American Express Global Business Travel reported 7 percent year over year transaction growth for the third quarter, boosted in part by client wins the travel management company said would buoy it against a more uncertain economic environment in 2024.
Amex GBT's total transaction value increased 8 percent year over year in the third quarter to $7.1 billion, which helped drive a 17 percent increase in revenue to $571 million, the company reported. Transactions from small and midsize clients were up 10 percent year over year in the quarter.
The SME market remains "the largest growth opportunity, with the fastest growth and the highest margins in the industry," Amex GBT CEO Paul Abbott said in an earnings call on Tuesday. Over the past 12 months, Amex GBT reported new client wins totaling $3.3 billion in annual transaction value, and $2.2 billion of which was in the SME segment. Of those new SME clients, about 30 percent had previously unmanaged travel programs, according to Amex GBT.
Large client wins over the period have included asset management giant Blackstone, Australian metals and energy company Fortescue and entertainment conglomerate Warner Bros. Discovery, according to Abbott.
That client growth should help offset potential slowdowns in economic growth next year, amid an environment that Abbott said has become more uncertain in recent months. Amex GBT is not yet establishing guidance for 2024, he said.
"Although we can't control the macro environment, we can control the share gains and net new wins, and we are very confident in the strength of our future sales pipeline," Abbott said. "As we head into 2024, even if macro events do result in a lower growth environment, we expect new wins alone to provide a baseline of 4 to 5 percentage points of volume growth in 2024."
Despite the uncertainty, executives said there are signs that growth could be above that baseline. Amex GBT CFO Karen Williams said a recent survey of the TMC's 100 largest customers showed 88 percent expect their travel spend to be equal or higher than 2023 levels next year. That tracks with a recent Global Business Travel Association poll, which showed similar sentiment among about three-quarters of more than 400 travel buyer and procurement respondents.
Amex GBT also is working to control expenses. Operating expenses in the third quarter increased 8 percent year over year to $575 million, driven by sales and marketing investments and higher restructuring costs.
Growth in digital transaction will help cut costs, Abbott said. In the third quarter, 77 percent of Amex GBT's transactions came through digital channels, and digital transactions' share has grown by about 12 percentage points over the past four years, he said. Transactions on Amex's own platforms, Egencia and Neo, were up 13 percent year over year in the quarter, "well above" overall transaction growth, which indicated growth in overall share. More than 60 percent of Amex GBT's digital transactions go through those channels, Abbott said.
Use of Amex GBT's mobile app and chat services has grown significantly this year as well, and that "unlocks a significant opportunity for us through AI-powered solutions for both improving the productivity of our people and improving the customer experience," Abbott said. About 40 percent of Amex GBT's costs currently come from serving customers in voice channels, he said.
Amex GBT reported a net loss of $8 million for the third quarter, an improvement from a $73 million loss in the third quarter of 2022.
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