The Corporate Travel Management Ltd (ASX: CTD) share price dropped 7% after reporting its FY23 result.
It was a curious reaction after the company released such a positive set of numbers and guidance.
Corporate Travel Management share price
FY23 result
These are some of the highlights from the 12 months to June 2023:
- Total transaction volume (TTV) up 77% to $8.96 billion
- Revenue up 70% to $660 million
- Underlying EBITDA (EBITDA explained) up 179% to $167 million
- Underlying net profit after tax (NPAT) grew by 367% to $92.5 million
- Statutory net profit up 2403% to $77.6 million
- Annual dividend per share up 340% to 22 cents
The business is benefiting from a return to normal operations after COVID-19 disruptions. Fourth quarter revenue was more than 90% of FY19’s (pro forma – company calculated) revenue.
Managing director Jamie Pherous said that the company was taking “strong momentum” into FY24, with EBITDA averaging $20 million per month and profit before tax and client amortisation (PBTa) of $16.5 million per month since February 2023.
The business has won a number of new contracts and clients over the last three years, and this is now bearing fruit for the business.
Pherous also noted that it has been investing in AI and automation for the last two years and, while early days, it is already saving 1,000 work hours per month in ANZ. A key goal for FY24 is to expand this globally. This could help the Corporate Travel share price in the longer-term if it boosts margins.
Trading update
July 2023 and August 2023 activity was tracking “significantly above” July 2022, with transactions up 42% and revenue up 34%. Corporate Travel put this down to “strong client wins” which are now starting to transact.
For FY24, it’s guiding that revenue will be between $770 million to $850 million (up from $660 million), EBITDA will be between $240 million to $280 million (up from $167 million) and PBTa of between $193 million to $233 million (up from $124.8 million).
Those numbers would mean delivering record earnings per share (EPS) in FY24.
Final thoughts on the Corporate Travel Management share price
Those are all impressive numbers, but clearly the market was expecting even more from the ASX travel share.
It’ll be interesting to see if it can continue to deliver profit and TTV growth after FY24 – were these growth numbers just a recovery from COVID-19 or has it significantly changed as a business? Will the wider economic climate impact the company’s earnings?
It seems like a medium-term opportunity to me at this lower price, so I’d be happy to invest with a three-year view in mind, though there are other ASX growth shares I’d pick first.
