Travelport Worldwide Ends the Year on a High Note

Travelport Worldwide (TVPT) released strong fourth-quarter 2017 results on Wednesday, handily exceeding its guidance thanks to international growth and the sustained momentum of its eNett commercial payments system. The travel commerce platform leader also provided an optimistic view of the year ahead. Shares rose more than 4% in response.

So let's take a closer look at how Travelport ended the year, and what investors can expect from the company in the coming quarters.

IMAGE SOURCE: GETTY IMAGES

Travelport results: The raw numbers

DATA SOURCE: TRAVELPORT 

What happened this quarter

• On an adjusted (non-GAAP) basis -- excluding items like stock-based compensation and restructuring expenses -- net income grew 56% year over year to $4.1 million. Adjusted net income per share increased 51% to $0.35.
• Adjusted EBITDA grew 6.1% to $138 million.
• Travel commerce platform revenue grew 6% to $549.2 million, including:
  • 3% growth in air segment revenue to $385.6 million.
  • 14% growth in beyond air revenue to $163.6 million, driven by 46% growth in eNett revenue thanks to a combination of new customers and higher payment volume settled with existing clients.
• Travel commerce platform revenue by geography included:
• 13% growth in sales from Europe to $184.7 million.
• 3% growth in Asia Pacific revenue to $127.5 million.
• 10% growth from the Middle East and Africa to $72.9 million.
• 6% growth from Latin America and Canada to $25.7 million.
• a 0.5% decline in the U.S. to $138.4 million.
• Technology services revenue declined 12% to $24.4 million, primarily driven by the divestment of IGT Solutions in mid-2017.
• Cash from operations declined 49% to $43 million due to fluctuations in working capital and higher income-tax payments. 

What management had to say

Travelport CEO Gordon Wilson noted that new business drove market-share gains in both Asia and Latin America, adding:

Our ongoing focus and investments in our platform saw a record level of new business signed and onboarded in 2017, with more to come onstream progressively during 2018, more than offsetting the loss of one travel agency account in the Pacific. We continue to lead our industry, being the first global distribution system to be certified at the highest level by IATA for its NDC Application Programming Interface as an Aggregator, and we have advanced further ahead of our peers with over 250 airlines now able to show their full merchandised value proposition to users of the Travelport platform. We are, therefore, well positioned for good underlying growth in 2018, particularly in the second half of the year.

Looking forward

More specifically, Travelport expects full-year 2018 revenue in the range of $2.535 billion to $2.585 billion, good for growth of 4% to 6% over 2017. On the bottom line, that should translate to 2018 adjusted EBITDA of $585 million to $605 million, and adjusted net income per share of $1.34 to $1.46. By contrast -- though we don't normally pay close attention to Wall Street's demands -- consensus estimates predicted earnings of $1.43 per share on revenue near the low end of Travelport's guidance range.

To be clear, management estimates the loss of that large agency last year (the migration of which was essentially completed by the end of the fourth quarter) will cut annual revenue and adjusted EBITDA by $85 million and $45 million, respectively. But that also makes its expectations for continued growth in 2018 -- which will be driven by both new air volumes and an increase of at least 30% from eNett -- that much more impressive.

All told, this was as solid a quarter as Travelport shareholders could have hoped for. And I think investors should be more than happy as the company looks to build on its recent successes from a position of strength.