origin. So that trip is booked from the U.S. or it's booked from Europe, then that trip from the U.S. to China or Europe to China is registered where it is ticketed, registered in Europe or in the U.S.

Thank you.

We now have Lee Horowitz of Deutsche Bank.

Hi great, thanks so much. Can you maybe help us understand your acquisition of full year revenue guidance? I guess, given the one you did the Q2 outlook by revenue growth in the second half of the year is in the low to a range versus 30% in the front half of the year. Maybe you can help us better understand sort of the macro assumption underpinning the second half growth and why we should be expecting sort of revenue growth to slow down some materially in the second half? And then one follow-up if I could.

Yes, sure. Look, I think, as Karen mentioned in her comments there, we acknowledge that if the current trends continue, we're likely to reach the upper end of the revenue guidance. I think we've guided in previous calls that we are expecting to see a couple of points recovery per quarter sequentially. I think we made that statement in Q3, and we saw a couple of points recovery in Q4. We also made that statement in Q4, and we've seen essentially a couple of points recovery. When you work they adjust it in Q1, we've gone from $72 million to $74 million so we are continuing to model out 2 points of recovery per quarter in the balance of the year. And if that recovery level plays out, then yes, we're likely to be at the upper end of the revenue guidance. I think what Karen also said though, is that we do have potentially some delays in the restructuring in Europe and which won't affect our exit rate from an operating expense standpoint. And we also have attractive investments that we may or may not choose to trigger in the balance of the year. So that's why we feel that actually the current range for revenues and adjusted EBITDA are still appropriate, whilst acknowledging that the current trend would take us to the higher end on the revenue side.

Great, helpful, thank you. And then maybe as the quarter as it goes in the conference call this year, without touching [indiscernible] where they are. So Paul, can you maybe talk a bit about how you see this cutting-edge technology is impacting your business operations? And how you're thinking about putting investments to work in say the near to medium term in order to harness the power of these [indiscernible]?

Yes, that's a great question. We see it as a tremendous opportunity. I mean if you look at what we actually do in Egencia and in Neo, we are consistently data to automate transactions that were previously through the voice channel, through our travel counselors. And that sort of percentage of online adoption, as we call, has been steadily increasing year-over-year, and it's now 76%. But we still have a big opportunity to take more demand out of the voice channel. And when we do that, it increases our margins and in many cases, creates a better self-serve experience for customers. So it's a muscle that we've got well developed in the company and what AI and the developments and the advancements that AI are doing is, frankly, just making the speed and scale of those changes look even more exciting. And so we do have a team that are focused on using generative AI models and big data to see what can we do to automate our processes more effectively. And yes, I definitely see that as a significant opportunity for us, not just in the months but years ahead.

Helpful, thank you.

Thank you. We now have Duane Pfennigwerth of Evercore ISI.

Hey, thank you. Could you just talk a little bit about the drivers of upside in the March quarter relative to your initial guidance? Which regions or segments kind of surprised you? And then I wonder if you could speak broadly to performance by month. What did a March exit rate on recovery looked like relative to January?

Yes, sure. May be Martine, you'd like to just come in and give you a perspective on the drivers of Q1 performance.

Sure. So we actually came -- we had $10 million of favorable carryover on supply revenue as I shared with you in the earnings presentation. If you adjust for that, we're actually seeing at the high end of the guidance. And this is really driven by better volume growth across all regions, and there's not really one particular region that stands out versus or at the high end of the year of the guidance was. And we saw a progressive recovery through the quarter on kind of month-by-month basis. We do see a similar pattern as what we saw in -- around the summer holiday and in the year-end Christmas holiday, which is we tend to have a bit of a dip around the holiday period and then followed by a strong recovery for the holiday period, and we're seeing that around Easter as well.

Thanks, you led into my -- that was a good segue for my follow-up was just going to be around seasonality, and you mentioned remote work and maybe some structural changes in the underlying seasonality, but maybe you could just expand on that. What -- as you look back on kind of the second half of last year and the early part of this year, where do you see periods of maybe exaggerated strength and maybe periods of exaggerated weakness relative to, say a 2019 baseline based on differing behavior?

Yes. Maybe I'll just come in and expand on the comment Martine made. We have now seen really across three holiday periods, so we run up to December holidays also in August and the summer holidays and then over the Easter period. We have sort of seen an extended impact over the holiday period and we've seen more of a trough and more of a peak. And we do think that, that is probably the new normal now, having seen it across three holiday periods, we do think that people are perhaps taking extended holidays and maybe working from that holiday destination for a period of time. But then what we see is we see a much stronger bounce back, which we saw in January. We saw that in September post Labor Day. And as Martine mentioned, in the run up to Easter, we saw a little bit more of a dip than we're expecting, but we saw a really strong recovery post Easter. So I think that's the one key trend that I think is something that we are looking at as the new normal now.

Okay, thank you.

Thank you. We now have Toni Kaplan of Morgan Stanley.

Hi, this is Hilary Lee on for Toni. I just wanted to ask about the adjusted EBITDA flow through. Like obviously, you guys talked about quarter-over-quarter, it was well over 100%. Year-over-year it looks like it was down to around 56%. Just wondering how we should kind of think about it going forward. Any cadence you guys could provide would be helpful.

Martine, would you like to take that one?

Sure. So I think going forward, right, I think what we've always shared with you and guidance on as we expected our flow through kind of a longer-term basis to be near 50%, 55% territory. That being said, [indiscernible] a real useful driver, if you wish, and we were going very quickly through the recovery of business travel. As that recovery starts normalizing and the growth start normalizing. Looking at the overall margin of the business will be a more useful driver going forward because you will see a lot more stability in the margin and margin expansion quarter-over-quarter than you would in fall through, as you just saw in the first quarter, quarter-over-quarter. That being said, to answer your question more specifically on the first quarter, versus the first quarter of last year, you may recall that in the first quarter of 2022, our volume base was obviously very depressed with Omicron. And we had not -- and the volume which we very quickly at the end of the first quarter, and we did not obviously ramped up our costs as quickly as the volumes come back. So in some sense, you had a overstaffing in the first quarter, which you want to have a little fall-through as compared to the first quarter. And you have exactly the reverse when you compare to the fourth quarter could you ramp up the cost in the fourth quarter of last year. So you have an excellent flow through Q1 over Q4.

Great, thank you. And just wondering if we could touch on SMEs a little bit, would you be able to give kind of the split in terms of number of transactions, TTV and revenue between BPM and SMEs for the quarter?

We don't provide that level of detail by quarter. I think we have previously guided that our SME business is over 50% of our revenues and a higher share of our profits. But we don't provide the details by segment by quarter, other than the new wins information, of course, which we do.

Thanks.

Thank you. [Operator Instructions] I can confirm, we have had no further questions. So I'd like to hand it back to Paul Abbott, CEO for any final remarks.

Great. Well, look, once again, thank you very much for joining. I would like to extend a sincere thank you to all of our team across Amex GBT for their dedication to our customers and the strong results that they've delivered in the quarter. We are very confident in our position and our outlook for continued success in 2023. Thank you for joining and your continued interest in the company.