Travelport Worldwide (NYSE:TVPT) released third-quarter 2017 results on Thursday, highlighting the continued outperformance of its eNett commercial payments segment and several moves to improve its balance sheet.

However, the travel commerce platform company also missed bottom-line expectations for the quarter, and reduced its earnings expectations for the full year, though not without reason; shares are down around 9% as a result. Let's take a closer look at what drove Travelport's business as it entered the second half of the year.

Legs of a businessman walking to an airplane with a suitcase.


Travelport results: The raw numbers


Q3 2017

Q3 2016

Year-Over-Year Growth


$610.8 million

$590.8 million


GAAP net income (loss)

$4.7 million



GAAP earnings (loss) per diluted share




Data source: Travelport. GAAP = generally accepted accounting principles.

What happened with Travelport this quarter

  • On an adjusted (non-GAAP) basis, which adds perspective by excluding items like restructuring costs and stock-based compensation, net income fell 45% to $22.7 million, or $0.18 per diluted share.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 9.3% to $136.4 million.
  • Travel commerce platform revenue grew 4.7% to $586.2 million, including 2% growth in "air" segment revenue to $417.4 million, and an 11% increase in "beyond air" revenue to $168.8 million.
    • Within "beyond air," eNett revenue climbed 30% to $54 million, thanks to transaction growth with several major European and Asian online travel agencies.
  • Travel commerce platform revenue by geography included:
    • A slight decline in the U.S. to $150.3 million.
    • 12% growth in the Asia-Pacific region to $145 million.
    • 3% growth in Europe to $185.8 million.
    • 5% growth in Latin America and Canada to $27.6 million.
    • 6% growth in the Middle East and Africa to $77.5 million.
  • Technology services revenue fell 20.3% to $24.7 million, mostly due to Travelport's divestment of its 51% stake in IGT Solutions earlier this year.
  • Operating cash flow declined 14% year over year to $96 million, and free cash flow fell 26% to $63 million.

What management had to say

Travelport CEO Gordon Wilson lauded Travelport's broad-based international growth, particularly in Asia where the company is gaining market share. Wilson also elaborated on the reasons for Travelport's falling profitability:

Our Adjusted EBITDA decreased in the quarter, with several of our planned technology investments moving from design to implementation phase, as we further expand our products and capabilities. We also incurred higher commercial expenditure relating to the growth and ongoing implementation of our signed new business. As our mix of business continues to pivot toward the fast-growing online channel, I am confident that these investments will drive sustainable longer-term growth.

Looking forward

Travelport reiterated its full-year 2017 guidance for revenue in the range of $2.425 billion to $2.475 billion, representing growth of 3% to 5% from 2016. But management now expects full-year adjusted EBITDA and adjusted net income per share to be near the middle to lower ends of their previous respective ranges (of $585 million to $595 million, and $1.29 per share to $1.37 per share). By contrast, three months ago Travelport told investors to expect adjusted EBITDA and earnings per share near the high ends of those ranges.

To be fair, it's hard to blame Travelport for shifting strategic investments to better support its higher-growth online channel. But however astute this long-term thinking might be, it's no surprise to see Travelport stock falling today, given its bottom-line underperformance relative to the market's expectations.

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