Transaction growth from large multinational customers helped drive a 6 percent increase in American Express Global Business Travel's second-quarter revenue year over year, while growth among small and midsize clients was "relatively muted," CEO Paul Abbott said.
Amex GBT's revenue for the quarter totaled $625 million, with travel revenue up 6 precent year over year to $506 million and product and professional services revenue up 5 percent to $119 million. Total transaction value increase increased 5 percent to $7.7 billion, and transaction growth for the quarter was 4 percent, down from the 9 percent year-over-year growth rate in the second quarter of 2023.
As was the case in the previous quarter, transaction growth by large customers led the way in the second quarter. Transactions by global multination customers were up 7 percent year over year, Amex GBT reported. The largest transaction growth was in the financial services sector, up 13 percent, and the pharmaceutical and healthcare sector, up 12 percent.
Abbott also noted improving sentiment among large customers, with the travel management company's most recent survey of its 100 largest customers showing they expect a 10 percent year-over-year increase in business travel spending this year, an increase of 2 percentage points compared with the TMC's previous survey of those customers, he said.
That was "driven by improvement in expectations within professional service, mining and oil and gas industries," Abbott said in an earnings call on Tuesday.
SME transactions, meanwhile, were up 1 percent year over year in the second quarter, as customers in the segment "have tightened spending controls in the face of higher interest costs and higher inflation," Abbott said. Those spending controls are not limited to travel among those customers, he said.
Even so, SME customers by and large are not cutting back on travel, with an Amex GBT survey of its top 120 SME customers showing 82 percent expect travel will increase or remain flat in the second half of this year, Abbott said.
Amex GBT's wins in the SME segment have been "strong," Abbott added. As of the second quarter, the TMC reported $3.3 billion of value in new customer wins over the previous 12 months, and $2 billion of that was from the SME segment. Amex GBT's customer retention rate was 97 percent over that period, according to the company.
The ongoing 2024 Summer Olympics in Paris also affected Amex GBT's transactions in the quarter, as they have had a "negative impact on business travel" in France, which is Amex GBT's second-largest company by transaction volume. Excluding France, transactions were up 5 percent year over year, and Abbott said business travel growth should return in France from "September onward."
Amex GBT executives also reiterated confidence in the completion of the TMC's acquisition of rival CWT, which hit a snag last week with the announcement that the U.K. Competition and Markets Authority would be doing a deeper Phase 2 investigation of the deal's market impact. The Phase 2 process lasts about 24 weeks, which is why Amex GBT pushed the target closing date from later this year to the first quarter of 2025, Amex GBT chief legal officer, corporate secretary and global head of M&A Eric Bock said in the earnings call.
"We believe the facts will play out in our favor and our very confident we will close this in the first quarter," he said.
Amex GBT reported a net income of $27 million for the quarter, compared with a net loss of $55 million in the second quarter of 2023. The company last month also completed a refinancing of its debt, which was "a pivotal moment for the company" that significantly lowers interest costs and contributes to an annualized $40 million in run-rate cash interest savings, according to Amex GBT CFO Karen Williams.
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