Good morning, and welcome to day two, Citi Global Tech Conference. My name is Peter Christiansen. I'm with Citi Payments Processors and IT Services team. Real, real happy to have Amex Global Travel with us today. CEO Paul Abbott, Karen Williams, who recently took on the role of CFO. Welcome both.
Thank you.
Great to have you.
Thank you. Good morning.
Good morning. So, I think maybe we'll start. Let's talk about the overall demand environment, how you see kind of like the growth algorithm evolving over the next few quarters. Then we'll get more into, like, product platform, that kind of stuff.
Sure.
And then maybe some strategic initiatives beyond that.
Okay.
It's been an interesting year, for sure. And the recovery from the pandemic still continues, and now that we think that, you know, the H1 of this year is past us, you-
Mm.
You've done, you've done exceptionally well. I would say, you know, that you still have the travel recovery momentum going on. Sounds like a real solid sales pipeline, with new wins, $2.3 billion of TTV, just over the last 12 months. Continued penetration of that unmanaged SME segment, which we know is such a core part of the growth algorithm, longer term. Egencia synergies, which are still manifesting, and obviously improving operating leverage. How do you now that we're getting into kind of like this transition period, coming off of the recovery, how do you feel about the growth algorithm in the medium term, and how that is gonna evolve from here?
Yeah. Well, look, thank you for referencing some of those stats in the question there. It's been. We were very pleased with the Q2. I mean, we thought there were a number of important proof points there. You know, we obviously exceeded the consensus on EBITDA, which is very important, but we delivered that margin expansion, return to positive free cash flow, and also, you know, raised our guidance for the full year. So, it's nice to have, you know, strong H1 of the year behind us. In terms of, you know, how we sort of sustain that growth going forward, the foundation of that is obviously making sure our retention rates are really high, and that we're gaining share.
You know, you mentioned some of these stats, and both of those are in really good shape.
Mm-hmm.
Customer retention is very, very stable. We announced $3.4 billion of new wins at the end of the Q2. That's those last 12 months, up to the end of Q2. Within that, and very importantly, we announced record wins in the SME segment. And also, 30% of those SME wins, you know, are coming from the unmanaged segment, which is this very large, $600 billion fragmented opportunity. So the foundation of it is making sure that our retention's really high, and the new wins and the share gains are really, really strong. I think we feel really good about that. I think as you look forward, I mean, there's definitely some moderation in growth rates this year. I mean, Q1, we had 60% revenue growth, 'cause we were growing over-
Right
Omicron. Q2 was 22, and we've guided to kind of double-digit growth on revenues for the H2 of the year. So you are seeing, obviously, a normalization of growth rates. You know, because this time last year, we did see a big pickup in demand, post-Labor Day.
Mm-hmm.
So, you know, obviously, we're now growing over a much higher level of demand that existed last year. So I think, yeah, you know, you are seeing a more normalized level of growth. I think your question about looking forward into 2024, you know, we're not sort of ready to land on a, on a 2024 number yet, but the way we think about it is, the net new wins and the share gains is pretty clear. You know, we can see eighty percent of that already. And, you know, we know we're gonna get four or five points from net new wins next year. So the question is, how much gas is left in the tank on recovery, and what are the macroeconomic conditions gonna give us?
You know, business travel has consistently grown at or above GDP, and I think we still have some room in the tank for recovery. I think we just, we're gonna know more about what that looks like, probably 90, 100, and 120 days from now, once we get through this, this period. How much more growth are we going to get from, from GDP?
Sure
And how much more growth are we gonna get from the continued recovery?
I do wanna get into some of the components of, you know-
Sure
Still the recovery going on. We'll,
Yeah
Talk about that a little bit. Obviously, SME been fantastic. GMN still sounds quite robust.
Yeah.
Nice big win. Really good financial services company you signed recently. That's great to hear. Can you talk a little bit on that side, how you feel about the sales pipeline, and why are you winning with large enterprise clients at this level, you know, at this point in time, you think?
Yeah, well, I think, it, it's a segment where we, we already have a very strong, you know, position, but I think, customer needs are changing in that segment, and I think customers are looking for a much more digital experience, a much better digital experience. You know, owning our own software platforms, and Neo and Egencia, gives us a significant advantage there over many of our competitors who don't own their own software platforms. So definitely that increased focus on digital and the traveler and the decision maker experience is a real plus for us. Customers are also looking for ways to travel more responsibly, more sustainably, and we've built out a suite of sustainability solutions for customers. Customers are also very focused on privacy, cybersecurity-
Mm
Making sure that their suppliers are operating, you know, to the highest level of standards. And, you know, we actually operate to the very highest level of compliance standards. We're actually governed as a bank holding company because of Amex's shareholding in the company, and so we operate to the highest possible levels of compliance and control, and that's very important to a lot of our large clients. And then the final piece is there's much more focus on this kind of integration of software and services, and that's been a big part of our strategy to make sure that we offer not just the leading software, but the leading services.
We integrate them better than anyone else, and then we deliver them proven, you know, at scale on a global basis, and many of these global customers do business with us in 50, 60, sometimes even 100 markets. So the increased focus on those areas has actually, I think, really played to our, our strengths, and so we, we feel good about our position in that segment. I think we'll continue to gain share.
Yeah, I would imagine at the large enterprise level, switching costs may be a bit challenging for people to change vendors. So you really do have to win on value proposition. And enterprise spending has obviously been going through some changes lately. Are cost saves a part of that, is efficiency, or is it really like, "Hey, this is just a much better experience, user experience," and that, or just poor service levels at maybe some of your competitors?
Do you know, I would say the focus on price is the same or less than it was-
Mm
Two or three years ago because of the factors that I just mentioned.
Mm.
You know, customers are now much, much more focused on more digital, you know, more governance, more control, better traveler experience, you know, and making sure that they have the right solutions to deliver on, you know, their sustainability goals. Those things have really dialed up. Now, of course, price is always an important component, but our fees are 1%-2% of their total-
Mm
Travel budget. So when we talk about price, you know, these customers may be procuring $300 million, $500 million, even $1 billion of travel spend, and so how we can help them get savings on that total travel spend is a critical part of it, but our fees are a relatively small part of that overall spend.
It's not major.
So of course, it's a factor in any large procurement, but it has not become more of a factor-
Right
Over these last few years. I would say, if anything, it's dialed down a little bit.
Pivoting to SME, where you're seeing similar trends there, super interesting. Only 30% of the trillion-dollar opportunity, sorry, managed today. You put up 15% transaction growth last quarter, half of that from new wins. What's getting some of these unmanaged businesses kind of over the hump, saying, "Hey, I do need a reputable, you know, service provider for our travel needs. Let's go to Amex GBT." What's driving some of that demand there?
Yeah, I mean, I think unmanaged specifically, you know, the value proposition is really simple and really, really strong. If you have a company and your travelers are going to supplier direct or OTAs, generally those companies don't have any visibility or control over their total travel spend. They're not able to influence those buying choices. They don't even have visibility over their total spend. So saying to a company, "Do you actually want to know how much you spend on travel?
Right
“And do you want to have some influence over controlling that?” Is, well, yes, but they want to do that in a really simple and easy way. So if you might move them onto a platform like Egencia, you know, it has a very consumer-centric, OTA-like feel, but you can build in all of the policy controls very easily. So being able to move to a managed control program is, is very simple now, and then if you say, “Well, you’re going to the supplier direct, or you’re going to OTAs,” most SME and unmanaged customers don’t have any of their own negotiated rates. 40% of the time, SME customers are using our own negotiated content-
Mm
Our own negotiated fares, so that delivers significant savings. So you're getting control, you're getting savings, and then it's service. With all due respect to all my friends and the suppliers and the OTAs, the service levels are just nowhere near the levels of service that we provide. You know, the 24/7 support that we provide to travelers on the road, whether that's, you know, through our voice chat, or whether that's through our mobile app, through chat with, like, travel counselors 24/7, it's just a much, much higher level of service. So honestly, Peter, you know, selling customers onto a managed programme is actually not difficult.
Right.
You know, do you want more control? Do you want more visibility? Do you want more savings, and you want better service? That's what we deliver.
That's interesting. I want to talk a little bit about international growth. Obviously, a big component of the glide path over the next couple of quarters. I believe, you know, Asia Pac was up 11% year-over-year last quarter, and that's an area where we know that capacity is still on its... of the trajectory, still recovering from those levels. How should we think about the glide path in Asia Pac, specifically for Amex GBT there? What's the runway looking like from your point of view?
Yeah, look, I think some of that year-over-year growth, I think APAC was 23%.
Oh, okay.
In Q2, I think Europe and U.S. were 11. So you're—but you're right, the APAC was definitely outsized growth, but some of that is because the recovery kind of happened later.
Right.
So you've got a little bit of, you know, year-over-year tailwind. But having said that, the absolute recovery rate is now ahead in APAC, and I, we do believe that is set to continue. You know, markets like India, for us, are already back above 2019, and we're seeing more capacity going into those markets, more aircraft orders coming in from those markets. So yeah, we, we do believe that Asia Pacific will continue to outpace the broader industry, you know, over the next 2-3 years. That's certainly part of our plan.
One of the things that does come up from time to time, and who knows what's gonna happen with, I guess, COVID and how it evolves over the next years or so, but could be another issue, although some believe it could just be the flu. But, you know, if we were to hit another COVID level or some fraction of that, how do you think the company's positioned in terms of levers you can pull, in terms of, you know, balance sheet strength compared to where we were when the COVID-19-
Maybe Karen can-
Maybe Karen can-
Give a view on that one.
Touch on those things.
Yeah, sure. And, yeah, you've touched on the momentum and how we're feeling positive, but to your point, I think there's a couple of proof points. The first is, if you look back, as much as we don't wanna look back to COVID and continue to talk about COVID, it's nearly four years on, but if you look back to that time, we were able to take 50% of our cost base out. So that shows the flexibility in terms of our model. You then think about our cost base, and 50% of our cost base is essentially cost to sales. So think traveler care, traveler counselors, our meetings and events business, and 70% of that is variable.
Okay.
Holistically, as you look at our cost base, 40% variable cost base, which gives us the levers to pull. I think the other point I would make is just your point around the balance sheet and how we're feeling. Certainly, from a cash perspective, it was a pivotal point for us in Q2 when we talked about positive free cash flow, and so we're feeling very good about the momentum there.
You know what? Let's jump right into that part. I think that's really important to highlight. You know, Full TTV recovery versus 2019 levels certainly remains on track for your longer term targets, and you certainly appear to be tracking ahead of the pre-IPO outlook, as it relates to EBITDA margins and free cash flow conversion, as you just mentioned, Karen. A big part of that story, obviously, is operating leverage, synergy gains. Can you give us an update on potential EBITDA margin, free cash flow conversion levels, where if we were to hit full recovery levels or same volume levels, has that outlook changed in any way versus what was prescribed, you know, or-
Yeah, Pete, I guess. Yeah, I think there's two parts to this question. One is around the margin and how we're thinking about margin, the other is around cash—free cash conversion. As we think about the margin, in Q2, we saw positive momentum, 18% margin, up significantly. As you think about guidance for the full year, we're really looking at about 10-point improvement in terms of the margin. As we look out, we've talked about at that $500 million of adjusted EBITDA, it'd be $2.4 billion in terms of revenue. That's a 21% margin when you do the math. We've talked quite openly in terms of we think about the margin going forwards in that low 20s to mid-20s. The reason why we have that range is essentially one priority for us is investing in this business.
There is still significant runway for growth for us, and it's really important that, that we continue to invest. So we want that lever to pull, hence-
Right
That range there. But we feel really good about that, and certainly the trajectory we're on. From a cash perspective, again, strong momentum in terms of where we've come from. And certainly as we think about really our point of arrival, we're looking at that 40%-45% cash conversion.
Wow, that is impressive, and it's great that you are certainly on an accelerated glide path versus original expectations. I do wanna dig a little bit back into some of the spending initiatives that you talked about. I mean, spending efficiency has just been fantastic, and it keeps on improving. Should investors think of some of those core investments, are they investments for growth, are they investments to increase if continued spending efficiency? Do you see further room for synergies or opportunities there between some of the recent assets that you've acquired? If you could just give us an outline of how are you thinking about allocating OpEx and between on some of your core initiatives?
Yeah, sure. So, and again, I think there's two parts to this as I listen to the question. In terms of how we're thinking about allocating OpEx going forward, you know, as I say, there's huge runway for growth, and so the SME segment is really important to us. And as we think about sales and marketing channels, we will continue to invest there. Then, as we think about software and our technology and think about our platforms, Neo and Egencia, it's really important as we think from a customer experience and continuing to improve that customer experience, it's also important there-
Mm-hmm
That we are investing for growth.
Mm.
So they're really kind of two key areas, and obviously, you know, M&A, we've talked about, as well. On the other side of things, from a cost perspective and as we think about the, you know, cost, we remain focused. Yeah, it's in our DNA in terms of this continuous improvement mindset, and I've talked about the margins. And there really is about automation, and so investing for automation.
Yeah, I was just about to ask you about that, the investments in technology, and maybe you can harness some things there that can deliver some of these efficiencies.
Yeah, and digital adoption are really key to us.
That's, that's interesting. And I do wanna talk a little bit more about the improvement in free cash flow conversion. A lot of that is working through some of the in-Egencia working capital issues there. Can you just take us through that progression there, yeah, and how you've been able to make some improvements?
Pete, maybe can I just make one point on the AI-
Oh, sure. Absolutely.
Before we go to that? I think one of the really two interesting points around the automation opportunity, one is, it's not a new skill for us. I mean, we have a team of people that have been working on O PI and AI. Egencia's team has been recognized externally for machine learning and data-driven machine learning and AI. And you look at our digital adoption, we've moved it up to now 77% of our transactions are coming through digital channels, and 60% of those are on our own software platforms. We bought a small company called 30 Seconds to Fly. They specialize, you know, in travel AI. So using automation to take cost out is something that, you know, we've been doing consistently for several years.
40% of our costs sit in people costs that are still, you know, in that voice channel, servicing customers.
Right.
So that's $750 million, right? So the opportunity to now, with Generative AI and Large Language Models, you know, to really accelerate the pace of change-
Mm
There and take more of that cost out at an accelerated pace, it is an exciting opportunity for us. And as I say, it's something that it's building on existing capabilities that we have. So, you know, we've got a team working on various use cases to see, you know, how we can do that. So, I look forward to maybe updating you and others about that in more detail in the months ahead. But sorry, Karen, back to you on.
No, but no, sorry, Karen, we'll get back to you. That's a super interesting point. We're hearing that from other companies, the opportunity in AI, particularly on call center kind of activities. I mean, some companies say, "Hey, look, like 40% of our calls are to check on a ticket status," you know, that kind of stuff. It's $10 a call, you know, texting and those types of notifications. So you see a lot of runway there.
Absolutely.
Yeah.
That's exactly it.
Yeah.
You know, that's a muscle that we're working today. We look at the demand coming in through the voice channel, and we basically, you know, rank the demand that's coming in, and then we build out the features on the Egencia platform or the Neo platform to self-serve.
Right.
Then we see that digital adoption rate go up, and the more that we move to the digital channels, you know, the more that we improve our margins. So it's definitely a muscle that we have in the company, and it's. But the opportunity now to do that just bigger and faster than we thought was possible is really, really interesting.
That's exciting. That is. All right, Karen, sorry. Back to you. Working capital, Egencia, can you just take us through that, that progression there, though? It seems like there was a lot of improvement there. Whether you see that, how do you see that glide path evolving from here?
Yeah, sure. So we, we've talked about $100 million of opportunity that we see from the Egencia side. And really expect to probably recognize about 70% of that in 2023. And really the way to think about this is we're integrating Egencia into GBT, and so as we integrate, there is opportunity to be able to leverage kind of GBT practices. And so as we think about payment terms, as we then think about form of payment, so Egencia has more payments that are on accounts, on invoice, and so we see the opportunity to move to card, which creates a benefit.
Mm.
So we're feeling good about it. In Q2, we talked about the upside that we were seeing from where we said we'd be approaching positive free cash flow. We were actually positive, and a lot of that really came back to the actions coming earlier in terms of some of those Egencia initiatives playing through.
Paul, this is your wheelhouse, so tying together my fintech coverage here, B2B automated payments, obviously a huge opportunity.
Yeah
There. Electronifying payments straight through processing for the. Is that an important value proposition, I guess, as you build out your feature set? Is it a client demand? Is it. And where do you see, I guess, your client base, you know, in that penetration of automating their expense flows and payment flows?
Yeah, I mean, it varies by segment. You know, we have, I mentioned earlier, a product called Neo1 , and that is a spend management platform. So we actually sell that to small businesses to manage all of their indirect spend, and travel is one of the components of that.
Sure.
It's actually a spend management sale with travel embedded.
Okay.
So you punch out to the Neo travel platform, and we primarily acquire customers through digital channels and at the smaller end of SME. So that's one part. We also then our Neo platform is travel and expense, and so some customers just use Neo for the travel booking, some use it for travel and the travel-related expenses. One of the opportunities for us is on Egencia to look at building out that expense capability on the Egencia platform. We're currently, you know, looking at opportunities to do that, to make sure that we broaden out our travel and expense offerings. And then we have a very close working relationship with American Express, as you know.
Mm-hmm.
You know, we're obviously working with Amex on integrating their virtual card payments, in order to create that sort of seamless end-to-end flow across travel, expense, and payments. So there's definitely some exciting initiatives that are underway in this area, for those customers that want to procure that way. But to be honest, Pete, there are some customers who still want those to be very separate, independent procurement decisions.
Mm.
Travel is one decision, you know, expense is a separate decision, and payment is a separate decision. And so we wanna make sure, you know, that we're able to have the leading proposition, you know, for each of those segments. I don't believe there's a one-size-fits-all approach.
How do you think about automation and expense management, especially on B2B payments, which is a big focus for us here, on the travel supplier side? Do you feel that. I mean, obviously there's large brands there, but we all know that travel supply is incredibly fragmented. In terms of its maturity, do you think it's in a place right now that can really, you know, at least offer that capability to both SME and some of your larger enterprise clients?
Yeah, I do. I think, you know, expense is a very, very fragmented market. Payments is obviously much more consolidated.
Right.
You know, so I think that there's a different dynamic in expense versus payment. But there's certainly, I think, more and more customers looking at the overall process end to end, and that creates opportunities for us to bring those, those different solutions together, for sure.
I really do like some of these automation initiatives, B2B payments, but there's a whole host of other product enhancement feature functionality-
Yeah
That you're working on. One of the things that caught my attention last quarter is obviously the chat service through Slack, and you know, how you can use other ways with AI to improve the UX, the user experience, but also I'm sure it helps from a development point of view. I just wonder if you could highlight some of those opportunities, and how you see them evolving as-
Yeah
Potentially new features of the brand.
Well, that's all about, you know, allowing customers to do business with us in their channel of choice. And it's all part of what we talked about earlier in terms of moving more and more demand to automated channels. So we actually have integration with WhatsApp, you know, we have integration with Slack. For some customers, we have integration with Google Chat. And so you know, it's all about saying, "Let's make it easy for the traveler or the travel booker to effectively do business with us in their channel of choice.
Mm-hmm.
That helps us take demand, you know, into lower cost channels as well, and it's a better customer experience. This, this is the critical thing for us. If you look at our metrics, we've moved up self-serve and digital adoption now from the sort of mid-60s, you know, right up into 77 last quarter, but our traveler satisfaction results are up, and our NPS results are up. That is not the case with every company. You know, companies are forcing customers into channels and not delivering a great experience. So, you know, the way we look at it is, it's great to see those digital adoption numbers go up as long as customer satisfaction and NPS is going up. That, that, that's the critical balance.
How do you balance that, particularly on the enterprise side, where there's. I'm sure there's a lot of demand for customized work. We hear that maybe the demand for customized solutions, for enterprise kind of solutions is kind of waning, going more standard, more open source, you know, not open source, but at least, you know, more open client geared, user geared. Are you seeing any tipping of the balance there, you know, maybe enterprise stepping away from these complicated, customized solutions and just going for more off-the-shelf, straight-up?
I mean, directionally, yes. You know, I think more. The fact that the platforms like Egencia, like Neo, are highly configurable now.
Right.
The necessity for sort of ground-up customization is becoming less and less. So I do think we are seeing a movement of customers towards more, let's say, configurable solutions, where the vast majority of their requirements can actually be met by a standard platform that they can configure.
Right.
However, there are certain industries, mining, marine, you know, offshore, you know, government services, pharma in some cases, where there are real, genuine, bespoke needs that need to be met. So I think it's about trying to separate the customization that's necessary and adds value.
Right
Versus things that really can be configured in a standard-
Mm-hmm
Platform. And the more that we add the configuration features into Neo and Egencia, I think the more that we'll see that transition.
That's great. I love hearing it when industries are evolving that way, leaving the user experience up to the pros. Absolutely. We had a really interesting conversation after last quarter's results, I thought, and it was about New Distribution Capability, NDC, a new standard that the airlines are looking to add or are embracing right now as it relates to offering ancillary content, all of those things. Just what and we were talking about, well, is our ancillary services from some of the air carriers really important for the business channel? It seems like it's more of a retail or consumer kind of offering. What's the opportunity for Amex GBT when it comes to adopting NDC?
Yeah, well, NDC is a technical standard that gives airlines just more flexibility in how they retail their-
Right
Products and services. And so it has the potential to obviously create personalized offers, to add in ancillary services, whether it's lounge access or whether it's, you know, seat requests or meal requests into personalized packages. So it definitely has the capability to create more flexibility and add value. I think you're right in that for corporate customers, that might need to be structured a little bit different than consumers direct. But it still does have the potential to create packages and personalized offers for corporate travelers from a specific supplier. Now, it's still pretty early stages. I think one of the GDSs said in their results that NDC transactions were still very, you know, low single digits globally, and that's certainly what we see. But it definitely has the potential to create value for customers.
The most important thing for us is to provide the most comprehensive and the most competitive content to customers. NDC is part of that, and will be a growing part of that. So we must have the technical capability to be able to deliver NDC content, and that's what we're doing right now, and I mentioned it in Q2. We have over 1,500 companies now on our pilots using NDC. We have that with four different airlines in four different countries. And our suppliers tell us that, you know, no other travel management company is delivering as many NDC bookings as we are. And so I think, you know, we feel good about our position.
The fact that we own our own software platforms in Neo and Egencia means that we've got engineers that can actually work with the supplier APIs and integrate that content into the platform. And our platforms, like Egencia, have their own order management system, so, you know, it makes it much, much easier to, to integrate that third-party content. So look, it's an area where we want to make sure that we have the capability to grow as it grows, and make sure our customers always get the most competitive and the most comprehensive content that's out there. That's a major part of our value proposition.
I want to merge tech features, functionality, innovation at Amex GBT with some capital allocation questions. You know, while we were researching our question set here, we scanning through some of the... your competitors and some of their releases and digging into their stuff, and it seems like your feature set, your technology, and some of the strides that you've been making, seems like you are pulling away from the pack more and more. Does it, from building scale perspective now, make sense to acquire Scale? Or, I mean, it seems like you're naturally winning share anyway. How do you think about that trade-off in your... in when you're thinking about M&A, is it worth it to buy Scale at this point?
Well, I guess coming back to your first point, I think our strategy is to have the best technology and the best people, and to integrate that better than anyone else-
Mm-hmm
And to do it at scale globally, proven at scale globally. You know, leadership in technology, leadership in software, and leadership in services at scale. You know, it's not easy to have a leadership position in the software solutions, which I believe we do with Neo and Egencia. It's actually really difficult to have a leadership position in all of the global services that are required, proven at scale. So integrating those things and delivering them on a global basis is really our, you know, our strategy. And our primary focus is making sure we use that to drive significant organic growth-
Right
And to continue to gain share. But this is a very large, fragmented market.
Sure.
We're the market leader, we're about 40% bigger than our nearest competitor, but we have $30 billion of $1.2 trillion. So there is a very fragmented market out there, and there are definitely opportunities to add scale and add capabilities, and that's an important part of our strategy. We've done nine transactions since the creation of the joint venture in 2014. You know, the two larger transactions people are obviously familiar with in HRG and in Egencia, very accretive transactions, delivering significant synergies and delivering significant value to customers.
No, you've-
So yeah.
No, you've surely proven that. I think we have time for one more because we started a little bit late. Outside of these capability tuck-ins, outside of acquiring scale, and I'd love to hear, first off, maybe what are some capabilities that you're thinking of or could be potentially opportunities, but how should we also think about adjacencies as well and TAM expansion?
Yeah, I mean, in terms of capabilities, we've sort of touched on some of the areas. I think there's a lot of innovation happening within travel technology. And, you know, I think looking at capabilities that can ensure that you're always providing the leading content, very important. Looking at capabilities that can help us accelerate that automation journey that we-
Mm-hmm
Talked about and that AI transformation we talked about, also an interesting opportunity. There are also a lot of interesting activity in areas like, you know, meetings and events and sourcing, where there are some new capabilities that are emerging, which are also interesting. Definitely some good capability plays there. And, you know, we're obviously gonna, you know, watch those areas, you know, really, really carefully.
I want one last one real quick. You know, we talk to investors all the time, and who have focused on the travel recovery more broadly, not just in business travel, but consumer travel as well. And there's this belief like, "Okay, that trade's done," right? We're at that point. And it seems like Amex GBT should be considered a little bit separate from, I believe, that theme. It's a back to work play. It's also corporate is certainly lagging some consumer there as well. What would you say to investors who have come across in that way, saying, "Hey, look, you know, the travel recovery trade's done, blah, blah, blah." And now looking at, you know, your valuation, which there could be some opportunity there.
What are you saying to them in terms of, "Hey, it's not done. We still have great opportunities here. And by the way, we're growing organically through new wins, new clients. It's not just recovery alone. There's a lot of other tailwinds there"?
Yeah, well, hopefully, through this conversation, you can see we've got a lot of levers to deliver value. I mean, you know, when I look out over the next 3-5 years, we want to be a top quartile B2B software and services company. That's essentially where we want to be, and that means consistently delivering quality earnings over that period of time. And, you know, delivering in excess of 15% TSR, you know, over that 3-5-year period, we believe is a very achievable, you know, ambition. And that would put us in that software and services company. So for us, it's not about the travel recovery play. You know, we have, as I said before, $900 billion opportunity in SME, $600 billion of it's unmanaged. We've got $1.2 trillion of business travel spend. We've only got $30 billion of it.
We have a massive runway of-
Mm-hmm
Capability and scale M&A, and we have the opportunity to transform our cost base. And I think we've proven that we have the ability to do that. And if you look at Q2, there are proof points around all the things I just said. So yeah, that's what I would say to investors, that this will be a top quartile B2B services company over the next three to five years.
You have a good elevator pitch. Very good. All right. Well, thank you so much, Paul, Karen, great to have you. Looking forward to, to seeing more.
Thanks a lot.
Thank you so much.
Thanks, Pete.
Thanks, Pete.
Enjoyed the conversation. Appreciate it.