Company Reports

Although Amadeus' demand has been affected by uncertain economic and geopolitical conditions recently, we expect its leadership position in global distribution systems, or GDS, to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume. Indeed, about half of the industry's air bookings occur through its platform.

Amadeus' first-half revenue increased 5% in constant currency, led by 9% growth in IT solutions, with the distribution business up 1%, while adjusted EBIT increased 5%. The outlook for 2026 constant-currency sales growth was lowered to mid- to high-single digits from high-single digits.

Although Amadeus' demand has been affected by uncertain economic and geopolitical conditions recently, we expect its leadership position in global distribution systems, or GDS, to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume. Indeed, about half of the industry's air bookings from the top 50 carriers occur through its platform.

Amadeus' first-quarter sales grew 3.1% (7.9% in constant currency). Air bookings decreased 0.2% due to the Middle East conflict. Constant currency adjusted EBITDA margins decreased 20 basis points to 39.3%.

Amadeus announced its intent to acquire Idemia Public Security, or IPS, for EUR 1.2 billion. IPS provides biometric technology to hundreds of clients across the border and travel (40% of sales), law enforcement (40%), and access control (20%) markets. The deal is scheduled to close mid-2027.

Although Amadeus' demand has been affected by uncertain economic and geopolitical conditions recently, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Amadeus' fourth-quarter sales grew 5%, with distribution increasing 4% and IT solutions up 7%. In the quarter, EBITDA margins expanded to 35.6% from 34.1% a year ago on labor efficiencies.

Although Amadeus' demand is being affected by waning consumer sentiment and enduring inflation expectations driven by tariff policy in the near term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Amadeus' third-quarter sales increased 6%. Air bookings grew 4%, driven by a 15% rise in Asia-Pacific. Air and hotel IT solution revenue both increased 5%, aided by a 7% lift in passenger volumes in the Middle East and Africa region. EBITDA margins expanded 110 basis points to 39.9%.

While Amadeus saw low-teens sales growth in 2024, the company enters 2025 with waning consumer sentiment and enduring inflation expectations driven by tariff policy. That said, we see Amadeus' demand continuing to rebound in 2025 from the pandemic-caused April 2020 nadir during the next few years. Long term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Amadeus' second-quarter revenue increased 4.6%, a slowdown from 9.1% growth in the first quarter, as air distribution bookings growth slowed to 1.5% from 2.5%. Passenger boardings rose just 3.9% versus 5.5% last quarter. EBITDA margin remained stable at 39.8%.

While Amadeus saw low-teens sales growth in 2024, the company enters 2025 with waning consumer sentiment and a jump in inflation expectations driven by tariff policy. That said, we see Amadeus' demand continuing to rebound in 2025 from the pandemic-caused April 2020 nadir during the next few years. Long term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Amadeus' group sales increased 9%, supported by broad strength across its businesses. Distribution revenue grew 8% and air and hotel solutions were up 11%. EBITDA margins were down 40 basis points to 38.5% on a 13% increase in personnel expenses.

While Amadeus saw low-teens sales growth in 2024, the company enters 2025 with waning consumer sentiment and a jump in inflation expectations driven by President Donald Trump's tariff policy. That said, we see Amadeus' demand continuing to rebound in 2025 from the pandemic-caused April 2020 nadir during the next few years. Long term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is second, followed by privately held Travelport) that control nearly 100% of market volume.

Narrow-moat Amadeus reported strong fourth-quarter results across all segments, with total revenue growth of 14% versus our 11% estimate. The company’s distribution business (46% of revenue) sales increased 14%, ahead of our 9% forecast, aided by both volume growth accelerating to 9% from 4% and revenue per booking improving to EUR 6.42 from EUR 6.17 sequentially. We believe this implies its network advantage remains intact, as the industry gradually transitions to the New Distribution Capability protocol, which offers the opportunity for Amadeus and its airline suppliers to generate incremental ancillary sales on Global Distribution System networks. Amadeus’ air IT solutions segment (37%) is also performing well, stoked by cloud and artificial intelligence innovation. Indeed, this business reported revenue growth of 15% compared with our 13% estimate, with revenue per passenger boarded of EUR 1.05 versus our EUR 1.02 estimate, as the company upsells more solutions to its clientele. Finally, hospitality (17%) revenue grew 13% versus our 11% estimate, helped by new customer wins like from no-moat MGM.

We have decreased our Uncertainty Rating for narrow-moat Amadeus to Medium from High, consistent with our quantitative methodology and a gradual improvement in corporate travel demand that we expect to continue for the foreseeable future. Our fair value estimate is EUR 67, leaving shares appropriately valued.

Despite uncertainty around the pace of corporate travel recovery and direct connections between major North American carriers and online travel agencies, we see Amadeus' business demand continuing to rebound in 2024 from the pandemic-caused April 2020 nadir during the next few years. Long term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is number two, followed by privately held Travelport) that control nearly 100% of market volume.

The Global Distribution System industry maintained positive momentum in the third quarter, with narrow-moat Amadeus' air bookings rising 4.4%, ahead of narrow-moat Sabre's 3% growth. The firm's year-to-date growth reached 3.4%, approaching our full-year growth estimate of 4%, buoyed by a recovery in business travel. Beyond benefiting from stronger demand, we are encouraged by Amadeus' progress in New Distribution Capability, now reflected in over 60 carrier agreements (up from 32 last quarter)—a feature that we believe strengthens the firm's network effect and efficient scale by providing airlines with greater customizable content. However, growth was partially offset by a 5.5% decline in North American air bookings, attributed to a single direct connection, which we consider an isolated event, and low-margin business with minimal impact on revenue. Overall, third-quarter and year-to-date air distribution revenue, representing 51% of sales, grew by 8.8% and 10%, respectively, aligning closely with our fiscal 2024 growth estimate of 10.2%.

Despite uncertainty around the pace of corporate travel recovery, direct connections between major North American carriers and online travel agencies, and consumer spending, we see Amadeus' business demand rebounding in 2024 from the pandemic-caused April 2020 nadir during the next few years. Long term, we expect its leadership position in global distribution systems to endure, driven by its leading network of airline content and travel agency customers as well as its healthy position in software solutions for these carriers and agents. Amadeus is the largest of the three GDS operators (narrow-moat Sabre is number two, followed by privately held Travelport) that control nearly 100% of market volume.

The gradual recovery in the Global Distribution System, or GDS, industry was evident in Amadeus’ 3% air booking increase during its second quarter and first half of the year. We are encouraged that half of Amadeus’ air inventory is now bookable through the industry’s updated New Distribution Capability, which we believe will incentivize airlines to use its platform relative to pushing their own direct channels, as it allows for customization and upsell of content. That said, one known blemish in first-half results was Amadeus’ North American air bookings declining 7%, due to a direct connection between one OTA and some carriers. But we note that this connection is low-margin business and has a more muted impact on revenue. Also, we think such connections will be rare. In fact, no-moat American Airlines lost corporate revenue share in its first half of 2024 after the airline deemphasized the GDS channel, a decision it is now moving back from, which shows Amadeus’ network advantage (primary source of its narrow moat).