Earnings Update – Corporate Travel Management Limited (CTD)

Date: 19/02/2025

*** GENERAL ADVICE ONLY***

Corporate Travel Management Limited (CTM) has reported mixed financial results for the first half of 2025 (1H25), demonstrating both growth and challenges across its operating segments. The company has emphasized strong capital management, operational efficiency improvements through automation and AI, and strategic transitions in service provision. Notably, CTM has secured the sole provider status for the UK Government’s Travel Management Consultant (TMC) travel services framework, marking a significant shift from a competitive trio to a singular supplier role. This strategic move is expected to bolster long-term revenue streams and market presence in the Rest of World (RoW) regions.

Key Metrics

• Underlying EBITDA (1H2025): $77.4 million
• Underlying NPAT attributable to owners (1H2025): $38.7 million
• Revenue (1H FY25): A$342.8 million vs A$363.7 million (1H24), down 6%
• EBITDA – Underlying (1H25): A$77.4 million vs A$100.7 million (1H24), down 23%
• NPAT – Statutory (1H25): A$29.2 million vs A$50.4 million (1H24), down 42%
• Interim Dividend (1H25): 10 cents per share vs 17 cents per share (unfranked) in 1H24, down 41%
• Cash at 12/31/2024: $75.5 million

Segment Performance

• Rest of World ex Europe EBITDA (1H2025): Increased by 38% vs 1H2024
• ANZ EBITDA (1H2025): Increased by 53% vs 1H2024
• North America EBITDA (1H2025): Increased by 49% vs 1H2024
• EBITDA Margin (FY25): Approximately 27.5%, up 450 bps YoY

Year-over-Year Changes

• Revenue: Decreased by 6% in 1H25 compared to 1H24
• EBITDA: Declined by 23% in 1H25 compared to 1H24
• NPAT: Dropped by 33% in 1H25 compared to 1H24
• Statutory NPAT: Fell by 42% in 1H25 compared to 1H24

Guidance and Expectations

• New Client Wins: As of February 14, 2025, CTM has secured new client wins exceeding $880 million in Total Transaction Value (TTV), nearing the full-year target of $1.0 billion TTV.
• Revenue Growth Drivers:
  • Seasonality effects contributing to stronger second half performance.
  • New client onboarding in the EU region.
  • Expansion of Lightning OBT in North America.
  • Continued success of Sleep Space in ANZ.
  • Stabilizing ticket prices and robust client acquisitions in Asia.
• UK Market Impact: Reduction in UK government expenditure is expected to result in an approximate 24% decrease in revenue compared to FY24.
• Capital Expenditure (CapEx): Projected to be approximately $42 million for FY25, down from $48 million in FY24.

Competitive Landscape

• CTM is positioning itself strongly in key geographic markets with significant EBITDA growth in Rest of World ex Europe, ANZ, and North America.
• The company’s high customer retention rate of 97% indicates strong client relationships and competitive service offerings.
• New client wins and market expansion efforts, particularly in the EU and Asia, enhance CTM’s market share and competitive positioning.
• Potential threats include reduced government spending in the UK and ongoing economic uncertainties impacting corporate travel budgets.

Strategic Considerations

• Capital Allocation:
  • CTM has returned $52.3 million to shareholders through share buy-backs (4,401,917 shares at an average price of $13.45 per share) and dividends (10.0 cents per share unfranked for the full year).
  • Group CapEx reduced to approximately $42 million for FY25, reflecting strategic cost management.
• Operational Initiatives:
  • Focus on proprietary technology development and automation to enhance operational efficiency.
  • Strategic management of corporate costs, targeted at approximately $23 million for FY25.
  • Maintaining workforce stability by retaining approximately 80 staff during the transition period.
• Long-Term Outlook:
  • CTM aims to achieve sustained profitability through market share gains and operational excellence, aligning with its 5-year strategic plan.
  • Incremental Revenue Conversion for FY25 is greater than 50%, aligned with the company’s long-term growth targets.