Travelport announced its financial results for the second quarter ended June 30, 2018.
• Net revenue increased 8% to $662 million
• Net income decreased $27 million to $7 million, primarily driven by unfavorable movements on foreign currency derivative contracts; Adjusted EBITDA increased 7% to $157 million
• Travel Commerce Platform revenue increased 9% to $638 million; Technology Services revenue decreased 15% to $24 million, largely due to the sale of IGT Solutions Private Ltd. (“IGTS”) during Q2 2017
• Beyond Air revenue increased 21% to $194 million, contributing 30% of Travel Commerce Platform revenue (Q2 2017: 27%); eNett net revenue increased 82% to $81 million
• Net cash provided by operating activities increased 43% to $119 million; Free Cash Flow increased 35% to $81 million
Gordon Wilson, President and CEO of Travelport, commented:
“Travelport has delivered a good quarter, with Travel Commerce Platform revenue up 9% and Adjusted EBITDA up 7%. Our strong performance enabled us to overcome the well-documented loss of a Pacific-based travel agency through winning new business in other regions. In fact, revenue growth accelerated across all regions in the quarter, with air market share growth in Asia, Europe and Latin America. Air revenue was up 5%, and Beyond Air revenue grew 21%, as the latter benefitted from another excellent quarter from our payments business, eNett.
Looking ahead, we remain on track to deliver our financial guidance for the full year. This is notwithstanding the likelihood of a more challenging market environment in the second half, due to recent travel demand being adversely impacted by the heatwave in Northern Europe and potential further impacts from higher jet fuel prices and tensions in global trade. Despite this and the impact of terminating our agreement with a European OTA due to their contract breach, we remain well positioned for long-term growth as we continue to invest in our key areas of differentiation, including search, merchandising and shopping, mobile enablement, payments and our industry-leading hybrid cloud architecture. Furthermore, we are on course to deliver the first wave of IATA NDC API-sourced content to our customers.”
Discussion of Results
Net revenue increased by $50 million, or 8%, to $662 million due to growth in Travel Commerce Platform revenue of $54 million, or 9%. Within Travel Commerce Platform revenue,
Beyond Air revenue increased by $34 million, or 21%, and Air revenue increased by $20 million, or 5%. The increase in Beyond Air revenue was driven by an increase in eNett net revenue of 82% to $81 million primarily due to an increase in the volume of payments settled with existing customers. The increase in Air revenue was mainly due to improved pricing, mix and growth in other regions, more than offsetting the impact of the loss of a large Pacific-based travel agency. Technology Services revenue decreased by $4 million, or 15%, primarily due to the sale of IGTS in April 2017.
International Travel Commerce Platform revenue increased by $52 million, or 12%, with growth in all regions. Europe contributed a majority of this increase mainly due to an increase in RevPas of 16% and an increase in Reported Segments of 7%. The increase in Travel Commerce Platform revenue in Asia Pacific of $3 million, or 2%, includes the loss of revenue resulting from the loss of a large Pacific-based travel agency.
Operating income decreased by $32 million, or 43%, to $42 million
Net income decreased by $27 million, or 80%, to $7 million due to the following:
• $32 million decrease in operating income
• $4 million increase in income tax expense primarily due to higher non-deductible interest in the United Kingdom and geographical profit mix; offset by
• $9 million benefit from a decrease in interest expense, net, resulting from the favorable impact of fair value changes on interest rate derivative contracts , lower amortization of debt finance costs and debt discount and a lower debt balance
Adjusted EBITDA increased by $10 million, or 7%, to $157 million
Adjusted Net Income increased by $2 million to $52 million
Full Year 2018 Financial Guidance
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