Corporate Travel shares tumble on earnings and dividend miss, FY24 guidance cut

Corporate Travel (ASX: CTD) shares haven't faced a downturn of this magnitude since November 2018, when the stock weathered a short seller attack from VGI Partners. The stock tumbled 17% as the market opened on Wednesday after reporting weaker-than-expected first-half earnings and a downgrade to full-year forecasts.

First-half FY24 – Key numbers

• Revenue up 25% to $363.7 million, a -5% miss against consensus ($383.6 million)

• EBITDA up 96% to $100.7 million, a -7% miss against consensus ($108.4 million)

• Underlying net profit up 162% to $57.9 million, a 6% miss against consensus ($61.2 million)

• Net cash of $131 million at year end

• Interim dividend of 17 cents per share was 10.5% below expectations of 19 cents

Guidance Downgrade and Earnings Call Takeaways

Corporate Travel flagged that macroeconomic issues outside of its control have weighed on short term performance. The company now expects FY24 revenue between $730-760 million, down from its prior guidance of $770-850 million (down -8.0% at midpoint).

Underlying net profit for the full-year was also cut to $125-140 million. There was no prior guidance for full-year net profit but the figure remains well-below $155.5 million consensus.

Corporate Travel just wrapped up its earnings call Q&A, where Managing Director Jamie Pherous summarised key insights from the results and fielded questions from analysts. Here are some of the key takeaways.

• Corporate travel market recovery is largely transaction-based and currently at around 75% of pre-covid levels, with the exception of Asia at 50%

• North American clients ran out of budget around mid-September due to "terribly, unsustainably high ticket prices" and to a lesser extend, the slower outbound recovery in China. Price reductions are expected to increase transactions

• UK Bridging Contract ($3bn contract value over two years for UK government to manage travel logistics for Asylum Seekers) has materially underperformed due to immigration issues and timing delays. The contract now has a guidance of $5 million for this year and $5 million for the next two years

• Expecting a one to two third skew in second-half earnings due to business momentum, flat costs and revenue growth

Jarden's First Take

"A miss to expectations and guidance cut and while Corporate Travel are executing on strategy, generating cash and driving positive operating leverage, this will likely be overshadowed by the downgrade with a big miss on new UK contract and weaker macro," Jarden said in a note this morning.

"Disappointing update and material miss, with stock likely to be weak and consensus to question ability to hit medium-term targets and macro recovery."

Corporate Travel shares opened -16.9% lower and hit a brief session low of -20.3 in early trade.

• Read the Announcement – Profit Guidance

• View the Presentation – 1HFY24 Results Presentation

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