Amadeus’ quarterly earnings show strength in software services
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Amadeus’ quarterly earnings show strength in software services

Amadeus IT is a pioneer in the travel industry, rolling out its backend infrastructural support to airlines looking to distribute airfares to travel agencies. But, while its traditional business is still its biggest segment, newer services are driving growth at the company – and look like they’re on course to catch up over 2019.

Amadeus’ share price has appreciated by more-than 8% so far this year

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Source: Yahoo Finance

Last week, Amadeus reported full year earnings for 2018 that demonstrate how the make-up of their business is changing. Full year revenue rose 6.4% against the previous year to $5.61 billion – although that includes transaction costs and revenue gains from its TravelClick purchase last year. Stripping that out, revenue hit $5.53 billion. And of that total, the company’s IT Solutions unit (which is pumping out innovative solutions for airports the world over) made up about 38%. Here’s the big news though: IT Solutions is becoming so popular, that by the end of this year, it is predicted to account for as much as 45% of total revenue. And 2019 is also predicted to be the first year where IT Solutions contributes a full half of Amadeus’ total earnings (in 2018, it accounted for 48%).

On the company’s earnings call, Amadeus’ president and CEO, Luis Maroto Camino, said: “Amadeus maintained its long-term record of revenue and profitability growth in 2018, despite a slowdown in growth of global travel in the second half of the year. One of the strengths of our business is its resilience, diversity and global footprint. And so while we face some turbulence in Distribution, our IT solutions business grew strongly. Our diversification efforts, including the broadening of our hospitality offering through the acquisition of TravelClick, also supported our growth.”

Disclosure

Dominion holds Amadeus IT Group in its Global Trends Managed Fund.


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