Global Business Travel Group Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
GBTG$9.500.0%Stored close · as of Sep 28, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001820872-24-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001820872-24-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 168 current paragraphs.
89 unchanged; 37 reworded; 35 added; 8 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 12 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
•our ability to complete any potential acquisition in a timely manner or at all;
Current report
•our ability to recognize the anticipated benefitsof any future acquisition, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;
Current report
For the three months ended June 30, 2024, TTV increased by $375 million, or 5%, to $7,724 million compared to the three months ended June 30, 2023. For the six months ended June 30, 2024 TTV increased by $1,058 million, or 7%, to $15,829 million compared to the six months ended June 30, 2023. The increase in TTV during these periods was primarily due to Transaction Growth and an increase in average transaction price driven by a higher mix in international transactions and higher hotel room rates.
Current report
(a)Includes (i) employee severance (reversals)/costs of $(3) million and $5 million for the three months ended June 30, 2024 and 2023, respectively, and $6 million and $28 million for the six months ended June 30, 2024 and 2023, respectively, (ii) accelerated amortization of operating lease ROU assets of $6 million for each of the three and six months ended June 30, 2023 and (iii) contract costs related to facility abandonment of $2 million for each of the three and six months ended June 30, 2023.
Current report
Travel Revenue increased by $27 million, or 6%, primarily due to volume growth, with travel yield remaining stable. Product and professional services revenue increased $6 million, or 5%, primarily due to $3 million increase in management fees and $3 million from increased consulting and other professional services revenue.
Current report
For the three months ended June 30, 2024, sales and marketing expenses decreased by $3 million, or 4%, due to (i) $5 million benefit from cost saving initiatives, offset by (ii) $2 million increased costs to support growth plans in hotel acceleration and small and medium enterprise customer base.
Current report
For the three months ended June 30, 2024, technology and content costs increased by $9 million, or 8%, due to (i) higher employee costs of $3 million as a result of increased employee headcounts related to our strategic investments and (ii) $6 million increased costs to support growth plans in hotel acceleration and small and medium enterprise customer base.
Current report
For the three months ended June 30, 2024, restructuring reversals of $(3) million related to employee severance costs was primarily due to true up of estimates.
Current report
Other Loss, net
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenues
Current report
Travel Revenue increased by $52 million, or 5%, primarily due to 5% increase in Transaction Growth and 7% increase in TTV. Product and Professional Services Revenue increased $13 million, or 6%, due to $8 million increase in management fees and $5 million from increased consulting and other professional services revenue.
Current report
For the six months ended June 30, 2024, cost of revenue (excluding depreciation and amortization) increased by $7 million, or 1%, due to (i) additional traveler care costs of $14 million to manage the increase in transaction volume and a merit increase of $11 million in salaries and benefits, offset by (ii) $18 million reduction in expenses primarily due to cost savings initiatives.
Current report
Sales and Marketing
Current report
Technology and Content
Current report
General and Administrative
Current report
For the six months ended June 30, 2024, general and administrative expenses increased by $8 million, or 5%, primarily due to (i) $25 million related to mergers and acquisitions costs for the potential acquisition of CWT, offset by (ii) $8 million decrease resulting from cost saving initiatives, (iii) $6 million of prior year costs incurred resulting from accelerated amortization of operating lease ROU assets and (iv) a $5 million reduction related to lower integration expenses.
Current report
Restructuring and Other Exit Charges
Current report
Depreciation and Amortization
Current report
For the six months ended June 30, 2024, depreciation and amortization remained stable.
Current report
Interest Expense
Current report
For the six months ended June 30, 2024, interest expense decreased by $4 million or 6%. The increase in variable interest rates did not have material impact due to interest rate swaps being in place. Further, fixed rate margins were lower during the six months ended June 30, 2024 compared to six months ended June 30, 2023 due to improved leverage ratios under the Original Credit Agreement based on which margins were set.
Current report
Fair Value Movements on Earnout and Warrant Derivative Liabilities
Current report
Other (Loss) Income, net
Current report
As of June 30, 2024, our Net Debt is lower by $36 million compared to Net Debt as of December 31, 2023, primarily due to $39 million increase in cash and cash equivalents balance.
Current report
On July 26, 2024, we amended and restate our senior secured credit facility, and borrowed an aggregate principal amount of $1,400 million of term loans. The proceeds therefrom were used, in part, to repay in full the loans and other outstanding obligations (including make-whole premium, related fees and expenses) under the Original Credit Agreement. See note 17 -Subsequent Events to our consolidated financial statements included elsewhere in this Form 10-Q.
Current report
The A&R Credit Agreement contains various affirmative and negative covenants, which are similar to those as existed as of June 30, 2024 under the Original Credit Agreement, including certain financial covenants (see below) and limitations
Current report
(subject to exceptions) on the ability of the Loan Parties (as defined under the A&R Credit Agreement) and their subsidiaries to: (i) incur indebtedness or issue preferred stock; (ii) incur liens on their assets; (iii) consummate certain fundamental changes (such as acquisitions, mergers, liquidations or changes in the nature of the business); (iv) dispose of all or any part of their assets; (v) pay dividends or other distributions with respect to, or repurchase, any equity interests of any Loan Party or any equity interests of any direct or indirect parent company or subsidiary of any Loan Party; (vi) make investments, loans or advances; (vii) enter into transactions with affiliates and certain other permitted holders; (viii) modify the terms of, or prepay, any of their subordinated or junior lien indebtedness; and (ix) enter into certain burdensome agreements.
Current report
The A&R Credit Agreement also contains a financial covenant applicable solely to the Revolving Credit Facility that requires the first lien net leverage ratio to be less than or equal to 3.50 to 1.00 as of the last day of any fiscal quarter on which the aggregate principal amount of outstanding loans and letters of credit under the Revolving Credit Facility exceeds 35% of the aggregate principal amount of the Revolving Credit Facility (subject to a $10 million exclusion for utilization of the letter of credit sublimit). The A&R Credit Agreement provides that such financial covenant is suspended for a limited period of time if an event that constitutes a “Travel MAC” (as defined in the A&R Credit Agreement) has occurred and the Loan Parties are unable to comply with such covenant as a result of such event.
Current report
Interest Rate Margin
Current report
Under the A&R Credit Agreement, the Loans will bear interest based on SOFR (or an alternative reference rate for amounts denominated in a currency other than U.S. dollars), or, at the Initial Borrower’s option, in the case of amounts denominated in U.S. dollars, at the Base Rate (as defined in the A&R Credit Agreement), plus, as applicable, a margin of (i) in the case of Term Loans, 3.00% per annum for SOFR-based Loans (or 2.00% per annum for Base Rate-based Loans) and (ii) in the case of the Revolving Loans, 2.75% per annum for SOFR-based Loans (or 1.75% per annum for Base Rate-based Loans).
Current report
Commitment Fee Margin and Debt Ratings
Current report
The Company’s borrowings under the A&R Credit Agreement was rated “B+” by Standard & Poor’s Financial Services LLC ("S&P") with "Positive" outlook. We also received a "B2" rating from Moody's Corporation ("Moody's") and "BBB-" rating from Fitch Ratings Inc.
Current report
Under the A&R Credit Agreement, we are required to pay, quarterly in arrears, a fee based on the average daily commitments under the Revolving Credit Facility of 0.375% per annum, with a single step-down to 0.25% per annum upon an upgrade of the Initial Borrower’s debt rating from either S&P or Moody’s on or prior to the first anniversary of the closing of the previously announced acquisition of CWT. Our debt ratings have a direct impact on our future borrowing costs and access to capital markets.
Current report
On July 26, 2024, we entered into the A&R Credit Agreement under which we borrowed $1,400 million of term loans and which provides for a $360 million revolving credit facility. The proceeds from the term loans were used to repay in full the loans and other outstanding obligation (including make-whole premium, related fees and expenses) under the Original Credit Agreement. The principal amount outstanding under the new term loan facility is required to be repaid on a quarterly basis at an amortization rate of 1.00% per annum, with the balance due at maturity on July 26, 2031. There were no amounts drawn down from the revolving credit facility. (see note 17 -Subsequent Events to our consolidated financial statements included elsewhere in this Form 10-Q).
Removed paragraphs (8)
Previous report
(a)Represents employee severance costs.
Previous report
Travel Revenue increased by $25 million, or 5%, primarily due to 6% Transaction Growth offset by small decline in yield. Product and professional services revenue increased $7 million, or 7%, primarily due to $5 million increase in management fees and $2 million increased product and consulting revenue.
Previous report
For the three months ended March 31, 2024, cost of revenue (excluding depreciation and amortization) increased by $3 million, or 1%, due to increased volume and spend to support Transaction Growth offset by cost savings initiatives.
Previous report
Other Income, net
Previous report
During the three months ended March 31, 2024, Net Debt increased marginally by $2 million.
Previous report
Our senior secured credit facility agreement contains customary restrictive financial and operating covenants. Under our credit agreement, our interest rate margin depends upon our leverage ratio calculated in a manner as provided under the credit agreement. Improvement in our leverage ratio resulted in decrease in our interest rate margins from 6.00% to 5.25% in the case of tranche B-3 and B-4 term loans and from 5.50% to 4.75% in the case of revolving credit facility. This would result in lowering our interest cost for the future periods and improving our liquidity. Any future changes to our leverage ratio beyond set thresholds under the credit agreement could increase or decrease our interest rate margins.
Previous report
Debt Ratings
Previous report
As of March 31, 2024, the Company’s long-term debt was rated “B+” by Standard & Poor’s Financial Services LLC (“S&P”). During the three months ended March 31, 2024, the outlook on our long-term debt is changed to "Positive". In assessing our credit strength, we believe that S&P considered, among other things, our market share gains and strong operating performance. Although we currently believe our long-term debt ratings will remain Positive, we cannot guarantee the future actions of S&P. Our debt ratings have a direct impact on our future borrowing costs, and access to capital markets.
Reworded paragraphs (37)
Previous wording
•the impact of any future acquisitions including the integration of any acquisition; and
Current wording
•risks related to, or unexpected liabilities that arise in connection with, any future acquisition or the integration of any acquisition; and
Previous wording
We operate American Express Global Business Travel, a leading business-to-business software and services company in travel and expense. We provide a full suite of differentiated, technology-enabled solutions to business travelers and business clients, suppliers of travel content (such as airlines, hotels, ground transportation and aggregators) and third-party travel agencies. We differentiate our value proposition through our commitment to deliver unrivaled choice, value and experience, and our brand promise.
Current wording
We operate American Express Global Business Travel, a leading business-to-business software and services company in travel, expense and meetings & events. We provide a full suite of differentiated, technology-enabled solutions to business travelers and business clients, suppliers of travel content (such as airlines, hotels, ground transportation providers and aggregators) and third-party travel agencies. We differentiate our value proposition through our commitment to deliver unrivaled choice, value and experience, and our brand promise.
Previous wording
•The Amex GBT Marketplace is our proprietary capability to provide travel suppliers with efficient access to business travel clients serviced by our diverse portfolio of leading travel management solutions and Network Partners. We believe this access allows travel suppliers to benefit from premium demand (which we generally view as demand that is differentially valuable and profitable to suppliers) without incurring the costs associated with directly marketing to, and servicing the complex needs of, our business clients. Our travel supplier relationships generate efficiencies and cost savings that can be passed on to our business clients, delivering access to extensive and competitive content including exclusive negotiated content.
Current wording
•The Amex GBT Marketplace is our proprietary capability to provide travel suppliers with efficient access to business travel clients serviced by our diverse portfolio of leading travel management solutions and Network Partners (defined below). We believe this access allows travel suppliers to benefit from premium demand (which we generally view as demand that is differentially valuable and profitable to suppliers) without incurring the costs associated with directly marketing to, and servicing the complex needs of, our business clients. Our travel supplier relationships generate efficiencies and cost savings that can be passed on to our business clients, delivering access to extensive and competitive content including exclusive negotiated content.
Previous wording
•Our award-winning client facing travel and expense solutions are built to deliver business value through optimized user experiences across business travel and are comprised of Neo1, Egencia, Select and Ovation. These solutions are accessible over web and mobile interfaces, powered by our data management infrastructure and built by our dedicated product engineering team who is committed to driving technical innovation across the business travel industry.
Current wording
•Our award-winning client facing travel and expense solutions are built to deliver business value through optimized user experiences across business travel and are comprised of Neo1, Egencia, Select, Neo and Ovation. These solutions are accessible over web and mobile interfaces, powered by our data management infrastructure and built by our dedicated product engineering team who is committed to driving technical innovation across the business travel industry.
Previous wording
•GBT Partner Solutions is our program whereby we extend our platform to third-party travel management companies and independent advisors (collectively, "Network Partners"), by offering them access to our differentiated content and technology, global servicing capabilities and access to our leading content marketplace ("GBT Partner Solutions"). Through GBT Partner Solutions, we aggregate business travel demand serviced by our Network Partners at low incremental cost, which we believe enhances the economics of our platform, generates increased return on investment and expands our geographic and segment footprint.
Current wording
•GBT Partner Solutions is our program whereby we extend our platform to third-party travel management companies and independent advisors (collectively, "Network Partners"), by offering them access to our differentiated content and technology, global servicing capabilities and leading content marketplace ("GBT Partner Solutions"). Through GBT Partner Solutions, we aggregate business travel demand serviced by our Network Partners at low incremental cost, which we believe enhances the economics of our platform, generates increased return on investment and expands our geographic and segment footprint.
Previous wording
The transaction is expected to be completed in the second half of 2024, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory approvals.
Current wording
The transaction is expected to be completed in the first quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory approvals.
Previous wording
Transaction Growth (Decline) represents year-over-year increase or decrease as a percentage of the total transactions, including air, hotel, car rental, rail or other travel-related transactions, recorded at the time of booking, and is calculated on a net basis to exclude cancellations, refunds and exchanges. To calculate year-over-year growth or decline, we compare the total number of net transactions in the comparative previous period/ year to the total number of net transactions in the current period/year in percentage terms. For the three months ended March 31, 2024, we have presented Transaction Growth (Decline) on a net basis to exclude cancellations, refunds and exchanges as management believes this better aligns Transaction Growth (Decline) with the way we measure TTV and revenue. Prior period Transaction Growth percentages have been recalculated and represented to conform to current period presentation.
Current wording
Transaction Growth (Decline) represents year-over-year increase or decrease as a percentage of the total transactions, including air, hotel, car rental, rail or other travel-related transactions, recorded at the time of booking, and is calculated on a net basis to exclude cancellations, refunds and exchanges. To calculate year-over-year growth or decline, we compare the total number of net transactions in the comparative previous period/ year to the total number of net transactions in the current period/year in percentage terms. During 2024, we have amended our definition of Transaction Growth (Decline) and, we have presented Transaction Growth (Decline) on a net basis to exclude cancellations, refunds and exchanges as management believes this better aligns Transaction Growth (Decline) with the way we measure TTV and revenue. Prior period Transaction Growth percentages have been recalculated and represented to conform to current period presentation.
Previous wording
For the three months ended March 31, 2024, Transaction Growth was 6% compared to three months ended March 31, 2023. Increase in Transaction Growth during this period was primarily due to share gains and increased demand for business travel from our clients.
Current wording
For the three months ended June 30, 2024, Transaction Growth was 4% compared to three months ended June 30, 2023 and for the six months ended June 30, 2024, Transaction Growth was 5% compared to six months ended June 30, 2023. Increase in Transaction Growth during both periods was primarily due to share gains and increased demand for business travel from our clients, with strong global multinational customer base performance offset by slower growth in small and medium enterprise customer base. Transaction Growth for the three months ended June 2024 was slightly suppressed from the impact of the summer Olympics on travel to Paris.
Previous wording
•restructuring, mergers and acquisition and integration costs, all of which are intrinsic of our acquisitive business model; and
Current wording
•restructuring, mergers and acquisition and integration costs, all of which are intrinsic to our acquisitive business model; and
Previous wording
Set forth below is a reconciliation of net loss to EBITDA and Adjusted EBITDA.
Current wording
Set forth below is a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA.
Previous wording
(f)Adjusted Operating Expenses excludes (i) long-term incentive plan expense of $3 million and $7 million for the three months ended March 31, 2024 and 2023, respectively, and (ii) legal and professional services costs of $1 million and $5 million for the three months ended March 31, 2024 and 2023, respectively. Adjusted EBITDA additionally excludes (i) unrealized foreign exchange gains of $8 million and $6 million for the three months ended March 31, 2024 and 2023, respectively, and (ii) non-service component of our net periodic pension cost related to our defined benefit pension plans of $1 million and $1 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(f)Adjusted Operating Expenses excludes (i) long-term incentive plan expense of $3 million and $5 million for the three months ended June 30, 2024 and 2023, respectively, and $6 million and $12 million for the six months ended June 30, 2024 and 2023, respectively, and (ii) legal and professional services costs of $4 million and $5 million for the three months ended June 30, 2024 and 2023, respectively, and $5 million and $10 million for the six months ended June 30, 2024 and 2023, respectively. Adjusted EBITDA additionally excludes (i) unrealized foreign exchange (gains) loss of $(1) million and $4 million for the three months ended June 30, 2024 and 2023, respectively, and $(9) million and $(2) million for the six months ended June 30, 2024 and 2023, respectively, and (ii) non-service component of our net periodic pension cost related to our defined benefit pension plans of $2 million and $1 million for the three months ended June 30, 2024 and 2023, respectively, and $3 million and $2 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
For the three months ended March 31, 2024, TTV increased by $683 million, or 9%, to $8,105 million compared to the three months ended March 31, 2023 primarily due to Transaction Growth and an increase in average ticket price and hotel room rates.
Current wording
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Previous wording
Cost of Revenue
Current wording
Cost of Revenue (Excluding Depreciation and Amortization)
Previous wording
Cost of revenue increase is primarily due to (i) additional traveler care costs of $11 million to manage the increase in transaction volume and (ii) $6 million due to increase in employee incentives and merit, offset by (iii) $12 million reduction in expenses largely due to cost savings initiatives.
Current wording
For the three months ended June 30, 2024, cost of revenue (excluding depreciation and amortization) increased by $4 million, or 2%, due to (i) additional traveler care costs of $8 million to manage the increase in transaction volume and (ii) $6 million due to increase in vendor rates and merit salary increases, partially offset by (iii) $10 million reduction in expenses primarily due to cost savings initiatives.
Previous wording
For the three months ended March 31, 2024, general and administrative expenses increased by $14 million, or 20%, primarily due to (i) $19 million related to mergers and acquisitions costs for the potential acquisition of CWT, offset by (ii) $4 million in benefits from cost saving initiatives.
Current wording
For the three months ended June 30, 2024, general and administrative expenses decreased by $6 million, or 7%, primarily due to (i) benefits from cost saving initiatives of $4 million, (ii) reduction in integration costs of $3 million, (iii) reduction from prior year costs resulting from accelerated amortization of operating lease ROU assets of $6 million, offset by (iv) increase in mergers and acquisitions costs of $6 million largely driven by the potential CWT acquisition.
Previous wording
For the three months ended March 31, 2024, depreciation and amortization increased marginally by $1 million, or 2%,
Current wording
For the three months ended June 30, 2024, depreciation and amortization decreased marginally by $1 million or 3%.
Previous wording
For the three months ended March 31, 2024, interest expense decreased marginally by $1 million, or 1%. The increase in variable interest rates did not have material impact on us due to interest rate swaps and was further offset by decrease in fixed rate margins due to improved leverage ratios under the senior secured credit agreement.
Current wording
For the three months ended June 30, 2024, interest expense decreased by $3 million or 10%. The increase in variable interest rates did not have material impact due to interest rate swaps being in place. Further, fixed rate margins were lower during the three months ended June 30, 2024 compared to three months ended June 30, 2023 due to improved leverage ratios under the Original Credit Agreement based on which margins were set.
Previous wording
During the three months ended March 31, 2024, the fair value movement of our derivative liabilities related to our earnout shares resulted in a credit of $18 million to our consolidated statements of operations compared to a credit of $3 million during the three months ended March 31, 2023. The decrease in fair value of earnout derivative liability was mainly driven by the decrease in our stock price as of March 31, 2024.
Current wording
During the three months ended June 30, 2024, the fair value movement of our derivative liabilities related to our earnout shares resulted in a charge of $10 million to our consolidated statements of operations compared to a charge of $19 million during the three months ended June 30, 2023. The increase in fair value of earnout derivative liability during the three months ended June 30, 2024, was mainly driven by the increase in our stock price as of June 30, 2024.
Previous wording
(Provision for) Benefit from Income Taxes
Current wording
Benefit from Income Taxes
Previous wording
For the three months ended March 31, 2024, our total revenue increased by $32 million, or 6%, due to an increase in both Travel Revenue and Product and professional services revenue. The increase in total revenue was driven by increase in Transaction Growth, offset by a modest decline of 30bps in yield to 7.5% due to mix of non-TTV driven revenue and higher digital transactions. Yield is calculated as total revenue divided by TTV.
Current wording
For the six months ended June 30, 2024, our total revenue increased by $65 million, or 6%, due to an increase in both Travel Revenue and Product and professional services revenue. The increase in total revenue was driven by 5% increase in Transaction Growth, offset by a modest decline of 10bps in yield to 7.8% due to mix of non-TTV driven revenue and higher digital transactions.
Previous wording
For the three months ended March 31, 2024, sales and marketing expenses decreased by $4 million, or 3%, primarily resulting from cost saving initiatives.
Current wording
For the six months ended June 30, 2024, sales and marketing expenses decreased by $7 million, or 4%, primarily due to cost saving initiatives.
Previous wording
For the three months ended March 31, 2024, technology and content costs increased by $7 million, or 7%, due to (i) increase in employee headcount to support our revenue growth and increase in employee incentives and merit of $5 million and (ii) $2 million increase to support growth plans in hotel acceleration and small and medium enterprise customer base.
Current wording
For the six months ended June 30, 2024, technology and content costs increased by $16 million, or 7%, primarily due to (i) increase in employee headcount related to our strategic investments, incentives and merit salary increase of $8 million and (ii) $5 million increase to support growth plans in hotel acceleration and small and medium enterprise customer base.
Previous wording
For the three months ended March 31, 2024, restructuring charges of $9 million related to employee severance costs due to reduction in workforce to improve operational efficiencies.
Current wording
For the six months ended June 30, 2024, restructuring charges of $6 million related to employee severance costs primarily due to reduction in workforce to improve operational efficiencies.
Previous wording
For the three months ended March 31, 2024, other income, net, increased by $2 million primarily due to favorable foreign exchange movement.
Current wording
For the six months ended June 30, 2024, other income, net, increased by $6 million due to favorable foreign exchange movement.
Previous wording
For the three months ended March 31, 2024 and 2023, we had income tax expense of $27 million and an income tax benefit of $8 million, respectively, and our effective tax rate was 333.78% and 23.88%, respectively. Our effective tax rate for the three months ended March 31, 2024 is higher than, the U.S. federal statutory corporate income tax rate of 21% due to an increase to the valuation allowance for deferred tax assets, non-deductible expenses and the U.S. base erosion minimum taxes. The impact of these items has a greater impact on the effective tax rate due to the low pre-tax net income.
Current wording
For the six months ended June 30, 2024 and 2023, we had income tax (expense) benefit of $(1) million and $10 million, respectively and the effective tax rate was (13)% and 11%, respectively. Our effective tax rate is different than the U.S. federal statutory corporate income tax rate of 21% due to permanent differences between financial accounting income and income for tax purposes, changes to the valuation allowance and certain U.S minimum taxes expected to arise for the full year. The impact of these items has a large impact on the effective tax rate due to the low pre-tax net income.
Previous wording
We maintain a level of liquidity sufficient to allow us to meet our cash needs in the short-term. Over the long-term, we manage our cash and capital structure with an intention to maintain our financial condition and flexibility for future strategic initiatives. Our principal sources of liquidity are typically cash flows generated from operations, cash available under the credit facilities under the senior secured credit agreement as well as cash and cash equivalent balances on hand. As of March 31, 2024 and December 31, 2023, our cash and cash equivalent balances were $475 million and $476 million, respectively. During the three months ended March 31, 2024 and 2023, our net cash from (used in) operating activities was $49 million and $(77) million, respectively, and our Free Cash Flow was $24 million and $(109) million, respectively (See “— Free Cash Flow” for additional information about this non-GAAP measure and a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP). As of March 31, 2024, we had $50 million of senior secured revolving credit facility that remained undrawn.
Current wording
We maintain a level of liquidity sufficient to allow us to meet our cash needs in the short-term. Over the long-term, we manage our cash and capital structure with an intention to maintain our financial condition and flexibility for future strategic initiatives. Our principal sources of liquidity are typically cash flows generated from operations, cash available under the credit facilities as well as cash and cash equivalent balances on hand. As of June 30, 2024 and December 31, 2023, our cash and cash equivalent balances were $515 million and $476 million, respectively. During the six months ended June 30, 2024 and 2023, our net cash from (used in) operating activities was $122 million and $(31) million, respectively, and our Free Cash Flow was $73 million and $(90) million, respectively (See “— Free Cash Flow” for additional information about this non-GAAP measure and a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP). As of June 30, 2024, we had $50 million of senior secured revolving credit facility that remained undrawn. On July 26, 2024, we amended and restated the Original Credit Agreement, which increased our revolving credit facility to $360 million (see note 17 -Subsequent Events, to our consolidated financial statements included elsewhere in this Form 10-Q).
Previous wording
We believe our liquidity is important given the limited ability to predict our future financial performance due to the uncertainties of a potential economic slowdown due to prevailing adverse macro-economic conditions. In the past, we have taken several measures to preserve our liquidity (voluntary and involuntary redundancies, flexible workings, mandatory pay reductions, consolidating facilities, etc.), and entered into several financial transactions, including debt financing / refinancing transactions and going public. We further continue to explore other capital market transactions, process rationalizations and cost reduction measures to improve our liquidity position.
Current wording
We believe our liquidity is important given our limited ability to predict future financial performance due to the uncertainties of a potential economic slowdown. We have taken and continue to take several measures to preserve our liquidity (voluntary and involuntary redundancies, flexible workings, consolidating facilities, etc.), and entered into several financial transactions, including debt financing / refinancing transactions. In July 2024, we refinanced our existing term loan facility and extended the maturity of term loans until July 2031 (see note 17 -Subsequent Events to our consolidated financial statement included elsewhere in this Form 10-Q). We continue to explore other capital market transactions, process rationalizations and cost reduction measures to further strengthen our liquidity position.
Previous wording
Based on our current operating plan, existing cash and cash equivalents, increase in business volume trends, our mitigation measures taken or planned to strengthen our liquidity and financial position, along with our available funding capacity and cash flows from operations, we believe we have adequate liquidity to meet the future operating, investing and financing needs of the business for a minimum period of twelve months. Although we believe that we will have a sufficient level of cash and cash equivalents to cover our working capital needs in the ordinary course of business and to continue to expand our business, we may, from time to time, explore additional financing sources to lower our cost of capital, which could include equity, equity-linked and debt financing. In addition, from time to time, we may evaluate acquisitions and other strategic opportunities. If we elect to pursue any such investments, we may fund them with internally generated funds, bank financing, the issuance of other debt or equity or a combination thereof. There is no assurance that such funding would be available to us on acceptable terms or at all. Our utilization of the senior secured revolving credit facility may be effectively limited with the leverage-and liquidity-based financial covenant requirements for such facility contained in the senior secured credit agreement when required.
Current wording
Based on our current operating plan, existing cash and cash equivalents, increase in business volume trends, mitigation measures taken or planned to strengthen our liquidity and financial position, along with our available increased revolving credit funding capacity under the A&R Credit Agreement and cash flows from operations, we believe we have adequate liquidity to meet the future operating, investing and financing needs of the business for a minimum period of twelve months. Although we believe that we will have a sufficient level of cash and cash equivalents to cover our working capital needs in the ordinary course of business and to continue to expand our business, we may, from time to time, explore additional financing sources to lower our cost of capital, which could include equity, equity-linked and debt financing. In addition, from time to time, we may evaluate acquisitions and other strategic opportunities. If we elect to pursue any such investments, we may fund them with internally generated funds, bank financing, the issuance of other debt or equity or a combination thereof. There is no assurance that such funding would be available to us on acceptable terms or at all. Our full utilization of the Revolving Credit Facility, under the A&R Credit Agreement entered into in July 2024, may be effectively limited with the leverage-based financial covenant requirements.
Previous wording
Cash Flows for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023
Current wording
Cash Flows for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous wording
As of March 31, 2024, we had $498 million of cash, cash equivalents and restricted cash, an increase of $9 million compared to December 31, 2023. The following discussion summarizes changes to our cash flows from operating, investing and financing activities for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
As of June 30, 2024, we had $541 million of cash, cash equivalents and restricted cash, an increase of $52 million compared to December 31, 2023. The following discussion summarizes changes to our cash flows from operating, investing and financing activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, net cash from operating activities was $49 million compared to $77 million of operating cash outflows for the three months ended March 31, 2023. The increase in cash flows from operating activities of $126 million was primarily due to favorable net change in working capital resulting from Egencia working capital optimization actions and timing of certain receipts and payments.
Current wording
For the six months ended June 30, 2024 and June 30, 2023, net cash from (used in) operating activities was $122 million and $(31) million, respectively. The increase in cash flows from operating activities of $153 million was primarily due to an increase in operating income and favorable net change in working capital resulting from Egencia working capital optimization actions.
Previous wording
During the three months ended March 31, 2024, cash used in investing activities decreased by $7 million primarily due to decreased investments in property and equipment.
Current wording
During the six months ended June 30, 2024, cash used in investing activities decreased by $20 million due to (i) decrease in purchase of property and equipment of $10 million and (ii) $10 million resulting from current period repayment of prior period loan to an equity affiliate.
Previous wording
During the three months ended March 31, 2024, net cash used in financing activities of $10 million was primarily due to: (i) $12 million cash paid for taxes withheld upon vesting of equity awards, offset by (ii) $4 million cash received from contributions for ESPP. During the three months ended March 31, 2023, net cash from financing activities of $122 million was primarily due to: (i) $131 million of proceeds received from borrowings under the senior secured tranche B-4 term loan facilities, net of discount, partially offset by (ii) $3 million repayment of principal amount of senior secured term loans and finance leases, and (iii) $8 million cash paid for taxes withheld upon vesting / exercise of equity awards.
Current wording
During the six months ended June 30, 2024, net cash used in financing activities of $17 million was primarily due to: (i) $19 million cash paid for taxes withheld upon vesting of equity awards, offset by (ii) $5 million cash received from contributions for ESPP and exercise of stock options. During the six months ended June 30, 2023, net cash from financing activities of $123 million was primarily due to: (i) $131 million of proceeds received from borrowings under the senior secured tranche B-4 term loan facilities, net of discount and (ii) $2 million received from exercise of stock options, partially offset by (iii) $4 million repayment of principal amount of senior secured term loans and finance leases, and (iv) $8 million cash paid for taxes withheld upon vesting / exercise of equity awards.
Previous wording
During the three months ended March 31, 2024, our Free Cash Flow improvement of $133 million was due to a $126 million increase in net cash from operating activities as discussed above and a decrease of $7 million of cash outflows related to purchases of property and equipment.
Current wording
During the six months ended June 30, 2024, our Free Cash Flow improvement of $163 million was due to a $153 million increase in net cash from operating activities as discussed above and a decrease of $10 million of cash outflows related to purchases of property and equipment.
Previous wording
As of March 31, 2024, we were in compliance with all applicable covenants under the senior secured credit agreement.
Current wording
As of June 30, 2024, we were in compliance with all applicable covenants under the Original Credit Agreement.
Previous wording
There has been no material change to our contractual obligations and commitments as compared to those disclosed in our Annual Report on Form 10-K .
Current wording
Other than as discussed above, there has been no material change to our contractual obligations and commitments as compared to those disclosed in our Annual Report on Form 10-K.
Previous wording
For the three months ended March 31, 2024, there were no material changes to our critical accounting policies and estimates presented in our Annual Report on Form 10-K. For additional information about our critical accounting policies and estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Estimates in our Annual Report on Form 10-K.
Current wording
For the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates presented in our Annual Report on Form 10-K. For additional information about our critical accounting policies and estimates, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Estimates in our Annual Report on Form 10-K.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
For the three months ended June 30, 2024, our total revenue increased by $33 million, or 6%, due to an increase in both Travel Revenue and Product and professional services revenue. The increase in total revenue was driven by 4% Transaction Growth and 5% TTV growth, with yield remaining stable at 8.1%. Yield is calculated as total revenue divided by TTV.
Current report — wording carried from elsewhere
For the three months ended June 30, 2024, other loss, net, decreased by $4 million primarily due to favorable foreign exchange movement.
Current report — wording carried from elsewhere
For the three months ended June 30, 2024 and 2023, we had income tax benefit of $26 million and $2 million, respectively. Our effective tax rate is different than the U.S. federal statutory corporate income tax rate of 21% due to permanent differences between financial accounting income and income for tax purposes, changes to the valuation allowance and certain U.S minimum taxes expected to arise for the full year. The impact of these items has a large impact on the effective tax rate due to the low pre-tax net income.
Current report — wording carried from elsewhere
The following is a discussion of our results of the consolidated statements of operations for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
Cost of Revenue (Excluding Depreciation and Amortization)
Current report — wording carried from elsewhere
During the six months ended June 30, 2024, the fair value movement of our derivative liabilities related to our earnout shares resulted in a credit of $8 million to our consolidated statement of operations compared to a charge of $16 million during the six months ended June 30, 2023. The decrease in fair value of earnout derivative liability was mainly driven by the lower remaining expected term of the earnout shares as of June 30, 2024.
Current report — wording carried from elsewhere
Benefit from (Provision for) Income Taxes