Global Business Travel (GBTG) - 2022 Q2 - Quarterly Report

Cover Page Global Business Travel Group, Inc. filed its quarterly report for the period ended June 30, 2022, identified as a non-accelerated filer and an emerging growth company - Global Business Travel Group, Inc. filed its quarterly report for the period ended June 30, 2022, and is identified as a non-accelerated filer and an emerging growth company[2][4][5] Company Basic Information | Metric | Details | | :--- | :--- | | Company Name | Global Business Travel Group, Inc. | | Jurisdiction of Incorporation | Delaware | | IRS Employer Identification No. | 98-0598290 | | Principal Executive Offices | 666 3rd Avenue, 4th Floor, New York, NY 10017 | | Telephone Number | (212) 679-1600 | | Trading Symbol | GBTG (Class A Common Stock), GBTG.WS (Warrants) | | Exchange on which registered | New York Stock Exchange | | Filing Status | Non-accelerated Filer, Emerging Growth Company | | Class A Common Stock Outstanding (as of August 10, 2022) | 56,945,033 | | Class B Common Stock Outstanding (as of August 10, 2022) | 394,448,481 | PART I. FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements, including balance sheets, operations, comprehensive loss, cash flows, and equity changes, with detailed notes Item 1. Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements and notes detailing financial position, operating results, cash flows, and equity changes Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Consolidated Balance Sheets Key Data (in millions of USD) | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 446 | 516 | | Accounts receivable, net | 688 | 381 | | Total current assets | 1,284 | 1,052 | | Goodwill | 1,312 | 1,358 | | Other intangible assets, net | 682 | 746 | | Total assets | 3,851 | 3,771 | | Liabilities | | | | Accounts payable | 274 | 137 | | Accrued expenses and other current liabilities | 441 | 519 | | Total current liabilities | 777 | 721 | | Long-term debt, net | 1,218 | 1,020 | | Pension liabilities | 280 | 333 | | Earnout and warrant derivative liabilities | 121 | — | | Total liabilities | 2,585 | 2,277 | | Stockholders' Equity | | | | Total equity attributable to company stockholders | 86 | 1,333 | | Equity attributable to non-controlling interests | 1,180 | 1 | | Total stockholders' equity | 1,266 | 1,334 | | Total liabilities, preferred stock, and stockholders' equity | 3,851 | 3,771 | - As of June 30, 2022, the company's total assets increased to $3.851 billion from $3.771 billion as of December 31, 2021, driven by a significant rise in accounts receivable[11] - Total liabilities increased due to higher long-term debt and the recognition of earnout and warrant derivative liabilities, while total stockholders' equity slightly decreased, despite a substantial increase in equity attributable to non-controlling interests[11] Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance Consolidated Statements of Operations Key Data (in millions of USD) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 486 | 153 | 836 | 279 | | Total operating expenses | 505 | 267 | 951 | 522 | | Operating loss | (19) | (114) | (115) | (243) | | Interest expense | (24) | (13) | (43) | (24) | | Fair value change in earnout and warrant derivative liabilities | 36 | — | 36 | — | | Income tax benefit | 4 | 73 | 29 | 95 | | Net loss | (2) | (55) | (93) | (169) | | Net income attributable to Class A common stockholders | 21 | — | 21 | — | | Basic earnings per share (Class A common stock) | 0.44 | — | 0.44 | — | | Diluted loss per share (Class A common stock) | — | (0.21) | — | (0.21) | - The company achieved significant revenue growth and a substantial reduction in operating loss in Q2 and H1 2022, transitioning from a net loss to net income attributable to Class A common stockholders[14] - This improvement is primarily due to business recovery, the consolidation of Egencia, and gains from fair value changes in earnout and warrant derivative liabilities[14] Consolidated Statements of Comprehensive Loss This section presents the company's comprehensive loss, including net loss and other comprehensive income or loss items, reflecting all non-owner changes in equity Consolidated Statements of Comprehensive Loss Key Data (in millions of USD) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | (2) | (55) | (93) | (169) | | Other comprehensive (loss) income, net | (69) | 7 | (76) | (2) | | Comprehensive loss | (71) | (48) | (169) | (171) | | Comprehensive income attributable to Class A common stockholders | 17 | — | 17 | — | - The company's comprehensive loss increased in Q2 and H1 2022, primarily due to changes in foreign currency translation adjustments[16] - Despite a narrower net loss, the increase in other comprehensive loss led to an expanded comprehensive loss[16] Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities, providing insights into the company's liquidity Consolidated Statements of Cash Flows Key Data (in millions of USD) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (309) | (236) | | Net cash used in investing activities | (42) | (71) | | Net cash provided by financing activities | 298 | 187 | | Effect of exchange rate changes on cash and cash equivalents | (16) | (1) | | Net decrease in cash and cash equivalents | (69) | (121) | | Cash and cash equivalents at end of period | 456 | 472 | - In H1 2022, net cash used in operating activities increased, primarily due to changes in working capital[19] - Net cash used in investing activities decreased as there were no significant business acquisitions during the period[19] - Net cash provided by financing activities significantly increased, driven by proceeds from the reverse recapitalization and the issuance of senior secured term loans[19] Consolidated Statements of Changes in Total Stockholders' Equity This section outlines the changes in the company's total stockholders' equity, reflecting transactions with owners and comprehensive income or loss - As of June 30, 2022, the company's total stockholders' equity was $1.266 billion, a decrease from $1.334 billion as of December 31, 2021[21] - Key changes include the reverse recapitalization, preferred stock dividends, equity-based compensation, and a significant increase in non-controlling interests[21] Stockholders' Equity Changes Summary (in millions of USD) | Metric | Balance as of December 31, 2021 | Balance as of June 30, 2022 | | :--- | :--- | :--- | | Additional paid-in capital | 2,560 | 244 | | Accumulated deficit | (1,065) | (128) | | Accumulated other comprehensive loss | (162) | (30) | | Total equity attributable to company stockholders | 1,333 | 86 | | Equity attributable to non-controlling interests | 1 | 1,180 | | Total stockholders' equity | 1,334 | 1,266 | Notes to the Consolidated Financial Statements This section provides detailed explanations and additional information supporting the consolidated financial statements (1) Business Description and Basis of Presentation This note describes Global Business Travel Group, Inc.'s operations as a leading business travel platform and the accounting treatment of its business combination - Global Business Travel Group, Inc. (GBTG) and its subsidiaries operate as a leading technology-powered business travel platform[23][24] - The company completed a business combination with Apollo Strategic Growth Capital (APSG) on May 27, 2022, which was accounted for as a reverse recapitalization[25] - The COVID-19 pandemic severely impacted global travel, but the company has seen a continuous recovery in transaction volumes since H2 2021, though still below 2019 levels[28][30] - The company implemented various measures, including workforce reductions, salary cuts, and debt financing, to maintain liquidity and expects sufficient liquidity for the next 12 months[33][34] COVID-19 Impact on Financial Performance (in millions of USD) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net loss | (93) | (169) | | Net cash used in operating activities | (309) | (236) | (2) Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the consolidated financial statements - The company classifies warrant and most earnout share liabilities as liabilities under ASC 815, measured at fair value, with changes recognized in the consolidated statements of operations[42][43] - Fair value is determined using market prices for public warrants, the Black-Scholes model for private warrants, and the Monte Carlo valuation method for earnout shares[44] - The company adopted ASU 2019-12 (Income Taxes), ASU 2021-04 (Issuer's Accounting for Certain Options), and ASU 2021-10 (Government Assistance Disclosures) with no material impact on consolidated financial statements[45][46][49] - The company is currently evaluating the impact of ASU 2016-13 (Credit Losses), ASU 2020-04 (Reference Rate Reform), and ASU 2021-08 (Customer Contracts in Business Combinations)[51][52][55] Government Grants and Other Assistance Benefits (in millions of USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Payroll and wage subsidies | 1 | 17 | 7 | 43 | (3) Revenue from Contracts with Customers This note details the company's revenue recognition policies and disaggregates revenue by service type - The company's revenue is categorized into travel revenue (transaction service fees, supplier fees, and management fees) and product and professional services revenue (platform usage fees, product revenue, consulting, and meetings & events revenue, and other income)[56][275][276] Revenue by Nature of Service (in millions of USD) | Revenue Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Travel Revenue | 388 | 79 | 645 | 141 | | Product and Professional Services Revenue | 98 | 74 | 191 | 138 | | Total Revenue | 486 | 153 | 836 | 279 | - As of June 30, 2022, the total transaction price of the company's remaining performance obligations was approximately $25 million, expected to be recognized as revenue within the next 18 months[63] (4) Prepaid Expenses and Other Current Assets This note provides a breakdown of the company's prepaid expenses and other current assets Prepaid Expenses and Other Current Assets Composition (in millions of USD) | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Prepaid operating expenses | 49 | 42 | | Income tax receivable/prepayments | 30 | 32 | | Deferred offering costs | — | 21 | | VAT and similar taxes receivable | 15 | 11 | | Other prepayments and receivables | 23 | 31 | | Total | 117 | 137 | - As of June 30, 2022, total prepaid expenses and other current assets were $117 million, a decrease from $137 million as of December 31, 2021, primarily due to the elimination of deferred offering costs[65] (5) Property and Equipment, Net This note details the composition of the company's property and equipment, net of accumulated depreciation and amortization Property and Equipment, Net Composition (in millions of USD) | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Capitalized software for internal use | 314 | 304 | | Computer equipment | 74 | 65 | | Leasehold improvements | 51 | 52 | | Furniture, fixtures and other equipment | 6 | 6 | | Capital projects in progress | 22 | 9 | | Total cost | 467 | 436 | | Less: Accumulated depreciation and amortization | (257) | (220) | | Property and equipment, net | 210 | 216 | - As of June 30, 2022, the company's property and equipment, net, was $210 million, slightly lower than $216 million as of December 31, 2021[66] - Depreciation and amortization expenses increased in H1 2022, reflecting the amortization of capitalized software development costs[66] (6) Reverse Recapitalization This note explains the accounting treatment and financial impact of the business combination with Apollo Strategic Growth Capital - The company completed a business combination with APSG on May 27, 2022, accounted for as a reverse recapitalization where GBT JerseyCo was deemed the accounting acquirer[67][71] - GBTG acquired 100% of the voting rights and approximately 13% of the equity interests in GBT JerseyCo[71] - The PIPE investment generated $323.5 million in net proceeds, and post-merger, GBTG's Class A common stock is held by public and PIPE investors, while continuing JerseyCo owners hold GBT JerseyCo's Class B common stock (economic interest only) and GBTG's Class B common stock (voting rights only)[70][72] - The merger also involved the issuance of Earnout Shares, contingent on GBTG's Class A common stock reaching specific price thresholds, and the conversion of existing APSG warrants into GBTG warrants[72] (7) Business Acquisitions This note provides details on the company's business acquisitions, including their strategic rationale and financial impact - There were no business acquisitions in H1 2022[76] - In January 2021, the company acquired Ovation Group for $57 million in cash, resulting in $36 million of goodwill and $29 million of amortizable intangible assets, with Ovation's results consolidated into the company's financial statements[77][79] - On November 1, 2021, the company completed the acquisition of Egencia, issuing 8,413,972 shares of non-voting common stock with a fair value of $816 million as consideration[81] - The Egencia acquisition aims to accelerate the company's growth strategy in the small and medium-sized enterprise market[85] Egencia Consolidated Financial Contribution (in millions of USD) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenue | 107 | 173 | | Net loss | (6) | (34) | (8) Goodwill and Other Intangible Assets, Net This note details the carrying amounts and changes in goodwill and other intangible assets Goodwill Changes (in millions of USD) | Item | Amount | | :--- | :--- | | Balance as of December 31, 2021 | 1,358 | | Egencia acquisition adjustment | 7 | | Foreign currency translation adjustment | (53) | | Balance as of June 30, 2022 | 1,312 | Other Intangible Assets, Net (in millions of USD) | Item | June 30, 2022 Net | December 31, 2021 Net | | :--- | :--- | :--- | | Trademarks/trade names | 50 | 53 | | Corporate customer relationships | 578 | 626 | | Supplier relationships | 53 | 66 | | Travel partner network | 1 | 1 | | Total | 682 | 746 | - As of June 30, 2022, goodwill, net, was $1.312 billion, a decrease from $1.358 billion as of December 31, 2021, primarily due to foreign currency translation adjustments[88] - Other intangible assets, net, totaled $682 million, with amortization expenses increasing in H1 2022, mainly due to the Egencia acquisition[90] (9) Accrued Expenses and Other Current Liabilities This note provides a detailed breakdown of the company's accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities Composition (in millions of USD) | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Accrued salaries and related costs | 165 | 198 | | Accrued operating expenses | 128 | 147 | | Accrued restructuring costs | 36 | 69 | | Customer deposits | 44 | 59 | | Deferred revenue | 24 | 18 | | VAT and similar taxes payable | 10 | 6 | | Income tax payable | 7 | 7 | | Other payables | 27 | 15 | | Total | 441 | 519 | - As of June 30, 2022, total accrued expenses and other current liabilities were $441 million, a decrease from $519 million as of December 31, 2021, primarily due to reductions in accrued salaries, operating expenses, and restructuring costs[93] (10) Restructuring Charges This note details the company's restructuring activities and associated costs Restructuring Cost Changes (in millions of USD) | Item | Employee-related | Facility-related | Total | | :--- | :--- | :--- | :--- | | Balance as of December 31, 2021 | 64 | 5 | 69 | | Reversals | (1) | (2) | (3) | | Cash settlements | (30) | — | (30) | | Balance as of June 30, 2022 | 33 | 3 | 36 | - As of June 30, 2022, accrued restructuring costs were $36 million, a significant decrease from $69 million as of December 31, 2021, primarily due to reversals of certain accrued expenses and cash settlements[94] (11) Long-term Debt This note provides a detailed breakdown of the company's long-term debt obligations and related terms Long-term Debt Composition (in millions of USD) | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Senior Secured Initial Term Loan Principal | 241 | 242 | | Senior Secured Term Loan B-3 Principal | 1,000 | 800 | | Senior Secured Revolving Credit Facility Principal | — | — | | Total Debt | 1,241 | 1,042 | | Less: Unamortized debt discount and issuance costs | (20) | (19) | | Total Debt, Net | 1,221 | 1,023 | | Less: Current portion of long-term debt | (3) | (3) | | Long-term debt, non-current portion, net | 1,218 | 1,020 | - As of June 30, 2022, the company's long-term debt, net, was $1.218 billion, an increase from $1.020 billion as of December 31, 2021, primarily due to borrowing $200 million under the Senior Secured Term Loan B-3[95][99] - The effective interest rate for the senior secured term loans was approximately 7% in H1 2022[103] - The company was in compliance with all applicable covenants under its senior secured credit agreement as of June 30, 2022, including maintaining a minimum liquidity requirement of $200 million[108][110] (12) Commitments and Contingencies This note discloses the company's contractual commitments and potential liabilities from legal and other matters - As of June 30, 2022, the company had approximately $202 million in uncancelled purchase commitments, primarily related to IT services, hosting, and licensing contracts, with $76 million payable within the next 12 months ending June 30, 2023[112] - The company has obtained $20 million in bank guarantees for certain travel suppliers and real estate lease agreements, some requiring cash collateral[113] - Management believes there are no pending legal proceedings or government reviews that, individually or in aggregate, would have a material adverse effect on the company's financial condition or liquidity[116] (13) Income Taxes This note explains the company's income tax structure, effective tax rates, and significant factors affecting tax expense or benefit - The company operates under an Up-C structure, where GBT JerseyCo, as a partnership, is not subject to U.S. income tax, and its taxable income or loss is allocated to its members[117] - GBTG is subject to U.S. income tax on its share of GBT JerseyCo's net taxable income or loss[117] Income Tax Benefit and Effective Tax Rate | Period | Income Tax Benefit (in millions of USD) | Effective Tax Rate | | :--- | :--- | :--- | | Three Months Ended June 30, 2022 | 4 | 80% | | Three Months Ended June 30, 2021 | 73 | 56% | | Six Months Ended June 30, 2022 | 29 | 25% | | Six Months Ended June 30, 2021 | 95 | 37% | - The effective tax rate in Q2 and H1 2022 was influenced by the non-taxable nature of fair value changes in earnout shares and warrants[120] - The higher effective tax rate in the comparable 2021 periods was primarily due to the remeasurement of deferred tax assets and liabilities following the increase in the UK tax rate from 19% to 25% (effective April 2023)[121] (14) Warrants This note provides information on the company's outstanding warrants, their classification, and fair value measurement - As of June 30, 2022, the company had 39,451,134 warrants outstanding (12,224,134 private warrants and 27,227,000 public warrants) with an exercise price of $11.50 per warrant, none of which were exercisable[122] - Warrants are classified as derivative liabilities under ASC 815 and remeasured at fair value[129] - As of June 30, 2022, the fair value of warrant liabilities was estimated at $44 million, and the company recognized a $13 million gain from fair value changes in Q2 and H1 2022[130] - The company may redeem public warrants under certain conditions, such as when the Class A common stock closing price reaches or exceeds $18.00 or $10.00 for 20 consecutive trading days[125] - Private warrants have similar terms to public warrants but are not redeemable as long as they are held by the initial purchasers[126] (15) Earnout Shares This note describes the earnout share arrangements, their vesting conditions, and accounting treatment - As part of the reverse recapitalization, certain stockholders and employees are entitled to additional earnout shares if the company's Class A common stock price reaches specific market price thresholds ($12.50 and $15.00) within five years of the merger completion[133][140] - Employee earnout shares are accounted for as equity-based compensation expense under ASC 718, with $2 million recognized in Q2 and H1 2022[135] - Stockholder earnout shares are classified as derivative liabilities under ASC 815 and remeasured at fair value[136] - As of June 30, 2022, the fair value of earnout share liabilities was estimated at $77 million, and the company recognized a $23 million gain from fair value changes in Q2 and H1 2022[138] (16) Equity-Based Compensation This note details the company's equity incentive plans, including stock options and earnout shares, and related compensation expenses - In May 2022, GBTG stockholders approved the 2022 Equity Incentive Plan (up to approximately 48 million shares of Class A common stock available) and the Employee Stock Purchase Plan (ESPP, initially up to approximately 11 million shares available for purchase, with employee contributions starting January 1, 2023)[142][143] - No awards were granted under the 2022 Plan as of June 30, 2022[144] - The GBTG Management Incentive Plan (GBTG MIP) replaced the original GBT JerseyCo management incentive plan, converting all unexercised options to GBTG MIP options while retaining original grant, vesting, and exercise terms[145][148] - Employee earnout shares are linked to the vesting conditions of GBTG MIP options[148] Equity-Based Compensation Expense (in millions of USD) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total equity-based compensation expense | 5 | 1 | 8 | 1 | (17) Stockholders' Equity This note provides detailed information on the company's capital structure, including authorized and outstanding shares, and changes in equity components - Post-reverse recapitalization, GBTG's authorized share capital includes 3 billion shares of Class A common stock, 3 billion shares of Class B common stock, and 6.01 billion shares of preferred stock (none issued as of June 30, 2022)[151][152][153] - Class A common stock carries voting and economic rights, while Class B common stock carries voting rights and nominal economic interest, convertible into Class A common stock on a one-for-one basis[155][159][162] - GBT JerseyCo's preferred shares were fully redeemed and cancelled upon completion of the business combination[169] - The Sponsor Side Letter imposes transfer restrictions and vesting conditions on Class A common stock held by the Sponsor and its insiders, with some shares vesting only upon Class A common stock reaching specific price thresholds[172][175] Accumulated Other Comprehensive Income (Loss), Net (in millions of USD) | Item | Balance as of December 31, 2021 | Balance as of June 30, 2022 | | :--- | :--- | :--- | | Foreign currency translation adjustments | (38) | (16) | | Defined benefit plan related | (128) | (16) | | Unrealized gain on cash flow hedges and net investment hedges of foreign subsidiaries | 4 | 2 | | Total accumulated other comprehensive loss | (162) | (30) | (18) Earnings (loss) per share This note details the calculation of basic and diluted earnings per share for the company's Class A common stock - The company's basic earnings per share for Class A common stock was $0.44 in both Q2 and H1 2022[188] - Diluted loss per share was $0 in Q2 2022 and $0.21 in H1 2022[188] - Earnout shares are excluded from basic EPS calculation due to their potential forfeiture conditions[183] - Approximately 39 million warrants and 25 million GBTG MIP options were excluded from diluted EPS calculation due to their anti-dilutive effect[184] - Class B common stock is included in diluted EPS calculation due to its convertibility into Class A common stock[185] Earnings (Loss) Per Share Calculation (in millions of USD, except share and per share data) | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net income attributable to Class A common stockholders (A) | 21 | 21 | | Net loss attributable to Class A and Class B common stockholders – diluted (B) | (2) | (93) | | Weighted-average Class A common shares outstanding – basic (C) | 48,867,969 | 48,867,969 | | Weighted-average Class A common shares outstanding – diluted (D) | 444,320,221 | 444,320,221 | | Basic earnings per share (A)/(C) | 0.44 | 0.44 | | Diluted loss per share (B)/(D) | — | (0.21) | (19) Derivatives and Hedging This note describes the company's use of derivative instruments for risk management and their accounting treatment - The company uses interest rate swaps to hedge interest rate risk on its floating-rate debt[192] - In February 2022, the company entered into an interest rate swap with a notional amount of $600 million, fixing the benchmark rate at 2.0725%[192] - This swap was terminated in June 2022, realizing $23 million in cash, and a new swap was executed, fixing the rate at 3.6858%[192] - Public and private warrants, along with non-employee earnout shares, are classified as derivative liabilities under ASC 815[193] - As of June 30, 2022, approximately 39 million warrants and 15 million non-employee earnout shares were outstanding[194] Fair Value of Derivative Instruments (in millions of USD) | Derivative Type | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Interest Rate Swaps | 10 | — | | Earnout Shares | 77 | — | | Warrants | 44 | — | | Total | 131 | — | (20) Fair Value Measurements This note provides information on the fair value of financial instruments, categorized by the fair value hierarchy - The company classifies financial instruments into fair value hierarchy levels (Level 1, Level 2, Level 3)[198] - Interest rate swaps are valued using discounted cash flow analysis (Level 2)[199] - Public warrants use market prices (Level 1), while private warrants use the Black-Scholes model (Level 3)[200] - Earnout shares are valued using the Monte Carlo valuation method (Level 3)[203] Financial Assets and Liabilities by Fair Value Hierarchy (in millions of USD) | Item | Fair Value Hierarchy | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | Interest Rate Swaps | Level 2 | 10 | — | | Earnout Shares | Level 3 | 77 | — | | Public Warrants | Level 1 | 28 | — | | Private Warrants | Level 3 | 16 | — | Earnout Shares and Private Warrants Valuation Assumptions (May 27, 2022 and June 30, 2022) | Assumption | Earnout Shares (May 27, 2022) | Earnout Shares (June 30, 2022) | Private Warrants (May 27, 2022) | Private Warrants (June 30, 2022) | | :--- | :--- | :--- | :--- | :--- | | Stock Price (USD) | 7.39 | 6.31 | 7.39 | 6.31 | | Exercise Price (USD) | N/A | N/A | 11.50 | 11.50 | | Risk-Free Rate | 2.81% | 3.01% | 2.70% | 3.00% | | Volatility | 37.5% | 40.0% | 37.5% | 40.0% | | Expected Term (Years) | 5.00 | 4.92 | 5.00 | 4.92 | | Expected Dividends | 0.0% | 0.0% | 0.00% | 0.00% | | Fair Value (per share/per warrant) | 4.82 (Tranche 1)/3.98 (Tranche 2) | 3.72 (Tranche 1)/3.04 (Tranche 2) | 1.68 | 1.30 | (21) Related Party Transactions This note discloses transactions with related parties, including affiliates and significant shareholders - The consulting services agreement with Certares Management Corp. (an indirect equity owner) terminated upon completion of the business combination[217] - The company paid Certares $1 million in fees during H1 2022[217] - The company has several commercial agreements with affiliates of Amex Coop[218] - In H1 2022, the company recognized $10 million in revenue from Amex Coop affiliates and paid $11 million in operating costs to them[218] - The company has a ten-year marketing cooperation agreement with an Expedia affiliate to provide Expedia Group's hotel content to its customers, generating $60 million in revenue in H1 2022[226] - Additionally, GBT UK has a transition services agreement with Expedia, resulting in $20 million in costs during H1 2022[227] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and operating results for the three and six months ended June 30, 2022, including revenue, costs, non-GAAP metrics, liquidity, and accounting policies FORWARD-LOOKING STATEMENTS This section highlights that certain statements in the report are forward-looking and involve risks and uncertainties that could cause actual results to differ materially - Certain statements in this report are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, involving known and unknown risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially[230][231] - Factors that could affect actual results include, but are not limited to, changes in financial information, customer and supplier relationships, competition, executive retention, COVID-19 impacts, interest rates and inflation, reduced global travel, political and economic conditions, and legal and tax changes[232] Overview This section provides a high-level summary of the company's business as a leading B2B travel platform, its customer base, and recent strategic developments - The company is a leading global business travel (B2B travel) platform, offering a comprehensive suite of differentiated, technology-powered solutions for business travelers, corporate clients, travel content suppliers, and third-party travel agencies[235][236][238] - As of June 30, 2022, the company served approximately 20,000 corporate clients and over 240 network partners, with approximately 17,500 employees across 31 countries[236][239][240] - The company completed a business combination with APSG on May 27, 2022, with GBT JerseyCo becoming a direct subsidiary of APSG, which was renamed "Global Business Travel Group, Inc."[241] Key Factors Affecting Our Results of Operations This section discusses the primary drivers influencing the company's financial performance, including market trends and strategic acquisitions - The company primarily focuses on business travel, a segment approximately twice the value of leisure travel due to higher-value bookings like premium seating and international long-haul trips[243] - While COVID-19 severely restricted global economic activity and travel, business travel has shown recovery since H2 2021, with transaction volumes reaching 76% of 2019 levels by June 2022[244][247] - Acquisitions are a significant growth driver, including the January 2021 acquisition of Ovation Travel, LLC, to expand leadership in high-value services and SME clients, and the November 2021 acquisition of Egencia to accelerate SME growth[248][250][251] Key Operating and Financial Metrics This section presents the key metrics used by management to evaluate the company's business performance and financial health - The company assesses business performance using Total Transaction Value (TTV) and transaction growth (decline)[253] - TTV grew by 438% in Q2 2022 and 470% in H1 2022, primarily driven by the full consolidation of Egencia and ongoing business recovery post-COVID-19[255] Key Operating and Financial Metrics (in millions of USD, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | TTV | 6,520 | 1,212 | 10,668 | 1,873 | | Transaction Growth (Decline) | 346% | 274% | 363% | (59)% | | Revenue | 486 | 153 | 836 | 279 | | Total operating expenses | 505 | 267 | 951 | 522 | | Net loss | (2) | (55) | (93) | (169) | | Net cash used in operating activities | (155) | (122) | (309) | (236) | | EBITDA | 63 | (79) | 10 | (170) | | Adjusted EBITDA | 47 | (74) | 19 | (164) | | Adjusted EBITDA Margin | 10% | (48)% | 2% | (59)% | | Adjusted Operating Expenses | 438 | 226 | 815 | 441 | | Free Cash Flow | (176) | (131) | (351) | (254) | | Net Debt (as of June 30, 2022/December 31, 2021) | | | 775 | 507 | - Adjusted EBITDA turned positive in both Q2 and H1 2022, reaching $47 million and $19 million respectively, indicating significant improvement in profitability[252][270] - Adjusted EBITDA margin also significantly improved during these periods[252] Components of Results of Operations This section describes the primary components of the company's revenues, costs, and expenses that contribute to its overall operating results - The company's revenue primarily consists of travel revenue (customer transaction fees, supplier fees, and management fees) and product and professional services revenue (product revenue, consulting, and meetings & events revenue, and other income)[275][276] - Costs and expenses mainly include cost of revenue (travel advisor salaries, outsourced resources), selling and marketing expenses (sales and marketing personnel salaries, client partnership fees), technology and content expenses (product development personnel salaries, software license fees), and general and administrative expenses (finance, legal, HR personnel salaries, acquisition integration costs, professional service fees)[277][278][279][282] Results of Operations This section provides a comparative analysis of the company's financial performance across different reporting periods Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 This subsection compares the company's operating results for the second quarter of 2022 against the same period in 2021 Q2 2022 Operating Results Changes (in millions of USD, except percentages) | Metric | 2022 | 2021 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | 486 | 153 | 333 | 217% | | Cost of Revenue | 199 | 95 | (104) | (110)% | | Selling and Marketing | 82 | 45 | (37) | (78)% | | Technology and Content | 95 | 59 | (36) | (61)% | | General and Administrative | 89 | 41 | (48) | (114)% | | Operating loss | (19) | (114) | 95 | 84% | | Interest expense | (24) | (13) | (11) | (83)% | | Fair value change in earnout and warrant derivative liabilities | 36 | — | 36 | Not Applicable | | Net loss | (2) | (55) | 53 | 97% | - Total revenue in Q2 2022 increased by 217% to $486 million, primarily driven by the Egencia consolidation and post-pandemic travel recovery[284] - Travel revenue grew by 387% to $388 million, and product and professional services revenue increased by 33% to $98 million[286][287] - Operating loss significantly narrowed by 84% to $19 million[283] - Cost of revenue, selling and marketing, technology and content, and general and administrative expenses all increased significantly due to Egencia consolidation, restored employee salaries, and increased transaction volumes[288][291][295][298] - Interest expense grew by 83% due to increased debt and rising interest rates[301][302] Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 This subsection compares the company's operating results for the first half of 2022 against the same period in 2021 H1 2022 Operating Results Changes (in millions of USD, except percentages) | Metric | 2022 | 2021 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | 836 | 279 | 557 | 200% | | Cost of Revenue | 372 | 177 | (195) | (110)% | | Selling and Marketing | 154 | 88 | (66) | (74)% | | Technology and Content | 185 | 116 | (69) | (60)% | | General and Administrative | 154 | 80 | (74) | (92)% | | Operating loss | (115) | (243) | 128 | 53% | | Interest expense | (43) | (24) | (19) | (80)% | | Fair value change in earnout and warrant derivative liabilities | 36 | — | 36 | Not Applicable | | Net loss | (93) | (169) | 76 | 45% | - Total revenue in H1 2022 increased by 200% to $836 million, primarily driven by the Egencia consolidation and post-pandemic travel recovery[309] - Travel revenue grew by 357% to $645 million, and product and professional services revenue increased by 39% to $191 million[310][312] - Operating loss narrowed by 53% to $115 million[308] - All operating expenses increased significantly due to Egencia consolidation, restored employee salaries, and increased transaction volumes[313][316][319][323] - Interest expense grew by 80% due to increased debt and rising interest rates[326][327] Liquidity and Capital Resources This section discusses the company's sources and uses of cash, its ability to meet short-term and long-term obligations, and capital management strategies - The company's primary liquidity sources include cash flow from operations, credit facilities under its senior secured credit agreement, and cash and cash equivalents on hand[332] - As of June 30, 2022, cash and cash equivalents were $446 million, a decrease from $516 million as of December 31, 2021[332] - Following the business combination on May 27, 2022, the company received $128 million in net proceeds and borrowed $200 million under its Senior Secured Term Loan B-3[333] - The company believes its existing cash and cash equivalents, revolving credit facility, and cash flow from operations will be sufficient to meet operating needs for the next 12 months[334] Cash Flow Summary (in millions of USD) | Cash Flow Type | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (309) | (236) | | Net cash used in investing activities | (42) | (71) | | Net cash provided by financing activities | 298 | 187 | | Net decrease in cash and cash equivalents | (69) | (121) | Net Debt (in millions of USD) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Debt, Net | 1,221 | 1,023 | | Less: Cash and Cash Equivalents | (446) | (516) | | Net Debt | 775 | 507 | - As of June 30, 2022, net debt was $775 million, an increase of $268 million from $507 million as of December 31, 2021, primarily due to borrowing $200 million under the Senior Secured Term Loan B-3 and a decrease in cash and cash equivalents[349] Critical Accounting Policies and Estimates This section highlights the accounting policies and estimates that require significant judgment and can materially impact the financial statements - The preparation of the company's consolidated financial statements requires management to make estimates and assumptions that affect reported assets, liabilities, revenues, costs, expenses, and related disclosures[352] - The COVID-19 pandemic increased macroeconomic uncertainty, requiring greater judgment and leading to higher variability and volatility in many estimates and assumptions[354] - Following the business combination, the company uses the Monte Carlo option pricing model and the Black-Scholes model for fair value measurement of earnout shares and private warrants, requiring significant judgment on assumptions like volatility, risk-free rates, and expected terms[355] Recent Accounting Pronouncements This section provides an overview of recently adopted and unadopted accounting standards and their potential impact on the company's financial reporting - For information regarding recent accounting pronouncements adopted and not yet adopted by the company, refer to Note 2 to the consolidated financial statements in this report[357] Emerging Growth Company Status This section explains the company's status as an emerging growth company under the JOBS Act and the implications for its financial reporting - The company has elected to take advantage of the extended transition period provided by the JOBS Act for complying with new or revised accounting standards and to adopt certain simplified disclosure requirements available to emerging growth companies[358] - The company will lose its emerging growth company status based on thresholds such as total annual gross revenue, market value of common equity, or issuing over $1 billion in non-convertible debt over a three-year period[360] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discloses the company's exposure to market risks, primarily interest rate, foreign currency, and inflation risks, and its strategies for managing them Interest Rate Risk This subsection describes the company's exposure to fluctuations in interest rates, particularly on its floating-rate debt - The company faces interest rate risk on its floating-rate debt, primarily based on LIBOR[363] - As of June 30, 2022, the outstanding amount of senior secured term loans was $1.221 billion[364] - A 100-basis point increase or decrease in LIBOR would increase or decrease the company's annual interest expense by $12 million, assuming the debt structure remains unchanged[364] - To hedge against rising interest rates, the company entered into an interest rate swap with a notional amount of $600 million in February 2022, which was terminated and re-entered into a similar contract in June 2022, fixing the rate at 3.6858%[364] - This interest rate swap is accounted for as an accounting hedge[364] Foreign Currency Exchange Risk This subsection discusses the impact of foreign currency exchange rate fluctuations on the company's operating results and cash flows - The company's operating results and cash flows are affected by fluctuations in foreign currency exchange rates, primarily involving the U.S. Dollar, British Pound, and Euro[365] - Exchange rate fluctuations have not materially impacted the company's financial performance, as revenues and expenses in different currencies largely offset each other[366] - The company currently does not engage in foreign currency hedging activities[366] Inflation Risk This subsection addresses the potential impact of inflation on the company's business, operating results, and financial condition - The company believes that inflation has not yet had a material impact on its business, operating results, or financial condition[367] - However, if costs face significant inflationary pressure and the company cannot fully offset them, it could harm the business[367] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting - As of June 30, 2022, the company's management, including the Chief Executive Officer and Chief Financial Officer, evaluated and concluded that the company's disclosure controls and procedures were effective[369] - There were no changes in the company's internal control over financial reporting during the reporting period that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[370] PART II. OTHER INFORMATION This section contains additional information not covered in Part I, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section discloses information about any material legal proceedings the company is involved in - The company believes there are no pending legal proceedings or government reviews that, individually or in aggregate, would have a material adverse effect on its operating results, financial condition, or cash flows[371] Item 1A. Risk Factors This section advises investors to consider the risks described in the company's registration statement that could materially affect its business, financial condition, or future performance - Investors should carefully consider the risks described in the "Risk Factors" section of the company's registration statement, as these could materially adversely affect its business, financial condition, or future performance[372] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on any unregistered sales of equity securities and the application of their proceeds during the reporting period - There were no unregistered sales of equity securities or use of proceeds during the reporting period[373] Item 3. Defaults Upon Senior Securities This section discloses any defaults on senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[374] Item 4. Mine Safety Disclosures This section indicates whether mine safety disclosures are applicable to the company - Mine safety disclosures are not applicable to the company[375] Item 5. Other Information This section provides any other information required to be disclosed that is not covered elsewhere in the report - There is no other information required to be disclosed during the reporting period[376] Item 6. Exhibits This section lists all exhibits filed with the report, including corporate governance documents, incentive plans, and certifications - Exhibits include the company's certificate of incorporation, bylaws, sponsor side letter amendment, 2022 Equity Incentive Plan, Employee Stock Purchase Plan, Management Incentive Plan, trademark license agreement, promissory notes, and CEO and CFO certifications[378] SIGNATURES This section contains the official signatures of the company's authorized officers, certifying the accuracy of the report - This report was officially signed by Paul Abbott, Chief Executive Officer, and Martine Gerow, Chief Financial Officer, on behalf of the company on August 11, 2022[383]