American Express Global Business Travel (GBTG)

Business travel management company Global Business Travel Group (NYSE:GBTG) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 12.9% year on year to $674 million. Its GAAP loss of $0.13 per share was significantly below analysts’ consensus estimates.

Company Overview

Originally spun off from American Express in 2014 but maintaining the Amex GBT brand, Global Business Travel Group (NYSE:GBTG) provides end-to-end business travel and expense management solutions, connecting corporate clients with travel suppliers and offering specialized software services.

The adoption of financial technology software is propelled by an ongoing drive to reduce costs. The combination of rising transaction volumes and global supply chain complexity is driving demand for cloud-based spend management platforms able to integrate the two.

GBTG competes with other major travel management companies including BCD Travel, CWT (formerly Carlson Wagonlit Travel), and FCM Travel Solutions (part of Flight Centre Travel Group), as well as travel technology providers like SAP Concur (NYSE: SAP) and TripActions (now Navan).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, American Express Global Business Travel grew its sales at a solid 22.5% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers.

Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. American Express Global Business Travel’s recent performance shows its demand has slowed as its annualized revenue growth of 5.3% over the last two years was below its five-year trend.

This quarter, American Express Global Business Travel reported year-on-year revenue growth of 12.9%, and its $674 million of revenue exceeded Wall Street’s estimates by 10%.

Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.

For software companies like American Express Global Business Travel, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

American Express Global Business Travel’s gross margin is substantially worse than most software businesses, signaling it has relatively high infrastructure costs compared to asset-lite businesses like ServiceNow. As you can see below, it averaged a 61% gross margin over the last year. That means American Express Global Business Travel paid its providers a lot of money ($38.97 for every $100 in revenue) to run its business.

The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. American Express Global Business Travel has seen gross margins improve by 3.6 percentage points over the last 2 year, which is very good in the software space.

American Express Global Business Travel produced a 59.9% gross profit margin in Q3, in line with the same quarter last year. On a wider time horizon, American Express Global Business Travel’s full-year margin has been trending up over the past 12 months, increasing by 1.6 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as servers).

American Express Global Business Travel has managed its cost base well over the last year. It demonstrated solid profitability for a software business, producing an average operating margin of 5.2%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, American Express Global Business Travel’s operating margin rose by 1.5 percentage points over the last two years, as its sales growth gave it operating leverage.

This quarter, American Express Global Business Travel generated an operating margin profit margin of 1.8%, down 2.7 percentage points year on year. Since American Express Global Business Travel’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

American Express Global Business Travel has shown poor cash profitability over the last year, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.9%, lousy for a software business. The divergence from its good operating margin stems from its capital-intensive business model, which requires American Express Global Business Travel to make large cash investments in working capital (i.e., stocking inventories) and capital expenditures (i.e., building new facilities).

American Express Global Business Travel’s free cash flow clocked in at $38 million in Q3, equivalent to a 5.6% margin. The company’s cash profitability regressed as it was 4.2 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

American Express Global Business Travel reported $427 million of cash and $1.48 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $503 million of EBITDA over the last 12 months, we view American Express Global Business Travel’s 2.1× net-debt-to-EBITDA ratio as safe. We also see its $41 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing American Express Global Business Travel beat analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed. Overall, this quarter was mixed. The stock traded up 3.9% to $8.27 immediately after reporting.

Updated: December 4, 2025 at 9:03 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in American Express Global Business Travel.

We cheer for all companies solving complex business issues, but in the case of American Express Global Business Travel, we’ll be cheering from the sidelines. Although its revenue growth was solid over the last five years and is expected to accelerate over the next 12 months, its gross margins show its business model is much less lucrative than other companies. And while the company’s sturdy operating margins show it has disciplined cost controls, the downside is its expanding operating margin shows it’s becoming more efficient at building and selling its software.

American Express Global Business Travel’s price-to-sales ratio based on the next 12 months is 1.2x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $10.86 on the company (compared to the current share price of $7.88).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.